Post Brexit Free Trade Deal With USA.

Hmm few pages of the usual hadbagging with little to do about a free trade dal with the US.

Fact. The EU is demanding...and been told to f*ck off.

Fishing, EU law, level playing fields, Gibralter, all the usual bullying bluster and rudeness they are so fond off, is being bluntly ignored, by a PM with some big nuts.

Fact. We are now ready to make independent deals with various countries who are more than willing to deal with us.

Fact. After Germany...who’s economy is faltering, we are the most powerful economic country in Europe.

Fact. Without our contribution, the EU are now scrambling to try and cover their outrageous spending plans...and failing.

Fact. The US has presently put us as the No 1 country they wish to do a trade deal with.

Fact. Nancy 'pursed lips' Pelosi’s gamble to impeach Trump has gone down in flames. It is now very likely that Trump versus the left wing Corbyn-like Democratic present favourite, Bernie Sanders, will probably end in a Trump second term.

So what is a free trade deal with the US likely to look like?

And... we are not, like a whole gaggle of remainers were bleating, dealing from a condition of weakness.
Trump might push a deal just for the optics of getting stuff done - and if it trolls the democrats/EU in the process, its a huge plus for him.
 

Steamboat

Old-Salt
Trump might push a deal just for the optics of getting stuff done - and if it trolls the democrats/EU in the process, its a huge plus for him.
Or the US and EU might try to do it now, because it might be easier to deal with each other at this point in time than the UK. Bojo seems a bit premature with his $hit talking at the moment.
 

Steamboat

Old-Salt

This one goes out to my buddy blade. Who seems to think that the EU and the US won’t try to negotiate a deal any time soon. But the one thing you seem to clearly misunderstand is that when the other party is willing to meet you half way on things, you are also obliged to sit down and start hashing things out.
 
But I will say it seems rather “odd” to place America in the same category as Brussels and Beijing. It does make it seem like we won’t be getting any closer. Your thoughts?
Johnson appears to be staking out a position early as being in favour of free trade and keeping Britain out of close alignment with any specific "trade block". It's pretty much the only realistic position for him to take given Britain's position in the world, which in trade terms is now analogous to that of Japan.

For a UK-EU trade treaty, both sides have said they are looking for something very similar to CETA. The only real question is how much gets added on to that in terms of things which are not strictly speaking trade matters, but which have political and diplomatic aspects to them. The EU keeps saying that the UK will have to accept compromises on sovereignty in order to "access the single market", while Johnson seems to be saying that he's not interested in "accessing the single market", he just wants trade terms similar to those of Canada. "Single market" to the EU seems to mean granting a "concession" to the UK that Johnson isn't interested in accepting, and Brussels have difficulty in understanding this concept.

A US-EU or US-UK trade treaty will likely be difficult to conclude unless it only covers trade in agriculture to a limited degree. The same is true for cultural industries, communications, and other areas. The NAFTA treaty only allows for limited trade in agriculture, cultural industries, communications etc., with each country excluding large sectors from the treaty. Something similar is likely for EU-US or UK-US trade.

The original US-EU trade treaty proposal was TTIPP. In parallel with this was CETA (Canada / EU). TTIPP went nowhere while CETA progressed because CETA took a different approach to things like food standards, investor/state dispute resolution, and other contentious issues. Part of the reason why CETA took so long was the EU's interest in keeping the two sets of talks in step with one another to ensure that they didn't offer anything to Canada which they weren't willing to offer the US.

Here's an article which discusses some of the comparisons between the two. I would suggest reading it.

Here's a good summary of the difficulty of dealing with the US from the EU perspective.
It is probably fair to say that the negotiation style of the US in trade deals seems to be rather peculiar. The general attitude from the US side is that the granting of access to the large US market is a huge concession for which it wants to be compensated with. Hence, typically demands on the US side are large while what they offer in terms of concessions for sensitive issues close to zero or non-existent.
The EU keeps saying that CETA is their blueprint for trade deals, and I suspect the same will be true for negotiating with the US. I would not be surprised if the UK were to take a similar position. So far as the EU is concerned, unless the US exhibits a change in attitude, then there doesn't seem to be much room for progress. We'll have to see what the UK position on these subjects is.

Trump on the other hand seems to want a piece of paper to wave about during the upcoming US election, so he may be happy with something that he can spin as a symbolic "win" but which means very little in practice. Trump talked big about all the changes he was going to make to NAFTA, but which amounted to very little in practice when Canada and Mexico told him to ram it.
 
Trump is a protectionist he is against free trade

The EU is protectionist, and will only become more so.

See its desire too legislate away the digital economy, GM food and AI technology.
 

Steamboat

Old-Salt
Johnson appears to be staking out a position early as being in favour of free trade and keeping Britain out of close alignment with any specific "trade block". It's pretty much the only realistic position for him to take given Britain's position in the world, which in trade terms is now analogous to that of Japan.

For a UK-EU trade treaty, both sides have said they are looking for something very similar to CETA. The only real question is how much gets added on to that in terms of things which are not strictly speaking trade matters, but which have political and diplomatic aspects to them. The EU keeps saying that the UK will have to accept compromises on sovereignty in order to "access the single market", while Johnson seems to be saying that he's not interested in "accessing the single market", he just wants trade terms similar to those of Canada. "Single market" to the EU seems to mean granting a "concession" to the UK that Johnson isn't interested in accepting, and Brussels have difficulty in understanding this concept.

A US-EU or US-UK trade treaty will likely be difficult to conclude unless it only covers trade in agriculture to a limited degree. The same is true for cultural industries, communications, and other areas. The NAFTA treaty only allows for limited trade in agriculture, cultural industries, communications etc., with each country excluding large sectors from the treaty. Something similar is likely for EU-US or UK-US trade.

The original US-EU trade treaty proposal was TTIPP. In parallel with this was CETA (Canada / EU). TTIPP went nowhere while CETA progressed because CETA took a different approach to things like food standards, investor/state dispute resolution, and other contentious issues. Part of the reason why CETA took so long was the EU's interest in keeping the two sets of talks in step with one another to ensure that they didn't offer anything to Canada which they weren't willing to offer the US.

Here's an article which discusses some of the comparisons between the two. I would suggest reading it.

Here's a good summary of the difficulty of dealing with the US from the EU perspective.


The EU keeps saying that CETA is their blueprint for trade deals, and I suspect the same will be true for negotiating with the US. I would not be surprised if the UK were to take a similar position. So far as the EU is concerned, unless the US exhibits a change in attitude, then there doesn't seem to be much room for progress. We'll have to see what the UK position on these subjects is.

Trump on the other hand seems to want a piece of paper to wave about during the upcoming US election, so he may be happy with something that he can spin as a symbolic "win" but which means very little in practice. Trump talked big about all the changes he was going to make to NAFTA, but which amounted to very little in practice when Canada and Mexico told him to ram it.
Thank you for that link, it is a good perspective.

I was also under the impression that both Canada and Mexico are unable to negotiate any sort of deal with China Independently with the USMCA? It does seem it has opened up the markets a bit more, and should help protect our auto industry.

The US-EU deal might be more feasible with Ursula. After Nordstream II, dealing with the US might be easier than one might initially think. I don’t expect the US to get everything it wants, but allowing more agricultural products in the EU seems to be an accepted reality. A trade deal also creates a trade peace, which helps the markets immensely. If the EU can get America out of the way, they can then focus on the U.K.

Bojo IMO has gone a bridge to far in his dealings with DC. Trump may accept a symbolic victory with little to no substance to pad his CV. But any real deal with the U.K. has to go through Congress. Which also IMO is where Bojo has failed to do his homework. Any significant deal has to be approved by Congress. The only thing Bojo has done is unite both the right and left against him. The left is worried about GFA, and the right 5G. So when you manage to get that body to cooperate you have problems.
 
The EU keeps saying that the UK will have to accept compromises on sovereignty in order to "access the single market", while Johnson seems to be saying that he's not interested in "accessing the single market", he just wants trade terms similar to those of Canada. "Single market" to the EU seems to mean granting a "concession" to the UK that Johnson isn't interested in accepting, and Brussels have difficulty in understanding this concept.
sovereignty really only becomes an issue if EU or U.K. law changes in the future as currently they are the same. Has he come up with any proposed law changes?

from this perspective, if Johnson is saying that he doesn’t want “access to the single market” then he is saying that he doesn’t want to British businesses to trade with any of the EU27
 
sovereignty really only becomes an issue if EU or U.K. law changes in the future as currently they are the same. Has he come up with any proposed law changes?

from this perspective, if Johnson is saying that he doesn’t want “access to the single market” then he is saying that he doesn’t want to British businesses to trade with any of the EU27


The EU is terrified Boris will ci=ut tax rates to draw in businesses.

See Ireland, the domicile of choice for so much US FDI…
It speak English, it has low taxes.

Well… next door is another English speaking island that can cut its taxes even lower, and has a cost of living very significantly lower
 
(...) I was also under the impression that both Canada and Mexico are unable to negotiate any sort of deal with China Independently with the USMCA?
No, all three parties can negotiate any trade treaties they want with anyone they want. All three can withdraw from NAFTA at any time if they don't feel that it's to their individual advantage. If the US don't like any trade treaty that the others have negotiated with a third party the US can simply pull out of NAFTA, as can Canada or Mexico.

It is normal practice in international relations to discuss new trade treaties with other major trading partners to explain to them how it may affect them (or not if it doesn't). After concluding the changes to NAFTA Canada's trade minister flew to Beijing to explain the changes to the treaty and discuss it with them. I expect that something similar was done with respect to the EU.

Neither of these are new, they're standard practice. If this is being sold in the US as something new, well it's not.

The US-EU deal might be more feasible with Ursula. After Nordstream II, dealing with the US might be easier than one might initially think. I don’t expect the US to get everything it wants, but allowing more agricultural products in the EU seems to be an accepted reality. A trade deal also creates a trade peace, which helps the markets immensely. If the EU can get America out of the way, they can then focus on the U.K.
From all accounts so far the EU's first priority will be a new trade relationship with the UK. Going by past performance any non-trivial EU-US trade deal will drag on for years.

Bojo IMO has gone a bridge to far in his dealings with DC. Trump may accept a symbolic victory with little to no substance to pad his CV. But any real deal with the U.K. has to go through Congress. Which also IMO is where Bojo has failed to do his homework. Any significant deal has to be approved by Congress. The only thing Bojo has done is unite both the right and left against him. The left is worried about GFA, and the right 5G. So when you manage to get that body to cooperate you have problems.
Any significant UK trade deal with the US has to go through parliament in Westminster. Johnson may have a majority at the moment, but he is only prime minister so long as his party backs him. His MPs won't back something they think will lose them their seats. If he presents something to parliament that his own party aren't willing to stand behind, he's out on his arse in an instant. It's not like the US where a president can hang on until the next election regardless of whether his MPS support him or not. The mood in the UK at present doesn't support kowtowing to anyone.
 

Steamboat

Old-Salt
No, all three parties can negotiate any trade treaties they want with anyone they want. All three can withdraw from NAFTA at any time if they don't feel that it's to their individual advantage. If the US don't like any trade treaty that the others have negotiated with a third party the US can simply pull out of NAFTA, as can Canada or Mexico.

It is normal practice in international relations to discuss new trade treaties with other major trading partners to explain to them how it may affect them (or not if it doesn't). After concluding the changes to NAFTA Canada's trade minister flew to Beijing to explain the changes to the treaty and discuss it with them. I expect that something similar was done with respect to the EU.

Neither of these are new, they're standard practice. If this is being sold in the US as something new, well it's not.


From all accounts so far the EU's first priority will be a new trade relationship with the UK. Going by past performance any non-trivial EU-US trade deal will drag on for years.


Any significant UK trade deal with the US has to go through parliament in Westminster. Johnson may have a majority at the moment, but he is only prime minister so long as his party backs him. His MPs won't back something they think will lose them their seats. If he presents something to parliament that his own party aren't willing to stand behind, he's out on his arse in an instant. It's not like the US where a president can hang on until the next election regardless of whether his MPS support him or not. The mood in the UK at present doesn't support kowtowing to anyone.
I would need paper copies of the cliff notes version of the old and new agreements to go through, which I don’t have. Apologies for being a slacker. I do recall the percentage of auto parts manufactured here should go up, an increase in agricultural and dairy products being exported and a gradual increase in jobs.

The barbs being traded by the EU and U.K. seem to be a bit more venomous than normal. It really does not seem like either side really wants to negotiate at this point. But time is not on the UK’s side.

I think America will see which side wants to negotiate seriously first, and focus on that deal. But either way we can just tariff the other parties to death and keep on jogging.


The Brits do seem a bit feisty, but coming out swinging at everybody has the potential to backfire. If they won’t seriously negotiate we will walk, if we even get to that point.


What about a deal with Japan, as a more feasible starting point?
 
sovereignty really only becomes an issue if EU or U.K. law changes in the future as currently they are the same. Has he come up with any proposed law changes?

from this perspective, if Johnson is saying that he doesn’t want “access to the single market” then he is saying that he doesn’t want to British businesses to trade with any of the EU27
Let's look at the options available.
  1. WTO terms
  2. CETA ("Canada style" agreement)
  3. Single Market
The first one, WTO terms, is the minimum baseline agreement. As both the UK and the EU are WTO members, it applies automatically in the absence of any other agreement. It sets maximum tariff rates and dictates many other aspects of trade with regards to non-tariff barriers and trade in services.

A CETA type agreement would eliminate tariffs on most goods, set quotas on agricultural goods, expand provisions for trade in services, provide a means of smoothing over non-tariff barriers, and provides a dispute resolution mechanism. It's the non-tariff barriers which are the most significant, as WTO tariffs are in most cases already very low.

Under a CETA type agreement, neither side is obliged to change things like food standards or worker protections to any significant degree or to adopt common standards. What they do is provide a means for facilitating that exporters meet the standards required in the destination country.

For example, let's suppose a company wants to set up frozen pizza manufacturing in both the EU and in Canada. Let's call them say "Dr. Oetker's Frozen Pizza", to pick a real example. While manufacturing primarily for the local market, they also want to be able to offer specific recipes made in each factory in the other market. That way they can try out sales of recipes in each market to see how well they will sell in that market without having to set up trial production on both continents.

In order to sell German made pizzas in the Canadian market they have to meet Canadian food standards, and to sell Canadian made pizzas in the German market they have to meet EU standards. So to take the German made pizzas as an example, the production line and supply chains all have to get certified, all the way back to the farm in some cases, that they meet Canadian standards, upon which they get to put a Canadian food inspection agency stamp on their packaging and are allowed to sell in the Canadian market. They are also subject to inspection by Canada at any time.

Now apply this example to everything from food to electrical goods to furniture to machinery, etc.

This has long been possible in both directions without a trade treaty, as is obvious by all the cheap Chinese tat that is sold around the world. What CETA does is reduce the regulatory barriers to getting certified by defining all the hoops that must be jumped through and what reasons certification can be denied for. This is a large part of what is meant by reducing non-tariff barriers.

What the above is not is "Single Market". Single Market in EU speak is every member of the Single Market has incorporated EU regulations into their domestic law and regulatory systems. This means for example there is no need to certify individual pizza factories or their suppliers for export to the EU, as they already as a matter of course meet those EU standards. A pizza made in any part of the Single Market should, at least in theory, meet all food standards in any other part of the single market.

However, the assumption behind the Single Market is that all members have transposed the applicable EU directives into domestic law. And the arbiter of whether they have done so adequately is the EU court. So being a member of the Single Market inherently means adopting EU law and being subject to the jurisdiction of the EU Court.

However, being subject to EU law and the jurisdiction of the EU Court is what Johnson has said he doesn't want. Rather, he wants what's behind Door #2, which is CETA. This is where sovereignty comes into play as this is the test by which is it judged whether the UK has actually left the EU.

In practice, the UK may not choose to change their laws or regulations to diverge significantly from those of the EU in a manner which would affect say the manufacture of frozen pizza. They do not however want to place themselves under EU law or the EU court because that would severely limit them when making trade treaties with other countries as they would not be able to agree to standard trade treaty provisions such as regulatory equivalence or dispute resolution mechanism, as those would be the province of EU law and the EU court.

To put it more succinctly, Single Market is the EU camel's nose in the UK tent, and so that is why Johnson doesn't want it.
 
I would need paper copies of the cliff notes version of the old and new agreements to go through, which I don’t have.
You would need a lot more than that. You would also need to know what the actual text means in practice, as it is interpreted according to long standing precedent. You would also need copies of "side letters", which are bilateral agreements which modify and supersede the provisions of the treaty itself. In addition you would need to examine the CPTPP to which Canada and Mexico, but not the US, are parties, and any side letters accompanying that.

I go by what I have been reading in the press over the past several years. What is literally in the treaty itself is not easy to understand without a broader context.

Apologies for being a slacker. I do recall the percentage of auto parts manufactured here should go up, an increase in agricultural and dairy products being exported and a gradual increase in jobs.
The main US complaints about NAFTA were with respect to auto manufacturers moving production from the US to Mexico. The US sought, and to some extent got, increases in "NAFTA" content for automobiles, as opposed to parts made outside NAFTA. However, that only applies to cars which are sold in the US. Cars which are sold in Canada or Mexico are subject to CPTPP, which for example allows more parts made in CPTPP countries than cars sold in the US do.

US accepted a dairy quota which they had previously rejected as "inadequate" under TPP before the US walked out of TPP (which became CPTPP in their absence). In other words, they simply took what was already on the table.

The main problem the US is going to run into is with respect to workers rights and health and safety in Mexico. The US were the ones keen on bringing Mexico into the existing Canada-US Free Trade Agreement as NAFTA, but have been agonising over the "race to the bottom" this has introduced in the American economy ever since as corporate pressure has been to bring US working class wages and benefits down to Mexican standards rather than bringing Mexican wages up to US standards. The UK have been going through the same thing with respect to eastern Europe once the former Comecon countries started joining the EU, with "freedom of movement" making the pressure even more intense.

The previous president of Mexico signed things in that regards which the current president of Mexico has said he has no intention of honouring as they infringe on Mexican sovereignty. Good luck with that one, as Canada is content to watch that play out from the side lines.

The barbs being traded by the EU and U.K. seem to be a bit more venomous than normal. It really does not seem like either side really wants to negotiate at this point. But time is not on the UK’s side.

I think America will see which side wants to negotiate seriously first, and focus on that deal. But either way we can just tariff the other parties to death and keep on jogging.


The Brits do seem a bit feisty, but coming out swinging at everybody has the potential to backfire. If they won’t seriously negotiate we will walk, if we even get to that point.
There's a lot of jockeying for position going on. Once it's settled whether the UK is in or out of the Single Market, the rest is by comparison relatively straightforward.

What about a deal with Japan, as a more feasible starting point?
The Japanese have invited the UK to sign up to the CPTPP, which includes Canada, Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. As I noted in a previous post, with the addition of the UK this amounts to a market that is approximately 90% of the size of the EU (without the UK). It is not as tightly as the EU, but it is already in place.
 
Let's look at the options available.
  1. WTO terms
  2. CETA ("Canada style" agreement)
  3. Single Market
The first one, WTO terms, is the minimum baseline agreement. As both the UK and the EU are WTO members, it applies automatically in the absence of any other agreement. It sets maximum tariff rates and dictates many other aspects of trade with regards to non-tariff barriers and trade in services.

A CETA type agreement would eliminate tariffs on most goods, set quotas on agricultural goods, expand provisions for trade in services, provide a means of smoothing over non-tariff barriers, and provides a dispute resolution mechanism. It's the non-tariff barriers which are the most significant, as WTO tariffs are in most cases already very low.

Under a CETA type agreement, neither side is obliged to change things like food standards or worker protections to any significant degree or to adopt common standards. What they do is provide a means for facilitating that exporters meet the standards required in the destination country.

For example, let's suppose a company wants to set up frozen pizza manufacturing in both the EU and in Canada. Let's call them say "Dr. Oetker's Frozen Pizza", to pick a real example. While manufacturing primarily for the local market, they also want to be able to offer specific recipes made in each factory in the other market. That way they can try out sales of recipes in each market to see how well they will sell in that market without having to set up trial production on both continents.

In order to sell German made pizzas in the Canadian market they have to meet Canadian food standards, and to sell Canadian made pizzas in the German market they have to meet EU standards. So to take the German made pizzas as an example, the production line and supply chains all have to get certified, all the way back to the farm in some cases, that they meet Canadian standards, upon which they get to put a Canadian food inspection agency stamp on their packaging and are allowed to sell in the Canadian market. They are also subject to inspection by Canada at any time.

Now apply this example to everything from food to electrical goods to furniture to machinery, etc.

This has long been possible in both directions without a trade treaty, as is obvious by all the cheap Chinese tat that is sold around the world. What CETA does is reduce the regulatory barriers to getting certified by defining all the hoops that must be jumped through and what reasons certification can be denied for. This is a large part of what is meant by reducing non-tariff barriers.

What the above is not is "Single Market". Single Market in EU speak is every member of the Single Market has incorporated EU regulations into their domestic law and regulatory systems. This means for example there is no need to certify individual pizza factories or their suppliers for export to the EU, as they already as a matter of course meet those EU standards. A pizza made in any part of the Single Market should, at least in theory, meet all food standards in any other part of the single market.

However, the assumption behind the Single Market is that all members have transposed the applicable EU directives into domestic law. And the arbiter of whether they have done so adequately is the EU court. So being a member of the Single Market inherently means adopting EU law and being subject to the jurisdiction of the EU Court.

However, being subject to EU law and the jurisdiction of the EU Court is what Johnson has said he doesn't want. Rather, he wants what's behind Door #2, which is CETA. This is where sovereignty comes into play as this is the test by which is it judged whether the UK has actually left the EU.

In practice, the UK may not choose to change their laws or regulations to diverge significantly from those of the EU in a manner which would affect say the manufacture of frozen pizza. They do not however want to place themselves under EU law or the EU court because that would severely limit them when making trade treaties with other countries as they would not be able to agree to standard trade treaty provisions such as regulatory equivalence or dispute resolution mechanism, as those would be the province of EU law and the EU court.

To put it more succinctly, Single Market is the EU camel's nose in the UK tent, and so that is why Johnson doesn't want it.
And a CETA gives “access to the Single Market”

you describe membership of the Single Market (eg customs union, Norway etc)
 
And a CETA gives “access to the Single Market”

you describe membership of the Single Market (eg customs union, Norway etc)
Not exactly. The EU distinguishes between "Canada", which is not "Single Market", and "Norway", which is "Single Market". "Single Market" in the EU's current starting point with respect to UK negotiations seems to be something equivalent to a customs union with some undefined tweaks to it, as the "Norway" option was rejected by the UK early on in the Brexit saga.
 

Steamboat

Old-Salt
@terminal



The U.K. is very ambitious indeed.

I don’t see them getting much of anything if they don’t come to the table with serious intent to open up to agriculture and pharmaceuticals. They want access to our procurement contracts and the lowering of tariffs.

I can see the service sector being the easiest area to find common ground on.
 
Not exactly. The EU distinguishes between "Canada", which is not "Single Market", and "Norway", which is "Single Market". "Single Market" in the EU's current starting point with respect to UK negotiations seems to be something equivalent to a customs union with some undefined tweaks to it, as the "Norway" option was rejected by the UK early on in the Brexit saga.
“Access to the Single Market” simply means ability to sell goods within the EU


The EU opening position is a “free trade area”

The UK’s is a “free trade agreement or ... based simply based on the Withdrawal Agreement..”



to be honest the UK appears to be playing to the masses (taking back control etc etc) but everything should be really easily agreed based on current standards as they are common. The issues are IMHO:

(a) when one side of the other change from their current common standards
(b) customs (including the relationship between NI/ROI(EU)/mainland UK).
 

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