LDN - Business

U.S., UK launch post-Brexit video trade talks amid coronavirus recession

[May 05, 2020] By David Lawder

WASHINGTON (Reuters) - The United States and Britain launch trade negotiations by videoconference on Tuesday following the UK's exit from the European Union, as both allies struggle with the effects of the coronavirus pandemic and aim to shore up domestic supply chains.

The talks will be Washington's first major new trade negotiation in 2020, and take place at the same time as London works out trade terms with the EU, with a year-end deadline.

U.S. Trade Representative Robert Lighthizer has said little publicly about the UK trade talks since publishing a sweeping set of objectives more than a year ago that sought full access for U.S. agriculture products and reduced tariffs for U.S. manufactured goods.

The Trump administration is looking to shift supply chains back to the United States and away from China, where the novel coronavirus originated, and is pushing a "Buy American" campaign for medical and other supplies.

Agriculture is expected to be among the thorniest issues in the talks, given the strong British opposition to U.S. genetically modified crops and antibacterial treatments for poultry. Prime Minister Boris Johnson has vowed to drive a "hard bargain" and UK International Trade Secretary Liz Truss has said that Britain would not diminish its food safety standards.

The top American business lobby, the U.S. Chamber of Commerce, on Monday urged the two historic allies to eliminate all tariffs, saying that would boost the long-term outlook for both countries at a time when their economies have been hard hit by shutdowns aimed at curbing the spread of the coronavirus.

The chamber said the two countries also could strengthen global trade rules to deal with challenges posed by non-market economies such as China..

Trade in goods between the United States and United Kingdom was valued at $127.1 billion in 2018, with the two sides roughly in balance, while the services trade topped $134.8 billion. Britain is the seventh-largest U.S. goods trading partner, after South Korea, according to the U.S. Census Bureau.

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U.S. Trade Representative Robert Lighthizer testifies before a Senate Finance Committee hearing on "The President's 2019 Trade Policy Agenda and the United States-Mexico-Canada Agreement" on Capitol Hill in Washington, U.S., June 18, 2019. REUTERS/Leah Millis

Ted Bromund, a senior research fellow in Anglo-American relations at the Heritage Foundation, a conservative think-tank in Washington, said one area ripe for tariff reduction was in automotive trade, Britain's largest export sector to the United States. U.S. passenger car tariffs are 2.5%, with pickup truck tariffs at 25%, while Britain maintain a 10% car tariff.

"There are lots of areas -- digital trade, visa liberalization, financial services -- but if you can't agree to essentially get rid of tariffs on visible trade, I'm not sure it's a free trade agreement," Bromund said.

Truss sounded conciliatory in a statement released by Britain's embassy in Washington on Monday.

"As we start trade talks with the US, we want to strike an ambitious deal that opens up new opportunities for our businesses, brings in more investment and creates better jobs for people across the whole of the UK," Truss said.

The talks, expected to last two weeks initially, will start with a videoconference call on Tuesday, the UK embassy said. Further rounds will take place approximately every six weeks and will be carried out remotely until it is safe to travel.

A USTR spokesman did not respond to a request for comment on the talks.

(Additional reporting by Andrea Shalal; Editing by Sonya Hepinstall)

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