LDN - Business

Biden or Trump, no guarantee of a post-Brexit U.S.-UK trade deal

[September 18, 2020] By Andrea Shalal and David Lawder

WASHINGTON (Reuters) - U.S. presidential candidate Joe Biden's recent warning that Britain must honor Northern Ireland's 1998 peace agreement to secure a U.S. trade deal adds new complexity to already tough trade talks between the United States and the U.K.

"We can't allow the Good Friday Agreement that brought peace to Northern Ireland to become a casualty of Brexit," Biden wrote on Twitter on Wednesday, referring to the deal that ended three decades of sectarian violence in Northern Ireland and created a shared regional government.

Biden was echoing Democrat House Speaker Nancy Pelosi's warning last week that any move by Britain to erect physical customs borders between British-ruled Northern Ireland and EU-member Ireland meant "no chance" for a U.S.-UK trade deal.

His warning comes as U.S. negotiators in the Trump administration wrap up a fourth round of trade talks with their British counterparts in Washington this week. U.S. Secretary of State Mike Pompeo said Wednesday the talks could "reach a successful conclusion before too long."

No matter how they end, U.S. law gives Congress authority over trade policy. President Donald Trump has sometimes sidestepped that authority on trade issues, but U.S. and UK officials have said they are aiming for a comprehensive agreement that would need Congress's approval.

The U.S. election in November is expected to leave the House in Democratic hands, giving extra weight to Pelosi's words.

Both the U.S. and U.K. have other hurdles to clear as well, trade experts say.

"Removing the Good Friday agreement is a non-starter, but there are five or six other potentially really difficult issues that the two countries are still far apart on," said Harry Broadman, managing director with the Berkeley Research Group and a former senior U.S. trade official, including agriculture, the British health system and Britain's proposed digital services tax.

NON-NEGOTIABLE

Asked about the Trump administration's view Thursday, U.S. Trade Representative Robert Lighthizer's office pointed to his June testimony to Congress, where he said there is no chance Congress would pass a trade deal if Britain put up borders in Ireland, violating the Good Friday agreement.

"I've made that quite clear. The chairman [of the committee] has made it quite clear to me. The president agrees this is not something on which we're going to have a negotiation," he said.

The Good Friday agreement is in jeopardy, some diplomats say, because of new legislation proposed by British prime minister Boris Johnson.

British trade officials have repeatedly said they are seeking a comprehensive trade deal and are not seeking to rush into an agreement before the U.S. election, nor waiting to see who wins at the polls in November.

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Democratic U.S. presidential nominee and former Vice President Joe Biden speaks to reporters before boarding his campaign plane in Scranton, Pennsylvania, U.S. September 17, 2020. REUTERS/Jonathan Ernst

U.S. and British trade negotiators were expected to discuss one of the thorniest issues between the two countries in the current round of trade talks - increased access for agricultural products.

British trade minister Liz Truss has pledged to drive a "hard bargain" with the United States, vowing that Britain would not diminish its food safety standards to import American products such as chlorine-treated poultry and genetically modified crops.

Britain wants access for lamb and beef exports to the United States.

Autos are the largest source of trade between the two economies, and another point of friction. Britain maintains a 10% tariff on any U.S. imports, four times the U.S. tariff on British cars. An outstanding threat by Trump to impose 25% tariffs on imported vehicles makes negotiating down the U.K. rate unlikely, trade experts say.

Pompeo, speaking Wednesday at a news conference with UK Foreign Secretary Dominic Raab, said he trusted Britain to find a solution.

"We know the complexity of the situation," Pompeo said. "In the end, this will be a set of decisions with respect to this that the United Kingdom makes and (I) have great confidence that they will get this right in a way that treats everyone fairly and gets a good outcome."

Raab told CNN on Thursday that the 1998 agreement is "not in jeopardy."

"There is not going to be any hard border, certainly not applied by the UK," Raab said, adding that if the EU made a similar commitment, "it would also help the negotiations."

Jacob Funk Kirkegaard, a non-resident senior fellow Peterson Institute for International Economics, said Biden's warning suggests that perhaps he is just not that interested in a deal.

"The phrasing of not wanting northern Irish peace to be a victim of Brexit, that's a really forceful intervention by a potential future American president - basically disavowing the signature project that defines the current British government. It's difficult to imagine that wording is not reflective of Biden's overall interest in pursuing this deal."

Trump has developed close ties to Johnson, but Biden's warning suggests he may not do the same, he said.

"This signals to me that the 'special relationship' between a Biden administration and Boris Johnson's government, especially in a no-deal Brexit, is not going to be very special."

(Reporting by Andrea Shalal And David Lawder; Editing by Heather Timmons and Daniel Wallis)

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