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This Week In Trade

U.S. makes overtures to UK, saying a trade deal will soften Brexit impact

Posted: August 12, 2019

White House national security adviser John Bolton is abroad this week courting British officials, saying a trade deal with the United States will soften the impact of the United Kingdom’s exit from the European Union, according to reports.

Bolton is in London to meet with members of Prime Minister Boris Johnson’s administration. According to the New York Times, U.S. officials said Johnson’s predecessor, Theresa May, was not interested in working on a trade deal with the U.S. During May’s term, the U.S. and UK launched a working group that was intended to lay the foundation for a trade agreement.

Bolton is scheduled to sit down with UK trade secretary Liz Truss, who just returned from Washington, DC, where she met with U.S. Trade Representative Robert Lighthizer. Last week Truss said a trade deal with the U.S. was “very, very high” on the UK’s priority list.

Trump and Johnson also spoke on the phone on Monday and discussed trade, according to a White House pool report.

EU law stipulates that the UK cannot begin to negotiate trade deals until it leaves the single market. If the UK and EU are able to reach a transitional deal by Oct. 31 that would temporarily allow the UK to remain in the EU single market, the UK could negotiate and ratify trade deals once its exit from the EU is complete.

Movement toward a trade deal with the UK could be the “big progress” on trade Trump tweeted about over the weekend, as movement on the two most high-profile trade matters for his administration -- negotiations with China and the renegotiation of NAFTA -- is likely to be slow at best during August. Talks with China are not expected to resume until next month if the Chinese agree to travel to Washington for talks as planned. And while USTR and House Democratic staff members are continuing to discuss changes the U.S.-Mexico-Canada Agreement during the congressional recess, lawmakers are back in their home districts until September.

Iowa Sens. Chuck Grassley (R) and Joni Ernst (R) on Sunday urged the House to vote on USMCA soon. “The Trump administration has done its part to negotiate a strong deal,” the senators wrote in an op-ed in the Sioux City Journal. “Now it’s time for Congress to ratify the USMCA. We encourage our colleagues in the House to work quickly and efficiently to pass this important trade agreement so we can deliver a decisive victory for Iowa’s farmers, manufacturers, automakers and small businesses.”

Grassley is the chairman of the Senate Finance Committee.

The U.S. and China continued to exchange blows last week with the U.S. naming China a currency manipulator and Beijing announcing it would halt all agricultural imports from the U.S. Sen. Rick Scott (R-FL) on Monday said he did not see how the two sides could reach a deal.

“They’re not a great partner,” he said of China on CNBC. “They’re an adversary -- they’re a political adversary, an economic adversary, military adversary. So we’ve got to do everything we can to take care of ourselves and see if we can get them to change. But right now I don’t see how we’re going to get a deal done with them.”

“We’ve got to help American companies to do everything they can to buy American products so we get more American jobs and stop helping China and acting like they’re a partner,” Scott added.

The U.S., he said, will “have short-term pain, unfortunately,” suggesting that the impact of tariffs be offset by new tax cuts. Scott’s comments echo an assessment by Goldman Sachs, who said they no longer expect the U.S. and China to reach a deal before the 2020 presidential election. In an investment note to clients, the firm estimated that U.S.-China tariffs will have a cumulative 0.6 percent drag on U.S. gross domestic product.

China’s neighbors are also embroiled in a trade spat. South Korea is tightening export controls on Japan in retaliation for Japan's similar move, according to reports. The dispute could roil supply chains for tech companies, including some in the U.S. According to Trump, South Korea has asked the U.S. to mediate the dispute. U.S. officials have not yet publicly entered the fray, but have called on both sides to calm tensions. South Korea announced the change on Monday, altering its trade policy to place its trading partners in three groups instead of the current two -- Japan will be the lone country in the newly established second group for countries that whose export control practices are “not up to international standards.”

The World Trade Organization’s Dispute Settlement Body will meet on Thursday. On the agenda is the consideration of a panel report that found in favor of India’s claim that U.S. state benefits granted to renewable energy companies violated WTO rules.

As is typical in August, the Washington, DC, calendar is bereft of the usual lineup of trade-centric events. -- Brett Fortnam (bfortnam@iwpnews.com)