UK-US Trade Deal

Today, we are publishing a suite of documents that mark a crucial step in beginning the formal negotiations for a free-trade agreement with our largest bilateral trading partner, the United States. These documents comprise the Government’s negotiating objectives, our response to the public consultation and an economic scoping assessment. They are available online and in the House of Commons Library.

The UK stands at an historic moment, building its independent trade policy for the first time in almost half a century. This Government will seize the opportunity to be an independent free trading nation with a simple message: that free trade is good for all nations and will deliver benefits for businesses, households and consumers across the UK. We aim to have 80% of UK trade covered by free trade agreements within three years, starting with the EU, the US, Japan, Australia and New Zealand. Seeking these agreements is key to our efforts to level up, deliver opportunity and unleash the potential of every part of the United Kingdom.

The US is one of our largest friends, the world’s largest economy, our closest security and defence partner and one of our oldest allies. We are the biggest investors in each other’s economies. An FTA represents a fantastic opportunity to strengthen and deepen our strong trade, investment and economic relationship, bringing us closer to the world’s economic powerhouse. In 2017, 1.7 million people worked for US companies in the UK, and 1.3 million people worked for UK companies in the US. UK-US total trade was valued at £221 billion last year, representing 19.8 % of all our exports. An ambitious free-trade agreement with the US could deliver a £15.3 billion increase in bilateral trade and a £3.4 billion lift to the economy.

The negotiating objectives we are publishing today are underpinned by one of the largest consultations ever undertaken. We received the views of more than 150,000 respondents, all of which have informed our approach and negotiating objectives. We have scaled up our trade negotiator expertise, with a similar size of team to the US Trade Representative, including a wealth of experience from the private sector, trade law, Commonwealth nations and World Trade Organisation experts ready to deliver for the UK.

My Department’s analysis shows that every single part of the UK could benefit from the US deal, delivering improved access for businesses, more investment, better jobs and higher wages. For Scotland, it could lock in the salmon and whisky trade and support new market access for beef and lamb. Wales stands to gain access for its lamb, and reduced tariffs in red tape for steel and ceramics. Northern Ireland can benefit from improved access to agriculture and furniture tariffs. Every region in England stands to benefit, particularly the midlands and the north-east with their strong manufacturing base in cars and machinery. We also expect significant gains in the tech sector across the country, with a bespoke digital and data agreement.

North, east, south and west, from agriculture to the creative industries, we find that a US trade deal can deliver for all parts of the UK economy. It means more choice for consumers at lower prices, new opportunities for businesses and more high-skilled jobs. It has the potential to slash trade barriers and tariffs of some £451 million, and it could boost British workers’ wages by £1.8 billion.

Small and medium-sized businesses are increasingly international traders in their own right. In 2018, 97% of goods exporters were SMEs, and 30,000 SMEs across the UK already trade with the US. We are going to make it a priority in these trade negotiations to support UK SMEs. We will do that with a dedicated chapter for SMEs. We will ensure that SMEs have easy access to information, and we will make sure that there are SME-friendly provisions, cutting red tape on customs and tariffs in services and goods.

We are also looking to rewrite the game on digital trade, to create a world-leading ecosystem that supports businesses of all sizes across the UK. This could include provisions that facilitate the free flow of data and prevent unjustified data localisation requirements, while maintaining our ability to protect users against online harm. We can ensure that customs duties are not imposed on electronic transmissions, and create great opportunities in areas such as blockchain, driverless cars and quantum technology.

In these trade talks, as in all future trade talks, this Government will drive a hard bargain on behalf of the British people. The NHS, the price it pays for drugs and its services are not for sale. There will be no compromise on high environmental protection, animal welfare and food standards. Throughout these negotiations, this Government will continue to engage collaboratively with Parliament, the devolved Administrations and the public. I can also assure the House that now that the UK is free to negotiate outside the EU, we will be aiming to begin negotiations with the US as quickly as possible. The appetite is clear on both sides. We welcomed the US Government’s negotiating objectives, particularly on developing “state-of-the-art” provisions in financial services and digital trade. We also welcome the enthusiasm, both in the US Congress and in the US Administration, as was made clear during my discussions with the US Trade Representative, Robert Lighthizer, last week. We see this as not just an opportunity to deepen our bilateral trade and investment relationship; it is also about setting an example to the world, about how two leading, open, free-market democracies can trade with each other.

As an independent trading nation, the UK will champion free trade and lower trade barriers at every opportunity. Striking free trade agreements will give our businesses the opportunities, certainty and security they need to prosper. The greatest opportunity to do that is with our closest ally and largest single trading partner, the United States. We have a mandate and we have the team. With these documents we are publishing today, we have the tools. And with hard work, I believe we can get it done. I commend this statement to the House.

May I thank the Secretary of State for early sight of her statement? We on this side of the House support ambitious trade agreements that unlock economic growth, create new jobs, and elevate rights and standards, so I congratulate her and her officials on the publication of today’s negotiating mandate for the Government’s flagship post-Brexit trade agreement. A year after the US equivalent, it has been greatly anticipated.

Some 20% of our current trade is with the US. It is our second biggest market, and we have enjoyed decades of two-way trade without an underlying trade agreement. The Government predict GDP growth of 0.07% to 0.16%, or £1.6 billion to £3.4 billion, as a result of this agreement. To put that in context, the Government’s own figures suggest a fall in GDP of about £150 billion as a result of the type of trade deal being proposed with the EU. Would it not be sensible to prioritise minimising losses of £150 billion, rather than chasing much smaller gains of £2 billion to £3 billion? How much will be added to GDP by the trade agreements with Japan, Australia and New Zealand, to which the Secretary of State referred? Will she confirm that countries on the other side of the Atlantic or further afield simply cannot come close to replacing what will be lost in the type of trade deal being proposed with the EU?

The negotiating objectives contain references to a level playing field with the US and a commitment to prevent either side from enjoying an artificial advantage—a commitment not being offered to the EU. Does the Secretary of State believe that the EU has not noticed? Or does she think the EU does not have access to translators? Dispute mechanisms are used by the US in international trade agreements to enforce its standards as a matter of course. It is noticeable that the EU negotiating objectives specifically exclude environmental protections and workers’ rights from the proposed dispute mechanism, but no such exclusions have been set out in the objectives published today, so will the UK end up having to back down, or are the rights and protections really the red lines that the Secretary of State would have us believe? Will she insist that the US signs up to International Labour Organisation conventions? How will the agreement reinforce the UK’s commitment to net zero by 2050?

I am pleased that the Opposition have acknowledged that there is value in trade deals and, indeed, in a trade deal with the US, because previously many of them have voted against trade deals with Canada and Japan. It is hard to understand who they actually want to do any business with.

The hon. Gentleman asked specifically about the trade arrangements with the EU; the simple answer is that we want a good trade deal with the EU and a good trade deal with the US. That is absolutely possible. Canada has an excellent trade deal with the EU and we want similar terms to it, and it also has a very good trade deal with the US, with an advanced digital chapter. It should be perfectly possible for us to seek such an arrangement that enables us to unlock the economic benefits of a deal with the US.

It takes a party with the economic literacy of the current Labour party to think that £15.3 billion of additional trade is not worth having. Why does the hon. Gentleman not tell that to the people of Stoke-on-Trent and the ceramics factories that could benefit? Why does he not say that to the midlands car manufacturers who want easier testing procedures? Why does he not say that to the people of Scotland, which is one of the regions that would benefit most from a free trade deal with the United States?

The hon. Gentleman asked me about the other deals that we are seeking—[Interruption.] Does he want to hear the answer to the next bit? He asked me about the other deals that we are working on at the moment. I will, in due course, be laying out our proposals for a deal with Japan, Australia and New Zealand. I can assure him that we will be publishing the full economic scoping studies, as we have for the United States, and we will be publishing objectives for those arrangements as well, in line with the commitments that we have made to Parliament. I am fully committed to working with Parliament on these arrangements. Of course, a treaty is an Executive prerogative, but at the same time I will be working with the International Trade Committee and making sure that we have proper scrutiny. We have been working with the devolved Administrations. My right hon. Friend the Minister for trade policy has had regular meetings with his colleagues in Northern Ireland, Scotland and Wales.

I congratulate my right hon. Friend on her statement. Will she confirm not only that UK exports to the United States currently attract half a billion pounds-worth of tariffs, the removal of which will be an immediate boost to the UK economy, but that the opportunities are even greater? We are currently involved in retaliatory tariffs as a result of the EU-US steel dispute and we are subject to tariffs that the US never wanted to apply to the UK. As we separate ourselves from the European Union, we can remove ourselves from that ensnarement, which will enable us to remove many other tariffs, which would be beneficial to consumers and businesses on both sides of the Atlantic.

My right hon. Friend is absolutely right. May I thank him for the work that he put in as Trade Secretary, which has got us to this point where we are able to launch these negotiating objectives, and for doing all the fantastic work that he did with our colleagues in the United States? I know the Labour party does not seem to think that tariffs are important, but that is not so for a pottery manufacturer in Stoke-on-Trent who is facing 28% tariffs on their dinnerware going into the US. If we get those tariffs removed, that will mean that that factory is able to employ more people, grow its business and invest. Yet again, that is the Labour party refusing to understand how enterprise works and where wealth comes from in this country.

My right hon. Friend is right about the steel industry. It is currently facing £300 million-worth of tariffs a year. If we can get those tariffs removed, that provides a brilliant opportunity for our steel industry to sell more products in the United States.

I thank the Minister for her statement and early sight of it. It is true that the analysis published today, which forms part of these documents, does provide some very useful information. It tells us that the maximum tariff reduction will be less than half a billion pounds, that the maximum increase in UK GDP would be 0.16%, that the maximum increase in gross value added for Scotland would be less than half a per cent—0.4%—and that, in the long-run, financial services GVA might actually go down. Yet in order to achieve these decidedly underwhelming targets, the UK will have to leave the European Union, surrender around 5% of GDP growth, and risk around 20% of UK global trade.

More worryingly, a pattern is emerging in the UK’s approach to trade negotiations. In the document on the future relationship with the EU, the UK seeks to exclude subsidies, competition policy, and environmental, tax and labour provisions from any dispute resolution mechanism. In today’s UK-US public negotiating objectives —only four pages of the total published today—there is limited reference to competition, labour and environment provision, nothing on subsidy or tax, and a single vague bullet point on dispute resolution that would enforce the level playing field and avoid the race to the bottom.

Apart from the environment, the Secretary of State mentioned none of those things in her statement. Let me ask her this: why are the UK Government giving the impression of abandoning level playing field provisions across so many aspects of modern trade deals? Why are they giving the impression that they are in favour of a wild west free-for-all in trade rather than a comprehensive rules-based system with a comprehensive dispute resolution mechanism? Why are they prepared to sacrifice so much in terms of global UK trade and GDP growth to secure what, by their own admission, are very, very modest gains indeed?

I have news for the hon. Gentleman: we have already left the European Union, although the news might not have reached him.

Scotland is one of the largest potential beneficiaries of a US-UK free trade agreement. The hon. Gentleman sniffs at the half a billion pound extra value added to the Scottish economy that is analysed, but a number of Scottish businesses are supportive, including the Scottish chamber of commerce. I suggest that he listens, as we have been doing, to businesses in Scotland about how they can see their businesses grow.

The hon. Gentleman specifically mentioned standards. In free trade agreements, including in the comprehensive and economic trade agreement, or CETA, there are often clauses saying that the parties will not deliberately lower standards for competitive advantage. That is what we are referring to in our US negotiating objectives and it is a perfectly proper and regular part of free trade agreements that we are happy to sign up to.

Order. I intend to run this statement until about quarter past 6. I urge short questions and short replies. Anybody who was not here at the beginning should not be standing. I will prioritise people who did not get called during the previous urgent questions.

Is the Secretary of State able to promise that the Government will not remove current restrictions or tariffs on food imports unless those imports are produced to standards of animal welfare as tough as the ones that we expect our own farmers to meet?

I thank my right hon. Friend for her question. As we make very clear in the negotiating objectives, we will not lower our standards. We will maintain our food safety and animal welfare standards and will not lower them as part of this free trade agreement. We decide which standards we abide by here in the UK. We have exceptionally high standards of animal welfare, and my right hon. Friend herself is a champion of that. We are not going to be told by the US what our standards should be; for that matter, we are not going to be told what our standards should be by the EU either.

Along with a majority of Labour MPs, I voted for the Canadian trade deal. The debate on that treaty was beset by disinformation campaigns by many non-governmental organisations, as was the Transatlantic Trade and Investment Partnership deal. Frankly, the Government did precious little to rebut them.

Currently, one of the concerns is whether drug prices will rise in the UK; the Secretary of State touched on that. Is there not a great desire across the United States, in fact, to achieve the same excellent deal as the NHS has secured? I doubt whether, in election year, even Donald Trump will die in a ditch for big pharma. Will the Secretary of State see this as a political campaign and not just a narrow, dry trade negotiation?

The right hon. Gentleman is a great champion of free trade on the Labour Benches, and I hope that his views prevail and become more mainstream in Labour party opinion. He makes a good point. Of course, there are strong economics behind this trade deal as we have outlined today. But there are those who seek to undermine the proposals and the benefits for British businesses with various smears and scare stories about the NHS, animal welfare standards or other issues. Those people damage the potential for British businesses and our economy. We are determined to rebut the false stories that they are putting out and to make sure that we put across the positive case for the whole UK.

I do not share the Scottish National party’s miserable analysis of the trade deal; I see great opportunities for Scotland from a deal. But there is a cloud on the horizon: the 25% duty currently applied to malt whisky. What confidence can the Secretary of State give us that at the end of this process there will be no duties on Scotch whisky of any kind in the United States and no duty on bourbon in the United Kingdom?

My right hon. Friend is right that this is a major issue for our excellent Scotch whisky producers and other companies such as Walkers shortbread and cashmere producers. I raised the issue again with Ambassador Lighthizer when I saw him last week. I want there to be an urgent settlement of the Airbus-Boeing dispute so that retaliatory tariffs on things such as bourbon, Harley-Davidsons and Florida orange juice as well as on our excellent products here in the UK can be removed. I am urging, as an early part of these trade negotiations, the removal of existing tariffs to show good will towards the negotiations.

Any increase in trade is clearly to be welcomed, but in private the Secretary of State will be honest, I am sure, about recognising that the benefits of the deal to the UK economy will be relatively small: just a 0.16% increase in GDP, and then only after 15 years. Why does she not do two other things? She could try to persuade her Cabinet colleagues to seek a deal with the European Union more ambitious than the Canada-light deal currently being advocated and, for goodness’ sake, to get behind a third runway at Heathrow.