Mordaunt: State-level US deals have unlocked talks for federal trade deal with Biden
The UK’s ambition to sign more than a dozen trade and business agreements with individual US states has helped unlock talks with the White House for a post-Brexit trade deal, trade minister Penny Mordaunt has said.
Mordaunt, who is deputy to international trade secretary Anne-Marie Trevelyan, told City PM in a wide-ranging interview that she was “hopeful” an official UK-US negotiating round will happen this year and that there was now a “real head of steam” after talks stalled last year.
The UK signed its first agreement with Indiana on Friday, which will cut red tape for British businesses looking to operate in the Midwestern state or bid for state government contracts.
Oklahoma, North Carolina, South Carolina and Texas agreements are all likely to be done in the coming months.
Mordaunt said these negotiations had helped thaw relations with the White House, after talks over a post-Brexit trade deal stalled when Joe Biden became President.
“I think there is a real head of steam now from the US side in terms of its businesses and its states. A lot of it is politicians too, who are actually starting to open up to round six of those discussions,” she said.
“We’ll have to work at a pace the US is comfortable with, but in the meantime there’s lots we can do.
“We’re determined, whether it’s tariffs or other barriers, that we’re going to remove those for our firms and our investors.”
None of the state-level deals will see tariffs or quotas cut on goods going in either direction as this needs to be done through a federal trade deal.
However, many of them will include provisions for mutual recognition of qualifications to ensure British professional services workers can more easily operate in the US.
Mordaunt said an agreement with Texas is currently the most realistic with a “super economy state”, with a deal set to be concluded this year, however talks with California have stalled for the time being.
Texas and California would have the 10th and fifth largest economies in the world if they were individual nations.
“There will be particular partnerships between institutions – academic institutions, education institutions and also across particular sectors,” Mordaunt said.
“In Indiana we’re very focussed on green tech, motorsport, all sorts of things like that. Elsewhere there’s a lot to be done in renewable energy, for example, like in Oklahoma which is another trailblazer state. There’s great synergy between what they’re doing and what we’re doing in Teesside.
“In Texas, we’re looking at the four big metro mayors there being partners with some of our powerful metro mayors in the UK.”
Five rounds of formal UK-US trade negotiations were conducted under the Donald Trump presidency, however trade deals have not been a priority for Biden since entering office.
However, there have been signs that the US may be willing to reopen talks with Biden’s trade representative Katherine Tai meeting with UK international trade secretary Anne-Marie Trevelyan in March.
A key breakthrough was made when the US announced it had dropped its Trump-era tariffs on British steel and aluminium during the March meeting.
Trevelyan said shortly after that the US had made a clear indication that it was willing to move forward with trade talks.
One of the key stumbling blocks to a deal has been the status of some American agricultural products, which are made with practices that are banned in the UK.
Mordaunt said she had been speaking with agricultural commissioners from the 50 states to try and build support for a UK-US agreement.
“That’s led to some very practical things, which will help … remove some of the myths around what a free trade agreement can do,” she said.
The UK’s ongoing negotiations with the EU over the Northern Ireland Protocol have also been seen as a hindrance on progress for a transatlantic deal.
Nancy Pelosi, senior Democrat and speaker of the House of Representatives, has threatened to block a UK-US trade deal if Boris Johnson triggers Article 16 and suspends the protocol – a long standing threat from Downing Street.
The White House has also indicated that it holds a similar position.
Labour shadow trade secretary Nick Thomas-Symonds last week said: “The Tory Manifesto of 2019 promised a comprehensive US-UK Free Trade Agreement by the end of 2022. With less than seven months to go it seems that this will be another broken promise from this government.
“Reducing barriers to trade with individual states is important, but the government must set out a formal process for proper scrutiny … in Parliament, and ensure that exporters here in the UK are given the support they need to take advantage of new opportunities.”