The UK still lacks answers to basic questions as trade talks with US begin

Negotiations for a free trade agreement (FTA) between the UK and the US started on 5 May. For Brexit supporters who wanted to make Britain a ‘free trade nation’ once again, this is a moment of celebration. For British business, it offers a modicum of good news in a difficult time. And it will also be satisfying for the Department for International Trade, as the UK's first crop of trade negotiators since 1973 get to put their newly acquired skills to the test.

For others in the UK, however, it is a moment of concern. Numerous civil society organisations, politicians and other campaigners have expressed worry about the implications of a UK-US FTA, focusing particularly on fears that the US will seek full market access to the National Health Service and that the UK will lower its food standards.

But what will the hundred-odd UK and US negotiators actually be talking about over the next fortnight of videoconferences? In short, it won’t be chlorinated chicken or a privatised NHS. The first round of negotiations is likely to be exceptionally dull, with any difficult conversations focusing on the UK's inability to answer the US’s basic questions about its trade policy.  

Free Trade Agreement negotiations are a marathon, not a sprint

The negotiators will break into groups to discuss individual chapters of the agreement. Unlike the EU negotiations that started in March, neither the UK nor the US has published an advance agenda for the talks, so we don’t know exactly what those groups will be. But all modern FTAs follow much the same structure: there will be chapters on market access (tariffs, rules of origin, services and so on); regulatory cooperation (product standards, food safety etc); rules on trade-related issues like subsidies, intellectual property and environmental standards; and some final procedural chapters setting up committees to oversee the implementation of the agreement and a mechanism to resolve disputes between the parties.

FTA negotiations also tend to proceed in much the same way regardless of the parties involved. On tariffs, where the two sides just need to agree numbers, the usual practice is for each side to present a list of offers (what tariff cuts they’re prepared to make on each product) and requests (what tariff cuts they need from the other side). On regulatory chapters, where the two sides need to agree legal wording, either one side or both will draft a chapter. The two sides then go back and forth, exchanging offers and requests, drafts and counter-drafts, until they’ve hammered out a mutually acceptable compromise.

The UK will need to answer some tricky questions about its trade policy

Before the two parties discuss where they want to end up , however, they usually need to focus on where they are now. They will offer each other presentations on their domestic regulatory systems, to understand better where the problems in the trading relationship lie and how they could be resolved. Before they start making tariff offers, the two sides will need to exchange trade data for each of the thousands of products on which they are negotiating: only that way will each side know how much the concessions they're asking for are worth.

The UK and US may already have discussed some of these issues in the six trade and investment working groups they have held since July 2017. But many of the questions in which the US will be most interested did not – and indeed still do not – have any very satisfactory answers. Take tariffs: before the US makes any offers, it will want to know the level of the UK's most-favoured nation (MFN) tariffs – those it applies to imports from countries with which it doesn’t have an FTA. Unfortunately, the UK still doesn't know. It currently applies EU tariffs and a consultation on what its MFN tariffs should be closed only a month or so ago. The US will not make any concessions in order to secure tariff reductions which the UK may end up granting unilaterally.

Even simple trade data for the UK is currently lacking. Almost half of the UK's trade is with the EU, and with no customs declarations required, data on intra-EU trade is notoriously unreliable. What is more, even if the UK did have that data, it might well be irrelevant before a UK-US FTA came into force, since a no deal outcome in December 2020 would likely produce significant shifts in the UK's pattern of trade. And the UK will find it difficult to explain its system of regulation to the US while the bodies that will ultimately replace the Commission have yet to start work.

So far, the government has relied on banal statements that all EU law will remain in force in the UK by virtue of the Withdrawal Act and that the government will never compromise the UK's high standards. This position is hardly DIT’s fault: it is in large part an inevitable consequence of the UK's unprecedented decision to throw itself into trade negotiations without a stable status quo to fall back on. But if it doesn't come up with better answers soon, it is hard to see these negotiations going anywhere fast.