After Brexit? Here’s What Trump’s Next Deal Should Look LikeFebruary 2, 2020
With Brexit Day upon us and the United Kingdom poised to reclaim control of its trade policy for the first time in 47 years, it’s worth sharing some preliminary thoughts about an eventual free trade agreement between the United States and the United Kingdom.
The first thing to keep in mind is that this process could take a while. The United Kingdom and the European Union are entering a transition period during which the terms of their existing relationship will continue, while they seek agreement on the terms of a new one. Understanding the rules and contours of that new relationship will be crucial to other governments interested in negotiating with the United Kingdom. In other words, it will be difficult to conclude a comprehensive U.S.-UK trade agreement until the terms of the new UK-EU relationship are settled.
Meanwhile, some less comprehensive deals between the two countries that build toward a full‐fledged agreement are possible. But, eventually, there is likely to be a U.S.-UK free trade agreement, which we hope will move both countries closer to a state of free trade. Such a deal would reflect certain principles and include broadly liberalizing terms, as we described in a collaborative paper last year.
The core provisions of trade agreements concern market access for goods, services, and investment. The U.S.-UK deal should provide for the elimination of tariffs as quickly as possible, on as many goods as possible, and to the lowest levels possible. It should limit the use of so‐called trade remedy or trade defense measures, as well as measures rationalized as national security imperatives. It should open all government procurement markets to each other’s goods and services providers. It should open all sectors of the economy to investment from businesses and individuals in both countries. It should open all services markets without exception to competition from providers of the other country. It should ensure that the rules that determine whether products and services are originating (meaning that they come from one or both of the agreement’s parties) are not so restrictive that they limit the scope for supply chain innovations. Those rules should reflect the fact that globalization has made it difficult—and sometimes arbitrary—to define a product’s origin. Because of cross‐border investment and global supply chains, the DNA of products and services is very difficult to trace nowadays, and that is good. Finally, the agreement should simplify, streamline, and make transparent all administrative procedures governing customs clearance for goods and the admission of all qualifying persons for the purpose of conducting business services.
In addition to those free‐market requirements, the U.S.-UK agreement must also include rules governing e‑commerce. Digital trade—data flows that are essential components in the provision of goods and services in the 21st century—must remain untaxed and…