"Landmines" in the UK's Brexit deal with the European Union could get in the way of the swift conclusion of a free trade agreement (FTA) with the US, Donald Trump's commerce secretary has warned.
Wilbur Ross identified continued "passporting" of financial services, compliance with EU food standards on GM crops and chlorine-washed chicken and future trade tariffs as areas which could pose problems in negotiations between the US and UK following Brexit.
But he said it would not be possible to identify specific points of contention until the shape of the divorce deal is known and insisted he hopes a UK-US FTA will take less than 10 years to negotiate.
Mr Ross was on the last day of a five-day visit to the UK for “scoping” talks designed to ensure trans-Atlantic trade and travel continues smoothly after the Brexit date of March 2019.
He met Theresa May and senior ministers including Philip Hammond, Boris Johnson, David Davis and Liam Fox during the trip.
The visit allowed him to "address with the UK some concerns we have that they may be tempted to include (provisions) in their agreement with the European Commission (EC) that could be problems for a subsequent FTA with the US", he said.
He made clear the US favours the continuation of many of the UK’s current arrangements with the EU, particularly on the passporting rights which allow UK-based companies to offer financial services in the other 27 member states and have made London a gateway into Europe for many American banks.
Any change to historic passporting arrangements “may facilitate or complicate doing something with us”, he suggested.
He added: “To the degree that it turns out there is a change and to the degree that it’s a complication, that could become a real barrier in services.
“I’m not suggesting that it is or that it will be, because we don’t know - we have no idea what’s going to be the UK-EU version.”
Mr Ross said: “It’s been a great convenience for many American companies - financial institutions particularly - to base themselves here in London and have passporting activity. We do need ways to have access to the EU.”
In other areas, such as food standards and tariffs, he said Washington would like to see some “nudging” of the UK position to adopt a less protectionist stance than Brussels.
Despite its free trade rhetoric, Mr Ross said the EU was “in fact quite protectionist”, imposing tariffs of 10 per cent on automobile imports, compared to 2.5 per cent in the US, and applying country-of-origin rules which in Washington’s view are “adverse to US food producers”.
“The European Commission has been trying very hard to get European standards adopted by third party countries, as opposed to US standards,” said Mr Ross.
Sanitary restrictions imposed by the EU on food products like GM crops and chlorine-washed chicken were “really not science-based”, he said.
If the UK agreed in its Brexit deal to continue complying with them, “it potentially could create problems with us”.
Mr Ross described an FTA with the UK as a priority for Washington, but admitted that it would be “very complex” to complete.
But he played down suggestions that negotiations could drag on for years, pointing out the Trump administration was aiming to conclude a renegotiation of the Nafta deal with Canada and Mexico in less than a year.
Asked whether a UK FTA could take as long as 10 years, he said: “I hesitate to put an exact parameter of dates on it. Hopefully not a decade.”
He added: “It isn’t that I’m forecasting that it will take a decade ... It’ll take whatever time it takes, but given the good relationship between the two countries and assuming that the scoping exercise turns out to be fruitful and further assuming that there are no big landmines in the exit agreement between the UK and the EC, then it shouldn’t take terribly long.
“We are trying to redo Nafta in less than a year. That’s a very much more complicated situation even than we would have with the UK. It really depends on the parties.”
Mr Ross played down suggestions that a “cliff edge” Brexit could stop airlines flying between UK and US airports, saying that a new Open Skies arrangement should be achievable “pretty quickly”.
In response to calls from some Eurosceptics for a no-deal “clean break” Brexit, Mr Ross said: “I don’t know what a clean break would really mean.
“The EU is a very important trading partner of the UK. I very much doubt that UK car manufacturers would want to be subject to a 10 per cent tariff going into the EU. It’s easy to use slogans like ‘clean break’, but what does it really mean?”
On Washington’s preferred shape for a Brexit deal, he said: “In many areas it would be fine if the UK just inherited the existing relationships from EU, but there are a few where some nudging perhaps would be useful.”
He declined to say what “tit-for-tat” trade-offs might be needed to secure an FTA:
“We are talking about an agreement where the negotiation can’t even start for a couple of years and very much will be conditioned by the terms of the departure agreement between UK and EU,” he said.
“It’s hard to anticipate where the easy parts and hard parts will be.”
-PA
