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U.S. will use trade talks to pull UK into its ‘regulatory orbit,’ expert says


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British Prime Minister Boris Johnson shakes hands with U.S. President Donald Trump onstage during the annual NATO heads of government summit on December 4, 2019.

Steve Parsons-WPA Pool | Getty Images

As the U.K. enters its fourth round of trade talks with the U.S. this week, Washington will be looking to push its own regulatory standards on the country, and drive it away from EU’s, an international trade policy expert has told CNBC.

Negotiators meet at a pivotal point in the U.K.’s path to establishing its post-Brexit trading relationship with the European Union. British Prime Minister Boris Johnson’s government has proposed an Internal Market Bill which will see it breach international law by violating Britain’s Withdrawal Agreement with the bloc.

The controversial legislation has led to divisions between the U.K. and Europe, and could provide an opportunity for the U.S. to push its own agenda.

Brian Pomper, international trade expert, lobbyist and partner at Akin Gump Strauss Hauer & Feld, said the overarching aim for the U.S. will be to pull the U.K. closer to its own regulatory worldview.

“To that end, a lot of the U.S. priorities go beyond just getting market access into the U.K., but rather are about setting a standard on issues where both countries are already high level, like on intellectual property, digital trade, and financial services. Ideally, the United States could then use this FTA model to pressure the EU,” Pomper told CNBC via email on Friday.

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Brexit and the Northern Ireland dispute

In the context of concurrent Brexit tensions, the U.K. could find itself in the center of a tug of war, with the EU and the U.S. both trying to pull it closer to their respective orbit on regulatory policy. Pomper suggested that far from merely being a pawn here, the U.K. is “smartly using that as leverage in negotiating with the United States.”

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“On the other hand, the fact of Brexit means the U.K. really wants a deal (with the U.S.). A key question for the United States is going to be how much regulatory flexibility the U.K. provides itself,” he said.

“The U.K.’s actions vis-à-vis customs checks on the Irish border also could have a very adverse effect on U.S. congressional consideration of the implementing bill.”

House Democrats have voiced staunch opposition to the Internal Market Bill’s changes to the Northern Ireland Protocol, an aspect of the Brexit Withdrawal Agreement designed to prevent a hard border in Ireland.

As well as broad regulatory alignment, the U.S. will be seeking key concessions on digital taxes against American firms, food standards and agriculture, all of which Pomper suggested have bipartisan support in Congress.

Core demands

In February 2019, the Office of the United States Trade Representative set out some of the White House’s priorities ahead of talks.

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These included wider market access for remanufactured goods, comprehensive market access for U.S. agricultural goods and full market access for U.S. pharmaceutical products, among others.

The British government has long insisted that its National Health Services is “not on the table” in discussions, not least because of how deeply unpopular such a move would be domestically. Johnson will also face staunch opposition on food standards, as evidenced in the British outcry over chlorinated chicken.

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“I expect that the U.K. will ultimately ‘deal’ on digital services taxes and try to trade it off for certain of its priorities,” Pomper suggested. “I think that food standards and agriculture more generally could be a true sticking point.”

Election crossroads

Central to the U.S. negotiating strategy further down the line, however, will be the occupants of the White House, Senate and House of Representatives after November’s elections.

Pomper said the goal is to try to finish negotiations by the beginning of April, the latest a deal can be signed if both parties want to use Trade Promotion Authority procedures that expire July 1, 2021.

“The biggest impact of the political landscape is going to be whether Vice President Biden wins the election and continues to vigorously pursue the FTA in light of his comments that his administration would not focus on new trade agreements,” he added.

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