‘Free to Trade!
UK-US trade deal can be negotiated now’
Friday 28th July: Liam Fox’s Washington talks highlight Britain’s freedom to negotiate trade deals for March 2019, says international economic lawyer, David Collins*.
The UK has begun to reach out in earnest to our trading partners. The aim is to negotiate future trade deals to go into effect upon its departure from the EU in March 2019. Liam Fox’s visit to Washington this week and the establishment of the UK-US Trade Working Group is a positive sign in this direction. A UK-US FTA could mean hundreds of billions of pounds in trade and investment in the years to come.Many have argued that the UK cannot begin negotiating FTAs while still a member of the EU, but nothing in the EU agreements actually prohibits this, as long as the FTAs do not go into force before the date of withdrawal. While pursuing formal trade negotiations now could be viewed as a violation of the EU law principle of sincere cooperation, denying the UK this capacity would effectively punish it by leaving the country without the trading advantages of any FTAs for some years after the Article 50 period has ended. Fearing this scenario would in turn pressure the UK to accept whatever deal is offered by the EU, even if it contains unrealistic separation payments. This approach would arguably undermine the principle of good faith which underpins international law.
The compatibility of the UK’s negotiating timeframe with EU law is largely moot anyway, as it is unlikely that the UK-US FTA will be in a position to be finalized before March 2019 given the complexity of such a deal. Still, since there is nothing in EU law which prevents the UK from engaging in informal discussions with its trading partners, many of the key issues, such as market access for financial services and agriculture can be ironed out now, so that the agreement can go into force as soon as possible following the UK’s withdrawal.
The smaller issues linked to the future US-UK FTA which have attracted the media’s attention, such as health bans on products like chlorinated chicken, should not operate as a sticking point in negotiations. Government ministers have been clear that food safety standards will not be breached and there was no evidence that chlorinated chicken was dangerous to begin with. It stands as a good example of the type of excessive regulation that the EU has imposed without justification.
With positive declarations concerning FTAs from countries such as Australia, India and Canada, there is every reason to expect that a series of trade discussions will get underway in the coming months with a view to the UK concluding a range of FTAs before long. Since FTAs typically take several years to conclude, in the event that there is some lag between March 2019 and the dates these go into force, the UK will be able to trade under World Trade Organization rules, enjoying already low tariffs on many goods through the WTO’s Most Favoured Nation rule.
*David Collins is Professor of International Economic Law at City, University of London and the author of Politeia’s Negotiating Brexit: The Legal Basis for EU & Global Trade. He previously practised commercial litigation in Toronto and was a prosecutor for the Attorney General in Ontario. His previous publications include An Introduction to International Investment Law (Cambridge, 2016) and The World Trade Organization Beginner’s Guide (London, 2015).