Trade Subcommittee Chairman Says USTR Should Negotiate UK FTA

House Ways and Means Committee Trade Subcommittee Chairman Adrian Smith, R-Neb., said the Biden administration is leaving an opportunity on the table by not continuing negotiations for a comprehensive trade agreement with the U.K.

Smith, who was speaking at a think tank program Feb. 15 presenting a paper called "U.S.-UK Trade Agreement: Now is the Time," endorsed the conclusions of former International Trade Commissioner Meredith Broadbent. "I couldn't agree more, now is the time," he said.

"Trade works. It's good for America, and it's good for the world when we lean in on this issue. That's why I have been incredibly disappointed in the administration's framework-first approach," he said. "The U.K. is a like-minded partner with similar commercial interests and values in the global economy. Reinforcing economic relationships with key allies will be key in combating China's influence. Every time the U.S. leans in on trade, and collaborates with like-minded partners around the world, China's influence withers."

Broadbent, who also moderated a panel on a potential U.S.-U.K. FTA after Smith's talk, wrote in her paper that the U.S. has a strategic advantage because the U.K. -- and other countries -- is eager to negotiate traditional trade deals that involve tariff reductions. Ignoring that, she said, involves "significant economic cost." During the program, Broadbent also said the U.S. will get a better deal if it is able to wrap up negotiations before the U.K. is accepted into the Trans-Pacific Partnership. The U.S. and the U.K. had four rounds of negotiations in 2020.

The paper noted that the U.K. is America's fifth-largest goods export market, and the U.K. is the eighth-largest source of imports for the U.S. -- but that the two countries trade more in services than they do in goods. More than a fifth of digital services exports are sold to the U.K., the paper said. She said that regulation improvements that would ease trade should be a central point of the talks.

"The United States will likely prioritize the removal of certain SPS and TBT [technical barriers to trade] barriers that keep globally competitive U.S. agriculture exports, such as beef and peanuts, out of Europe and the United Kingdom," she wrote. The two countries trade very little in ag, with wine and liquor dominating the two-way flows.

"It is an open question how the United Kingdom will respond on agriculture," she wrote, particularly since its beef and lamb producers are already concerned about competition with Australia and New Zealand, since trade in those commodities is being liberalized through their new FTAs.

Shanker Singham, a British trade law expert and adviser, said during the panel that the tension over what's known as chlorinated chicken is overblown, as the wash for slaughtered chickens actually makes many U.S. products less risky than U.K. chickens. Singham noted he was giving his own views, not those of the U.K. Commission on Trade & Agriculture, where he is a member. While he said there are balancing acts the U.K. has to manage, in terms of maintaining its export access to the EU, he said, "if the U.S. does push for [SPS] changes, then changes are likely to come."

When the former U.S. trade representative asked for trading priorities with the U.K., the Cato Institute's Daniel Griswold noted that agricultural trade is small between the two countries, and is politically sensitive, especially U.S. demands for openness to hormone-treated beef and chlorinated chicken. He said in 2019, "We don't want to see the tremendous opportunities of this agreement forfeited because we're hung up on one or two issues that don't involve a huge amount of trade."

But Smith and Ways and Means Chairman Jason Smith, R-Mo., represent agricultural constituencies, as do many of the Republican advocates of free trade on the Senate Finance Committee. Panelist Dave Salmonsen, senior director of the American Farm Bureau Federation, said leaving agriculture out of talks is not a good strategy.

Panelist Jeff Weiss, an attorney at Steptoe & Johnson, said non-tariff barriers to exports based on regulations were what killed EU-U.S. trade talks. He said having to do conformity assessments for products is what causes U.S. exports the most headaches, and that even if good text is negotiated, USTR will need to see if the promises are fully implemented. He said that mutual recognition of safety standards for automobiles could be possible, but only if the U.S. can make an argument to British regulators that their standards will protect U.K. pedestrians or passengers. "They're not going to be interested in just lowering costs for U.S. industry," he said.

Generally, the reluctance of the Biden administration to traditional free trade deals seems to be rooted in the feeling that lowering U.S. tariffs will cost U.S. manufacturing jobs, and that opposition from those interests will cause a battle in Congress. In the case of the U.K., when the previous administration asked for input, the AFL-CIO said it is appropriate to negotiate lower tariffs with the U.K., as long as there are lengthy phase-outs for trade-sensitive products such as glass, and as long as negotiators set a high bar for labor and environmental protections.

Singham said that when the U.S. looks at possible FTA partners, the U.K. "is one of the few" with which there would be "no race to the bottom on labor and environment."

Harmonizing regulation in chemicals, medicines, financial services and digital trade are some of the major advances Broadbent sees from a U.K. FTA, along with agriculture.

But criticism on the left of trade deals, as seen with the TPP, goes beyond tariffs to concerns about intellectual property protections for pharmaceuticals, convincing others to accept our definitions of food safety or chemical safety, or even pushing for Silicon Valley's preferences on data privacy. The AFL-CIO, in its comments about a possible FTA, called these changes "a corporate wish list."