Regulatory barriers likely to be contentious and most significant obstacles to UK-US trade

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12 July 2018

Rorden Wilkinson is Professor of Global Political Economy and Deputy Pro-Vice-Chancellor at the University of Sussex and a Fellow of the UK Trade Policy Observatory. Charlotte Humma is Research Communications Manager at the Business School and Business Manager at the Observatory.

Standards and technical regulations are likely to be the most significant—and potentially contentious—obstacles to a UK-US trade deal according to leading trade experts.

Published today our latest briefing paper states that the UK faces a challenge in whether it stays with EU regulation, moves towards the US approach or tries a pick-and-mix approach of its own.

The research, conducted in conjunction with trade experts from the Georgetown University’s McDonough School of Business and Walsh School of Foreign Service, shows initial public support is likely to favour signing a trade deal. However, the US and UK trade experts state the UK government should not assume its public will be happy to admit more GMO foods, hormone-treated meat, and other products currently restricted or banned.

The study, which explores the public support for, the benefits of, and the key obstacles to a transatlantic agreement might be, is entitled, “The Future of US-UK Trade: What case for a bilateral trade agreement?”. It comes ahead of the meeting between US President Donald Trump and UK Prime Minister Theresa May this Friday. Other key findings include:

• The extent of public support for a US-UK trade agreement, but also worries about existing trade agreements and concerns about the kind of regulatory framework that might be pursued.
• The need to deal with the barriers to trade in services to realise clear economic benefits.
• The extent of the challenges posed by standards and technical regulations. The UK’s post-Brexit regulatory regime risks being pulled in different directions by the EU and the US. A solution will depend on the UK’s capacity to navigate the demands of its two major trading partners.
• A need to settle the UK’s position in the multilateral trading system before meaningful and substantive negotiations with the US can commence.

Rorden Wilkinson, Professor of Global Political Economy and Deputy Pro-Vice-Chancellor at the University of Sussex added: “In the short term, the UK’s capacity to negotiate a mutually beneficial trade deal with the US is likely to be limited. Given the regulatory obstacles ahead and the likely impact they may have on public support, this might not be a bad thing.  The best the two governments can probably hope for is a limited agreement underlining their desire to work together.”

Marc Busch, Karl F. Landegger Professor of International Business Diplomacy at Georgetown University, commented: “Amidst the tensions over Trump’s Section 232 and Section 301 tariffs, and the increasingly complex questions about Brexit, lies the promise of a US-UK free trade deal,” said Busch. “Our group of scholars sees the challenges that lie ahead, yet recognises the opportunity as an important one, not just for Washington and London, but for the transatlantic trade relationship more generally.”

The research for this briefing paper was conducted by Fellows of the UK Trade Policy Observatory at the University of Sussex conducted in conjunction with trade experts from the Georgetown University’s McDonough School of Business and Walsh School of Foreign Service:  Marc Busch, Karl F. Landegger Professor of International Business Diplomacy; J. Bradford Jensen, McCrane/Shaker Chair in International Business; Rodney D. Ludema, Professor of Economics; Anna Maria Mayda Associate Professor of Economics; Pietra Rivoli, Vice Dean and Professor; and Stephen Weymouth, Assistant Professor – Georgetown University. Michael Gasiorek, Senior Lecturer in Economics; Peter Holmes, Reader in Economics; Emily Lydgate, Lecturer in Law; Jim Rollo, Emeritus Professor of European Economics; Rorden Wilkinson, Professor of Global Political Economy and Deputy Pro-Vice-Chancellor; and L. Alan Winters, Professor of Economics and Director of the UK Trade Policy Observatory – University of Sussex.