US and UK Launch Virtual Negotiations of a New Free Trade Agreement This Week

The United States and the United Kingdom will begin virtually negotiations of a new free trade agreement this week. The talks will be conducted remotely through video conferences due to the COVID-19 pandemic with US and UK negotiators engaging in discussions over the next two week in nearly 30 different negotiating groups covering all aspects of the agreement. On May 5, 2020, USTR Robert Lighthizer and UK Secretary of State for International Trade Elizabeth Truss issued a Joint Statement announcing the launch of the trade agreement negotiations. Both parties agree that a free trade agreement would contribute to the long-term health of their economics, which is vitally important as the world recovers from the challenges posed by COVID-19.The US negotiating team will be led by Dan Mullaney, Assistant U.S. Trade Representative for Europe, and the Middle East. The UK negotiating team will be led by Oliver Griffiths, Director for US Negotiations at the Department for International Trade. Over 200 staff from U.S. and UK government agencies and departments are expected to take part in the negotiations.

The United States and the United Kingdom are the first and fifth largest economies in the world, respectively. Total two-way trade between the two countries is already worth about $269 billion a year.  Each country is the other’s largest source of foreign direct investment, with about $1 trillion invested in each other’s economies.  Every day, around one million Americans go to work for UK firms, while around one million Britons go to work for American firms.

The Trump Administration notified Congress of its intent to negotiate a trade agreement the UK on October 16, 2018. On November 16, 2018, the USTR solicited public comments by Federal Register notice regarding objectives and positions for the U.S.-UK trade agreement and received over 120 submissions. A public hearing was held on January 29, 2019, to hear the testimony of 24 witnesses regarding negotiating objectives and positions. The following provides a summary of the key negotiating objectives of the United States published by the USTR—

• Ensure fair, balanced, and reciprocal trade with the UK.
• Increase transparency in import and export licensing procedures.
• Secure comprehensive duty-free market access for U.S. industrial goods.
• Address non-tariff barriers that constrain U.S. exports.
• Expand market access for remanufactured goods exports by ensuring that they are not classified as used goods that are restricted or banned.
• Secure duty-free access for U.S. textile and apparel products, and seek to improve competitive opportunities for exports of U.S. textile and apparel products while taking into account U.S. import sensitivities.
• Greater regulatory compatibility to facilitate U.S. exports in key goods sectors and reduce burdens associated with unnecessary differences in regulation.
• Secure comprehensive market access for U.S. agricultural goods in the UK by reducing or eliminating tariffs.
• Provide reasonable adjustment periods for U.S. import-sensitive agricultural products.
• Eliminate practices that unfairly decrease U.S. market access opportunities or distort agricultural markets to the detriment of the United States, including: non-tariff barriers that discriminate against U.S. agricultural goods; and restrictive rules in the administration of tariff rate quotas.
• Reduce burdens associated with unnecessary differences in regulations and standards, including through regulatory cooperation where appropriate.
• Establish specific commitments for trade in products developed through agricultural biotechnologies, including on transparency, cooperation, and managing low level presence issues, and a mechanism for exchange of information and enhanced cooperation on agricultural biotechnologies.
• Build on and set high standards for implementation of WTO agreements involving trade facilitation and customs valuation.
• Increase transparency by ensuring that all customs laws, regulations, and procedures are published on the Internet as well as designating points of contact for questions from traders.
• Ensure that, to the greatest extent possible, shipments are released immediately after determining compliance with applicable laws and regulations and provide for new disciplines on timing of release, automation, and use of guarantees.
• Provide for streamlined and expedited customs treatment for express delivery shipments, including for shipments above any de minimis threshold.
• Provide for simplified customs procedures for low value goods and a more reciprocal de minimis shipment value.
• Ensure that the UK administers customs penalties in an impartial and transparent manner and avoids conflicts of interest in the administration of penalties.
• Provide for automation of import, export, and transit processes, including through: supply chain integration; reduced import, export, and transit forms, documents, and formalities; enhanced harmonization of customs data requirements; and advance rulings regarding the treatment that will be provided to a good at the time of importation.
• Provide for both administrative and judicial appeal of customs decisions, and provide procedures for ensuring uniformity in customs treatment of goods.
• Provide for electronic payment of duties, taxes, fees, and charges imposed on or in connection with importation or exportation.
• Provide for the use of risk management systems for customs control and post-clearance audit procedures to ensure compliance with customs and related laws.
• Provide for disciplines on the use of customs brokers.
• Provide for disciplines on the use of reusable containers.
• Promote cooperation with the UK to prevent duty evasion and combat customs offenses.
• Develop rules of origin that ensure that the benefits of the Agreement go to products genuinely made in the United States and the UK.
• Ensure that the rules of origin incentivize production in the territory of the Parties, specifically in the United States.
• Establish origin procedures that streamline the certification and verification of rules of origin and that promote strong enforcement, including with respect to textiles.
• Promote origin procedures that ensure that goods that meet the rules of origin receive the Agreement’s benefits.
• Secure commitments from the UK to provide fair and open conditions for services trade, including through: rules that apply to all services sectors, including rules that prohibit discrimination against foreign services suppliers, restrictions on the number of services suppliers in the market, and requirements that cross-border services suppliers establish a local presence; and, specialized sectoral disciplines, including rules to help level the playing field for U.S. delivery services suppliers in the UK.
• Secure commitments not to impose customs duties on digital products (e.g., software, music, video, e-books).
• Ensure non-discriminatory treatment of digital products transmitted electronically and guarantee that these products will not face government-sanctioned discrimination based on the nationality or territory in which the product is produced.
• Establish state-of-the-art rules to ensure that the UK does not impose measures that restrict cross-border data flows and does not require the use or installation of local computing facilities.
• Establish rules to prevent governments from mandating the disclosure of computer source code or algorithms.
• Secure for U.S. investors in the UK important rights consistent with U.S. legal principles and practice, while ensuring that UK investors in the United States are not accorded greater substantive rights than domestic investors.
• Establish rules that reduce or eliminate barriers to U.S. investment in all sectors in the UK.
• Promote adequate and effective protection of intellectual property rights.
• Define SOEs on the basis of government ownership or government control through ownership interests, including situations of control through minority shareholding.
• Retain the ability to support SOEs engaged in providing domestic public services.
• Ensure that SOEs accord non-discriminatory treatment with respect to the purchase and sale of goods and services.
• Ensure that SOEs act in accordance with commercial considerations with respect to the purchase and sale of goods and services.
• Ensure strong subsidy disciplines applicable to SOEs, beyond the disciplines set out in the WTO Agreement on Subsidies and Countervailing Measures (SCM Agreement).
• Require that SOEs not cause harm to the United States through provision of subsidies.
• Require that SOEs not cause harm to the domestic industry of the United States via subsidized SOE investment.
• Ensure impartial regulation of SOEs, designated monopolies, and private companies.
• Provide jurisdiction to courts over the commercial activities of foreign SOEs.
• Require the UK to adopt and maintain in its laws and practices the internationally recognized core labor standards as recognized in the ILO Declaration.
• Establish strong and enforceable environment obligations that are subject to the same dispute settlement mechanism that applies to other enforceable obligations of the Agreement.
• Secure provisions committing the UK to criminalize government corruption, to take steps to discourage corruption, and to provide adequate penalties and enforcement tools in the event of prosecution of persons suspected of engaging in corrupt activities.
• Preserve the ability of the United States to enforce rigorously its trade laws, including the antidumping (AD), countervailing duty (CVD), and safeguard laws.
• Facilitate the ability to impose measures based on market distortions due to ongoing subsidization or dumping.
• Strengthen existing procedures and create new procedures to address AD/CVD duty evasion, including the ability to conduct AD/CVD duty evasion verification visits.
• Increase opportunities for U.S. firms to sell U.S. products and services to the UK Government.
• Establish obligations and procedures to combat corruption in procurement.
• Establish fair, transparent, predictable, and non-discriminatory rules to govern government procurement in the UK, including rules mirroring existing U.S. government procurement practices.
• Secure commitments by the Parties to provide information resources to help small businesses navigate requirements for exporting to each other’s market.
• Encourage the early identification and settlement of disputes through consultation and other mechanisms.
• Establish a dispute settlement mechanism that is effective and timely, and in which panel determinations are based on the provisions of the Agreement and the submissions of the Parties and are provided in a reasoned manner.
• Establish a dispute settlement process that is transparent.
• Discourage actions that directly or indirectly prejudice or otherwise discourage commercial activity solely between the United States and Israel.
• Discourage politically motivated actions to boycott, divest from, and sanction Israel.
• Seek the elimination of politically motivated nontariff barriers on Israeli goods, services, or other commerce imposed on Israel.
• Seek the elimination of state-sponsored unsanctioned foreign boycotts of Israel, or compliance with the Arab League Boycott of Israel.
• Ensure that the UK avoids manipulating exchange rates in order to prevent effective balance of payments adjustment or to gain an unfair competitive advantage.

Miller Proctor Law will track and monitor the negotiations of the trade agreement between the United States and the UK. If you have any questions relating to this new trade agreement or other international trade-related issues, please contact us.