Five Things to Know about a US-UK Free Trade Agreement
Erin Kuhn
British Consul (Government and Prosperity) - UK Government Office, Denver
1. A US-UK Free Trade Agreement will build on an already strong and vibrant transatlantic relationship
Without a doubt, the US-UK economic relationship is one of the largest and most important in the world, with annual two-way trade totalling more than $230 billion. We are each other’s closest allies with links at every level of society, culture and the economy.
We are also one another’s largest investors – every morning, 1.3 million people get up and go to work for British companies in America and 1.7 million people in Britain do the same for American companies in the UK.
And you can look no further than right here in Colorado to see a model for how this economic relationship has prospered. As many of you will know already, the UK is (by far and away) the largest foreign direct investor in the State, with over 200 British subsidiaries here, employing nearly 21,000 Coloradans. On the trade side, the relationship is equally strong. The UK is a top three export market for Colorado goods and services – and these exports fuel more than 9,000 additional jobs in the State.
2. A Free Trade Agreement can help both the US and the UK recover from the economic impacts of COVID-19
A US-UK Free Trade Agreement, or FTA for short, can help create higher paying jobs and growth in both economies. It can unlock new opportunities for businesses and diversify supply chains while also making them more resilient, thereby protecting against future global crises.
It can also increase choices for our consumers. For example, Americans love British cars, high-end fashion, and jewellery. Brits have high demand for the US’s precious metals, aircraft, and machinery. Trade deals like the UK-US FTA could offer consumers greater variety and lower prices.
An FTA can also help increase business mobility. Our estimates indicate that if temporary entry from the UK into the US increased by 10%, US exports to the UK could increase by around $1.4 billion to $3.3 billion.
Overall, we estimate that a comprehensive FTA could lead to a total trade increase of £15.3bn / $19bn.
3. A US-UK FTA can become a new gold-standard for future trade agreements
An FTA is an opportunity to set standards and practices in two of the world’s largest economies. This, and our cooperation in international bodies such as the WTO, can help us set a high watermark for free trade and push back on those would seek to undermine the rules-based international system.
An FTA also presents an opportunity to ‘future-proof’ our partnership and our economies by taking into account emerging technologies like AI and IoT. Furthermore, it can include cutting-edge digital provisions which maximise opportunities for digital trade across all parts of the economy.
We can also use an FTA to cooperate on Intellectual Property to support innovation in technology and a range of other sectors that rely on robust frameworks.
4. An FTA can help us tackle other shared global challenges, like climate change
The UK leads the world in combatting climate change, as the first major economy to pass new laws for net zero emissions by 2050. The Prime Minister has set out his vision to ensure Britain has the most ambitious environmental programme of any country on earth. And through the UK’s hosting of COP26, the UN’s Climate Change Conference that will take place in Glasgow this November, countries and other parties will come together to accelerate action and commitments towards the goals of the Paris Agreement.
We can also support both UK and US climate change objectives through an FTA by promoting new opportunities in low carbon technologies, services and systems, thereby creating more clean jobs and growth in this sector.
We are both ambitious about tackling climate change, and we should work on all fronts including the FTA, to support our domestic efforts and play a leading role internationally.
5. SME’s are the lifeblood of both the US and UK economies – and this FTA is meant to work for them
We want to reduce barriers to boost trade for SMEs, which make up around 80% of trade between the UK and US. Given the importance of this demographic, we have already reached broad agreement on an SME chapter to an FTA. We hope these provisions can establish new measures for information-sharing and pave the way for new online resources to provide greater transparency. SMEs could also benefit from measures across the rest of a UK-US FTA, on customs and trade facilitation, business mobility, and digital trade.
Want to learn more?
I’d encourage you to watch our recent virtual event with the Denver World Trade Center, which provides an update on where negotiations stand and also highlights the ways in which the FTA can benefit some of Colorado’s most important sectors, including agriculture, aerospace, tech, and the environment. You can view the whole event here.