Liz Truss hopes to secure free UK/US trade deal
- UK International Trade Secretary Liz Truss meets with US counterpart Katherine Tai to secure a free UK/US trade deal.
- Ms Truss will aim to tackle unfair trading practices between the UK and the US.
- British lamb could be made available on US menus for the first time in 25 years.
- UK government sources suggest that a UK/US trade deal will not be secured for another two years.
- British pound to US dollar (GBP/USD) remains muted ahead of UK Prime Minister Boris Johnson’s lockdown lifting address.
UK International Trade Secretary Liz Truss has headed to the United States to meet with US counterpart Katherine Tai to secure a free UK/US trade deal. Ms Truss has embarked on a five-day trip to the US, which commenced on Sunday and will end on Thursday 15th July 2021.
Ms Truss will focus on unfair trading practices between the UK and the US, such as industrial subsidies and price discrimination, also known as dumping. The UK Trade Secretary stated her aim during the US trip was to build on the UK’s progress in tackling these discriminatory market practices and improving overall global prosperity.
Both the US and the UK are financially impacted when their respective products are subject to trade practices such as industrial subsidies and intellectual property theft, which is why these trade issues will be treated as a high priority.
UK/US trade provides over one million jobs in both countries, hence the eagerness for Mr Truss to strengthen investment ties and build a better future for digital trade between the nations. In addition, both sides will aim to improve worker conditions by tackling forced labour and bolstering supply-chain resilience.
After conducting discussions with the US Trade Representative, Mr Truss will then head to the US West Coast to endorse the UK as a top investment destination before the Global Investment Summit in October. The US West Coast, namely Silicon Valley, is home to some of the world’s leading tech firms, including Amazon and Google.
During the US West Coast trip, Ms Truss will meet with US tech industries and investors to converse on growth opportunities in both the UK and US in the hopes of securing a free UK/US trade agreement to set “gold-standard rules” on digital trade.
Digital trade has seen a rapid rise over the years, contributing around GBP 151 billion to the UK economy in 2019 and the UK tech sector generating around GBP 7.3 billion of international investment in 2020.
The US is the UK’s number one single trading partner, with collective trade surpassing GBP 196 billion in 2020, with both countries having invested over GBP 720 billion into one another’s economies. Total UK exports to the US also came to a colossal GBP 120 billion in 2020.
UK post-Brexit trade discussions with the US began last year whilst former US President Donald Trump was still in office. Securing a free UK/US trade deal initially seemed optimistic, but enthusiasm soon faded when Joe Biden entered the Whitehouse, with the new US President not agreeing with the UK’s Brexit decision.
However, progress was made last month when US President Joe Biden and UK Prime Minister Boris Johnson signed a new Atlantic charter before the G7 Summit to help strengthen trade links between the two countries.
Ms Truss’s trip to the US follows the recent resolution of the UK/US Airbus-Boeing dispute, which saw the end of damaging tariffs on US goods, which raised hopes regarding the future of UK/US trade. US Trade Representative Katherine Tai said that the new agreement signified a new stage in the UK/US special relationship and ended large civil aircraft disputes.
Following this significant trade resolution, it seems that there could be additional breakthroughs for other UK products in the US.
British lamb could be made available on US menus for the first time in 25 years
Another priority for UK International Trade Secretary Liz Truss is to lift the US ban on British lamb. Ms Truss said she would push hard to end the ban, which was first imposed in 1989 following the panic surrounding mad cow disease.
The US lifted its ban on British beef last year, so it’s hoped that the same will follow for British lamb. Ms Truss stated that lifting the ban would allow US citizens to experience world-class produce and unlock a crucial part of the US market.
Lifting the US ban on British lamb could unlock additional jobs within rural communities and generate GBP 66 million for UK exports, with the US being the world’s second-largest lamb importer.
Rizvan Khalid of Euro Quality Lambs highlighted the rising demand in the US for high-quality British meat, labelling the US as an exciting market.
UK government sources say UK/US trade deal won’t happen for another two years
Despite optimistic reports of the UK securing a free trade deal with the US this year, UK government sources have dashed hopes by saying that a trade deal is unlikely to happen for another two years.
However, to establish a trade deal this year, an agreement would have needed to have been reached by 1st July 2021 to be fast-tracked through Congress by US President Joe Biden.
Both President Biden and UK Prime Minister Boris Johnson touched on a UK/US trade deal before the G7 Summit in June, highlighting that new jobs and opportunities would be created in both countries. However, a timeframe for the trade deal was not established.
UK International Trade Secretary Liz Truss has already established trade deals with Japan, Canada and Australia, providing optimism that a successful trade deal will also be secured with the US. The aim for Ms Truss is to ensure as broad a trade deal as possible, hence the trip to Silicon Valley to gain backing from crucial businesses such as the tech industry.
GBP/USD remains muted ahead of Boris Johnson’s UK lockdown lifting address
The British pound to US dollar (GBP/USD) exchange rate has entered the new trading week on a muted tone as the UK braces itself for UK Prime Minister Boris Johnson’s address regarding lifting lockdown measures.
The currency pairing is trading at USD 1.3854 at the time of writing, hovering around the USD 1.38 mark during the past week. Mr Johnson delivering a positive message this evening regarding lifting UK lockdown measures on 19th July 2021 is likely to create an upbeat market mood, improving pound Sterling (GBP) sentiment.
Although Mr Johnson is likely to confirm that full COVID restrictions in the UK can be eased from this target date, there will also be a strong message of caution. Coronavirus cases are likely to surge in the UK once restrictions are lifted; however, COVID-related deaths and hospital admissions should not be as severe due to the rollout of coronavirus vaccines.
The UK government stated that UK coronavirus restrictions would be lifted if the UK reaches its four targets. The targets included a successful vaccination rollout, reduced hospital admissions and deaths from COVID vaccines; COVID infection rates not causing hospital admissions to surge; and limited threats from COVID variants.
With the UK on course to meet each of these targets, it’s hoped that all UK businesses can be fully reopened, seeing the return of nightclubs and large-scale events to bolster the UK economy even further.
Last week saw the US dollar (USD) gain ground against its currency competitors following the release of positive Purchasing Managers Index (PMI) data for June 2021. However, progress in the Greenback soon stalled as the Federal Open Market Committee (FOMC) delivered a more dovish message than anticipated.
This week will see the release of the latest inflation data for both the UK and the US. US inflation figures are forecast to soften to 4.9, whilst UK figures are thought to rise to 2.2%, which could see the British pound (GBP) edge higher against the US dollar (USD).
The British pound (GBP) will also be further impacted by the release of UK employment data for June 2021. It’s thought that figures will reveal an influx of new jobs added to the UK labour market, which will help strengthen pound Sterling (GBP) further.
The US will see the release of US retail sales towards the end of the trading week, which could see the US dollar (USD) take a hit. US retail sales are thought to have fallen for the second month in a row, as US consumers place more focus on US services.