Britain should negotiate trade deals with individual US states as a backstop while
Boris Johnson tries to seal a post-Brexit free trade agreement with America, a former trade secretary will say on Monday. Liam Fox will point out that four US states -
California,
Texas,
Florida and
New York - would be members of the G20 if they were independent nations, and that many deals could be struck with states, rather than the US as a whole. While
tariffs on goods can only be negotiated by
Washington, deals on services, which account for the majority of Britain’s transatlantic trade, can be sealed on a state level, unlocking billions of pounds of business for the
UK economy. Dr Fox will tell a conference in Geneva that free trade agreements are not “the only mechanism” to generate huge volumes of business between countries such as the UK and the US. He will say that a comprehensive free trade agreement with the US will encounter “unavoidable difficulties” because “the US will, quite correctly, negotiate hard for its own interests” and “is likely to focus on better access for its agricultural products”. Liam Fox Many commentators have warned that the Government’s insistence that it will not allow products such as chlorine-washed chicken or hormone-fed beef into the country from the US is incompatible with a free trade agreement (FTA), meaning it will be difficult to convince
Donald Trump to sign one. However, Dr Fox, who served as International Trade Secretary until last summer, will tell business leaders that
Britain should concentrate on removing non-tariff barriers to trade with the US, which would not need an FTA. He says regulatory autonomy after
Brexit - as promised by Mr Johnson - will be key to removing long-standing trade barriers. One example he cites is a mutual recognition agreement negotiated by the Government between the Institute for Chartered Accountants of
Scotland and two US accountancy bodies covering every US state, which made professional qualifications on either side of the Atlantic compatible with each other and opened up the
American market to accountants from Scotland. US trade negotiations | Britain can make deals with individual states over services Services already account for £50bn of exports to the
USA, around 60 per cent of the total export market, and similar deals would open up the US market still further. Speaking to The Telegraph ahead of his speech, Dr Fox said: “There are other things in the toolkit apart from FTAs. “We should be concentrating on market access restrictions rather than solely FTAs with countries like America.” An FTA would cover tariffs, quotas and fees on goods being traded across the Atlantic, but Dr Fox says that as well as mutual recognition agreements, the removal of regulatory barriers can be done outside an FTA. Dairies in
Northern Ireland, for example, were unable to export yoghurt and other dairy-based products to
China because of regulations that meant that although China imported milk from both Northern
Ireland and the Republic of Ireland, it would not import Northern
Irish yoghurt that incorporated milk from the Republic. The Department for International Trade negotiated the removal of the regulatory glitch, which was worth £250 million to Northern Irish producers. Dr Fox will tell the Spinoza Foundation think tank that such side deals represent “enormous potential for Britain to trade more with the US, beyond the concept of an FTA”.