LONDON — President Joe Biden has quietly shelved plans for a “foundational” trade agreement with the U.K. ahead of the 2024 election — following Senate opposition and disagreements over the scope of the deal.
A draft outline of the pact and its 11 proposed chapters, prepared by the United States Trade Representative’s (USTR) office earlier this year, indicated negotiations would begin before the end of 2023.
But after facing multiple headwinds, the deal is not expected to go ahead, two people briefed by the British and U.S. governments respectively told POLITICO. Both were granted anonymity to speak on a sensitive matter.
“I don’t think we’re going to see that re-emerge,” said one of the people briefed on the proposed negotiations.
The proposal’s timeline for talks — which would not consider market access or meet the World Trade Organization’s definition of a free trade agreement — set out that negotiations would wrap up ahead of elections in Britain and the U.S. next year.
The deal was closer in substance to the U.S.-led Indo-Pacific Economic Framework for Prosperity (IPEF) — which tackles regulation and non-tariff barriers — than a full trade agreement.
But last month IPEF talks fell apart after senior Democrats criticized the Biden administration’s negotiation of trade provisions that did not contain enforceable labor standards.
The British government has long coveted a trade agreement with the U.S. as a significant post-Brexit prize.
The draft was considered a road map to eventually securing a full-fledged, comprehensive deal. Business and Trade Secretary Kemi Badenoch pitched the IPEF-style deal in April during Biden’s visit to Belfast, Bloomberg reported, to reinvigorate talks first started under the Trump administration.
Congressional oversight
Key voices in the U.S. have expressed concern about the nature of a pact with the U.K.
“Trade negotiations should be driven by substance,” said a spokesperson for Democratic Senator Ron Wyden, chairman of the powerful Senate Finance Committee, which provides congressional oversight for trade.
“It is Senator Wyden’s view that the United States and United Kingdom should not make announcements until a deal that benefits Americans is achievable,” the spokesperson added.
When POLITICO first reported on proposed talks in October, Wyden said it was “extremely disappointing” the Biden administration was attempting to proceed “with a ‘trade agreement’ that will neither benefit the American public, nor respect the role of Congress in international trade.”
Wyden’s spokesperson said Congress “must have a clear role in approving any future trade agreements” and that the senior Democrat “believes it is important for USTR to be significantly more engaged with Congress on any future negotiations.”
‘The vibes were quite tough’
USTR has gone back to Congress to ask for its input on a potential U.K. trade deal. But major outstanding issues between the U.S. and U.K. remain, including agriculture and whether any agreement would benefit American workers.
In a recent meeting with U.S. diplomats “the vibes were quite tough,” said the second person briefed on the proposed negotiations cited earlier. “They just doubled down on ‘you guys really need to lean into the worker-centric trade policy’ and ‘put yourself in the shoes of somebody in Pennsylvania.’”
The message, the person added, was “does this improve the lot of the farmers in Iowa? Does this help the U.S. economy? And if it doesn’t, they’re not going to do it.”
The U.S. approach “seems to be very focused on labor standards, on environmental issues on these very worthy things,” said the first person briefed on the proposed negotiations quoted at the top of this story.
Prime Minister Rishi Sunak’s Cabinet also pushed back on a chapter dealing with agriculture regulations in the draft after the British leader told a food summit earlier this year that he would not allow chemical washes or hormone-injected beef imports like those from the U.S. into Britain.
Scottish ministers meanwhile complained they hadn’t been consulted. Agriculture regulations are a devolved issue in Scotland.
In the meantime, the focus of the U.K.-U.S. trade relationship is predominantly on securing a critical minerals agreement that would allow British automotive firms to tap into electric vehicle rebates offered in the Biden administration’s Inflation Reduction Act.
“The U.K. and U.S. are rapidly expanding co-operation on a range of vital economic and trade issues building on the Atlantic Declaration announced earlier this year,” said a U.K. government spokesperson.
Some in the U.K. are taking a philosophical view on whether a wider ranging trade deal with the U.S. is really needed. Michael Mainelli, who, as lord mayor of the City of London, opened a new outpost for the U.K.’s powerhouse financial district in New York City on Monday said: “The trade has been going on fine without it. It might go a bit better with it.”
The latest numbers show total two-way trade between the nations grew 23.8 percent in the year to the end of Q2 2023.
But in the U.S. a trade deal with the U.K. is just “not that high on the list,” Mainelli said.