US-UK trade deal – what’s at stake

Yesterday, the UK started to release its negotiating objectives for a trade deal with the United States, at the same time as it begins formal negotiations with the European Union over future trade arrangements.

A US-UK trade deal could have far-reaching implications – this briefing outlines the big issues to watch out for, including what we already know has been discussed, the secrecy of the negotiations, and the timeline for the talks.

 

1) What are the big issues?

Food, environmental and other standards

The US wants the UK to move to the US approach to standards. This is the fundamental play-off between a deal with the US and a deal with the EU – it’s not possible to align closely with both. Leaks from the talks so far reveal that US officials said that commitment to a level playing field with the EU would make a US deal a “non-starter”.

In general, the UK’s current approach is that products must be proved safe before they can go on the market, whereas in the US the burden is the other way around – products can be on the market unless and until they are proven unsafe. The UK has traditionally also taken more account of factors such as animal welfare.

Particular issues for the UK public include:

• Chlorine chicken: this iconic issue is primarily an animal welfare issue. Currently, we take a ‘farm to fork’ approach that seeks to improve hygiene and conditions at every stage, whereas the US tolerates dirty, crowded conditions until the end and then blitzes the carcases with chlorine or acid washes. Spraying bleaches can cause health problems for workers. And on top of this, recent evidence from the University of Southampton suggests that chlorine may not remove bacteria but just mask it.
• Cosmetics: Over 1,300 toxic ingredients have been banned from use in cosmetics in the UK, with restrictions of another 500  ingredients. By comparison, only 11 are banned in the US – for instance, formaldehyde, which causes cancer, is allowed there. Animal testing of cosmetics is legal in the US but banned in Britain.
• Baby food: the UK has specific regulations for baby food, over and above normal food standards. These ban pesticide residues, arsenic traces and artificial food colour e-numbers, and set limits for added sugar. The US has none of these.
• Hormone beef and ractopamine pork: hormones and steroids such as ractopamine are used to promote growth in pigs and cattle in the US, despite the risks both for the animals and for human consumption. These are banned in the UK

Climate

A US-UK trade deal will have implications for fossil fuel emissions and could prevent necessary climate action. The recent Heathrow decision reinforces the need for all public policy to be coherent with climate goals. Yet leaks last year showed that the US has refused to even discuss climate change in talks with the UK.

Trade deals tend to promote trade in fossil fuels and carbon-intensive sectors such as industrial agriculture and transport, while at the same time insisting that rules cannot consider the climate impact of different products and sectors. Recent US trade deals and mini-deals with China, Canada and Mexico, and the EU have even specifically required increased trade in fossil fuels at a time when we should be leaving them in the ground.

To tackle the climate crisis we need strong binding regulation that can shift us out of decades of inertia and business as usual. Yet trade rules are written to prioritise voluntary self-regulation – exactly the approach that has resulted in continued inaction.

This is not the only way that trade deals can block climate action. If meaningful regulation on climate issues is passed, corporations can turn to ‘corporate courts’ to seek damages  (see below). This has already started to happen elsewhere. The Netherlands recently took the decision to phase out coal power over the next decade in the light of climate change. In response, a German energy company, Uniper, which owns a power station in the Netherlands, has started threatening to sue in a corporate court. In Canada, when the province of Quebec introduced a fracking moratorium, energy company Lone Pine sued in a case that is still ongoing.

 

Corporate courts

There is a high risk that a trade deal with the US will include ‘corporate courts’, officially known as investor-state dispute settlement or ISDS. These allow transnational corporations to sue governments outside of the national courts. The amounts involved can be in the billions, and even the threat of a case can be enough to cause governments to change policies and plans.

The range of cases is huge:

• Cargill sued Mexico when it first introduced a tax on sugary drinks;
• Ethyl sued Canada over a ban on the chemical MMT in petrol, which is suspected of causing nerve damage;
• Vattenfall is suing Germany for deciding to phase out nuclear power following the Fukushima nuclear disaster;
• Philip Morris sued both Australia and Uruguay over anti-smoking measures;
• Infinito Gold is suing Costa Rica over the introduction of a ban on open-cast mining for metals.

Last year’s trade leaks revealed that US and UK officials have had extensive discussions about the inclusion of corporate courts in a trade deal.

 

Medicine prices

Leaks from the talks with the US have shown that there are proposals for the extension of monopolies for big pharmaceutical corporations, which could massively increase the cost of medicines for the NHS. There is also mention of another US concern: at present, the NHS’s bulk-purchasing power allows it to negotiate prices, while the regulator, NICE, assesses whether medicines are effective enough to justify their price. Trump considers this to be ‘freeloading’ and has asked trade negotiators to fix it.

The two sides have effectively concluded all the preliminary negotiations they need in this area and say, in the leaked papers, that they are ready to begin agreeing text on this for the final deal.

 

NHS

A sweeping opening up of services is a big focus of the talks. The US is insisting on an approach called ‘negative list’ where everything is on the table unless it is specifically excluded. Trade deals usually have a standard exemption for public services, but the existing level of privatisation and internal market within the NHS means that it doesn’t fall within the definition. It and many other public services would have to be specifically excluded – and we know that in the previous negotiations between the EU and the US over the Transatlantic Trade and Investment Partnership (TTIP), the UK chose not to do so when other European countries did.

 

Power of internet platforms

Governments are just beginning to address the challenges posed by the internet and the power of online platforms such as Google, Amazon, Facebook and Apple – issues such as fake news, political advertising, hate speech and online bullying. Yet leaks show that in the talks so far the US has been pushing to protect big tech platforms from regulation in trade rules.

Ensuring that big tech companies pay the tax they owe is also increasingly urgent, and the UK now plans to introduce a digital services tax. The US has publicly threatened to impose trade sanctions if it does.

The US is also pushing for an unrestricted ‘free flow of data’ between the two countries, which would undermine existing data protection and privacy standards in the UK. It could also prevent data flows between the EU and the UK.

 

2) Secrecy

Much of what we know about the US-UK trade talks is from leaks because negotiations are being conducted in great secrecy, without democratic oversight.

The UK parliament does not get to approve the objectives, does not get to properly scrutinise progress, nor is it guaranteed a vote on the final deal. The devolved administrations and legislatures in Scotland, Wales and Northern Ireland are similarly shut out, even though the negotiations will touch on areas of devolved responsibility, such as agriculture and health.

A US-UK trade deal will impact on many issues which are usually assumed to be part of domestic policymaking, and there is a strong public interest in knowing what is on the table in the negotiations.

 

3) What is the timeline?

The first formal round of negotiations with the US is expected to be held in the near future. The pressure is then on for the next four months, to see if a deal can be agreed by the summer before the US goes into election mode. As six informal rounds of trade talks have already been held since 2017, the negotiations are not starting from scratch, so it is feasible that some kind of deal could be reached in this period.

The US should need Congress’s approval for the deal. This would mean that the deal would need to be put together by 26 June in order for Congress to be given the required 90 days notice to vote on it before breaking up for the elections. Alternatively, it could be left a bit later and be voted on in the lame-duck session after the elections.

It is also possible that a mini-deal could be done that the Trump administration would argue does not need Congressional approval.

 

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