JAKARTA (TheInsiderStories) – Amid the tariff war between the United States (US) and China which continues to negotiate, the world will witness an increase in trilateral trade cooperation between America, United Kingdom (UK), and Japan after the official Brexit decision was decided.
The three countries signed their first trilateral cooperation in October 2016. The agreement cites “shared national interests” and the need to deal more effectively with an increasingly globalized world to ensure the flow of free trade and access to maritime commons.
In February, US and UK government announced that they had signed a Mutual Recognition Agreement (MRA) on Conformity Assessment. US’ President Donald Trump has welcomed that agreement that he said would help boost trade between the two countries “very, very substantially” after Brexit.
He revealed the trade links had been strengthened by the signing of the deal, which will see the terms of a similar agreement between the European Union (EU) and the US continue to apply to the UK after Brexit.
He described the UK and US as having a “very good trading relationship”, despite having previously warned that Theresa May’ Brexit deal could harm business links. The deal continues the terms of the EU – US MRA after Brexit, allowing goods made in the UK to be sold in the America and vice versa, with less bureaucracy for manufacturers and exporters.
US – British’ trade in the sectors covered by the deal is worth up to £12.8 billion, the government said, including exports of £8.9 billion, most of them in the pharmaceutical industry. Other sectors covered include tech and telecoms.
“So with the UK, we’re continuing our trade and we’re going to actually be increasing it very substantially as time goes by. We expect that the UK will be very, very substantially increased as it relates to trade with the United States – the relationship there is very good,” Trump tweet in his official Twitter after the deal.
Although uncertainty about Brexit persists, London remains eager to prioritize a US-UK free trade agreement when it eventually leaves the EU. Coupled with similar agreements the UK has signed with Australia and New Zealand, the US deal shows Britain is entirely capable of negotiating its own trade pacts.
As the now-abandoned Transatlantic Trade and Investment Partnership negotiations between the US and the EU showed, the organization prefers to harmonize the mutual recognition. It seeks to entrench Europe’ expensive standards internationally.
This is great for the big industries of today, but terrible for new companies that have to meet standards designed by their larger competitors. The continuation of the US – UK agreement shows the way to an even wider, more ambitious Anglo-American free-trade area that would set a new gold standard for trade deals — one with zero tariffs and based on mutual recognition.
Similarly, it is a particularly good moment to try to expand access to Japan’ large consumer market, given Japanese prime minister Shinzo Abe’s bold moves to open up his economy to global competition.
An EU – Japan FTA has recently come into force, giving European goods an advantage over American ones, and Tokyo has spearheaded the Trans-Pacific Partnership in America’s absence. A US-Japan agreement could bring America benefits from Tokyo’s ties to the remaining Trans-Pacific countries.
In December last year, Robert Lighthizer, the US trade representative, released a detailed summary of negotiating objectives, and the two sides have just completed initial talks. The US current account deficit with Japan stood at just under $70 billion in both 2016 and 2017, on $284 billion of trade in goods and services. Tokyo levies tariffs of 38.5 percent on US frozen meat exports and 40 percent on processed cheese, for example.
The key sticking points are Japanese agricultural barriers and the threat of US tariffs on foreign automobiles. Non-tariff barriers, such as onerous regulatory requirements, are also in the American administration’s crosshairs.
An exchange of no auto tariffs for some agricultural access, particularly on beef, could be a palatable first step. Even bolder move than that currently proposed would be a trilateral agreement between the US, the UK, and Japan, linking the world’s first, third and fifth-largest economies.
America would have free-trade anchors in Europe and Asia, and the other two would have similar footholds abroad. For post-Brexit, it would counter the suggestion that the country is about to isolate itself in the global economy. Japan similarly would benefit from showing that China was not Asia’s only attractive trade partner.
Written by Lexy Nantu, Email: firstname.lastname@example.org