We’ve launched our third Harvard Brexit Paper: ‘On the Rebound: Prospects for a US-UK Free Trade Agreement’

Peter Sands, Mehek Sethi and I launched the third in our series of Harvard Working Papers exploring the impact of Brexit on British businesses at a Strand Group event at King’s College London last night. img_1803

The paper,  ‘On the Rebound: Prospects for a US-UK FTA’, examines the prospects for, and potential impact of, a free trade agreement between the US and the UK. The research is based primarily on interviews with senior government officials, economists and trade experts, plus a range of companies and trade associations from the UK, US, and Europe. We discuss the key potential upsides, possible risks and principal negotiating issues from both US and UK perspectives. We conclude that it is highly unlikely that a free trade deal between the US and the UK will be secured in the near term and that the likely potential benefits for British businesses are less than often suggested.

At the launch event, we outlined our seven key findings:

Finding 1: UK needs a deal, but it is unclear how committed the US is

Finding 2: There is a clear power imbalance between the US and UK (the relative size of the US and UK economies and the relative institutional experience and capacity in conducting trade negotiations)

Finding 3: The UK must strike a deal with the EU before it can negotiate an FTA with the US

Finding 4: The UK will have little to gain and will have to concede more on tariff reductions than the EU offered in TTIP

Finding 5: The US demands on non-tariff and regulatory issues will be politically contentious and difficult for the UK to meet

Finding 6: Negotiating non-tariff and regulatory issues will force the UK to choose between US or EU in terms of regulatory alignment

Finding 7: The US cannot, or will not, move on many British non-tariff and regulatory interests

We conclude that both US and UK officials are doubtful that a meaningful deal can be reached therefore British business should not bank on the prospect of a US-UK Free Trade Agreement. While it might be a great idea, our research suggests such an agreement is not going to happen any time soon, and that any gains will be very hard to realise.

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Balls, Sands, et al., M-RCBG Associate Working Paper No. 89, May 2018

The paper, co-authored with Eleanor Hallam, Sebastian Leape and Nyasha Weinberg, can be read here.

Peter and I also wrote a Huffington Post blog post yesterday discussing the key findings from the paper.

Posted May 17th, 2018 by Ed