Could produce hold up a UK/U.S. trade deal?
Beyond the impact of the COVID-19 pandemic, the summer of 2020 might well be seen as something of a turning point for the United Kingdom in terms of international trade relations.
With Brexit, the threat of No Deal remains. It looks as if this will go down to the wire at the end of the year. Prime Minister Boris Johnson’s apparent bravado might be tempered by the fact that most predictions are that No Deal could be potentially disastrous for the U.K. economy.
So where does this leave the U.K./U.S. Free Trade Agreement? Talks have started and this is a good sign. A U.S. deal does represent a significant opportunity for the whole UK economy — potentially creating a substantial increase in trade with the U.S. of £15.3 billion ($19.98 billion U.S.) in the long run, delivering a £1.8 billion ($2.35 billion U.S.) boost to U.K. wages, lowering prices on goods imported from the U.S.
Agriculture and food will almost certainly be a sticking point in all of this. The U.K. is worried about a free trade deal opening opportunities for the U.S. to sell genetically-modified soybeans, chlorinated chicken and hormone treated beef to the U.K.
The U.S. produce sector could get caught up in this — exports to the U.K. (except for nuts) have all fallen recently for a variety of reasons. In some cases, it is because of European Union non-tariff barriers, but also as U.S. shippers have found new markets in Southeast Asia and the Far East. A sticking point might be the differences in the number of chemical products allowed in the U.S.
The U.K. tends to take a more precautionary approach on pesticides, with a wide range of pesticides banned due to health concerns that are still allowed in the U.S. Other pesticides are banned due to toxicity to bees and other pollinators.
The U.K. has also banned a number of pesticides due to potential to pollute water and damage aquatic life. The U.S. has just over three times as many agricultural chemical products registered for use as the U.K. does.
Do the leading growers and shippers have the technical and commercial ability to deal with the U.K.? Yes. Does it mean that they will look to the U.K. market at a time when post-COVID-19, U.K. importers and retailers might be looking to shorten supply chains? The best of the best in the U.S. might re-examine the U.K. market, but this is by no means certain.
It looks as if sealing a U.K./U.S. trade deal will almost certainly take longer than the much heralded “quick and outstanding deal” that President Trump has promised. Trade deals normally take several years to negotiate. Even then, there is a longer implementation period.
What does seem sure is that there is some way to go on this and there is plenty of water to flow under the bridge before a U.K./U.S. deal is finalized.
John Giles is a divisional director with Promar International, the consulting arm of Genus PLC. E-mail him at john.giles@genusplc.com.
More from John Giles:
A personal view of COVID-19's impact on UK supply chains
COVID-19's ramifications for produce in the UK
What's next for Brexit?
