Coronavirus and the US-UK free trade agreement
The coronavirus has roiled global commerce. How will this pandemic influence trade policy? The upcoming US-UK negotiations will serve as a test.
A US-UK trade deal has been in the works for years. It gets outsized attention because Britain’s “Brexit” from Europe presents both sides with a “greenfield” opportunity to get things right. In the face of the coronavirus, this will be challenging.
The United States and Britain enjoy deep economic ties. The UK is America’s single largest source of foreign direct investment, and the US is among Britain’s foremost trade partners, in terms of both goods and services.
There are, to be sure, barriers to be resolved. But a US-UK trade deal represents so much more than just a fix for a number of lingering tensions. It’s about building an agreement between two like-minded allies to hold up as a model for others to emulate.
The coronavirus has also shone a spotlight on trade policy. That’s because access to medicines, medical equipment and other essentials around the world is being impeded by tariff and nontariff barriers. Two of these problems also afflict US-UK trade, and should be prioritized as part of an “early harvest” to demonstrate their feasibility to other countries.
First, digital trade. The coronavirus has left people scrambling for information, best practices and access to supplies. Digital trade has been on the agenda for years, but the need to get things right has never been in sharper relief. The US and UK should lead in banning restrictions on the flow of data between them, and prohibit customs duties on digital products like software, books, film, and music.
Second, drug approval. The coronavirus has people waiting for a vaccine. The timeline on such a vaccine will depend on several factors, including a permissive regulatory environment, as well as strong enforcement of intellectual property. But even once a vaccine exists, approvals might be slower for imports, assuming they get a good look in the first place. The US and UK must show the global economy how to tackle these challenges.
Across many countries, tariffs and taxes are the main impediments to getting drugs to patients. In US-UK trade, the problem lies mostly in nontariff barriers. US firms, for example, worry that their medicines can languish in the approval process. Some are not approved at all. Of course, access to medicines isn’t only, or perhaps even mostly, a trade issue. But where it is a trade issue, the US and UK should take the lead in redressing those policies that get in the way of doctors doing their jobs.
It shouldn’t take a pandemic to draw attention to the tariffs, taxes and other costs that countries impose on the well-being of their citizens. But that’s exactly what the coronavirus has done. US-UK negotiations should rise to the occasion.
Marc L. Busch is the Karl F. Landegger professor of international business diplomacy at Georgetown University’s School of Foreign Service.