The promise of UK economic sovereignty was touted as a significant benefit of Brexit. Vote Leave supporters wanted to take back control of the EU’s role to negotiate international trade and investment agreements on our behalf. The promise of a strategically important trade deal with the US, which would supposedly be concluded at great speed, was the most prized of all the potential deals. It would demonstrate an advantage the UK would have over its European neighbours, which have failed to secure a deal with the Americans.
A UK-US trade agreement should not be rushed. A bad agreement could be catastrophic
The Transatlantic Trade and Investment Partnership (TTIP) would have seen the EU and the US agree a historic trade pact worth billions of dollars. Negotiations began in 2013 and were ongoing until they ground to a halt due to the change in US administration with the election of President Trump and the result of the UK’s Brexit referendum in 2016. TTIP was put on ice, and it has not yet been thawed.
The world has moved on since 2016. Brexit is done and the Biden administration has entered the White House. The UK government and the Office of the United States Trade Representative have signified the possibility of a UK-US deal.
Scholars, businesses, and the general public know little about the potential terms of the UK-US trade agreement that is currently thought to be under negotiation. Beyond the results of the 2018 Department for International Trade public consultation, the only documents that have been published regarding the negotiations are both parties’ negotiating objectives, which are vague and lack detail.
Often, governments do not complete detailed assessments on a proposed agreement’s impact in terms of economic, environmental and societal costs and benefits. Secretive negotiations and lack of cost-benefit analysis are typical. This is concerning, given the risks associated with any trade deal. Whilst increased trade and investment can bring significant benefits, the wrong type of trade and investment, or poor accompanying policies, can give rise to detrimental effects.
In the context of TTIP, European citizens were concerned about the potential negative effects of the EU-US agreement, such as the lowering of regulatory standards, including those applicable to agricultural and food products. Concerns sparked protests about various aspects of the proposed deal, including the risks of chlorinated chicken and hormone-treated beef. The Brits were also concerned about protecting their National Health Service (NHS) from privatisation through sales to US medical service providers, potentially giving US companies the status of foreign investor, which attracts a range of investor protection obligations through generous trade and investment agreements.
The risk of giving foreign investors control over key national services should not be underestimated; nor should the risk of lawsuits by foreign investors. One of the most contentious aspects of the TTIP agreement was the potential inclusion of the investor-state dispute settlement (ISDS) mechanism, which gives investors the right to sue the investment host state government. Disputes can cost the government millions of dollars to defend, and potentially billions of dollars in compensation if the investor wins.
With trade pacts, the devil is in the detail. The global economy suffered a devastating blow in 2020-21 due to the Covid-19 global pandemic. Governments have spent eye-watering sums on health responses, as well as to support businesses and jobs at risk throughout the pandemic. As we emerge from the economic nightmare of Covid-19, national governments will naturally look to trade and investment as a vehicle for economic recovery. The UK-US agreement could play an important role in boosting two battered economies.
However, the agreement must be negotiated in a way that benefits both states, and should not be rushed. A bad agreement could be catastrophic. This agreement is an opportunity for two world-leading nations to help shape the future of the trade and investment regimes in a time of uncertainty. It could become a benchmark for trade and investment negotiators around the world.
Any proposed agreement should be scrutinised by academics, stakeholders, and civil society to give the agreement legitimacy and democratic endorsement.Transparency is fundamental
Governments should engage in an open dialogue with stakeholders, including civil society, to ensure that public interest is at the heart of the agreement negotiated between these two advanced economies.
Jasem Tarawneh and Nicolette Butler are law lecturers at Manchester University
Photo: Protest against TTIP in 2016. The world has moved on but the issues remain (Shutterstock)