Enhancing US-UK Trade and Economic Prosperity in a Time of Change
Founded three decades ago in Washington, DC, the British-American Business Association (BABA) is the premier business forum for British and American companies, organizations and business professionals in the mid-Atlantic region. Drawing from their transatlantic experience, BABA members share valuable insights around business in the US and UK, and pursue mutual policy interests. From airlines, aerospace and technology firms, to banks and hotels, BABA's membership reflects a full range of British and American businesses.
Therefore, BABA is committed to strengthening the US-UK economic relationship and is encouraged by President Trump and Prime Minister May’s support for bilateral trade discussions. Since the signing of the US-Great Britain “Friendship, Commerce and Navigation Treaty” following the War of 1812, the US and UK have enjoyed an enduring economic partnership. Today, our nations share the pole position in cutting-edge industries like automotive, finance, pharmaceuticals and information technology. Building on the strength of our existing partnership and our shared political and cultural heritage, deeper trade ties would underscore and encourage US and UK leadership in innovative industries and open the door for world-leading, rules-based trade relations that are purpose-built for the 21st Century.
While we fully recognize that the UK cannot sign or complete a new bilateral US-UK trade Agreement until it has exited the EU, we see the following areas as potential priorities for appropriate ongoing discussions and exploratory talks to work towards that goal and to bolster US-UK trade. As Britain seeks to redefine its relationship with Europe, the transatlantic relationship is more vital than ever.
The US and UK are the world’s largest foreign direct investment partners, with an investment relationship valued at over $1 trillion. We support a bilateral commitment to promote open, inclusive and competitive markets as a basis for prosperity between our two countries. As part of this commitment, the UK and the US should develop a new, state-of-the-art investment dispute resolution mechanism addressing, in particular, concerns around transparency and accountability. This should be coupled with efforts to explore incentive schemes for bilateral investment and capital flows, particularly around public-private partnerships and with respect to government procurement opportunities.
Building on the strength of our cultural and commercial ties, the US and UK should explore areas for further alignment of regulatory processes. This alignment should include norms that ensure balance and proportion between risk and precaution, while supporting innovation-led approaches to deliver better outcomes in, for example, healthcare, consumer safety, food safety, environmental management and emerging technologies.
3. Research and Innovation
The US and UK have world-leading research and innovation institutions that deliver enormous benefits to our economies and citizens. To encourage further cooperation in this area, we recommend the negotiation of a bilateral agreement that builds on the existing Horizon 2020 EU-US Agreement and enables collaboration in science and research. The US and UK should expand cooperation in higher education to amplify the leadership roles of our renowned universities and take full advantage of their great economic potential.
The US and UK are world leaders in financial services: our companies offer deep pools of liquidity and agile product and service structures that share many common features, including an overriding commitment to prudence. Bilateral discussions should commit to enhancing the UK-US financial services relationship – through regulatory cooperation – to improve resilience, augment our strengths and promote economic growth.
5. Talent Mobility
Our shared histories of immigration are directly linked to our nations’ economic success. The ability to attract and employ highly-skilled workers from an international pool of talented professionals is imperative to developing and maintaining strong and competitive industries, especially those facing labor shortages. The US and UK should therefore explore new bilateral visa arrangements to foster the movement of talent and enhance opportunities to live, study and work on either side of the Atlantic.
The free flow of data is an essential input to 21st Century economic dynamism. Data is essential in every industry, and especially in the high-value services sectors that support the broader economy and global value chains. Data is increasingly the lifeblood of the manufacturing sector, as the advanced manufacturing processes of the 21st Century will rely on ever-more data to perform complex tasks and produce complicated products. Even the agricultural sector is being transformed by data. Building on progress being made with the EU-US “Privacy Shield” data transfer mechanism, the US and UK should drive pragmatic new solutions that protect citizens’ privacy while allowing for the free flow of data. Given that global cross-border data flows now generate more economic value than traditional trade in goods, we should blaze an internationally compelling trail for the responsible and sustainable deployment of data-driven technologies.
Our economies are world leaders in services and net services exporters. The US and UK should explore ways of enhancing trade in services, particularly in business services such as accountancy and law which, as described above, are crucial inputs for global value chains and support the vitality of other domestic industries. Given the growing importance of data to our economic prosperity we should, in particular, explore ways to further increase competition and encourage growth in the market for ICT services.
8. A Rules-Based System for Trade
In the latter half of the 20th Century, the US and UK led the creation of a sustainable, rules-based system for trade. Rather than pivot away from global leadership, we should reflect on challenges to this order in the 21st Century and explore beneficial, productive means of advancing a positive agenda. The strength of the US and UK’s economic partnership presents an ideal platform for those discussions. In updating our bilateral legal framework for trade, we should also recommend forward-looking priorities for the multilateral agenda, particularly with respect to the World Trade Organization. A first step might be to signal strong mutual support for the Trade in Services Agreement plurilateral negotiations.
9. A New Trade Policy
Over the past year, the public has demonstrated anger and distress around the perceived role that trade has played in increasing economic inequality and stagnating growth. While both of our countries are dependent on trade for our economic success, it is widely accepted that trade generates winners and losers. To address citizens’ legitimate concerns, the US and UK should lead the way in developing socially responsible and growth-enhancing means of dealing with economic dislocation, including dislocation that results from technological transformation. This should be addressed in trade conversations via mutual commitments to strengthening job re-skilling and adjustment assistance programs.
10. Trade Outreach and Consultation
Along with concerns about the impact of trade on the broader economy, critics often highlight concerns around transparency and the closed-door nature of trade negotiations. We acknowledge that trade negotiations rightly take place in strictly intergovernmental settings. However, we also recognize that the mechanisms by which negotiating priorities are established should include the broadest possible set of stakeholders, including key large and small businesses within BABA’s membership. Governments should see consultations not only as a means of receiving input, but also as a forum for educating citizens about the value of trade and the substance of trade commitments.
July 10th 2017
NOTE: This policy paper was developed in conjunction with British American Business – https://www.babinc.org/.