(Bloomberg) -- The U.K. and U.S. will open negotiations over a post-Brexit trade agreement next month, posing an early test of Britain’s ability to strike such deals and of its relationship with President Donald Trump.
“There are some very, very big markets that we will be able to take advantage of,’’ U.K. Trade Secretary Liam Fox told BBC TV’s “Question Time” program late Thursday. “I’ve got news for you -- that we are beginning our actual discussions on July 24.’’
Britain cannot formally sign trade deals with other countries until it leaves the European Union in March 2019, but can prepare the groundwork for them to be ratified soon after. Such accords are key to Prime Minister Theresa May’s ability to deliver what she calls the “promise of Brexit.”
The U.K. exports about 37 billion pounds ($48 billion) more in goods and services to the U.S. than it imports, highlighting the importance of a deal for the British. After then-President Barack Obama last year warned the U.K. would be at the “back of the queue” for a trade pact if it voted for Brexit, Trump has been warmer.
He told The Times in January that the U.S. is “gonna work very hard to get it done quickly and done properly.” He subsequently told May that the U.K. would be able to continue to trade with the U.S. on at least the same terms it does now after Brexit.
Still, the Times reported in April that after talks with German Chancellor Angela Merkel, Trump might ultimately prioritize talks with the EU. That would be a blow for May.
When talks do begin, the U.K. will lack leverage given it likely needs a deal more than its transatlantic partner. The U.S. might try to force Britain’s financial services to sign up to Wall Street regulations and push the U.K. to open up industries such as health to American competition. It might also try to weaken the U.K.’s food standards.
Fox’s comments suggest May’s government is still planning to withdraw from the EU’s tariff-free customs union, which prevents trade accords with third parties. There has been speculation it may try to stay in the arrangement as part of a softer Brexit which would raise questions about Fox’s job.
“Ninety percent of global growth in the next 10 years will be outside Europe,” said Fox. “If we as a country want to generate the wealth that we will need for all those things that everybody wants in terms of spending on public services, that growth is going to come from somewhere else.”