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Trade Deal with US won’t be Easy

Boris Johnson admits the obvious: getting a good US trade deal will be difficult.

A UK-US trade agreement is difficult to achieve for a number of reasons. One is the continuing talks with the EU and the prospects of no-deal Brexit and restoration of checks at the Irish border. The other is that the American market is significantly larger.

Boris Johnson has said that the UK would not pay the £39 billion divorce bill in full in the event of a no-deal Brexit.

“If we come out [of the EU] without an agreement it is certainly true that the £39bn is no longer, strictly speaking, owed,” he told ITV. “There will be very substantial sums available to our country to spend on our priorities. It’s not a threat, it's a simple fact.”

Some of the £39 billion divorce bill arises because the UK has pledged contributions towards the EU budget that have not yet been paid. Britain is also being asked to contribute towards EU staff pension costs that were incurred before Brexit.

A Downing Street spokesperson declined to say how much of the divorce bill the UK would pay in the event of a no-deal Brexit.

The prime minister is seeking to renegotiate the UK-EU withdrawal agreement finalised by his predecessor Theresa May. Specifically, he wants to remove the so-called backstop that is intended to prevent the return of a hard Irish border.

The EU officials insist that they are ready to take seriously any credible UK suggestions for changes to the political declaration on future relations between the two sides, but not the withdrawal agreement.

Boris Johnson also played down expectations of concluding a quick UK-US trade deal, saying any agreement would require America to make compromises.

Although Mr Johnson said he would “love” to agree a deal “within a year”, he acknowledged there would be significant challenges to overcome if an agreement was going to be finalised rapidly after Britain leaves the EU.

“I don’t think people realise quite how protectionist sometimes the US market can be, Mr Johnson told ITV after he held a breakfast meeting with Mr Trump at the G7 summit in Biarritz.

“But what I’m saying to Donald . . . this is a big opportunity for both of us but we need some movement and we need to see movement from the US side.”

Mr Johnson at the weekend set out many areas where he wanted to see the US curtail restrictions on UK companies selling goods and services to America — ranging from cauliflowers and pork pies to train carriages and shower trays.

“There are massive opportunities for UK companies to open up, to prise open the American market,” he said. “We intend to seize those opportunities but they are going to require our American friends to compromise and to open up their approach because currently there are too many restrictions.”

Mr Johnson also reiterated that some sectors of the British economy would be off-limits in any UK-US trade deal — notably the National Health Service. A British government official said Mr Trump acknowledged in the meeting with Mr Johnson that the NHS would not form part of an agreement.

The US president said that the US would “do a very big trade deal, bigger than we've ever had with the UK”. He described the EU as an “anchor” around the UK’s “ankle” that would at some point no longer be there.

French president Emmanuel Macron has warned that Britain would be a “junior partner” in any trade talks and might find itself in a place of “historic vassalisation”.

Experts said the UK would struggle to assert itself in trade negotiations with the US, as the significantly larger American market would be more likely to set the terms of any deal.

Published: August 25, 2019