In an economic climate marred by the coronavirus pandemic and increasing global tensions, experts have warned the UK has started to find itself negotiating with all parties for trade deals, from the EU and the US to China and Australia. The US and China, both close allies of the UK historically, have recently seen boiling tensions with each other, resulting in tariffs and trade disputes. For years, the US has sanctioned Chinese telecoms company Huawei with sanctions, and despite January seeing a Phase One trade agreement between the two nations, the COVID-19 pandemic has led to major distrust and conflict between Washington and Beijing. For the UK, this complicated geo-political situation has led some to question how will Brexit go ahead.
Andrew Northage, head of the International Trade sector group at leading international law firm Walker Morris, believes that the UK’s economic situation is already fraught with tension as it departs the EU’s pre-existing bloc of trade, and that worsening US/China relations poses difficult questions for how Brexit will go ahead.
He told Express.co.uk: “The UK could be expected to face a harder economic environment at a time of global economic fragility, which would increase the stress on the UK economy.”
“Growing US/China tensions may result in the UK seeking to obtain better market access in China and attract Chinese companies and capital to the UK, which could be seen as positive.
“If China has reduced access to US financial markets and technology, the UK could look to bridge that gap.”
The UK’s Brexit talks could be marred by US and China
However, he suggested that the UK may be weaker than the EU for trade deals, which could hinder their search for an agreement.
Mr Northage added: “The US is likely to put pressure on the UK to support its efforts and may look for the UK to align itself more with Washington.
“The price of such cooperation may be concessions in the free trade agreement the UK is looking to conclude with the US.
“The issue of food standards (and in particular chlorinated chicken) has been in the news again recently and looks to have some distance to run yet.”
Experts have talked to the Daily Express about what the UK can expect to see from rising conflicts between China and the US.
But he holds that “the UK may look to try to position itself as a middleman between the US and China”.
He concluded: “Easier said than done but potentially big rewards if done well.”
Meanwhile, Professor Stefan Legge, trade expert and economist from the University of St. Gallen, also said that the UK will have a tough time finding a new deal, but more because of the US’ hardline stance on trade issues.
Prof. Legge pointed out that the Trump administration in the US has not made a lot of international agreements on trade, specifically referring to the Trans-Pacific Partnership, which Trump withdrew from.
He continues to say that “trade agreements usually take years to be negotiated and ratified”.
He said: “In more than three years the Trump administration has achieved very little – the new NAFTA (USMCA) is not much different from the original NAFTA and will come into effect July 1, 2020.
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Professor Stefan Legge, trade expert and economist from the University of St. Gallen, also holds that the UK will have a tough time finding a new deal, but more because of the US’ hardline stance on trade issues.
“There is hardly any chance in my view that the UK will secure a trade deal with the US before the end-of-2020 deadline.
“If talks start in the coming months, American negotiators will ask for better access to the British health care system (NHS) and food market – both highly sensitive matters in London.
“It has always been clear that an `independent’ UK outside the EU will have a hard time securing trade agreements with key partners.
“This is especially true in 2020 when the UK will want to use its scarce resources to negotiate a favourable agreement with its most important partner, the European Union.”
China and the US have seen rising tensions
However, John Royden, Head of Research at JM Finn added that the tensions may make it easier for the UK to gain access to these markets, due to the US and China’s decoupling in trade elating a vacuum for UK businesses.
Royden said: “Before COVID-19 the Chinese and US were at each other’s throats; the US wanted to stop subsidising Chinese economic growth by ceasing to tolerate the expropriation of US technology by Chinese firms.
“The expropriation took the form of Chinese laws requiring the majority Chinese ownership of local companies and poor court processes when it was alleged that Intellectual Protocol (IP) theft had occurred.
“From a geo-political perspective this was all part of a greater ambition to slow Chinese progress towards the Chinese goal of matching and then exceeding the US’s global influence.
“Trade wars played an important part of the pressure mixture as well.
“Then came COVID-19 and the suspected Chinese cover-up that followed.”
Taiwan has recently re-elected the pro-independence Democratic People’s Party (DPP) candidate Tsai Ing-wen as President, in a sharp rebuke to Beijing
Mr Royden also explained that without COVID-19 worsening, it is unlikely that state control of Chinese media will loosen, as it is essential for public relations and international condemnation will look bad on the government.
He continues: “Pressure to relax state controls of Chinese media will come from international condemnation of Xi’s COVID-19 cover up.
“The trade war is likely to morph into a cold war of words and accusations.
“The US will like this because trade wars have an element of “cutting your nose to spite your face” about them.
“The impact on the UK’s attempts to do international trade deals should therefore become easier as the spats between the US and China move away from trade.
“Watch the next G20 meeting with interest.”
Published at Mon, 08 Jun 2020 23:39:00 +0000