The United Kingdom is set to leave the European Union on January 1st. That presents a big opportunity for American producers and the U.S. Trade Representative has been working around the clock to secure a deal with the U.K. in a post-Brexit world.
As our fifth largest export market, the United States already has a strong trade relationship with the United Kingdom, but agricultural export markets are underdeveloped, according to Daniel Griswold, Senior Research fellow at the Mercatus Center at George Mason University.
“Nine percent of the goods that we export to the rest of the world are agricultural goods, but to Great Britain, it’s less than three percent in agricultural goods,” Griswold states.
The Trump administration held five rounds of negotiations on U.S./U.K. agreements, but the incoming presidential administration will be approaching negotiations after Brexit.
According to Griswold, “It’s in nobody’s interest for the U.K. to have a hard exit from the European Union and that very well maybe what happens on January 1st. If they don’t have an agreement, tariffs are going to go up, and the European Union buys 43 percent of the U.K. exports so it’s hugely important.”
He says that both tariff and non-tariff barriers limit exports, including food standards on genetically engineered crops, hormone-treated beef, and chlorine rinsed poultry.
“In the U.K., you hear a lot about not lowering their food standards. This is basically misleading and it’s driven in part by, unfortunately, their own food sector, certain farm interests that are taking advantage of certain consumer misgivings about this, but it’s not about higher or lower standards,” he states. “It’s just about different standards.
Griswold says that at the end of the day, free trade agreements give families more affordable options at the grocery store.
“They lead to more exports for U.S. farmers and that’s a great thing, but ultimately, they benefit consumers; so, I think, a trade agreement with the U.K. and lower trade barriers all around... would mean U.S. families would have to spend less on their groceries and their day-to-day goods,” he adds.
According to the World Trade Organization, the highest tariff rates fall on dairy products, with a 19 percent tariff for dairy coming into the U.S. and a 37 percent tax on dairy headed to the European Union.
