Climate Commitments Could be the Way to Unlock Trade Talks
Notes from the CEO – February 2021
Chief Executive Officer
A month into the new year and the political drama that we have become accustomed to hasn’t abated. I won’t add to the comment that BAB made on January 6th other than to say that the US processes designed to ensure a peaceful transfer of power prevailed, as we thought they would, and a new administration is getting its program underway.
Trade continues to be a focus for our work at BAB and three different issues are worth highlighting to our members. Included in a flurry of Executive Orders is the Made In America directive which further strengthens rules which require that government procures goods and services from domestic firms and limits exceptions. Those hoping for a more liberal approach to trade policy will be disappointed by this pronouncement signaling potential further protectionist measures to come.
The EU’s decision to impose export controls on medicines and the triggering of Article 16 of the Northern Ireland protocol, thus creating a hard border in Ireland (thankfully since rescinded), was an extraordinary response to what looks like a failure of planning and execution of a vaccination program by the commission on behalf of its members. However this plays out it feels that the natural protectionist tendencies of the EU are only just below the surface and are ready to break through at any time.
On a more positive note, the UK announced it would formally begin negotiations to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) the Pacific free trade agreement, as part of its medium–term objective to have 80% of UK trade covered by free trade agreements. Although this is outside of our normal focus of work, we support the UK’s ambition and hope it is successful.
Unsurprisingly, the UK is still talking up its desire to conclude a trade agreement with the USA after a huge effort by both sides during 2020 and is waiting for the new US Trade Representative, Katherine Tai, and Commerce Secretary, Gina Raimondo, to have their nominations confirmed by the Senate. As we have said before, we think there is a lot to be gained from an FTA by both countries and the transatlantic business community, particularly by setting ambitious new standards for digital trade, regulatory co-operation and making life easier for SMEs. At the same time, we know that some real issues remain unresolved and trying to get the new administration to give this deal the political focus it needs, at a time when Covid and other domestic issues are blocking out the sun, is going to be tough.
Any significant action by the Biden team is going to need to check one of their key progressive boxes on labor, healthcare, equality or climate for it to get urgent attention and this may be the opportunity that the UK should pursue. An FTA could be used to proclaim overarching and cross-cutting commitments on climate, sustainability and the environment which build on the commitments both countries have made through the Paris Accord and which will be reported on at COP 26. Given the domestic commitments made by both countries on carbon emissions and longer–term commitments to net neutrality, it might be possible to place climate at the top of the agreement without impacting the core commercial terms. There are still crucial and substantive issue to be resolved but if these can be agreed, a set of climate clauses may make this attractive enough to get the attention it will need to pass in the time left available.
Our program of activity has quickly got back up to speed after the Holiday break and I would point you to the following: We have partnered with the US Embassy in London to identify Champions of Trade, companies with stories to tell about the importance of trade to their businesses, their stakeholders and their communities; you can follow some of these stories here, or if you have a story to tell and want to join our UK-wide Champions of Trade network, click here.
We also partnered with the Department for International Trade to hear from SMEs about what would help them in a transatlantic trade agreement, and you can read these stories in our publication, Making a Difference and see the DIT’s comments here.
Our convening program is also fully up and running with a varied agenda reflecting the issues that boards and businesses are thinking about. You can see what is coming up here and I hope to see you at one of these terrific events in the coming months.
A final note on the Covid crisis and response. Throughout the last year we have declined to criticize either government for their response to an extraordinary situation which would have presented challenges to whoever held the reins. In fact, our sense has been that the financial response by both the UK and the US treasuries has been of a scale and speed that has made the economic crisis a lot less bad than it well could have been. The same might be said about the development and deployment of vaccines, a task of supreme complexity and risk. At the time of writing, the UK and US amongst large, developed nations, lead the world in percentage of population vaccinated; both countries are home to companies that have successfully developed vaccines in record time and both countries are thinking about their larger responsibility to make sure that these vaccines are shared with the whole world as soon as possible. There is a long way to go but these are successes worth recognizing.