Losing free access to Europe’s financial markets would damage Britain’s chances of striking a successful trade agreement with America, the US commerce secretary has warned.
Wilbur Ross described the loss of passporting rights into the European Union, or an equivalent arrangement, as a potential “landmine” in negotiations with Brussels that could set back trade talks with the US.
He called on UK negotiators to reject European food safety laws and allow lower tariffs for car imports to clear the way for a US trade deal.
The American demands underscore the complications of Britain’s position. The US simultaneously wants the UK to retain access to the EU’s financial services market and ditch the rigorous conditions that come with access to its goods and agriculture markets.
Mr Ross was speaking at the end of his first official visit to the UK, where he met several cabinet ministers and the prime minister as part of a “scoping exercise” to lay the groundwork for a future US deal.
He said that he was hopeful that a deal could be struck relatively quickly, claiming that a UK negotiation could potentially be less complicated than reforming the Nafta arrangements with Mexico and Canada, which the White House wants resolved in a year.
However, he said that a successful outcome would depend on ensuring that conditions were in place for a “fruitful” negotiation between the US and UK.
“Given the good relationship between the two countries and assuming that the scoping exercise turns out to be fruitful and further assuming that there are no big landmines in the exit agreement between the UK and European Commission, then it shouldn’t take terribly long,” he said.
Asked what potential “landmines” might disrupt talks, he said: “Both the UK economy and ours are very heavily service dependent. Depending on what arrangements there are between the UK and the [European side], that may facilitate or complicate doing something with us.
“Historically, you’ve had the passporting into the EU. That’s a whole question. To the degree that it turns out that there is a change and to the degree that it is a complication that could become a real barrier in services.
“It’s been a great convenience for US institutions to base themselves in London and have passporting.”
He added that the government should jettison EU restrictions on chlorinated chicken and genetically modified food.
He said that meetings with UK ministers were “to address some concerns we have about things that they may be tempted to include in their agreement with the EC that could pose problems for the subsequent free trade agreement with the US”.
He pointed to the EU’s 10 per cent tariffs on car imports, compared with the 2.5 per cent tariffs in the US, and food standards that are “adverse to US food producers”. He added: “The EC is working hard to get European standards to be adopted by third parties rather than US, or [the choice of] either the EC or US.”
