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U.S. to Pursue Trade Agreements with EU, UK and Japan

The Trump administration notified Congress on 16 October of its intent to negotiate separate trade agreements with the European Union, the United Kingdom and Japan. The Office of the U.S. Trade Representative will next consult with Congress and gather public input on the direction, focus and content of these agreements as part of a process set forth under the trade promotion authority law to ensure that any final agreements receive expedited consideration by lawmakers. Negotiations will begin no earlier than 14 January 2019 with the EU and Japan, while talks with the UK will begin “as soon as it is ready” after it exits from the EU on 29 March 2019.

One of the reasons USTR gave for pursuing agreements with the EU and Japan is the “chronic” trade deficits the United States runs with them, which in 2017 were US$151.4 billion and US$55.5 billion, respectively. As a result, the notification letters state, USTR will seek to address both tariff and non-tariff barriers and achieve “fairer, more balanced trade” with these partners. The agency said it may seek to pursue these negotiations in stages but “will only do so based on consultations with Congress.”

By contrast, the United States ran a US$15.9 billion trade surplus with the UK in 2017. USTR thus explained that its aims in negotiating a trade agreement with the UK include “developing cutting edge obligations for emerging sectors where U.S. and UK innovators and entrepreneurs are most effective” and achieving “free, fair, and reciprocal trade.”

The announcement was welcomed by congressional trade leaders, many of whom have expressed concern that the Trump administration’s approach to trade policy could damage U.S. relationships with key trade partners and harm domestic businesses and consumers. Senate Finance Committee Chairman Orrin Hatch (Republican-Utah) said “a trade agenda that prioritizes free trade and open markets is the best ways to defend American interests and strengthen our economy.” House Ways and Means Committee Chairman Kevin Brady (Republican-Texas) added that trade agreements would not only boost U.S. exports to, but also “deepen our partnership with, these close trading partners and vital allies.”

Senate Finance Ranking Member Ron Wyden (Democrat-Oregon) praised the administration’s “shift to focus on additional markets where there are barriers to U.S. exports and opportunities for made-in-America manufactured goods, agricultural products and services” but cautioned the administration to take its time in the forthcoming negotiations in order to “set a high bar in areas like labor rights, environmental protection and digital trade.” House Ways and Means Committee Ranking Member Richard Neal (Democrat-Massachusetts) agreed and added his hope that at a time when “many sectors of the U.S. economy [are] seized with anxiety over the impact of the president’s trade policies, perhaps these notices indicate that the Trump administration will finally try to create new economic opportunities for U.S. workers and businesses through constructive engagement with important U.S. trading partners and allies.”

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