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U.S.-UK trade talks are in progress, although conducting them over Zoom or Skype (or however they are doing it), rather than in person, is likely to slow things down. At aHouse Ways and Means Committee hearing yesterday, U.S. Trade Representative Robert Lighthizerindicatedthat these talks were unlikely to be completed this year.

Nevertheless, these are real, substantive talks, and its worth paying attention. When it gets done, what kind of trade deal will this be exactly? Some of the Trump administrations early trade renegotiations (NAFTA, the KoreaUS FTA) added more protectionism than liberalization, and its completed negotiations (with Japan and China) did not liberalize very much. What would aU.S.-UK trade agreement do?

One of the strongest protrade voices in Congress, Senator Pat Toomey, tried to get at this point in aSenate Finance Committeehearingwith Lighthizer yesterday (he had abusy day!). In particular, Senator Toomey want to know the degree to which tariffs would be cut in aU.S.-UK FTA. Heres what he asked (1:18:40of the video):

Id like to get alittle bit better understanding of your plans and your goals with the US/UK freetrade agreement, which as you know Im enthusiastic about. Id like to betterunderstand what your goal is, what youd like to see as the outcome.What would be the ideal arrangement? Ithink Iheard you say that were not likely to get to zero tariffs on everything, and Iwonder is that just apractical reality, given the inevitable reluctance on the part of the UK to give up tariffs on certain things, or do you go in with the goal of not having zero tariffs on certain things, and if so which are those things. Id just like to get abetter understanding of how youre approaching this agreement and what you would like to get out of it.

When you hear references to free trade agreements, you might think that means all tariffs are eliminated. In reality, while NAFTA got pretty close to zero tariffs, most trade agreements actually leave many tariffs in place. Senator Toomey made reference to practical reality here, and he is certainly right about how things tend to work. But Iliked how he also said this: do you go in with the goal of not having zero tariffs on certain things. With the Trump administration and its negotiating record, that is definitely worth asking.

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Heres how Lighthizer responded:

In terms of the goal on the US-UK, from our point of view we want an agreement that goes across all sectors thats as high astandard as one can have. Do Ithink well go to zero tariffs, no, Idont, andwill Isupport zero tariffs in all areas, no Iwont either. For example, Ithink were going to find agricultural areas, and there are sensitive areas in both our economies. The secret is to have as much, be open and free as we can, given the political circumstances in each country. And Ithink that alot of the fight is going to be over SPS issues and things like that, the kinds of stuff where you and Icompletely agree.

In asense, Lighthizers answer is correct and simply acknowledges political realities. At the same time, Im fairly confident that if Senator Toomey were leading atrade negotiation, he would be pushing for both sides to lower their tariffs as much as possible, and we would get pretty close to zero. As they say, personnel is policy, in trade policy just like everywhere else.

This article by Simon Lester firstappearedinCATOon June 18, 2020.

Image: NATO Secretary General Jens Stoltenberg and Britain's Prime MinisterBorisJohnsongreet U.S. PresidentDonaldTrumpat the annual NATO heads of government summit at the Grove hotel in Watford, Britain December 4, 2019. REUTERS/Peter Nicholls/Pool

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