US-UK Free Trade Agreement: What UK Customs Managers must know now about the US' intentions

Updated: May 9

TECHNICAL BRIEFING FOR CUSTOMS MANAGERS AND GLOBAL TRADE PROFESSIONALS FAMILIAR WITH TRADE AGREEMENTS


In a 2018 negotiating document, the US summarized its negotiating positions vis-à-vis the Free Trade Agreement with the UK.


We summarize the key provisions here.


What trade agreements usually cover

Trade Agreements can be ambitious or limited to certain elements, like the reduction of industrial tariffs. It really depends on the relationship between parties and their objectives as to the scope of the negotiations. Typical issues you may find in trade agreements include:


  1. Trade-in Goods (Industrial and Agricultural)

  2. Rules of Origin

  3. SPS

  4. Customs and Trade Facilitation

  5. Trade Remedies:

  6. Good Regulatory Practices

  7. Transparency, Publication, and Administrative Measures

  8. Trade in Services, Including Telecommunications and Financial Services

  9. Digital Trade in Goods and Services and Cross-Border Data Flows

  10. Investment

  11. Intellectual Property

  12. Procedural Fairness for Pharmaceuticals and Medical Devices

  13. State-Owned and Controlled Enterprises (SOEs)

  14. Subsidies

  15. Competition Policy

  16. Labor

  17. Environment:

  18. Anti-corruption

  19. Government Procurement

  20. Small and Medium-Sized Enterprises (SME):

  21. Dispute Settlement

  22. General Provisions (Exceptions & protection of Israel)

  23. Currency - No manipulation



What are the US objectives as regards "Trade in Goods"?

The general objectives are, of course, welcomed, on both sides. The agreement should ensure fair, balanced, and reciprocal trade with the UK.and increase transparency in import and export licensing procedures and discipline import and export monopolies to prevent trade distortions.


Industrial Goods

  • The US would like to secure comprehensive duty-free market access for U.S. industrial goods and strengthen disciplines to address non-tariff barriers that constrain U.S. exports.

  • Expand market access for remanufactured goods exports by ensuring that they are not classified as used goods that are restricted or banned.

  • Secure duty-free access for U.S. textile and apparel products and seek to improve competitive opportunities for exports of U.S. textile and apparel products while taking into account U.S. import sensitivities.

  • Secure commitments with respect to greater regulatory compatibility to facilitate U.S. exports in key goods sectors and reduce burdens associated with unnecessary differences in regulation, including through regulatory cooperation where appropriate.


Agricultural Goods

  • Secure comprehensive market access for U.S. agricultural goods in the UK by reducing or eliminating tariffs.

  • Provide reasonable adjustment periods for U.S. import-sensitive agricultural products,

  • Eliminate practices that unfairly decrease U.S. market access opportunities or distort agricultural markets to the detriment of the United States, including non-tariff barriers that discriminate against U.S. agricultural goods; and restrictive rules in the administration of tariff-rate quotas.

  • Promote greater regulatory compatibility to reduce burdens associated with unnecessary differences in regulations and standards, including through regulatory cooperation where appropriate.

  • Establish specific commitments for trade in products developed through agricultural biotechnologies, including on transparency, cooperation, and managing low-level presence issues, and a mechanism for exchange of information and enhanced cooperation on agricultural biotechnologies


Rules of Origin:

  • Develop rules of origin that ensure that the benefits of the Agreement go to products genuinely made in the United States and the UK.

  • Ensure that the rules of origin incentivize production in the territory of the Parties, specifically in the United States.

  • Establish origin procedures that streamline the certification and verification of rules of origin and that promote strong enforcement, including with respect to textiles.

  • Promote origin procedures that ensure that goods that meet the rules of origin receive the Agreement’s benefits.


Sanitary and Phytosanitary Measures (SPS)

Sanitary and phytosanitary (SPS) measures are measures to protect humans, animals, and plants from diseases, pests, or contaminants. Countries have very different approaches to SPS measures that need to be aligned, otherwise, import may fail due to SPS rules. They need to be aligned between trading partners.


The US wants:


  • Provide for enforceable and robust SPS obligations that build upon World Trade Organization (WTO) rights and obligations including with respect to science-based measures, good regulatory practice, import checks, equivalence, regionalization, certification, and risk analysis, making clear that each Party can set for itself the level of protection it believes to be appropriate to protect food safety and plant and animal health in a manner consistent with its international obligations.

  • Establish a mechanism to remove expeditiously unwarranted barriers that block the export of U.S. food and agricultural products in order to obtain more open, equitable, and reciprocal market access.

  • Establish rules that further encourage the adoption of international standards and strengthen implementation of the obligation to base SPS measures on science if the measure is more restrictive than the applicable international standard.

  • Establish new and enforceable rules to eliminate unjustified trade restrictions or unjustified commercial requirements (including unjustified labeling) that affect new technologies.

  • Establish new and enforceable rules to ensure that science-based SPS measures are developed and implemented in a transparent, predictable, and non-discriminatory manner.

  • Include strong provisions on transparency and public consultation that require the UK to publish drafts of regulations, allow stakeholders in other countries to provide comments on those drafts, and require authorities to address significant issues raised by stakeholders and explain how the final measure achieves the stated objectives.


Customs and Trade Facilitation

  • Build on and set high standards for implementation of WTO agreements involving trade facilitation and customs valuation.

  • Increase transparency by ensuring that all customs laws, regulations, and procedures are published on the Internet as well as designating points of contact for questions from traders.

  • Ensure that, to the greatest extent possible, shipments are released immediately after determining compliance with applicable laws and regulations and provide for new disciplines on timing of release, automation, and use of guarantees.

  • Provide for streamlined and expedited customs treatment for express delivery shipments, including for shipments above any de minimis threshold.

  • Provide for simplified customs procedures for low value goods and a more reciprocal de minimis shipment value.

  • Ensure that the UK administers customs penalties in an impartial and transparent manner and avoids conflicts of interest in the administration of penalties.

  • Provide for automation of import, export, and transit processes, including through supply chain integration; reduced import, export, and transit forms, documents, and formalities; enhanced harmonization of customs data requirements; and advance rulings regarding the treatment that will be provided to a good at the time of importation.

  • Provide for both administrative and judicial appeal of customs decisions, and provide procedures for ensuring uniformity in customs treatment of goods.

  • Provide for electronic payment of duties, taxes, fees, and charges imposed on or in connection with importation or exportation.

  • Provide for the use of risk management systems for customs control and post-clearance audit procedures to ensure compliance with customs and related laws.

  • Provide for disciplines on the use of customs brokers.

  • Promote cooperation with the UK to prevent duty evasion and combat customs offenses.

  • Establish a committee for the Parties to share information and cooperate on trade priorities with a view to resolving inconsistent treatment of commercial goods.


Trade Remedies

  • Preserve the ability of the United States to enforce rigorously its trade laws, including the antidumping (AD), countervailing duty (CVD), and safeguard laws.

  • Facilitate the ability to impose measures based on market distortions due to ongoing subsidization or dumping.

  • Promote cooperation between trade remedies administrators, particularly with regard to the sharing of information that would improve the ability of administrators to effectively monitor and address trade remedies violations.

  • Strengthen existing procedures and create new procedures to address AD/CVD duty evasion, including the ability to conduct AD/CVD duty evasion verification visits.

  • Establish transparency and due process obligations reflected in U.S. AD/CVD laws, regulations, and practice.


Technical Barriers to Trade (TBT):

TBT exists to ensure that technical regulations, standards, testing, and certification procedures do not create unnecessary obstacles to trade. This is based on the WTO agreement and prohibits technical requirements created in order to limit trade, as opposed to technical requirements created for legitimate purposes such as consumer or environmental protection.


In fact, its purpose is to avoid unnecessary obstacles to international trade and to give recognition to all WTO members to protect legitimate interests according to own regulatory autonomy, although promoting the use of international standards.


The list of legitimate interests that can justify a restriction in trade is not exhaustive and it includes the protection of the environment, human and animal health and safety.


The objectives of the US are:


  • Require application of decisions and recommendations adopted by the WTO TBT Committee that apply to standards, conformity assessment, transparency, and other areas.

  • Include strong provisions on transparency and public consultation that require the publication of drafts of standards, technical regulations and conformity assessment procedures, allow stakeholders in other countries to provide comments on those drafts, and require authorities to address significant issues raised by stakeholders and explain how the final measure achieves the stated objectives.

  • Ensure national treatment of conformity assessment bodies without conditions or limitations and encourage the use of international conformity assessment systems, including mutual recognition arrangements.

  • Establish an active TBT Chapter Committee that will discuss bilateral and third-party specific trade concerns, coordination of regional and multilateral activities, regulatory cooperation, and implementing Good Regulatory Practices.


Digital Trade in Goods and Services and Cross-Border Data Flows

Secure commitments not to impose customs duties on digital products (e.g., software, music, video, e-books).


Government Procurement

  • Increase opportunities for U.S. firms to sell U.S. products and services to the UK.

  • Ensure reciprocity in market access opportunities for U.S. goods, services, and suppliers in the UK.

  • Establish obligations and procedures to combat corruption in procurement.

  • Establish fair, transparent, predictable, and non-discriminatory rules to govern government procurement in the UK, including rules mirroring existing U.S. government.

  • Maintain broad exceptions for government procurement regarding National security, measures necessary to protect public morals, order, or safety; protecting human, animal, or plant life or health; and protecting intellectual property.

  • Maintain the ability to provide for labor, environmental, and other criteria to be included in contracting requirements.

  • Establish requirements that promote transparency in procurement statistics.


General Provisions (Exceptions & Israel)

  • Include general exceptions that allow for the protection of legitimate U.S. domestic objectives, including the protection of health or safety and essential security, among others.

  • Provide a mechanism for ensuring that the Parties assess the benefits of the Agreement on a periodic basis.

  • Provide mechanisms for terminating the Agreement under appropriate circumstances.

  • Provide a mechanism to ensure transparency and take appropriate action if the UK negotiates a free trade agreement with a non-market country.

  • With respect to commercial partnerships: Discourage actions that directly or indirectly prejudice or otherwise discourage commercial activity solely between the United States and Israel; Discourage politically motivated actions to boycott, divest from, and sanction Israel. Seek the elimination of politically motivated nontariff barriers on Israeli goods, services, or other commerce imposed on Israel; and seek the elimination of state-sponsored unsanctioned foreign boycotts of Israel or compliance with the Arab League Boycott of Israel.


Sources


The US website on the US-UK Free Trade Agreement


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