Transatlantic Trade Forum – an insight into the current status of the UK-US Free Trade AgreementPrint publication
Walker Morris recently attended a Transatlantic Trade Forum hosted by overseas trade specialist, Chamber International and sponsored by RSM, for an insight into the current status of the UK-US Free Trade Agreement in light of the impending US election and Covid-19.
Charlotte Wright notes the key takeaways from the forum including top tips for UK businesses expanding into the US market.
Walker Morris has teamed up with Chamber International, the overseas trade division of West and North Yorkshire Chamber of Commerce, to deliver this insight. More information regarding Chamber International can be found at: https://www.chamber-international.com/.
The UK-US Free Trade Agreement
Why is the UK-US Free Trade Agreement important?
The United States is the world’s largest economy and the biggest exporter and importer of goods and services. As a single country, it is also the UK’s largest export market.
Trade deals create easier access to markets through reduced costs and bureaucracy and this one is a significant opportunity for the UK to strengthen its trade relationship with the US. The UK-US free trade agreement is expected to go beyond the provision of a tariff policy, with public services and food standards regulation all being subtly tied to a trade deal.
What is the status of the negotiations?
The negotiations were able to begin following the UK’s departure from the EU on 31 January 2020. UK International Trade Secretary, Liz Truss, and US Trade Representative, Robert Lighthizer, formally launched the trade deal negotiations via a videoconference on 5 May 2020. These have continued despite Covid-19 travel restrictions but delays are expected due to the change in dynamic that videoconferencing brings to negotiations as any ‘closed-door’ negotiations are likely to be off the table.
The imminent US election also meant that UK-US trade deal negotiations have not been a priority for the US.
What are the key concerns surrounding the UK-US Trade Agreement?
Inevitably there are some concerns given the US election on 3 November 2020. A win for the Democratic Party candidate, Joe Biden, would introduce a new administration on a free trade agreement, which has not happened before. However, we already know that Biden would seek a more EU-based deal, possibly reigniting the Transatlantic Trade and Investment Partnership.
UK media headlines have also been saturated with the threat of US ‘chlorinated chicken’ entering British supermarkets. The key concern is whether the UK’s environmental protection, animal welfare and food standards will be compromised in the wake of a deal being reached with the US.
There also appears to be an expectation about UK market access from US companies. Sectors including agriculture, automobiles and pharmaceuticals are all pushing hard to gain entry to the UK market through this free trade agreement.
In turn, UK companies are hoping for greater access for professional services firms, including legal, accounting and consultancy, and a lifting of tariffs on food and farming, manufactured goods and textiles.
Looking Forward: Expand your business into the US market…
Speaking at the Transatlantic Trade Forum, Executive Director of the British American Business Council of North Carolina, Sarah Peeler, highlighted the following key considerations for UK businesses looking to enter the US market:
- Is the US market ready for the product/service you want to export? Is that particular market already saturated?
- Is your business in an adequate stable financial position to invest in a new market? Do not underestimate the costs of international expansion or, importantly, the time it takes.
- How much of your workforce and resources can you commit to your US strategy?
- Have you formulated a marketing strategy for the US market?
- What will be your USP to the US market?
- Is your sales pitch compelling? Tailoring your website, marketing materials and USP for the US market can help – but don’t forget to Americanise spellings!
- Do you have a good understanding of the legal and accounting issues associated with conducting business in the US? These can include IP protections, technology and data protection/privacy rules and insurance.
- Do you already export? You can apply knowledge you have already gained from the process of expanding your business into another market.
- Do you have the necessary capacity to exploit the opportunities that the US market presents and meet anticipated customer demand?
- Have you thought about how you will receive products including currency, customs etc.?
What advice was provided by key speakers experienced in the US market?
- President of MasterMover Inc, Hugh Freer, reiterated the point of tailoring your website and marketing materials to the US market. If your company looks and feels American you will win more business.
- When considering expansion from the UK to the US remember that communication is key and location is crucial. For example, West Coast states have more substantial time differences than East Coast states and places closer to New York are more expensive to operate from. Different states may also have higher taxes and more complex laws which should all be taken into consideration.
- Outsourcing services at the outset through recruiting a US team to run certain administrative roles, rather than hiring your own US staff, can create an effective start without having to delve into employment law issues, including visa concerns. Remember, unlike in the UK, healthcare is an operational cost in the US. Start-ups seeking to tap into local talent will be expected to offer benefits. The average cost of offering healthcare benefits is around £12,000 a year for an employer.
- Shaun Khan, Managing Director of Loadhog, shared his experience of using a sister company already operating in the US, showing the importance of accessing knowledge you may already have.
- Market Insights Consultant at OE Electrics, Joe Prendergast, discussed the expectations of the US market and how, despite Americans being very receptive to British businesses, they expect a hands-on approach and require frequent communication.
How can Walker Morris help you?
If you are thinking about expanding your business into the US market, we can help you with the legal considerations surrounding the movement of goods, services, people, data and capital. Our International Trade Group has a team of specialist lawyers who can support you along each step of the way.