5 things to expect from Joe Biden on UK trade

LONDON — If the first weeks of 2021 are anything to go by, the United States under Joe Biden will present a wholly different face to the world.

But will that be true when it comes to trade with the U.K., which is locked in talks with the U.S. over a post-Brexit trade agreement?

Trade experts paint a mixed picture. “It is difficult to say to what extent the new administration will reverse [current U.S. Trade Representative Robert Lighthizer’s] trade policy,” said Holger Hestermeyer, a law professor and Shell reader in international dispute resolution at King’s College London.

Still, Biden’s priorities are becoming clearer. Last weekend, his team announced he will tackle the “COVID-19 crisis” and “climate crisis” as top priorities in his first ten days as president. This includes rejoining the Paris Agreement and effectively canceling the $9 billion Keystone XL oil pipeline. So how might the two historic allies team up — and tussle — on trade?

Tackling climate change

“I think there’s a great opportunity for the U.K. and the U.S. to work together on shared interests,” said former U.S. deputy ambassador to the U.K. Lewis Lukens in an interview with Channel 4 Monday. Biden is “very focused” on addressing climate change, he pointed out, “as is Boris Johnson” with Britain’s hosting of the COP26 climate conference in November.

“The U.S., under President Biden, is likely to introduce a tariff regime that encourages sustainable trade,” said Rebecca Harding, chief executive of Coriolis Technologies.

And it is worth watching “what the Biden administration does on carbon border taxes,” said Tim Figures, a senior expert on geopolitics and trade at the Boston Consulting Group, late last year.

The tax imposes levies on the embedded carbon in imports of certain products, like steel and aluminum. If the U.K. starts work on this too, Figures said, “that probably is the area where collaboration between the U.K. and the U.S. will be most fruitful in the short term.”

Rebooting the WTO

With the U.S. again playing a leadership role at international institutions, “expect consensus” on a director general for the World Trade Organization (WTO), said Hestermeyer.

“But I would not expect the return of the Appellate Body for the time being,” he said, referencing the WTO’s dispute-resolution forum. The U.S. under Trump blocked the nomination of new judges to the body after he decided it was soft on China — grinding it to a halt. “While I hope consensus on burning issues can be found, it is not easy to say what such a consensus and joint strategy would look like,” Hestermeyer said. It could be a while before the new U.S. administration has the bandwidth to deal with this. 

“The U.K. has not backed the EU’s interim Appellate Body proposal,” said Peter Holmes, a fellow at the University of Sussex’s U.K. Trade Policy Observatory (UKTPO). Rebuilding the WTO’s operations is another “big issue that will be on the agenda,” he added. 

Getting tough with China

Throughout the next year “we will see more explicit references made to China as a strategic competitor” to the West, said Harding. “The means of tackling this perceived threat are through economics and trade,” she said. And the U.K. will have more clout if it works with the U.S.

Dealing with China, said Hestermeyer, “will be one of the difficult questions on which the U.S. and the EU will strive to find consensus.” The U.S.’s Phase 1 trade deal with China from January 2020 and the new EU-China Comprehensive Agreement on Investment “will not make the difficult task any easier,” he said. Such rifts could potentially dilute the West’s response, and Holmes said a top priority for Biden “will be the desire to mend fences with the EU and to find a better way to respond to China.” Is there a way for the U.K. to play a diplomatic role in between?

On Wednesday Britain’s trade secretary Liz Truss clearly echoed Biden as she called for an alliance of free-trading democracies — including the United States and Japan — to protect global trading rules. In a speech littered with veiled references to China, Liz Truss said human rights would feature on the agenda of this year’s U.K.-hosted G7 summit. “We need to work together with these countries, who alongside us cover 52 percent of world GDP, to ensure free trade is not undermined by practices such as environmental degradation, non-market economies artificially subsidizing goods or the violation of human rights,” she told U.K.-Japan Free Trade Summit.

Getting a trade deal

If the U.K. can turn its gaze from Brexit, Holmes said, “we will need to respond to the Biden trade agenda.” Trade agreements will be at the bottom of the new president’s priorities, he added, and “a separate trade deal with the U.K. will be relatively unimportant.”

Before the Democrats won the U.S. Senate this month, Lukens predicted a deal in 2022. But Biden’s trade team led by U.S. Trade Representative nominee Katherine Tai will still need to get into position. The U.K. is working to entice the Biden administration back to the table by promising to go further on the deal’s sustainability provisions.

Yet dealing with the domestic economic aftermath of COVID-19 and all the other burning issues left by the Trump administration will cause the deal to “fall down the political agenda,” said Sam Lowe, a senior research fellow at the Centre for European Reform, shortly after Biden’s election.

Rolling back Trump tariffs

In an early move, Biden and Tai may “roll back some of the Trump tariffs,” said Dan Griswold, a senior trade research fellow at George Mason University’s Mercatus Center, a free-market think tank. Specifically, Griswold pointed to painful levies targeting British goods in the Airbus-Boeing dispute. 

Last week U.K. Trade Secretary Truss told parliament she was “seeking an early meeting with” Tai, and said negotiating the rollback “will be one of the items on my agenda.”

Truss repeatedly raised the issue in U.K.-U.S. trade negotiations with Lighthizer — and Britain now looks to the Biden administration for the next move.

Anna Isaac contributed reporting.

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