It's often said that a week is a long time in politics. And as 2016 showed, just one day can transform a nation's political landscape. If so much can change in 24 hours, what could the next few months, with the Article 50 trigger in sight, have in store? Could just a few months – as Ted Malloch, the man tipped to be the next US ambassador to the EU, believes – be all it takes to negotiate a free trade agreement between the US and the UK?
This seems quite a stretch, even in this new world of politics, but I asked our Deloitte trade expert Sally Jones just how ambitious a 90-day free trade deal really is. She explained that even taking into account that formal trade negotiations with the US can't happen until the UK has exited the EU, recent experiences of other trade negotiations like the TransPacific Partnership (TPP, eight years of talks),Transatlantic Trade and Investment Partnership (four years) and the Trade in Services Agreement (TiSA, five years) gives some perspective on the time and complexity of such a task at hand.
The positive news for the UK is that the bandwidth of the US authorities to discuss trade agreements has increased considerably since Donald Trump's inauguration. He's made clear that he's not a fan of multi-lateral negotiations and, as such, has pulled out of TPP, the TiSA is on hold, and most commentators think TTIP will not progress any further. Mr Trump has also made clear he doesn't share the previous administration's view that the UK should be sent to the back of the trade queue after Brexit.
Yet it remains unclear what the priorities of this new US administration will be in what are some of the critical trade areas for the UK such as services, and, in particular, financial services. The US doesn't show any sign of favouring a trade agreement that includes financial services, despite some intense lobbying from Europe during previous TTIP talks. Therefore, if the City is to remain the conduit through which the US banks access the entirety of the EU financial markets after Brexit, an awful lot of stars will have to align, including a big change of heart by the US Treasury on US bank regulation. But there is, at least, plenty of goodwill on all sides: Europe wants the City to still be able to provide finance to its markets, London definitely wants to retain its status as a global financial ecosystem and the US banks need to continue to be able to trade freely in Europe.
While the shared language, business culture and political will with the US should certainly support the negotiation, it is the outcome of the UK's talks with the EU, in particular on key areas such as services, agriculture and procurement that will undoubtedly influence what any future US-UK free trade deal could look like.
Whether that free trade deal will cover all of the bases that the UK needs depends on how long both sides are willing to give to negotiations, and the power balance between them.
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