The many obstacles in the way of a US trade deal after Brexit

Transatlantic allies have differences on issues from healthcare to mobile phones, social media and chicken dinners, writes Andrew Woodcock

PM insists NHS will be kept out of any agreement (AFP/Getty)

Leaving the EU was supposed to open the doors for Britain to strike lucrative new trade deals with countries like the USA.

But as Boris Johnson prepares to greet Mike Pompeo, the US secretary of state, to London on the eve of Brexit day, the UK seems to be stacking up more reasons for trade disputes than accords.

The decision on Huawei, expected on Tuesday, is the biggest of these, and could have massive ramifications not only for Britain’s trade links but also security and intelligence ties with its closest partners including the US.

But Mr Johnson must also overcome differences on issues ranging from nuclear proliferation to climate change to chicken dinners which currently separate London from Washington.

So what are the main causes of transatlantic friction and will they stop the PM from securing his coveted US trade deal?

Huawei

Nothing is more likely to drive a rift between London and Washington than a decision to allow the Chinese tech giant to play a role in the development of the UK’s high-tech 5G mobile communications network.

Since leaks suggested last year that Theresa May was ready to give the green light to Huawei involvement in “non-core” parts of the network – which will not only speed up mobile connections, but vastly increase capacity and allow a wide range of smart devices to communicate seamlessly with one another – the US has put increasing pressure on Britain to think again.

Donald Trump has warned that, because of Huawei’s links with the Beijing government, allowing the firm into sensitive networks is a security risk and could jeopardise intelligence-sharing with the US and Britain’s other “Five Eyes” partners: Canada, Australia and New Zealand.

But Mr Johnson has sent out clear signals that he wants to avoid years of delays and adding billions in extra costs to his plans to “turbocharge” communications networks. That would be the price of switching supplier.

Social media

Britain’s plans for a digital services tax of 2 per cent on the UK earnings of US tech giants like Facebook, Google and Amazon has the potential to spark a full-scale trade war. Britain insists the levy, devised by Theresa May and due to come into effect in April, will level the playing field between internet firms based outside the UK and bricks-and-mortar British companies which cannot avoid paying taxes. But the US regards it as discriminatory, with Mr Trump’s treasury secretary, Steven Mnuchin​, warning that Washington is ready to “arbitrarily put taxes on car companies” in retaliation.

Food

Chlorine-washed chicken and hormone-pumped beef are the “bogey” products which have caught the public imagination, and Theresa Villiers, the environment secretary, pledged earlier this month that they would not be included in any US trade deal. But actually there is a wide range of foods legal in the US but banned by the European Union which America’s farming lobby wants to be on the negotiating table – and the kitchen table – in any post-Brexit deal. Chief among these are genetically modified crops, currently subject to a blanket ban in the UK but widely grown in America.

Healthcare

Labour has repeatedly accused the government of putting the NHS up for sale to the US, while Mr Johnson insists it will be kept out of any trade deal. In reality, no one on the other side of the Atlantic is demanding to buy up the UK’s health system wholesale. But US corporations do want access to NHS markets, allowing them to provide services on behalf of the NHS, and access to highly valuable data about NHS patients. Pharmaceutical companies also want to see their patents extended, so they can charge high prices on breakthrough drugs for a longer period and break the NHS’s ability to drive down costs by switching to generics.

Iran

Along with European allies Germany and France, the UK is fighting a rearguard action to preserve the international agreement which has prevented Iran from developing a military nuclear capability. The US has walked out of the deal, and is putting intense pressure on companies in allied nations to stop trading with Tehran or face sanctions on access to American markets.

Climate

Mr Trump is pulling the US out of the Paris Agreement on climate change, designed to cut the world’s greenhouse gas emissions and keep global warming below 2C. His decision, due to take effect the day after the US presidential elections this November, puts the US at odds with an international consensus to which the UK remains firmly signed up. The difference will provide cause for friction over any environmental conditions which the UK seeks to include in a trade deal.