Trump opposes EU-UK agri-deal in blow to May’s Brexit plans

Please use the sharing tools found via the email icon at the top of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email [email protected] to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found here. https://www.ft.com/content/92bb5636-a95b-11e7-ab55-27219df83c97

The Trump administration has joined a group of countries objecting to a deal between the UK and EU to divide valuable agricultural import quotas, in a sign of how the US and others plan to use Brexit to force the UK to further open its sensitive market for farm products.  President Donald Trump has been one of the most prominent international backers of Brexit and has vowed quickly to negotiate a “beautiful trade deal” with the UK after it leaves the EU.  But his administration’s objection to a preliminary plan, agreed to by Brussels and London over how to split the EU’s existing “tariff rate quotas” under World Trade Organisation rules after the UK assumes its own WTO obligations following Brexit, illustrates how Washington is likely to drive a hard bargain.  It also undermines efforts by Theresa May’s government this week to portray the WTO deal with the EU as a significant win, something made doubly painful by Mr Trump’s past backing of Brexit.  The risk for the UK is that as part of its post-Brexit transition in the WTO it may have to accept opening up access to agricultural goods from third countries far more than it wants — even before it agrees any new trade deals with such countries. A spokesman for Britain’s department for international trade said on Thursday that the EU-UK plans would be discussed “extensively with our partners in the WTO before proceeding”, in a reference to the UK’s desire to avoid a bruising battle in the WTO on the issue. Britain was seeking a “smooth transition which minimises the disruption to our trading relationships”, he said. But the US joined other major agricultural exporters including Argentina, Brazil and New Zealand in signing a letter sent last week to the EU and UK’s WTO ambassadors objecting to the plan to split the quotas that cover everything from New Zealand butter and lamb to US poultry and wheat.  Under WTO rules, those country-specific quotas allow low-tariff imports up to a certain volume with tariffs increasing after that. As such, they are hugely valuable to countries such as Argentina and New Zealand that depend heavily on agricultural exports and the powerful farm lobby in the US.  While the UK was a founding member of the WTO and one of the first signatories of its predecessor, the General Agreement on Tariffs and Trade, its membership obligations until now have been managed by the EU.  The EU-UK plan calls for the existing EU quotas to be split between the EU and UK after Brexit based on historical imports and consumption patterns.  The US and others, however, argue that method is unfair as it would effectively allow the EU to reduce its obligations to fellow WTO members and set a low bar for the UK as well.  “Such an outcome would not be consistent with the principle of leaving other [WTO] members no worse off, nor fully honour the existing TRQ access commitments. Thus, we cannot accept such an agreement,” the countries wrote.  Emily Davis, spokeswoman for Robert Lighthizer, the US trade representative, said neither the EU nor the UK had presented any written plan for how to handle the WTO quotas to Washington. But the Trump administration was “actively engaged with its trading partners on the future of UK and EU tariff rate quotas following Brexit”.  “Ensuring that US exporters of food and agricultural products have the market access in Europe due to them even after Brexit is a high priority for the administration,” she said.  The UK and EU are due to present their plan to other WTO members during the week of October 16 when trade negotiators descend on Geneva for what is known as agriculture week.  European diplomats have emphasised the importance to both the EU and the UK of striking a deal on dividing up of TRQs.

/r/brexit Thread Link - ft.com