Proposed Agency Information Collection Activities; Comment Request (SIFMA and ISDA)
SIFMA and The International Swaps and Derivatives Association, Inc. (ISDA) provided comments to the Office of the Comptroller of the…
CONSULTATION ON TRADE NEGOTIATIONS WITH THE UNITED STATES
The Securities Industry and Financial Markets Association (SIFMA) believes strongly in free, rules-based international trade and cross-border investment. With the United Kingdom (UK) preparing to negotiate trade deals independently of the European Union (EU), we look forward to the opportunity to create a comprehensive and forward-looking UK-United States (U.S.) free trade and investment agreement (FTA). We appreciate this opportunity to feed in our initial thoughts through your consultation.
The eventual terms that the UK and EU reach on their future relationship are yet to be determined. But that future relationship with the EU will form part of the context in which the UK makes its own trade policy, including with the U.S. Moreover, despite Brexit, SIFMA hopes to see continued and increasing trade, investment and regulatory cooperation between all three jurisdictions – the UK, U.S. and EU – in the future. Therefore, this contribution represents an initial outline of what UK and U.S. negotiators should be focused on as they approach potential negotiations rather than a definitive or exhaustive account of industry priorities.
The long-standing UK-U.S. relationship has important economic dimensions, underpinned by significant similarities in the structure and performance of financial services. London and New York remain the world’s leading financial centers. Financial services account for around seven per cent of GDP in both economies. The UK is both the largest consumer of U.S. financial services exports, and the largest supplier of U.S. financial services imports. Both are capital market-based financial systems, with similar regulatory philosophies.
These common foundations mean a future UK-U.S. trade agreement offers an unprecedented opportunity for putting financial services at the heart of a new, 21st century economic relationship and enhancing the economic benefits to both countries.
The future relationship between the UK and U.S. in financial services, through a trade and investment agreement and related mechanisms of cooperation, should aim to have four key characteristics:
SIFMA welcomes the UK Government’s pledge to develop trade and investment policy in transparent and inclusive ways. Its consultation regarding trade negotiations with the U.S. as well as similar exercises regarding Australia, New Zealand and the Comprehensive and Progressive Trans-Pacific Partnership are most welcome. We hope these efforts allow industries, such as financial services, to help the UK Government develop a solid foundation for active negotiations from 2019 onwards.
The recent conclusion of the U.S., Mexico and Canada Agreement (USMCA) offers pointers to the U.S. and UK as well as some lessons for improving trade policy. For example, for the first time in any U.S. trade agreement USMCA included a prohibition on local data storage requirements in circumstances where a financial regulator has the access to data that it needs to fulfill its regulatory and supervisory mandate. At the same time, there is significant scope compared with USMCA to enhance investor protections to ensure a level playing field between financial services and other sectors. USMCA is therefore a starting point for the U.S. and UK but the latter should be more ambitious. We elaborate on some of these issues below.
In terms of the substance of the future relationship between the two economies, including but not limited to a formal FTA, SIFMA urges negotiators to include the following elements, which we have divided into those based on technology and those related to more long-standing trade issues (such as, for example, investor protection).