Letters

UK Consultation on Trade Negotiations with the US

Summary

SIFMA provides letter to the UK Government in response to its consultation on UK-U.S. trade. The UK is preparing for an independent trade policy once they leave the EU. The Department for International Trade is preparing for possible negotiations with the United States after the UK leaves the EU on March 29, 2019. The UK Government is consulting with members of the public, businesses, trade experts, and any other interested organisations to help inform this work.

SIFMA believes now is the moment for the UK and US authorities and their respective financial services industries, to begin laying the groundwork for how the new UK-U.S. relationship can develop over the next decade and beyond. Further trade, investment and regulatory co-operation between the UK and the U.S. will lead to greater job creation, enhance economic growth and support increased competitiveness on both sides of the Atlantic.

See more on UK Consultation on trade negotiations with the United States

PDF

Submitted To

Department for International Trade of the UK Government

Submitted By

SIFMA

Date

26

October

2018

Excerpt

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:

  • Ensure that both economies maximize opportunities for exports and cross-border investment in financial services, integrating the U.S.-UK market in financial services and strengthening the competitive advantage of the industry in both the UK and U.S.
  • Be forward looking and transparent and designed to tackle regulatory frictions early in the rule-making process.
  • Strengthen the UK and U.S. as leading influencers of the future international financial regulatory agenda as rule-setters.
  • Help re-define how trade and investment agreements are conceived, by fully integrating services and addressing truly 21st century challenges arising from modern technology and cross-border operations.

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).

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