March 25, 2023

Liz Truss has admitted that a trade deal between the UK and the US, long seen as one of the biggest prizes of Brexit, is not on the horizon when she arrived in New York on her first overseas trip as prime minister.

Brexit supporters insisted that the 2016 Leave vote would open the way for a free trade deal with the US, which would eclipse trade deals with countries like Australia or New Zealand.

But President Joe Biden has made it clear that such a deal was not a priority, and on the flight from London to New York, Truss admitted it was not on the agenda.

“There are currently no negotiations with the US and I don’t expect them to start in the short to medium term,” Truss told reporters en route to the UN General Assembly.

Her candid assessment ahead of a meeting with Biden in New York leaves a gap in the government’s post-Brexit trade strategy, a core part of Truss’ ambition to boost UK growth.

Boris Johnson’s government replaced an in-depth trade deal with the EU, Britain’s largest trading partner, with a more basic trade deal that raised numerous barriers.

The argument was that Britain would make up for lost trade with Europe by concluding trade deals around the world, like the one signed with Australia last year.

Truss said her focus was to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, along with trade agreements with India and the six countries of the Gulf Cooperation Council.

“Those are my trading priorities,” Truss said. Asked when she thought a trade deal with the US would be feasible, she declined to comment.

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A leaked UK government document in 2018 estimated that a trade deal with the US could increase Britain’s gross domestic product by 0.2 percent in the long term, compared with official forecasts suggesting Brexit could boost GDP. long-term by 4 percent.

According to the analysis, deals with countries such as India, Australia and countries in the Gulf and Southeast Asia could add another 0.1-0.4 percent to GDP in the long run.

Truss’ bleak comments about an alleged US deal partly reflect the fact that Biden and the US Congress are in no rush to reach a trade deal with Britain, as well as the wider politics surrounding her visit to New York.

When Truss meets with Biden on Wednesday, post-Brexit trade arrangements in Northern Ireland are expected to be discussed.

Biden wants Truss to settle a spat with the EU over the issue and some Democrats have warned the UK that there can be no trade deal unless the issue is resolved.

Truss’s allies said the Prime Minister wanted to “decouple” the issues, making it clear that her tough stance on Northern Ireland’s protocol would not be affected by threats of trade retaliation, especially as there was no deal on the table.

In May, US House Speaker Nancy Pelosi warned that unilateral UK legislation to scrap the protocol, which is being pushed through parliament, could jeopardize Britain’s prospects of a free trade agreement.

“Our relationship with the US goes far beyond talking about trade deals,” said an ally. Talks with Biden at the UN on Wednesday will also focus on policy towards the war in Ukraine and broader security cooperation.

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Truss said: “The main issue is global security and ensuring that we can collectively deal with Russian aggression and ensure that Ukraine has the upper hand.”

The prime minister added that it is important that Europe and the G7 countries work together “to ensure that we are not strategically dependent on authoritarian regimes”.