UK to try and close trade deals with individual US states after White House talks stall

The UK will now prioritise closing trade deals with individual US states like California and New York, after negotiations with the White House stalled earlier this year.

Trade minister Penny Mordaunt said today that while “we want a comprehensive Free Trade Agreement between the UK and the US” that “much of my time will be spent” on “working in the US at state level”.

Negotiations for a post-Brexit trade deal with the US began under the Donald Trump White House, however formal negotiations have not continued under Joe Biden.

Boris Johnson indicated that a deal was some way off during a recent trip to the US as Biden was not looking to close trade deals with any country at the moment.

While any agreement between the UK and individual states would not be able to remove tariffs on goods, trade experts say that a deal could be done to make it easier for British companies and professionals to operate in the US.

“We know the US has more to do to be ready for an FTA, but when they are, we will be waiting for them,” Mordaunt said.

“We will be working in the US at state level in the meantime to forge closer economic and political bonds between us. That will be where much of my time will be spent in the coming weeks and months.”

It has been suggested in the past that the UK would look to close trade agreements with individual US states if talks with the federal government looked unlikely to bear fruit.

Key stumbling blocks are thought to be around the status of US agricultural exports and food safety standards.

Former international trade secretary Liz Truss met with a number of state governments in the US this year, including representatives of California Governor Gavin Newsom.

California has the sixth largest economy in the world, with its Gross Domestic Product (GDP) bigger than India, France and Italy.

Much of this is thanks to the cluster of tech giants based in Silicon Valley.

Sam Lowe, trade policy director at Flint Global, said it was worthwhile trying to broker agreements with large US states like California, New York and Pennsylvania.

He said it’s “worth a go, because you’re talking about states the size of small countries or even large countries”.

“US states retain some competencies – for example over rules of recognition for professional qualifications,” he said. 

“There are also areas where you have state level competencies around licensing – perhaps in insurance market. It’s plausible the UK could attempt to engage with some states in order to do something there.”