UK and US in talks over mini trade deal

The outgoing US administration is in talks with the UK to try to seal a mini-deal to reduce trade tariffs, Donald Trump's trade chief has said.

US Trade Representative Robert Lighthizer told the BBC he was hopeful for a deal that could see punitive tariffs on Scottish whisky lowered.

The UK recently said it would drop tariffs against the US over subsidies for aerospace firms.

This was in a bid to reach a post-Brexit trade deal with Washington.

In his first international interview, Mr Lighthizer suggested the UK would need to go further than last week's announcement breaking with the EU's support of European plane maker Airbus.

"I'm talking to [International Trade Secretary] Liz Truss, about trying to work out some kind of a deal... I'm hopeful we can get some kind of an agreement out you know, we don't have a lot of time left," he said.

"We have the advantage in that both the US and the UK - particularly the current government of the UK - are not big subsidisers, where some other countries are more inclined to subsidise. So it would be helpful if we could come to some kind of agreement," he said when asked about lowering tariffs on whisky and cashmere. "We are in discussions, we'll see how that works out."

Last week, the UK unilaterally broke with European support of Airbus in a long-running transatlantic trade dispute, changing policy expressed only in January this year of ongoing support even after Brexit, by announcing it would no longer apply tariffs to imports of Boeing aircraft.

Liz Truss said that she wanted to "de-escalate" the 16-year-old conflict over subsidies.

However, the BBC understands that in a phone call, the USTR told the trade secretary directly that the US would not treat this as a concession, because, outside of the EU, the UK had "no authority" to continue to apply retaliatory measures on the US.

"For sure, it's true that the UK as an individual was not a party to that Airbus-Boeing litigation, right," said Mr Lighthizer.

"We brought an action against the EU, France, Germany and the UK. The EU just brought one against us, the member states did not in all cases. so there's no question that as a legal point, that is correct," he added.

Instead, the US wants the UK to make concessions on the separate EU dispute over steel and aluminium, where US bourbon was among products upon which European tariffs were levied.

The talks are part of a general move by President Trump's trade team to wrap up the Boeing-Airbus dispute with the EU, and the UK separately, outside the auspices of the World Trade Organization (WTO).

The US' top trade negotiator also explained why, despite high hopes even this year for a full US-UK free trade agreement, the next administration had a "short period" now in the first half of 2021 to try to wrap up a deal.

While he said it was "extremely likely" that a full deal would be struck "before long", he emphasised that "tough compromises have to be made" on agricultural issues, for example.

Asked about demands to adapt UK food standards on beef and chicken, as well as reforms to the way the NHS pays for US medicines, Mr Lighthizer said: "These negotiations are ongoing.

"You know, clearly, the US needs to get additional access to the agricultural market in the UK - that's an important part of it, each side has to get something out of it. These are complicated technical issues. And they're the kinds of things that will be worked out, I think, in the in the final stages of negotiation."

He also indicated that the US team were never convinced that the UK was actually going fully to depart from EU trade rules, because of the sheer amount of UK-EU trade, despite that being the stated policy of the current government.

"The Brexit situation was always something that was on our mind, if you think about it," he stressed.

"The nature of our relationship is going to be affected by the nature of the relationship between the EU and the UK, right. They're a much bigger trading partner to you than we are, so that has an impact... I've always had the view that there's just an awful lot of trade between the UK and the EU and it was hard to see there weren't going to be any rules to that."

Mr Lighthizer made it clear that giving the US "new access" to UK markets was important, but would be "less significant" should the same deal be offered by the UK to another country.

"But, you know, that'll be sorted out here probably in the next two or three weeks or so... one way or another. And then I think there's no reason why the US and the UK can't get to a deal fairly expeditiously after that," he added.

Mr Lighthizer confirmed that the Trump administration was still planning to hit back against countries levying digital services tax hitting big US tech firms "unfairly".

He also defended the actions of the current administration in ripping up decades of multilateral action in building a global trade system.

However, he said he had no regrets and had helped "reorient the global trading system" to help ordinary American workers rather than large corporations.