The US Presidential Election: Why UK-US trade deals are crucial, whoever wins
By Tamara Cincik, CEO and Founder of Fashion Roundtable
Last year, I was asked to attend a meeting on my own at Whitehall where I met with civil servants from various departments to discuss my thoughts on the UK-US trade deal. This was my chance to give my best pitch for what the fashion industry needs to policy leads from DCMS, DIT and BEIS: essentially the three target departments who work on how our sector is represented across policy (in terms of culture, industry and trade both nationally and internationally). I appreciated this was a golden opportunity, as I was in the room with these experts: just me, my opinions and wishes for the best outcome for the UK fashion industry.
Meetings like this are very important to me, as I see them as a real chance, as a representative of the fashion industry, to put across what is important for the sector and explain why, to those who implement policy. Already in Fashion Roundtable's short lifespan, we have seen policy changes which show our work embedding itself into policy recommendations and implementations. So meetings like these are vital to create a human response to our work.
The UK-US trade agreement is going to be vital for our sector's global survival if we see a Brexit agreement which limits our access to the all important EU markets of Paris and Milan (and the rest, hello Zara in Madrid, Farfetch in Porto). They are our largest fashion trading partner, with UK fashion and textile exports to the EU (pre-Covid) worth over £6.7bn of our £32.3bn UK fashion industry. To potentially lose the benefits of free trade with our closest, and currently largest, trading partner (we still don't know the terms of the Brexit deal, which is of course around the corner, as the UK officially leaves the EU on New Year's Eve), we need to see an opportunity in other territories. While of course the UK-Japan trade deal which was signed this Autumn is to be applauded (as this is a great market for the sector) buying into UK fashion from heritage brands to new generation talent, it’s not going to meet those figures, as there is just not the population in Japan to fill those EU consumption numbers.
If you work in the fashion industry, as I did, as a stylist, New York in particular and the States in general, are perceived as the holy grail where the big players earn their stripes. You have the opportunity to work on the biggest shoots, with the largest budgets, it's where most supermodels are located, meaning you can earn great money and be successful— in a way which is not as open to those who live and work in the UK. In fact for most stylists or creatives travel (pre-Covid of course) is a prerequisite, as you cannot make a living from the UK market when there is so much talented competition and only a finite number of jobs. The UK is where you can work on amazing (unpaid) editorials, but it is harder to make a decent income from UK fashion jobs. Many travel back and forth to the EU, which is why the future relationship with Europe will be so important: you might live and pay taxes in the UK, but travel back and forth for shoots, shows, events. Well known UK brands have consistently told me that while they might have a show at LFW, it will be during PFW where they fill their order books. This is why I have urged an ease for all creatives and business owners to be able to continue their travel and work across Schengen without carnets, work visas and red tape. For a business based on a just-in-time model, this is vital, especially in a competitive post-Covid global marketplace.
My points at that Whitehall meeting were as follows…
1) A free trade deal, to allow us to improve our market share with their 331m population. This would end tariffs, like those currently making US denim more expensive here and brands such as Erdem, Preen and Loake more expensive there. Plus, an end to the customs regulations which add delays and costs on all goods deliveries.
2) Given the traditional route of big players moving to the US to be successful: from Anna Wintour to so many of the most successful consultants, editors and designers working in NYC, we need to see an end to the brain drain of talent working in the US being led from two 01 or 02 visas to a green card as their third visa. While it makes living and working in the US easier, it means that even if you leave the US you have to pay tax to the US for the rest of your life. This translates as losing not only talented and high earning UK residents, but forever losing their taxable income. Surely this has to be addressed.
3) I advocated that we need an easier way of working, based on a current tourist ESTA visa, allowing a UK resident to legally work in the States over a 90 day period, making it more in line with where the UK-EU deal is currently heading.
My three points are arguably ahead of the curve in terms of the trade agreement that the UK-US will sign. However, over my work at Fashion Roundtable, I have seen that even if my ideas seem more strident than those which are initially agreed, they percolate in policy planning and people's minds only to come up in the future as targets and commitments.
With the US election happening today, while emotions are running high and the news from Washington is all-consuming, a strong relationship with the next US government will be vital for the UK to make a strong trade agreement. Joe Biden has publicly declared that the Good Friday Agreement has to be respected by the Brexit deal, for any UK-US agreement to be signed, plus the environment has to be front and centre of any future trade deals. Meanwhile Trump has consistently pushed for an America first agenda, which would make a free trade agreement allowing UK goods into the US market at price points potentially cheaper than those made in the States problematic. Whoever is elected, I do not believe that this economically and strategically vital trade agreement between the UK's historically closest allies, will be as straight-forward or as lucrative as that which we are about to lose with the EU— unless we can, by some miracle, sign a free trade deal with both the EU and the US, which while desirable seems currently unlikely.
As we watch the US presidential election results from our homes this evening and over the coming days, with a second lockdown looming, I think it’s important that we consider these points. I asked the Department for International Trade this morning for their guidance on the UK-US trade agreement, which I am sharing here and I advise all of you looking to widen your market, or expand into the US to read these points. If you have any queries or would like more guidance for your business, please email admin@fashionroundtable.co.uk. The UK and US are the largest investors into each other's markets, if the UK is to thrive post Brexit we need to really work on this relationship and sign as good a deal as we can get.
The Department of International Trade's Guidance:
The fifth UK-U.S. Free Trade Agreement (FTA) negotiating round took place from 19 to 30 October 2020.
This was the most intensive round of negotiations held so far, with 38 sessions covering 19 different chapter areas.
Almost all chapter areas are now in the advanced stages of talks. A significant proportion of legal text has been agreed across multiple chapters.
The round included focused discussions on market access for goods, including negotiations around product specific rules of origin, which determines whether or not a product can benefit from preferential tariffs under the FTA.
We also held detailed textual discussions on a Digital chapter and agreed much of the legal framework for a future agreement.
Following the significant progress made in talks to date, both sides are confident that we are on track for a comprehensive agreement which would provide a significant and mutual benefit to our economies. We believe we are in a good position to move forward after the U.S. election.
We have agreed a programme for continued talks at official level for the weeks following the U.S. election.
We are unable to provide specific details as we are in a live negotiations, but as stated in our negotiating objectives, we are looking to secure a broad liberalisation of tariffs on a mutually beneficial basis, taking into account UK product sensitivities.
Shortly before the fourth round of UK-US negotiations, we exchanged our first market access offers with the US, and round five had a major focus on negotiating tariffs on goods.
Our scoping assessment indicates that UK businesses could face savings totalling £493 million from liberalising tariffs in an ambitious US deal. Goods traded between the US and UK include road vehicles, machinery and clothing.
We are also looking to increase opportunities for UK service suppliers and investors to operate in the US by enhancing opportunities for business travel and supporting the recognition of professional qualifications.