CGTN Europe interviewed Mattia Di Ubaldo, Deputy Director, UK Trade Policy Observatory (UKTPO)
Category
🗞
NewsTranscript
00:00Well, for more on the UK-US trade deal, I spoke to Mattia Di Ubaldo, who is Deputy Director of the UK Trade Policy Observatory
00:07and Principal Research Fellow in International Trade at the University of Sussex.
00:13I would define it as a proposal of an agreement that shows that there are some good intentions to start some more detailed negotiations.
00:21So it is clearly a deal of limited legal value, to be optimistic, and it does not give much certainty at all to UK firms.
00:30As we have seen that even more solid or legally solid arrangements can often only be a little protection from sudden changes in the minds of US trade policy makers.
00:38So, you know, if you want to give it a negative spin, you can say that the UK has been strong-armed into making concessions under the threat of high tariffs.
00:47But then, you know, the positive side of it, as you have said, is that it does seem that the US is sort of more favorable towards the UK than it is towards other countries.
00:57So it is a diplomatic win, at least until we see what other countries will get out of their deals with the US.
01:05OK, so a diplomatic win, but it's not leaving much certainty for British industry.
01:10If we could look at some of the details, the US continues to maintain Section 232 tariffs on UK steel and aluminium pending further negotiation.
01:20Does that leave UK industry exposed, do you think?
01:23Yes, the short answer is yes.
01:26The deal does leave a huge deal of uncertainty for UK firms because there is the promise that Paris will go down from the current 25% to presumably zero, although that is not exactly stated explicitly in the text.
01:41But if you do read the fine print of this deal, you see that the preferential treatment that UK firms are likely to get is conditional on the UK satisfying certain US security requirements about the supply chains of products that are going to be shipped to the US.
02:00Now, this is a new approach, right?
02:02And we don't know exactly how to evaluate it because, you know, we don't know what restrictions will be imposed on how UK firms operate.
02:09Because how is security defined here?
02:11Is it about the capacity of foreign suppliers, say, for instance, about the price of the inputs that the US is concerned about?
02:21Or is it the nationality of these foreign suppliers?
02:24So all these requirements will be set entirely by the US.
02:27And also, there is uncertainty going forward because even if tariffs go down now because the UK is seen as satisfying the US concerns, nothing prevents the US to bring tariffs back to the future.
02:40The US still imposing tariffs on UK vehicles above a certain quota.
02:44I mean, is that a fair outcome for the UK automotive industry?
02:47I would define this as an OK outcome so far, but not a great outcome.
02:52And I think it's for a couple of reasons.
02:54First of all, the tariffs that UK manufacturers used to face just up until last year was 2.5%.
03:02Now, even if this deal will apply and within the quota, they will face 10%.
03:07So it's a loss of preferential market access of 7.5 percentage points, which is a large loss.
03:13However, the quota just about covers the volume of cars that the UK ships to the US.
03:20So I think last year it was just above 100,000 cars.
03:23So it's an OK quota.
03:25And within the quota, UK firms will have a competitive advantage.