Most Favoured Nation: Trade Beef in 2023, UK-US Edition

Things that could cause trade beef between the UK and US in 2023

Welcome to the 83rd edition of Most Favoured Nation. The full post is for paid subscribers only, but you can sign up for a free trial below.

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This week, in the new MFN “Trade Beef in 2023” series for paid subscribers, I am going to take a look at the issues that **could** lead to trade beef between the UK and US. The conditions are the same as when we looked at potential trade beef between the UK and EU: these are not things that definitely *will* happen, just things that *could* happen, to varying degrees.

On that note, and in no particular order, here are some things that could create trade beef between the UK and US in 2023:

1. Inflation Reduction Act (USIRA)

I know, I know … everyone (including this newsletter) keeps going on about the Inflation Reduction Act and it is getting annoying. But the US’s absolutely discriminatory and not really about climate although it will probably help the climate a bit piece of legislation poses quite the conundrum for the UK. Large American subsidies combined with local content requirements could quite easily lead to the UK missing out on future investment in new green technologies such as electric vehicles, green hydrogen and batteries. It could also result in American firms unfairly out-competing existing UK-based competitors in domestic and foreign markets. (This is all ignoring the frankly bigger concern about the EU’s response to the USIRA …)

But so what?? The UK may be annoyed … but realistically, what’s the UK gonna to do about it?

One option is initiating a WTO dispute against the US … b’cos let’s face it, as above, the USIRA is a blatant breach of its WTO commitments. In reality, the UK wouldn’t want to do this alone, but if others such as the EU, South Korea, etc are doing it then the UK might join in. One of the problems here is that China might get involved too, which would be really bad optics. The other is that the US would probably get really pissed off … and let’s face it, the UK isn’t exactly fully compliant with all of its own WTO obligations either …

2. Lingering UK rule-breaking

When the UK left the EU it rolled over a number of EU rules and regulations. Some of these are not fully compliant with the UK’s WTO obligations. The most obvious breach is the continued ban on selling beef sourced from cows treated with growth hormones.

To recap (I’m not saying I wrote about this in 2016, but I definitely wrote about this in 2016):

In 1996 the US and Canada took the EU to arbitration at the WTO over its ban on hormone-grown beef. They argued that the ban was unscientific and that it was unfairly discriminating against their producers. In 1997, they won.

But the EU didn’t lift the ban.

The EU instead agreed to increase the import quota offered to the US and Canada for non-treated beef as a compromise.

Post-Brexit, the UK has retained the ban, and if the US wanted to reopen the issue it would be a pretty slam-dunk case. And then the UK would probably have to find a way to buy the US off.

Note: this seems pretty unlikely unless the UK really pisses the US off [see above].

[There’s also an issue with UK trade remedies, given the UK is keeping a load of tariffs on imported steel despite the fact that its own trade remedies authority said doing so wasn't justified, but given all the similar shenanigans the US is up to at the moment I don’t think this will be something the US makes a fuss about.]