US could force UK to discard post-Brexit trade deal with China
US also calls for changes from EU over clearing house rules
The UK could be forced to choose between the United States and China when striking trade deals after Brexit, according to reports.
The Trump administration inserted a clause into its new free trade agreements with Canada and Mexico this month that allows members to end the deal with a six months notice if another country strikes a bilateral agreement with a non-market economy, essentially meaning China.
Secretary of State for International Trade Liam Fox has been warned that US officials could insert such a “poison pill” clause into any trade deal struck after Brexit that would allow the White House administration to block the UK from striking a concurrent deal with China, The Times reported on Thursday.
According to the newspaper, David Henig, assistant director at the UK’s Department for International Trade (DIT) until March, said British officials are likely to face a “ferociously controversial” decision: “As soon as you start signing trade deals, contrary to what DIT has said, you are immediately starting to narrow your scope. The China clause will be a problem. We don’t want to say we won’t do a trade deal with China.”
The UK has the door open to negotiations from both sides since China offered this summer to discuss a free trade agreement post-Brexit.
MORE US THREATS
The Commodity Futures Trading Commission in the US threatened to prevent European banks from accessing US markets over EU plans for the oversight of foreign clearing houses after Brexit, reported the Telegraph on Thursday.
Christopher Giancarlo, head of the Commodity Futures Trading Commission, said the EU plans to amend European Market Infrastructure Regulation were “unprecedented and wholly unacceptable” and warned they could create “costly burdensome regulatory requirements” in the US.
He added that if the EU did not change the existing plans it could ban EU banks from using US financial infrastructure such as the Chicago Mercantile Exchange.
“These are blunt and strong tools”, he said. “We are fully aware of the devastating impact they would have on market access and trading liquidity provision on national markets in which they would be applied.”
Around 90% of the EU based firms use the UK for derivative contracts but european authorities want all activity in euros to take place within the EU and not in London after Brexit.