A legal challenge in the UK to the US-UK trade deal?

News stories identify that some provisions of the US-UK trade deal (formally known as the US-UK Economic Prosperity Deal (EPD)) are likely to come into effect in the coming days, affecting UK car exports to the US, and UK beef and ethanol imports from the US.

The tariff free importation to the UK of US produced hormone free beef for up to about 1.5% of annual UK beef consumption seems a small quid pro quo for the reduction in tariffs on the first 100,000 vehicles exported from the UK to the US. That the quid pro quo also includes the tariff free importation of ethanol from the US for up to a volume similar to the total annual UK consumption of ethanol has faced criticism. Putting aside that these arrangements are to avoid or reduce recent US imposition of import tariffs, which are being legally challenged in the US, a tariff reduction agreement is arguably a step in the right direction for free trade. However, the product for product deal is far removed from a general tariff reduction and therefore far removed from allowing the invisible hand of commerce to determine what commercial activities occur and on what terms. As the seminal essay I, Pencil (1958) by Leonard Read brought out as regards the world of commerce, there is no master mind involved in the production of goods (this message was prescient and exampled by Milton Friedman in his book Free to Choose (1980), a staple of the libertarian economic viewpoint).

On the basis that there is no master mind, the concern exists that in trying to be the master mind, the UK and US governments’ trade agreement will result in unknown unintended consequences. Perhaps Derwent Pencil Factory, the last remaining UK pencil manufacturer, should refresh its economic risk forecast! More seriously, the only two ethanol producers in the UK and their customers have raised concerns to the UK government about their prospects.

Now that details of the EPD are being settled, challenges might commence. As a start, however, the EPD and any agreements that come from it will be scrutinised by the UK Parliament. The Business and Trade Committee of Parliament has noted that the EPD is based on national security concerns, notably such concerns held by the US (but perhaps not always necessarily a UK national security concern!). The Committee has raised the question of the UK government as to the legal standing of the EPD and any agreements made as a result, in the context of the Constitutional Reform and Governance Act (2010) and raised the question of compatibility with the UK’s WTO obligations. What will be interesting to see is whether the UK government’s detailed agreements, as they affect businesses in the UK, will stimulate legal challenges as well as the usual business lobbying.