A new transatlantic gold standard? - The future of US/UK trade in financial services post Brexit webinar series - 2/5

• Global

• Brexit
• Financial services

05-02-2021

27 January 2021 - TheCityUK

To view a PDF version of this article, please click here. 

A series of five webinars exclusively for clients held under the Chatham House rule through January and February 2021 looking at a potential deal to support a closer US-UK trading relationship in financial services is summarised below.

Week two of our series of webinars welcomed TheCityUK, which has been taking a coordinating role on behalf of the financial services industry at the US/UK negotiating table.

The discussion covered the following key issues:

• the roles of TheCityUK (“TCUK”) and the British American Finance Alliance (“BAFA”)
• the BAFA September 2020 Scoping Paper
• key threshold issues for a successful US/UK future relationship
• potential UK/US financial services priority areas – the new US Administration and its likely impact on UK/US negotiations

The role of TCUK

TCUK is an industry-led body uniting members of the financial and related professional services industry to promote the UK as an international financial centre. TCUK looks closely at market access issues and the promotion of cross border trade, especially the UK’s relationship with priority markets such as the US, Japan and China, and niche markets such as Turkey.

The role of BAFA

BAFA is a US/UK financial services industry coalition which gathers together stakeholders across the financial services industry, and leads transatlantic dialogue on financial services issues. The development of BAFA coincided with the launch of the US-UK Financial Regulatory Working Group (“FRWG”). TCUK and SIFMA act as secretariat.

BAFA’s September 2020 Scoping Paper (“Scoping Paper”)

The end of the Brexit transition period and the new US Administration is an opportunity for the US/UK financial services sector to establish a new vision for its transatlantic relationship. The Scoping Paper sets out recommendations and ideas on how this vision can be realised. The paper focuses on two mutually reinforcing core areas (i) trade and investment and (ii) regulatory cooperation. US/UK cooperation can also improve financial stability, enable both countries to spot and address issues more readily, reduce regulatory divergence and create a more efficient and larger transatlantic financial services market. This US/UK relationship could have a significant impact on financial markets as well as financial regulation globally, further solidifying the US and the UK as global leaders in the financial services industry.

Threshold issues for a successful future US/UK relationship

• free flow of data remove restrictions on cross-border data flows and prohibit data localisation
• investment protection clear, transparent and predictable rules on investment are important for guaranteeing fair treatment of foreign investors, and in allowing frictionless movement of capital between the US and the UK. As financial institutions invest on behalf of overseas clients, it is important that these investments are protected in any bilateral agreement. One key part of protecting investments is the provision of an effective dispute resolution mechanism with access to required technical expertise
• digital trade the USMCA is the first trade agreement to have a digital services chapter, and the same would be anticipated in a US/UK agreement. It would be beneficial to see a ban on tariffs and levies on digital products
• framework for regulatory cooperation BAFA advocates for the inclusion of a reference to regulatory cooperation in a trade agreement with the organisation and governance of the cooperation established and maintained separately Such a dialogue will provide market certainty as it will enable the US and the UK to continually cooperate and address issues as they arise

The establishment of a regulatory dialogue independent from trade agreements will allow for good governance and flexibility. It is important to respect the independence of regulators. The necessity of regulatory dialogue was echoed in a poll of webinar delegates. Practitioners believe that out of the threshold issues identified, the framework for regulatory cooperation is of paramount importance