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4UK-US Trade & Investment
5Working Group
62- 7 November 2018
7Full Readout
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11FINAL AGENDA & TABLE OF CONTENTS
12Thursday 1 November Page
1313:30 – 17:30 SME Dialogue 3
14 Friday 2 November
1514.00 - 17.00 Digital 10
16 Monday 5 November
1709:00 - 10:30 Opening Plenary 21
1810:45 - 12:00 Customs 24
1910:45 - 17:00 Investment 30
2013:00 - 17:00 Intellectual Property Rights (IPR) 37
2113:00 - 15:00 Good Regulatory Practice (GRP) 45
22Tuesday 6 November Page
239.00 - 15.00 Agriculture 49
249.00 - 12.00 Legal Services Roundtable 53
259.00 - 10.00 Industrial Subsidies 59
2610.00 - 11.15 State Owned Enterprises (SOEs) 63
2713.00 - 15.00 Services 70
2813.00 - 15.00 Coordination Team Planning 71
29 Wednesday 7 November
309.00 - 12.00 Mutual Recognition Agreements (MRAs) 72
319.00 - 10.30 Textiles 73
329.00 - 10.30 Financial Services 74
3310.45 - 16.00 Economics 88
3413.00 - 15.00 Technical Barriers to Trade (TBT) 96
3513.00 - 15.00 Competition 97
3615.00 - 17.00 Closing Plenary 102
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40SME DIALOGUE
41Date: November 2, 2018
42Time: 09:00 –12:00
43Participants
44Name Department/Directorate
45Kate Maxwell DIT
46Deborah Matthews BEIS
47Angelina Canizzarro BEIS
48Alex Nicholson DCMS
49Sam Oakley DIT
50Christina Sevilla USTR
51Pat Kirwan USTR
52Sarah Bonner US - Small Business Administration
53Tricia Van Ordern US – Commerce Department
54Jim Cox US – Commerce Department
55Rosalind Stewart US – Commerce Department
56Lori Cooper US – Commerce Department
57Barrett Haga USTR
58Key Points to Note
59• The feedback was overwhelmingly positive on the SME Dialogue, with SMEs from both
60countries saying how useful it was, and wanting to be part of future Dialogues. UK confirmed
61that it would host the next Dialogue but couldn’t commit to a time or place – although would aim
62for June or July in a location outside London. USTR proposed that the next Dialogue should
63concentrate on a post-Brexit UK, looking at areas of change for business; an updated UK-US
64joint SME brochure in light of Brexit; cyber security and GDPR updates, again in light of Brexit;
65and feedback on the UK-US FTA.  
66• US talked UK through the SME Chapter of USMCA, highlighting that it was ‘TPP+’ with a clear
67cooperative focus and a commitment to SMEs from all sides in participating in regular
68Dialogues and information sharing. USMCA is the first US FTA to have a chapter on SMEs
69and is considered to be ‘state of the art’. The underlying sense, although not confirmed, is that
70we could expect this chapter to be a blueprint for a UK FTA. 
71• There was brief call and discussion on marine technology and best practice regarding the USUK pilot on SME cooperation in marine technology.  It was confirmed that the Oceans Business
72Conference will meet in Southampton on 9th April as a key outcome. 
73• UK shared positive feedback from DIT and BEIS on the recent ACE 10 event in Northern
74California. The US invited the UK to attend the 11th Americas Competitiveness Exchange in
75Puerto Rico in May 2019. An action was agreed for an exchange of information on regional
76economic development strategies, including U.S. information on their Comprehensive
77Economic Development Strategy (CEDS). It was also agreed that both the US and UK will 
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81explore potential ‘incubator-to-incubator’ opportunities, with hubs in the US and UK possibly
82offering spaces to each others’ businesses.
83Report of Discussions and Outcome
84Reflections on SME Dialogue
85CS (US) led feedback on the SME Dialogue of the previous day. The hosts, Paypal, thought it was
86a really positive event and many of the New York SMEs who had reported back thought that it was
87a really valuable exercise. CS (US) felt this dialogue was a good formula – with the right mix of
88policy and guides to tools for SMEs equally. It was useful for governments to be setting the policy
89stage but then to hear from actual businesses on how that operates. Additionally, the half day
90format was agreed to be the best way to hold people’s attention.
91KM (UK) thanked the US for hosting and echoed positive feedback, particularly on the digital
92theme. AN (UK) reflexted that it was important to use the opportunity to give practical advice to
93SMEs and the cyber attacks session, in particular, was viewed as particularly useful. PK (US)
94thought that the Dialogue as a whole may be focussing too much on goods, and that in future we
95should be looking to involve more services businesses – particularly given the breakdown of both
96UK/US economies. He added that the event partner could be crucial in getting the right people in
97the room next time.
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99AC (UK) felt it was important to allow space for businesses to raise some questions – and that the
100Google session, in particular, was impressive. The consensus of a number of the businesses was
101that it would be useful to have an entire session on the total availability of government tools. CS
102(US) wondered if both countries could develop a standard module for resources as well as
103additionally highlighting that a number of businesses involved wanted to focus on SME access to
104finance.
105
106There was agreement among all that the networking session was particularly powerful and
107important with evidently lots of business being developed out of it. JC (US) raised the idea of future
108venues in the US such as Boston, Chicago or San Jose – notably in potential partnership with MIT
109in Boston who are already working with the British Consulate. CS (US) agreed that there is
110definitely a feeling that more businesses want to get involved.
111KM (UK) felt that harnessing momentum is important, although Brexit can complicate things. She
112noted that the UK should host in 2019, potentially in June or July and should do so outside of
113London – perhaps in Manchester, Liverpool or Bristol.
114CS (US) in raising possible ideas for a future theme suggested outlining to attendees all of the
115ways in which the respective governments offer help to SMEs. She indicated that many businesses
116would welcome a discussion of US/UK relations post Brexit. Additionally, CS (US) felt a discussion
117of what may feature in a potential free trade agreement would be useful, as part of a ‘doing
118businesses positively post-Brexit’ theme. As a side note, CS (US) indicated that the US ITC would
119be issuing their report on US SME barriers to entry in the UK market in July of 2019, and that they
120may be planning on coming over before that time.
121AC and KM (UK) were both keen to indicate that things may shift in the coming months and years,
122but broadly agreed with the theme. AC (UK) noted that a key outcome would updating the toolkits
123that currently exist, particularly the ‘guide to doing business’.
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127CS (US) summed up, suggesting a fourth dialogue to take place in June/July in 2019, potentially in
128the north west of the UK. It would be a day or half day focussing on US/UK FTA, Doing Business
129Post Brexit, US UK Cmmmerical Guides, updating the resources brochure and an overall module
130on what has been produced thus far (cyber, privacy). CS (US) added that repeating this agenda for
131both UK and US audiences would be useful, opening the door to two potential dialogues in 2019.
132SME Chapter in USMCA
133KM (UK) opened discussion by asking whether USMCA had been difficult to negotiate. CS (US)
134responded that it was the first chapter across the line, and had been concluded in the rounds. It is
135a cooperative chapter that demonstrates a lot of win-wins. It is a ‘TPP+’ chapter, which has led to a
136deeper set of existing relationships. CS (US) added that it is based on the principle of cooperation
137to increase trade and investment for SMEs. Such a chapter can be relatively bespoke and is about
138committing to partnership and improvements. CS (US) added that the references to the social
139aspects of inclusion received positive feedback, and particularly that SME access to capital is
140important.
141AC (UK) noted that a divide between national and local policy is important to distinguish, with CS
142(US) responding that information sharing is important, as is a solid commitment to doing so. KM
143(UK) asked whether this has been solved within USMCA through the creation of a ‘one stop shop’
144– CS (US) responded that export.gov covers the specifics of US/UK, with PK (US) adding that it is
145incumbent on USTR to make sure everyone has the information that they need. AC (UK) noted
146that there are different understandings of ‘one stop shop’ – in the UK that is perhaps an entry point
147and then signposting (due to other agency compatibility).
148CS (US) noted the inclusion of a committee on SME issues within the chapter, with AC (UK)
149suggesting that it is important to make the Committee on SME issues quite visible to the outside
150world.
151CS (US) indicated that the SME Dialogue itself is TPP+, given the obligations of the USMCA
152chapter to benefit SMEs. KM (UK) asked whether other chapter leads were happy for SME
153inclusions and CS (US) responded that within USMCA, SMEs are self-defining and that we are not
154talking about special and differential treatment. JC (US) added that the overriding hope is to grow
155out SMEs into being bigger.
156KM (UK) and PK, CS (US) all agreed that SMEs represented 99% of the economy. PK and CS
157(US) outlined that the value of US SME exports has gone up from 27 to 33% since the 90s, which
158rises to 40% if you include indirect exports through supply chain. KM (UK) noted that for the US,
159their SME trade is Canada-heavy, with the UK third.
160CS (US) noted that there is no dispute settlement mechanism within the SME chapter of USMCA.
161KM (UK) asked what would happen if you needed dispute settlement – would the SME Committee
162of government representatives talk about it. CS (US) noted that the chapter itself is all about
163cooperation and that, if necessary, any issue could be raised at a ministerial level.
164AC (UK) asked how will the signatories know that the chapter is operating in the way that it is
165intended - what if the provisions in 25.4 aren’t happening? CS (US) responded that that is the key
166purpose of the SME Dialogue, to examine where things aren’t being discussed. She added that the
167agenda items of the Dialogue is the important way to raise these issues and a report to free trade
168commission is the vehicle to resolve them.
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172KM (UK) asked about the reception of businesses. CS (US) noted that advisory committees and
173associations are very happy with it.
174PK (US) asked about the UK’s engagement with small businesses in return. AC (UK) outlined that
175there is a small business board chaired by Minister in BEIS in which business representatives all
176feed in. Additionally, the Secretary of State meets with the top five businesses representative
177organisations every week, and does so further on a discretionary basis.
178PK (US) noted that a problem with CAFTA had been that it didn’t have a good mechanism for
179feeding information into small businesses. DM (UK) was, in return, interesting in learning how the
180US informs SMEs of the benefits of the agreement. CS (US) highlighted that the Commerce
181Department, Small Business Administration, US Exporters and Small Business Development
182Centres are the primary arms for getting information out. JC (US) added that webinars and seminar
183discussion programmes are helpful. Equally, trade missions to get the word out wherever possible.
184PK (US) added that there is sector-specific help available, with TvO and RS (US) both adding that
185they are looking ‘beyond the border’ and the wider groups that sit alongside that.
186KM (UK) asked whether this chapter is going to be the blueprint for all future US deals. CS (US)
187responded that this is ‘state of the art’ for the Trump Administration and that all agreements work
188on the basis of accepted precedent. She added that USTR is going to be out there promoting this
189chapter strongly.
190KM (UK) in response noted that as a basis the UK liked the chapter and that, while the US noted it
191is TPP+, it is very TPP. The UK is looking to be ambitious and strong, and this chapter is common
192sense but it feels ambitious. CS (US) said that with TPP done in 2012 and TTIP in 2013-2015 a lot
193of experience existed, and the Administration felt that it was important to have an SME chapter.
194The key question was how do we better marry existing resources and service providers together?
195AC (UK) asked whether late payments for SMEs is an issue in the US and whether it had been
196considered an important policy issue in the US for USMCA. SB (US) responded that it had been
197raised once or twice, but that it’s not in the big list – counterfeiting and IP is the largest problem for
198SMEs. CS (US) added that it is an interesting agenda item to potentially add to an SME Dialogue.
199TvO (US) added that financing is also a key issue for US SMEs. AC (UK) concluded that we need
200to be live to issues as they come up.
201Marine/Blue Economy
202There was a brief call with (include who Lori is) on the next steps from the previous working group
203regarding the marine/blue economy. CS (US) highlighted that the Southampton trade show in 2019
204was a useful opportunity to demonstrate best practice. By way of further detail, it was outlined that
205at the Oceans Business Event on 9th April 2019, there will be a potential session on SME best
206practices exchange in the marine tech sector. It was noted that this would be particularly powerful
207given the upcoming 400th anniversary of the Mayflower.
208Lori (US) noted that discussions with the UK are beginning next week (w/c 5/11) to build on the
209ideas and objectives laid out in September. The US are working to coordinate with the UK on
210comments and topics, with the hope that a session will take place on the opening day of the trade
211show on the 9th April. AC (UK) noted that BEIS is the lead agency on this, but that Defra should be
212involved too. 
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216CS (US) proposed that text should be agreed within the working group on what had been agreed
217for the SME best practices exchange in the marine tech sector. All agreed that it is good to be out
218there demonstrating the strength of the relationship.
219Americas Competitiveness Exchange
220DM and KM (UK) gave a summary of the feedback from UK colleagues who were part of the
221delegation for the 10th Americas Competitiveness Exchange (ACE), which had taken place in
222Northern California in the week prior to this meeting. The UK delegation had been invited as an
223output from the SME working group in July.
224DM (UK) noted that colleagues had found ACE extremely useful and had developed good
225contacts in a good location. It was felt that the University of California’s involved in tech diffusion is
226important and that participants were impressed by the incubator process. They were struck by the
227opportunities for UK businesses in new markets and impressed by the visit to a community college.
228KM (UK) added that for DIT the next steps were to obtain a more thorough debrief, but that the
229links established had been inspirational. She added particular thanks to USTR and Commerce for
230their flexibility during the invitation process.
231BH (US) felt the experience had been positive for the UK and that the flight control tower visit had
232been particularly useful. In addition he offered the UK two spots for ACE 11, taking place in Puerto
233Rico on 18-25 May 2019. Puerto Rico is seen as a hotbed for incubators across a number of
234industries (notably manufacturing and biopharma).
235BH (US) suggested that it would be useful, in the spirit of cooperation on SME development, for the
236US to share their Comprehensive Economic Development Strategies (CEDS) for regional
237development with the UK. He felt it would be a good way to establish potential incubator-toincubator links, ensuring that the US can send some people to the UK and vice versa. He added
238that the UK could look to host its own version of ACE. KM (UK) responded that Brexit
239limitations are hugely significant on resources and that ACE participation is definitely valuable, but
240it should be a long-term ambition.
241CS (US) noted an agreed action for the UK to participate in ACE 11 and for next steps on SME
242cooperation to be considered on a long-term basis. She summed up Barret Haga’s offer
243of sharing the CEDS process, and the idea of incubator-to-incubator ‘mini-ACE” exchange between
244the UK and US. It was agreed that next steps are for the US to share information on the CEDS
245methodology of 5 year plans, and to explore options for incubator-to-incubator opportunities. It was
246also underlined that the UK is now viewed as part of the ACE network.
247BH (US) added that the CEDS process is recognised as hemispheric best practice for planning by
248the Organisation of American States. CS (US) went further that bespoke cooperation is important
249and that a commitment to exchange of information on CEDS (how US is doing regional economic
250development) is important.
251Readout of outcomes of the meeting
252The meeting closed with an agreed text drafted on the outcomes of the meeting, as below:
253“The Small and Medium Enterprise  (SME) Working Group convened the 3rd US-UK SME Dialogue
254in New York City focusing on the topic of Digital Trade benefits for SMEs and ecommerce tools to
255promote SME exports, attended by over 100 US and UK SME stakeholders with government
256officials from USTR, U.S. Department of Commerce; U.S. Small Business Administration; U.S. 
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260Patent and Trademark Office; National Institute of Standards and Technology; and regional
261economic development offices; and UK Department for International Trade (DIT); UK Department
262for Business, Energy and Industrial Strategy (BEIS); UK Department for Digital, Culture, Media and
263Sport; and the UK Information Commissioner’s Office.  The U.S. and UK released joint ECommerce guides for small businesses selling online into both markets (link here).  The SME WG
264agreed that the UK will host the 4th SME Dialogue outside of London in summer 2019, focused on
265the U.S.-UK trade and commercial relationship post-Brexit.  The SME WG also agreed to hold a
266sectorally-focused SME best practices exchange on marine technology on April 9, 2019 at the
267Oceans Business conference in South Hampton, UK.
268The U.S. welcomed UK senior officials from DIT and BEIS to the 10th Americas Competitiveness
269Exchange in Northern California in October 2018, highlighting economic assets of the region
270including visits to the University of California system and NASA Ames research center.  Next steps
271for the SME WG will be an exchange of information on regional economic development strategies,
272including U.S. information on the Comprehensive Economic Development Strategy (CEDS), by
273which the public sector, working in conjunction with other economic actors, creates the
274environment for regional economic prosperity. The SME WG will also explore potential incubatorto-incubator opportunities with centers interested in hosting UK firms on the US side and US firms
275on the UK side.  The U.S. also extended an invitation to the UK to join the 11th Americas
276Competitiveness Exchange in Puerto Rico in May 2019.” 
277Action Items
278• The SME working group agreed that the UK will host the 4th SME Dialogue outside of London
279in summer 2019, focused on the U.S.-UK trade and commercial relationship post-Brexit. 
280• The group also agreed to hold a sectorally-focused SME best practices exchange on marine
281technology on 9th April 2019 at the Oceans Business conference in Southampton.
282• SME Working Group will exchange information on regional economic development strategies,
283including U.S. information on the Comprehensive Economic Development Strategy (CEDS), by
284which the public sector, working in conjunction with other economic actors, creates the
285environment for regional economic prosperity.
286• SME Working Group will also explore potential incubator-to-incubator opportunities with
287centres interested in hosting UK firms on the US side and US firms on the UK side. 
288• The UK will review the invitation extended by the U.S. for the UK to join the 11th Americas
289Competitiveness Exchange in Puerto Rico in May 2019.
290Additional to note
291The full readout of the fifth trade and investment working group outlined the following with regards
292to the SME Dialogue and SME working group:
293UK - US SME Dialogue
294The third dialogue focused on the topic of digital trade. It highlighted the benefits for SMEs and the
295e-commerce tools to promote SME exports.
296Over 100 UK and US SME stakeholders met with government officials from:
297• USTR
298• US Department of Commerce
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302• US Small Business Administration
303• US Patent and Trademark Office
304• National Institute of Standards and Technology
305• regional economic development offices for the United States
306• The SMEs also meet with officials from the United Kingdom:
307• the Department for International Trade
308• the Department for Business, Energy and Industrial Strategy (BEIS)
309• the Department for Digital, Culture, Media and Sport (DCMS)
310• the UK Information Commissioner’s Office
311At the SME Dialogue, the UK and the United States released joint e-commerce guides for small
312businesses selling online in both markets.
313The UK will host the fourth SME Dialogue in the summer of 2019, focused on the UK-US trade and
314commercial relationship post-Brexit. In addition, the UK and United States agreed to hold a
315sectoral-focused SME ‘best practice’ exchange on marine technology on April 9, 2019 at the
316Oceans Business conference in Southampton, UK. The United States also extended an invitation
317to the UK to join the eleventh Americas Competitiveness Exchange in Puerto Rico in May 2019.
318FOR INTERNAL DISTRIBUTION ONLY
319Lead Negotiator Analysis/Comments
320Summary:
321A positive and productive meeting chaired by Kate Maxwell, DIT, which provided strong consensus
322on the direction for the fourth SME Dialogue, reflected broad agreement on respective UK-U.S.
323approaches to SMEs in a future UK-US FTA, and looked forward to continuing collaboration on a
324number of outcomes.
325
326Very positive and productive atmosphere, driven by both sides. We have established a very good
327working relationship with both USTR and Commerce (underlined by the welcome we received from
328Christina, Ros and Silvia at the EU-US SME Dialogue in Vienna).
329There was a desire on the US to ensure more short-term outcomes in the working group, mainly
330driven by Christina Sevilla.
331The UK is very much aligned with the US in relation to the majority of SME issues. There is also a
332joint ambition to consider lighter regulatory regimes wherever possible. We agree with the text of
333the USMCA SME chapter in the main – there is little divergence from our core policy. The UK and
334US are both supportive of the future FTA including a robust and far reaching standalone SME
335chapter, as well as SME-friendly provisions throughout the agreement.
336Very good cross-Whitehall working across DIT, BEIS and DCMS.
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340DIGITAL TRADE
341Date: November 2, 2018
342Time: 09:00 - 12:30
343Participants
344Name Department/Directorate
345Rebecca Fisher-Lamb—RFL DIT
346Chris Woodward—CW DIT
347Tom Dannatt—TD—Absent DIT
348Victoria Donaldson—VD DIT
349Sophie Brice—SB DIT
350Jonny Martin—JM DCMS
351Harry Lee—HL DCMS
352Jaya Choraria—JC HMT
353Robb Tanner—RT USTR
354Rebecca Nolan—RN US State Department
355Matt Swinehart or Sullivan US Treasury
356Andrew Steel US Department of Commerce
357Brian Woodward US Department of Commerce (ITA)
358Peter? US Department of Commerce
359Linda Quigley United States Patent Office
360Key Points to Note:
361• A positive, technical session that built on the July TWG session in which the UK set out digital
362policy principles. The US discussed new and priority provisions within the USMCA digital
363chapter, and the UK flagged where provisions had been covered by principles set out in
364January. Both the US and UK remained clear on the restrictions placed by TPA and
365Consultation processes respectively.
366• The US outlined their approach to the digital chapter of USMCA including explanations of
367evolutions from TPP to USMCA and which clauses remained the same. Most the digital
368changes that resulted in broader scope for were a result of TPP countries lobbying for
369additional clarity via footnotes or language which Mexico and Canada did not require. In
370particular, the US set out that: 
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374a. Tariff free treatment for digital trade, non-discrimination, electronic signature and paperless
375trading are elements that did not change from NAFTA or TPP. Online consumer protection from
376SPAM and for personal data as well as data flow rules and prohibiting server localisation are
377changes from TPP. Rules for internet platforms and protection for source codes or algorithms
378are new in UMCA compared to all other US FTA’s.
379b. The US established baseline modern USMCA digital rules by bringing together international
380agreements from the WTO and OECD with key terms from US domestic law. Frequent
381references to WTO agreements in USMCA’s digital chapter indicates that the US aims to build
382on existing consensus as international digital rules are formed.
383c. The USMCA digital chapter fundamentally seeks to foster open markets and competition
384without infringing on legitimate government regulatory administration. The US made it clear that
385a similar, but not identical approach would be taken forward in future FTAs. The UK also
386confirmed the importance of digital rules and reiterated that the UK position is largely in an information
387gathering stage until more specifics of the EU Exit are firmed.
388• Stakeholder engagement on the digital and e-commerce topics of the SME dialogue were
389positive and will continue in this area. The UK and US shared information about domestic
390consultation process including the prevalence that digital issues were raised by stakeholders
391on both sides.
392• The UK’s ‘digital tax’ wasn’t raised at all, clearly the US see this as a senior/ political rather
393than technical issue.
394Report of Discussions and Outcome:
395RT (US) started with an introduction and welcome to the UK officials. He explained that the US
396was in process of consulting with domestic industry for their positions in a US UK FTA. He was
397clear that the discussion about USMCA was specific to North America and the US may have
398different objectives with the UK.
399RFL (UK) and HL (UK) echoed the sensitivity of sharing information and that the UK was still
400working through future policy. In particular for this session the UK was happy to consider USMCA
401information purely as a sharing exercise and not as a negotiation. The UK was similarly consulting
402with domestic stakeholders to form up positions.
403RT (US) offered a tentative agenda for the session by picking and choosing from the USMCA
404digital chapter highlighting the server article, platform liability, source code protection, cyber
405security, tariff and non-discriminatory measures for digital products and data protection.
406RFL (UK) confirmed the UK was content to take US points of change and then offer points based
407on questions from other FTAs and countries approaches that the UK has found as part of a large
408information gathering effort in DIT. The first question was about the name change from previous
409US FTAs having an e-commerce chapter to USMCA holding a digital trade chapter instead.
410Historical Development of Digital Chapter
411RT (US) Digital chapter name evolved out of historically what was the e-commerce chapter,
412although defining the digital aspects of the chapter is always a challenge. The US FTA approach
413includes a 5-chapter models that focuses on services, investment, cross border trade,
414telecommunications and e commerce. The e-commerce chapter has existed since the USSingapore FTA. In that first iteration it was called electronic commerce, as the internet has 
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418changed the global economy the US chapter has evolved. The name change from e-commerce to
419digital trade was partially a branding decision because there is still debate on what e-commerce
420means. For the US e-commerce is a broad set of disciplines as opposed to the approach of other
421countries where e-commerce simply ends at the internet used for sales. The US view was always
422that e-commerce or the new digital trade chapter was horizontal across the FTA with broad
423applications beyond services. The US has engaged in some of the multilateral and bilateral
424conversation, although the view now is that those conversations are less productive and less
425useful. The US preference is to engage in trade or transformative policy that engages with actual
426problems.
427RFL (UK) and CW (UK) agreed that it was helpful to understand the substance and nominal
428change from e-commerce to digital trade. CW confirmed hearing about the argument that says the
429lack of definition of digital trade prevents solid rules from being created. He asked if the OECD
430work on defining digital trade was linked to the US understanding of digital trade.
431RT (US) said that important work has been done adding to the Services Trade Restrictiveness
432Index (STRI), but the OECD work has also been a bit of a learning process. The US is unsure
433about how their work will be reflected in final product, but agree that it is useful especially to
434explain trade distortions. USTR has done and is collecting barriers qualitatively, but it is a
435challenge. Ultimately the OCED definition will be a helpful baseline definition. The WTO will be
436more of a challenge. The US advocated for additions to the trade policy review and is now
437receiving the first one. The review is important and critical for understanding better services
438statistics.
439USMCA Walk Through
440RT (US) there are two articles that fundamentally solves problems for cloud services in USMCA
441article 19.11 cross-broader transfer of information by electronic means. The US has received
442complaints from cloud companies that their decisions were made based on borders instead of
443market of efficiency and the US addressed the concerns in the digital trade chapter. The US goal
444was to include space for governments to regulate while maintaining rules for commerce. The digital
445trade chapter in USMCA was modelled after TPP.
446On data flows, the critical element highlighted by the US was agreement that no parties will restrict
447information. In the US eyes, a legal prohibition of restriction exists in order to prevent an absolute
448ban. The USMCA rules do not inhibits a government’s ability to regulate, these rules are specific to
449cross border instances. The line “for the conduct of business” exists to limit the scope and add
450clarity for when there are cases where the data transferred across borders has nothing to do with
451commerce. The wording for “covered persons” indicates financial services being separately called
452out. Ultimately for data flows, the US have kept exception language. In the instance where counties
453have conflicting regulatory policy the US would fall back to a GATS Article XIV defence. Article
45419.11 exists so that USMCA member can legitimately regulate domestic sectors for a public policy
455objective as long as it does not apply additional discrimination or restriction to trade.
456The USMCA language is almost identical to the Technical Barriers to Trade Agreement. The
457approach was to lift up TPP language closer to article 14 standards. TPP has some similarities in
458article 2 in data flows and facilities. When the US started TPP talks they didn’t think data flows
459clauses needed to be address, but as the talks went on the US got cautious and decided it was
460good to add. The nature of the TPP talks made it necessary to add significant exceptions. Digital
461elements were new and there was anxiety from Southeast Asian countries which required
462concessions in the form of appearances of flexibility. Typically, the US approach is to write text
463legally tightly by provides some limits, and some robust clauses. The US had concerns with EU 
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467Indonesia trade deal and raised them with EU Directorate-General officials. The US characterized
468the EU approach as self-judging and difficult. The US said the EU was not in position to negotiate
469on GDPR with the EU, though the US would appreciate the EU be present with a more open
470ambitious mind. Ideally, the US would want to give Europeans assurance that GDPR would not be
471subject to attack in digital cooperation.
472There are couple of articles in digital trade chapter on personal information protection (Article 19.8)
473as well. The US does not always propose them in FTA’s, but they do see value in them. USMCA
474personal information protection came out of a US Australia conversation. Point 2 specifically
475obliges parties to provide protection, which is different from TPP language. The US thought more
476about what the three North American countries could do, which was easier than with the broader
477TPP group of countries. The US is hopeful that international bodies (OECD and APEC) will agree
478and carry similar texts forward. Paragraph 3 is entirely new in USMCA. It was added to lend
479specificity to paragraph 2. The language employed was important, it reads “recognizes” in order to
480grant flexibility. Paragraph 4 is standard non-discriminatory language applied to digital trade.
481Paragraph 5 is a transparency article on remedies and compliance practices.
482Paragraph 6 is slightly different from the TPP text. It puts emphasis on mechanisms to allow
483business to comply with laws in regimes they to business within. Interoperability is key to solving
484problems where countries can maintain privacy regimes for the US. APEC recognizes that
485countries have legal differences and there is support across APEC to create a similar baseline
486clause on enforceable action. From the US perspective, GDPR needs article 42 in order to engage
487with the rest of the world.
488New USMCA Items.
489Platforms:
490CT (US) Interactive computer services (Article 19.17) is the term for what is commonly known as
491platforms. The EU and US have common approaches on platform issues which the rest of the
492world lacks. The US approach was to look for where TTIP and TISA overlap. The wants to work
493with EU to come up with principled baseline reflecting both approaches. TTIP negotiations ended
494before platform rules could be meaningfully discussed. The US raised TTIP to be clear that lots of
495thinking within the US is being devoted to be accommodating US and EU law, which may make
496current UK conversations with the EU smoother on platform rules. The US will carry forward a
497similar USMCA approach, although they conceded that USMCA language isn’t perfect. The texted
498is structured with an ask of Mexico and Canada not to adopt a positive law. Canada currently has
499precedent in judicial system consistent with US asks in USMCA. While Canada future courts could
500deviate, right now both Canada and Mexico are in full compliance of USMCA requirements.
501Footnote 8 exists to further comfort and clarity Canada that Canada and Mexico are in compliance
502right now.
503The US approach is based on domestic law which was stripped out of a wider piece of legislation.
504The rest of the act was stuck down by US courts based on censorship concerns and 1st amend
505rights. In the early 1990s, Senator Wyden (D-OR) saw problem with precedent of newspaper and
506transition to digital medium. Ultimately the US agreed that publishers have right to edit,
507Bookstores do not edit based on shelving and therefore are not liable. The same law established
508that content is created by 3rd party with no role from the platform, then the platform does not share
509liability.
510“Good Samaritan” language is also included in this section to help platforms to take action without
511being liable. There has been some concerns that “Good Samaritan” language is too permissive, 
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515but Congress is still discussing options. The US approach was not to require Mexico and Canada
516to replicate US section 230. Part of the approach was to imagine changes in other countries and in
517the future. The platform language is narrower than US domestic law. If you have a law that says
518when user a harms user b that platform is liable. Platform cannot be liable. Broadly the US is
519flexible regarding the creation of rules about platforms, but they do have an affirmative obligation
520for hate speech and defamation. US domestic law is more detailed and more restrictive than
521USMCA language. USMCA language on platform protection was a challenge because Canada
522wanted to think it through and Mexico needed convincing that it was good for industry.
523There are exceptions to the platform rules, specifically in the US system there is separation
524between platform rules and IP issues. The IP chapter deals with wider range of issues and
525significant work was done to make sure the platform section did not touch on IP issues. The US
526does not view platform rules as criminal law enforcement area. Historically the government has
527given shield for platforms against law. The US wants to be clear it is not intending to link USMCA
528commitments with criminal law enforcement. 4C under platform rules seems obvious, but was
529added at the request of law enforcement agencies. Annex 19-A is very specific to Mexico’s desire
530for a compliance period to pass legislation. US doesn’t see conflict between network neutrality and
531USMCA. The normal industry practices are for net neutrality, but Mexico felt more comfortable with
532the addition of Annex 19-A.
533Source Code:
534RT (US) explained that source code protection language was initially from Japan, but has evolved
535in TPP and since TPP. There are large differences in USMCA including the added idea of
536algorithms to international rules. The simple answer is that USMCA source code protection
537remedies against the behaviour of some countries. In the US perspective rules preventing source
538code turnover are critical for fostering a fertile business environment and those rules should be
539extended similarly to algorithm based on the potential to damage to competitive advantage. The
540US finds the WTO conversation on defining whether or not algorithms are IP unproductive and
541unhelp, the US wants to protect algorithms regardless of whether or not it meets IP definitions. The
542Language changes from TPP were to eliminate some of the carve outs, In TPP talks the US was
543initially sceptical that the language was necessary at all. During consultation for NAFTA talk the US
544decided to move away from the big carved out concessions from TPP. The main carve out in
545USMCA protects government rights on regulation with respect to conducting investigations. The
546US approach attempts to put standards in rather than undo the rule of law.
547Open Government Data:
548CT (US) said open government data was an important measure of modernization that was initially
549proposed by Mexico. The thrust of the text is about increasing the value of government information
550by opening the information to the public as computers have become more widespread. In the last
55110 years the US have benefited from academia and consumer group having access to data and
552driving policy forward too. The actual text uses “recognize” in order to maintain broadness and
553ensure no action is strictly required.
554HL and RFL (UK) agreed it was interesting to hear that Mexico proposed the section and that the
555thrust of the provision quite familiar to UK government.
556Non-Discriminatory Treatment of Digital Products:
557CT (US) said that non-discrimination text is the oldest article in US practice. The new element is
558application to digital trade and the aim is for future US FTAs to skip definitions for the sake of
559eliminating duties. 
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563As sales move from physical to digital spaces there is a risk of losing WTO protections. The US is
564trying to extend application to things that are not digital that had previous protection. If all countries
565could agree, it would ideally be very helpful for business to maintain level fields across borders.
566The ecosystem around phone and apps is particularly relevant because apps created by small
567teams. The US approach prioritizes the example of apps by imagining a world where location or
568nationality of developer is an impediment to app development. The mentioned extending the
569negative list model to the digital chapter.
570RFL (UK) noted that the UK supported non-discriminatory practices at the WTO
571Online Consumer Protection:
572CT (US) said USMCA contains a competition chapter which includes consumer protection. The
573digital chapter cross references the competition chapter. Historically, recognizing the importance of
574consumer protection is critical to fostering digital trade in the US. The US Federal Trade
575Commission fed into the consumer protection language to ensure fraudulent and deceptive
576activities are comprehensively covered. The US approach is specific to the trading partner interests
577and the US recognizes that sometimes it is not helpful to formalize consumer protection in FTAs.
578Paperless trading clause
579CT (US) said that TFA at WTO makes some of the language in USMCA duplicative. The US had
580already asked Mexico and Canada to make much more substantial commitments. Access and use
581of Internet for digital trade required some neutrality elements. There are layers paperless trading
582recognizing that the world is changing, and consumers have far more access with the spread of
583personal devices. The USMCA language is partially from the Federal Communications
584Commission, although it is not intended to reflect commitment to specific telecoms rules for any of
585the three countries. Paperless trading is a challenge in the US domestic space.
586Unsolicited Commercial E Comms (SPAM).
587CT (US) explained that there are options to tackle SPAM problems and USMCA slightly different
588from TPP language. The US deems some commercial messages as legitimate as opposed to
589countries which require an opt in affirmation. The US preference is a system that allows consumers
590to opt out, but still recognized that some rules for SPAM are necessary. Rules for emails are
591different from the rules established for mobile devices and telephone generally, though the US has
592concern with apps like “Whatapp” which blur the line between digital and telecommunication.
593RFL (UK) explained that the opt in approach is the EU strategy and there is interest in the UK to
594ensure trade agreements delivering benefits for consumers
595RT (US) said the previous conversation on cyber in London was very productive and little changed
596since then. There is cooperation element that is similar to past practices included an APEC
597references.
598Conclusion of USMCA review:
599RT (US) US direction is flexible and pragmatic after agreement on USMCA. The US is eager to
600keep options open if need. The US view is that digital trade portion of USMCA is particularly useful
601because it combines past practices and future interests. 
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605RFL (UK) the UK has been looking at other types of digital chapters in last 2 years to understand
606changes and is very excited to see the real evolution in trade policy. As laid out in the UK industrial
607strategy, the UK is existed to learn and contribute to the newest and most innovative policy in
608digital trade.
609UK Consultation and Conclusion:
610CW (UK) suggested a session in the next work group on emerging technology and foreign firm
611technology.
612CT (US) Said there was space to talk about both and asked about the UK consultation process.
613RFL (UK) explained lots of research was being gathered to form portion of future policy. The
614processed started 2 years ago as DIT began gather information through town hall meetings and
615one on one engagements. It is clear that the British public is very interested in trade with the US
616and the knowledge level is growing significantly. More recently stakeholder conversations have
617shifted from general questions to the UK government gathering specific stakeholder positions
618including some subcommittee structures. Digital trade has been a top focus from the British public.
619SB (UK) explained that the consultations with the public on trade with the US, New Zealand,
620Australia and potentially exploring CPTPP formally launched on July 20 and closed Oct 26.
621Privately the UK has received 160,000 responses from US consultation. Less were bespoke
622individual responses and many more were from campaigns which has themes that were expected
623based on TTIP: NHS protection, high food standards, and ISDS challenging sovereignty. The UK
624government will not response to every comment, but instead will publishing a government
625response to concerns and opportunities including how the government will consider them in future
626trade talks.
627Questions on USMCA
628HL (UK) is 19.12 a different rule than GATTS 14. Or is there more comfortability with an appeal to
629USMCA 19.12 or GATS? Is it about the US policy regime?
630RT (US) said there was less concerns with server rules and more concern with data flows. The US
631understanding is that there is need to have flexibility, which creates less concern with an appeal to
632GATS. Broadly the serve rules are more about looking at the US policy regime and needing to
633accommodate. Domestically the US does not have strict rules on data flow. Footnote 6 in Article
63419.11 2b further qualifies all restrictions specific to cross border data flows.
635CW (UK) TPP and USMCA language has provisions recognizing regulatory rights?
636RT (US) part of the language ensuring regulatory rights was to reassure other countries in TPP. In
637USMCA Canada and Mexico did not need as much of that reassurance.
638HL (UK) asked about the difference between personal data and private data
639AS (US) answered that personal data is directly to a person, whereas private data can be broader.
640Most of the time the two are the same.
641HL (UK) asked about the linguistic difference between “recognize” and “take into account?” 
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64417
645RT (US) pending legal advices, the US mostly does not see a difference. “Recognize” sees value
646and notes the situation, where as “take into account” is a slightly different structure.
647CW (UK) asked if the non-discriminatory article is targeting practices the US has seen emerging?
648RT (US) said that all the countries agreed to make commitment to non-discriminatory with some a
649tacit understanding that none of the three countries are entirely non-discriminatory. The intention
650was to make the commitment and be kept accountable if one country has a clear pattern of moving
651in the wrong direction.
652CW (UK) asked about the references to APEC and OECD in USMCA’s digital chapter. Are there
653standards or principles you have in mind when drawing those together?
654RT (US) no parties are obligated to APEC or OECD references through USMCA. In USMCA, the
655US is demonstrating that APEC and OECD are illustrative examples, not binding clauses of
656USMCA.
657Platform protection questions:
658CW and HL (UK) asked about enforcement regarding defamatory posts and instances of hate
659speech. Is there an affirmative requirement for platforms to remove posts? Does the US have
660space to include the affirmative requirement?
661RT (US) said that some of the platform protection language in this instance was a political outcome
662with some legally clever work. Ultimately for the US, as long as a measure was aimed at the
663platform there would be no problem for the US. There might be a problem would be when platform
664becomes liable for damage from another citizen. The US goal is not to protect the worst of worst,
665but rather empower platforms.
666HL (UK) asked if American system is more restrictive and if there have been more cases where
667platforms are more liable or outcomes where they are not?
668RT—US has courts have made some common law to deal with platforms. The power lies with
669Congress, and without Congress changing the law, the US is unable to impose more restrictive
670regulation on platforms.
671CW (UK) asked why “interactive computer services” is used instead of “internet platform” or
672something else.
673RT (US) interactive comp service term comes from US domestic law where broad terms are
674applied. This is an instance of where e-commerce is different than digital.
675CW (UK) asked a question about interactions with IP and digital trade. There is a similar provision
676in JSI at WTO, but a noticeable difference between US and EU approaches.
677RT (US) said that IP issues are in one section and digital issues are in another section. The US
678wants to separate the two because it becomes easier to provide protection for copyright. This is
679due to where each provision is drawn from in US domestic law (i.e. DMCA for IP and Sec 230 for
680platform liability)
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684LQ (US) added that digital millennium copyright act qualified safe harbour different depending on
685activity. Some safe harbour is granted by being in the category defined in the act, but other
686required specific actions to qualify for safe harbour.
687CW—Platform or content provide?
688LQ (US) -- Could be either
689CT—if you don’t renew, can be pushed out a safe harbour. Also clear to emphasise that there was
690no restriction on affirmative olbigations in domestic law. A platform needed to register a valid
691agent. Notice to take down. Good faith obligation. IP chapter leads might be more useful.
692Language on trade side is high level. Not able to explain US.
693Dept Commerce —we landed closer to US domestic law than ever before
694VD (UK) asked if the exceptions apply to entirety of article. Footnotes 9 and 6 seemed to skirt
695around paragraph 3 and footnote 9 exempts something from para 2 if it falls in 4c2. What is the
696structure?
697CT (UK) said the footnote was added during negotiations. There are situations where a site is run
698through another site’s services. The US still wanted to be covered in interpretive situations. The US
699views is that exceptions and footnotes are not inconsistent with paragraph 2. In the talks Canada
700and Mexico raised that they thought it was problematic which resulted in the footnote to make the
701language it clearer.
702HL (UK) asked if a country can get around paragraph two of the platform section 2 by empowering
703law enforcement?
704CT—yes, but it’s not likely because it is direct law in Mexico and there are there legal obstacles
705where it immediately applies. In US, the implementing text is where these issues gets scrubbed
706out.
707Source code questions:
708JM (UK) asked a question about protecting trade secrets which CT (US) agreed to send follow up
709information to respond.
710JC (UK) asked about the application of source code protection to financial services?
711CT (US) said financial services are subject to their bespoke section of USMCA. Broadly, the
712source code protections covers everything. If there are references to covered persons in the
713language, it typically means that financial serves has been carved out.
714CT (US) also commented that government procurement is not covered by the source code
715protection, but the US is not opposed to thinking about it. To date the US hasn’t had interest from
716trading partner on it, but the US is open and willing to engage.
717CW (UK) asked about why algorithm protection was covered in the digital chapter instead of the IP
718chapter?
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72119
722CT (US) said that algorithms are not always considered IP in every country because of the
723creativity element, but the commercial element of algorithms made sense to group their rules in
724digital trade.
725CW (UK)—TPP and USMCA language. Provision 3. Ask Chris question. Justification for removing?
726Rights inherent?
727CT (US)—don’t think there’s a rule that prohibits private contacts?
728CW (UK)—TPP reference judicial authority in patent disputes? Was intention to make it broader?
729CT (US) —Japan’s concern from TPP. Wasn’t particularly helpful now. All rules says is can’t
730require transfer for getting into business place. Article 2 helpful. Not prohibited from article 1.
731CW (UK) —TPP change on software code change language in USMCA.
732CT(US) —again, not totally necessary in NA as w. TPP group. General rule to see source code is
733bad. Transfer is worse. If its w.in scope of legitimate government exercise its open.
734Digital Non-discrimination questions:
735CW (UK) asked if there was a customs duty point and if there was a specific target of expansion of
736that language change from TPP?
737CT (UK) historic evolution in the text from the Singapore text to the USMCA text. The intent is the
738same, the US wants to capture formal customs duties and other charges that are discriminatory.
739The US does not have a strong desire to expand or contract the language compared to TPP.
740CW (UK) asked about a TPP language change on the cultural carves outs
741CT (US) said that the cultural carve out made some of the agreement slightly irrelevant and
742explains some of the changes from TPP. USMCA is structurally different from NAFTA because of
743carve outs that previously existed.
744CT (US) said a number of articles did not change including maintenance of UNCITRAL and
745accepting electronic signature. The US Federal law is a model law that 29 individual states have
746adopted to commit to non-discriminatory. In contrast to EU approach, which has government
747endorsement of validity of signatures, the US has no interest to endourse some third-party
748signature verification. The important aspect is that government cannot deny a form based on
749electronic signature.
750Consumer Online protection questions
751CW (UK) asked if “In use of Public interest” intending to incorporate article 14 of GATS coverage.
752CT (US) said no, but that the phrase was commonly understood in the US legal system
753Paperless trading questions:
754CW (UK) asked about the footnote for TPP that recognized something, which was removed in
755USMCA?
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759CT (US) said that the language was included a concession to Singapore, but the US doesn’t view it
760as a legal concern necessary for USMCA.
761Key Actions and Next Steps
762VTC to be planned as a follow up between this session of the working group and the next one
763RFL—joint discussion with colleagues on consumer online protection across government for the
764next session
765CT and Chris Woodward to have a further chat on details
766FOR INTERNAL DISTRIBUTION ONLY
767Session Lead Analysis/Comments
768Suggested issues for Session Lead to add:
769• Atmosphere of the meeting (relaxed, but content focused)
770• Areas to push in future working groups (digital element of procurement)
771• Pushback from counterparts, as well as the potential implications (GDPR approach v APEC
772approach)
773• Initial thoughts on the success of the meeting/the extent to which objectives were achieved
774Chris Woodward – Deputy Head of Services – Digital, DIT
775The session was positive and fairly relaxed. With both the US and UK setting out their domestic
776sensitivities around referencing ‘offers’ or ‘established positions’ at the outset, the session was held
777very much in the spirit of information sharing. The US was very keen to sell the benefits of their
778new digital chapter from USMCA, which USTR are clearly delighted at having landed (having lost
779the deliverable of the ambitious digital package from TPP).
780While much of the chapter echoes CPTPP provisions, and there are some ‘natural evolutions’ of
781ambitious coverage, it was definitely notable that there were many US wins in the new chapter that
782were reflective of US domestic laws and regulations. USTR were quite keen to play these down
783during their presentation of new provisions, though the targeted questioning we were able to utilise
784in the session was very helpful to break down justifications and precedents. Some of the US
785messaging was occasionally crossed (e.g. around proactive versus reactive carve outs), and
786clearly the result of stakeholder lobbying on the US side. Clearly US were not happy with the
787breadth of the Canadian cultural carve out, though this was not discussed.
788HMG dynamic in the room was quite positive, with both DIT and DCMS leads asking some probing
789questions. DCMS provided detail comments where need on the UK system and asked probing
790questions on the US system, while DIT leads were more familiar with the USMCA material and
791how it varied from other FTA precedents, asking detailed questions on drafting that drew out some
792key differences in the US approach and tactics that we can expect to play out in a UK-US
793negotiation. A helpful dynamic with clear and different roles for everyone one in the room. Clear
794cross over with IP and Gov procurement that will need further policy development across TPG.
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798OPENING PLENARY SESSION
799Date: November 5, 2018
800Time: 09:00 – 10:30
801Participants
802Name Department/Directorate
803Chaired by
804Dan Mullaney Assistant USTR for Europe
805Oliver Griffiths Director, Americas Negotiations and
806Strategic Engagement, Department for
807International Trade
808All members of UK and US delegations
809present
810
811Key Points to Note:
812Dan Mullaney (DM) opened the Plenary Session and offered his condolences on the passing of
813Cabinet Secretary, Jeremy Heywood. He then highlighted that there would likely only be one more
814TIWG before the end of March 2019. We therefore needed to make as much progress as possible
815to target 1st April 2019 as the potential start of negotiations.
816DM then ran through an update US trade policy. USTR Lighthizer has written to Congress
817notifying of the Administration’s intent to start trade talks with the UK (EU and Japan). This
818was a formal part of Trade Promotion Authority (TPA) and had to happen at least 90 days before
819negotiations commenced. The next step was a federal register notice, kick-starting a public
820consultation period – including a public hearing [Comment: the federal register notice was posted
821on 16 November and the public consultation is open until 15 January 2019, with a public hearing
822on 29 January]. Following this, USTR will have to issue its detailed negotiating objectives for a
823UK-US FTA 30 day before negotiations starts. If 1 April was the target, objectives would need to
824be sent to Congress no later than 27 Feb. We could however continue to “lay the groundwork” for
825a potential FTA.
826DM said that the Administration was pleased with the results of the recently agreed US-MexicoCanada Agreement (USMCA). The agreement was currently going through a legal
827scrub. Factsheets on were available on the USTR website, including on the “new and innovative”
828parts of USMCA (digital trade, SME, innovation policy). DM highlighted that USMCA gave a good
829indication of the Administration’s priorities for future trade agreements. That said, USMCA was
830designed to address some issues particular to the US-Canada-Mexico trading relationship: A UKUS FTA would focus on issues specific to the UK.
831On EU-US talks, USTR had been working “aggressively” with the Commission to identify NTBs
832which could be eliminated in the short-term, outside the scope of an FTA. USTR Lighthizer and
833Commissioner Malmstrom were due to meet again on 14 November [Comment: now
834happened]. Cooperation on 3rd country issues, for example China, were also being
835discussed. Where the WTO rules were judged to have been infringed upon, the US was working
836directly with the EU. In areas outside the scope of the WTO, US was using its trilateral discussions
837with the EU and Japan to discuss how to address international rules to deal with China. The
838Administration was focussed on how the US and allies could increase the leverage on China to
839change its prejudicial behaviour now. Whilst international rules were important, they could take a 
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843long time to negotiate and it was also questionable whether China would ultimately comply with
844them. The focus therefore had to be on how to change China’s behaviour now. DM indicated that
845discussions were progressing, but that the Administration wanted more ambition.
846
847Oliver Griffiths (OG) followed by updating on recent events in the UK. The UK consultation on
848the US, NZ, Oz and CPTPP had closed on 26 October. There had been unprecedented levels of
849interest with approximately 650,000 responses overall, of which 160,000 had been specific to the
850US. Some responses had been elated to campaigns led by NGOs, with echoes from TTIP (NHS,
851ISDS, food standards). There had however been over 6,000 substantive individual responses
852specific to the US. The aim was to publish a government response to the consultation within 12
853weeks – this would however be difficult to meet. HMG would also likely publish its outline
854approach to a UK-US FTA (analogous to USTR’s detailed negotiating objectives to Congress) at
855same time as outcome of consultation. The timing had yet to be confirmed.
856On the Trade and Customs Bills: the Customs Bill had received Royal Assent on 13 Sept and
857was now the Customs Act; the Trade Bill was on a slower timeline and was unlikely to get assent
858this year.
859DM then stated that the US wanted an ambitious FTA with the UK and would therefore
860be watching the UK’s negotiations with the EU carefully, particularly on the Future Economic
861Partnership and any free trade area for goods and a common rulebook which went with it. The
862Administration was concerned that this could limit the scope of any UK-US agreement on
863regulations (e.g. SPS). We needed to remain vigilant and creative to ensure there was enough
864space for UK-US FTA – this would be very important to Congress.
865On Short Term Outcomes (STOs), DM and OG agreed that the 3
866rd UK-US SME Dialogue had
867been a great success with: both UK and US SMEs helping each other find ways forward; and
868enabling the UK and US governments to showcase all the resources available for SMEs (with the
869latest focus on digital trade). Both were looking forward to the inaugural Legal Services
870Roundtable the next day. OG highlighted the joint economic study on IP – and the desire to
871agree a deadline for completion – as well as the new work-stream on non-trade STO being driven
872by the Economic Working Group.
873DM and OG also agreed on the importance of the work on taking place on Continuity
874Agreements – for both a “deal” and “no-deal” scenario.
875Rhys Bowen (UK), Director International Agreements and Trade, Department for Exiting the
876EU then gave an update on Brexit. The UK was trying to conclude two agreements: i) the
877Withdrawal Agreement - a Legal Treaty setting out terms of the UK’s exit from the EU; and ii) the
878Future Framework – a political declaration setting out broad parameters of the UK’s future
879economic and security relationship with the EU.
880On the Withdrawal Agreement, the most difficult parts had been left until the end. Lots of good
881progress had been made, including on some tricky issues (Cyprus SBAs, Gibraltar, other technical
882issues). Agreement was almost complete, with the main sticking point being Northern
883Ireland. Here, lots of issues had been resolved, including the Common Travel Area. The main
884outstanding issue was over the “back-stop”. The “back-stop” reflected a very strongly held and
885shared objective by the UK, Ireland and the Commission that it was imperative for any
886arrangement vis-à-vis Northern Ireland to support the Good Friday Agreement, which meant
887having no hard border. The UK government believed that in the long-term, this could be achieved
888through the future relationship. This was the aim of the Chequers Agreement. The “backstop”
889dealt with scenario whereby there was not quite enough time in Implementation Period (IP) to 
890OFFICIAL – SENSITIVE (UK eyes only)
891
89223
893finalise these arrangements, meaning that there might be a need to fall back on a separate set of
894arrangements for a small period of time. The PM had been clear that the “back-stop” was merely
895an insurance policy and that she did not intend to use it – if it was necessary, it would only be used
896for a very short period of time. There were currently two issues blocking agreement on the “backstop”: i) the scope of the UK-EU customs relationship – the Commission had published a proposal
897which saw Northern Ireland in isolation remaining in the EU Customs Union. The PM had rejected
898this as sovereignty issue – no British Pm could agree to separate Northern Ireland from the rest of
899UK (a position which held unanimous support in Parliament); and ii) duration – the EU was
900proposing an “all weather back-stop”. It was very important for the UK that the “back-stop” was not
901indefinite and that we could not be held in it against our will
902The Future Framework was a political declaration designed to provide overall guidance on what
903future UK-EU relationship would look like on both economic and security issues. The UK’s
904objective was to ensure a deep and meaningful relationship with the EU, including via frictionless
905trade; upholding the Good Friday Agreement and therefore peace and stability in Northern Ireland;
906and allowing us the freedom to do future trade deals with third countries. This Future Framework
907was in a good place overall and once the Withdrawal Agreement had been finalised should fall into
908place quickly.
909Once both the Withdrawal Agreement and Future Framework had been finalised and agreed by EU
910Leaders, the PM would need to take the deal to Parliament for a “meaningful vote”, which would
911likely take place within two weeks of any European Council. This was likely to be a very intense
912time in British politics. [Comment: the UK and EU have now reached agreement in principle,
913subject to agreement from EU Leaders at an extraordinary European Council].
914
915FOR INTERNAL DISTRIBUTION ONLY
916OFFICIAL – SENSITIVE (UK eyes only)
917
91824
919CUSTOMS
920Date: November 5, 2018
921Time: 16:00
922Participants
923Name Department/Directorate
924Neil Feinson (Chair) DIT
925Adam Fenn DIT
926Rhys Davies DIT
927Tim Ward DIT
928Cleo Bourote DIT
929Wyndham North HMT
930Philip Bower HMRC
931Rhys Bowen DEXEU
932Megan Roberts HMT
933Mojgan Ahmad HMRC
934Christina Kopitopoulos US Customs
935Daniel Mullaney USTR
936Sushan Demirjian USTR
937Tim Wedding USTR
938Alexandra Whittaker USTR
939Yuliya Gulis Attorney advisor for valuation and special
940programmes
941Key Points to Note:
942This session was Chaired by Neil Feinson and covered both the development of the FCA and a
943first preparatory discussion on a future UK-US Customs and Trade Facilitation Chapter.
944Facilitated Customs Arrangement
945The US asked the following questions on the FCA, which were answered by the HMT and DIT
946team:
947• How will products going to the US via UK from EU be treated? For example, how could the US
948ensure preferential treatment to UK originating products was not extended to EU products?
949• DIT explained that these would not be treated any differently than under a standard US FTA,
950and origin could be verified by supplier declarations.
951• How do you anticipate new or existing EU FTAs being treated under the FCA?
952• HMT explained that the FCA gives the capacity for separate UK and EU customs policy.
953• The US explained they have seen EU reaction and concerns about UK officials collecting
954duties on behalf of the EU. They asked what other issues are the EU raising about the
955applicability of the FCA.
956• HMT explained that it is an ongoing negotiation
957OFFICIAL – SENSITIVE (UK eyes only)
958
95925
960• When do you envisage being able to create an independent UK Tariff Schedule?
961• DIT/DEXEU explained that the intention was to create an independent schedule following the
962IP, but that this would depend on our negotiations with the EU
963• The US asked how we would treat import taxes.
964• HMT explained that this would be dealt with separately and we would seek to align with the EU
965on cross border import taxes.
966Outcome: Overall it was agreed this had been a useful discussion, with the UK able to answer all
967of the US questions, albeit at a high-level. The UK reiterated that it was keen to continue feeding
968US input into the design of the FCA. No firm follow-up was agreed to this part of the session.
969Customs and Trade Facilitation
970The US gave an overview of its approach to C&TF in bilateral agreements, which is to:
971• Take what has been agreed in global agreements, such as the TFA, and set further obligations
972in bilateral agreements that will help enhance the implementation of these agreements.
973• Try to address concerns from stakeholders and use this to enhance and improve the
974implementation of global agreements
975The US set out that areas of interest in bilateral agreements were:
976• Cost Effectiveness and time. The cost of compliance, documentation processes etc. Trying to
977reduce data and document processes that do not enhance compliance. Focus on quick release
978of the goods and procedures that reduce time and admin burden.
979• Look for commitments in automation as a way to achieve these efficiency goals.
980The US also set out that the USMCA represented the most up to date example of a model US
981customs chapter, alongside the customs related elements that appear in the Market Access
982chapter of USMCA.
983Outcome: While short, it was agreed that this session had been a very useful first discussion of the
984sorts of issues that it would be useful to cover in a more detailed session at a later date. No firm
985actions were agreed. However, the US stated it would share some background on the principles
986that underpin the single window described in USMCA. The UK also stated that it would be happy to
987provide more details on what a future UK independent customs regime looked like, in any future
988session with the US. Caveating this by saying that some of this detail was still in development.
989Report of Discussions and Outcome
990Facilitated Customs Arrangement (FCA)
991To set the scene for the FCA discussion RB (UK) gave a brief overview of the Brexit presentation
992he had given in the plenary.
993WN (UK) then gave a short overview of the design of the FCA and the principles it is built on, which
994balance both the UK’s future relationship with the EU and the UK’s future independent trade 
995OFFICIAL – SENSITIVE (UK eyes only)
996
99726
998policy. Furthermore, WN gave an explanation of how the FCA will function in practice. To which the
999US asked the following questions:
1000Within a customs bill is there discussion of how EU FTAs would factor into a customs union?
1001WN explained that the key element of the FCA, is that it is not necessary to be fully aligned with
1002EU trade policy. This proposal gives the UK the Flexibility of two separate trade policies and
1003ensures that tariffs are only applied where appropriate. AF(UK) continued that, the ability to
1004implement UK and EU trade policy is not limited to tariffs but also other aspects of FTAs
1005e.g. RoO. Therefore, a distinction between the implementation of EU and UK trade policy can be
1006seen.
1007The US have understood that the customs union agreement between Turkey and the EU has
1008recently been reopened. Turkey have complained that the FTA partners were able to ship duty free
1009via the customs union with Turkey but Turkey did not hold similar benefits. Similarly, what role
1010would FTAs play in a customs arrangement that the UK envisions with the EU?
1011WN explained that the situation is slightly different for the UK, as the UK is not proposing to apply a
1012common external tariff with the EU. Therefore, if the EU signed a new FTA the UK would not face
1013risks similar to Turkey as described in the scenario.
1014Are you anticipating a transition period of some kind and how long would this be?
1015WN explained that the UK are hopeful to agree an Implementation Period with the EU. It will be
1016necessary to take a phased approach to the implementation of the FCA. The UK is
1017currently considering how can we best manage these phases to be able to operate an independent
1018trade policy as soon as possible.
1019How do you anticipate maintaining control of goods coming into the UK via Ireland or elsewhere in
1020the EU? What procedures do you anticipate to maintain origin of goods that come under
1021preferential treatment?
1022AF explained that there would not be a difference to a standard FTA. In an FTA
1023evidence is required for a ‘value add’ rule. This is often provided by supply declarations. A supply
1024declaration would demonstrate whether the value of a product had increased either in the UK or
1025as non-originating content. In this way, supply declaration could be used to assess whether the
1026rules that had been agreed between the UK and the US had been met.
1027With reference to the response to the above question, please describe how you anticipate this
1028would work with the Irish border. Minimal customs control at the border would raise questions over
1029how you could verify the origins of the goods that have passed through that border.
1030AF continued that from a purely Rules of Origin perspective, the UK does not consider that the
1031solution to the Northern Ireland border will impact goods travelling to and from the UK as a part of
1032the FCA. The focus would be upon following the chain of supply and where value has been added
1033to a product. The Irish border under the FCA is not different to how we would treat other
1034borders e.g. with France. There is no proposal to introduce new checks or measures at borders
1035with France or Ireland. The Intention is to produce frictionless trade, and this can be done
1036by verifying goods via evidence and declarations rather than checks at the border.
1037The way you are envisioning this is that in cases where products come in destined for the UK
1038market, the tariff duty assigned to the product would be less than the EU rate. Thus, a rebate can 
1039OFFICIAL – SENSITIVE (UK eyes only)
1040
104127
1042be issued to the importer. However, in a situation where the EU has negotiated new agreements
1043and the products entering the UK subject to the EU deal would be lower than the UK rate. I
1044assume you would charge the higher rate and the importer of the product ultimately going to the
1045EU would need to demonstrate the need for a rebate if this product was transhipped via the UK.
1046WN explained that this was correct. The FCA would work in reverse. The importer could
1047use special procedures such as transit to avoid this.
1048What issues are the EU raising about the applicability of the FCA.
1049WN expressed that the UK believes that the FCA is legally possible and WTO compliant. The
1050UK recognises the EU’s concern to ensure that the right level of governance and trust is in
1051place. A framework has been set up to discuss how this would work and how the correct
1052governance can be put in place to ensure that all parties have the right level of trust.
1053SD(US) expressed that the FCA is a good idea. However, they ask that the UK ensure that the
1054processes are transparent and cost effective i.e. using advanced technology and or automation to
1055ensure that goods continue to move freely.
1056Currently, tariffs are aligned with the EU. When do you expect to create UK tariffs?
1057NF explained that there are a range of potential scenarios based on EU negotiations. However, the
1058UK anticipates that at the end of the implementation period we would be in a position establish our
1059own MFN tariff.
1060The US expressed their thoughts that within the FCA approach, the UK is taking on the
1061administrative burden between the EU and RoW. It would appear that the UK would now be in the
1062position to take a leadership role in automation, where the EU has fallen behind. Movement
1063towards automation would be a key factor in determining whether the UK remains a viable place
1064of transhipment. The failure of the UK to move towards automation will make the UK a less
1065desirable transhipment location.
1066Do you plan to handle taxes in the same way as duties e.g. VAT?
1067Tax will be handled slightly different. The UK proposal is to align on cross border VAT
1068rules with the EU so that goods can continue to move smoothly across the border without the need
1069to make VAT declarations. Current processes for RoW would remain in place.
1070Customs and Trade Facilitation
1071SD (US) outlined the US approach in a bilateral FTA. The US seek to achieve two objectives:
1072• Take what has been done globally and improve in this area. By setting further obligations that
1073will help enhance the implementation of these agreements.
1074• To address concerns from stakeholders and use this to enhance and improve the global
1075agreements
1076The US have set a new standard for C&TF in north America, as can be seen in the latest USMCA
1077agreement. The focus is on transparency, i.e. information available online to exporters regarding
1078exporting rules, fees and taxes. Preserving due process is also a key priority for the US.
1079Protecting the rights of traders and ensuring that their rights and obligations are known and
1080respected by appeals and advance ruling. SD highlighted current work that the US is undertaking
1081in penalties as an example of this. The US has a successful voluntary disclosure programme, in
1082which traders can admit to having made a mistake in customs declarations and pay any money 
1083OFFICIAL – SENSITIVE (UK eyes only)
1084
108528
1086owed. This does not count as a penalty as they have come forward voluntarily. Traders find this
1087valuable and successful.
1088Finally, SD outlined US interests in cost effectiveness and time. The US seek to reduce data and
1089document processes that do not enhance compliance. Their focus is on the quick release of goods
1090and procedures that reduce time and admin burden. E.g. AEO Schemes.
1091NF questioned whether there were any elements of C&TF that cause problems in negotiations
1092even when countries agree to their benefits.
1093SD explained that there is always an element of what countries are willing to commit to on paper.
1094Countries may not wish to be responsible for knowing where all their fees are going. The US has
1095found that generally including an article in a bilateral agreement will improve the domestic
1096situation. E.g. a key US concern is express shipments, by adding automation to FTAs they have
1097been able to improve this domestically. The US when negotiating a new bilateral agreement would
1098be disappointed to see anything less than the ambition that they have already achieved.
1099RD questioned whether there are areas where it would be useful to exchange information e.g. fees
1100and charges or US experience on how they created a single window.
1101SD responded that in terms of preparatory conversation it would be beneficial if the UK shared
1102where their current stages are in automation and how far they are willing to take this. In particular
1103whether the UK could share Data specifics to the UK that the EU would not hold.
1104The UK agreed to share information in this area at a future meeting.
1105SD continued that in areas of EU legislation, the EU commitment is generic, and the details of
1106implementation is left to member states. The US would be interested to hear UK plans e.g. an
1107appeal system to return duties, what will penalties look like what is the new process?
1108The UK agreed to share information in this area at a future meeting.
1109RD asked whether the US could discuss their involvement in the TFA and how they have built
1110upon these principles. SD explained that in early US FTAs e.g. Singapore/Chile most customs
1111commitments revolved around advance shipments, appeals etc. The TFA reflects many of these
1112customs areas, but also commitments that would not normally be found in a bilateral customs
1113chapter e.g. inward processing can be found in an FTA but not necessarily in the customs chapter.
1114Since the TFA the US has negotiated TPP and US MCA. These FTAs contain articles that go
1115beyond TFA e.g. Publication. Previously the requirement has been that information must be
1116published in a Gazette, this is now required to be published online as this is more useful to
1117traders.
1118SD continued that there are other valuable articles that the US utilises that have not been included
1119in the TFA, e.g. standards of conduct. USMCA contains the obligation that a customs officer should
1120not use penalties in a way that would benefit the officer. It should be clear that no renumeration of
1121a customs officer should come from giving penalties. Officers should not have any conflicts of
1122interests between work and personal life.
1123AF mentioned that the TFA crosses over several areas, what would you give us as an example of
1124the best US customs chapter. SD answered that the USMCA is the most recent and up to date
1125example of US ambitions in an FTA customs chapter.
1126Key Actions and Next Steps
1127OFFICIAL – SENSITIVE (UK eyes only)
1128
112929
1130• No Key actions were agreed in this meeting
1131Session Lead Analysis/Comments
1132As set out above, a useful couple of meetings, friendly in tone and helpful in preparing the ground
1133for future engagement but no urgent follow up. We agreed to aim to share more information about
1134our likely future customs regime at a future unspecified meeting, subject to the large dependencies
1135on EU negotiations, but this was a soft commitment in recognition of the uncertainties about the
1136development of the future regime. 
1137OFFICIAL – SENSITIVE (UK eyes only)
1138
113930
1140INVESTMENTS
1141Date: November 5, 2018
1142Time: 10:45 – 17:00
1143Participants
1144Name Department/Directorate
1145Lola Fadina DIT – DD Investment
1146Matt Ashworth DIT Investment
1147Chrysoula Mavromati DIT Legal
1148Rebecca Fisher-Lamb DIT – DD Services
1149Johanna Michael DIT – Services
1150Jaya Choraria HMT
1151James Flannery HMT
1152Ian Bhullar BEIS
1153Lauren A. Mandell USTR - Deputy Asst. USTR for Investment
1154Emily Kilcrease USTR - Investment
1155Thomas Fine USTR - Services
1156Also in attendance at margins: US officials from US Treasury, State Department, Dept. of
1157Commerce, Small Business Administration. 
1158Key Points to Note:
1159• USTR presented on the key provisions of the USMCA Investment chapter, and how the
1160US’s thinking has developed compared to previous practice. There was a particular focus on
1161the implications of the changes to US approach to ISDS, minimum standard of treatment,
1162national treatment and most favoured nation. Other areas discussed included the US thinking
1163on right to regulate and provisions around CSR and Senior Management and Board of
1164Directors (SMBD) within the chapter.
1165• The mood of the session was highly collaborative, and the US welcomed the opportunity to
1166spell out clearly why it has adopted the positions within USMCA noting this was a negotiated
1167outcome. The US was respectful of the fact that the UK’s policy positions on investment are still
1168under development.
1169• The US was particularly robust on the opposition to the EU’s proposed Multilateral Investment
1170Court (MIC) (‘a seriously flawed approach’) and that adopting such an approach in a future UKUS FTA is ‘untenable with US preferences’. They were clear that the ‘traditional ad hoc tribunal’
1171approach is their favoured method, particularly as it is the system in which they have won 17/18
1172litigation cases. US equally clear that a ‘one size fits all approach’ MIC, which can ‘enshrine
1173misunderstood precedents’, is not the way forward and they would look to ‘convince the UK
1174otherwise’ in any negotiation. If the UK preferred a court mechanism it would be a ‘high level
1175concern’ for USTR and Ambassador Lighthizer personally. The US specifically questioned the
1176UK’s ability to manoeuvre during any IP and at the 1st-5th April UNCITRAL meetings and in
1177multilateral negotiations going forward given the duty of sincere co-operation with the EU. 
1178OFFICIAL – SENSITIVE (UK eyes only)
1179
118031
1181• On areas such as CSR inclusions, the US was eager to point out that while the
1182provisions in USMCA cover the OECD guidelines on Multinationals, domestic law should bear
1183most of the weight of these provisions, and not the text of an FTA. US continues to have
1184concerns around recent trend for agreements to include separate articles on the “right to
1185regulate” given this exists under international law and is also enshrined in the preamble of the
1186agreement.
1187
1188Report of Discussions and Outcome:
1189USMCA
1190LM (US) outlined the investment provisions in USMCA. He had led on the investment negotiations
1191and said that the final text broadly reflected traditional US principles on investment protections,
1192such as national treatment and MFN, minimum standard of treatment (‘MST’) but also
1193some improvements Aon both the defensive and offensive side: the former
1194include mainly clarifications to the different provisions, which can also be found in (CP)TPP, to
1195assist tribunals in their interpretation; improvements on the offensive side include, among
1196others, barring incentives for companies to use local technology, in stark contrast with previous US
1197practice. On investor-state dispute settlement (ISDS), the US took a new approach with
1198USMCA. The provisions only apply between the USA and Mexico, while disputes
1199between Canadian investors and the US or vice versa will be referred to state-state dispute
1200settlement. With respect to Mexico, there are two approaches: a) Annex 14D which applies to ‘all
1201investors/all sectors’ disputes. In this case, investors may only bring claims for post-establishment
1202National Treatment, MFN, and Direct Expropriation (as opposed to previous US practice
1203which also covered pre-establishment NT and MFN, MST and indirect expropriation). Foreign
1204investors must pursue local remedies in the host state for at least 30 months before bringing a
1205claim or until they obtain a final judgment before that time; b) Annex 14E covers disputes
1206arising from contracts with the federal government in a limited number of sectors (oil and gas,
1207power generation, transportation and infrastructure) and allows for ISDS claims based on the
1208totality of the UMCA investment protections, whilst pursuing local remedies will not be a
1209prerequisite. Again, this only applies to the US and Mexico. Interestingly, under (b) full protection
1210is granted to the affiliates and subsidiaries operating in the same sector even if this other
1211investment is not conducted under the same contract.
1212LF (UK) asked if the changes to ISDS signalled a change to the US approach for future FTAs. US
1213replied that USMCA should not necessarily be seen as setting a precedent given specificities of
1214these negotiations and the ease with which US companies could relocate to Mexico. For example,
1215some changes were consistent with provisions agreed in TPP and other changes were a
1216“negotiated outcome”. CM (UK) asked how the US envisaged the state-state mechanism to play
1217out in practice, including whether this could possibly prejudice access of SMEs to dispute
1218settlement given that investors will need to lobby the government as in the case of WTO
1219disputes. The US replied that their goal has always been to ensure that US companies have
1220access to dispute settlement, but where ISDS was eliminated USG could need to engage to make
1221sure companies were fairly treated. The US had not yet come to a view as to how to ensure that
1222the traditional redress (including compensation) available through ISDS could be delivered through
1223state to state mechanism. UK asked about ISDS coverage for financial services claims and US
1224replied that they’ve never had ISDS provisions for the full scope of financial services claims,
1225though US bilateral investment treaties provided some coverage. Reactions to the USMCA ISDS
1226provisions has been mixed, with US business glad that there are some ISDS provisions, though
1227some were unclear as to how some sectors had been chosen and some wanted broader
1228application. 
1229OFFICIAL – SENSITIVE (UK eyes only)
1230
123132
1232Other ISDS-related novelties in USMCA include the definition of ‘claimant’ in chapter 14 which specifically
1233excludes an investor that is owned or controlled by a person that the other Party considers to be a non-market
1234economy. LM (US) further pointed to Article 32.10 on non-market economies, which provides that if
1235one of the other treaty partners seeks to negotiate with a non-market economy, there is a
1236requirement to present the text to the other party whilst the latter maintains the right to
1237terminate the agreement should the agreement with the non-market economy enter into force. “It’s
1238a broader concern with non-market economies using the benefits of the Investment chapter to use
1239ISDS against the United States and a broader concern that they don’t follow the rules, engage in
1240practices that are significant enough that they shouldn’t have access to these tools. We don’t want
1241to give investors from those jurisdictions access to those tools, due to the threat they pose. The
1242fact is that even if there are few or no enterprises that meet this definition currently, there could be
1243enterprises that meet this moving forward,” explained LM (US). US specifically name-checked
1244China in this respect.
1245LM (US) also referred to certain amendments to the provision on awards. These include a
1246clarification that an investor may only recover based on satisfactory evidence for loss that is not
1247purely speculative. This is an affirmation that there must be an evidentiary basis for the award of
1248damages. The other change is Footnote 26, regarding remedies that a tribunal may order.
1249Essentially, tribunals may only award monetary relief. Stakeholders have looked for specific
1250language, such as this, to make clear an award does not trigger changes to laws and
1251regulations. LM (US) further explained that the ‘for greater certainty’ language is intended
1252to calibrate the meaning of certain contentious provisions.
1253As it relates to the concern of “double hatting,” where arbitrators concurrently serve as counsel,
1254both sides agreed that the situation raises potential conflicts of interest. However, LM (US) noted
1255that a sweeping ban would “eliminate the diversity of the pool of arbitrators” and that a “wide choice
1256[of arbitrators] is very important.” He also noted that it would negatively affect young arbitrators ...
1257you may want a mix of young and old arbitrators. LF (UK) stated that “it’s useful to understand the
1258real impact on cases and the outcomes of tribunals; this is what we are interested in.” While not
1259perfect, pointing to the International Bar Associations rules on conflicts of interest (“IBA Rules”) and
1260supplemental guidelines, they are “the best we have,” said LM (US). He also mentioned that a lot
1261of work is being done as it relates to the Code of Conduct for arbitrators, i.e. ICSID/UNCITRAL
1262work.
1263Minimum Standard of Treatment (“MST”)
1264LM (US) noted that the US approach to MST is “distinct” from that found in other investment
1265agreements in that the US links MST to customary, international law (CIL). “For us, this is a critical
1266concept,” said LM (US). He explained that from their perspective where the standard language on
1267MST/FET is provided without tying it to CIL, tribunals have a lot of unchecked discretion to interpret
1268what that means. To lift any uncertainties regarding the content of the MST, the NAFTA
1269Commission (made up of the Trade Ministers of Canada, the United States, and Mexico) issued in
12702001 a binding note of interpretation, which provided that the MST is linked to the CIL and
1271thus is distinct from an autonomous standard. The US has made clear in their submissions before
1272arbitral tribunals that the MST is an umbrella concept reflecting a set of rules that, over time, has
1273crystallized into CIL which requires establishing State practice and opinio juris. According to the
1274US, there are two standards that have been fully formed under the CIL: the denial of justice and full
1275protection and security standards.
1276The Trans-Pacific Partnership (“TPP”) agreement was raised as another example of trade deal
1277clarification. In TPP, there was another clarification on legitimate expectations, which has been
1278incorporated in the USMCA too. The language sets out that the mere breach of an investor’s
1279legitimate expectations does not result in a breach of MST. This clarification was added in 
1280OFFICIAL – SENSITIVE (UK eyes only)
1281
128233
1283response to the Bilcon case, where the tribunal placed a great deal of importance on the investor’s
1284legitimate expectations to make a finding of the MST breach.
1285Another clarification that has come up in the context of litigation is this relating to the burden of
1286proof. The claimant bears the burden of proving certain state conduct is violating the CIL. The US
1287has repeatedly made this point in the submissions before arbitral tribunals.
1288LM (US) also discussed the ‘open vs “EU” closed list’ approach to the provisions on “fair and
1289equitable treatment”. The US questioned what is the theory of having a closed list and
1290whether this is about providing greater rights to investors. Although their understanding is that
1291this has been intended to provide a narrower scope, the concepts contained in the closed list are
1292subject to a great amount of subjectivity, which could result in providing investors with wider
1293protections and lead to increased claims than originally envisaged. CM (UK) noted that NAFTA
1294tribunals have not always consistently interpreted the MST, pointing to certain NAFTA awards. In
1295response, LM (US) explained their view that in those cases where the US has been a respondent,
1296the tribunals have consistently interpreted the MST because of the consistent way the US has
1297been pleading its cases, most recently in the Glamis and Apotex cases, whereas other
1298tribunals might have not been as consistent because of the inconsistent way other NAFTA states
1299have pleaded their cases.
1300LF (UK) noted that as the UK looks to previous practice and the EU’s closed list idea provides an
1301opportunity to further clarify this. Though she cautioned that “we haven’t moved away from our
1302previous treaty approach.” This will be something to discuss in due course.
1303National and Most-Favoured-Nation (“MFN”) Treatment
1304LM (US) noted that the MFN treatment rule is parallel to the national treatment rule. The US noted
1305that the non-discrimination standard is intended to protect the full life cycle of the investment. They
1306also referred to the distinction between ‘in like situations’ language that appears in older US
1307treaties and ‘like circumstances’ noting that these are used interchangeably and there is no actual
1308difference in their meaning. Whether treatment is accorded in like circumstances depends on the
1309totality of the circumstances, including whether the relevant treatment distinguishes between
1310investors on the basis of legitimate public welfare objectives. The US noted that the ‘in like
1311circumstances’ requirement has been interpreted with a remarkable degree of consistency by
1312investment tribunals. “Post-2004 and in the USMCA, we explicitly clarify that you cannot invoke
1313ISDS under other agreements. We would want to do the same in the UK-US FTA,” LM (US)
1314specified. This aligned with MA’s (UK) description of UK emerging policy thinking on MFN and
1315ISDS if it were to be included in future agreements. USMCA also contains a clarification of the term
1316‘treatment’ which may include measures adopted in connection with the implementation of
1317substantive obligations in other agreements but explicitly excludes the provisions themselves. CM
1318(UK) asked why they have introduced this clause in the dispute settlement chapter (which only
1319applied between the US and Mexico) as opposed to the substantive part, where it normally
1320appears in other agreements. LM (US) replied that they consider this to be a unique ISDS
1321issue that is not expected to arise in the context of State-to-State dispute settlement because it
1322would raise questions of treaty-shopping that no government would argue on behalf of their
1323investors.
1324On burden of proof, LF (UK) asked for clarification on the burden of proof standard required by
1325complainants. LM (US) pointed to the United Parcel Service of America, Inc. (UPS) v. Government
1326of Canada case, which articulates the three-step standard. In line with this, a complainant has the
1327burden of proving nationality-based discrimination. 
1328OFFICIAL – SENSITIVE (UK eyes only)
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133034
1331The US went on to explain the distinction between ‘best in-state’ vs. ‘best out-of-state’ treatment. “Our
1332normal practice is state-level treatment, you compare state-to-state, not state-to-federal,” said LM
1333(US). “Traditionally, the US goes for the ‘best out-of-state’ treatment: foreign investors get the best
1334treatment that Florida accords to investors from other states. We do comply with this rule,” said LM
1335(US). The US also noted that they can move to provide “best in-state” but this would be subject to
1336negotiated NCMs.
1337On pre-establishment ISDS claims, LF (UK) explained that traditionally the UK (and EU) have not
1338opened up ISDS to pre-establishment claims, as opposed to the US, and asked why under Annex
133914D pre-establishment NT and MFN is out of the ISDS scope. LM (US) responded that the goal
1340was not to “admit purely speculative claims.” He also explained that emphasis has been put on the
1341rebalance of ISDS and FDI incentives: they don’t want (US) manufacturing companies to move
1342across the border (to Mexico) only to benefit from pre-establishment protections. This is to avoid
1343non-market incentives for US investors, which is why protections are only limited to ‘extreme’
1344state conduct such as direct expropriation and violation of the NT/MFN post-establishment.
1345He then pointed to the Keystone Pipeline case as a pre-establishment case example. In Keystone
1346Pipeline, contracts were in place and infrastructure was developed in preparation to receive
1347approval to make the pipeline operational. However, LM (US) said that they haven’t identified a
1348purely “pre-establishment” national treatment case.
1349On Addressing Corporate Social Responsibility (CSR), Human, Labour and Environmental
1350Rights Using Trade Agreements
1351LM (US) set out that, “If you look at the preamble of the USMCA, we always have very strong
1352language stating that we view the obligations across the agreement that it protects sovereign
1353rights, labour, etc.” He also said that the way to strike the right balance – when signalling – is
1354accomplished by “how you draft the rules, the definitions. And we point to litigation on how these
1355provisions function. There are a lot of tools that we use to explain our approach,” according to LM
1356(US). The US was critical of a separate standalone right to regulate carve out, noting that this could
1357have unintended consequences: if there is an explicit provision in the investment chapter does that
1358mean that the right to regulate does not exist with respect to other chapters of the FTA? This goal
1359is better served by introducing strong preambular language that recognises states’ powers and
1360extends to all chapters of the FTA.
1361According to LM (US), their trade agreements do not typically address corporate social
1362responsibility (CSR), nor do they impose obligations on investors, because domestic laws are best
1363placed to regulate investors’ behaviour and including such provisions would suggest that there is
1364some limitation in domestic laws. However, he explained “governments are recognising that it’s
1365important to encourage enterprises to act according to corporate responsibilities that both countries
1366endorse,” and stakeholders (such as NGOs and other groups that examine US treaty practice very
1367carefully) find value in this. He said that the US looks to OECD guidelines on this matter. In fact,
1368corporate responsibility codes of conduct were included in USMCA, LM (US) pointed out.
1369When asked by CM (UK) why the US did not adopt the language of “subject to laws of the host
1370country,” LM(US) replied that there are other ‘well-established’ doctrines under CIL such as the
1371‘unclean hands doctrine’ which would bar a claim that is based on the wrongful act of the
1372investor. LM (US) further added that this language lacks the nuance between failure to adhere to
1373certain formalities and cases where the investor has committed more serious offenses (e.g.
1374corruption). He also mentioned that the Comprehensive and Progressive Agreement for TransPacific Partnership (“CPTPP”) was the first negotiation where the US included the first corporate
1375responsibility provision, which was carried into the USMCA.
1376 
1377OFFICIAL – SENSITIVE (UK eyes only)
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137935
1380When CM (UK) asked why bottom-to-race provisions on labour and environment were not
1381mentioned in the investment chapter of the USMCA, LM (US) pointed to Environmental Labour
1382chapters: “The language appears in the Environment and Labour chapters of the FTA that apply
1383across the agreement. Just because it’s not reflected here doesn’t mean that it’s not important to
1384raise,” said LM (US).
1385On Senior Management and Boards of Directors (SMBD)
1386This rule tends to be less contentious for both the US and its treaty partners, and prohibits a host
1387country from requiring a foreign investor to appoint senior management of a
1388specific nationality. However, the rule allows a Party to require that a majority of the board of
1389directors is of a particular nationality or to reside in the territory provided that the requirement does
1390not ‘materially impair the ability of the investor to exercise control over its
1391investment’. When CM (UK) asked LM (US) what the rationale of this rule is and whether he
1392could provide examples of US legislation that provide for such cases, LM (US) said that he would
1393look at their practice and get back to UK with an answer. The UK further queried whether the
1394nationality requirement could possibly be a condition for admitting an investment that is subject to
1395screening and the US explained that indeed such a condition might be imposed as a matter of
1396practice, although not explicitly envisaged in any statute.
1397On Multilateral ISDS Reform; the UNCITRAL Reform Effort
1398LM (US) noted that the US and UK are both members of the UNCITRAL Commission and that
1399Working Group III has debated reform of ISDS procedures for the last one and one half years. Both
1400the UK and US delegates had just returned from the Vienna Working Group where the parties had
1401reached agreement that there are some concerns with ISDS and that reform was desirable. UNCITRAL has
1402considered concerns related to consistency and predictability of the interpretation of treaties, ethics,
1403arbitrators, and the cost of ISDS procedures ... Now the question will be to consider what
1404reforms to pursue. LM (US) also noted that it hoped that having left the EU, the UK and US would
1405be able to cooperate during the next working group from 1-5 April 2019... The US continued to
1406have severe concerns with respect to the EU’s proposals for a Multilateral Investment Court
1407(MIC) and reiterated previous statements that the US Government would be very concerned at any
1408indication that the UK was in favour of a MIC, they were clear that this would undermine the ability
1409of the US to work with the UK in other forums including in the context of the FTA.
1410LF (UK) advised that the UK was aware of the US position and would remain actively engaged in
1411the UNCITRAL process but would not prejudge the outcome. As an EU member state, the UK
1412remains subject to the duty of sincere cooperation. MA (UK) then asked LM (US) what his
1413perspective on work plans are, in terms of what the US would suggest. LM (US) flagged the US
1414would seek to focus on: parallel proceedings, transparency, and ethics, as “these are things that
1415don’t exist in 95% of trade agreements”.
1416Key Actions and Next Steps
1417• Noting usefulness of discussions to date, agree to further exploration of outstanding issues
1418and respective positions on key provisions at the next TIWG. UK to provide a further update on
1419policy development at the next session, building on emerging policy principles.
1420• On Multilateral ISDS Reform: UK and US will to continue to work together on this – similarly
1421to the UK-US Trade and Investment Working Group forum – in the various multilateral fora
1422considering this topic.
1423OFFICIAL – SENSITIVE (UK eyes only)
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142536
1426FOR INTERNAL DISTRIBUTION ONLY
1427Session Lead Analysis/Comments
1428• The mood of the session was highly collaborative, and the US welcomed the opportunity to
1429spell out clearly why it has adopted the positions within USMCA noting this was a negotiated
1430outcome. The US was respectful of the fact that the UK’s policy positions on investment are still
1431under development.
1432• The US specifically questioned the UK’s ability to manoeuvre during any IP and at the 1st-5th
1433April UNCITRAL meetings and in multilateral negotiations going forward given the duty of
1434sincere co-operation with the EU. NB guidance and/or LTT from DExEU on this point would be
1435appreciated.
1436OFFICIAL – SENSITIVE (UK eyes only)
1437
143837
1439INTELLECTUAL PROPERTY RIGHTS
1440Date: November 5, 2018
1441Time: 13:15 –16:00
1442Participants
1443Name Department/Directorate
1444Sophie Brice DIT
1445Maryam Teschke-Panah DIT
1446Mark Prince DIT
1447Paras Junejo DIT
1448Gavin Jaunky DIT
1449Anthony Christodoulou DIT
1450Victoria Donaldson DIT
1451Adam Williams IPO
1452Thomas Walkden IPO
1453James Ham IPO
1454Jonny Martin DCMS
1455Sung Chang USTR
1456Nancy Omelko USPTO
1457Rachel Salzman US International Trade Administration
1458Linda Quigley USPTO
1459Sarah Bonner US Small Business Administration
1460Benjamin Levin US Legal
1461Paolo Trevisan USPTO
1462Anne Snyder US Department of Health and Human Services
1463Jennifer Blank USPTO
1464Elizabeth Kendall USTR
1465Kevin Amer US Copyright Office
1466Ed Gresser USTR
1467Key Points to Note
1468• Introductions to the new team at USTR and an overview of key achievements to date.
1469• Highlighted collaborative work to date on the US-UK SME Dialogue, in particular noting the
1470success of the IP toolkit. Further thought is being given to how the toolkits can be incorporated
1471into outreach efforts by both the US and UK. Over 100 stakeholders from both the US and UK
1472were in New York on 1 and 2 November for the third SME Dialogue, and engagement was
1473positive.
1474• The US gave an overview of the key provisions of the US-Mexico-Canada Agreement
1475(USMCA), speaking in detail about trade secrets, copyright and patents.
1476OFFICIAL – SENSITIVE (UK eyes only)
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147838
1479• The UK gave an overview of their approach to copyright, speaking about the Broadcasting
1480Treaty, Artists’ Resale Rights and the Copyright Directive.
1481• There was agreement that the Joint Economic Study (JES) should be published at the next
1482TIWG in February 2019. The final action is to draft the conclusion and clear the completed JES
1483through the relevant channels. It was agreed that the countries would continue to use the
1484processes that they have used thus far, and that the completion and publication of the JES is a
1485significant outcome of the TIWGs.
1486
1487Report of Discussions and Outcome
1488Introductions and a recap of achievements to date
1489SC (US) noted that as himself and Michael Diehl (not present) are new to the portfolio, it would be
1490helpful to highlight the achievements of the US-UK Trade and Investment Working
1491Groups (TIWG) in the past year.
1492RS (US) stated that both countries have put out a set of reciprocal SME Toolkits on IP. This has
1493been a collaborative process, and text and data has been shared. The toolkits have been
1494published on the UK IPO and USPTO websites, and were presented at both previous SME
1495Dialogues. The US and UK are working together to think about how to incorporate the toolkits into
1496outreach work by both countries. SB (US) added that over 100 stakeholders from both countries
1497participated in the third SME Dialogue held in New York City on 1 and 2 November. There are
1498plans for a sector-specific best practice exchange in April 2019, as well as work on additional
1499exchanges regarding economic development.
1500MTP (UK) agreed that the SME Dialogue has been one critical part of a good set of discussions
1501with the US and the SME Toolkit was one of the first key deliverables from the TIWGs. The TIWGs
1502themselves have emphasised the positive discussions being held on IP, which has been on the
1503agenda of every TIWG since July 2017. MTP also highlighted the Joint Economic Study (JES) as
1504another short-term outcome that had been agreed early on.
1505
1506Overview of US-Mexico-Canada Agreement (USMCA)
1507EK (US) stated that the negotiations on the USMCA concluded at the end of September 2018, and
1508that this had been a relatively fast-paced negotiation for the US. The US is very proud of the
1509outcome on the IP chapter, as it reflects the US’s priorities in this area.
1510Trade secrets
1511EK (US) noted that trade secret misappropriation had a basis in NAFTA, and in TPP the US had
1512committed to negotiating criminal penalties, which they were able to build on in the USMCA. The
1513text also includes civil and criminal remedies. Canada and Mexico are both revising their laws on
1514trade secrets.
1515MP (UK) asked about the overall thinking and policy intention behind criminalisation of trade secret
1516misappropriation, particularly in relation to government officials and state-owned
1517enterprises (SOEs). EK (US) stated that the US has seen trade secret theft in many different
1518contexts and had identified SOEs as particularly problematic in China; Canada and Mexico
1519understood this and the US wanted to articulate a high standard in the agreement. Economic
1520espionage and business-to-business problems have been concrete examples. Trade secret theft is
1521an IP concern that crosses many industries. Regarding criminal protections, EK (US) stated that
1522the USMCA text is of a higher standard than the TPP text, and they were able to tighten the
1523language of the TPP text with fewer carve outs for Canada and Mexico.
1524OFFICIAL – SENSITIVE (UK eyes only)
1525
152639
1527AW and MTP (UK) asked if there had been any consideration of regulatory equivalents of
1528protection? EK (US) stated that due to the strict timeline, there were a number of steps to take in
1529order to make the process productive, with limited room for ‘creative drafting’. The US do seek
1530text that reflects as closely as possible in US law, but had they had more time, they might have
1531tried to articulate more general models. They have to consider how prescriptive or descriptive to
1532be, and there may be a narrative that draws on practices and regulations. More precise text is
1533usually a mesh of both countries’ FTA language. It also depends on the political charge – if they
1534get approval for something entirely new, then they will seek this. EK (US) noted that every country
1535is different, and every trade negotiation is different. The specific objectives will be set by the
1536political direction.
1537MP (UK) asked about the evidence gathering process throughout the negotiation of the USMCA,
1538ad how the three countries came to a similar view. EK (US) explained that there are hearings and
1539submissions, as well as giving stakeholders the opportunity to comment on notices that are
1540published. The Department of Justice and Department of Homeland Security are sources
1541of information, but are not necessarily public. When conducting stakeholder engagement, there is
1542often information that is confidential to businesses. This makes it more challenging when
1543negotiating an agreement because information and examples provided must be more general.
1544Mexico’s stakeholders indicated that they do not use trade secret laws, but would do so if they had
1545more confidence in the domestic litigation process.
1546Biologic medicines
1547EK (US) stated that US law provides for 12 years of data protection for biologic medicines, and
1548USMCA stipulates ten years. This was a particularly difficult issue to negotiate. This was an area of
1549high priority for the US, but the language does not include everything that the US (or Canada or
1550Mexico) brought to the table.
1551Copyright and related rights
1552EK (US) noted that full national treatment with no derogations was a priority and had been a point
1553of friction between the US and Canada for a number of years. Copyright term was also a
1554priority and the USMCA has exceeded the standard set in both TPP and NAFTA. Canada is
1555required to change its laws accordingly. Other copyright elements of note are enforcement,
1556technological protection measures (TPMs) and rights management information (RMI), and safe
1557harbour provisions. Regarding safe harbour provisions, non-IP safe harbours have been included
1558in the USMCA text for the first time. Canada have chosen to address the US notice and takedown
1559regime through a system of ‘notice and notice’ and statutory liability.
1560AW (UK) asked how the US balanced policy objectives on term extensions with user needs and
1561innovation, as this is always an area of tension in copyright. EK (US) stated that the US Supreme
1562Court has consistently applied the theory that copyright is not just for economic good, but also for
1563social good. The negotiation team received clear guidance from Congress and had precedents
1564from previous FTAs. Copyright term is standard provision that the US seeks in other markets.
1565MP (UK) asked about how the US have moved TPMs forward. EK (US) stated that there were very
1566detailed provisions on TPMs and RMI in previous FTAs, and Congress was not comfortable with
1567much deviation from that level of detail. The protection of TPMs and RMI has led to further
1568innovation, and gaps in these provisions would affect market opportunities. EK also noted that
1569Mexico is seeking to implement the WIPO Internet Treaties (the WIPO Copyright Treaty and the
1570WIPO Performances and Phonograms Treaty). The provisions on TPMs and RMI in the USMCA
1571are more prescriptive than the provisions in TPP. EK also explained that the language in the 
1572OFFICIAL – SENSITIVE (UK eyes only)
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157440
1575USMCA goes beyond an expressive link to copyright equivalent. EK stated that this is an important
1576trade objective for the US.
1577MP (UK) asked about the expected economic impact of the provisions on camcording in cinemas.
1578EK (US) stated that it will have a huge impact because Mexico was identified as the second-largest
1579source of camcording piracy.
1580
1581UK and US approach to Copyright
1582TW (UK) stated that the UK is looking at initiatives in FTAs that increase the cross-border
1583availability of content services, while ensuring appropriate protection of IP rights. The UK would
1584be looking for its trading partners to sign up to the WIPO Internet Treaties and the Paris Act of the
1585Berne Convention, without reservations – this would be as a means to achieve consistency across
1586all IP rights, and not just copyright. AW (UK) stressed the importance of recognising a balance of
1587consumer interests in copyright, mainly as it is described as the right of the creator in various
1588European languages. TW (UK) noted particularly that the UK is keen to see progress on the
1589Broadcasting Treaty and indicated the UK’s interest in hearing how the US sees this
1590progressing. He also mentioned Artists’ Resale Rights (ARR) and the recent American Royalties
1591Too (ART) Bill, and stated that the UK is interested in bringing a level playing field across as many
1592areas of copyright as possible.
1593MTP (UK) gave an update on the consultations in the UK on trading with the US, Australia, New
1594Zealand and CPTPP. The consultations closed on 26 October and the submissions are expected
1595to reflect the need for balance as mentioned earlier. The UK has a strong creative sector, who
1596responded to the consultations; but there have also been submissions from civil societies and
1597consumer groups, which show the balance in responses. The UK is also conscious of the need to
1598look at areas which overlap with digital. MTP noted that there is clearly a strong digital component
1599to copyright, but there is a need to also look at setting out provisions which are ‘future-proof’.
1600SC (US), as a general matter, echoed what had been said about policy goals for copyright in FTAs.
1601He stated that the JES shows that copyright-heavy industries play a large part in the US economy.
1602With regards to the WIPO Internet Treaties, the US sees TRIPS as a starting point, but have many
1603TRIPS+ provisions in the USMCA.
1604Regarding the Broadcasting Treaty and SCCR, LQ (US) stated that there are some issues that
1605need further consideration and working out, and expressed an interest in hearing UK ideas on how
1606to resolve any open conflicts on this subject.
1607Regarding ARR, KA (US) noted that the US Copyright Office had conducted a study on ARR some
1608years previously; at the time, ARR in the UK was limited to living artists and later subsequently
1609extended to heirs. The ART Bill has been introduced in the Senate and House of Representatives
1610a few times, but there was currently no specific news to report on the progress of the Bill.
1611AW (UK) gave an update on the EU Copyright Directive – the draft text of the Directive is going
1612through the European trilogue process and the focus of the Austrian Presidency of the EU is to see
1613this Directive approved during their term. AW also noted that as a regional bloc, the EU has
1614copyright protections that do not exist in the rest of the world; for example, sui generis database
1615rights and the country of origin rule. Copyright is a property right and there are legacy rights which
1616the UK will have to protect. There are technical notices on copyright in the event of a no deal with
1617the EU, which the UK agreed to share with the US.
1618OFFICIAL – SENSITIVE (UK eyes only)
1619
162041
1621LQ (US) asked about the UK’s interest in specifically articles 11 and 13 of the Copyright Directive.
1622AW (UK) stated that if the Directive is agreed before the UK leaves the EU, it would depend on the
1623length of any agreed implementation period as to whether or not the Directive would be transposed
1624into UK law. The UK is very much interested in the subject matter, as it is important and will
1625inevitably shape global behaviour in this area. UK stakeholders are particularly interested in
1626articles 11 and 13 on the press publishers’ right and value gap which, TW (UK) noted, are the two
1627most controversial. The UK supports the European Council’s approach to both articles.
1628SC (US) suggested that it would be useful to have an exchange on domestic copyright regimes in
1629the US and the UK, for a better understanding. MP (UK) noted that case studies have been
1630conducted in other areas, and that this may help to facilitate the discussion.
1631
1632Joint Economic Study
1633SC (US) noted that since his predecessor’s departure, he has been trying to shepherd the
1634procedural aspects of the Joint Economic Study (JES). The initial aim had been to have the JES
1635finalised and ready for publication by the current TIWG, but unfortunately this was not
1636possible. SC suggested a new publication date of February 2019, at the next TIWG, as well as a
1637joint press release.
1638MP (UK) agreed with SC but noted that the parties would need to factor in time for clearance
1639processes. He suggested a final draft be produced in January 2019, pencilling in TIWG 6 as a
1640target publication date. Regarding the suggestion of a joint press release, SB (UK) stated that the
1641parties should follow TIWG precedent and asked them to consider whether they would wish to do a
1642joint press release or target a joint statement at relevant industry bodies as part of TIWG
1643stakeholder events. SC (US) further suggested a stakeholder meeting following publication (if in
1644February at TIWG 6) where stakeholders can put forward questions about the study. The
1645completion and publication of the JES is a significant outcome for the TIWG, and the US and UK
1646should maximise the impact this will have.
1647SC (US) also agreed that the parties would need to factor time for the formal process of sharing
1648and clearing the study through the relevant channels. He agreed that the text should be finalised
1649by early January. SC put forward the question of final editing and the agreement to harmonise the
1650writing style as best as possible. TW (UK) stated that the IPO’s Chief Economist has agreed to find
1651the budget for editing, but it was noted that this would mean the study will be written in UK English;
1652previously, the IPO has used copy editors. SC (US) agreed to discuss this internally and feed
1653back at the next VC meeting.
1654It was agreed that the UK would take on the first draft of the conclusion. SC (US) suggested
1655holding at least two VC meetings before 2019 – the first in the week following TIWG 5, and the
1656second in early December, by which point the parties should have a clear idea of the timeline for
1657finalising the JES. MP (UK) suggested that matters of editing and project management should run
1658in parallel to completing the draft.
1659SC (US) raised one outstanding comment from the last VC meeting in mid-October – the US had
1660asked the UK to provide UK-specific data. TW (UK) stated that the study containing the relevant
1661data was near completion and that the data could be input in time for the February publication
1662date.
1663GJ (UK) stated that the most recent comments from the US on the JES would need to be
1664considered in detail, but the discussion has been encouraging. SC (US) stated that many of the
1665comments on the study were simply agreeing with the UK’s previous comments, and that the US 
1666OFFICIAL – SENSITIVE (UK eyes only)
1667
166842
1669had tried to include the additional sources and citations that the UK had asked for. MTP (UK) noted
1670that the Economist Group was due to meet on Wednesday 7 November and the conclusions on
1671JES from the current session would be fed into that meeting. GJ (UK) agreed to feed back to the
1672Economist Group.
1673
1674Other areas for cooperation
1675SC (US) asked if there were other areas of cooperation that can be highlighted at TIWG 6 in
1676February 2019. He suggested a potential deep dive on enforcement. MTP (UK) pointed out that
1677there had been substantive and in depth discussions on enforcement at TIWG 4 in London in July,
1678but the parties could plan for further discussion of any specific areas of follow up. Beyond
1679enforcement, most areas of IP rights have been covered at TIWGs, aside from trade marks and
1680designs.
1681TW (UK) noted that TIWG 4 had been a deep dive on enforcement from a UK perspective, where
1682enforcement experts talked about online infringement and counterfeiting, the justice system, IPEC
1683and access to justice- this included detail on the takedown of websites. He suggested that it may
1684be useful to think about the US perspective on these issues.
1685SB (UK) asked if there were any areas where it might be useful to overlap IP and digital, as there
1686had been some discussions at the SME Dialogue in New York. JM (UK) suggested trade secrets
1687and algorithms in the USMCA. SC (US) agreed to discuss this with the Services Office. He
1688also stated that he would discuss internally if there are any specific areas of enforcement that the
1689US feel need further attention. He suggested the possibility of holding a stakeholder roundtable at
1690TIWG 6 in February 2019 with those stakeholders who are common to both the UK and US. AW
1691(UK) stated that the parties need to be conscious of stakeholders’ priorities regarding Brexit at the
1692end of March 2019, but also that the parties should focus on the JES.
1693MP (UK) agreed to update SC (US) on the short term outcomes (STOs) progress table. SC (US)
1694asked if a private sector workshop on enforcement had taken place. TW (UK) stated that it would
1695be useful for both parties to follow up on this; IPO enforcement colleagues had held initial
1696discussions with the FBI, and the parties should get a high-level update.
1697Key Actions and Next Steps
1698• Parties to review IP SME Toolkit and update if required.
1699Overview of USMCA
1700• UK internal discussions on approach to IP chapter, in particular trade secrets.
1701UK approach to Copyright
1702• Copyright follow-up at stakeholder meeting with USPTO representatives on 6 November.
1703• UK to share IP technical notices with the US.
1704• US to consider a case study of US copyright protection for the UK to comment on and provide
1705views on how it would apply under UK law.
1706Joint Economic Study
1707• Parties to work together towards completion and publication at TIWG 6 (February 2019); UK to
1708draft conclusion and address US comments on last draft.
1709• Parties to continue fortnightly working level VC meetings and monthly steering VC meeting.
1710OFFICIAL – SENSITIVE (UK eyes only)
1711
171243
1713• Parties to initiate work on editing and project management; in particular, language (UK or US
1714English) and publication format (online and physical).
1715• UK to discuss internally with central US team regarding joint press statement and launch of
1716JES on publication.
1717Other areas for cooperation
1718• Parties to discuss further collaboration on enforcement and follow up internally on IPO-FBI
1719cooperation initiated in late 2017 by TIWG.
1720• Parties to consider a private sector enforcement session at future TIWGs or SME Dialogues.
1721• MP (UK) to speak with SC (US) about short term outcome (STO) progress chart and explain
1722some of the initiatives that have been undertaken.
1723
1724FOR INTERNAL DISTRIBUTION ONLY
1725Lead Negotiator Analysis/Comments
1726• Following the departure of the previous USTR IP lead after TIWG 4, this was the first
1727opportunity to meet face-to-face with Sung Chang (SC) (USTR, Director, IP, Europe & Middle
1728East) and Mike Diehl (MD) (USTR, Senior Director, IP, Europe, WTO and China). We held an
1729initial informal side meeting and developed a good rapport with SC. MD was pulled into other
1730meetings for most of the TIWG, concerning other parts of his portfolio.
1731• SC’s role incorporates responsibility for the preparation of the annual S.301 report (published
1732April) and Off Cycle Illicit Markets Report (published December).
1733• SC and MD have split IP rights between them for UK engagement – SC (Patents and Trade
1734Secrets) and MD (Copyright and Enforcement).
1735• SC was keen for opportunities to collaborate in third countries. We could consider if there
1736is anything we can do in relation to the Middle East subject to TPG resource. This may be
1737useful to build our relationship with SC.
1738• There was recognition that the responsibility for the delays in the Joint Economic Study (JES)
1739largely lay with the USTR. SC repeatedly apologised and committed to renewing efforts from
1740USTR to drive this towards completion by February 2019.
1741• Overall, throughout both informal and formal sessions there was enthusiasm from USTR to
1742build on the already positive relationship that has been established since the beginning of the
1743TIWG engagements.
1744• The DIT-IPO combined strategy of holding a meeting at USPTO the day after our TIWG 5 IP
1745session was particularly effective, enabling us to address Copyright in sufficient detail and to
1746build relationships across the US agencies involved in IP FTA chapters.
1747• Our focus for TIWG 6 and during the interim will be to explore further detail on priority areas
1748such as Patents via VCs and engage on topics that have not featured in TIWG meetings to
1749date such as Trade Marks, Designs (by VC) and New Plant Varieties. Our priority is to
1750complete the JES so that it is ready for publication at TIWG 6.
1751• The IP session was followed by a series of positive bilateral stakeholder meetings
1752with the American Creative, Technology, and Innovative Organisations Network (ACTION) for 
1753OFFICIAL – SENSITIVE (UK eyes only)
1754
175544
1756Trade, the Pharmaceutical Research and Manufacturers of America (PhRMA), the Association
1757of American Publishers (AAP) and the Association for Accessible Medicines (AAM). DIT and
1758IPO met with representatives from each organisation to discuss USMCA and priorities for each
1759stakeholder for future trade agreements.
1760OFFICIAL – SENSITIVE (UK eyes only)
1761
176245
1763GOOD REGULATORY PRACTICE
1764Date: November 5, 2018
1765Time: 13:00
1766Participants
1767Name Department
1768Kate Maxwell—KM DIT
1769George Radice—GR DIT
1770Kim Wager—KW BEIS
1771Rachel Shub—RS USTR
1772Alex Hunt—AH US Office of Information and Regulatory
1773Affairs
1774Wendy Liberante US Office of Information and Regulatory
1775Affairs
1776Silvia Savich—SS USTR
1777Matthew Jaffey—MJ USTR
1778Henry Furlong US Environmental Protection Agency
1779Joe Farranti US Environmental Protection Agency
1780Kate US State Department Trade Officer (US
1781Embassy London)
1782Donald US Department of Agriculture
1783Carol US Department of Commerce
1784Robert US Department of Commerce
1785Rosalyn Steward US Small Business Administration
1786Key Points to Note:
1787• The majority of the working group session was spent on discussion around the GRP chapter of
1788the USMCA. The US described GRP as a new element to US FTAs in TPP, but explained that
1789the negotiated TPP language was weaker than they preferred, and so the GRP chapter in
1790USMCA is much stronger and more ambitious.
1791• The US noted that this chapter had elements that will be carried forward in other US FTAs,
1792such as the application of dispute settlement. When asked, the US said they prefer the text of
1793USMCA than the TTIP GRP approach.
1794• The US requested that the next working group include further discussion on GRP with
1795regulatory bodies present.
1796Report of Discussions and Outcome:
1797Updates from both Parties on public consultations, and KM (UK) updated on Brexit.
1798Update from UK on the public consultations, which closed on 26th October. It is unclear at this
1799moment how many responses are GRP/Regulatory Cooperation-related.
1800The US will be going out to public consultation shortly on the objectives of the FTA negotiation with
1801the UK. The US has a statutory obligation to include GRP in its FTAs as a tool to improve
1802domestic implementation of FTAs, and because GRP is seen as a key aspect in reducing non-tariff
1803barriers to trade.
1804OFFICIAL – SENSITIVE (UK eyes only)
1805
180646
1807.
1808USMCA chapter
1809Overview
1810RS (USTR) – Trade Promotion Authority has a statutory obligation to promote GRP. The GRP
1811chapter in the USMCA is seen as a supplement to the SPS, TBT, Services and other chapters. It
1812is an improvement on TPP, and inference from RS was that this would be their preferred text on
1813GRP going forward.
1814The GRP chapter in USMCA is binding. It is full of obligations and subject to dispute settlement
1815(please see below). Every clause is obligatory unless specified.
1816Articles
1817The definitions are there for clarification, and to encourage USTR to coordinate with other areas of
1818government.
1819Article 28.4: Internal Consultation, Coordination, and Review 1 (d) was inadvertently left out of
1820TPP. It derives from the WTO after the Uruguay round.
1821Article 28.5: Information quality is very important for US government. The article is a distillation of
1822major elements across sectors in order to support evidence-based decision making. The US
1823private sector approves of the text, including a minimum standard of what governments should
1824have guidance on.
1825Articles 28.6-9 : The US wanted to be practical with Canada and Mexico, and all three countries
1826agreed it was important and useful to have baseline standards for public notice and a website.
1827Early planning calls for an annual list of prospective legislation. RS said it was helpful to
1828companies to know what was coming up.
1829Notice and Comment (Transparent Development of Regulations) – this is at federal level, across all
1830agencies. Text of regulation must be publicly available for at least 60 days, accompanied by an
1831impact assessment, an explanation of the objectives of the regulation, the rationale for the
1832regulation, explanation of the accompanying data, and any alternatives to the regulation that were
1833considered. Impact on trade to be considered.
1834Article 28.11: Regulatory Impact Assessments - AH (US) explained that an impact assessment is
1835required of all US regulation – the threshold is $100M of any cost benefits/transfers. it triggers
1836compliance with OIRA Circular A4. However, evidence-based decision making is still required,
1837even if the threshold is not triggered.
1838Article 28.12 – Final publication of final RIA (or other document) to explain how the regulation
1839achieves the Party’s objectives. RS said it was an evidence-based decision-making requirement.
1840It also serves a challenge function.
1841Article 28.13: Retrospective review – The US does not require annual reviews of the stock of
1842legislation, but statutory 5-yearly reviews are required in certain sector such as transportation,
1843environment, etc. Agencies have similar requirements for retrospective reviews. Only provisions
1844for small enterprises (less than 500 employees).
1845OFFICIAL – SENSITIVE (UK eyes only)
1846
184747
1848Article 28.17: Regulatory cooperation – the article helps to coordinate the Agencies as well as
1849USTR, and to facilitate trade. The article includes suggestions for regulatory cooperation, drawn
1850from OECD IRC guidance, and the EU-US 2002 Agreement.
1851Article 28.18: Committee on GRP. There is a requirement in USMCA for a committee of
1852government departments and regulators to meet at least once a year with a view to trade
1853facilitation, and provide an annual report. Can include government representatives from other
1854chapters of the USMCA, such as TBT and SPS. On the US side, it is coordinated from the North
1855America office of USTR, as there is no joint USMCA Secretariat.
1856Article 28.19: Application of Dispute Settlement. It should only be used where there is either a
1857fundamental change in policy by one of the Parties, or if there is sustained inaction or disregard of
1858the obligations set out in the chapter.
1859Additional Questions on USMCA
1860• KW (UK) asked about the single accessible website because the UK has two sites that hold
1861regulatory info. Why one website? Have that already or active decision?
1862• RS (US) said that 28.9 paragraph two allows for multiple websites as long as they are linked
1863together.
1864• KM (UK) asked about the definition of small enterprises. RS (USTR) said that US had no
1865problem with the term SME, but the unclear WTO definition stops the US from giving special
1866treatment to SMEs. RS (US SBA) said that the small business administration defines small
1867businesses as 500 employees or less with some qualifications on the industry and profits. The
1868US does not acknowledge special treatment for medium companies. Giving SMEs fewer
1869obligations is not the approach the US government takes, but something that could be
1870considered.
1871• KM (UK) asked if dispute settlement would continue to be applied to GRP chapters going
1872forward in other FTAs and RS (US) confirmed it would be carried forward in future US FTAs.
1873• KW (UK) asked about the US preference between TTIP and USMCA versions of GRP. RS
1874(US) said that US prefers USMCA to TTIP text on practicality.
1875• KM (UK) asked about the advisory GPR committee and who advocated for it.
1876• RS (US) said lots of chapters have advisory committees. The US says that it institutionally
1877decided a committee wouldn’t be right approach. The US proposes a meeting mixed with policy
1878makers and regulators without needing to establish a formal committee.
1879• KM (UK) asked if GRP is only on a federal level. RS (US) said yes because of divided powers
1880in the federal and state level. While many states have an administrative procedure act, the
1881federal government cannot enforce requirements.
1882• KM (UK) asked about how the negotiations on GRP in the USMCA went and RS (US) said that
1883GRP was a priority from the outset. The US was eager to prevent GRP from being “dumbed
1884down” like TPP or, as an afterthought, CETA. GRP finished in round 7 of the talks and the
1885trilateral nature made it easier because everyone was ambitious, and everyone saw clear
1886benefits to GRP. 
1887OFFICIAL – SENSITIVE (UK eyes only)
1888
188948
1890Key Actions and Next Steps
1891• The US requested that the next working group include further discussion on GRP with
1892regulatory bodies present. KM asked if there were any particular regulators in mind, and RS
1893mentioned Transportation, food, Agri, FDA, and EPA. We didn’t commit to this, but will DIt and
1894BEIS (BRE) will consider this further ahead of the next TIWG.
1895FOR INTERNAL DISTRIBUTION ONLY
1896Session Lead Analysis/Comments
1897A positive and productive meeting.
1898Most of the US attendees hadn’t been present at the plenary so I gave an update on the
1899consultations and Brexit, and on the amendments to the Better Regulation Framework. All were
1900positively received.
1901The US gave us quite a detailed walkthrough on the GRP chapter, often explaining the rationale
1902behind certain sections of the text. Indication was that this would be their preferred text going
1903forward. Lots of food for thought, especially in relation to the application of dispute settlement to
1904the chapter. The US seemed more ambivalent in relation to a regulatory oversight body for the
1905chapter, but I expect them to come down on the side of having one. Overall, the session was very
1906useful from a UK point of view.
1907The US requested that there be further discussion on the USMCA at the next working group, but
1908with our own (appropriate) regulatory bodies in the room, so the US can understand any issues
1909they may face. No commitment from the UK side - we’ll need to discuss further with BRE 
1910OFFICIAL – SENSITIVE (UK eyes only)
1911
191249
1913AGRICULTURE
1914Date: November 6, 2018
1915Time: 14:00– 18:00
1916Participants
1917 Name Department/Directorate
1918Ceri Morgan Defra
1919Russell Stokes Defra Legal
1920James Dunn Defra
1921Sophie Brice DIT
1922Jennifer Groover BEW
1923Julie Callahan USTR
1924Roger Wentzel USTR
1925Mara Burr USDA
1926Joe Babb USDA
1927Silvia Savich USTR
1928Kate Skarsten US Embassy London
1929Anne Kirschner USDA
1930Jessica Simonoff USDA
1931Matthew Jaffe OGC
1932Alexandra Whittaker OGC
1933Sam Russo USTR
1934Dana Du Bovis USDA
1935Trevor Kolodny FSA
1936VTC
1937Sinjini Mukherjee Defra
1938Geoff Richards Defra
1939Emma McCarthy Defra
1940Simon Allcock Defra
1941Kulin Patel APHA
1942Phil Munday Defra
1943Paul Dray Defra
1944Bob Firmin Defra
1945Annah O’Akuwanu Defra
1946Jack Moreton-Burt DIT
1947Rebecca Schneider DIT
1948Meg Trainor DExEU
1949OFFICIAL – SENSITIVE (UK eyes only)
1950
195150
1952Key Points to Note:
1953• We have mutually agreed the Veterinary Equivalency Agreement will lapse, instead committing
1954to a process to establish continuity for identified good-will elements of the agreement.
1955• The Wine Agreement is still problematic, and may ultimately need political intervention to
1956achieve continuity
1957• We have shared the Entry into Force text for the Spirits Agreement. We expect completion by
1958end November
1959• We were notified of a successful inspection for the Organics Arrangement in September and
1960have instigated next steps, including a timetable for exchange of letters
1961• The USMCA discussion was not as in depth as in other sessions, with the US unprepared to
1962discuss technical detail, and advised not to by General Counsel in the room. We have
1963requested a follow up telecon after the 90 day period.
1964Report of Discussions and Outcome:
1965The session was split into three parts: a discussion on continuity texts; a discussion on US policy
1966areas and; a presentation from Defra on future domestic reform.
1967Continuity Agreements
19681. Veterinary Equivalency:
1969The US opened with a broad summary of progress to date, reiterating the position of the US and
1970the EU that this text was fundamentally not necessary to trade.
1971The UK agreed with this position, following appropriate cross-Whitehall sign off. We proposed to let
1972the text lapse, noting the strong work from both teams to date, but only with a commitment to
1973explore options for continuity regarding the principles of the agreement, as well as good-will
1974mechanisms (such as swift responses and zoning protocols in the event of disease outbreak).
1975The US accepted this position, echoing the work to date. Defra will follow up shortly with a telecon
1976date to establish form of the continuity statement and discussion on content.
19772. Wine Agreement
1978The US, overnight, had sent wording for two Articles (Article 1 and Article 10). The UK accepted
1979the wording on Article 1 and reserved its position on Article 10 while we work through the
1980proposal.
1981The UK offered follow up from our October 23rd call on Articles 4, 5 and 7. The UK will shortly
1982send further information, although the US are looking for a clear indication of a future policy intent
1983from the UK that is independent of the EU relationship (as well as non-membership of the wine
1984body, OIV).
1985The US raised the status of listed terms under Article 7. The US is waiting on a number of
1986recognitions submitted to the EU over the past seven years, and are curious as to whether we will
1987automatically update. This may be problematic, so we are awaiting the US list in order to
1988compare.
1989The UK accepted deletion of Article 13 (Implementation) as it is surplus to requirements on both
1990sides. 
1991OFFICIAL – SENSITIVE (UK eyes only)
1992
199351
1994The most challenging element was the discussion on traditional terms. The US do not want to
1995accept our continuity approach, even for a no deal text. They described the position, whilst
1996referring to the issues with the EU, as “the disease spreading”. This may require political
1997escalation. The UK will send over the latest Wine Agreement text following this call. We are about
199890% agreed.
19993. Spirits
2000The UK (this morning) received the Entry into Force wording. We walked the US through this
2001and will send over ahead of the closing plenary. USTR will still need to review. We technically
2002agreed the text in July. Very likely to be completed by ahead of the end of November.
20034. Organics
2004The US noted that the UK had comfortably passed the inspection in September. The UK will send
2005over a timetable to keep the process fast-paced, outlining how to achieve our next steps.
2006The UK also committed to sharing responses to draft letters as soon as possible. The US is due to
2007send their draft report by the end of November, with a 30-day response time for the UK. Defra will
2008aim for a much faster time than that.
2009Policy discussion
2010We had given the US notification (in continuity calls) of our intention to ask about USMCA
2011negotiations. However, the session was not as in-depth as others across the TIWG. We discussed
2012timelines, stakeholder reception and the key updates and US perceived ‘wins’. However, the USTR
2013General Counsel was in the room to ensure substantive discussion was not possible. A follow up
2014will be arranged after the 90-day period. The US responded to a number of questions with probes
2015on a future UK-EU Sanitary and Phytosanitary (SPS) relationship.
2016Presentation
2017The UK walked through the latest on the 25 Year Plan, the Agriculture Bill, and the Fisheries Bill.
2018The US used it as an opportunity to ask some technical follow up (on subsidy operations to replace
2019Common Agriculture Policy), as well as to ask about a future EU relationship.
2020Key Actions and Next Steps
2021• Individual actions and next steps are largely covered in the respective Continuity Agreements
2022outlines.
2023FOR INTERNAL DISTRIBUTION ONLY
2024Session Lead Analysis/Comments
2025It’s possible we’ve reached as far as the UK is prepared to go on the wine agreement. We will
2026assess early next week and decide whether to recommend political intervention.
2027That agreement has thankfully not affected progress in other areas, such as Spirits or MRA.
2028The significant progress concluding on Spirits and Organics is most important to UK stakeholders.
2029It is therefore a good outcome for the UK.
2030OFFICIAL – SENSITIVE (UK eyes only)
2031
203252
2033On VEA, a mutually beneficial outcome has been reached that demonstrates the UK’s intent not to
2034continue with the same levels of bureaucracy when we leave EU, which has in the past effectively
2035translated to barriers to trade.
2036ON USMCA, whilst disappointing that USTR did not go in to full detail, whilst being guarded by
2037their General Counsel, the high-level summary is probably enough at this stage, given there was
2038no innovation in SPS, other than updating to reflect Uruguay round, and the only substantive
2039market access outcome was covered in discussion – the Canadian diary break though, which may
2040have wider ramifications for the UK. A further more in depth discussion will be needed on the GI
2041changes, but this should happen as part of a wider GI discussion next year.
2042USTR continued to probe on UK plans for agricultural subsidy, but this is probably more for WTO
2043leverage.
2044OFFICIAL – SENSITIVE (UK eyes only)
2045
204653
2047LEGAL SERVICES ROUNDTABLE
2048Date: November 6, 2018
2049Time: 09:00 – 13:00
2050Participants
2051Name Department/Directorate
2052Oliver Griffiths DIT
2053Rebecca Fisher-Lamb DIT
2054Johanna Michael DIT
2055John Carroll DIT
2056Jenny Pickrell Ministry of Justice,
2057Jasmin Chohan Ministry of Justice,
2058Gavin Baylis BEIS
2059Jonathan Goldsmith Law Society of England and Wales
2060Ben Stevenson Law Society of England and Wales
2061Richard Collis Solicitors Regulation Authority
2062Christian Wisskirchen Bar Council of England and Wales
2063Michael Clancy Law Society of Scotland
2064Gordon Jackson QC Dean of the Faculty of Advocates
2065Eileen Ewing Law Society of Northern Ireland
2066Sarah Ramsey Bar of Northern Ireland
2067Dan Mullaney USTR
2068Tom Fine USTR
2069Laurel Terry Penn State Dickinson law School
2070Jenny Mittelman State Bar of Georgia
2071Carole Silver Northwestern University Law School
2072Kristi Gains American Bar Association
2073Pat McGlone Washington D.C. Bar Association
2074Darrin Sobin Washington D.C. Bar Association
2075Key Points to Note
2076• The UK-US attendees agreed on the need for a structure to continue the UK-US legal services
2077dialogue, noting the success of the roundtable meeting.
2078• To be successful, these discussions must be led and administered by industry and regulators,
2079using the momentum of the bilateral discussions between central governments.
2080• The attendees discussed convening in early 2019 (possibly April around an existing legal
2081meeting), following interim work on goals and objectives. 
2082• The attendees agreed on the importance of focusing on narrower, short term goals, while also
2083keeping in mind longer term objectives.
2084OFFICIAL – SENSITIVE (UK eyes only)
2085
208654
2087Report of Discussions and Outcome
2088Opening remarks
2089DM (US) set out a brief context to the roundtable and highlighted the opportunities in light of Brexit
2090to lay the ground work for a potential UK-US FTA (Free Trade Agreement). A critical component of
2091this exercise involves consulting with stakeholders to see what can be achieved,
2092and participants were encouraged to identify short term opportunities that may not necessarily fit
2093within the formal framework of an FTA.
2094OG (UK) set out that both legal services markets were starting from a position of strength, with
2095shared common law values, world class legal providers, and significant existing trade flows.
2096Regulator dialogue is not a new conversation, but one that is being renewed in light of new
2097opportunities, with a chance to bring fresh perspectives and energy. There are lots of
2098interdependencies between our UK-US relationship and the EU exit dynamic.
2099Legal Services in the US; Presentation by Laurel Terry (US)
2100The roundtable began substantively with a presentation by LT (US). This centred on legal
2101services regulation in the US, and the opportunities for future UK-US trade in legal services.
2102Regulation of legal services in the US is a state rather than federal matter. Rules for admission and
2103foreign-lawyer qualification vary across the jurisdictions, with regulatory powers vested
2104in the judiciary. The primary regulator in each state is the State Supreme Court, although powers
2105will often be delegated to the ‘frontline’ regulator, which is usually a Court agency, or a bar
2106association.
2107There are in addition a number of representative bodies which take an interest in US legal services
2108regulation. This includes the Conference of Chief Justices (CCJ), which is an overarching
2109body that has significant influence over the State Supreme Courts (although it does
2110not have binding authority on regulatory matters). The CCJ adopts resolutions; for example, in
21112015, the CCJ adopted a resolution supporting the American Bar Association’s recommendations
2112for regulations permitting limited practise by foreign lawyers in the US to address issues arising
2113from legal market globalisation and cross-border legal practise. The National Centre for State
2114Courts (NCSC) is also important. This organisation functions as a think-tank and non-profit
2115consulting firm for the courts, and advocates for judicial and legislative reform. Finally, the
2116American Bar Association (ABA) is the national representative body for lawyers and creates ‘model
2117rules’ for legal services regulation for state bars to adopt, although these are not mandatory.
2118LT gave an opinion on future opportunities for UK-US legal services trade, with an initial remark
2119that both jurisdictions already had open systems, and there should be caution in trying to
2120fix elements that were already functioning well. It was suggested that any further regulatory
2121dialogue should be held under a formal structure, with regular meetings, identifiable work steams,
2122and standing agenda items such as data sharing.
2123The delegation was asked to ensure the ABA were kept involved because although the CCJ had
2124the power to amend regulations, the ABA would do the “leg work in delivering this”. To achieve
2125progress the UK should specify particular states of interest. Furthermore, given regulation of US
2126legal services lies with the states, the UK should focus discussions on trade in services with the
2127regulators in the relevant state, rather than through federal government, which cannot bind states
2128to any federal-level agreement.
2129OFFICIAL – SENSITIVE (UK eyes only)
2130
213155
2132LT referenced the UK-Australia FTA and the annex on professional business services and
2133suggested this could serve as a model for legal services in a future UK-US FTA. LT concluded by
2134suggesting that in parallel to any regulatory dialogues, it was important to develop a narrative that
2135focussed on the fact that any changes would be for the benefit of citizens, and that there would not
2136be a lowering of standards.
2137Legal Services in the UK; Presentation by Jonathan Goldsmith (UK)
2138JG introduced the UK delegation presentation on legal services regulation in the UK. This firstly
2139set out the distinction between the three legal jurisdictions of England and Wales, Scotland, and
2140Northern Ireland, and the differing roles of solicitors compared to barristers, and how we arrived at
2141this distinction.
2142In the UK, the ‘title’ of solicitor and barrister (or advocate in Scotland) is regulated. These titles are
2143defined by the right to practice reserved activities, such as the right of audience, the conduct of
2144litigation, and administration of oaths. The UK does not regulate outside of these activities, save for
2145a few limited exceptions such as the provision of immigration advice. This therefore means that
2146anyone can come to the UK and provide ‘legal advice’ on any matter of law outside of these
2147reserved activities, without the need to be regulated as a solicitor or barrister/advocate.
2148There was then discussion of the rights of foreign lawyers to practice in the UK, and the routes to
2149requalification into host title. A comparison was made to the US foreign lawyer regime, which JG
2150suggested was far more restrictive in nature.
2151For example, 17 US states do not have Foreign Legal Consultant status, so no lawyer can
2152practice in those states under their home title under any conditions. This was said to have caused
2153problems when industry and business required foreign legal advice in these states but there was
2154no means for that to occur. Similarly, 39 states do not have rules permitting ‘fly-in, fly-out’ provision
2155of legal services, which again can have similar negative consequences for business where legal
2156advisers are needed to fly in to meet client demands, or legal advisers face reprimand for providing
2157services illegally (or ‘under the radar’).
2158JG then set out the UK regulator and professional body asks of their US counterparts. This
2159comprised: explicit rules in all US states to allow all UK lawyers to be able to provide advice on UK
2160law, international law and any third country law in which they are qualified (licensed) as foreign
2161legal consultants; recognition of UK qualifications regardless of route to qualification; no minimum
2162post qualification requirement for eligibility to be a foreign legal consultant; temporary
2163practice permitted in all US jurisdictions; and establishment in all US jurisdictions.
2164On the point around recognition of UK title regardless of route to qualification, LT (US) suggested
2165the US preferred to look at the duration and substance of someone’s education, rather than simply
2166accepting the ‘title’ as sufficient. This was an ‘activity’ based approach, which considers what
2167subjects someone has studied, and then deciding whether that is adequate to meet State
2168regulations. LT argued that this was to ensure high standards. JM (US) commented that she had
2169seen the ‘bottom of the barrel’ when it came to foreign lawyer practice in the US, and there was a
2170fear that if you opened up the admissions regulation to only look at ‘title’, rather than route to
2171qualification, then this could pose a risk to the quality of service being provided.
2172JG (UK) responded by pointing out that across the EU, recognition of lawyers is title based, and
2173does not involve a process of looking ‘behind the title’ to education. This was said to work well
2174even though there were obvious differences across the EU jurisdictions.
2175OFFICIAL – SENSITIVE (UK eyes only)
2176
217756
2178 TF (US) suggested there could be work done to look at ‘recognition of experience’ for foreign
2179lawyers wishing to qualify in a US state. However, TF suggested there was no empirical evidence
2180which indicated that those with more experience are less likely to cause issues. RC (UK)
2181suggested that most disciplinary action in reality is from more experienced lawyers.
2182Washington D.C. Bar case study on foreign lawyer regulation
2183TF (US) introduced PM (US) and DS (US) from the Washington D.C Bar, who gave a short
2184introduction and overview of their work which has looked at liberalising state admission and
2185regulation of legal services in DC.
2186The Bar had established a taskforce on global legal services trade, which examined rules of
2187admission for lawyers who wanted to qualify in DC but had not obtained a law degree from an ABA
2188accredited law school. A brief outline was given of the policy recommendations from that work.
2189This comprised of lowering the credit hour requirement so foreign lawyers had to study for less
2190time at an accredited law school in order to take the Bar exam, and recommending that certain
2191credit hours could be achieved by distance learning. These proposals are now sitting with the
2192judiciary for a final decision on whether to adopt them.
2193Future opportunities for regulatory dialogue
2194TF (US) thanked the delegation for their presentations and moved the conversation on to agreeing
2195key actions and next steps. JM (UK) asked the group to think about how to constitute structures for
2196dialogue, and how this would be led if it were to be a long-term, sustainable work programme. The
2197UK Government is very happy to facilitate conversations where appropriate.
2198The group agreed to initially focus regulatory dialogue on the professions with the greatest interest;
2199i.e. solicitors and barristers/advocates in the UK, and lawyers in the US. This would keep
2200discussions streamlined in the initial stages but there could be scope to broaden out to other
2201professions such as notaries and licenced conveyancers.
2202The Law Society of England and Wales offered their support in continuing the dialogue but
2203stressed the need to ensure key players were involved, such as the Conference of Chief
2204Justices. It was suggested that existing forums could be used to take these discussions forward;
2205for example, there had been previous meetings between the CCJ and The Council of Bars and
2206Law Societies of Europe, with a standing secretariat, and this could provide a useful model to
2207follow. The Law Society also raised that they attended a number of calendar events hosted
2208by the ABA, and that meetings could take place in the fringes of these events. The group
2209responded positively to this idea.
2210CG (US) stressed the importance of establishing a secretariat, producing terms of reference for the
2211group, scheduling regular calls, and agreeing goals/objectives. There should be a focus on
2212narrower, more targeted goals initially, and a discrete goal could form part of a ‘pilot’ project, with
2213longer term ambitions mapped out to steer the direction of dialogue. CG (US) reiterated the Law
2214Society’s suggestion that occur in the fringes of the next big ABA conferences.
2215The Law Society of Scotland thanked government for their support and highlighted the unique time
2216the sector found itself in, which in itself provided an opportunity to make real progress at a pace not
2217seen before.
2218  
2219TF (US) reminded the group that incrementalism is the way in which progress will occur. Policy
2220recommendations are useful as they tend to be adopted if the right relationships are in place. JM 
2221OFFICIAL – SENSITIVE (UK eyes only)
2222
222357
2224(UK) stressed that we would need to manage expectations across the sector, and that this would
2225need to be a two-way conversation. The UK and the US governments would continue to feed in on
2226FTA negotiation progress.
2227RFL (UK) highlighted there was a strong political push to come back out to DC in April, and that
2228notwithstanding the previous suggestions this might be a good time to reconvene.
2229Key Actions and Next Steps
2230UK/US Regulators and Professional Bodies
2231• Agreed that establishing a formal structure would benefit progress, and delegates would think
2232about existing mechanisms with might provide a platform in which to do that. The secretariat
2233would be provided by industry, not the UK or US government.
2234• Agreed that focus would initially be on shorter term, more narrowly defined goals.
2235UK/US Government (to note, actions were not assigned to particular individuals during the
2236meeting, but will be in due course)
2237• Agreed that both UK and US government were keen to support and help facilitate continued
2238dialogue.
2239• Action – to explore agenda items for the next meeting. There was suggestion that Government
2240could continue to bring an item looking at what might be aimed for in a UK-US FTA.
2241• Action – DIT to examine US-Australia FTA PBS annex as a model for a UK-US FTA.
2242• Action – DIT and USTR to follow up with delegates on readouts and planning for next steps.
2243• Action – DIT to examine consultation results and feed back to UK delegation.
2244FOR INTERNAL DISTRIBUTION ONLY
2245Session Lead Analysis/Comments
2246• Overall, very positive discussion that showed a genuine willingness from the U.S government
2247and industry to address state barriers and drive domestic reform programmes.
2248• We welcome the suggestion of a possible formalisation of regulatory dialogue structures within
2249an UK-US FTA. Historically, regulatory dialogue and the authority of state-level regulators have
2250been a sensitive area for the U.S. We are conducting further analysis on the language in U.S.-
2251Australia, CPTPP and KORUS to identify how these structures have been used in the past.
2252• Extensive presentations for a large part of the event covering the detail of legal services
2253regulation. This was necessary for the first convening of the delegation and useful for
2254promoting transparency between the jurisdictions, but it was a resource-heavy and timeconsuming part of the agenda.
2255• The US are eager to follow up on the agreed actions points and the UK-side will need to
2256consider carefully how best to manage resource given ongoing EU exit work for the industry.
2257• We need to consider who is best placed to lead from the UK industry and to provide secretariat
2258support for future dialogues. 
2259OFFICIAL – SENSITIVE (UK eyes only)
2260
226158
2262• Clear that there was less interest on this from certain organisations, such as the Solicitors
2263Regulation Authority, and Faculty of Advocates. We should be aiming to engage in more indepth discussion with those who are best placed to drive this work forward, whilst keeping
2264others updated on progress.
2265• This session was a positive start and we should aim to make further progress on this in the
2266lead up to the next WG.
2267• Noted in follow up conversation that Dan Mullaney sought to manage expectations on the
2268likelihood of progress in this area of work. This contrasted with Tom Fine’s sentiment earlier in
2269the session, who expressed more optimism. In any event it will be for the industry to deliver on
2270any regulator dialogue and work towards mutual recognition, so Government should not on the
2271face of it be a blocker to progress. 
2272OFFICIAL – SENSITIVE (UK eyes only)
2273
227459
2275INDUSTRIAL SUBSIDIES
2276Date: November 6, 2018
2277Time: 09:30
2278Participants
2279Name Department/Directorate
2280Andrew Pickering DIT Trade Policy Directorate
2281George Radice DIT
2282Ian Bhullar BEIS
2283Jennifer Groover British Embassy Washington
2284Roy Malmrose (RM) USTR
2285Robert Gerber USTR
2286Tim Hruby Department of Commerce
2287Neil Beck USTR
2288Various other US attendees from USTR,
2289State, Commerce, Treasury
2290Key Points to Note:
2291• The UK and US exchanged views on our domestic approaches to subsidies and how this
2292translates into both bilateral and multilateral contexts, and how the programmes of other
2293countries are monitored
2294• Due to the early stage of both parties’ policy development process, we did not obtain clarity on
2295the desirability or potential scope of future FTA provisions on industrial subsidies as a separate
2296matter to subsidies via SOEs. A future discussion should go into more detail about our
2297respective bilateral ambitions on this topic.
2298• The US outlined its views on substantive subsidy disciplines in the WTO and how these might
2299be reformed (eg through the US-EU-JP trilateral)
2300• The discussion also covered the application of subsidy rules to state-owned enterprises, both in
2301the WTO and in CPTPP and USMCA.
2302Report of Discussions and Outcome:
2303Overview of domestic arrangements
2304The UK outlined plans for the state aid regime as set out on the FEP White Paper. RM implied that
2305he have liked the US to have internal controls of its own, and noted the propensity in the US
2306for state- and local-level subsidy races to arise.
2307UK asked how the US ensured that states complied with WTO commitments; RM said this was
2308challenging, they would like to do more monitoring especially of legislative initiatives. Notification is
2309an involved process and is always maturing. That process can be a tool to educate the states
2310about subsidy rules. If a case arises, states do tend to cooperate with the Federal govt (almost
2311apologetically). Being able to identify relevant draft legislation is the key thing. Canada had been
2312the one pushing more for sub-central application of the SOEs rules in CETA.
2313OFFICIAL – SENSITIVE (UK eyes only)
2314
231560
2316Industrial subsidies in a bilateral context
2317RM thought that the UK and US were probably more like minded than the US and EU.
2318The US had historically considered subsidies a multilateral issue, noting also that some had feared
2319agricultural subsidies could spill in if subsidies were considered in an FTA context. RM also noted
2320the 'unilateral disarmament' logic (ie if you disarm vis a vis one country, you're doing it multilaterally
2321by default). But the US is wondering if FTAs can be used as a testing ground, perhaps for issues it
2322would like to see addressed multilaterally. For SOEs, it's just that. A separate track to the Appellate
2323Body ruling on public bodies in the WTO.
2324The UK asked how the US approach had changed. RM explained that in the TTIP context, the US
2325was interested in SOE coverage and the EU was interested in subsidies coverage. The US could
2326see the value of subsidies coverage - it was a ‘holdover’, historically.
2327The EU had concerns, though, about subsidy rules directed solely at SOEs, due to Art 345 TFEU,
2328which mandates that public bodies and private must be treated equally. RM said there was a spill
2329over to the work of the trilateral group now. On reform, the EU was having difficulties with
2330the imputability doctrine in the EU, which says that an SOE couldn't be assumed to be acting on
2331government's behalf, there would have to be evidence. RM said the US focus on SOEs grew two
2332or three years ago, focusing particularly on China, at least in part due to stakeholder pressure. RM
2333felt that the US has more flex on SOEs than the EU, simply because it has fewer.
2334On subsidies, the US finds it slightly harder to be aggressive though it has been a leader in the
2335WTO.
2336The UK sought to press the US on what it might want to see in a bilateral context on industrial
2337subsidies separate to the SOEs angle, but was not able to get a clear answer. RM answered most
2338questions by referring back to SOEs. RM saw the subsidies issue more as a wedge to set
2339standards for the multilateral space, rather than a bilateral focus.
2340WTO reform
2341On WTO reform, RM explained that for ASCM-prohibited subsidies, there is no need to show
2342adverse effects. For dark amber subsidies, there was a reversed burden of proof, that the
2343defending party would have to show there were no adverse effects. The dark amber category and
2344non-actionable category fell out of the rules at the same time. Developing countries had concerns
2345about the overall direction of travel and felt the green box didn't help them. The US would like to
2346add some subsidies to the prohibited category. This first appeared in its 2007 paper, covering
2347equity to non-investment worth firms, unconditional aid, subsidies to insolvent firms without a
2348restructuring plan. The US was being more aggressive than the EU or Japan. Putting something
2349into the prohibited category is difficult. Showing what uncreditworthy means is hard (though RM
2350noted that banks do this every day). USMCA also prohibited debt to equity transfers in some
2351circumstances; they have seen this as an issue in China.
2352UK asked how much these issues were about China versus other countries. RM said almost all
2353China. Tim Hruby added that similar issues are seen in the Gulf.
2354The UK asked about the public bodies ruling - how did the US think this could be addressed
2355technically? RM agreed it was challenging. It had not yet been decided that re-opening the ASCM
2356is the right way forward - the US is more sceptical of EU proposals in that direction. In the Doha 
2357OFFICIAL – SENSITIVE (UK eyes only)
2358
235961
2360negotiations, the US fought to prevent this. There is a risk of linkage to the anti-dumping
2361agreement and others.
2362RM said that the endgame is still undecided. Maybe a plurilateral. It would have to include China.
2363Maybe commitments could be made in Members' schedules. It would need time. The EU is asking
2364the same questions. On monitoring other countries' subsidies, RM said that for China (across
2365multiple issues), there is a team of 30-40 people (‘ICTIME’?). The US suspects that China is
2366deliberately situating its ‘questionable practices’ at sub-central level.
2367For the US, both a change to the rules and an improvement in transparency are both needed.
2368There is a group who have agreed to make notifications amongst themselves (?) on
2369semiconductors. RM said that the OECD has a study coming out which says aluminium
2370overcapacity is due to state-owned bank loans and subsidised input pricing. Confirms the US
2371analysis in its WTO case.
2372On the trilateral, the US, EU and JP were generally on the same page. There were some
2373divergences coming up on language and the US was more aggressive. For the EU,
2374the imputability issue is the big problem on SOEs. The US would prefer to do away with the public
2375body concept and just say SOE, but the EU is nervous.
2376The UK told the US assuming a domestic regime was put in place, it might be able to be quite
2377offensive in this space. As for what the UK might look to on US intentions, RM suggested checking
2378the Doha papers where it was more aggressive. RM noted that while it notifies 700 subsidies, it still
2379has defensives.
2380Key Actions and Next Steps
2381• No agreed actions but see below for areas for the UK to work on.
2382• A future discussion should go into more detail about our respective ambitions on this topic
2383bilaterally.
2384FOR INTERNAL DISTRIBUTION ONLY
2385Session Lead Analysis/Comments
2386Atmosphere – Personal atmosphere was fine. RM is the US representative at the WTO SCM
2387Committee, so there will be the possibility to catch up in Geneva as well. It appears that
2388subsidies has been a long-term professional focus for him and he may have sympathies for going
2389further than the US has done in the past. The US did not exhibit any concerns about the UK
2390adopting the EU state aid regime. No questions on UK subsidy programmes or our intended
2391approach in the WTO. The US was surprisingly open about domestic subsidy races and challenges
2392in applying WTO disciplines to sub-central levels in the US.
2393Key Achievements of session - First discussion on this topic. Disappointingly, we did not manage
2394to get clarity on the mooted change in approach from the US on subsidies chapters in
2395FTAs. Unclear whether the fact that RM kept pushing the discussion onto SOEs means that the US
2396has not considered stand-alone subsidies provisions, or whether this was because it was the
2397only angle he had clearance to discuss. We will have to press them further next time, once their
2398thinking has advanced any their domestic processes have moved on.
2399Areas to work on for UK ahead of next meeting 
2400OFFICIAL – SENSITIVE (UK eyes only)
2401
240262
2403• We should check if Art 345 TFEU is being brought over via EUWA, and if our lawyers think this
2404is something for us to be concerned about. At the time, the US took the view that Art 345
2405shouldn't be a problem insofar as it would only require justification for treating SOEs
2406differently.
2407• We should also get a legal view on the EU’s imputability doctrine, its applicability in the UK
2408post-Exit and what this means for our position on WTO reform.
2409OFFICIAL – SENSITIVE (UK eyes only)
2410
241163
2412STATE OWNED ENTERPRISES (SOEs)
2413Date: November 6, 2018
2414Time: 15:30 -17:00
2415Participants
2416Name Department/Directorate
2417Andrew Pickering (AJP) DIT
2418Matt Ashworth DIT
2419George Radice DIT
2420Ian Bhullar BEIS
2421Neil DeSouza BEW
2422James Manning (VTC London) (JM) DIT
2423Emma Stubbs (VTC, London) DIT
2424Dorottya Szeles (VTC, London) DIT
2425Edwin Mangheni (VTC, London) DIT
2426Roy Malmrose (RM) USTR
2427Robert Gerber USTR
2428Tim Hruby US Department of Commerce
2429Various other US attendees from USTR,
2430State, Commerce, Treasury
2431Key Points to Note:
2432• The US provided valuable insight into USMCA provisions (listing, de minimis, subsidies
2433provisions, definitions), including what the US might be looking for from the UK in agreeing a
2434chapter.
2435• Both parties agreed that there are commonalities between our domestic arrangements, trade
2436policy attitudes and the role of Government in the economy.
2437• Both parties agreed to continue discussions to develop a ‘gold standard’ template together and
2438keep progress moving forward. Both parties have much to gain in the future by setting out a
2439precedent of having strong SOE chapters, with particular reference to the issues posed by
2440countries with a larger SOE profile, including China.
2441Report of Discussions and Outcome:
2442AJP outlined the agreed session objectives 
2443• To further understand the US historic approach and aims for SOE chapters, building on our
2444previous conversation in April 2018. 
2445• To discuss particular language and concepts used in SOE chapters, including the newer
2446elements in USMCA. 
2447AJP noted that the preceding working group session on industrial subsidies had touched on SOEs,
2448as the two areas are closely linked.
2449OFFICIAL – SENSITIVE (UK eyes only)
2450
245164
2452US concerns regarding SOEs and what forms of harm are the US’ primary focus.
2453RM outlined that in the past two or three years US stakeholders have increasingly raised concerns
2454in particular in relation to Chinese SOEs and have pressed the US to develop rules to address
2455these concerns. The primary sectors concerned are steel, aluminium and semiconductors, and
2456also the fishing industry – for example in the WTO you can see some SOE impact in China’s
2457fishing industry.
2458The main concerns in China are subsidies provided to SOEs, regulatory action to promote SOEs
2459and the creation of ‘national champions’. In China SOEs are used to develop the economy, partly
2460through subsidies, so the US looking to discipline the provision of subsidies and strive to have
2461SOEs subject to commercial considerations and non-discriminatory treatment to ensure US
2462business is treated fairly.
2463RM also set out the US’ concerns related to the WTO – the US have had a number of adverse
2464appellate body decisions regarding SOEs in China, which were related to the ‘public
2465bodies’ concept. The US in their FTAs are starting to create an ‘alternative track’ to address SOE
2466problems.
2467TPP
2468RM stated that TPP was the first US FTA to have separate chapter on SOEs.
2469Many TPP rules are similar to WTO, such as SOEs being subject to commercial considerations,
2470non-discriminatory treatment and subsidies rules. There is also a section dealing with subsidised
2471investment under the heading ‘injury’. This is aimed at targeting subsidised investment coming
2472into a market that is causing injury – TPP and USMCA create a dispute mechanism to remedy
2473that.
2474USMCA discussion
2475USMCA tries to go further than TPP, in particular creating additional subsidy rules, with 3 subsidy
2476types prohibited – loans or loan guarantees provided to uncreditworthy SOEs, debt equity
2477conversion, subsidies to SOEs that are insolvent or on the brink of insolvency without a credible
2478restructuring plan. USMCA also includes an expanded definition of an SOE, including a ‘control’
2479limb not present in CPTPP, though which appears in a number of recent EU SOE chapters, as well
2480as additional provisions on transparency.
2481AJP asked about the US’s views on a possible OECD global reporting standard for SOEs. RM said
2482this is the State department’s domain and there is a need for the US government to collaborate
2483more in this regard. RM added SOEs can also be approached from an APEC context, which China
2484is also a member of.
2485RM stated that USMCA is absolutely more about setting a gold standard than addressing specific
2486concerns with Mexican or Canadian SOEs. Mexico and Canada are likeminded, particularly in
2487relation to their steel industries (they meet every year). USMCA in RM’s opinion takes another step
2488or two forward towards the US’ ‘ideal’ SOE chapter. Nonetheless, Canada and Mexico did still
2489have some reservations. As mentioned previously, moving a subsidy into the prohibited category is
2490hard and needs to be defined clearly to help governments find the right line.
2491Commercial considerations
2492OFFICIAL – SENSITIVE (UK eyes only)
2493
249465
2495AJP asked what exact kind of practices are specifically covered by USMCA’s commercial
2496considerations provisions. RM stated that there is very little change from TPP in this
2497regard. CPTPP Article 17.4 – here the US wanted to make a true commercial considerations
2498standard and thus make the actions of a private enterprise the benchmark for SOEs. RM noted
2499that although there are concerns about some SOEs being exempted from competition law or
2500specific regulations, these provisions don’t specifically try and address that issue. RM raised
2501USMCA Article 22.51
2502in relation to this concern but admitted that he was not sure if it’s ‘all that
2503powerful’.
2504Definitions of a state-owned enterprise in USMCA
2505Attendees discussed that the definition has been broadened from TPP. TPP focused on majority
2506ownership only, and the US received a lot of criticism for that definition (for example, that it didn’t
2507capture situations in which the Government has control without ownership). This criticism came
2508from US businesses, who were concerned that there could be circumvention (mainly in relation to
2509Chinese SOEs).
2510Attendees discussed the difference between state-owned enterprises and state
2511enterprises. RM stated that state enterprise is a broader term, referring to entities controlled or
2512owned by government. State enterprise is defined in the general definitions section of USMCA.
2513USMCA’s new language says that if Government can control the entity through ownership
2514interests, it’s an SOE. 2 RM asserted that the US has always been cautious to link control to
2515ownership – there must be control exercised via ownership interests, contrary to the EU’s
2516approach.
2517AJP queried whether the US had an idea of how to measure the control ownership limb in ‘real life’
2518situations. An example could be that of companies such as Facebook or Amazon, whose owners
2519own 10% of shares but retain stronger control over decisions of the companies, therefore retaining
2520in effect much stronger control than their shareholdings would imply. RM stated that each case
2521needs to be examined individually on a case by case basis, which is very fact intensive, but
2522that footnote 8 lists some examples. He added that there are infinite ways to demonstrate
2523control. The US preference was initially not to have any examples of control and that footnote 8
2524was a ‘negotiated outcome’.
2525AJP queried cases in which Government might exercise control without any ownership. RM was
2526sceptical of this and said it had to be balanced with the risk of regulatory activities being construed
2527as government control.
2528Non-commercial assistance – to and by SOEs
2529RM confirmed that the non-commercial assistance provisions cover instances where SOEs provide
2530government subsidies to other SOEs. AJP asked about subsidies from SOEs to private
2531companies. RM stated that this is not covered because the chapter is ‘about SOEs not subsidies to
2532private entities.’ The USMCA subsidies provisions are the US’ alternative to the WTO’s ‘public
2533body’ case law. RM added that he sees this as one of the key advancements in USMCA.
2534Transparency
2535In USMCA, the Q&A mechanism goes further than TPP, notably in the area of equity
2536infusion (USMCA Article 22.10.4) - regardless of whether this equity infusion is deemed noncommercial assistance or not, Parties still must give information when requested. Once again, this 
2537OFFICIAL – SENSITIVE (UK eyes only)
2538
253966
2540provision is aimed at China – domestically, China has a new mechanism which establishes equity
2541investment funds - ‘private entities’ where government has no control. An example is the IC fund3 –
2542the Ministry of Finance owns 1/3 and several SOEs own the rest of it.
2543The US would consider this an SOE. The US has asked China to notify this programme but
2544in China’s WTO trade policy review, they stated that this is a private enterprise. The USMCA
2545provisions aim to pre-empt that kind of a response. The US believes that where there is
2546government ownership, there must be a ‘higher standard’.RM pointed out USMCA’s transparency
2547paragraph on equity capital (22.10.9) which sets out when information about government equity
2548investment should be confidential.
2549While the US recognises that some programmes might be confidential, this is an area that the US
2550would like to further develop. For example, perhaps the terms of a loan could be argued
2551as confidential (though even this was not the US’s preference), but the quantity of subsidies or
2552equity capital should not. This is because if Government is providing taxpayer funds to another
2553entity, that should be transparent.
2554Listing
2555The US sees the listing provisions in USMCA as applying to all SOEs above the de minimis
2556threshold4
2557.
2558AJP queried what this list might look like in practice – would there be specifics about which
2559activities were in scope of the chapter, for example. RM was clear that this was ‘just a list’!
2560RM stated that he had not thought about whether US companies might want access to the
2561list, but he had assumed that this list would be ‘transparent in the wider sense’. RM stated that
2562USMCA’s listing provision ‘does say publicly available’ so he assumes that this would be on a
2563website and therefore available to all. RM said he will have to check whether the list would be
2564shared with firms. [USMCA provisions actually state that parties shall ‘provide to other parties OR
2565make publicly available on an official website a list’].
2566‘Principally’ engaged in commercial activities
2567AJP queried how the US would determine the concept of ‘principally’ engaged in commercial
2568activities. RM recognised that this might become an issue - SOEs often have public functions as
2569well as commercial so the question is how best to target the commercial activities that are likely to
2570be trade-distorting.
2571RM noted that the EU words this slightly differently – stating that if an SOE has both public and
2572commercial functions, only the commercial activities would be in scope. But even so, in case of a
2573dispute, parties would still have to divide commercial and non-commercial. RM’s interpretation is
2574that ‘principally’ is strong wording, that often results in an SOE not being in scope of the
2575chapter. This is because what parties care about are commercial operations causing trade
2576distortions not public policy functions.
2577JM queried borderline situations. RM asserted that transparency provisions could partly answer
2578that – parties could question the list given on that basis. JM also queried the risk of letting some
2579SOEs ‘off’ as they’re not principally engaged in commercial activities, even in situations where their
2580commercial revenue is over de minimis? This was not something RM has thought about before, but
2581he drew attendees’ attention to the ‘two-pronged’ test – firstly is it principally engaged in
2582commercial activities, and then are these commercial activities over the de minimis threshold. With 
2583OFFICIAL – SENSITIVE (UK eyes only)
2584
258567
2586listing, you'd again need to self-determine whether an SOE was principally engaged in commercial
2587activities. Q&A on this is permitted, so you could use that to query a list.
2588De Minimis
2589RM confirmed that the USMCA de minimis is lower than TPP, but that the US’ starting point had
2590been 25 million SDRs. RM also said that they had not found a principles-based method for
2591devising a de minimis starting point, and simply stated that the US ‘prefers’ a lower de minimis than
2592200M.
2593Sub central application of provisions
2594RM stated that in USMCA negotiations, Canada was the demandeur on sub central application, as
2595well as the US. In CETA, the EU ‘forced’ Canada to apply some rules sub centrally so
2596they now had an offensive interest here as well.
2597In addition, many SOEs in China are sub central so this application is also offensive towards
2598China. RM asserted that if you want a ‘gold standard’ chapter, you really should apply provisions
2599sub centrally.
2600AJP queried how this would work in given the US’ state system. RM stated that more
2601‘sophisticated’ state entities recognise this issue with China, so they’d be happy with
2602this application. However, he noted that US states are apprehensive about this – asking about
2603rules, identifying SOEs etc. The US doesn’t have a great idea about what’s owned at sub central
2604level but stated that this was likely to be airports, hospitals, etc. The US have done
2605some scoping work and are not terribly concerned, stating that there is probably only one SOE that
2606produces goods at sub central level.
2607The US (Hruby) queried what the UK’s ‘sub central’ level would be. AJP said that to some extent
2608those details were still to be worked out. Trade policy is reserved to Westminster, but we
2609work closely with the Devolved Administrations (DAs) on trade policy and are speaking to
2610them to gain awareness of what entities they own. Similarly to the US, ports and airports have
2611come up in these discussions.
2612AJP added that the DAs are broadly aligned with Westminster and were not generally in the
2613business of using SOEs to distort trade. ‘Sub central’ is not clearly defined in the UK,
2614but AJP noted that we have not identified anything to cause concern so far as to non-compliance –
2615the UK’s SOEs are run in accordance with international best practice at all levels. George
2616Radice noted that this could be a discussion in future working groups and noted that this has been
2617discussed in other sessions.
2618Designated monopolies
2619AJP queried the US’ understanding of the term to ‘designate’ in the context of designated
2620monopoly provisions. Roy stressed not to read too much into it, but that the US understands this to
2621capture ‘overt action by the Government’. Legislation would be an obvious example of this – if
2622Government legislates to ensure that only one firm is granted a monopoly. Roy agreed that in
2623some instances licensing could be construed to mean designating but attendees discussed that if
2624this does not overtly block other firms entering a market then this would not mean it was
2625designated in practice.
2626Courts and Administrative Bodies
2627OFFICIAL – SENSITIVE (UK eyes only)
2628
262968
2630AJP asked about what Art 22.5(1) USMCA aims to do. RM explained that there are SE Asian
2631countries where their own SOEs are simply not subject to local court jurisdiction at all, so US firms
2632cannot challenge anything they do.
2633SOEs in the WTO
2634AJP asked about the US position on WTO reform related to SOEs. The US stated they
2635had made a proposal5
2636in the context of the Doha Round suggesting that the prohibited category of
2637subsidies should be expanded, together with increased transparency of any financial contributions
2638to majority owned SOEs. Again, this was making a point about subsidies. The US noted that this
2639was an aggressive proposal, but that they are continuing to push for further transparency on
2640SOEs in the WTO, with support from Japan. There is no current reform discussion that reflects
2641USCMA style transparency provisions on SOEs in the WTO.
2642State trading enterprises in the WTO
2643AJP asked about the distinction between SOEs and STEs. RM doesn’t work specifically on STEs
2644and believes that the two concepts are separate. For the US, STE provisions are largely about
2645non-discriminatory treatment, with links to the GATT article on commercial considerations.
2646Links with previous EU discussions (TTIP subsidies and SOEs chapter)
2647The US asked the UK in the context of the subsidies session and raised again in the SOEs
2648session, whether we, like the EU, had concerns about having both a subsidies and a SOEs
2649chapter (related to Art345 TFEU6
2650). AJP said that the UK was aware that there had been an issue
2651but thanked the US for explaining it in more detail. The UK would take that issue away and think
2652about it.
2653Key Actions and Next Steps
2654• No key actions
2655FOR INTERNAL DISTRIBUTION ONLY
2656Session Lead Analysis/Comments
2657Atmosphere - Atmosphere was friendly, with the US responsive and open to questions on their
2658USMCA approach and understanding of key terms.
2659Session was dominated by UK questions about USMCA. Surprisingly few hard questions back
2660from the US – they did not seem inclined to ask about our own domestic arrangements in any
2661detail.
2662Key Achievements of session - We have more clarity on US thinking on SOEs with both
2663commercial and non-commercial functions (seemed favourable). We have learned about prior EU
2664reticence in this area and we can take some legal queries home to make sure we won’t have
2665similar difficulties. We have a clearer understanding of the non-commercial assistance provisions
2666and the use of ‘control’ in the definition of SOE.
2667Areas to work on for UK ahead of next meeting - The UK still has more work to do to understand
2668our own ownership profile, and should come to the next meeting prepared to discuss the UK
2669position in more detail – in particular the US probed on the definition of ‘sub central’ for the UK 
2670OFFICIAL – SENSITIVE (UK eyes only)
2671
267269
2673given the role of the DAs. We will also need to explore any defensives around transparency of
2674government loans terms.
2675OFFICIAL – SENSITIVE (UK eyes only)
2676
267770
2678SERVICES
2679(Readout delayed)
2680OFFICIAL – SENSITIVE (UK eyes only)
2681
268271
2683COORDINATION TEAM PLANNING
2684(Sophie to insert)
2685OFFICIAL – SENSITIVE (UK eyes only)
2686
268772
2688MRAs
2689Date: November 7, 2018
2690Time: 14:00 – 17:00
2691Participants:
2692UK Name Department/Directorate
2693Julian Farrel DIT
2694Henry Alexander DIT
2695Verity Threlfell DIT
2696Sumeet Virdee DIT
2697Cynthia Morgan DIT
2698Anton Routledge DIT
2699Richard Thompson DFT
2700Jon Elliot BEIS
2701Rhidian Roberts BEIS
2702Robert Morris BEIS
2703Phillip Highe BEIS
2704Andrew Preston BEIS
2705Ian Rees MHRA
2706Daisy Ellis MHRA
2707Lea Reynolds DEFRA
2708Meg Trainor DExEU
2709US- Name Department/Directorate
2710Jim Sanford USTR
2711Ashley Miller USTR
2712Christine Brown USTR
2713Bryant Trick USTR
2714Matt Jaffe USTR Legal
2715Rachel Shub USTR
2716William Hurst FCC
2717Mark Abdoo FDA
2718Anne Kirchner FDA
2719Ramona Saar NIST
2720Eric Puskar NIST
2721Brandi Baldwin US Coast Guard
2722Brian Woodward US Department of Commerce
2723Cara Lofaro US Department of Commerce
2724OFFICIAL – SENSITIVE (UK eyes only)
2725
272673
2727Key Take-Away Points
2728• The US are resistant to the UK proposal of the Short Form Agreement approach to the
2729Mutual Recognition Agreement (MRA) that was shared in September 2018 and want to
2730take the Long Form Agreement approach. The UK highlighted that the timeline is becoming
2731pressing in the event of a No-Deal scenario as the agreed, initialled and signed text would
2732need to be in Parliament by mid-December in order to follow UK processes. Therefore, if
2733the US would like to take the Long Form approach, there may not be enough to time to go
2734through and agree it. The UK asked how long it would take the US to prepare the
2735equivalent 1998 EC-US agreement for the UK, the US responded by informing the UK that
2736they would have it prepared within two weeks (by 21/11/18).
2737• The UK explained that if we are seeking to replicate the existing 1998 EC-US MRA, we will
2738also need to incorporate the inactive annexes (Electrical safety, recreational craft and
2739medical devices), and asked what the implications would be for the UK if one or more of the
2740non-operative annexes was to become operational. The US stated that they have no
2741intention to extend the annexes that are non-operative to us as they could never become
2742operational under the EC-US 1998 agreement. Due to this, the US do not believe it would
2743not make any sense to transition the annexes that are non-operational.
2744• The UK will be sending a paper answering the questions raised by the US Coast Guard on
2745the latest version of the UK-US Marine Equipment MRA text.
2746• The UK will be sending a paper in response to questions posed by NIST in the July 2018
2747Trade and Investment Working Group.
2748Record of Discussion
2749Item 1: Updates from Regulator-to-Regulator discussions
27501. The US asked the of the extent and mechanism by which the UK will adopt the Marine
2751Equipment MRA and how the UK will notify Conformity Assessment Bodies (CABs) on
2752these three issues. The UK (DfT) explained that they have prepared a paper to answer the
2753question and would be sharing it within the week however they have some issues on how
2754market surveillance will operate.
27552. The US explained that they would like to hear the answers to the questions NIST had
2756asked in July. Particularly the two priority areas which were discussed briefly during the
2757session:
2758a. US Question 1: ISO / IEC 17065 or ISO/IEC 17020 can be used; How will
2759regulations be listed on the Scope of Accreditation for the UK?
2760UK Answer: UK based CABs must gain accreditation and designation to test
2761against the relevant MRA legislation. There will be no changes to UKAS’
2762accreditation process. UKAS will continue to use the international accreditation
2763standards, ISO / IEC 17065 or ISO/IEC 17020.
2764b. US Question 2: NIST provides RED and EMCD Technical Assessment Checklist to
2765ABs for mandatory use for EC – OK to use for UK? Are there additional UK specific
2766requirements at this time? 
2767OFFICIAL – SENSITIVE (UK eyes only)
2768
276974
2770UK Answer: We do not foresee additional requirements. The European Union
2771(Withdrawal) Act 2018 has passed all its Parliamentary stages, received Royal
2772Assent, and become law. It will keep most existing EU law as UK domestic law after
2773Brexit in order to ensure the continuity and completeness of the UK's legal system.
2774This means that requirements will remain the same on our day of exit in March
27752019.
27763. The UK offered to send the answers to all NIST’s questions over in text form and the US
2777agreed that this would work for them.
27784. FCC confirmed that they would be having a conference call on e-labelling with BEIS the
2779following week and would update the UK on the outcome. BEIS noted that they have
2780provided information on the research the UK are doing on e-labelling regarding the future of
2781regulatory delivery and to learn how we might shape the future of e-labelling.
2782Item 2: Discussion of Draft MRA texts
27831998 EC-US MRA
27845. The UK explained our reasoning for exploring a short form approach of mutatis mutandis as
2785this approach would save both the US and UK a lot of work and not at the expense of legal
2786certainty. It would also ensure continuity for economic operators on both sides who are
2787currently operating under the EC-US MRA, and would avoid a cliff -edge. The UK explained
2788that the exchange of letters would form the new agreement and would enter into force when
2789the current agreement ceases to apply to the UK. If there was a decision that changed the
2790EC-US MRA later, it would not be incorporated under the UK mutatis mutandis approach.
27916. The UK talked through the articles of the Short-Form Agreement and explained that the UK
2792wanted the current designation of CABs to continue. The UK explained that as the intent of
2793the UK-US MRA is to replicate the existing EC-US MRA, we would need to incorporate the
2794inactive annexes and asked what the implications would be for the UK if the EU and US
2795made one of the non-operative annexes operational. The US informed the UK that they
2796have no intention of transitioning the inactive annexes as they could never become
2797operational.
27987. The US (Jaffe) informed the UK that the short form approach is something that they could
2799not agree to as they do not believe that it is transparent and find it confusing. The US
2800proposed using the long form approach which would include Pharmaceuticals, EMC and
2801Telecommunications. The UK emphasised the point of importance of ensuring that the
2802entry into force language is consistent with wider EU-US agreements - notably the updated
2803GMP annex, given that the US intended to base their draft on the US-EFTA agreement in
2804which the GMP annex has not yet been updated.
28058. The UK explained that timelines were becoming pressing in the event of a no-deal as the
2806agreed and signed text would need to be laid in the UK Parliament by mid-December. The
2807US agreed to prepare a long form text equivalent to the 1998 EC-US MRA (but based on
2808US-EFTA) and to send it to the UK in two weeks (21 Nov).
2809Marine Equipment MRA
2810OFFICIAL – SENSITIVE (UK eyes only)
2811
281275
28139. The US explained their draft of a US-UK Marine Equipment MRA (received 15 minutes
2814before the meeting), and that it differs from the EEA EFTA agreement as it only involves
2815two parties whereas EFTA involves four parties. The operative provisions are replicated for
2816the most part within the new text however they believe that legal references will need to be
2817considered. The legal references depend on the EU withdrawal agreement and this occurs
2818in several places where the agreement references the Marine Equipment directive.
281910. The UK will review the amended text sent by the US and come back with questions during
2820regulator-to-regulator discussions.
2821Item 3: USMCA Sectoral Annexes
282211. The US explained the outcomes of the United States Mexico Canada Agreement (USMCA).
2823The goal of the sectoral annexes in USMCA was to reduce or eliminate unnecessary
2824regulatory differences in key sectors of commercial interest with the objective of cost saving
2825and regulatory efficiencies.
282612. There is an annex for each sector, as well as a bilateral US-Mexico side letter on
2827automotive safety standards. The letter is limited to US-Mexico because there is already
2828extensive cooperation with Canada as their automotive standards mirror those of the US.
282913. The sector annexes in USMCA are: Chemical substances; Pharmaceuticals; Medical
2830Devices; Cosmetics; Information and Communication Technologies; Automotive Safety
2831Standards; and Energy Performance Standards.
283214. Each annex applies to technical regulation, standards and conformity assessment
2833procedures and depending on the size of the sector, could apply more broadly to
2834notifications, marketing authorisations, hazard communications and import/export permits.
2835Commitments by competent authorities to make publicly available the description of each
2836authority and the point of contact within each authority. Each party must notify other parties
2837if this information changes. There is also a commitment for competent authorities to avoid
2838imposing and/or maintaining duplicative regulatory requirements.
283915. There were no queries from the UK regulators at this time.
2840Item 4: Update on US-EU Economic Working Group (following Trump-Juncker bilateral)
284116. The UK asked for more information on what happened in the US-EU Economic Working
2842Group. The US said that there had been some specific discussions in relation to medical
2843devices (alignment of Unique Device Identifier undre MDSAP), and pharmaceuticals
2844(discussion on including veterinary medicines in the GMP Annex foreseen by next year).
2845The US said an announcement would be made in the next week or two as part of the
2846Malmstrom visit to Washington.
284717. The UK expressed the view that if it was possible for the US and EU to make progress in
2848these areas, it should be possible for the UK and US to make similar progress also.
2849Item 5: Next Steps
2850OFFICIAL – SENSITIVE (UK eyes only)
2851
285276
2853• The UK reiterated that we were keen to progress the MRA as quickly as possible and the
2854US agreed to send over their proposed Long Form Text on the 1998 EU-US agreement in
2855two weeks’ time.
2856• OPSS are to provide the US with answers to NIST questions.
2857• The UK are to provide the US Coast Guard with a review of their latest text and answers to
2858their questions.
2859• The US is to provide an update on the outcome of the FCC conference call on e-labelling.
2860OFFICIAL – SENSITIVE (UK eyes only)
2861
286277
2863TEXTILES
2864Date: 7th November 2018
2865Time: 14:00 – 14:50 (GMT)
2866Signed off by Session Lead: YES
2867Participants
2868Name Directorate/Department
2869Neil Feinson DIT – Trade in Goods
2870Adam Fenn DIT – Trade in Goods
2871Tim Ward DIT – Trade in Goods
2872Rhys Davies DIT – Trade in Goods
2873Emily Ellis DIT – Trade in Goods
2874Edwin Mangheni DIT – UK-US Trade Policy
2875Charlotte Martin DIT – UK-US Trade Policy
2876Janet Heinzen Deputy Assistant for USTR – Textiles
2877Linda USDC
2878Elizabeth US State Department
2879Sam Oakley DIT – UK-US Trade Policy
2880Key Points to Note:
2881• The US interventions were entirely led by the US Chair (Janet Heinzen, Dep Asst USTR Textiles).
2882• The session ran along the lines of the agreed agenda, with the US side providing a (scripted)
2883overview of the US approach to textiles in FTAs, followed by questions from the UK team. It lasted
2884just under an hour.
2885• The US presentation was a high level of detail, covering both existing trade flows and key areas of
2886focus for the US (RoO, safeguards and enhanced customs procedures). The US team also provided
2887detailed answers to UK questions.
2888• Some interesting stats from the US presentation included: 41% of tariff collected by US customs
2889relates to textiles. 25% of total US textiles exports to EU go to the UK. 7% of EU exports to US come
2890from UK. $336 million exports to US from UK vs c$600m imports from US to UK.
2891• The US team said they would be interested to understand more about the position of the UK sector
2892and the UK position on how regulatory issues in textiles might be covered in a future agreement.
2893• The UK stated it would be able to share links to existing, published, stakeholder positions (such as
2894those displayed on trade association websites), and would take away the question on handling
2895regulatory issues.
2896• Loose commitments made to stay in contact. No follow-up session was requested or agreed.
2897Report of Discussions and Outcome:
2898US Presentation on Textiles and Apparel
2899The US gave a scripted presentation on their approach to textiles in Free Trade Agreements (FTAs). Below
2900are the key areas they covered throughout the presentation.
2901Importance of the textiles sector to the US
2902• The textiles and apparel sector is a very important manufacturing sector in the US.
2903• The US is the 4th largest exporter of textiles and apparel in the world
2904• The domestic textile industry is very strong in the US and as such is heavily supported by Congress.
2905• 41% of tariffs collected by US customs relate to textiles
2906US approach to textiles and apparel in an FTA
2907• The approach the US takes in having a textiles chapter as a part of their FTAs reflects the
2908importance of the industry to the country and the US' aim in creating new markets for their textile
2909products to be exported into. 
2910OFFICIAL – SENSITIVE (UK eyes only)
2911
291278
2913• Textiles have historically been a separate negotiating area for the US. US stakeholders and
2914Congress have come to expect this from their negotiations.
2915• In their existing FTAs, the US has ensured a level of protection for their domestic textile industry.
2916• If there is a chance in a new FTA that US supply chains will need to adapt to be able to meet the
2917product specific rule (PSR) requirements, they would want time for that to occur. This has happened
2918in the recent US-Mexico-Canada Agreement (USMCA).
2919US-UK negotiation position
2920• The US is in the process of obtaining guidance from Congress regarding what their objectives will be
2921in negotiations with the UK.
2922UK-US trade statistics
2923• UK is among largest EU member states for imports and exports of textiles from the US. 25% of total
2924US exports to EU go to the UK. 7% of EU exports to US come from UK.
2925• The UK exports textiles to the US worth $336 million. In comparison the US’ textile exports to the UK
2926are valued at $600 million.
2927EU-US Trade Negotiations
2928• In the Transatlantic Trade and Investment Partnership (TTIP) negotiations between the US and the
2929EU the two parties had reached an agreement to remove tariffs on 97% of all textile products with a
2930view to also removing tariffs on the remaining 3%.
2931• Market access was not seen as a difficult issue to address between the two parties.
2932• The EU opposed the requested US customs visits and direct contact with textile manufacturers. This
2933was an issue because there is a requirement from Congress that Customs Officials will have the
2934power to do this when an agreement is signed.
2935• EU had similar approach to rules of origin on yarn but differences when it came to apparel.
2936• The US saw the EU's approach for textile rules of origin as being essentially a very permissive
2937version of fabric fraud.
2938• The US does not recognise the EU approach as conferring origin. Believe that minimal value has
2939been added in the free trade area under the EU's approach.
2940Customs
2941• The US experiences a high degree of customs fraud in textiles/apparel and thus expects effective
2942enforcement mechanisms in the agreements they sign
2943• They also require a clear process to follow when a fraudulent/false origin claim has been filled and
2944discovered.
2945• There is a requirement from Congress in trade agreements the US signs that customs officials will
2946be able to conduct visits to the contracting party to inspect their textile production facilities.
2947Rules of Origin
2948• The US believes that rules of origin should promote regional production.
2949• The US approach to rules of origin is based on the idea that a significant level of production should
2950occur in the region/contracting party of the agreement.
2951• The US has consistently adopted a "yarn-forward" approach to textile rules of origin.
2952o In this approach the processing that occurs after the creation of yarn should occur in one of
2953the signatory parties.
2954• This approach to rules of origin assures that the benefits of the agreement go to the partners of a
2955trade agreement and not to other countries.
2956• The US is not a fan of origin quotas. They prefer to address specific concerns with a particular
2957product in the product specific rules.
2958UK questions on US presentation
2959Following the presentation, the discussion was then opened for questions.
2960Request from the UK for expanded explanation on customs fraud.
2961• US Customs Service has textiles and apparel marked as a priority trade issue.
2962OFFICIAL – SENSITIVE (UK eyes only)
2963
296479
2965• Congress has recently passed legislation to ensure resources are targeted and focused on tackling
2966undervaluation of goods, intellectual property rights and mis-classification of products on import.
2967• This is predominately a textiles and apparel issue, but it is not exclusive to these sectors.
2968• 41% of all tariffs collected in the US is from textiles/apparel and so this is a sector which is rich for
2969abuse.
2970Question from the UK for clarification on where the differences were between the EU and the US for their
2971negotiation stance on textiles and apparel.
2972• The biggest difference was likely their differing approach to rules of origin for textiles and apparel.
2973While the US favoured their yarn-forward approach the EU favoured one that allowed minor
2974processing to confer origin.
2975• They did try at times to narrow the differences down to specific products and address the issues with
2976those specific products but that is as far as the negotiations got before they stopped.
2977• Hadn't got to the point where they had the specific products pin-pointed as it was still very high level
2978by the time the negotiations ended.
2979• There was concern from the EU regarding their Generalised Scheme of Preferences (GSP)
2980development commitments and the US did understand that the EU had a special relationship with
2981developing countries outside of the EU.
2982Question from the UK on how UK stakeholders question why there is a need for such rigorous customs
2983checks for goods entering the US from the UK.
2984• It is very important for US Customs to have specific provisions for textiles and apparel as it allows
2985them to track and monitor the production of a good to try and prevent fraud.
2986• Customs visits to factories helps to assure the customs officials that the production is occurring in
2987the "correct" country.
2988• Unable to pre-judge the impact this will have on the UK.
2989Question from the UK on whether the US has had to use their enhanced customs provisions to ensure the
2990integrity of production coming from developed countries.
2991• US customs agents will do annual conduct customs textile verification visits to various countries.
2992• How the countries which are visited are determined depends on risk assessments done internally. It
2993will depend on various issues such as import levels.
2994Question from the UK regarding the short supply provision.
2995• The US employs a number of different approaches to the short supply provision
29961. Negotiating an amendment to change a particular product specific rule for a particular input.
2997This has been used previously but it is a very long method.
29982. Creating a short supply list and having a streamlined process to be able to add products to
2999that list. This is currently used in the Central American Free Trade Agreement (CAFTA) and
3000the US runs this list. It takes between 30-45 days to process a request with over 90% of
3001requests being processed and added to the list within 30 days. They have had very few
3002objections on this system thus far.
30033. Under TPP as a part of the negotiations they negotiated a list of products that would be on
3004the short supply list.
3005• The US is seeing a lot of new investment in their textile industry and as such which products will and
3006will not be available in the future is a conversation we will have to have.
3007• There is no prescribed level of detail required for entry onto the short supply list. It is entirely due to
3008what the individual stakeholder needs and the level of detail they provide in their application.
3009• The creation of a short supply list is done on a case by case basis with each individual trading
3010partner.
3011Question from the UK on the Article 6-A, Special Provisions, in USMCA.
3012• The special provisions annex did exist under North American Free Trade Agreement (NAFTA).
3013• 980200.90 is the code for textile and apparel goods, assembled in Mexico in which all fabric
3014components were wholly formed and cut in the United States, etc.
3015OFFICIAL – SENSITIVE (UK eyes only)
3016
301780
3018• The special provisions contained under this tariff code are available for any good the requirements
3019specified.
3020Question from the UK regarding the opinions of US textile stakeholders raised at the Industry Trade Advisory
3021Committee on Textiles and Clothing (ITAC 11) with regards to the rules that will be applied under USMCA.
3022• Under USMCA the goal was to increase North American content in textile and apparel trade without
3023unduly effecting existing supply chains.
3024• The question remained on how best to increase North American content.
3025• They decided to establish new chapter rules for sourcing various materials. Importers and retailers
3026were made aware of these changes and the US found that a lot of what is already sourced by the
3027textile industry is done so throughout North America.
3028• In order to address the concerns of industry there is a transition period until these riles become
3029effective to give industry time to alter supply chains as necessary.
3030Question from the UK on which model of textile chapter the US is most likely to want to adopt in our
3031negotiations.
3032• They would not pick one particular model as the best one.
3033• They will wait for guidance from Congress and their stakeholders as to which approach to take with
3034the UK
3035• If the UK looked at all American FTAs they should be able to get a sense of what is a common
3036approach across the textile chapters.
3037• Must remember that each FTA has its own unique provisions which are specific to that trading
3038partner so advice is to look at all of them to determine what options are available to people.
3039Question from the UK on the timeline for the work Stakeholders and Congress are doing considering the USUK FTA approach.
3040• Currently about 30 days into a 90-day process.
3041• Believe in about a month or some there should be some publicly available guidance on the situation.
3042US stated that they are very interested in learning more about the UK textile and apparel industry and any
3043special interests they might have. Any information the UK can provide on that will be gratefully received.
3044• The UK offered to send the US information regarding the UK’s textile and apparel sectors.
3045• In response the US also offered to send the UK links to useful customs webpages.
3046US is also interested in regulations, standards and regulatory issues that could impact trade with the UK.
3047• The UK took this question away.
3048Key Actions and Next Steps
3049• UK to send to the US any information they have found useful regarding the UK's textile and apparel
3050sectors. This could potentially include consultation responses once they have been made public.
3051• US to send the UK links to US customs enforcement efforts and a link to the webpage to the Office
3052of Textiles and Apparel.
3053• UK to provide an answer to the US question on regulations, standards and regulatory issues.
3054FOR INTERNAL DISTRIBUTION ONLY
3055Session Lead Analysis/Comments
3056Suggested issues for Session Lead to add:
3057• Atmosphere of the meeting
3058• Areas to push in future working groups
3059• Pushback from counterparts, as well as the potential implications
3060• Initial thoughts on the success of the meeting/the extent to which objectives were achieved
3061OFFICIAL – SENSITIVE (UK eyes only)
3062
306381
3064OFFICIAL – SENSITIVE (UK eyes only)
3065
306682
3067FINANCIAL SERVICES
3068Date: November 7, 2018
3069Time: 0930 – 1230
3070Participants
3071Name Department/Directorate
3072Jaya Choraria HMT
3073Matt Mueller HMT
3074James Flannery HMT
3075Shirley Rhone HMT – Legal
3076Johanna Michael DIT – Services
3077John Carroll DIT – Services
3078Matt Ashworth DIT – Investment
3079Victoria Donaldson DIT – Legal
3080Sophie Brice DIT – US Team
3081Claire Furbush British Embassy Washington
3082Philip Kenworthy British Embassy Washington
3083Matt Sullivan UST
3084Matt Swinehart UST
3085Lailee Moghtader UST
3086Mirea Lynton Grotz UST
3087Tom Fine USTR
3088Also, in attendance at margins: US officials from US Treasury, State Department, Dept. of Commerce,
3089Small Business Administration.
3090Key Points to Note
3091• The session focussed on a detailed, technical discussion of the financial services provisions in
3092the USMCA – including areas of innovation such as additional cross-border commitments and
3093advanced provisions on financial services digital and data.
3094• The UK provided an update on ongoing UK-EU negotiations on financial services and
3095responded to questions from the US.
3096• The UK and the US agreed to continue discussions on financial services at future Working
3097Groups.
3098Report of Discussions and Outcome
3099Opening Remarks
3100Matt Sullivan (UST) opened the discussion, noting the positive conversation that took place in
3101London in July 2018. MS also noted that the US agencies would not be in a position to discuss
3102objectives for a future UK-US FTA at this meeting. 
3103OFFICIAL – SENSITIVE (UK eyes only)
3104
310583
3106Responding for the UK, Jaya Choraria (HMT) acknowledged the UK was also not yet in a position
3107to discuss specific policy positions for a future UK-US FTA, but noted it would be useful to
3108continue the discussion started in London. In particular, given the recent successful conclusion of
3109negotiations on USMCA, the UK is interested in understanding the financial services content of the
3110agreement.
3111MS (UST) agreed, noting that HMT had already identified certain areas of interest in USMCA to be
3112discussed in this meeting.
3113USMCA Discussion
3114Definitions
3115JC (HMT) noted that the definitions in USCMA employ several new terms compared to previous
3116US FTAs. The UK is keen to check our understanding of which activities fall within scope of the
3117financial services chapter versus other chapters such as investment or digital – for instance, we
3118understand payment activities carried out by companies like Visa or Mastercard fall within the
3119scope of the data localisation provisions in the digital rather than financial services chapter?
3120Similarly, do financial services provided by non-financial institutions – such as a supermarket chain
3121providing credit card services – fall out of the scope of the financial services chapter?
3122Matt Swinehart (UST) responded that the scope of the chapter is defined in several ways in
3123relation to financial institutions. The definition of “financial service supplier” under the agreement is
3124based either on whether an entity is supervised by a financial regulator; another is if it is subject
3125to regulatory rules applicable only to financial institutions – e.g. capital requirements. The scope is
3126defined in part by domestic law and will vary by jurisdiction.
3127MSw explained the cross-border element of the definition of “covered person”. Where the “covered
3128person” definition relates to data transfer and location of computing facilities article, it was essential
3129to ensure that there were built-in protections to enable regulatory and supervisory access to data
3130stored. These protections relate to the “acute need” for regulators to have access to data. Only
3131those cross-border service providers that meet that acute need are scoped in. If a firm
3132is not supervised by a financial regulator, it is indicative that the “acute need” does not need to be
3133met.
3134On the specific text, MSw (UST) noted that the particulars of the language related to working with
3135Canada and Mexico and the idiosyncratic Canadian regime. The language is somewhat unique,
3136given Canadian domestic “title-based” approach to financial regulation. For instance, in the US, if
3137you’re taking deposits and making commercial loans from those deposits, you must have a
3138bank licence. However, in Canada, although you can’t call yourself a bank without a
3139banking licence, firms are otherwise free to perform “banking” activities.
3140US proposal had been a definition that fits the US regulatory system, such that if a crossborder supplier was required to register as financial institution in their home territory to provide their
3141services, then they’d qualify under the cross-border definition. Clearly this approach would not be
3142compatible with the Canadian system, hence the need for the alternative “acute need” approach –
3143the USMCA text involves “threading the needle” between the two regulatory systems through the
3144use of appropriate proxies that bring the right set of FS firms into scope.
3145The USMCA approach hinges on the domestic requirement to register as a financial
3146institution conditioning coverage by the cross-border “covered person” definition. This domestic
3147requirement operates within three parameters: 
3148OFFICIAL – SENSITIVE (UK eyes only)
3149
315084
3151• A cross-border service supplier must be regulated by a domestic financial regulatory authority.
3152• A cross-border service supplier must be supervised by that financial regulatory authority,
3153ensuring ongoing monitoring and compliance with above financial regulation.
3154• A cross-border service supplier must have completed some form of authorisation or registration
3155with its domestic authorities.
3156MSw (UST) clarified that if there’s no regulatory interest in simple registration, then it’s hard to
3157justify the argument that there’s an “acute need” for information. Similarly, if there is no domestic
3158requirement to register, it is indicative that there is fundamentally no “acute need”. MSw (UST) also
3159noted that, from the US perspective there is a difference between regulation (i.e. developing a
3160basic set of rules) and supervision (i.e. the ongoing monitoring of compliance with that rule set).
3161Matt Mueller (HMT) queried whether it wouldn’t have just been enough to say regulation and
3162supervision. Responding, MSw clarified that the intention was also to make clear that this was
3163a “trigger” for the cross-border “covered person” definition – if a firm is supervised domestically
3164as a financial institution, then it is also likely to be a requirement them to have some sort
3165of licence or authorisation.
3166Responding to JC’s question about particular entities, MSw (UST) noted that it depends on the
3167jurisdiction. In the US system, supermarkets providing cheque cashing services may or may not
3168need licences, depending on the state. For the purposes of USMCA, the key is whether or not an
3169entity is subject to additional regulatory requirements, such as capital requirements. By
3170way of additional example, MSw noted that payment providers – such as Visa and Mastercard –
3171are not typically subject to financial regulation and therefore not a financial institution for the
3172purpose of the financial services chapter, but are considered to be banks in some jurisdictions
3173where they are located because they choose to be – e.g. PayPal is a bank in some jurisdictions.
3174MM (HMT) queried whether that means that the scope of the chapter would vary. MSw confirmed
3175that this is an intentional part of the chapter – the chapter can be applied flexibly depending on the
3176domestic rule-making of the parties and adapts to changes in domestic rule-making in a way
3177that keeps the chapter “fresh”.
3178On specific definitions, JC (HMT) noted the change from “financial services provider” – as under
3179NAFTA 1.0 – to “financial services supplier” in UMSCA in line with the GATS – asking whether this
3180is indicative of any substantive change. MSw responded that the US never used the word
3181“provider” in financial services except in NAFTA 1.0 which was written at the same time as the
3182GATS, so there were various places where there were inconsistencies with WTO definitions.
3183MM (HMT) queried whether the USMCA “investor of a party” definition could be construed as
3184conferring pre-establishment rights.
3185MSw responded that the definition applies to all elements of a financial services investment. At its
3186heart, the definition of an “investor of a party” is based on capital rules. There is a commonlyaccepted definition of what constitutes regulatory capital, and loans and other debt instruments can
3187be considered investment if they meet the other requirements to be considered an investment
3188under the investment chapter. In practice, parties would look at other loan terms to see if they meet
3189definitions. The policy reason behind the particular nuance is that, instead of leaving the definition
3190open-ended, it allows you to know that this is a more serious, long-term kind of investment rather
3191than a short-term inventory loan – regulatory capital is what counts as capital under a financial
3192institution’s rules and is one way of providing clarity about what is investment and what is not. 
3193OFFICIAL – SENSITIVE (UK eyes only)
3194
319585
3196Market Access and Cross-Border Annex
3197JC (HMT) noted expansion of market access obligation to cross-border supply of services and
3198related re-jigging of some of the titles and structures in USMCA and asked whether this is now
3199what the US considers to be “best practice”.
3200MS (UST) responded that the US is constantly revaluating the annex and cross-border list to
3201assess what services should be added. Key to this is monitoring developments in financial services
3202sector and talking to stakeholders – particularly in areas of growth and disruptive change such as
3203Fintech.
3204However, MS also noted that the US approach to the cross-border annex is “technology neutral” –
3205i.e. it is not the modality of service that matters but the nature of the service itself. This means
3206that fintechs are in scope of the commitments if they are just delivering the same activity in a
3207different way.
3208MSw (UST) noted that the reason the reason for a short list of cross-border services
3209is that balance sheet risks management and cross-border regulatory issues are often not
3210amenable to cross-border supply. The three principal additions to GATS found in US financial
3211services chapters were because industry – and other stakeholders – had identified them as major
3212areas that would add value by being delivered on a cross-border basis. Importantly, they are also
3213areas where UST and regulators could sign up to additional commitments, because the regulatory
3214framework allowed the activities to take place cross-border. These areas include the additional
3215commitments on portfolio management and electronic payment services.
3216On the extension of cross-border commitments to portfolio management services, MSw noted that
3217the provision does not cover custodial and execution services unrelated to collective investment
3218schemes (but does cover if related to collective investment schemes). However, the value of the
3219provisions lies in permitting portfolio managers ability to buy and sell securities on behalf of clients,
3220essential for collective investment schemes with global reach using portfolio management
3221delegation between entities.
3222MSw noted that the commitments on electronic payment services draw directly on the definitions
3223provided in the UN-CPC.
3224MSw observed that payment services are “a backwater of FS regulation” and it is not clear what is
3225covered by EPS given how large the payment ecosystem is. However, his upcoming article
3226in the Kansas Law Review should provide some additional clarity.
3227MSw observed that describing the provision as covering “electronic payment services” is
3228a misnomer – as drafted, the commitment covers only messaging services – i.e. when a consumer
3229and a merchant are trying to send funds back and forth they may not have a relationship with the
3230same bank and require a way of matching the consumer bank with the merchant bank.
3231Many banks and messaging services provide this matchmaking services – sending messages from
3232merchant bank to consumer bank and carrying out the actions listed in 17-A US para 2.e.i
3233(e.g. verification of financial balances, authorization of transactions, notification of banks (or credit
3234card issuer) of individual transactions and provision of daily summaries and instructions regarding
3235the net financial position of the relevant institutions for authorized transactions).
3236OFFICIAL – SENSITIVE (UK eyes only)
3237
323886
3239Then a card payment service provider will send messages to the Federal Reserve, as settlement
3240provider, so payment can be made between the customer and merchant. This message to the
3241settlement system is not covered by the EPS definition.
3242MSw added that messaging and EPS services provide a certain amount of valueadd, leveraging complex systems in order to determine whether transaction is valid or fraudulent
3243and sending notification to the consumer of unnatural spending behaviour.
3244MSw clarified that the payment systems covered in the financial services chapter use only
3245proprietary networks and that the customers of payment providers are banks (rather than
3246consumers). Bitcoin – and other alternative currency or payment systems – are not proprietary
3247networks and therefore not covered by this umbrella. Bitcoin also does not provide messaging
3248services.
3249MSw clarified that the payment services covered by the agreement does not involves the transfer
3250of funds to and from transactors’ accounts. The three main areas of coverage are credit, debit, and
3251pre-paid cards (e.g. the Starbucks app). This also includes any digital form of those cards, so
3252while products like Apple Pay are not covered, any underlying messaging services are covered.
3253MM (HMT) queried whether this provision applied to messaging services for wholesale
3254transactions, such as SWIFT.
3255MSw clarified that wholesale transaction services are not covered by this, adding that this
3256is a particularly good question. There are a very limited number of such cross-border companies,
3257but in US there is one clearing house-operated system – CHIPS – and one operated by the
3258Federal Reserve that also covers cross-border transactions. SWIFT is operated by a consortium of
3259banks, so there is little commercial value in creating something uniquely for it in an FTA. By
3260contrast, much of messaging services conducted by central banks is considered worth covering
3261for the same reason.
3262Ultimately, this may be academic because SWIFT doesn’t send messages between US and the
3263EU – there is an EU SWIFT system and a US SWIFT system and the two don’t talk.
3264JC (HMT) asked about the structure and language of the electronic payment card services
3265commitments, querying if there was any substantive liberalising effect in USMCA above equivalent
3266TPP language which seemed to be of a more best endeavours nature.
3267MSw (UST) noted that the original US TPP proposal on EPCS looked similar to USMCA text.
3268The new language provides additional clarity to firms and regulators – particularly on the questions
3269of permission and imposition of quantitative limitation. If the text simply “permits” the service – as in
3270TPP – then there remains the possibility for fees and transaction costs attached to the service such
3271that the service can become so onerously expensive it is effectively barred. Preventing this is the
3272source of most of the new – more concise – language
3273Likewise, the USMCA parties are bound not to impose quantitative limitations on the supply
3274of a service, but of course can impose regulations – consistent with national treatment – on that
3275service. Additional conditions – such as licensing – are also permitted. MSw also explained that US
3276was not required to list any limitation-based reservations against EPCS commitments, as
3277those conditions are not inconsistent with underlying obligation. 
3278OFFICIAL – SENSITIVE (UK eyes only)
3279
328087
3281James Flannery (HMT) queried whether the parties had considered taking on any additional crossborder commitments. NAFTA 1404.4 had required the parties to consult on additional
3282commitments on insurance, any consultation outcomes are not reflected in the USMCA text.
3283MSw (UST) responded that all original NAFTA obligations are carried forward in USMCA 17.6. No
3284specific cross-border commitments were negotiated in NAFTA.
3285However, if USMCA parties permitted the service in 1994, they are not now allowed to restrict it.
3286The language in 17.6 is included purely to guarantee there are no gaps between NAFTA and
3287USMCA. Additional thinking on additional cross-border commitments took place between 1994 and
32881998 that is reflected both in the USMCA and text – and more significantly – in the GATS Financial
3289Services Understanding.
3290Tom Fine (USTR) noted that USMCA 17.6 is very specific to the NAFTA context.
3291JF (HMT) noted that Mexico appear to have taken on additional cross-border commitments on
3292insurance in 17-A Mexico para 1.a.i and 17-A Mexico para 1.b. and questioned the value of
3293these commitments in the US view.
3294MSw noted that the UK had clearly been through the USMCA text in detail. In the US view,
3295Mexico has taken on all of the same affirmative obligations as the US and Canada, but wanted to
3296match some nuance in their laws, hence the inclusion of this specific language.
3297On the additional Mexican insurance commitment (17-A Mexico para 1.b), MSw observed that the
3298specific language had been translated directly from Spanish into English.
3299The Mexican obligations which go above and beyond US and Canadian commitments mean that, if
3300a firm is seeking primary insurance in Mexico, it must first undertake a process (reasonable
3301effort) to see whether a Mexican supplier is willing and able to supply this service. If no
3302Mexican supplier is capable of providing the service, then a cross-border supplier can be
3303used. The customer would know this in the case of repeat insurance. The US perception was that it
3304was not particularly valuable for consumer lines, but more so for commercial risks. Insurance of
3305global risks was particular to those trading partners.
3306MM (HMT) asked whether it is a question not just of whether that provider exists, but
3307whether the provider has an incentive to provide services cross-border. Also queried whether this
3308provision allows Mexican entities to come to the US market and whether there was any
3309discussion of the US making similar commitments. The commitment seems imbalanced.
3310MSw observed that the US finds it fascinating as well. Suggested that the differences are derived
3311from specific negotiations with individual markets leading to minor variations. It is all part of a
3312negotiated outcome. MX asking for reciprocity for this commitment would have come at a price –
3313given the value would have been unclear, ended up with the asymmetry.
3314TF (USTR) asked whether the UK has any specific views on expansion of the cross-border list.
3315JC (HMT) responded that this is under consideration and that HMT is going through a process with
3316our regulators.
3317TF queried whether UK industry had any specific view on additional cross-border. JC responded
3318that there are a variety of views. 
3319OFFICIAL – SENSITIVE (UK eyes only)
3320
332188
3322National Treatment
3323JC (HMT) questioned whether the US sees a difference between language on “like circumstances”
3324and “like situations” for the purposes of interpreting national treatment articles.
3325MSw (UST) responded that the US considers them to be the same for interpretative purposes.
3326Transparency & Administration of Certain Measures
3327JC asked UST to explain the additions to transparency provisions in USMCA. MS (UST) noted that
3328the first 6 paragraphs reflect existing US best practice, but that Para. 7 – on authorisations –
3329reflects US proposals in TiSA which attempt to incorporate elements to ensure parties are faithful
3330to their mandate while allowing for flexibility.
3331The US view has been that, while some markets have a veneer of market access – e.g.
3332inviting applications for licenses in a particular sector – there can be limited practical follow-up.
3333This provision is an effort to include more specificity to ensure that commitments made are actually
3334kept, that applications are followed up on and that any reasons for denial are conveyed to the
3335applicant.
3336MSw (UST) asked if the UK had any questions on the notice and comment provisions.
3337MM (HMT) asked whether, from a regulators’ perspective, the additional prescriptiveness of these
3338commitments has presented any additional burden.
3339MSw responded that the obligations under the commitment are consistent with standard US
3340regulatory practice.
3341UST Lawyer noted that the US has a rule-making law called the Administrative Procedures Act that
3342sets out the framework and timelines for agencies to propose regulations pursuant to an act of
3343legislation. An agency must provide notice of a proposed piece of regulation – typically 30-60 days
3344(but can be up to 180) – Art. 17 Paras.1-3 spell that out. In relation to Para. 3, 3.a provides for
3345advanced publication of regulation, 3B about comment period being required. The comment period
3346allows interested parties – and other parties – to comment on the proposed rule, and
3347timelines are prescribed again for that (also typically 30-60 days). There are also timelines for the
3348regulation taking effect (30-60 days also), spelled out in Para. 5. Regulators must then respond to
3349comments in writing, if they do not incorporate them.
3350UST Lawyer also noted that Paras. 3-5 apply solely to regulations, not the underlying legislative
3351rules. A measure refers to both legislation and regulations.
3352UST further noted that “to the extent practicable” language is included so as to not bind regulators
3353too tightly.
3354JC (HMT) queried the removal of the 120-day limit for regulatory decisions on licensing
3355applications found in TPP.
3356MSw (UST) responded that the 120-day deadline came from the requirements for some FS
3357regulation in the US (market regulation in SEC space), but USMCA moved to “a more
3358reasonable period of time” as this more general, GATS-based approach better reflects
3359heterogeneity and doesn’t specify a particular time frame. 
3360OFFICIAL – SENSITIVE (UK eyes only)
3361
336289
3363UST clarified that the provision in TPP is binding even though this is “to the extent practicable”. “To
3364the extent practicable”, allows parties and regulators to take into account the exigencies of
3365specific special circumstance.
3366
3367TF (USTR) ask how the USMCA text requirements would marry up with UK financial
3368regulation. MM (UST) responded that HMT is still talking to regulators. We expect that UK
3369approach would largely be reflected in the TPP approach. The UK considers its regulatory
3370transparency practice to be best practice.
3371MSw (UST) added that the US is happy to take licensing applications digitally. The text of Para. 7.e
3372reflects the need in Mexico to present applications in hard copy in person. This was a red line for
3373MX.
3374Digital & Data Localisation
3375MS (UST) noted that the UK and US had discussed data and digital in July, but that
3376additional language has been included in USMCA that might provoke questions. JC (HMT)
3377queried the application of 19.16 (Source Code) in the digital chapter to financial institutions in
3378comparison to specific financial services provisions for data transfer and localisation.
3379MS (UST) explained that the exception to general application of the digital chapter is by virtue of
3380the definition of “covered person” for data localization chapter/transfer of info.
3381MSw clarified that, while the core source code obligation is found in Chapter 19 Article 19.16 Para.
33821, Para. 2 is threading a needle because financial and other regulators – e.g. law enforcement –
3383may have a need to see source code.
3384For instance, if a firm is engaged in manipulative algorithmic trading, the SEC is highly likely to
3385ask the firm to see the underlying source code, especially in the case of suspicious market
3386behaviour, and the SEC will be looking into the suspicious behaviour of a specific actor. However,
3387this is not a blanket source code disclosure requirement -— source code may only be disclosed
3388when there’s a discrete investigation going on under mandate of regulatory or enforcement
3389authority. Additional safeguarding against unauthorized disclosure means that regulatory or
3390enforcement authorities are not allowed to pass the source code to any third party.
3391The genesis of the Para 2 was financial market regulators’ concern (especially SEC) about
3392their ability to access source code in the case of suspicious trading patterns or activity. TF (USTR)
3393noted that the language in Para. 2 is probably already covered by the general exception anyway,
3394but the additional language is to ensure that regulators and enforcement authorities are
3395guaranteed access.
3396MSw (UST) added that the provision is written broadly because there may be cases
3397outside financial services where a regulatory investigation requires source code disclosure. MM
3398(HMT) asked if UST could clarify the definition of “covered persons” and any differences from TPP.
3399MSw clarified that in TPP there was a wholesale exclusion of financial services from the covered
3400person element and none of this language was included at all. As described in July, the fact that
3401this was a sticking point for some stakeholders was the genesis of this new approach.
3402MM (HMT) asked, in relation to personal information, how the US developed its data protection
3403rules. 
3404OFFICIAL – SENSITIVE (UK eyes only)
3405
340690
3407MSw explained that part of the answer lies in trade history. The first financial services
3408data commitment was in GATS, when negotiators were trying to confront the nascent digital
3409economy, but understanding of cross-border flows of data was less well-developed.
3410At the time, the basic understanding was that parties had to permit the cross-border transfer of
3411information when required in the ordinary course of business.
3412However, this raised a lot of questions, including when data is explicitly required. Consequently,
3413the US has removed that language, as well as the “ordinary course of business” language because
3414it was too general.
3415Some countries – that will remain nameless (i.e. USMCA parties) – say they don’t need to allow
3416the cross-border transfer or information because unless the data isn’t directly related to the small,
3417on-the-ground transactions, then it is not necessary to permit its transferral cross-border.
3418Instead, the language is tied to the license/registration and “covered persons” definition, tightening
3419the drafting. The license/regulation itself is proof of the acute need for information. If a firm is
3420authorised to carry out an activity, then it is also permitted to transfer information related to that
3421activity. Regulators and market participants like this because it makes the requirement much
3422clearer. The link to authorisation/ regulation also ensures the application of the provision is futureproof. The second sentence is exactly the same as in GATS and in other FTAs, and is included
3423here for clarity. Nothing in the provision is intended to impose additional privacy or confidentiality
3424requirements on accounts storing private information
3425JC (HMT) queried how the USMCA carve-out of the definition of computing facilities e.g.
3426for financial market infrastructures and exchanges was defined and asked whether the carve outs
3427had enabled the provision to be agreed in the context of USMCA.
3428MSw (UST) explained that the FMI language was taken directly from IOSCO and CPMI and
3429collectively agreed standards for FMI data handling. An example of this is the Chicago Mercantile
3430Exchange (CME – as well as LCH, LME, Fedwire), a collectively agreed system where institutions
3431get together and agree rules for clearing and settlements.
3432In US, authorities take an approach based on the concept of financial market utility, where the
3433FSOC can designate certain systemically important FMUs as FMIs – this includes NYSE, CME and
3434other types of exchanges and clearing houses
3435However, it is important to note that computer systems accessing these networks are not covered.
3436On computers accessing the network, there is often a requirement to have a connection within the
3437same territory. Given the sensitivity of the infrastructure there’s often some data localization
3438requirements, but this is very targeted to direct connections to these particular infrastructures.
3439MM (HMT) questioned the difference between FMUs and FMIs.
3440MSw responded – by way of example – that the price-setting function of the NYSE is not
3441considered to be a part of market-setting infrastructure. Additionally, many smaller exchanges that
3442don’t allow for the larger clearing functions may be considered financial exchanges or markets but
3443not FMIs
3444MM pressed UST on this point, asking how this relates to proprietary or bilateral exchanges, such
3445as market-based pools. MSw responded that market-based pools – such as dark pools – are not
3446covered as these would not be considered to be an exchange or market. Although there is a pricediscovery tool, but they are opaque by design and are not fulfilling the central function 
3447OFFICIAL – SENSITIVE (UK eyes only)
3448
344991
3450of a marketplace. Similarly, a bilateral securities transaction – such as the purchase and sale of
3451privately-held securities – would also not be covered.
3452Additionally, MSw noted that SEC Schedule 13D sets out requirement for securities that are listed
3453on exchanges and markets – securities and security-based derivatives that are covered in the US
3454are listed in 13D and E.
3455MSw noted that entities like FINRA, NYSE, etc. are covered for sure. However, FINRA’s computer
3456systems not covered – the US does not currently require that FINRA have its
3457computers domestically located, but if it did, that requirement would be covered by the exclusion.
3458MM (HMT) queried the motivation for excluding exchanges, due to the systemic sensitivities of
3459those kind of infrastructures.
3460MSw responded that all of these exceptions are covered by the prudential exception but because
3461systemically important or providing a regulatory function (like an SRO) it’s better to have complete
3462clarity on scope upfront.
3463JC (HMT) asked whether the exceptions related to actual practice.
3464MSw responded that he was only aware of one instance – in the US, if a firm wants to send money
3465over Fedwire, it needs to have a computer in the US to settle in the US. The firm needs a branch or
3466subsidiary to use settlement finality, therefore needs to have a computer, but not a data centre,
3467and transactions of this type do not require sufficient computing power to necessitate a data
3468centre.
3469JC (HMT) noted that there had been a discussion of US data language and access to data at
3470TIWG4 and asked if the US could provide any further detail on interpretation of the specific
3471terms.
3472MSw (UST) noted that all global financial regulatory authorities around the should have the tools at
3473their disposal to do their job – including access to data on an “in real time” or “on request”
3474basis. This wording is not pulled from specific legislation. The objective is to ensure that regulatory
3475authorities have the access they need in order to fulfil their mandate. There is an expectation that
3476there would be bank supervisors in big banks doing real-time analysis, but in the case of
3477a medium-sized registered investment advisor, US authorities don’t want them sending bulk data to
3478the SEC on an ongoing basis—only as requested. The approach varies between regulators.
3479MSw noted that the FFIEC IT Examination Handbook will be substantially revised in the coming
3480months and the preamble makes clear what is being expected of firms in terms
3481of data regulation. The guidance will be performance-based (i.e. principle based). Under US
3482rules, firms must demonstrate that they have a business continuity plan so that, in the event
3483of disruptions, they can be back online and providing financial services within 2-3 hours. The
3484regulations do not prescribe how and is system neutral, it just requires that they be able to meet
3485these performance-based requirements. This is the type of approach that runs throughout trade
3486agreement language.
3487The provision may be worded in an overly protective way, but this is just to ensure that all types of
3488regulator access are definitely covered.
3489MM (HMT) questioned the US approach to cloud computing in relation to FTAs. 
3490OFFICIAL – SENSITIVE (UK eyes only)
3491
349292
3493MSw responded that this is an area of emerging trade policy and it is probably premature to get
3494into a discussion of cloud computing. MSw distinguished between a private and a public cloud.
3495Firms like JP Morgan had a private cloud. Smaller firms used a public cloud provided by a thirdparty service provider. The US regulators had no comprehensive policy, so it is premature to
3496incorporate a specific commitment lock-in permissions for the use of cloud computing. The UST
3497report acknowledged that this was in flux. The obligation doesn’t speak to third party services
3498providers. This was an interesting issue. However, the US is aware that it can lower cost and
3499increase security, especially for smaller banks. These smaller banks can leverage these tools, but
3500they are unlikely to become a major global lender, so there is no imminent prospect of any stability
3501or data security risks. Nonetheless, it is important to some regulators that this provision doesn’t
3502speak to core versus non-core functions – e.g. what can and cannot be outsourced.
3503MM responded that the FCA has published its own guidance on cloud computing this summer.
3504MSw acknowledged this, noting that he had found it an enjoyable read.
3505Investment
3506JF (HMT) noted the revised USMCA approach to ISDS, noting the inclusion of breaches of
3507National Treatment and MFN within the scope financial services ISDS, and the novelty of this
3508approach for US FTAs.
3509Mirea Lynton Grotz (UST) replied that this approach is function of negotiating circumstances. On
3510NT and MFN, the US approach has varied over the years. MSw added that the US typically
3511negotiates something in each agreement that takes into account each trading partner.
3512JF (HMT) asked about reasoning behind the 18-month recourse to domestic courts in the financial
3513services chapter compared to 30 months in the investment chapter. MLG noted that this was in
3514recognition that for financial services it was likely that there was also a prudential filter process.
3515The whole package was specific to that negotiation and would need to be revisited in future
3516negotiations.
3517MLG (UST) talked through the procedures laid out in 17-C, Para 5 – i.e. the Prudential Filter. The
3518tweaks to the prudential filter were also a negotiated outcome. There was more focus on how a
3519joint determination would be arrived at.
35205.a.i This was an addition and stipulates that the respondent will set out in the request the text of a
3521proposed joint determination on the validity of the prudential exception as a defence.
35225.b allows the timeline for the procedures to be extended an additional 60 days beyond the original
3523120- in extraordinary circumstances.
35245.c permits additional changes to reflect discussion on a joint determination between the parties.
35255.d. and 5.e cover how any joint determination would be handled
3526If there’s no response by the respondent, then it is assumed that the respondent is not disagreeing
3527with the joint draft determination. The joint draft determination is then deemed to be the joint
3528determination and is binding through the ISDS process.
3529There is an additional second presumption that, if a case proceeds before an ISDS
3530tribunal, then there is an opportunity for a non-disputing party to weigh in and submit a non-
3531OFFICIAL – SENSITIVE (UK eyes only)
3532
353393
3534disputing party submission. If there is silence (i.e. no submission) from a non-disputing party,
3535then the second presumption is that the non-disputing party view is not inconsistent with the
3536respondent.
3537MSw (UST) noted that the other nuance here that is largely consistent with general financial
3538services ISDS provisions is the requirement for an arbitration panel to have financial services
3539expertise. Para. 3.a covers this for the presiding arbitrator.
3540MSw also indicated the provisions in Para. 3.b. and the requirement that a domestic regulator
3541responsible for the relevant regulation will be consulted in the course of the dispute settlement. JF
3542(HMT) responded that this seems like a sine qua non. MSw described this as a hortatory promise.
3543JF (HMT) queried the purpose of Para. 6, asking if it operates as a kind of filter mechanism
3544for NCMs.
3545MSw confirmed this, noting that the US had always intended for this to be the case but didn’t
3546explicitly say that. This paragraph sets out the process for interpretation of NCMs and how
3547they should be applied to financial institutions. The investment chapter also has a procedure for
3548NCMs.
3549Senior Management & Boards of Directors
3550JF (HMT) queried the approach to senior management and boards of directors, noting that the
3551equivalent TPP language was for no more than a minority on boards, but USMCA now specifies
3552a simple majority. MSw noted that the US prefers minority and complies with this apart from the
3553OCC. USMCA negotiating partners in this instance insisted on taking NCMs that would
3554have effectively lowered commitments to this level. Therefore, instead of allowing them to take
3555out NCMs, USMCA lowers the overall baseline.
3556JF (HMT) noted the difference in language between the financial services and investment
3557chapters, observing the lack of language on board sub-committee in the financial services
3558chapter. MSw responded that the US would interpret the financial services language as applying
3559to any sub-committees – any difference in language is unintentional.
3560Financial Services Committee
3561JC (HMT) asked about the regulatory dialogue between the USMCA parties that had been
3562proposed alongside the FTA as this didn’t appear in the chapter text but we understood from
3563discussion at TIWG4 that something had been agreed.
3564JC (HMT) noted the additional language in the FSC provision regarding the attendance of
3565regulators as appropriate and asked whether regulators would be involved in discussion on the
3566implementation of the FTA chapter. MSw (UST) noted that inclusion of regulators would depend on
3567the specific measure being implemented or discussed. The Fed is almost always invited. He noted
3568that the NAFTA committee had historically developed into more of a free flow discussion.
3569MS (UST) added that the US has a number of financial regulatory dialogues, including with the
3570UK, EU, India, Japan, and North American countries. The US does not keep documents that
3571memorialize the contents of those dialogues with Japan and India, but there is one non-public
3572document with the EU. The US understands the desire for dialogues. MS noted that there will be a
3573document outside USMCA setting out the parameters for the dialogue with CA and MX. 
3574OFFICIAL – SENSITIVE (UK eyes only)
3575
357694
3577MSw noted that the discussion between the UK and US is on a par with the USEU discussions. Continuing, MSw admitted that the UK-US discussion is actually more substantial,
3578but noted that he would deny saying that if asked by the EU. There wasn’t a sense that the
3579US/Mexico/Canada dialogue would meet every six months.
3580Brexit update
3581JC (HMT) recapped on the update in the plenary about the Withdrawal Agreement where the
3582pending issues concerned the Northern Ireland border. On the future relationship, the position on
3583financial services had been set out in the White Paper in July. HMG had also provided a
3584presentation on the financial services proposition to the Task Force 50 later in July. This
3585presentation was public.
3586The Commission had responded constructively to the shift in the UK position with the move away
3587from previous language about mutual recognition and towards an emphasis on recognition of
3588autonomous decision making. HMG continued to aim to preserve the economic benefits of financial
3589services trade (although this wouldn’t be through passporting). The proposal involved enhancing
3590equivalence and also having a bilateral agreement for regulatory dialogue and supervisory
3591cooperation (as set out on slide 8). It was positive that there was common ground with the
3592Commission on ambitions for the future relationship on financial services. There had not been
3593further detailed discussions with the Commission as the current focus was on finalising the
3594Withdrawal Agreement and the declaration on the future framework.
3595JC noted that principles for the future relationship had been discussed and there were a variety of
3596existing precedents and concepts (as set out on slide 14). Given the unique UK/EU starting point
3597and ambitions for the future UK/EU relationship, we would need to go beyond these precedents.
3598JC noted that the UK/US starting point was different but, nevertheless, encouraged consideration
3599of these concepts including for example in the EU-Japan agreement.
3600MS asked for clarification of the UK proposal that equivalence decisions were autonomous and
3601therefore not subject to dispute settlement but that the bilateral process was subject to dispute
3602settlement. JC confirmed that this was the case. MSw asked about the boundaries between the
3603autonomous decision making and elements subject to dispute settlement. JC noted that there
3604would need to be further discussions on this as part of the negotiations. MSw asked whether being
3605subject to dispute settlement on the process could affect the incentives for regulators to grant
3606market access in the first instance. JC acknowledged that the scenario UST was describing was
3607counter-productive and noted that this wasn’t the intention. There would need to be detailed
3608discussions on this issue. MM reiterated that there was a unique UK/EU starting point of identical
3609rules.
3610US asked what the reference to global norms on slide 8 referred to. JC explained that this referred
3611to international standards but there wasn’t an exhaustive list. MM referred to examples on slide
361214.
3613MS thanked HMG for the update and noted that the US shared HMG’s ambitions to preserve
3614UK/EU market access.
3615Closing
3616JC noted that it had been very useful to get UST’s detailed insights and technical explanation on
3617the history and background of the USMCA text. We looked forward to the next discussion in 
3618OFFICIAL – SENSITIVE (UK eyes only)
3619
362095
3621February by which time HMG expected to be in a position to start discussing its thinking on a UKUS FTA. US noted that it would also expected to have UK-US negotiating objectives by then.
3622Session Lead Comments
3623UST recognised that the UK team had studied the USMCA financial services chapter closely. The
3624detailed discussion gives us a good understanding of likely direction of US positions in most but
3625not all areas e.g. it is unclear what US position on ISDS for financial services will be in a UK-US
3626FTA. The US has not yet indicated specific objectives for a UK-US FTA or where it thinks a UKUS FTA could potentially go beyond existing on the shelf precedents. We may need to do the
3627heavy-lifting in getting discussion started on this. US sensitivities continue to be clear on linkages
3628of financial services regulatory cooperation to trade talks.
3629In the margins, USTR pressed us on whether the UK was going to table its own "model". It would
3630be helpful to have a discussion on negotiating strategy across the agreement within the UK team
3631before the next TIWG.
3632OFFICIAL – SENSITIVE (UK eyes only)
3633
363496
3635ECONOMICS
3636Date: November 7, 2018
3637Time: 10:45 – 14:30
3638Participants
3639Name Department/Directorate
3640Richard Price DIT
3641Catherine Barber DIT
3642Gavin Jaunky DIT
3643Anthony Christodoulou DIT
3644Tom Knight DIT
3645Jonathan Bateman DIT
3646Paul Roe DIT
3647Peter Antoniades DIT
3648Nikos Tsotros DIT
3649Jade Golding DIT
3650Katie Waring DIT
3651Igor Zurimendi HMT
3652Enrik Noka BEIS
3653Meghan Ormerod BEW
3654Alice Campbell BEW
3655Philip Kenworthy BEW
3656William (Bill) Shpiece USTR
3657Fay Johnson USTR
3658Kari Heerman USTR
3659Praveen Dixit Department of Commerce
3660Jean Janicke Department of Commerce
3661Kristy Howell Department of Commerce
3662James Fetzer Department of Commerce
3663Jessica Hanson Department of Commerce
3664Sharon Sydow Department of Agriculture
3665Shawn Arita Department of Agriculture
3666William (Bill) Powers US International Trade Commission
3667David Riker US International Trade Commission
3668Saad Ahmad US International Trade Commission
3669Sarah Scott US International Trade Commission
3670Lin Jones US International Trade Commission
3671Tim Fitzgerald Council of Economic Advisors
3672Andre Barbe Council of Economic Advisors
3673OFFICIAL – SENSITIVE (UK eyes only)
3674
367597
3676Won Chang Department of Treasury
3677Ken Swinnerton Department of Labor
3678Rebecca Kirchmer Department of Labor
3679
3680Key Points to Note
3681• DIT provided an update on our Consultation and the general contents and scope of the
3682Scoping Assessment. We highlighted the large interest in a UK-US FTA from the public as
3683demonstrated through the large number of responses to the Consultation.
3684• Bill Shpiece (BS) mentioned that US could begin negotiations until 90 days have passed since
3685the USTR sent the letter of intent to Congress in mid-October. The US would carry out
3686consultations, with responses published as standard procedure. US negotiations objectives for
3687a UK/US FTA wold be publisged 30 days prior to the start of negotiations.
3688• US presented preliminary economic modelling results analysing the impact of a UK/US
3689FTA, under ‘hard’ and ‘soft’ Brexit scenarios, on the UK/US economies and on bilateral trade.
3690The analysis looked only at tariff and TRQ elimination and did not model NTBs or services
3691trade. The main macroeconomic outputs suggested that UK welfare and GDP gains from
3692elimination of UK and US tariffs and TRQs on goods would be smaller under the ‘hard Brexit’
3693scenario, whereas for the US, the reverse held. USTR were keen to have an update
3694on our CGE modelling, suggesting a future video call between UK and US modellers.
3695• US Commerce gave a presentation on how they communicate the gains from an FTA to the
3696public, emphasising the importance of tailoring the message to the audience in question.
3697• DIT provided an update on the NTB study, highlighting that around 180 interviews so
3698far had been conducted with exporting firms in both the UK and the US. USTR expressed
3699interest in seeing the results.
3700• USITC gave a presentation on their fact-finding investigation into barriers faced by US SMEs
3701exporting into the UK. The study would be conducted through telephone interviews, group
3702meetings, public hearings and written submissions. The study would be finalised by July
37032019. The study would identify and quantify barriers facing SMEs exporting into the UK,
3704it would not provide an assessment of the actionability to tackle the barriers, which will be
3705carried out by the USTR.
3706• USITC provided a presentation on GVCs and UK/US integration. The presentation provided a
3707description of official trade data and TiVA data, examining its uses and limitations.
3708They provided some alternative approaches to measuring GVCs, including survey and
3709modelling approaches.
3710• UK and US statisticians discussed issues around bilateral trade asymmetries. Collaborative
3711work between ONS and BEA had led to some progress on the causes of bilateral asymmetries.
3712More work was needed.
3713• DIT agreed to share statistics, as previously outlined in our written offer to the USTR, with the
3714US reciprocating. It was agreed that we would share an initial package of statistics as soon as
3715they could collated, with the UK’s FDI statistics to be sent once the ONS publish the 2017
3716figures in December. US also asked for our post-Brexit tariff schedules but DIT noted that
3717these were currently undergoing scrutiny at the WTO.
3718• USTR noted the analytical reports they were required to send to Congress assessing the
3719impact of an FTA on a number of categories, such as the labour market. These reports were
3720usually sent to Congress as a package late in the FTA process. 
3721OFFICIAL – SENSITIVE (UK eyes only)
3722
372398
3724• The atmosphere was positive and collaborative.
3725
3726Report of Discussions and Outcome
3727Opening remarks
3728Bill Shpiece (US) opened the session by welcoming everyone and hoping to build upon
3729the successful first economic session at the 4th TIWG. The wide participation showed that the US
3730Administration regarded a UK/US FTA as important. Richard Price (UK) emphasised that
3731analysis was vital in the process of an FTA. He was pleased with progress since the last
3732session and looked forward further progress. He was confident that the UK would secure a good
3733deal with the EU soon.
3734
3735Upcoming DIT/USTR publications on UK-US FTA
3736Catherine Barber (UK) highlighted the Secretary of State’s (SoS) commitments to securing an FTA
3737with the US and his commitments to the UK Parliament in July to undertake consultations for all
3738future FTAs. The UK would publish a Scoping Assessment and an Outline Approach on the UK’s
3739FTAs with the US, Australia, New Zealand and CPTPP before entering negotiations. CB (UK) laid
3740out the general contents of a Scoping Assessment, explaining it would assess the potential
3741economic impact of an FTA based on assumed scenarios. She highlighted the large public interest
3742in a UK/US FTA as represented by the many responses received in the public consultations.
3743BS (US) explained that the Trade Promotion Authority (TPA) required the USTR to pursue certain
3744objectives which are expected to be met in an FTA. USTR had sent a letter to Congress in midOctober outlining the intent to begin negotiations with the UK. The US could not begin negotiations
3745until 90 days after this. The US also holds a consultation process for all FTAs, with the responses
3746published as standard procedure. USTR will use the responses of the consultations to inform their
3747objectives for an FTA with the UK, with a requirement for the USTR to publish their negotiating
3748objectives for a UK FTA at least 30 days prior to the commencement of negotiations.
3749BS (US) stated that he had sent a letter to the USITC requesting a report on the impact of an FTA
3750with the UK. This “Probable Economic Effect of an FTA with the UK” (similar to DIT’s Scoping
3751Assessment) would not be published. The US published impact assessments on conclusion of an
3752agreement – for example, on November 15/16 the USITC was expected to publish an impact
3753assessment of the USMCA.
3754BS (US) asked if UK consultation responses were made public, as in the US. CB (UK)
3755explained they would not be made public, but individuals could publish their own responses if they
3756wished.
3757Preliminary economic modelling
3758USTR and USITC presented their initial work on modelling the impact of a UK/US FTA on the
3759UK/US economies and on bilateral trade.
3760This modelled two base scenarios, a ‘hard Brexit’ where the UK and EU traded on EU MFN terms,
3761and a ‘soft Brexit’ where the status-quo was maintained and no tariffs were imposed on UK/EU
3762trade. The model analysed the effect of tariff and TRQ elimination but did not model NTBs or
3763services liberalisation. The US explained that it was a static model, using a simple ‘before and
3764after’ analysis and the latest GTAP (version 10) data.
3765OFFICIAL – SENSITIVE (UK eyes only)
3766
376799
3768The main macroeconomic results were small. UK welfare and GDP increased less under the hard
3769Brexit scenario. For the US, the reverse held, with the soft Brexit scenario offering smaller
3770gains. The model estimated similar relative increases in trade across the GTAP sectors under both
3771a soft and hard Brexit. Differences between a sector’s soft / hard Brexit ranking, by change in
3772value, tended to be minor or involve very small changes in trade flows (less than $1 million and
3773less than 1%) relative to the counterfactual. A notable exception was a relatively larger expansion
3774under the hard Brexit setting in US exports in two agricultural sectors: dairy and meat
3775products. Exports contracted in a few sectors when tariffs and TRQs on goods were removed, but
3776almost all the contractions were very small (less than $1 million and less than 1% change). Almost
3777all contracting sectors were agricultural products, natural resources or services.
3778Gavin Jaunky (UK) provided an overview of DIT’s approach to modelling the impact of a UK/US
3779FTA and how this would feed into future work, primarily through the Scoping Assessment.
3780Answering questions from Paul Roe (UK), USITC confirmed their results showed a negative return
3781to land (factor of production); that the model assumed perfect competition across all sectors and
3782used standard CGE modelling assumptions, such as mobile capital and full-employment.
3783BS (US) said it would be useful for the UK to identify the important sectors it wished to
3784model and expressed his interest to have an update on the progress we have made on CGE
3785modelling, suggesting a future video call between UK and US modellers to discuss
3786technicalities. CB (UK) clarified that the UK would be able to share more information on modelling
3787and sectors of interest once HMG had published material relating to our modelling for EU Exit
3788analysis.
3789BS (US) emphasised the importance of modelling NTB liberalisation, while acknowledging the
3790difficulties in measuring or estimating NTBs, as they usually present much higher trade costs than
3791tariffs.
3792Praveen Dixit (US) expressed the importance of determining where and when CGE models are
3793useful for influencing decisions and ensuring CGE results are understandable. He believed that
3794CGE modelling was most useful in the early phases of policy development to identify important
3795sectors. He agreed that closure conditions were very important and must be well documented to
3796ensure that differing results were understood and could be communicated clearly.
3797He emphasised the importance of distributional impacts of trade which are often ignored
3798by economists.
3799BS (US) agreed on the importance of being transparent with policy makers on results and
3800analysing distributional impacts of trade. CB (UK) explained that the UK was also thinking about
3801distributional impacts and how CGE modelling relates to this, mentioning discussions with the
3802Devolved Administrations on trade policy.
3803PD (US) spoke about the importance of employment and multipliers to be incorporated into the
3804modelling.
3805Igor Zurimendi (UK) asked for advice on pitfalls to avoid in modelling.
3806BS (US) said there was sometimes too much emphasis on the quantitative estimates of small
3807issues. Instead he stressed the importance of emphasising the comprehensive impact of an FTA.
3808OFFICIAL – SENSITIVE (UK eyes only)
3809
3810100
3811Communicating the benefits of trade agreements
3812The US presented on the lessons they had learnt in effectively communicating the benefits of trade
3813agreements to stakeholders, providing a useful three-point guide to effective communication:
38141. Start early. What data and analysis are needed to communicate the benefits of the trade
3815agreement effectively. For example, regional breakdowns? What sectors are of interest? What
3816are common misinterpretations?
38172. Go granular. Stakeholders want local information, relevant to their personal situation. It may be
3818useful to supplement data with stakeholder evidence. This applies to Congress, to lobby
3819groups, to consumers. PD (US) referred to this as a market for information (“if they don’t
3820produce numbers then someone else will”). Transparency is key.
38213. Think about the audience. Some audiences prefer numbers, some graphs, and some
3822narratives. It’s important to tailor the presentation to the audience.
3823GJ (UK) asked how the US ensured an accurate and representative view of the industry when
3824engaging with stakeholders. The US replied that they got information from a range of different
3825sources. In manufacturing for example, there were often conflicts of interest between different
3826sectors, however they tried to get a wide range of views and test against available data.
3827Non-tariff barriers/measures (NTB)
3828GJ (UK) described DIT’s NTB survey, explaining that it had interviewed around 180 British and
3829American businesses each, with majority in the goods sector so far. He laid out the future timeline,
3830planning for 100% data collection by the end of November, and a summary report to be drafted in
3831December/January.
3832BS (US) asked if the survey responses would be made public. GJ (UK) said we could share
3833summarised tables of the findings of the survey, however there might be confidentiality issues at a
3834more disaggregated level.
3835USITC presented their fact-finding investigation on barriers US SMEs face exporting to the
3836UK. This focused on tariff and NTBs that SMEs consider to disproportionately affect their ability to
3837export to the UK. The study would identify barriers by sector or issue, focusing on sectors with high
3838concentrations of SMEs. It would distinguish qualitatively among the identified barriers. There
3839would be a section including suggestions, either from SMEs or the literature, for actions to address
3840the identified barriers and enhance the participation of US SMEs in exporting to the UK. The
3841approach would be a combination of telephone interviews, domestic group meetings, public
3842hearings and written submissions. The study would last for 12 months until July 2019.
3843CB (UK) asked whether the SMEs had detailed knowledge of their supply chains. USITC
3844responded that they used information from SMEs alongside information from the Maritime Agency
3845to help track supply chains backwards. GJ (UK) asked if the USITC would assess of the
3846actionability of the barriers which they identify. BS (US) informed us that the USTR will provide an
3847assessment on actionability on the barriers that have been identified, rather than USITC.
3848BS (US) discussed the work the USTR had done to gather intelligence on barriers faced by US
3849businesses. BS (US) highlighted the USTR’s request for public comment to inform the National
3850Trade Estimate Report on Foreign Trade Barriers. BS (US) also mentioned the China Compliance
3851Report and Russia Compliance Report which would assess the compliance of the two countries
3852with their commitments as WTO members.
3853OFFICIAL – SENSITIVE (UK eyes only)
3854
3855101
3856Trade in Value Added data / supply chains
3857BP (US) and his colleagues presented USITC’s work on measuring Global Value Chains (GVCs).
3858They distinguished between the two main sources they used to measure GVCs as official trade
3859statistics and Trade in Value added (TiVA) date.
3860Using OECD trade data, they showed that most UK/US bilateral trade was in intermediate
3861products. This aligned with DIT analysts’ assessment of trade in the Information Notes
3862accompanying DIT’s US FTA consultation. They also highlighted the importance of Multi-National
3863Enterprises (MNEs) in our trade, with US foreign affiliates based in the UK comprising one-quarter
3864of US goods trade with the UK in 2012. UK/US bilateral trade was dominated by products
3865produced in regional or global supply chains. However, official trade statistics had a number
3866of limitations, such as the inability to inform us of the sources of value of products consumed
3867domestically or the final destination of domestic valued-added.
3868The TiVA database helped to overcome some of these issues by tracking value-added in GVCs
3869from the original source country and industry to final destination. The US explained the
3870methodology and limitations of TiVA data, focusing on the fact that inter-country input-output tables
3871have to harmonise trade and national accounts data on a consistent industrial basis and time
3872periods across countries. This could lead to issues such as a reliance on relatively aggregated
3873sectors and significant time lags in the data. As a result, TiVA analysis could not show
3874heterogeneity in firm types and differences in value-added structure for bilateral trade. The US
3875also highlighted other potential approaches of GVC analysis beyond inter-country input-output
3876tables, such as surveys and modelling.
3877Tom Knight (UK) said that the OECD was planning to update the TiVA database in December with
3878data up to 2014/2015. It would also have additional data on employment, gender and carbon
3879dioxide emissions. He welcomed the examination of TiVA limitations and mentioned that the OECD
3880recognised the need for greater transparency of the TiVA methodology. Nikos Tsotros (UK) also
3881recognised the significant limitations of the TiVA data but asked whether the TiVA data provided a
3882more realistic estimate than the other approaches from the US. BP (US) responded that it
3883depended on the industry in question and the level of sectoral disaggregation.
3884
3885Data asymmetries and data sharing
3886TK (UK) described the work undertaken by the Office for National Statistics (ONS) on data
3887asymmetries. He explained that in the case of bilateral trade asymmetries, it was not the case that
3888one country’s data was right and the other’s wrong. Instead, there were methodological and
3889definitional differences. NT (UK) mentioned the third report from the ONS in the series on trade
3890asymmetries. He noted the finding that there is an absolute bilateral trade asymmetry with the US
3891of around £37 billion in 2016. The main drivers of the asymmetry were financial and business
3892services. Much of the difference could be explained by definitional differences. For example,
3893the ONS included Puerto Rico in US trade (but not other US territories), and the BEA included the
3894UK Crown Dependencies in UK trade.
3895KH (US) said that the BEA had produced a report on data asymmetries in February 2018.
3896They had identified the source of around one-third of differences in UK/US bilateral trade
3897asymmetries. The BEA had tried to quantify the impact of classification differences on the trade
3898asymmetry. On “financial intermediation services indirectly measured” (FISIM) the BEA were
3899looking to update on their definition. The BEA were also looking to improve the source of travel
3900services data. They would then evaluate how these improvements affected bilateral trade 
3901OFFICIAL – SENSITIVE (UK eyes only)
3902
3903102
3904asymmetries. Relating to international efforts to reduce trade asymmetries, the US were limited in
3905their participation due to legal constraints on sharing firm-level data.
3906NT (UK) said that FDI asymmetries were around 9 times bigger than trade asymmetries. Four HS
3907codes explained around three-quarters of the trade asymmetries between the UK and the US.
3908On data sharing, Peter Antonaides (UK) confirmed that all the data that DIT have offered to
3909share was publicly available. Data sharing was not an exercise in reducing trade asymmetries. The
3910US had additional data requests from DIT, namely input-output tables, post-Brexit MFN tariff rate
3911schedules and more detailed FDI data. PA (UK) stated that DIT do not have any more detailed
3912data on FDI, but that the OECD publish an AMNE database and FDI Restrictiveness Index
3913database which would provide further detail on the UK FDI regime. PA (UK) mentioned that the
3914ONS would soon publish an update for the UK FDI data for 2017.
3915PA (UK) asked whether the US had trade data at a sub-regional level and whether the BEA would
3916be able to share that. FJ (US) said that the BEA produced detailed State-level data which they
3917would be able to share. DIT and USTR agreed to exchange a package of data before the end of
39182018.
3919
3920Other issues
3921Discussion then moved onto the reports which USTR are required to produce under the Trade
3922Promotion Authority. BS (US) said that all reports were published apart from the Probable
3923Economic Effects report. The USTR would produce a package of reports examining the impact of
3924an FTA on labour, the environment and SMEs.
3925Jonathan Bateman (UK) asked the timings of the reports in the FTA process. The US clarified that
3926the reports would be sent as a package to Congress in the late stages of the FTA negotiation
3927process.
3928CB (UK) asked whether they would look at different demographics within the labour markets report.
3929The US replied that it was difficult to make a robust comment on the demographics of the labour
3930market other than relating to educational level and skilled/unskilled labour. CB (UK) asked if the
3931question were ever reversed, i.e. designing an FTA to meet the requirement of the labour market.
3932The US said not but there were overarching objectives relating to employment and protecting jobs
3933which the USTR was required to meet in an FTA. IZ (UK) asked if labour market impacts on other
3934areas other than manufacturing were analysed, e.g. the impact of jobs within services industries.
3935The US replied that the main focus was usually on manufacturing and agricultural sectors as it was
3936difficult to measure employment connected to services trade. This stemmed from the difficulties in
3937measuring services trade more generally.
3938BS (US) then asked what reports the UK was required to publish during an FTA. CB (UK) informed
3939him that the UK was currently determining this.
3940BS (US) and CB (UK) thanked the delegations and closed the session.
3941Key Actions and Next Steps
3942• UK and US statisticians committed to share the agreed data as soon as possible, and definitely
3943before the end of 2018.
3944• DIT and USTR will arrange a discussion between UK and US modellers once the UK has
3945published information about its CGE model.
3946OFFICIAL – SENSITIVE (UK eyes only)
3947
3948103
3949• DIT will share information from the NTB business survey in early 2019.
3950• DIT will provide an update on progress on the Withdrawal Agreement and associated
3951modelling at the next TIWG Economic Session.
3952
3953FOR INTERNAL DISTRIBUTION ONLY
3954Session Lead Analysis/Comments
3955• Constructive discussion. Good progress on data exchange.
3956• Interesting that USTR shared their first modelling of a deal - but tariffs only – imagine they are
3957trying to elicit numbers from us. They’ll see more of our results in early 2019 (through the
3958scoping assessment) than we will from them (USITC’s equivalent is not published).
3959• USTR were very sceptical about 25/50% NTM reductions proposed by DG Trade for
3960TTIP modelling, as they said the EU assumed the US would sign up to European standards.
3961They will presumably disagree with our analysis for the same reason unless we indicate it’s the
3962UK signing up to US standards (unlikely). We don’t expect them to publish numbers that would
3963contradict ours publicly, but they may disagree gov-to-gov and challenge us on what NTM
3964liberalisation we’re expecting.
3965• The discussion was technically useful for us. It also helped clarify what analysis both
3966sides would publish (and when) during the FTA process, to avoid surprises in either direction.
3967OFFICIAL – SENSITIVE (UK eyes only)
3968
3969104
3970Technical Barriers to Trade
3971Date: November 7, 2018
3972Time: 13.00 - 15.00
3973Participants
3974Name Department/Directorate
3975UK
3976Julian Farrel DIT
3977Henry Alexander DIT
3978George Radice DIT
3979Ian Bhullar BEIS
3980James Dunn DEFRA
3981Meghan Ormerod British Embassy Washington
3982US
3983Christine Brown USTR
3984Rachel Shub USTR
3985Natalie Simonoff
3986Matthew Jaffe USTR
3987Silvia Savich USTR
3988Katherine Skarstem US Embassy London
3989Key Points to Note:
3990None
3991Report of Discussions and Outcome:
3992USMCA TBT Chapter
3993Discussion started with the US offering to walk through the TBT chapter in USMCA. Christine
3994Brown explained that USMCA contained the US’ most ambitious TBT chapter and that there had
3995been a number of improvements when compared to NAFTA or any other US FTA. She explained
3996that the chapter builds on WTO commitments in this area and commented that US policy on
3997international standards discussed in the last TBT session of the TIWG was fully reflected in the
3998chapter.
3999USTR noted that, as in (CP)TPP, the USMCA chapter requires Parties to apply the WTO TBT
4000Committee decision from 2000 when defining international standards. In contrast to CPTPP,
4001USMCA makes explicit that no additional criteria should be applied in determining what an
4002international standard is. There should not be any limit on where a body is located, whether the
4003standards body is governmental or non-governmental. The US considers this clarification a
4004strengthening in comparison to CPTPP. 
4005OFFICIAL – SENSITIVE (UK eyes only)
4006
4007105
4008There are elements of the USMCA TBT chapter where the US had built upon TPP – and they
4009commented that it had been good to give that language a legal scrub.
4010The US explained that the idea of this provision went back much further that TPP, to the FTA with
4011Chile. The USMCA chapter made clear that parties should not be adding additional criteria to the
4012TBT Committee decision.
4013On conformity assessment the US explained that the USMCA chapter is consistent with existing
4014US FTAs, providing national treatment for accreditation of conformity assessment bodies. It also
4015makes clear that there should be greater transparency of conformity assessment procedures and
4016their fees.
4017Article 11.6.6 adds language for national treatment of accreditation bodies. A number of additions
4018have been made here for the sake of transparency. This is particularly the case around enabling
4019stakeholders to feed into the process of regulation making. Parties should make best endeavours
4020to notify revisions to regulations, and where significant revisions are made notify this to the WTO.
4021On technical regulations, like CPTPP, USMCA says Parties shall normally allow 60 days for
4022comments on draft technical regulations: where possible Parties should consider extending this to
402390 days. There should normally be a minimum of 6 months for the process of implementing new
4024regulations.
4025The agreement enhances commitments to make technical regulations based on impact
4026assessment.
4027The US explained that it is important for them that parties acknowledge that there may be
4028instances where more than one international standard could be used to demonstrate compliance
4029with regulations. There should be a pathway for regulators to use other standards. Provisions
4030regarding the review of regulations are relevant here – and this ties back in to the GRP chapter.
4031No preference should be accorded to standards developed in a manner inconsistent with the TBT
4032Committee Decision on international standards;
4033On third party agreements and technical assistance, there are provisions stating that
4034parties should encourage the use of standards, guides and recommendations developed in
4035accordance with the TBT committee decision.
4036On dispute settlement, provisions the US explained that they had made some modifications to
4037previous agreements:
4038• Preventing USMCA dispute settlement in respect of provisions of the WTO TBT
4039requirements incorporated in the USMCA agreement.
4040• Requiring the parties to pick one of either the USMCA dispute settlement route or the WTO
4041and preventing parties from bringing a dispute on the same issue in both.
4042The UK (Henry Alexander – HA) asked if the US had a certain time period in mind in the
4043commitment to periodically review technical regulations. The US noted that there is an overall
4044review period for the US, but that each Administration comes in and has their own effort to review
4045regulations – this is particularly the case with the current Administration. The US noted that the
4046review provisions in the TBT chapter are a little stronger than you have in the GRP chapter. The
4047point was that you should not maintain regulations beyond their shelf-life, to encourage agencies to
4048ensure any regulations are current. 
4049OFFICIAL – SENSITIVE (UK eyes only)
4050
4051106
4052In response to a question from the UK (Julian Farrel – JF) the US explained that they had included
4053a right to petition in the agreement. The provision sets out that the private sector should have a
4054right to approach the regulator to seek to have a regulation reviewed – very much like the good
4055regulatory practices review.
4056JF asked if the labelling provision was intended to address a particular problem that had already
4057arisen, or one that might arise in the future. The US said that they had not proposed this measure.
4058It sounded good, but in fact labelling guidance tended to be more appropriately dealt with on a
4059sector specific basis, so they were sceptical about the added value of the provisions here above
4060what is already in the WTO agreements.
4061JF commented that provisions on national treatment and conformity assessment looked very
4062similar to those in TPP. The US agreed. National treatment of accreditation of conformity
4063assessment bodies had existed for some time. There were new commitments, but on
4064transparency, procedures and fees, as well on sub-contracting and accreditation.
4065JF asked if this meant that if a CAB in Mexico or Canada wanted to be accredited the accreditation
4066process would be the same as for a US based CAB. The US explained that if a regulator in the US
4067recognises that private sector bodies can perform tests then it has to be open to private bodies
4068located elsewhere in the world to apply for accreditation. Each one of the regulators sets up their
4069own processes for how they recognise licensed bodies and there is a range. Whatever the
4070programme of accreditation, it should apply to domestic and international bodies.
4071Clarifying this, the US said that between the three parties to the USMCA there are differences in
4072how regulators recognise conformity assessment bodies and labs, but whatever those processes
4073are it requires the regulator to look at the CAB similarly wherever it is based.
4074HA commented that the provisions around sub-contracting are new, and asked what problem the
4075US was seeking to solve by including this. The US explained that sometimes the range of
4076requirements are not available within a single body and this is used to discriminate. Explicitly
4077outlining measures around sub-contracting is intended to help deal with this.
4078In response to a question on fees, the US explained that the intention of provisions is to make clear
4079that a regulator can recoup additional costs involved in reviewing a CAB in another country (travel
4080etc.), but that charging higher fees to CABs located elsewhere should not be seen as a revenueraising exercise.
4081The US confirmed that the measures around notification of TBT (60 days notification) is a
4082recommended figure.
4083On the TBT Committee established by the agreement the US explained that this committee is
4084“more robust” than those established by previous FTAs and that they imagine it will undertake
4085more work. Expect it to meet at least on a yearly basis to talk about trade concerns. The US (RS)
4086commented that the committee under NAFTA was very active for the first 5/6 years, for example
4087through regulatory co-operation groups. After a number of years, they tend to “run out of steam”.
4088All parties in USMCA were agreed that it should be made clear to stakeholders that they committee
4089is a place they could come to if they have ideas on things that could be done to facilitate trade – for
4090example on conformity assessment. Any one of the parties could also put any issues on the
4091agenda. 
4092OFFICIAL – SENSITIVE (UK eyes only)
4093
4094107
4095HA asked how the public would be involved in the committee. The US explained that this had
4096evolved over the years. Often the committee met back-to-back with a meeting with the private
4097sector. The private sector is not part of the decision-making but might receive a briefing from the
4098committee and provide inputs to it. The US commented that they had used the committee with
4099Australia in a very robust way in this respect. There were a couple of outcomes in APEC that were
4100a direct result of US-AUS co-operation in the context of the FTA.
4101The US commented that this committee would be entirely separate to the Regulatory Co-operation
4102Council with Canada. The RCC was recently renewed through an MOU. It looks to regulators to
4103volunteer up things they are working on at the time to be taken forward through the RCC. There
4104are already direct relationships between the regulators, the RCC looks to help facilitate them. The
4105RCC has generated a variety of outcomes including joint inspections of boats on the Great Lakes.
4106The US commented that FTA stakeholder meetings tend to be more focused on TBT issues and
4107sector specific issues (e.g. digital). They had previously held successful workshops in the margins
4108on conformity assessment for example.
4109The US explained that the preference set out in the agreement is to avoid “government unique”
4110standards. Governments should avoid creating a standard where industry has developed voluntary
4111standards – standards should not be inward and government facing. The UK said that it did not
4112think that this was an issue it came up against: standards are voluntary and created by those that
4113use them. [There appeared to be some scepticism from the US side on this.] The US said that
4114some governments appear to “take pride” in the “originality” of their standards and they wanted to
4115be clear that this was not a good thing.
4116Exiting the EU
4117The UK (JF) updated the US on negotiations. JF noted the common rulebook proposal in the
4118Chequers White Paper, and that it remained to be seen where this would come out in negotiations
4119with Brussels. JF commented that on DIT analysis it did not seem that there would be insuperable
4120obstacles to the kind of TBT chapter found in TPP if the UK were in a Chequers agreement
4121scenario. The UK had not had the chance to study USMCA to the same degree to reach a
4122determination on this. The UK’s sense was that none of the TBT chapters in FTAs seem to be so
4123prescriptive on product regulation that there would be a conflict with the common rulebook
4124approach.
4125The US asked for more information on why the UK did not think there would be a problem. They
4126noted that there was a lot of similarity between the TBT provisions in USMCA and those laid down
4127by the US for TTIP. Many of the elements of TTIP had been problematic for the EU and continue to
4128be problematic in current EU-US discussions: having more than one acceptable standard; public
4129notification of intention to set new technical regulations; considering international standards that
4130are not limited by the Geneva institutions. The US asked how the UK could reach the conclusion
4131that a TBT chapter like that in TPP could be acceptable if it is adopting a common rulebook
4132approach.
4133JF explained that while the UK will rollover the EU acquis for the Implementation Period what
4134happens after that is dependent on the long-term agreement reached with the EU on the Future
4135Economic Partnership. European standards are voluntary with very few exceptions. One way that a
4136manufacturer can demonstrate that they have complied with the law is by meeting the European
4137standards, but the standards themselves are not the law. The law is the safety requirement set out 
4138OFFICIAL – SENSITIVE (UK eyes only)
4139
4140108
4141in the legislation. European standards are only ever one route to demonstrating compliance. The
4142CE Mark demonstrates that you meet the regulation, not the standard.
4143The US remained sceptical about this. They outlined that their objective is a predictable system
4144and that the EU system is not predictable, unless you are using European standards. The
4145European standards system may be voluntary in principle, but in their view in practice, the
4146alternative means does not work. The chapter in USMCA outlines a system that is more
4147predictable and flexible for companies.
4148The US (Small Business Administration – Bryan O’Byrne BoB) commented that the US also had
4149problems with the European standard itself. It was precisely to avoid a similar scenario that
4150USMCA has a section on the TBT committee decision.
4151JF argued that the UK takes what is on the statute book seriously – the safety requirement is what
4152is important, not the standard. The US argued that it was nonetheless a risk for importers of US
4153products and one they were unwilling to take. Importers could not be sure that a product would get
4154through. The US would look to UK regulators to say in a public, transparent way: “you can use X
4155standard that is not the EU standard, and that would be acceptable”. JF repeated that the
4156obligation in the UK is compliance with the law and that it was open to any manufacturer to
4157demonstrate that they meet the law. RS said that this is what the US had heard from the EU and it
4158was an impediment to progress in the TTIP negotiations.
4159The parties discussed whether it was possible to continue the discussion on this topic currently
4160given the uncertainty around the UK’s position post-EU exit. The US said that their overarching
4161point was trying to determine what space the UK would have to act after exit. RS said that she
4162accepted that the UK might already respond slightly differently to other parts of the EU: a US
4163manufacturer had in the past managed to get something approved by the UK body, but the UK
4164body was then reprimanded in Brussels. Would this kind of set-up be the same in the future?
4165BoB noted that this issue was particularly pertinent for small businesses. SMEs in particular need
4166greater certainty and are unlikely to pursue trade in this space where uncertainty exists.
4167Both parties agreed that as the situation becomes clearer with respect to the UK’s position postexit more specific conversations will be possible.
4168The US commented that this issue was one reason why the petition process became so important.
4169It provided a way to get the government to provide more certainty product by product, sector-bysector. This is what the US had been seeking from the EU.
4170UK consultation
4171The UK (George Radice – GR) updated the group on the initial results of the consultation process
4172– 6,000 substantive responses on UK-US, a team in London currently analysing the results. HMG
4173will likely issue a response at the same time as an “outline approach” for a UK-US FTA.
4174JF outlined some of the initial findings on TBT. There is a cross-cutting concern that no FTA should
4175lead to a reduction in protection in different areas covered by FTAs (e.g. food safety). Some
4176returns raise the issue of the split between federal and state level regulation.
4177Key Actions and Next Steps
4178Further discussion once greater clarity on FEP provisions.
4179OFFICIAL – SENSITIVE (UK eyes only)
4180
4181109
4182FOR INTERNAL DISTRIBUTION ONLY
4183Session Lead Analysis/Comments
4184Ongoing US scepticism about the compatibility of a Common Rulebook with the EU, and our ability
4185to sign up to a TBT chapter in an FTA.
4186OFFICIAL – SENSITIVE (UK eyes only)
4187
4188110
4189COMPETITION
4190Date: November 7, 2018
4191Time: 13:00
4192Participants
4193Name Department/Directorate
4194Andrew Pickering Head of Trade and Competition, DIT Trade
4195Policy Directorate
4196Katie Waring US Team, DIT
4197Anne Collet Deputy Head, Trade and Agriculture Team,
4198BEW
4199Mark Mowrey (MM) Deputy Assistant USTR for Eurasia and the
4200Middle East
4201Timothy Longman (TL) US Department of Justice
4202Andrew Heimert (AH) US Federal Trade Commission
4203Debbie Holland US Department of State
4204Ryan W US Department of Commerce
4205Alexandra Whitaker Attorney, USTR
4206Krista Barry USTR
4207Key Points to Note:
4208• Useful discussion of USMCA which is clearly the US model in this area
4209• Clear US focus on procedural rights; UK sought to emphasise like-mindedness on this.
4210• US interested in UK's ability to deviate from substantive EU approach and case law; this was
4211not unexpected, but we may get more pressure on this even if it's not formally covered in an
4212FTA.
4213• Agreement that UK-US cooperation agreement and work on the Multilateral Framework on
4214Procedure are separate tracks to the TIWG and discussions on a future FTA, and that an FTA
4215would typically not need to go into detail on cooperation where the position between agencies
4216where clear and there were no doubts about mechanisms for cooperation.
4217Report of Discussions and Outcome:
4218Overview of US approach to competition chapters
4219MM explained that competition chapters are included in US FTAs as standard, with a focus on
4220process and transparency. ‘Competition authorities are in driving seats so we try and keep out of
4221the way.’
4222UK competition policy
4223The UK outlined its proposed to the EU for the FEP, including how the EUWA will apply in this area
4224and to what extent the UK will be bound to pre-Exit case law. Competition law covered in Brexit
4225(FEP) White Paper. It doesn’t say there will be ongoing harmonisation with the EU.
4226OFFICIAL – SENSITIVE (UK eyes only)
4227
4228111
4229The US asked about what would happen where it wanted to deviate, or where the EU's own
4230position changed over time - would the UK still be bound to the status quo ante? The US also
4231asked how whether this would cover EU case law on procedural rights. The UK said that the
4232intention was to retain flexibility, but agreed to write with a fuller explanation, including how this
4233would relate to the structure of the UK legal system - at what level such decisions would be made.
4234The UK would also share the draft SI and Explanatory Memorandum.
4235FTC hearings
4236The UK asked the FTC about the current hearings it is holding. AH explained that it's 25 years
4237since the last set. The FTC leadership wanted to hear various voices and has an open mind on key
4238issues. Concentration is an issue being discussed, as is the consumer welfare standard. There
4239would be a possibility to propose legislative changes or changes to agency working practices.
4240There were hearings taking place now but there would be a further series into spring. No decision
4241on next steps after hearings conclude but a report is a potential outcome.
4242Consumer welfare standard and multilateral framework on procedures
4243The UK asked about references in USMCA to consumer welfare [COMMENT: USTR seemed to
4244confuse this with consumer protection]. On consumer protection, USTR said the EU had had some
4245limitations in TTIP discussions. There were also provisions in the digital trade chapter.
4246On the consumer welfare standard, the DoJ noted that the relevant provisions are phrased such
4247that consumer welfare is an indirect effect of the competitive process, not the direct objective. The
4248DoJ mentioned its opposition to excessive pricing cases.
4249The UK asked if the US priority had tended to be substantive convergence, procedural
4250convergence, or something else. The DoJ said that in its view, procedural rights were not a matter
4251of convergence, but basic standards and fundamental rights. There was a minimum threshold that
4252it wanted to see. Above that there might be a question of a place for divergence/convergence.
4253The UK asked about the kinds of concerns that it gets from stakeholders on this topic. The US
4254mentioned concerns about China, Korea, Japan, Taiwan, but noted the EU as well in certain
4255specific elements of its approach. The DoJ said that it was not exclusively a stakeholder-driven
4256approach. The agencies also had an interest: the more they cooperate with other agencies, the
4257more they are concerned to ensure those agencies meet procedural standards.
4258The FTC added that the legitimacy of a regime was also relevant: where procedural rights are not
4259strong, the odds of bad decision-making are raised. The best results come from proper procedures
4260- better evidence. The UK agreed, noting that it had used similar arguments in the past.
4261USTR said that for TTIP, they got a lot of input from industry, and there were a lot of things the
4262USTR had to say no to [ie US firms are clearly offensive in this space and we should expect to be
4263under some pressure].
4264The UK asked the DoJ about its Multilateral Framework on Procedures (MFP) initiative. The DoJ
4265said that negotiations were underway on a final text and they were aiming for signatures next year.
4266This was agency to agency not government to government and unlike an FTA, was not a legally
4267binding text. There would be 'adherence devices': dialogue and reporting. Reporting would take the
4268form of an authority explaining how its processed met the MFP obligations. This would be updated
4269as required. It was still TBC how this would relate to ICN and OECD work. The US was sceptical 
4270OFFICIAL – SENSITIVE (UK eyes only)
4271
4272112
4273on the ICN in that it would be hard to get 140 signatures by consensus. Debates with the EU were
4274ongoing on that.
4275USMCA
4276The UK asked the US to introduce USMCA. USTR said that the structure was usually the same in
4277their FTAs: opening statement, procedural fairness (explicit mention of cross-examination of
4278witnesses ‘high on the list’), consumer protection, DS disapplied.
4279On procedural fairness, there had been certain things the EU could not do, like cross-examination
4280of testifying witnesses. The UK asked the DoJ whether this meant that a regime must allow for
4281testifying witnesses and that they should be cross examined, or whether it meant that if a regime
4282had testifying witnesses, they should be able to be cross-examined. The DoJ said the latter.
4283The UK and US confirmed their shared understanding of intentions for a first (and potentially, later,
4284a second) generation cooperation agreement. The UK said that it felt that where cooperation
4285agreements exist, there was no obvious reason to go into detail on cooperation mechanisms in an
4286FTA. The US said it would tend to add more where the position was unclear or where there were
4287doubts about the mechanism. If a party did not have the legal mechanism to cooperate as desired,
4288FTA provisions could be a means to trigger legislative change.
4289The US confirmed that USMCA was its most comprehensive competition chapter. The UK asked
4290why private actions were not covered here, where they were in CPTPP. USTR was unsure but
4291would check. But in TPP, this was included at the request of another party, not the US - it may
4292have been to help another country get a private actions regime set up. NAFTA had been used to
4293get a Mexican competition regime in place; similar for Vietnam/Brunei in TPP.
4294The UK noted the symbolic value of consumer rights provisions [nods from the US] but asked the
4295US for views on the practical value. The US said it didn't have lots of experience but would get a
4296view from Stacey Feuer (international consumer affairs, FTC). Again, there could be cases where
4297another country didn’t have domestic arrangements and this was used to encourage them.
4298Cooperation could also be important.
4299The UK asked why the definition of fraudulent and deceptive practices appeared in TPP but not
4300USMCA. The FTC said that it was unsure but noted that it was (likely) based on an OECD
4301definition, so unlikely that there would have been new negotiations on the wording/differing
4302understandings.
4303The UK asked about US agricultural exemptions (Capper-Volstead). The DoJ handles agri in the
4304US system1 but said that Congress sets the laws and Congress can create exemptions. The DoJ
4305wasn't going to tell them otherwise; this won't change. The UK asked whether comp law
4306exemptions were on a 'block' or 'individual' basis. The FTC said that they were usually industry
4307specific, often based on litigation where a view had then been taken that the industry shouldn't
4308have to bear the brunt of certain practices being covered by the antitrust laws. Often dating from a
4309time when analysis was less refined and where modern antitrust enforcement would likely
4310conclude there is no harm anyway.
4311The UK said that EU block exemption regulations (BERs) would be brought across into UK law via
4312the EUWA. The UK agreed to provide a fuller explanation of how HMG/Parliament would be able to
4313amend this in future, and how this related to adopting pre-Exit EU case law.
4314
43151 For some enforcement matters, sectors are divided between the FTC and DoJ.
4316OFFICIAL – SENSITIVE (UK eyes only)
4317
4318113
4319The US asked how case handling would work on Exit - who would deal with what? Would the UK
4320take responsibility for the UK elements of the Google case, for example. The UK said some
4321elements were still subject to negotiation, but we would update the US when we could.
4322The US asked about how case law would work with the DAs - would they be able to do something
4323different and how would this work with separate court systems. The UK said all of the UK applied
4324the same law, but it would provide a fuller explanation in writing. US asked if a trade agreement on
4325this space would apply to all regulators across UK? UK replied that some details name all the
4326regulators and the law. UK open to which method is best to ensure UK- wide application
4327The US asked about whether pre-Exit EU case law would apply to the SFO2 and FCA [and
4328implicitly concurrent regulators.] The UK said, again, then concurrent regulators applied the same
4329law.
4330China engagement
4331The UK asked the FTC about its work in China. AH said engagement is robust and ongoing.
4332Increasingly case cooperation and decreasingly technical assistance. The UK asked if the new
4333agency had fewer staff than the old three agency system. The FTC had heard that, but unclear if it
4334was true on an FTE basis. The UK asked how well the FCMR is working. FTC said it was a
4335challenging exercise and early days still. A modest success. Much advocacy is naturally behind the
4336scenes.
4337Closing
4338The UK mentioned that ERRA13 provides for a review of the UK regime before April 2019. BEIS
4339was handling this. The US asked if this would account for EU Exit considerations. The UK said it
4340expected they would be taken into account, but that this was not the focus or what Parliament had
4341intended when it passed ERRA13.
4342The US asked about CPTPP - was this an accession or a negotiation. The UK said TBC. The US
4343said TPP and USMCA were different but not inconsistent.
4344The UK closed by stating that all the content of USMCA are recognisable principles. UK is looking
4345at joining CPTPP. UK has common principles – seems very achievable without too many
4346difficulties. US concluded by stating that today’s discussion was a good start. Agreed to keep
4347exchanging information.
4348Key Actions and Next Steps
4349UK to provide further information in writing as to how EU case law will apply post-Exit, including
4350amendments made to Competition Act 1998 s60 by virtue of The Competition (Amendment
4351etc.) (EU Exit) Regulations 2019. To share draft SI and Explanatory Memorandum, as well as an
4352explanation where the UK would have flexibility to deviate from EU precedent and at what level of
4353the UK legal system. NB: completed 16 Nov 2018.
4354FOR INTERNAL DISTRIBUTION ONLY
4355
43562 The SFO is not a concurrent regular for competition law. The CMA and SFO can both investigate and
4357prosecute individuals for the criminal cartel offence as set out in the Enterprise Act 2002 (and for which there
4358is no EU law parallel). This is separate to concurrency arrangements for civil matters in the Competition Act
43591998. We may need to ensure the US has understood this distinction.
4360OFFICIAL – SENSITIVE (UK eyes only)
4361
4362114
4363Session Lead Analysis/Comments
4364Atmosphere – Positive atmosphere in a like-minded area, helped by prior professional
4365engagements between Pickering, Heimert (and Coppola) and Longman. Probing and detailed
4366questions from Alexandra Whitaker, which we should be better prepared for next time. Some hints
4367that US would push UK quite hard on procedural rights.
4368Key Achievements of session – This was our first discussion, so this was mostly about making
4369sure we had covered it and that there were no nasty surprises. Obtained clarity on certain
4370elements of US preferences (private actions, consumer welfare standard, cross-examination of
4371testifying witnesses).
4372Areas to work on for UK ahead of next meeting
4373• Lines to take on likelihood of divergence from EU case law
4374• Lines to take on UK/EU case allocation during IP and immediately after Exit
4375• Procedural rights audit for UK CMA and concurrent regulators
4376OFFICIAL – SENSITIVE (UK eyes only)
4377
4378115
4379CLOSING PLENARY SESSION
4380Date: November 7, 2018
4381Time: 15:00 – 16:00
4382Participants
4383Name Department/Directorate
4384Chaired by
4385Dan Mullaney (DM) Assistant USTR for Europe
4386Oliver Griffiths (OG) Director, Americas Negotiations and
4387Strategic Engagement, Department for
4388International Trade
4389All members of UK and US delegations
4390present
4391
4392Key Points to Note:
4393Dan Mullaney (DM) commenced by setting out the highlights from the week: over 200 officials
4394from UK and US departments/ agencies had participated in the 5th TIWG; the 3rd UK-US SME
4395Dialogue had focussed on digital trade and attracted over 100 SMEs; there had been good
4396discussions at the inaugural Legal Services Roundtable - jointly hosted by UK and US regulators;
4397and whilst we couldn’t control the political circumstances, the work put in to lay the groundwork
4398for an FTA meant that we would be totally prepared for what might eventually happen, including
4399starting negotiations. The next TIWG – notionally in the 1st quarter of 2019 – would probably the
4400last in the current format. We would then move into an entirely new mode. DM said that leads had
4401done a very god job of planning on-going engagement between TIWGs – this should
4402continue. There had been good progress on Continuity Agreements, but there was still some work
4403to do to avoid any gaps.
4404Oliver Griffiths (OG) said that there had been really strong atmospherics with strong relationships
4405on both sides – very important as took work forward. There had been solid progress and we were
4406now heading into acceleration mode. The extensive engagement with stake-holders at this TIWG,
4407including the joint event at the US Chamber, felt like “coming out into the light”. With the UK
4408consultation; USTR’s notification and request for comments; and the Congress expressing more
4409interest all meant that we were getting ready for gear shift.
4410DM thought that both sides were well on their way to potential negotiations. It would therefore be
4411useful to use the time between now and next TIWG to ensure we were ready for a potential 1
4412April start date. Whilst we didn’t know exactly what timeframe leaders will be on, DM anticipated
4413that the President and USTR Lighthizer would want to move as quickly as possible.
4414
4415DM continued that the recently completed US-Mexico-Canada Agreement (USMCA) was in some
4416ways a good indication of the approach the Administration was taking to new trade
4417agreements. There were however a number of provisions specifically tailored to US, Canada and
4418Mexico in USMCA. USTR would also need to take on board responses to the federal register
4419notices on a UK-US FTA and there would be aspects which would need to be tailored to the
4420specifics of the UK and US economies. At the next TIWG (potentially February) it would be useful
4421to have UK thoughts on USMCA, in particular: areas aligned with UK interests; and things which
4422weren’t acceptable to the UK. This would be useful to help anticipate where we were likely to be
4423aligned and where needed to resolve differences. 
4424OFFICIAL – SENSITIVE (UK eyes only)
4425
4426116
4427In terms of next steps, DM highlighted the Administration’s interest in the UK’s negotiations with
4428the EU, were it was important to leave maximum space to negotiate an ambitious FTA with the
4429US. There was strong interest from Congress and other US stakeholders on this. For the US’
4430Trade Promotion Authority (TPA), the next step would be a Federal Register notice to elicit
4431comments from the public including a public hearing [Comment: issued on 16 November]. Timing
4432likely to be Dec/Jan timeframe with hearing likely in Jan. The final step - developed on the basis of
4433this consultation – would be a set of detailed negotiating objectives to Congress 30 days before
4434any negotiations commence (no later than 27 February for a 1 April start date).
4435OG summed up the three main areas covered by the TIWG:
44361. Continuity Agreements, where there had been good progress, including at the Economic
4437Working Group in the margins on the broader economic agenda. On Spirits, wording would be
4438agreed in the next couple of weeks; on Organics, the UK had passed inspection and would
4439appreciate receiving confirmation soon; on Vetinary Equivalence, both sides were aiming to have a
4440call by the end of month to decide the format (e.g. exchange of letters); on Wine, there remained
4441some distance, but the UK planned to send over the latest text by the end of next week; and on
4442MRAs, the UK had received the message that the US wanted a long-form on marine equipment
4443and the UK had requested detail on the industrial goods MRA asap.
44442. Short Term Outcomes, it would be good to have the economic study on IP ready for the next
4445TIWG and we were looking forward to the 4th UK-US SME dialogue. The Legal Services
4446Roundtable had been really positive (led by regulators and industry). This should be used as a
4447template for a broader agenda – e.g. architects and engineers
44483. Laying the groundwork for an FTA, it had been very helpful to be walked through USMCA. Here
4449it would be helpful to have a follow-up on agriculture. It had also been useful to have an initial
4450discussion on industrial subsidies and competition (where there was a UK action point to find out
4451how far the UK would be bound by EU case law); there had also been a really valuable customs
4452session - here there was more the UK and US could do and it would be good to expedite work
4453before next TIWG. Economists had also agreed to exchange trade data before Xmas. On TBTs,
4454the UK did not see the common rulebook posing an obstacle to a TBT chapter in a future FTA. At
4455the next TIWG, it would be useful to cover off procurement and remedies.
4456OG then set out next steps on the UK side: we now had consultation responses in, which were
4457being digested; we would look to do public response in the first quarter next year, accompanied by
4458an outline approach (objectives) for a UK-US FTA. Whilst we were keen to signal green or amber,
4459red lights regarding USMCA, we may be constrained in some areas between now and the next
4460TIWG. There would hopefully be more clarity on the UK’s future relationship with the EU before
4461the next TIWG (although this would be a broad outline approach).
4462End of report
4463For any queries about the contents of this dossier or the Trade Working Group meetings, please
4464contact:
4465Sophie Brice
4466Acting Deputy Director, UK-US Trade Policy Group
4467Department for International Trade