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At a crossroads: How a UK-US trade deal would impact the life sciences sector

At a crossroads: How a UK-US trade deal would impact the life sciences sector

Nabil Rastani | Dods Monitoring

3 min read

In a post-Brexit world, the Government is seeking to forge a new bilateral trade agreement with the US. But this could have wide-ranging implications for the UK’s life sciences sector, as Nabil Rastani writes. 


In the background of the pomp surrounding President Trump’s state visit, the nascent UK-US FTA has already gathered significant media coverage.  It all begs the question on how a future trade deal could impact sensitive and economically important industries such as the life sciences sector. The complexities associated with it necessitates a deep analysis of the possible implications that such a trade agreement could have on the industries long-term vitality post-Brexit.

A false dichotomy: Between the US and EU

International trade agreements, especially between two highly advanced and sophisticated economies like the UK and US are notoriously hard to negotiate. In part due to the plethora of institutional checks and balances in place, as well as the complexities associated with protecting domestic industries. The life sciences sector will be a pivotal element in the successful negotiation of any future comprehensive trade arrangement. 

The protectionist nature of the Trump administration means that any prospective arrangement may require the deregulation of the UK’s health regulations and standards which pharmaceutical companies currently abide by. Trump’s overarching ‘America First’ Strategy feeds into this narrative of a realist-oriented trade deal that has ‘relative gains’ for the US, at the possible expense of the UK healthcare environment.

While a US-UK FTA could facilitate greater economic output in the short term, it may also be detrimental to the interconnectedness of the UK’s life sciences sector to continental Europe.  Indeed, a trade deal, which includes regulatory policies could increase barriers that the UK faces from the EU. This is especially true from the dissimilarities in the comparatively stricter regulatory models for medicine uptake in the EU, through its various Directives and regulations and those within the US. If the UK decides to firmly orient itself more closely with the US model of regulatory alignment, it will become harder to retain the flow of medical goods between the EU and UK. 

The International Trade Committee has already called upon the Government to undertake a deeper cost-benefit analysis on the implications of how increasing barriers for the EU in exchange for some removal of barriers with the US would impact the business policy environment. Indeed, as of 2018, 44 percent of UK exports were made to the EU, while 73 percent of imports came from the EU. 

Maintaining regulatory alignment with the EU was a key call of industry leaders, so it will be imperative upon the Government to ensure a level of dialogue between sector and policy makers, to ensure that any future negotiations do not lead to a ‘race to the bottom’ for the regulatory regime.

An Atlantic sized quandary

What is also important to note is that the US is also increasingly being perceived as an unreliable political actor, Trump’s unilateral withdrawal from Trans-Pacific Partnership and overtly populist discourses could reduce the likelihood of a new trade agreement being forged. Indeed, the Trump Administration’s more insular approach to international economic policy has ramifications on the long-term prospects of a trade deal. Additionally, institutional scrutiny applied through Congress and the UK Parliament also throws a preverbal spanner in the works.

A comprehensive trade agreement could also take several years to negotiate and would require serious compromises over issues such as….

To read more and download a 1-month look ahead at related life sciences events, click here.

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