The EU referendum debate has heard a lot of arguments about the future of the UK’s trading relationship with Europe.

However, US President Barack Obama’s remarks that Britain would find itself at the “back of the queue” when drawing up any potential post-Brexit trade deals with the US has also put the focus on Transatlantic commerce.

It is not the first time the US has threatened dire trade consequences should the UK vote to leave the EU on 23 June.

Last year, US trade representative Michael Froman warned that if the UK left the EU it would face the same tariffs and trade barriers as other non-EU countries such as China, or Brazil or India.

The tariffs which UK exporters pay (as a company based in an EU member country) on goods sent to the US are at present relatively low.

Imports and exports

The heightening of the trade rhetoric seems curious when one examines the current mutually-beneficial trading relationship between the UK and US.

While the EU bloc of nations is the UK’s largest export market, that is a large territory comprising another 27 countries.

When it comes to British exports to a single nation, then the US is the UK’s biggest export destination, a market worth some £3.5bn.

The UK exports a huge variety of items to the US, from gin and industrial chemicals to live animals and vegetable fats.

Conversely, the US is the UK’s third biggest source of imports, after Germany and China, buying some £2.9bn in goods from America.

According to the UK government around 17% of British exports went to the US in 2012.

In addition, the US and the UK are each other’s largest foreign investors, and “this investment supports approximately one million jobs in each country,” it says.

‘More opportunities’

So far, so good, but the government has its eyes on what it says is an even bigger potential prize, the signing of a Transatlantic Trade and Investment Partnership (TTIP) deal between the EU and US.

This is the deal which Barack Obama says the UK risks missing out on if it votes to leave the EU.

For the past couple of years negotiations have been taking place on this bi-lateral deal, which, the UK government says “could add as much as £10bn annually to the UK economy in the long term”.

It adds: “It could also add £100bn for the EU and £80bn for the US.”

And according to UK Trade and Investment, which drums up international trade for British firms: “Negotiations between the US and EU for the TTIP should generate even more opportunities for the UK. This will remove trade barriers by lowering tariffs and making regulations similar.”

TTIP is primarily a deal to cut tariffs and regulatory barriers to trade between the US and EU countries, making it potentially easier for companies on both sides of the Atlantic to access each other’s markets.

Industries it would affect include pharmaceuticals, cars, energy, finance, chemicals, clothing and food and drink.

The government says shoppers would benefit by the removal of EU import tariffs on popular goods, such as jeans and cars.

Foreign investment

It’s also claimed that reducing regulation would help UK businesses export to the US, with small businesses in particular predicted to benefit.

Tariffs between the EU and US are already low – averaging around 3% – and both sides foresee they will be eliminated under the agreement.

The main focus of negotiations is on harmonising regulations, reducing “non-tariff barriers” to trade, or getting rid of them if they’re deemed unnecessary.

For instance, US and EU regulators have different requirements for testing the safety of cars, drugs and soft furnishings.

Going through the different tests is expensive for firms, particularly in developing new medicines. TTIP aims to reduce those costs by bringing in common standards.

Other areas being considered include protection for foreign investors, co-operation to achieve greater participation by small businesses in EU-US trade and a controversial procedure to resolve investment disputes between the US and EU.

‘Assault on societies’

Not everyone is enamoured by the potential agreement, with concerns the deal will drive down wages, weaken environmental protection and labour rights, and put the demands of big business before those of citizens.

John Hilary, executive director of campaign group War on Want, says: “TTIP is correctly understood not as a negotiation between two competing trading partners, but as an assault on European and US societies by transnational corporations seeking to remove regulatory barriers to their activities on both sides of the Atlantic.”

Much of the opposition to TTIP in the UK and other EU countries including Germany, is focused on its provisions for “investor-state dispute settlement”.

This procedure would allow companies to sue foreign governments over claims of unfair treatment and to be entitled to compensation.

Critics say the measures undermine the power of national governments to act in the interests of their citizens.

For example, they warn that tobacco giants could use the procedure to challenge restrictive regulations, citing a case in Australia, where Philip Morris Asia used a 1993 trade agreement with Hong Kong as the basis for a legal move to stop a change to packaging.

Poorer standards

In the UK, attention has focused on the potential impact on the NHS, with critics saying TTIP would allow private firms running NHS services to sue the government if it chose to return the services to the public sector.

Opponents have called for the NHS to be exempted from TTIP, arguing that other sectors have already secured exemptions, such as the French film industry.