An American free trade deal wouldn’t put Britain first
Donald Trump’s most recent intervention in the Brexit debate came as a surprise to many UK businesses, who have enjoyed deep business ties to the US for years, if not decades. Mr Trump’s assertion that the UK “may not be able to trade” with the US if the Government’s proposed Brexit deal is approved is a comment that simply doesn’t stand up to scrutiny, given that British businesses already trade more extensively with the US than they do with any other single country, even without a comprehensive free trade deal.
Nor should Mr Trump’s intervention deflect Westminster and Whitehall away from the UK’s most urgent trade priority: securing a good level of future market access to the European Union and finding ways to retain preferential access to countries from Canada to South Africa to Korea, where the EU has trade agreements that are well-used by UK firms.
Most UK businesses tell us that they are currently much more concerned with the real market access they could lose as a result of Brexit – both in Europe and further afield – than they are about hypothetical gains with partners like the US. While clarity and precision on the terms of European trade are at the top of business’s wish list, that doesn’t mean British firms are somehow uninterested in growing their presence in the US market. Our own surveys make it clear that six in 10 Chamber businesses want the UK government to prioritise improved trade links with the US. The problem, as ever, is a political one.
A fully-fledged, comprehensive Free Trade Agreement between the UK and the US is seen by far too many in Westminster as some sort of holy grail, a definitive and highly symbolic “answer” to the question of the UK’s future place in the world.
Yet the prospect does not sit as well with many in the business communities across the UK that I represent.
While liberalising trade with the US is a valuable aim, an all-singing, all-dancing Free Trade Agreement should not be a UK priority, at least in the short to medium term.
Indeed, a wide-ranging FTA could prove a distinctly worrying prospect for many UK exporters of both goods and services.
Unlike with many other nations, the UK enjoys a very significant trade surplus with the US, something that could be put at risk the minute a current or future Prime Minister decides to send their negotiators to lock horns with the experienced Office of the US Trade Representative on the terms of a wider trade agreement. Having relied on the experience and knowledge of the European Commission for decades, now is not the time for the new UK Department of International Trade to go head-tohead with the some of the most seasoned public and private sector trade negotiating experts in the world.
The recent imposition of tariffs on many of the US’s closest trading partners – including the UK as a member of the EU – demonstrates that the Trump administration is serious about a protectionist, “America First” approach to international trade. No matter how close our two countries may be, the US administration’s starting point doesn’t position the UK in a place to emerge as a big beneficiary from an FTA with the US.
The US also starts with an obvious market size advantage, and in many cases lower regulatory costs and requirements than businesses in the UK, which US negotiators would try to use to their advantage in any trade talks. It’s also crucial to note that decisions taken as part of a US-UK FTA would profoundly affect the overall course of future UK trade policy – “locking us in” to elements of an American trade and regulatory model, just as the UK starts to move away from a purely European one.
It makes no sense for the UK to establish an independent trade policy upon leaving the EU, only to significantly restrict that independence from the outset through a lopsided deal with one of the world’s most powerful economic powers. Much can be done, even outside of a
‘Unlike with many other nations, the UK enjoys a very significant trade surplus with the US’
big political free trade agreement, to help UK and US businesses do more together. Better mobility arrangements between the two countries, improved tax treaties, and more customs facilitations that smooth the passage of goods across borders are all worthy goals for the British and US governments to tackle together.
So, it’s time for politicians on both sides of the Atlantic to pull back on the rhetoric, and take a clear-eyed look at what practical steps we can take to boost the hugely-successful trade relationship between the UK and the US.
Attention to the small details – not grand statements and big signing ceremonies – is what will make business, trade and investment flow, no matter the final outcome of the Brexit process.
Trump’s trade priority is to put America First at all times