At the heart of the right-wing flavour of British Euroscepticism lives a dream trade deal with the United States of America (for reference, the heart of Lexit is communism in one country, so take heart, things could be even worse). It has always been there, going back to the mid-2000s and the rise of UKIP. This idea that we could “unshackle” ourselves from the corpse of continental Europe and become “equal partners” with the US.
People who don’t want the UK to do a trade deal with the US, ie most of the left and a healthy tranche of Remainers, always point to the wrong things – chlorinated chicken, the supposed threat to the NHS. It plays on the Leavers terms and assumes that such a trade deal is more likely than it really is. A much better criticism of a potential trade deal between the UK and the US is that unless the UK is prepared to accept a deal that is very economically lopsided towards the US, there won’t be a trade deal between the two countries. This is why I keep saying that a no deal Brexit really is a no deal Brexit – the UK would be looking to try going without trade deals with anyone at all for at least a period because HMG’s expectations are way out of kilter with reality.
Beyond the basics, the reason a UK-US trade deal will be tricky is because the UK is desperate for it and the US doesn’t really need it. At all. America is careful with the trade deals it gets involved in and slants them heavily toward being favourable to themselves. The reasons for this are simple: the US is the richest country in the world. It owns the world’s reserve currency (for now). On top of all that, the place is a veritable continent unto itself – in practical terms, it doesn’t really need trade deals with anyone. The UK, it is obvious to point out though I shall, has none of these advantages.
The Suez crisis looms large in the right-wing Eurosceptic imagination. It is evoked a lot, something you’ll note if you sit through a fair few Bruges Group panel events (which I wouldn’t recommend, incidentally). There is a fantasy around Brexit that in leaving the EU, the UK can “take its rightful place in the world again”. This, again, means being “equal partners” with the US. But the US never deals with anyone on equal terms – it is part of their basic modus operandi. They lay out conditions favourable to the US right at the start of any trade negotiations – if the other country isn’t prepared to agree to them up front, America walks away. Again, because it can.
The Department for International Trade has today put out its own impact assessments on what a UK-US trade deal could mean for Britain. In a scenario where the trade deal isn’t so great by their expectations, the positive impact on UK GDP per year would be a measly 0.07%. All right, what happens if we get a whizz bang of a deal with the Americans? GDP goes up 0.16%. And bear in mind, their so called worst case is way, way too positive given the misconceptions they are plugging into the whole thing. For contrast, leaving the Single Market and Customs Union at the end of this year looks set to have a negative impact of -5.00% on GDP over the next fifteen years. But hey, sovereignty and all that.
The first line of today’s DIT document on UK-US free trade reads: “The UK will be a champion of free trade and will seek Free Trade Agreements (FTAs) with like-minded democracies.” Well, yes, except for all of the ones in continental Europe, of course. All because those Euro types supposedly want to impinge on our sovereignty. Chaps, if you don’t like UK sovereignty being diminished, I wouldn’t cheer so hard for a UK-US free trade deal if I were you.
Given we’re leaving the EU, I myself would love a solid UK-US free trade deal to happen, so I am not arguing against something here to which I have an ideological objection. I just do not see any of the discussion around its probability, the likely hurdles involved, and how the US actually conducts trade negotiations giving me any cause for optimism that this government can pull it off. Perhaps they are prepared to sign a really bad deal with the US to say they got it done, figuring no one will understand the detail. The more I think about it, the more I figure this might be the scenario we end up with.