Crashing out would leave us entirely at the mercy of countries like the US when it comes to trade deals.
On first glance, Donald Trump’s visit next week and the prospect of ‘no deal’ seem unrelated. But much like the fact the PM caved into granting this visit in the first place, no deal would represent a weakness in our global influence, rather than our power.
In February, the US government released its negotiating objectives for a future US-UK (yes, USUK) trade deal. While a trade deal is a long way off – they take years to negotiate – it fired the starting gun on what could become a very contentious debate.
And there’s a big problem on the horizon. Crashing out with no deal would leave us entirely at the mercy of the US and other states to deregulate labour, environmental and social standards to secure trade deals.
While our current relationship with the EU is based on common standards around workers’ rights and environmental protections (from maximum working hours to pollution limits), a Trump-led US will have no time for such trifling concerns.
“The only card we have is if we enter a deal with the EU [on these matters]…That would give the UK a stronger negotiating position. Crashing out means we could have to give up anything the US wants in a deal. Yet at the moment the [Conservative] leadership contenders are implying that we wouldn’t have to give anything up.” says Dr Michael Plouffe, an expert in trade policy at University College London.
Of course, if you’re an ideological right-winger, lowering social and environmental standards would be exactly the sort of policy you’d want.
“Most of the Conservative leadership seem to be thinking in a similar vein as what we saw in the US prior to Trump – [believing that] deregulation and relying on markets to provide a solution to everything, which only happens when you have perfect competition.
“It’s the sort of response you get from first year economics students about how markets work…before they’ve taken their other modules and learnt about the flaws,” Dr Plouffe tells LFF.
He points to a potentially-telling feature of the US’ negotiating position when it comes to the UK. The wording of the US objectives focus explicitly on the UK’s obligations when it comes to these standards.
In contrast, US objectives for negotiations with Japan refer to both “parties”, rather than specifically Japanese obligations. It’s one symbolic sign of how weak a post-Brexit Britain is perceived.
Where might we see standards dropped? It’s no secret that US healthcare networks are keen to move in and compete with the NHS. “You may end up seeing deregulation and American based competition whittling away at what the NHS can provide.” Bizarrely, we could also see this in rail network, despite the US rail system being famously appalling. The US may also seek to ‘harmonise’ (i.e. bring down the UK’s) environmental rules.
For now, there’s no firm timeline on a US-UK trade deal: there’s far too much uncertainty with Brexit, and the small question of who is going to run the government. Meanwhile, the US is facing some early ‘headwinds’ ahead of the 2020 elections.
One thing is clear – a UK faced with the ‘shock and awe’ destruction of high tariffs following a no deal Brexit would be desperate for a quick trade deal with the US. And American companies will be licking their lips.
Josiah Mortimer is Editor of Left Foot Forward. Follow him on Twitter.
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7 Responses to “There’s another reason why no deal would be a disaster – and no one’s talking about it”
Chester Draws
no deal would represent a weakness in our global influence, rather than our power.
I sometimes despair of the modern Left. Why does it matter how much power and influence the UK has? The Left used to fight against nonsense like that.
One good reason for leaving the EU is that it is trying desperately to turn itself into a competitor to the USA. Politicians are not good at having massive power and not using it, so it won’t be long before the heads of the EU are throwing themselves round like Trump and Putin.
Leave. And get on with our lives without wasting money on prestige and “influence”. Don’t send bombers to “fix” anywhere. Play nicely with trade rather than trying to bully people with size.
It’s no secret that US healthcare networks are keen to move in and compete with the NHS.
And this is equally bollocks.
There’s a massive difference between reforming the NHS by splitting it up into a less monolithic organisation and privatising it. There’s simply no chance the UK will do down the US route — there isn’t another country in the world who would.
It’s not like the EU would stop privatisation of the NHS by a sufficiently motivated government anyway. What other privatisations have the EU stopped. Please stop trying to pretend they are an efficient guard against everything you don’t like.
Dodgy Geezer
This item is a textbook exercise on how the Left cannot understand economics. They seem to think that economic issues are entirely state-driven, and characterise the situation as one where the nice cuddly EU suddenly turns nasty and won’t trade with us any more – leaving the US wolf to fall on us and eat us all up. This is an understanding fit for the nursery.
If we have something people want, they will trade with us. If the EU bans trade with the UK, where will they get the items or services that the UK provides? If it is elsewhere in the world, that will create a shortage for us to sell into.
The essential point about leaving the EU is sovereignty. If we have sovereignty, that allows us to run a left or right wing government, as WE want to. If the EU has sovereignty, they will run the kind of organisation that the Commission want. Unless you are very sure that the EU Commission will always run a left-wing government, it would seem foolish for the left to hand control to them.
Tom Sacold
There is no real reason why we would be “at the mercy” of the US. We would be an independent country, free to deliver socialist solutions to our economic problems unhindered by the constraints of the EU’s capitalist Single Market regulations.
We are currently dominated by and “at the mercy” of the undemocratic neoliberal EU Commission.
Dave Roberts
Yes we are talking about it and why aren’t you talking about Labour’s candidate in Peterborough who hates Jews?
steve
We’re heading for No Deal.
Labour’s Blairites, by attempting to turn the LP into a Remain party and by insisting on another referendum, are driving more and more democracy-supporting voters into the arms of the Brexit Party – a Brexit Party which is now able to present itself as the defender of democracy.