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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