Why the Idea of a UK-US Free Trade Deal is Little more than Performance

A free trade agreement with the US has consistently been presented as the main prize from the UK's much touted post-Brexit trade policy independence. The UK Prime Minister's admission that this was not going to be realised any time soon merely confirmed it was a long shot.

Taken together with the short-lived suggestion of the UK joining the United States-Mexico-Canada Agreement (USMCA), we argue that it is the desire to perform ‘independence’ from the European Union rather than policy content which is driving the UK's trade strategy.

Why a UK-US free trade agreement?

Although trade policy hardly featured at all in the referendum campaign, it has arguably been the most significant policy development in the period since.

Theresa May created the Department for International Trade (DIT) less than a month after the referendum. In January 2017, she gave a speech at Lancaster House, setting out the UK's negotiating objectives and ‘red lines’ for the upcoming EU negotiations. The British people, the Prime Minister declared, ‘voted to leave the European Union and embrace the world … I want us to be a truly Global Britain—the best friend and neighbour to our European partners, but… a country that goes out into the world to build relationships with old friends and new allies alike’.

May's subsequent blueprint for future trade relations with the EU foresaw a greater level of continued alignment with the EU than the Lancaster House speech had implied. This led Brexit hardliners to turn against May. A characteristic intervention from Donald Trump, suggesting that Chequers and the Irish backstop would undermine a UK-US trade deal, fuelled the flames.

Although May and Johnson differed on regulatory alignment, at face value they shared a common objective: an independent trade policy. However, the ‘price’ to be paid would involve a permanent hit to the UK economy far greater than what could be recouped through global free trade.

A trade deal with the US

The US came to be particularly totemic, in part because of its association with the ‘Anglosphere’, an idea popular in Eurosceptic circles since the 1990s. As then Trade Secretary, Liz Truss, put it at the launch of UK-US trade talks: ‘Britain and America are linked by language and law, habit and history. Our friendship is not some alliance of convenience. It rests, rather, on shared values and principles.’

A trade deal with the US was also presented as a virility test of the UK's status as an independent trade power, designed to cement the UK’s separation from the ‘protectionist’ EU.

Trade negotiations so far

The UK government’s trade deals with ‘68 countries plus the EU’ are, almost without exception, ‘rollovers’ of existing EU agreements. Of all the negotiations carried out by DIT so far, only those with its so-called ‘priority’ partners, the US, Australia, New Zealand, and its proposed accession to the Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP), would involve the UK becoming a party to entirely new agreements.

As Table 1 shows, the US stands out as the most economically significant of these prospective deals, but even here the most optimistic projection of a GDP increase of 0.16 per cent pales in comparison to comparable estimates of the costs of leaving the EU's Single Market and Customs Union (which range between -0.8 per cent and -12.5 per cent).

[caption id="attachment_4050" align="alignnone" width="1024"] Table 1. Estimated gains from new UK trade agreements. Note: *The lower point of the range corresponds to the central estimate of the more conservative scenario, while the higher point corresponds to the equivalent figure of the more optimistic scenario. Source: UK Department for International Trade[/caption]

Old wine in new bottles

The two main domestic impediments to a UK-US trade deal are that the NHS ‘remains off the table’ and UK food standards ‘must not be undermined’. In other words, the very same obstacles that had derailed the controversial EU-US Transatlantic Trade and Investment Partnership talks in the UK and (in the case of food standards) the EU more widely.

The US approach to food standards is seen as contrary to the precautionary approach adopted in the EU and UK. Add to this concerns over animal welfare and the ability of UK farmers to compete with US counterparts unburdened by such restrictions, and you arrive at a UK Conservative Party that is internally split between what journalist Katy Balls has called ‘Waitrose’ and ‘Lidl Conservatives’.

The other bone of contention is the NHS. The United States Trade Representative has been keen to tackle the NHS's centralised procurement regime, which is seen as artificially holding down pharmaceutical prices, including beyond the UK.

The last UK-US negotiation was held just days before Trump was voted out of office. The Biden administration has now signalled that its priorities do not lie in negotiating new trade agreements. The new President has also expressed concern that Brexit might upset the Northern Ireland peace process.

It was in this context that on 22 September 2021, the Financial Times (among others) reported that the UK government was considering an application to join the USMCA. This announcement took most trade experts by surprise, not least since the USMCA does not actually have an accession protocol. Indeed, in the space of twenty-four hours the government was distancing itself from the idea.

Performative trade policy

The interesting question from the perspective of broader UK trade strategy is why the idea of joining USMCA was ever raised, given how little time it took for the government to dismiss its own proposal. We suggest that the UK's independent trade policy is performative in nature.  Policy has not been driven by an economic logic. Rather, this is about ‘independence’: announcing talks with trade partners are enough for this goal to be realised.  However, UK trade policy sovereignty requires it to differentiate itself from the ‘protectionist’ EU by signing new agreements. With a UK-US trade deal now officially and very publicly off the cards, the veil has slipped even further.

Now DIT’s attention has turned towards the ‘Asia-Pacific’. But again, this pivot is less about articulating a coherent trade strategy driven by economic concerns than about unmooring an imaginary ‘Global Britain’ from the EU economic space.

A longer version of this article was first published in the Political Quarterly journal.