A US-UK trade deal is important for both parties. Its importance stems from the strength and endurance of the bond between our two countries. We are united by our history, culture and language. We have shared interests in sectors like defence, intelligence, financial services, and pharmaceuticals.
We have a shared system of values. The British Council recently surveyed young Americans, who ranked the UK first against seven other major countries for: “being a force for good in the world; having a free press, fair justice system, and strong non-governmental institutions; valuing individual liberty; and being a strong example of a democratic society.”
We have had our differences, of course. The US staged its own version of Brexit in 1776. But there are clear similarities between the American fight for independence in the eighteenth century and the United Kingdom’s desire to govern our own affairs in the twenty-first.
Then, as now, the dissatisfaction stemmed from the over-reach of a remote, unrepresentative power, embodied by the famous rallying cry of “No taxation without representation.” Those same impulses of democratic control – a people wishing to decide who spends their money, who shapes their destiny and having power to remove their rulers by voting – underpinned the Brexit vote.
There are also lessons from our shared history that a vindictive negotiation settlement is not the answer. Following the War of Independence, the extraordinarily magnanimous Jay Treaty of 1794 paved the way for a decade of peaceful trade between our two nations on a mutual most-favoured nation basis. We agreed that disputes over the Canadian border and a number of wartime debts would be settled by the almost unknown means of arbitration, setting an example which other nations were to follow.
Chief Justice Jay and the Foreign Secretary, Lord Grenville, showed extraordinary foresight in recognising the need to move on from the War and the Revolution in favour of an agreement for “reciprocal and entirely perfect Liberty of Navigation and Commerce.”
The decade following the signing of the Treaty saw US exports rise from $33 million in 1794 to $78 million in 1804. Over the same period, US imports rose from $36 million to $87 million. There is surely a lesson here for the UK and EU negotiators as to how a mutually-beneficial, amicable solution can be reached.
Now, once again, the UK and the US are important allies in an existential battle currently being played out across the world. The battle of ideas between competition-led capitalism and state-led intervention, between competition and cronyism. Our enemies are poverty and wealth destruction.
Where protectionism and over-regulation have destroyed wealth, suppressed technology and pushed people deeper into poverty, competition has spurred innovative ideas and turned them into jobs for hundreds of thousands of people. Over the last two decades – with markets opening after the fall of Communism – 1 billion people have been lifted out of poverty.
An independent UK trade policy can make the case for free trade afresh. The US has been long been one of the world’s strongest forces for liberalised trade. A deal with the UK – a country at a similar socio-economic level so there can be no race to the bottom or offshored US jobs – is the ideal candidate for the American bilateral agenda.
Despite his many protectionist actions, President Trump knew this when he proposed a bold, free-trading vision at the Quebec G7 meeting in June. “No tariffs, no barriers,” he said, “that’s the way it should be.”
He also knew that three G7 members – France, Germany and Italy, bound by the EU’s external tariffs – are not capable of joining that project.
The possibility of the UK moving away from the prescriptive approach of the EU’s rulebook to a system based on outcomes could signal a significant opportunity. That possibility is blocked by the Chequers plan, which would keep the UK tied to the EU’s extreme technological risk aversion.
Indeed, the Chequers Agreement fails to deliver the Conservative Brexit manifesto pledge in anything but name. It would severely impede the UK’s ability to strike new trading arrangements around the world, and so embrace the chief economic opportunities of Brexit. It is even “strongly opposed” by Michel Barnier. It is completely unacceptable and I will vote against it.
But fully outside the EU, the UK can strengthen our role by retaking a full seat on the world bodies – including the WTO – that determine global regulation. We will regain our right to vote on such bodies, as well as our right to initiate new standards and propose amendments to existing ones, working closely with like-minded allies.
Brexit marks a crucial moment in the battle for the heart of the global regulatory system. The US must act now, with determination and the entrepreneurial spirit that has characterised the nation from its beginning.
The US must take full advantage of this unique opportunity to have the world’s fifth largest economy and second biggest exporter of services push hard for competition-based regulatory and trade policy as an ally and partner. Together, we can turn back the tide of anti-competitive regulation around the world, and create wealth where previously it has been destroyed.
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