The United Kingdom’s departure from the European Union presents the former with the great prospect to exercise a fully independent trade policy for the first time in over forty years. In practice, a Brexit that removes the UK unreservedly out of the EU’s Single Market, Customs Union, and more importantly, the EU’s inflexible regulatory regime, would allow any future British Government the complete scope to negotiate comprehensive free trade agreements with nations across the world. Under these circumstances, Britain would be able to flexibly position itself to take advantage of future global economic growth, ninety percent of which, according to the EU Commission’s own report, come outside of the bloc.
Of those nations outside of the European Union that is predicted to contribute significantly world-wide economic growth, is the United States.
‘Largest trading partner’
Currently, the US is the UK’s largest single-country trade partner, and while the Confederation of British Industry (CBI) estimates the value of the relationship to be £160 billion, UK trade with the US accounts for 19.7% and 11.1% of the UK’s total exports and total imports respectively.
More noteworthy, is the very high level of investment undertaken by both trade partners in each other’s economies. The UK is the single largest investor in the United States as British companies invest over $570 billion every year, directly sustaining 1.1 million American jobs in every state and almost every industry.
At IEA free trade deal launch attended by many top Tory Brexiters Shanker Singham says that Chequers’ common rule book is seen in the US Trade Representative office as precluding a US-UK trade deal, same with Trans Pacific Partnership now known as CPTPP pic.twitter.com/WlpdhGSRti
— Faisal Islam (@faisalislam) 24 September 2018
Conversely, the United States is the largest source of inward investment in the United Kingdom, which also too directly sustains over one million British jobs. According to both UK and US trade authorities, the UK and US have around $1 trillion invested in each other’s economies.
What is startling is that this deep trading relationship, creative and sustaining of over two million jobs, has been achieved, in most part, under WTO rules. Trade therefore between the two countries is not tariff free and while the EU has attempted to negotiate a free trade agreement, it has proved a fruitless exercise that has denied the UK the opportunity to further benefit from closer economic ties with the United States.
Brexit with free trade or supercalifragilisticexpialidocious Canada. https://t.co/Dnd7BI74QT
— Jacob Rees-Mogg (@Jacob_Rees_Mogg) 24 September 2018
However, it is not only under the EU’s auspices that the UK has not been able to advance its trading relations with the United States. The plans submitted under the UK Government’s White Paper, dubbed ‘Chequers’, entails measures that would inhibit a comprehensive UK-US free trade agreement from being negotiated. Chequers’ commitment to a common rulebook on goods and, more saliently, agri-foods, would most certainly be an effective veto to an agreement. Hypothetically, a UK-US comprehensive free trade agreement under Chequers would mean UK negotiators seeking to have their US counterparts to acquiesce to EU rules for any goods or agricultural items they wish to sell to UK consumers. The measures in the Chequers proposal is a red line for the United States.
So, while Chequers would prevent a UK-US trade agreement from being reached, Plan A+ promises no common rulebook or any regulatory alignment on trade. Therefore, British negotiators would have a flexible hand to position the UK in most advantageously to reap the benefits of a comprehensive UK-US free trade agreement. Indeed, this does not mean the UK would be forced to compromise on specific domestic interests such as the involvement of American firms in the delivery of NHS services, but that our Government and trade negotiators would have a wide and complete hand to maximise the opportunities to benefit from global economic growth.
A comprehensive UK-US free trade agreement is estimated to increase annual bilateral trade from £167 billion to £207 billion by 2030, and in the view of some trade experts, have the effect of increasing UK gross domestic product by 2-3% and boost further investor confidence in the trading relationship.