How a UK-US trade deal could lead to Prime Minister Corbyn

The starting gun has been fired on what could be the UK’s first bilateral free trade agreement post-Brexit. On 16^th October the US Trade Representative Robert Lighthizer sent a letter to the Speaker of the House of Representatives, Paul Ryan, “that the president intends to initiate negotiations on a trade agreement with the United Kingdom.” The UK government had already started consultations on agreements with the US, Australia, and New Zealand, but without a specific commitment.

The stakes are high. The US-UK trade relationship is valued at least $160bn dollars annually, and together the US and UK have around $1trn invested in each other’s economies. But perhaps more significantly, the prospect of a US trade deal is likely to spark huge political controversy in the UK, and probably be a major campaigning topic for Jeremy Corbyn and the Labour Party.

We can say this fairly safely as it is only two years since talks on the proposed EU-US trade deal, TTIP, broke up without agreement, partly due to campaigns against it across Europe. These were often hard to counter, as you can’t definitively prove some hypothetical bad thing can’t happen before the final text has been agreed, but those of us promoting TTIP could at least point to the EU’s numerous trade deals where none of the worst scare stories had come true.

The UK government has no such precedent for trade agreements. It is therefore going to be hard to disprove the accusations. Indeed, the government is already struggling.

Chicken washed in chlorine is the symbol for the fear that a deal with the US will lead to the UK having to accept food produced to US standards. This is normal practice for US trade agreements, and the letter referred to earlier talks of “removing non-tariff trade barriers” and delivering “timely and substantive results for US farmers.” Conservative MPs are already expressing their fears, with Energy Minister Claire Perry saying in the Times “I don’t imagine we would ever be importing chlorine washed chicken” and Environment Secretary Michael Gove saying that the UK would accept US food standards “over my dead body.”

International Trade Secretary Liam Fox has got into a tangle by being rather less definitive in saying variously that we will not “lower” or “compromise” food standards, both words without meaning in a trade deal. However he also recently said that “policy should be based on science. We can’t allow any other impediment to that” which reflects language that appears in US trade agreements with regard to agriculture, to allow for the export of US food, but does not appear in EU agreements. He will probably know that the UK must almost certainly accept US food standards to get a bilateral agreement or join the Trans-Pacific Partnership, owing to prior US involvement in that deal.

Beyond food we can expect the NHS to become associated with a US trade deal before long, with allegations that the UK will make irreversible commitments on privatising service provision as part of the deal, and pressure therefore to exempt the service entirely. Meanwhile back in June it was rightly said that typical US provisions would prevent the UK participating in European standardisation bodies as currently.

Indeed one of the most justified fears of a UK-US deal is that it will introduce new barriers to trade with the EU. This could happen if we adopted US food standards, or if the UK decided to align regulations with the US in areas like chemicals and automotive, where there are major differences with the EU approach. It isn’t just about the EU either; a US clause included in its recently agreed deal with Mexico and Canada effectively stops other parties negotiating a trade agreement with China. We assume the US would also seek this in a UK agreement.

It is easy to see how a US trade negotiation could become steadily more controversial. NGOs are already preparing their campaigns, those who favour a close economic relationship with the EU are likely to oppose elements of a US deal that prevent this, farmers and the food industry are already making their concerns known, business enthusiasm is lukewarm at best, and a Labour Party leadership currently instinctively opposed to trade deals will find this even easier given President Trump, who is despised by Labour members.

This doesn’t stop the government going ahead with talks, there is no requirement for it to consult parliament before completing negotiations, but there is a question of whether it would be wise to hand the Labour Party such a gift of a campaigning issue, particularly given the concern of the government’s own MPs. Many Conservative MPs fear that Corbyn isn’t all that far from No 10 as it is.

There are better alternatives. The UK-US trade and investment relationship is healthy, and it is hard to see this being improved by trade talks on issues that divide us. We would be far better focusing on discrete non-tariff barriers where we can find new approaches, perhaps in e-commerce. We could also encourage the US and EU to get back to trying to resolve their regulatory differences, since the best result of all for the UK would be not to have to choose between the two.

But if we have to talk with the US, because we need to show we can strike trade deals, let us do so with at least two principles. That all UK trade deals should overall reduce trade barriers, and that they should be acceptable to the public. As things stand, a US deal would not meet these criteria as it would damage trade with the EU, and encourage those who aren’t really supporters of trade deals. A gift for Corbyn, and a further problem for UK business.