Washington’s trade deal doors remain open

Posted on July 18, 2016

The parallels with the anti-establishment movement Donald Trump is leading into this week’s GOP convention in Cleveland have made Britain’s vote to leave the EU a hot topic of conversation among Republicans.

Mr Trump quickly read the referendum vote as an affirmation of his pledge to dismantle “globalism”. The day after the ballot, he proclaimed: “People are angry all over the world”.

    But some of the same mainstream Republicans Mr Trump has taken over on issues such as race, trade and the general rules of debate and decorum in American politics have also identified Brexit as a longer-term strategic opportunity.

    Last week two of the most powerful Republicans in Congress called on President Barack Obama — who not so long ago was pushing the UK to the “back of the queue” — to quickly open discussions on a trade agreement with a new British government.

    Such a pact, their argument goes, would link two like-minded liberal economies, provide economic benefits to both sides and add vigour to an already impressive commercial and strategic relationship. It would also provide the US potential leverage over the remaining members of the EU and Brussels, with whom the US has been conducting achingly slow negotiations for the past three years.

    “As the UK starts the process of withdrawing from the EU we stand ready to support our strong ally and friend,” said Kevin Brady, the Texan who chairs the influential House ways and means committee and is pushing the idea with Orrin Hatch, the veteran Utah senator and chairman of the Senate finance committee.

    “We have a special relationship, a very long tradition of working in close co-operation and a modern, updated ambitious trade agreement between the US and UK [that] will grow both economies,” he said.

    Such arguments are encouraging to those in the UK who campaigned for Brexit arguing that a liberated Britain would be able to negotiate better trade agreements, though it will take years of negotiations to test the thesis.

    Some preliminary conversations have already started. But any deal between the US and UK will probably take years to hatch. Mr Obama has just six months left in office so any meaningful trade talks between the US and UK would be the responsibility of the next administration, whether led by Mr Trump or his Democratic rival Hillary Clinton.

    There is a daunting tangle of uncertainties and complexities that has to be picked apart before talks can realistically begin.

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    U.S. Oil Workers Threaten To Expand Strike To California Port...An Orient Overseas Container Line (OOCL) container ship waits to unload cargo in this aerial photograph taken above the Port of Los Angeles in Los Angeles, California, U.S., on Wednesday, Feb. 18, 2015. United Steelworkers members who help run crude terminals at a California port are threatening to join a national oil workers' strike at U.S. refineries. Photographer: Patrick T. Fallon/Bloomberg

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    Under EU rules the UK is not even allowed to negotiate its own trade deals while it is a member. Then there is the question of what sort of trading relationship the government of prime minister Theresa May will reach with the EU, something that will define the terms of any US negotiations.

    Asked last week when he thought a trade deal with the UK might actually materialise Mr Brady demurred. “It is hard to know at this point because the [discussion over] the UK and the EU trading relationship is just beginning. In fact it hasn’t begun yet,” he said.

    Trade deals — and globalisation in general — are hardly in political fashion in the US this election year. On the stump both leading presidential candidates have spoken more about ripping up trade agreements than striking them.

    Mr Trump wants to erect a wall at the border with Mexico and impose punitive tariffs on China. Both he and Mrs Clinton have decried another far bigger and arguably more strategically important US trade agreement negotiated by Mr Obama, the 12-country Trans-Pacific Partnership, which most mainstream Republicans back.

    And yet the fact senior Republicans in Congress are still speaking about putative pacts in a year when their party’s candidate is railing against trade ought to provide some comfort to those who believe in the value of open economies.

    If nothing else it testifies to the fact that there are still important people in Washington thinking beyond the current political noise.


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