UK has much to gain and little to fear from trade deal with US
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A new briefing from the Institute of Economic Affairs explains the benefits of an agreement, arguing that an early deal with the US would help post-Brexit Britain to set out its stall as a global champion of free trade, and help in the harder tasks that lie ahead in gaining deals with emerging economies such as China and India.
The benefits of a US-UK deal:
- The economic and financial links between the two countries are already close. For example, the UK exports more goods to the US than to any other country, and the US and the UK are each other’s largest source of foreign direct investment. The UK should therefore be able to conclude a good trade deal with the US sooner than the EU ever could.
- There are many areas – including aviation, defence and financial services – where trade could be liberalised to the benefits of both sides.
- If US firms are allowed more access to UK public sector contracts, the UK could reasonably expect equivalent access to the much larger US markets in return – meaning waivers from ‘Buy American’ provisions.
- The liberalisation of agricultural trade would result in more choice and lower prices for UK consumers for a wide range of foodstuffs, including many (such as rice and citrus fruits) which UK farmers do not even produce and where animal welfare is simply not an issue.
Fearmongering around a deal is overblown:
- A deal would not lead to ‘Americanisation’ of the NHS. A US-UK trade deal may mean that more of the NHS contracts that are currently awarded to private British or EU companies go, in future, to private US companies instead. But increased competition from a wider pool of potential suppliers should improve quality and drive down costs. Healthcare would remain universally available and free at the point of delivery – unless the UK government decides otherwise.
- Fears around investor-state dispute settlements are overblown. Critics argue ISDS would lead to an undermining of areas such as workers’ rights. But it is not obvious that free trade deals must include an ISDS mechanism, and it is hard to see why a well-designed system should penalise a government that is acting reasonably and within the rules. Moreover, the UK government is already subject to the jurisdiction of international courts – not least the ECJ.
- Food standards need not be undermined. It is wrong to assume that the most restrictive standards are necessarily the best. Rules should be science-based and proportionate, and the EU doesn’t always get the balance right. The UK government has though already made it clear that it will not allow a trade deal with the US to undermine food safety or animal welfare.
Commenting on the briefing, its author Julian Jessop, said:
“Not only would a US-UK trade deal further strengthen one of the UK’s closest relationships, it would help post-Brexit Britain to set out its stall as a global champion of free trade. As long as we escape the constraints of the EU’s customs union and restrictive regulations, the UK will be able to forge a trade deal with the US more quickly than the EU ever could. The opportunities to consumers are huge; it’s time to ignore the naysayers and recognise the path to prosperity Brexit provides.”
Notes to Editors:
For media enquiries please contact Stephanie Lis, Director of Communications: [email protected] or 0207 799 8909 or 07766 221 268
To download the briefing, click here.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems and seeks to provide analysis in order to improve the public understanding of economics.
The IEA is a registered educational charity and independent of all political parties.
Further IEA Reading: The IEA Brexit Prize: A Blueprint for Britain – Openness not Isolation ; Brexit Prize: Final shortlisted entries