THE BLOG
22/03/2018 13:20 GMT | Updated 22/03/2018 13:20 GMT

The Truth About A 48-hour UK-US Trade Deal Post-Brexit

The first thing to recognise is that we are not playing with a very strong hand

NurPhoto via Getty Images

Trade agreements have a reputation for taking a long time to negotiate. When I say long, I’m talking years. So imagine my surprise last week when Nigel Farage stood up in the European Parliament and said that the UK could do a free trade agreement with the US in 48 hours post Brexit. Interestingly, Farage did not use the word negotiate. Instead he simply called for a deal. What he failed to mention is that such a “deal” would involve accepting everything demanded by the US and asking for nothing, or very little, in return. A deal of this nature would have consequences for almost every aspect of life in the UK. Since Farage is unwilling to give you the full picture, I will.

When discussing a future UK-US trade deal the first thing to recognise is that we are not playing with a very strong hand. This is by no means talking the UK down but is merely a recognition of the economic gulf between the UK and US. When it comes to trade negotiations size equals leverage and the US, with its 17 trillion dollar economy has an awful lot of leverage. In comparison the UK has an economy of around 2.6trillion dollars, a similar size to the state of California.

This is not a strong negotiating position at the very best of times. To make matters worse the UK currently has the lowest economic growth of any developed nation and is on the verge of severing ties with the EU, its largest economic partner. Mr Farage may talk a good game but at some point the chest beating has to stop and the negotiations have to start, and at that point cold hard economic facts win out over empty rhetoric.

A trade deal involves accepting each other’s products and in turn accepting a mutual recognition of production standards. This can either involve lifting each other up, and meeting at the higher level, or pulling each other down, and meeting at the lowest common denominator. The EU, as the single biggest economic block in the world and currently offering over 500 million potential new customers to American businesses, was unable to get America to meet their higher standards. Does anyone really think the US will do this for a much smaller trade deal with the UK?

The only alternative for a deal is to cave to every American demand and allow their lower standard produce into the UK. In order to compete, UK companies will have no choice but to follow suit and start producing UK goods to these lower standards. We would also have no choice over the number of goods that were imported so the US would be free to flood our markets, risking home grown jobs. UK businesses will also be placed at a severe disadvantage to American competitors because of lower workers’ rights and environmental standards in the US. Of the 8 global conventions setting International Labour Standards the US has signed only two and Mr Trump’s recent withdrawal from the Paris Climate agreement shows his disdain for environmental protection. furthermore, if we lower our standards we can’t then sell to the EU – our biggest market.

Last year Liam Fox refused the rule out American chlorinated chicken being allowed into the UK (it’s currently banned under EU rules) as part of a UK-US trade deal. In truth this is just the tip of the iceberg. In agriculture alone the UK would also have to accept hormone injected beef, genetically modified crops, and an array of additives, colourings and preservatives currently banned in the UK and EU but commonly used in the US.

If this wasn’t bad enough, the implications go much wider. The US has a very large private health care sector that has long eyed Europe’s rich, ageing population as a golden egg. The US would undoubtedly demand guarantees of “market access” to contracts within the NHS and wider public sector. Do we really want to see a back door to further privatisation of our NHS services? Such access to the NHS will surely be used as bait to entice the famously anti-trade Trump. Closer to home, when the Prime Minister was explicitly asked to rule out including the NHS in any future trade deal, her spokesperson answered with a disconcertingly bland “We do not yet have an existing position on a trade deal that is yet to be negotiated”.

Farage has shown a real enthusiasm and commitment to Trump’s “Make America Great Again” agenda. So much so, he seems willing to sell out the UK, and his own constituents, in order to make it happen. Just last week he was on American television telling the EU, including the UK, to “back down” in its response to Trump’s proposed steel tariffs, putting America and Trump ahead of UK steel industry jobs.

Throughout history human progress and development has been built on our ability to share knowledge, goods and ideas. When trade is done well it can create jobs, raise standards and lower costs. When trade is done badly its consequences can be truly devastating. Mr Farage rarely turns up to the European Parliament but must have seen enough of the TTIP negotiations to know a 48 hour trade deal with the US means lowering food standards, lowering environmental protections and workers’ rights, opening up our markets to chemicals, drugs, cosmetics and other products we currently deem unsafe, while simultaneously risking further privatisation of key public services and putting UK jobs at risk. He knows all this but the fact is, he simply does not care.