Last week saw the UK state visit of US President Donald Trump; coming at a critical moment of political and economic instability in the UK, many were watching for potential news of a US/UK trade deal that could strengthen the UK’s position in the event of a No Deal or Hard Brexit.
According to Trump, US and UK have the “greatest alliance the world has ever known” and in a news conference previously with Theresa May, promised a “phenomenal” trade deal after the UK leaves the European Union, but added that “everything is on the table” – including the National Health Service.
The President has been firm in his support of Brexit, stating it “will happen and it probably should happen” because the UK is “a great, great country and it wants its own identity”. But what could a post-Brexit trade deal mean for both the US and UK, and will it bring the stability and wealth that Trump and May’s Conservative government hope for? While the picture remains unclear, we outline the baseline points of the US-UK trade relationship, and potential barriers or impacts to the possibility of a post-Brexit deal.
US-UK trade relationship
The relationship between the US and UK remains strong, particularly in respect of trade – in 2018, UK was America’s 5th largest export market and its top foreign investor, and the US was the UK’s top trading partner.
However, Brexit will undeniably impact the existing functionality of the relationship. The uncertainty around the format of Brexit contributes to a fairly unclear picture of what US/UK trade and business will look like; most forms of Brexit will lead to procedural changes for the import/export of goods and the UK’s position as a gateway to Europe for US businesses. Terrence Guay, a clinical professor of international business Pennsylvania State University, told CBS MoneyWatch. “To the extent that the U.K.’s economy does well, with or without Brexit, that’s going to have an impact on Americans who have jobs and industries that export to the U.K.”
Influence on and access to the EU
Another key impact is America’s access to and influence upon the EU. Guay says “Through the UK, the US has a strong voice in shaping EU policy, but with Brexit this will be jeopardised. The political side of this is that in Europe, the U.K. is America’s greatest friend and has been for decades. If we’ve lost that important ally there, then the U.S. has less influence in what the EU does.” Without its insider position in the EU, will the UK’s standing with the US be weakened from ally, informant and confidant to that of a reliant younger sibling?
Movement of US-UK citizens
There has been talk of granting free movement to US citizens into the UK to drive the trade deal. However, with tightened immigration controls one of the major focuses of Trump’s presidency, a reciprocal offer will not be easy to secure. A proposed policy in a 2018 report from a pro-free market thinktank suggested US-UK immigration could be conditional on a job offer and workers would be given a deadline to return if they were made redundant.
Chlorine-washed chicken and the NHS: barriers to the deal
The NHS is one of the most potentially damaging threats to a UK-US trade deal. By and large, the UK electorate is extremely supportive of the NHS and any government seen to be putting the healthcare system up-for-sale will likely see damaging losses in elections. On the other hand, the dissolution of the NHS would be beneficial to American pharmaceutical and healthcare providers as its contracts would be accessible to US companies. Trump himself has staunchly opposed the NHS’s negotiation of reduced prices for medication from pharmaceutical companies, describing it as “freeloading” and driving up prices for the US.
Another big barrier is agricultural and consumer standards, which differ greatly between the US and UK. The UK bans imports of genetically-modified (GM) foodstuffs, chlorine-washed chicken and growth-hormone treated meat – any concessions granted to the US as a result of the deal are likely to be hotly contested by environmental/animal welfare and consumer standards lobby groups as well as the British public, who placed the environment as their third greatest concern ahead of crime and the economy, according to YouGov tracking data last week.
While the outcome of Brexit and the US-UK deal is yet to be determined, we’ll be keeping up-to-date with any developments as they happen. If your organisation has dealings in the US, UK and/or the EU and need advice on your upcoming international strategy, get in touch with a Mauve specialist via the contact form.