Trade deals can be done quickly – and where better to start than with the USA?
Tony Abbott, the former Prime Minister of Australia, recently remarked that the reason trade deals take so long is because bureaucrats never want outcomes – because they’d be out of a job.
This refreshing view is borne out by a list of top UK civil servants from Lord O’Donnell to Sir Simon Fraser to Sir Ivan Rogers predicting Armageddon, catastrophe, infinite difficulty and never-ending negotiation – ten years at least, they say – for Britain to do what most countries in the world have managed with the EU – that is to negotiate a trade deal and a political agreement alongside.
The ingrained lack of belief in our own nation by many of those meant to serve it, that has got us so deep into the European Union, holds us back from delivering what other independent, sovereign nations deliver without losing any sleep. For example, the exciting drive for Commonwealth trade deals is derided by some unnamed officials as ‘Empire 2.0’, despite the Commonwealth being about to overtake the EU in terms of economic output and India alone growing at 7% per year. So this is not old-style Imperial Preference but new global reality, and we need positive, capable, can-do officials to deliver on it – and should rapidly clear out ‘Les Miserables’.
We have simply stopped thinking and acting like a free nation and become unthinking, servile agents of the European Union, with whole UK departments acting like centrally-directed EU subsidiaries.
Tony Abbott managed. He simply instructed his civil servants to deliver trade deals with the top three markets for Australia: Japan, China and South Korea, and to do this in one year. It was simple: do what you can in that time-frame. And it was done.
So, we have two years to do a trade deal and yes, my seven and a half years working on EU trade deals in the European Parliament does indicate that they are very technical and complex, but almost every nation state is a member of the World Trade Organisation (WTO) and follows the same global trade rules and deal elements – so we are hardly reinventing the wheel.
Britain also starts way ahead: we don’t have any tariffs and quotas with the EU. Our laws are in alignment, as we are an EU member. Yet Canada started with up to 16,500 goods tariffs to negotiate away – which does mean years of negotiating rounds watched closely by vested interests. Even then they only took three years actually negotiating; two years were unnecessarily added by EU human rights demands, and another two on investor state disputes.
Even the EU managed to negotiate the South Korean and Vietnam trade agreements in under three years. The EU’s pleasant Chief Negotiator on the US-EU deal TTIP is also (in his spare time?) the lead negotiator for the EU-India free trade agreement – don’t think the EU has battalions of trade negotiators.
Yes, once a trade deal is signed by the EU Council and voted through by the European Parliament, it does indeed require years actually to ratify – South Korea took up to five years. But what is not reported is that these deals are provisionally applied in the meantime, so they are actioned before being ratified by all 38 EU Parliamentary bodies (including Westminster).
So when people challenge the notion of doing a US-UK bilateral trade deal in just 180 days or less, they are not acknowledging how will finds a way. President Trump is serious about doing a fast trade deal with the UK, and the UK welcomes the chance to create our new (or restored) Global Britain with the Prime Minister and Liam Fox leading the charge.
If the terms of the deal are chosen carefully, then delivery – as Tony Abbott ably demonstrated – is entirely conceivable. Of course we would have to ‘leave some fruit on the tree’, and return later for a deeper, more comprehensive and ambitious deal, but much can be done quickly. My Washington contacts verify that a deal could be agreed in 180 days.
As my recent Leave Means Leave paper, Right to the Front of the Queue, recommends, this kind of fast deal could include scrapping tariffs on British agricultural goods of up to 40% and on exports of our cars: Honda is increasingly exporting to the USA, not just Jaguar Land Rover. Conversely, jeeps, jeans and Californian wine will be cheaper on the British high street. Under WTO guidelines, a Free Trade Agreement – which is actually licensed favouritism – is only allowable if 90% of goods tariffs are scrapped.
Meanwhile, services – already well embedded between our two nations – could be opened up.
A financial services clause can enable UK and US financial institutions and investors to benefit even more from fair, equal access to each other’s markets, and on the controversial Investor-State Dispute Settlement (ISDS) side, the deal would avoid the toxic ISDS issue that has caused the EU-US TTIP deal to collapse. Instead a new mechanism based on one third British adjudicators, one third US and one third independents could be set up.
There may also be Common Tax Reform – co-operation over where companies levy profits and where they sell products in order to address anomalies and to encourage the easier repatriation of profits to both jurisdictions. Meanwhile a State-Owned Enterprises rule would reassure that the UK and US have full freedom of choice in the way they provide public services – like the NHS – to their citizens.
Mode 4 temporary business visa entry would give legal certainty for trained workers, who temporarily enter the US or UK just for business purposes – a strict control, not free movement. There would be mutual recognition of professional qualifications too, a key part of the CETA deal, to allow the UK to attract more well-qualified US professionals to the UK, making up for some medical or other EU professionals who may choose to leave the UK.
Then there would be a ‘Rules of Origin’ agreement to set out what counts as having been made in the UK or made in the USA, particularly where the component supply chain is complex, and a separate bilateral aviation agreement to replace the incomplete US-EU ‘Open Skies’ transport access agreement.
In the ongoing longer term agreement, you might build on the initial deal with items such as: subsidies; competition policy; telecommunications; domestic regulation; Intellectual Property (IP); international maritime transport services; administrative and institutional provisions; and/or bilateral dialogues and co-operation.
Then, finally, there is a political aspect that might be considered. Just as Canada has a separate ‘Strategic Partnership Agreement’ (SPA) now with the EU, and Britain may well have with the EU, so an SPA could be be negotiated between the US and UK to cement many of the institutional arrangements such as a US-UK Joint Ministerial Committee to turn the UK into a ‘Transatlantic Bridge’ between the USA and the EU.
It is perhaps appropriate then that the first fast trade deal following Britain’s Declaration of Independence from the EU should be with the very nation that sought to declare independence from us.
April 9th, 2017: Brexit Central