“UK-US TRADE DEAL IS DONE” announced the Sunday Express in August 2019. Boris Johnson was at Biarritz for his first bilateral meeting with Donald Trump and the stage was set. “A historic trade agreement between Britain and the United States is set to be signed next month,” claimed the Tory tabloid.
Three years on, all prospects of a post-Brexit trade deal between Britain and the US are dead. Even the talks needed to begin the process will not begin “for years”, Liz Truss admitted as she flew into New York for the UN General Assembly. The Prime Minister told journalists: “There aren’t currently any negotiations taking place with the US and I don’t have an expectation that those are going to start in the short to medium term.”
Thus perished yet another of the grand illusions on which Brexit was sold to Britain’s voters.
The pre-Brexit narrative was clear, and shamelessly promoted by Johnson and his Tory MP allies in the European Research Group. Britain would swap regulatory alignment with Europe for alignment with the US. After Trump won the US presidential election Johnson rushed to Washington to inform the media: “We hear that we are first in line to do a great free trade deal with the United States. So, it’s going to be a very exciting year for both our countries.”
This made sense only if you were planning to destroy Britain’s trade relationship with the EU – an economy bigger than the US and with which 30 years of single market membership had left deep, organic connections.
The US is Britain’s biggest bilateral trade partner and, once outside the EU, the idea was that the UK could bandwagon on America’s legendary dynamism – in manufacturing, defence, digital technology and financial services. Yet to achieve it, Britain would have needed three things it never had with Johnson as prime minister. First, diplomatic credibility with Europe. Second, stability over Northern Ireland. Third, a receptive partner in the form of a Congressional majority and a sympathetic president.
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Johnson destroyed Britain’s diplomatic credibility in Europe, first by adopting a needlessly hard break with the EU over security, space collaboration and soft-power initiatives like Erasmus and Galileo. Second, by threatening to renege on the Northern Ireland Protocol of the Brexit agreement. Johnson, in short, sealed the fate of Britain’s trade relationship with Europe the moment he agreed to the protocol, which drew a customs border down the middle of the Irish Sea to avoid having one on the island of Ireland. His party, and its allied mass base in Ulster Unionism, would never accept this in the long term, so it became like an unexploded device: it doesn’t matter whether the clock on the fuse is ticking or paused, its existence is a constant source of worry and instability to all around it.
As for a willing interlocutor in Washington, that ship has sailed. Not just because Trump lost to Joe Biden but because, between the Brexit vote in 2016 and today, the world has begun substantially to deglobalise. The drivers here are beyond Britain’s control. First came the Covid-19 pandemic, which led to a scramble for markets, supply chains and spheres of trade influence in the recovery phase. Then came Russia’s attack on Ukraine, which has de facto broken the world into geopolitical power blocs.
Johnson’s infamous speech in Greenwich on 7 February 2020 spelled out the illusion on which his failure was based. Standing amid the regalia of the early British empire, which had prised open the markets of India and the Americas by cannon fire, he announced we were about to do it all again: “We have the opportunity, we have the newly recaptured powers, we know where we want to go, and that is out into the world… We are re-emerging after decades of hibernation as a campaigner for global free trade.”
It was a fundamental misreading of the historical conjuncture. In the 18th century Britain, for sure, rose to global dominance by imposing “free trade” on an unwilling world – and with it terms favourable to its own economic development. The US did the same in the 20th century. But that is no longer Washington’s game: not under Trump, not under Obama, not under Biden. We are now in a world of great power diplomacy, where both China and Russia have combined an ideological offensive in favour of totalitarian, fossil-fuelled development with the carve-up of the Global South into semi-colonial spheres of influence.
Free trade is a weapon only for superpowers whose armies have the power to impose it on their weakened partners and adversaries. We are in a game of increasingly protected continental trading blocs, separated information spheres and financial services constrained by sanctions and state support. It is a matter of mystery to me, and others, why the Conservative tradition in Britain has been unable to process this fact.
When I opposed Brexit in the referendum I did so not because I loved the European Union’s dedication to free-market capitalism but because I understood – even in 2016 – that only large, continental sized economies would matter in the 21st century; that Europe would achieve not just a deeper market but “technological sovereignty” of the kind that shuts Russian state media out of Twitter and imposes multi-billion dollar fines on US tech corporations.
In this new world, you have to be in – or a close peripheral partner to – an economy whose GDP is measured in tens of trillions of dollars and whose population amounts to hundreds of millions of people. Johnsonism was based on the delusion that Britain could play some kind of “libero” role, ducking and weaving between the global combatants to deliver rabbit punches to the kidneys of this or that great power, to our own tactical advantage. Like the man who dreamed it, the fantasy is gone.
Trade, investment, productivity, real wages and the value of our currency meanwhile, are all either stagnant or heading downwards.
With the US, in current circumstances, our trade is as healthy as it’s going to get. We export almost as many goods (by value) to them as they do to us. In services, too, the trade deficit is not spectacular. It is in agriculture and consumer products that the further opportunities lie – everything from craft beer to Adderall to the famous chlorinated chicken the Americans would like to dump into our supermarket freezers. Any responsible British politician would have to face the fact: there is no significant expansion in US-UK trade possible without British regulatory alignment that would lock us out of the EU market on our doorstep.
The consequence is that Britain should – at the earliest opportunity – do three things. First, announce a strategy of regulatory alignment with Europe. Second, renounce all possibility of unilaterally suspending parts of the Northern Ireland Protocol. Third, resume full and active collaboration with the EU as a defence, security, space, energy and intelligence partner.
As we will learn this week, Truss’s domestic economic strategy amounts to hit-and-hope. A big splurge of borrowing and tax cuts designed to produce a sugar rush in an economy already running on the “bad carbs” of property speculation and borrowing. Having cut themselves off from Europe, the Tories have no economic model to emulate or attach to.
With the admission that a US trade deal is off for the foreseeable future, any attempt to mould the UK economic model to that of the US is basically stuffed. We’re adrift without a destination or a steering wheel. That’s what Truss’s admission on the red-eye to Washington really means.
[See also: Liz Truss’s free-market experiment is a threat to economic stability]