“We have been working on a trade deal which will be a very, very big deal a very powerful deal, great for both countries and I think we will have that done very, very quickly” - President Trump, July 2017
There is great political will in both the US and the UK to complete a post-Brexit trade deal. Although formal negotiations can’t legally begin until after March 2019, talks have already begun in the form of a trade and investment dialogue, whose working group first met in July 2017. Preparatory work on a potential US-UK trade deal is also being carried out in both legislatures.
So what should this US-UK trade agreement look like? The ideal free trade agreement would include provisions that foreclose governments’ access to discriminatory protectionism and obligate the parties to refrain from backsliding. It would achieve maximum market barrier reduction and enable the fullest expressions of market integration, while simultaneously preserving national sovereignty to legislate and regulate in ways that do not discriminate against imported goods, services, or capital.
Crucially the ideal free trade agreement would focus on mutual recognition of standards and qualifications for goods and occupations. Some estimates suggested that of the economic gains to be made through TTIP, 90% would come from dealing with regulatory differences. There is one trade deal in existence today that enshrines mutual recognition to this degree: ANZCERTA between Australia and New Zealand, which has been recognised by the WTO as a model free trade agreement.
An agreement of this kind would be much less complex and quicker to negotiate than the usual deals that include multiple carve-outs for the protection of certain industries. And, unlike the Australia-New Zealand deal, whose benefits have largely been concentrated in those two countries, a deal between the world’s largest and sixth-largest economies would have worldwide impact. In time, like-minded countries would surely want to join. This kind of “coalition of the willing” would have an enormous positive impact on the global trading system.
IFT has teamed up with the Cato Institute’s Trade Policy Unit who produced an initial draft of this “ideal” US-UK FTA. In a unique exercise that brought together 11 major conservative and free market think-tanks on both sides of the Atlantic, this paper then became the subject of two rounds of simulated trade talks (one in London, one in Washington DC) between delegates from the participating think-tanks.
We believe that the paper serves several related purposes. First, it is to persuade policymakers and the public in both countries that a comprehensive bilateral trade and investment agreement that removes barriers—at and behind-the-border—to trade across all sectors of both economies without exception is in their best interests. Second, it is to provide an intellectual foundation for the terms of what free-traders would consider the ideal agreement. Third, and ultimately, it is to provide a blueprint for policymakers in the form of official legal provisions and textual summaries of an agreement that would be the most liberalizing FTA in the world.
We strongly encourage you to read the paper and consider its recommendations a roadmap for the future of the U.S.-U.K. economic relationship.
[To be made available at 14:30 BST, on Tuesday September 18th]
Participating think-tanks: Adam Smith Institute (UK), American Enterprise Institute (US), Centre for Policy Studies (UK), Competitive Enterprise Institute (US), Institute of Economic Affairs (UK), Manhattan Institute (US), Mercatus Centre (US), Politeia (UK), The Heritage Foundation (US).