The case for a US-UK trade deal​

“Brexit or not, you’ll always be at the front of the business queue in Indiana”, they declared. “We stand with BAE systems, BP, Rolls Royce, Tate & Lyle and the other 50+ UK companies in Indiana”.

Thank you, governor. And congratulations, by the way.

That list of companies is in no sense unusual. Many U.S. states could come up with a similar roll-call, as could most British counties if it were the other way around. The United States is by far the largest investor in Britain, and vice versa. Every day, a million people in America clock in to work for British companies. Every day, slightly more than a million people in Britain turn up to work for American companies.

So far, though, the trade flows haven’t matched the investment flows. Why? Because, as long as Britain is in the EU, our trade policy is controlled by Brussels, not London.

Now, that can change. In his taster video about the first hundred days of his administration, President-elect Trump said he wanted “bilateral trade deals” instead of the two mammoth initiatives launched under the outgoing administration, namely the Trans-Atlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP).

Well, here’s a bilateral trade deal that would tie the largest and the fifth-largest economies on the planet together, raising GDP in both states with pretty much no downside to anyone.

I don’t share Trump’s antipathy to globalization. Protectionism was refuted by Frederic Bastiat’s theory of the seen and the unseen nearly two centuries ago. It may be true that, as a result of NAFTA, some low-skilled American jobs moved to Mexico, but many more high-skilled jobs were created in the United States.

The trouble is that the victims attribute their misfortune to NAFTA, whereas the beneficiaries attribute their good fortune to themselves.

As a politician, I can see the problem. Free trade brings dispersed gains but concentrated losses. It is only natural for some people to fret about more American jobs being lost to China.

In the case of Britain, though, even this notional objection doesn’t apply. Our wage levels are similar, and we are hardly in competition when it comes to what is left of heavy industry. Does anyone seriously imagine steel mills relocating from Dearborn, Mich., to Corby, Northamptonshire?

The United States and the United Kingdom form a natural market. It’s not just that we share a language. We also share the unwritten customs that facilitate deals: the same business etiquette, the same accounting systems, the same common law. It took less than five years from the War of Independence for trade to bounce back to its previous volume, and it has grown ever since.

Once Britain no longer has to worry about the protectionism of French filmmakers, Italian textile manufacturers and the rest, we should reach a comprehensive deal covering services as well as goods.

I spent last week in Washington and found no one, in either party, who opposed the idea of a bilateral trade deal. The challenge is keeping it short, sweet and simple. We need to avoid the corporatism and the producer-capture that were creeping in to both TTIP and the TPP.

How? By basing our deal around mutual recognition rather than common standards. If a drug is approved by your FDA, it should automatically be approved for sale in the U.K. If a trader can practice in the city of London, he should automatically be licensed to practice on Wall Street.

A commercial deal should have nothing to do with human rights or child labor or climate change. Important as those issues are, they are separate from the free exchange of products.

At a lunch with a senior Republican last week, I heard the most brilliant suggestion I’ve come across for months. Having listened to me expounding the case for a U.S.-U.K. deal, he said ruminatively, “Yeah. And when we’ve signed it, we tack on a clause saying that anyone else can join. Then we can just sit back and wait. We’ll never have to do another trade deal.” Amen.

Dan Hannan is a British Conservative MEP.