FINALLY, we had an admission from Liz Truss this week that a free trade deal with the US is not expected in the “short to medium term”.
The phrasing implies not for years.
This will, of course, come as no surprise at all to anyone with even a passing knowledge of current affairs.
However, given the belated acknowledgement of reality came from a Prime Minister who has been a most enthusiastic convert to the Tory hard Brexit, the proponents of which have long and rambunctiously flagged a US trade deal as a supposed flagship benefit of leaving the European Union, it was quite remarkable.
The UK Government’s sabre-rattling at the EU over the Northern Ireland protocol, to which the Tories agreed to facilitate their determination to leave the European single market and customs union come what may, has to put it mildly not appeared to impress US President Joe Biden. This is not surprising, given the Conservatives’ drive to scrap key parts of the arrangements through their Northern Ireland Protocol Bill is very worrying indeed.
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When the UK’s dismal hard Brexit was pushed through by the Boris Johnson administration, Donald Trump was of course still US president and he has at times been a most enthusiastic cheerleader for Brexit.
Even during Mr Trump’s period in power, however, the hapless Brexiters struggled to make any much progress on the road to their desired free trade deal with the US.
And it is crucial to bear in mind, even if they had been successful, the net economic benefits of a US trade deal projected by the Conservative Government itself are absolutely tiny relative to the losses that have and will be sustained as a result of Brexit.
Speaking ahead of her visit to the US this week, Ms Truss declared: “There aren’t currently any negotiations taking place with the US and I don’t have any expectation that those are going to start in the short to medium term.”
Labour peer and emeritus professor of accounting Lord Prem Sikka summed up the post-Brexit reality well when he declared on Twitter: “Brexit Folly: Trade deal with the US is unlikely in the ‘short to medium term’. So UK has no trade deal with the US or the EU, two of the largest trading nations/blocs. It can’t dictate terms. What is gained from Brexit? Tories had 6 yrs to prepare.”
Alastair Campbell, best known for his roles as former prime minister Tony Blair’s spokesman, press secretary, and director of communications and strategy, tweeted: “So no US trade deal. Another of the big Brexit lies nailed. And on they go pretending it is going to plan, going well, can be made to work and none of our economic problems have anything to do with it…They should never be allowed anywhere near power again.”
At the end of May, an announcement by the UK Government that it had signed a memorandum of understanding on trade development with the US state of Indiana had made the Conservative Brexiters, at that stage still led by Mr Johnson, look more than a little desperate.
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The Department for International Trade hailed the signing of the UK’s “first state-level trade and economic development memorandum of understanding”, with Indiana, as a “milestone in trade relations with the US”.
It seemed like a dramatic comedown for the Brexiters.
After all, when he was foreign secretary in 2017, Mr Johnson had declared: “We hear that we are first in line to do a great free trade deal with the United States.”
And, on May 27 this year, “milestone” certainly seemed like an over-the-top description, even from people clutching at straws. Then again, maybe it is the one-mile marker on what Ms Truss has signalled this week will be a very long road. The Conservative Government’s Brexit bandwagon is, given there are no negotiations on a free trade deal with the US and no prospect of these on the horizon, well and truly stalled on this long road. Of course, it might just be a dead end in any case.
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And while it is important to bear in mind the relatively tiny economic benefits of a US trade deal, which might not actually be worth it anyway given other downsides, the failure to even make any advance towards such an agreement is surely a humiliation for the Conservative Government. After all, the Tory Brexiters have all along seemed so desperate to seal such a deal, with this enthusiasm contrasting starkly with their hostility towards the world’s largest free trade bloc, the EU and broader single market, on which they decided for unfathomable reasons to turn their back.
The Conservative Government’s assessment of the free trade deal it has been trying to do with the US, published in March 2020, is that such an agreement would boost UK gross domestic product by around 0.07% or 0.16% on a 15-year horizon, under two different scenarios.
Forecasts in November 2018 from the Theresa May government showed Brexit would, with an average free trade deal with the EU, result in UK GDP in 15 years’ time being 4.9% lower than if the country had stayed in the bloc if there were no change to migration arrangements. Or 6.7% worse on the basis of zero net inflow of workers from European Economic Area countries.
The Johnson administration, following its hard Brexit, has clamped down dramatically on immigration to the UK from the EEA, to the huge detriment of businesses, the economy and society.
The Australia and New Zealand free trade deals struck by the Tory Brexiters also pale into utter insignificance relative to the huge losses from the wrenching of the UK out of the EU, which we should remember was done against the will of the electorate in Scotland and other parts of the UK such as London.
And just to emphasise, while a US trade deal would not have amounted to much anyway, that does not mean the Brexiters’ failure to realise their pipe dream is unimportant.
Their failure on this front is another shocking demonstration of the gulf between the fantasy they have so shamelessly peddled and the reality of the situation, in the run-up to the Brexit vote and in its aftermath.
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