During this spring’s Brexit campaign, President Obama threatened to make the United Kingdom wait at the “back of the queue” for any future trade deals with the United States if the British people made the “unthinkable” decision to leave the European Union.
Now that Americans have made a shocking choice of their own, President-elect Trump should honor his promise to move Britain to the front of that same queue.
Indeed, he should immediately offer the U.K. a simple, bilateral free-trade deal with the United States. It would not only promote both countries’ interests — it would boost a wide range of President Trump’s other priorities, too.
First, a free-trade agreement between the U.S. and U.K. would foster trade and growth in both countries without subjecting either to the onerous external regulation and loss of democratic control that Britain has experienced in the European Union. Until now, the exclusive nature of the EU prevented Britain from establishing a free-trade pact with America, its most lucrative trading partner, to the detriment of tariff-paying businesses in both countries.
Nevertheless, under treaties governing EU membership, the U.K. cannot make free trade deals with non-EU partners. It must apply the growth-suppressing common EU external tariff, an average of 4.5 percent, to all imports. Once Britain legally extricates itself from the EU, that can change — and should. An agreement between the world’s largest and fifth-largest economies will create a huge free trade zone, benefiting businesses and spurring growth on both sides of the Atlantic.
Second, an agreement that focuses on eliminating tariffs, but not creating supranational oversight bodies, will protect both countries from the loss of sovereignty that British voters rejected with Brexit and that Mr. Trump has criticized. Such a simplified deal would require U.S. companies operating in (or exporting to) the U.K. to accept U.K. law, and U.K. companies operating in the U.S. to do the same. Since U.K. and U.S. law is so similar and both countries have so many lawyers versed in the commercial law of the other, international oversight would prove largely unnecessary. In a bilateral treaty, significant disputes or grievances can simply trigger provisions to renegotiate terms — or to accept arbitration in limited cases before mutually agreed tribunals.
A U.S.-U.K. deal would also pose no threat to the manufacturing industries of either country. Both Britain and America have educated, skilled (and relatively expensive) work forces. Neither has an oversupply of cheap labor that would incentivize the outsourcing of manufacturing jobs. Similarly, neither country has a history of currency manipulation or subsidizing exports, practices that Mr. Trump vigorously opposed during the campaign. Instead, both countries have typically honored commitments to trade fairly, even when trading partners have enacted mercantilist interventions on behalf of favored domestic industries. An Anglo-American agreement could also help Mr. Trump hedge against potential trade disruptions as he renegotiates existing deals with other nations.
Third, access to the vast American market would strengthen Britain’s hand in its coming negotiation with the EU. Britain hopes to establish a free trade agreement with the EU (and its remaining 27 countries) without accepting the EU’s current strictures. Some non-EU countries such as Norway and Switzerland currently have such arrangements, though with a provision that commits them to “free movement of peoples” — one the British will likely oppose. Since Britain purchases more exports from other EU countries, than they purchase from Britain, EU negotiators will have good reason to accede to British demands. Nevertheless, EU leaders may take a punitive approach in the negotiation despite potential harm to European businesses. That’s because Brexit represents an existential threat to what many EU leaders care about most, the political unification of Europe.
Meanwhile, a U.S. offer to Britain — one that does not require the U.K. to relinquish sovereignty, especially over immigration — will alleviate public and market fears of an economic slowdown should EU negotiators prove intransigent. That will help sustain public support in Britain for the referendum result, making an actual British exit more likely to occur and E.U. negotiators more likely to yield. (To date, the Conservative government of Theresa May has sought to honor the will of the British people as expressed in the June referendum. But with former Prime Minister Tony Blair and others already calling for either a second referendum or parliamentary vote, a final legally binding exit from the EU is by no means certain.)
A free trade offer will also help repair the U.S.-U.K. special relationship after eight years of intentional neglect and decades of slow erosion as the result of Britain’s gradual absorption into the EU. Strengthening the alliance with Britain will promote U.S. national security because it will free the U.K. to act decisively as a bilateral partner when the strategic interests of our two countries align — as they often have. The Obama years have witnessed a dramatic weakening in the strategic position of the United States and the West, as well as a diminution of U.S. military power. In addition to rebuilding military capacity, as Trump has promised, the United States now badly needs genuine allies with shared interests who have demonstrated the will and capability to stand alongside America in times of international crisis. More than any other ally, Great Britain has consistently demonstrated that proclivity and capability: Apart from France, only the U.K. among U.S. allies maintains an independent nuclear deterrent and the capacity to project significant naval power. Among NATO allies, only the U.K. keeps its treaty commitment to spend 2 percent of GDP on defense.
Finally, a U.S. trade initiative could begin a process of strategic rebalancing that fits with Trump’s foreign policy of placing American interests first. His policy suggests the need to strengthen alliances that advance U.S. security interests and to reassess those that don’t. By making an offer that will help the British economy (and negotiating position), Trump can bolster an alliance that benefits the United States (and anchors NATO).
Donald Trump has risen to power on a wave of anti-globalist sentiment fostered by populist rejection of what the president-elect has argued are the wrong kind of trade deals—wrong, in part, because they diminish U.S. national sovereignty. Since his election, he has also expressed a desire to reinvigorate the special relationship with Great Britain, even suggesting that he and Prime Minister Theresa May could collaborate as closely as Mrs. Thatcher and President Reagan did during the 1980s.
Offering the right kind of trade deal to the British — as they negotiate the return of their own national sovereignty — will decisively advance that goal.