You can understand the desperation of Theresa May, the British prime minister. In just under two years’ time, May and her country (assuming she is still in the job) will face a big black hole in their trading accounts, when they leave the EU. The race is on to fill that gap.
More than 40 percent of UK exports go to the EU, and Britain imports over 50 percent of its total from Europe. A hard Brexit — what the British are now calling a “no cake” break with Europe — would threaten swingeing tariffs. Trade would not disappear completely but would be severely impaired.
Hence the increasingly frantic search to find global trading partners willing to do trade deals with post-Brexit Britain. The UK’s international trade minister Liam Fox — a frequent visitor to the Arabian Gulf — has been clocking up the air miles in spectacular fashion in his search for new trading partners willing to share in the UK’s new globalist world view.
It is going to be a difficult experience if recent events are anything to go by. At the Group of 20 (G-20) meeting last week, May was able to parade a potential trade deal with the US as the new lifeline, after US president Donald Trump said a “very powerful” deal could be reached “very, very quickly” after Britain leaves the EU in 2019.
But almost as soon as the obligatory handshake was made, May’s own ministers seemed to dash her hopes, admitting that a US-UK deal would not be enough to make up the difference. The figures look unarguable: UK trade with the US is about a quarter of that with the EU. Even the most favorable deal could not make that up quickly.
You have to concede that a deal with the Trump administration would be a good start and a real confidence-booster to May and the Brexit camp. If it were followed by similar deals with India, China and the Middle East, you could see a viable post-Brexit strategy beginning to take shape.
But as soon as you look at the nitty-gritty, it all begins to cloud over. For one thing, the US president is in no position to promise a trade deal. The US’ highly professional cadre of trade professionals will be responsible for delivering it.
Trump’s track record of delivering things “very, very quickly” — from travel bans on Muslim-majority countries to Obamacare reform — does not inspire confidence that he could push a deal through fast enough to suit Britain’s timetable.
Prime Minister Theresa May could find that the US president’s diplomatic handshake means little in the hard-nosed world of commerce.
Even if he did, would it be the kind of deal Britain could embrace? The president’s “America First” stance would suggest the US would hold out for the most favorable terms for US industry, and the tough US trade officials would certainly not be of a mind to do May any great favors.
Why would the US be prepared to pay for Britain’s Brexit folly by offering a deal that goes against its own interests? It would be difficult to explain to the man in Little Rock, Arkansas, that the man in Leeds, West Yorkshire, needs a helping hand. May could find that Trump’s diplomatic handshake means little in the hard-nosed world of commerce.
In three areas, in particular, you can imagine the negotiations would get very tough indeed. Finance is the key. May wants to ensure London does not lose its position as the pre-eminent banking center of Europe, but at the same time wants to retain access to the global financial capital, New York.
It is very uncertain whether London would want to bend to the new regulation that a deal with Wall Street would demand, or what effect this would have on London’s efforts to retain access to European financial markets. The City could end up falling between two stools.
Agriculture is the other big stumbling block. The US market could be very attractive for British exporters, but would UK importers and regulators be willing to allow US produce in return, especially genetically modified products? You mess with the Englishman’s meat and two veg at your peril.
But you mess with the UK National Health Service at even greater risk. There would be huge domestic opposition to any trade deal that opened the embattled medical system up to US privatization. That would be a guaranteed election-loser for any British politician.
So a trans-Atlantic trade deal is not likely in the short timeframe Trump suggests and May wants. In any case, it could not be implemented until Britain actually leaves the EU in 2019.
In the meantime, Britain is probably better off concentrating on getting the best possible trade deal it can out of the EU, and looking to potential partners like China and the Gulf states, where things move more quickly, rather than being distracted by Trump’s illusory promises.
• Frank Kane is an award-winning business journalist based in Dubai. He can be reached on Twitter @frankkanedubai