Labour may find a trade deal with Trump easier than getting anything from the EU

Sir Keir Starmer may wish to hug Europe and thrash out closer post-Brexit ties: he will instead run into the same problems faced by four Tory prime ministers trying to deal with a rigid neo-imperial system.

You are either in the legal structure of the EU, in which case you are better off being a full member with voting rights; or you are out of it and on the wrong side of an ideological iron curtain. There is no halfway house. The epithet of cherry-picking is hurled as soon as you ask for any improvements.

Labour may find it easier to deal with America, and perhaps even with a Trump II White House. History has seen odder bedfellows.

Project 2025, the Republican blueprint for a second Trump presidency, is best known for pushing a Right-wing Gramscian march through the US institutions. It also contains this extraordinary nugget: “Trade with the post-Brexit UK needs urgent development before London slips back into the orbit of the EU.”

David Lammy, the shadow foreign secretary, and a group of top Labour figures got on marvellously with Republican leaders on a trip to Washington in May. They even had dinner at the Heritage Foundation, Trump’s policy brain trust and authors of Project 2025.

The Harvard-educated Mr Lammy has refined his doctrine of “progressive realism”. You work with the world as it is. He has also polished his diplomacy, describing Donald Trump as “misunderstood” – not the “woman-hating, neo-Nazi-sympathising sociopath” of yesteryear.

The Heritage read-out of that dinner was that both sides gushed enthusiasm for a US-UK trade deal and that Labour talked of joining the wider North American free trade pact (USMCA).

“The big prize for Brexit has always been to get a trade deal with America, because it is the only way to offset free trade losses with the EU. The fact that it hasn’t happened under the Tories is a big embarrassment,” said one leading trade official.

“If Labour can pull it off, good for them. But once they get into the nitty-gritty, they are going to have to deal with chlorinated chickens, the ‘NHS for sale’ and all that stuff. How will they sell that to their own internal Left?” he said.

“I’m not sure that Labour is going to have any more luck negotiating with Washington than the current mob, whoever is in the White House,” he said.

Labour is of course angling for closer ties with the EU as well, starting with a deeper Anglo-German defence pact. This has promise. Sir Keir Starmer is a kindred spirit of Chancellor Olaf Scholz, and a shoulder to cry on as France goes mad.

“Germany is desperately looking for friends. The National Rally is a Germanophobic party, and [Jean-Luc] Mélenchon on the Left has a history of anti-German outbursts,” said Charles Grant, head of the Centre for European Reform.

“But if you go behind the door of the EU and try to do bilateral deals, it always backfires. The Commission is too powerful to ignore,” he said.

Labour wants to start with the “easy win” of closer EU defence ties, hoping that this opens the way for better trade. There is a giant obstacle. Defence, too, is becoming a theological no-go zone.

Sir Jonathan Faull, a former director-general at the Commission and now at the Brunswick Group, said the EU is creating a new post of defence commissioner, buttressed by an ecosystem of industrial and defence procurement that is protectionist in character and is tied to the EU’s law-making machinery.

“Defence and security cooperation sounds easy and is necessary, but it brings in single market issues: the Commission and the European Court of Justice – things that the Brits don’t want,” he said.

“The rise of the protectionist Right and Left in Europe makes it even more difficult to be a ‘third country’. Is the UK inside the tent, or is it outside? In a way, Brexit hasn’t really started: the real dilemmas are yet to come as we diverge,” he added.

With a bit of give and take, Labour can hope for minor tweaks on vet controls, chemicals, rules of origin, product conformity, etc. One of the untold stories of Brexit is the trade damage to Germany as a result of barriers imposed by the EU itself.

“If you want to intensify your trade relationship with the EU – call us!” said Christian Lindner, German finance minister, last year, complaining about pointless obstacles that hurt both sides. Germany has lost export share to rivals in the UK, once its most profitable market for car sales. This has been an unforced error at a time when other global shocks are ravaging German industry.

Ultimately, Labour will have to lean either towards the US or towards the EU. It cannot straddle both. “The more they ‘dynamically align’ with EU regulations, the more difficult it will be to do trade deals with others. You have to have your own regulatory authority,” said Shanker Singham from the trade consultancy Competere.

Washington wants Britain on side over China, tech regulation, pharmacy patents and data policy, all of which clash with Europe’s regime. Labour seems willing to oblige, just as Sir Tony Blair did when push came to shove. Sir Keir has already delayed recognition of a Palestinian state for fear of deviating from the US script.

It is an article of faith in Europe and in the UK’s pro-Brussels media that Britain will eventually “see the light” and accept the imperative of the single market. This is based on a caricature portrait of the British economy. The hard data show that a) accumulated GDP growth since mid-2016 has matched the eurozone big four; b) that unemployment is lower than in Germany or France; c) that service exports are booming; and d) that goods exports are doing OK once you adjust for the Rotterdam Effect.

From my vantage point covering the global economy, the EU looks tired, dated, and increasingly marginal. Furthermore, there are rising costs and legal barriers to rejoining any part of the EU’s commercial system. Labour wants to stay in the Pacific trade pact (CPTPP), the world’s biggest and fastest-growing free trade zone. That alone rules out single market realignment. A trade deal with the US would clinch the matter.

The EU is a low-growth bloc. It accounts for just 13pc of global GDP and is losing a further percentage point every three years. The gravitational pull is diminishing. Labour may not say it yet but early actions suggest that it is already shaking off the European spell. We may get “global Britain” after all.