A trade deal with America is within our grasp – but will Labour squander the opportunity?
On Wednesday, at my first Prime Minister’s Questions just hours after Donald Trump’s election victory, I challenged Keir Starmer to get moving on a UK-US Free Trade Deal. If President Trump does pursue a new protectionist tariff regime it would be terrible news for the UK. Only a Free Trade Agreement will protect us.
It shouldn’t be too much of a challenge for Labour. In 2020, towards the end of President Trump’s first term in office, the Conservative government worked with his administration to draw-up a landmark deal. Joe Biden scrapped it, deciding his White House wouldn’t sign trade agreements with any nation. So our deal got left on a shelf, ready to be dusted off if the opportunity arose.
The return of President Trump is that golden opportunity. The onus is now on the Labour Government to put aside their embarrassing student politics diplomacy, which has already shot Britain in the foot on Israel and the Chagos Islands, and go full steam ahead to secure a deal that will enrich the people and businesses of the UK.
A lot has changed since we began trade negotiations with America in 2019. A new axis of evil is slowly but surely drawing closer together. Instability in the Middle East and war with Russia in Europe has left us exposed to energy shocks and heightened fears of terrorism. Global inflationary pressures mean we can no longer rely on low borrowing costs.
Around the world, trade hostility is heating up and an era of protectionism is looming over the horizon. As Business and Trade Secretary I was able to buck this trend by securing Britain’s entry into the Trans-Pacific Partnership – our biggest post-Brexit trade deal, aligning us with the fastest growing economies in the World. But a US trade deal is the real prize.
The fundamentals of why we need a trade deal, have not changed in the past five years. America is our largest trading partner and closest ally. Ever since Winston Churchill coined the “special relationship”, and despite repeated changes of government and party in the White House and Downing Street, America has remained the UK’s most important partner on the world stage.
As President Biden was opposed to trade deals, I made building closer economic links with the US states a priority and signed state-level agreements with Texas, Florida, Indiana, North and South Carolina, Oklahoma, Utah and Washington. These deals deepened cooperation between the US and UK, offering new opportunities and bigger markets for British companies. And, particularly in the case of the landmark Florida and Texas agreements, with economies bigger than most European countries! The foundations to build on are there, but I worry Labour is not interested in anything except the EU.
A US-UK FTA is one of the biggest Brexit prizes. The opportunities for collaboration in artificial intelligence, global supply chains, energy security, and financial services, among other issues, are bottomless and boundless. Every single part of the UK could benefit from the Government prioritising this deal, delivering improved access for businesses, more investment, better jobs and higher wages. It could be Starmer’s silver bullet to deliver the economic growth he claims to want, even if the recent Budget suggests otherwise.
Although President Trump talks often about “America First”, in 2019 his historic and familial links to the UK, the obvious economic benefits and compelling strategic advantages were enough to convince him that a deal was in both countries’ interests. This time around, I hope the President would see that an FTA with Britain would send strong signals to France and Germany that positive engagement with his administration could yield benefits, and that it could further his agenda with respect to European powers.
Fundamentally though, it goes deeper than the direct benefits of this particular deal. We are each other’s largest foreign direct investor, supporting almost four million jobs across the Atlantic. We have the world’s strongest bilateral defence and security partnership. And our diplomatic interests are in lock step. We must not be held back by Labour’s barely concealed contempt for, and juvenile depictions of, President Trump.
If trade barriers go up without any mitigations in place, Britain will be economically, politically and diplomatically kneecapped. The negative impact on growth, investment and productivity would be profound.
Starmer must press ahead with a trade deal while we have the impetus. If he dithers and delays, as is usually his style, the opportunity will pass us by. Picking up our ready-made deal and making a concerted effort to get it signed would finally prove that Starmer is willing to do as he’s said, and put country before party. Anything less would be yet another betrayal of the British people’s trust.
Rt Hon Kemi Badenoch MP is the leader of the Conservative Party