New Times,
New Thinking.

The government is too timid to strike a proper US-UK trade deal

The potential electoral cost of a policy that would offend both farmers and urban residents is likely to be deemed too great. 

By Stephen Bush

One of the difficult things about politics is that you do, eventually, have to upset somebody. Everyone likes good public services and growing numbers of people are happy for taxes to go up to pay for them – but at some point you have to put taxes up and at least some of the people paying higher taxes won’t thank you. (That council tax, the only tax that has gone up significantly in the past five years, is consistently the most unpopular tax is probably in part a reflection of that.)

The “big idea” as far as “seizing the benefits of Brexit” goes is trade deals. The theory is that free of the demands of the European Union, which has to reconcile the sometimes conflicting aims, economies and electorates of 27 member states in order to strike trade deals, the United Kingdom will be able to strike many more trade deals of greater depth and complexity, allowing it to grow and trade at far greater rates than most economists predict after Brexit.

It could work. The benefit of negotiating trade deals as a bloc of countries is that the bigger your market, the more valuable access is to it. This allows bigger blocs and countries to be, for lack of a better word, more “unreasonable” in their demands. The United States, the EU and China all do this in different ways. Other nations have started to form their own agreements – like the African Free Trade Agreement or Mercosur – in part to combat this.

There is an advantage to be had in international trade talks in being a mid-sized country that accepts and leans in to being a smaller country, broadly by allowing most of the bigger nations it negotiates with to set most of the terms.

The problem in the case of the United States is that “an ambitious and comprehensive” trade deal, to use the words preferred in the British government’s own objectives for the coming trade talks, published today, will involve removing non-tariff barriers to US-UK trade in agri-food and in services, including those provided by the state. Or, in words you can fit on a bumper sticker: “putting the NHS up for sale and putting chlorine-washed chicken on British dinner tables”.

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To take the latter case, I’ve long been of the view that, broadly, the British public’s preoccupation with animal welfare and general high sensitivity around food means that the political cost of doing a deep and extensive (or “ambitious and comprehensive” if you prefer) trade deal will never be struck. The Labour government of Tony Blair, at the peak of its powers, ended up retreating over genetically modified food and I think a similar coalition will see off the Conservative Party here. While the majority is decent-sized, it is not impregnable and a policy that will offend both farmers and people in urban areas (whose fears will be stoked by the farming lobby) seems almost perfectly designed to trigger a defeat.

So I think the government is probably right not to bother on that front, but kicking off its trade negotiations pledging to uphold “the UK’s high levels of public, animal, and plant health, including food safety” while also enhancing “access for UK agri-food goods to the US market by seeking commitments to improve the timeliness and transparency of US approval processes for UK goods” basically looks like starting the talks with a high-profile promise that a) can’t be exited from and b) prevents an “ambitious and comprehensive” agreement being reached as far as agriculture goes.

But the bigger prize for both sizes is services. Services make up the bulk of the British economy and that proportion is likely to grow – so prioritising services makes sense in almost any British trade deal, but particularly ones with other advanced economies, like the NHS.

There are several provisions about the NHS in a US-UK trade deal, all of them relating to things the UK will not do. Some make a lot of sense, like keeping NHS drugs prices out of any trade deal or keeping the running of any British public service outside the grasp of any trade agreement’s arbitration panel. But one in particular feels both needless and cowardly:

“The government has been clear that when we are negotiating trade agreements, the National Health Service (NHS) will not be on the table. The services the NHS provides will not be on the table. The NHS is not, and never will be, for sale to the private sector, whether overseas or domestic.”

The thing is, right now in 2020, according to the health consultancy Candesic around one NHS bed in every eight is provided by a private American company. One hospital bed in every four in the Greater Manchester area is provided by a private American company. The majority of patients suffering an addiction-related disease in London are using services provided by private companies.

For some, this represents a National Health Service that is already dangerously close to ceasing to exist in a recognisable form. But for others, including the government, all that matters is that the NHS is free at point of use – it doesn’t matter if the provision is private as long as there is no upfront cost to the patient.

Given that the government believes that, why not argue for it? The theory is simple: that to make an argument to the British electorate based on that essential truth about the present-day NHS is to court death, electorally speaking.

Are they right? Who knows? But that the government, at the start of a multi-year process, with a big majority, can’t bring itself to even argue for the status quo in the NHS is one reason to be extremely sceptical that the UK will sign a comprehensive and ambitious trade deal with the US or anything like it.

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