The US and UK are the world’s two pre-eminent services exporters and the flow of knowledge and deals between them is similarly immense, as is the healthy competition between firms and financial centres. Because of this, a surprisingly large number of politicians and commentators seem to believe that, rather than pursuing quick wins that tackle some of the practical issues faced in UK-US trade, a comprehensive FTA with the US should be an early goal for post-Brexit Britain.
Britain and the United States will kick off informal talks on a trade deal when U.K. officials visit Washington Monday.
President Trump has said that he expects a “very big” and “very powerful” deal that’s good for both countries to be reached “very, very quickly.”
Such an agreement would be a huge boon to Britain. It has staked the future of its economy on the idea that leaving the European Union will unleash its trading potential because it will be easier to do bilateral deals than wait for the 27 other countries in the bloc to agree.
Mergers and acquisitions are positive and healthy, particularly where they leave long-lasting economic value for the communities they affect; another consequence of a US-UK agreement could be predatory purchasing of UK firms by bigger, cash-rich US competitors. We have seen cases where UK firms were hollowed out and asset-stripped by overseas buyers. Indeed, in more limited circumstances, UK firms have done the same in the US and other markets. But the truth is that under a US-UK deal, this less-welcome variant of mergers and acquisitions activity would probably be to the UK’s long-term disadvantage.
Despite Trump’s public show of support for a comprehensive US-UK deal, British ministers should focus on the more practical aspects of our trading relationship – and avoid diving straight into a complex deal.