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Brexit Is an Opportunity for a Genuinely Liberal US‑UK Free Trade Deal

September 27, 2018 in Economics

By Daniel J. Ikenson

Daniel J. Ikenson

With six months and counting before the UK-EU divorce becomes
official, Britons understandably are frustrated by the absence of
post-Brexit clarity. Genuine concern, lingering misgivings about
the referendum, and a series of government missteps have invited
justified criticism, but also heaps of hyperbole and fear-mongering
from politicians and opinion leaders across the ideological
spectrum.

Obscured by grandstanding is the fact that a Brexit agreement
that preserves structural integration where it is mutually
beneficial and restores Westminster’s autonomy to negotiate
free trade deals is both desirable and attainable.

Extricating the UK from the single market and customs union will
restore national sovereignty, improve fiscal accountability, and
ensure flexibility to decide laws and regulations properly suited
to British concerns. But, of course, ceding the privileges of EU
membership won’t be costless.

British policymakers must ensure that costs of withdrawal are
minimised or, at least, outweighed by the benefits. That is why a
comprehensive free trade agreement with the United States should be
among the government’s top priorities. And that is why any
Brexit agreement that attenuates Britain’s capacity to
negotiate trade deals would leave the UK worse off.

The timing for launching negotiations with the US could hardly
be better. Over the next few months, the Trump administration is
likely to conclude renegotiations of trade deals with Korea,
Canada, and Mexico. It is likely to shift focus to new, bilateral
free trade agreements in the new year. The US ambassador to Britain
recently noted that President Trump has a “robust
appetite” for a bilateral trade deal, which puts the launch
of negotiations in late March 2019 very much within the realm of
possibilities.

The US and UK are natural candidates for a state-of-the-art,
comprehensive trade agreement. British and US companies account for
nearly $1.3 trillion of direct investment and employ 2.6 million
workers in each other’s economies.

Both countries are deeply rooted in the institutions of free
market capitalism and the rule of law. Negotiators could agree on
principle to a deal that would create greater prosperity through
novel, transparent rules that eliminate costly barriers to trade
across all sectors, stimulate innovation, encourage competition,
and attract the interests of reform-minded governments around the
world.

Indeed, a proposal offering the text of such an agreement
already exists — the Initiative for Free Trade in London and
the Cato Institute in Washington have released a paper outlining
the ideal US-UK free trade agreement.

The paper, which is the fruit of collaboration among policy
experts representing 11 think tanks in both countries, calls for
elimination of all barriers to trade in goods, services, government
procurement, and investment. It opens financial services in both
countries to the full array of competition. It permits free
movement …read more

Source: OP-EDS

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