Brexit

Johnson Gives Up Idea of US-UK Trade Deal

SK Ashby
Written by SK Ashby

When Boris Johnson sought the prime minister's office, he campaigned on finally delivering the Brexit that the British public voted for in 2016 and one of his supporting claims was that a bilateral trade deal with the United States could make up leaving the European customs union.

That was always a fantastical if not laughable claim given that there's very little demand for British goods in America. The United Kingdom was the United States' 7th largest trading partner as of 2020, but the U.S. has a surplus in both goods and services. Britain imports far more from America than they export to us and British exports are suffering the most now that they're subject to checks at the European customs border.

Even a perfect trade deal would not make up for leaving the European customs onion, but Boris Johnson is no longer pretending that a big deal is possible. In fact, Bloomberg reports that Johnson's government is considering joining the North American Free Trade Agreement* (NAFTA) instead.

[Hours] before Johnson’s meeting with Biden came a major strategy shift, which also risks coming to nothing. A person familiar with the matter said the U.K. is exploring joining an existing free-trade agreement between the U.S., Mexico and Canada, a recognition that the Biden administration won’t start talks on a bespoke deal any time soon. [...]

As well as the political embarrassment of not delivering on a key Brexit pledge, any U.K. effort to join the U.S.-Mexico-Canada Agreement could be interpreted as an effort by Downing Street to play catch-up, given the EU already has separate trade deals with Canada and Mexico.

Trade observers also noted that any attempt to join could take years of wrangling and put U.K. negotiators in a weak position, at the mercy of three political systems that might not see much incentive to welcome another member -- particularly one with an economy about the size of California’s.

Johnson's government recently applied to join the Trans-Pacific Partnership (TPP) that Trump abandoned and now his government may apply to join NAFTA.

It feels obvious to question why leaving the European Union (EU) was necessary only to join two other trading blocs with some of the same requirements imposed by the EU.

Being a member of the European Union means adhering to many other regulations and standards that other trade deals do not, of course, but the Brexit was pitched as an economic policy that would boost the British economy and deliver freedom, or whatever. The best economic policy at this point in time, however, would be rejoining the European Union.

*Trump may have renamed NAFTA to the United States Mexican Canada Agreement or USMCA, but it's still the same NAFTA