The White House has successfully scratched off Japan, China, Canada, and Mexico from its trade agreement to-do list. The next country on its notepad is the United Kingdom. At first glance, it would appear to be an easy deal to make, a slam-dunk that can be established within a matter of days. Unfortunately, what may have seemed like a benign situation has suddenly turned into an episode simultaneously involving a rebellious prime minister fending off an interventionist country and a bitter ex-girlfriend who cannot let it go and move on. This is what happens when central planners oversee making trade pacts.
Mnuchin on Trade Deals
After more than three years of British lawmakers playing a game of will-they-or-won't-they, it looks like the U.K. is finally leaping off the sinking ship, also known as the European Union. Prime Minister Boris Johnson is set to deliver on his Brexit promise that will put an end to the handwringing by the Remain side and allow Westminster to move onto other issues affecting Britons, including trade.
Treasury Secretary Steven Mnuchin recently met with Sajid Javid, the Chancellor of the Exchequer. Mnuchin confirmed that Washington was “prepared to dedicate a lot of resources” to putting together a trade pact sometime this year, adding that President Donald Trump has placed the U.K. “at the top of the list” for deals in 2020.
“We've said that our goal - your goal - is trying to get both of these trade agreements done this year. And I think from a US standpoint we are prepared to dedicate a lot of resources,” Mnuchin said. “If the UK and US have very similar economies with a big focus on services, and I think this will be a very important relationship."
Mnuchin has already expressed some disagreements, including a new digital penalty set to go into effect in April.
The British government will implement a 2% tax on revenues generated by search engines, social networks, and digital marketplaces. Javid has clarified that the levy is only temporary until a global agreement is instituted that explains how to regulate online juggernauts. However, Mnuchin noted that the new tax is “discriminatory,” “not appropriate,” and contains “violations to our tax treaties.” He also threatened to slap new tariffs on British carmakers as a means to encourage England to ditch the tax.
The other issue is Huawei. The U.K. government announced that Huawei had been approved to work on parts of its 5G infrastructure. It did clarify that restrictions have been established to limit possible national security threats. The Department of Culture, Media, and Sport (DCMS) confirmed that businesses considered “high risk” would be prohibited from performing 5G network tasks in sensitive areas, including military bases and nuclear power plants.
This decision will trigger some displeasure in the U.S. as the administration recently warned Britain that it “would be madness” to utilize Huawei technology in developing the 5G network. Senator Lindsey Graham (R-SC) tweeted that the decision “could greatly complicate a US-UK free trade agreement,” and former House Speaker Newt Gingrich called it “a major defeat for the United States.”
Mark Angelides, Managing Editor of Liberty Nation and a British treasure, described the move as a “terrible idea.”
“Not so much because I think China will use the platforms to spy (which they will), not because it will damage our security relationships with other major players (which it has), but because I'm shocked that Britain doesn’t have the skills or resources to do this itself,” he said.
See EU Later
Like a bitter ex-girlfriend who cannot seemingly leave you alone, the European Union keeps rearing its head into the sovereign affairs of the U.K.
The Times is reporting that an internal Brussels diplomatic document has revealed that the body will demand that the European Court of Justice enforce the terms of a trade, fishing, and security deal. Essentially, the E.U. would remain in control of Britain’s trade rights, even in post-Brexit.
Sources on Downing Street say that the Johnson government will reject the proposal because of the European court’s partiality. Brexiteers, meanwhile, are urging the prime minister to “walk away” from negotiations instead of agreeing to Brussel’s demands.
Why is there a feeling that the governing body will never let go of its loss of the U.K.? In 20, 30, and perhaps even 50 years, the E.U. (if it is still around) will continue to clamor for its lost love.
It is fitting that the E.U.’s chief Brexit negotiator Michel Barnier, mirrored the behavior of a petulant child when he said in a speech that Brussels will “never, never, never” compromise on the integrity of the single market. He was sure to deliver a doomsday prognostication of the U.K. pulling out of the E.U.:
“Leaving the EU, leaving the single market, leaving the customs union, it’s the choice of the U.K., will have consequences. And what I saw in the past, in the last year, is that many of these consequences have been underestimated in the U.K., or not so well explained to the people. Now we have to face the reality and to be realistic.”
Boris Johnson (Photo by Justin Tallis/PA Images via Getty Images)
But this type of scaremongering has been par for the course before, during, and after the Brexit circus. What has really happened? The employment rate, for example, is the highest it has been since comparable records commenced in 1971. Hourly wages and weekly earnings are up. The manufacturing, services, and composite purchasing managers’ indexes (PMIs) have risen this month. New motor vehicle sales expanded 3.4% year-on-year last month. The pound sterling has surprisingly been coping. The only disappointing trend in the U.K., as it is elsewhere across the globe, is the industrial slump.
We were promised the U.K. would metastasize into a fallen wasteland inhabited only by racists eating fish and chips and getting drunk on Guinness at the local pub with Nigel Farage!
Living Without EU
The Remain crowd would love nothing more than to see the Johnson government have a falling out with Washington. Britain’s left would find it pleasing to see London unable to ratify trade deals that can benefit one of the greatest countries on the planet. Perhaps the media would find an opportunity to blame Brexit should there be any scandal involving China, Huawei, and Great Britain. No matter what happens, the fact remains: The U.K. survived before the implementation of the E.U., and it will thrive after it has tipped its bowler derby and politely uttered “cheerio” to the trade bloc. The anti-Brexit folks can continue to sing, “I can’t live if living is without E.U.”
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Read more from Andrew Moran.
