Britain’s trade agreement with Trump may not be good news for the world

Unlock Free

Roula Khalaf, publisher of the FT, selects her favorite stories in this weekly newsletter.

“What legal structure will this treatment have?” A commercial lawyer in a prominent firm asked me yesterday, gesturing at the detritus of a meeting at the conference table in front of him. “The same as this napkin.”

Not even the architects of the trade agreement announced between the United States and the United Kingdom would call it something of economic or legal beauty. Apparently without even a signed document, and designed exclusively to escape the rates Donald Trump imposed on steel and cars, the pact is closer to a payment payment to a crowd head than a liberalizing agreement between sovereign countries.

Whether the agreement is worth politically, it is a calculation only the UK government of Sir Keir Starmer can do. He certainly did not grant exporters a huge amount more access to the United Kingdom market. But any short -term benefit that has given to the United Kingdom has not done much for the integrity of the global commercial system.

The United Kingdom is not one of the economies most affected by Trump’s rates. Their automotive industry is export oriented but mainly to the EU: the United States take Less than one fifth of exports from the United Kingdom. Has a relatively small steel industry, less than 10 percent of exports of which Go through the Atlantic. And since it has almost no commercial surplus with the United States, the United Kingdom was not threatened with the rates called “reciprocal” above 10 percent of the reference line announced on April 2 and then suspended a week later. The EU, for example, faces 10 other percentage points of rate, if Trump ever finds courage to incorporate and risk another financial market.

This new agreement is risks for the United Kingdom, even considering the broader implications. Given the desired of the United Kingdom to make an agreement, there is no guarantee that Trump will not return anymore. According to the poet Rudyard Kipling, the Dane-Geld’s thing, the protection money with which the kings in medieval England Anglo-Saxon England bought Vikings invaders, “once you paid the Dane-Geld, you will never get rid of the Dane.”

During the first term, commercial partners could make Ad -Hoc deals with Trump, such as the “first phase” agreement of the United States with China, and to be reasonably safely safe. But, as Canada and Mexico can demonstrate, Trump in the second term is more whimsical and is likely to be modified by an agreement after it has been allegedly agreed. The commitments of these countries to reduce the smuggling of Fentanyl were first accepted and then rejected -summarized by Trump, despite the absolute lack of evidence in the case of Canada that this smuggling existed on a remarkable scale.

This agreement is supposed to be followed by a complete trade agreement next year, but the country has now been in a weak negotiation position. Trump can withdraw these concessions at any time if these talks do not go on their way.

In the meantime, the most important risk is not for the UK itself, but the global commercial system. Part of the agreement is to reduce import protection, including ethanol and beef in the United States, but not other countries, although this is not a formal legal trade agreement. The United Kingdom has diminished the principle of the “most favored nation” based on the multilateral negotiation system. Officials have credibility in claiming that it is compatible with the rules of world trade organization as part of a wider package. If other countries want to crush, a OMC dispute resolution audience may soon be resolved. By accepting that it will continue to face the 10 percent initial rate, the United Kingdom has also normalized a deeply regressive movement.

When Britain left the EU, a part of the pitch was that he would be a vigorous and active defender of the freer trade and the multilateral rules. I would play a creative and catalytic role in the WTO, released from EU stupid protectionism. And when joining the CPTPP agreement in Asia-Pacific, it would be linked to the World Central Region region.

By capitulating the pressure of the United States and advancing -the United Kingdom has encouraged others to do the same. In recent weeks, the EU and the CPTPP have made provisional movements towards cooperation to protect the rule -based commercial system. China, Japan and the EU have resisted all the United States received in rapid agreements. China has insisted that it arrive at the negotiation table according to its own terms. The EU has revealed its last list of retaliation targets today against the United States. These efforts have been diminished.

The United Kingdom can certainly make a political choice. You can choose to pay the DANE. At the moment it has been able to escape the worst of Trump’s rates. But the promise that Post-Britain Britain would be a disturbing anchor of the rules-based international trade system seems weaker than before.

alan.beattie@ft.com