UK-US Trade Deal Negotiating Objectives

Lord Kerr of Kinlochard Excerpts

Monday 2nd March 2020 Lords Chamber

[Viscount Younger of Leckie]

There were several questions from the noble Lord, so I will not be able to answer all of them, but I say at the outset: the respect is there between the two countries—it always has been. We have very strong and close relations with the US for a whole range of reasons and there is no reason why that will not continue in terms of our negotiations. In fact, as I said earlier, talks in the working groups have been extremely constructive, and we very much hope they will continue in the same vein. Having said that, I have no doubt that the US will talk tough. We are prepared to talk tough and have said that we are prepared, if necessary, to walk away from negotiations if we feel that any of the issues that we are negotiating on do not fall in with the national interest.

[Lord Kerr of Kinlochard (CB)]

My Lords, I think we risk being a little churlish. What we have here is what I recognise as a White Paper. We have a serious document with some serious economic analysis resulting in some serious consultation with a serious attempt to quantify the effects of the policy the Government chose to follow, broken down sectorially, geographically and in different categories of citizen, and there has been consultation with the devolved Administrations. In all these respects, this is admirable and in striking contrast with what we got last week about the negotiation with the European Union, which started today.

I think that one should give the Government credit for being honest about how small the likely scale of increase in trade would be if one managed the scenario that is sketched out here. If, optimistically, one achieved what is here, one would be gaining, after 15 years, a fraction of 1% of GDP, whereas, with the European Union, the Government’s own economic analysis shows that they would be some 5%, 7 % or 8% down in GDP. So this is small stuff.

I also agree with the noble Lord, Lord Lilley, that what matters is what the traders do. More than two-thirds of transatlantic trade in goods is intra-company trade, so it is issues such as taxation that matter as much as any of this here. I also find the optimism of this quite striking. I was always struck, when in America, that the land of the free is not the land of free trade: it is the land where might is right. Remember that the Jones Act is still on the statute book in the United States, that we are the small party—the demandeur—and that the United States is out to, “Make America Great Again”. It is out to bring home jobs; it is not out to support jobs in this country, even though we are a close ally.

It is an admirable document; I see no harm at all in the attempt the Government are making, but let us be realistic. The noble Lord, Lord Howell, is right: it is in Asia, not America, that there are the real prospects for expanding trade. In America, we will come up against fierce protectionism: America is the most protectionist economy of all our trading partners.

[Viscount Younger of Leckie]

It is praise indeed that the noble Lord, Lord Kerr, has said that the document is admirable and I am pleased to have been able to listen to that very carefully. I take note of what the noble Lord says about the US and our prospects, but I do not agree. If we take, for instance, SMEs as one particular issue, there are 5.9 million small businesses, but relatively few export to the US. This new deal will provide a tremendous opportunity for SMEs to do business in the US. From the analysis we have done—the noble Lord will have probably read the document—we believe we have more to gain in the UK in terms of business with the US than the US has in return. I think it is exciting and I am not at all dismissing the point made by my noble friend Lord Howell and the noble Lord, Lord Kerr, about the importance of the Far East. The point is that, as we have left the EU, and as we go through this transition period, the opportunities are absolutely tremendous in terms of what we can do in global deals generally, but it makes sense for us to start with the US.