U.S. and U.K. Begin Negotiations on Free Trade Agreement

Good analysis by Sundance

The United States and the United Kingdom are the first and fifth largest economies in the world, respectively. Total two-way trade between the two countries is already worth about $269 billion a year. Each country is the other’s largest source of foreign direct investment, with about $1 trillion invested in each other’s economies. Every day, around one million Americans go to work for UK firms, while around one million Britons go to work for American firms. (more)

An important geopolitical overlay helps to better understand the specifics of this dynamic.

The United States is essentially a self-sustaining economy. Meaning, if you think about a nation as an independent construct able to sustain itself; our imports are enhancements not priorities. Our domestic resources, energy development, food production and essential internal needs are capable of sustaining our population. The import of products is valuable, but in the bigger picture not fundamentally necessary for survival.

The United Kingdom is very similar in this regard. The U.K. has abundant energy resources, food and agricultural development, and is positioned as an independent economy absent the dynamic of internal politics regulating those functions. Domestic politics surrounding left-wing climate change (energy development etc), to restrict internal development, are a function of ability, not necessity. The U.K. has abundant coal, oil and natural gas; it also has abundant agriculture. [The U.K weakness is military defense.]

Because both nations are similar in their ability to be non-dependent on trade, a free trade agreement is essentially a second-tier negotiation on products and services that enhance the independence. This is a unique dynamic not found in all trade discussions. Two independent economic systems negotiating on trade enhancements to each-other.

This is a much different dynamic than negotiation with a dependent country like China. China cannot feed itself, it needs to import raw materials to sustain itself; thus the importance of the One-Belt/One-Road Beijing initiative. China is a massive economy, but China is also a dependent economy; subject to damage from external dynamics.

Similarly, due to advanced political ideology, Canada cannot sustain itself economically; however, they are dependent by choice. Currently Mexico is not self-sustaining; they too are dependent on both access to the U.S. market and the import of industrial goods. However, unlike Canada our southern trade partner is working toward self-sustenance.

♦ Dependence or Independence is the ultimate context for all trade negotiations.

Dependent countries do not inherently carry negotiation leverage, and must create leverage through access to their economy (China again). The more independent the internal economy is within any nation, the less dependency they have. Less dependency means more leverage… more leverage means better terms (with nationalist negotiators).

A U.S-U.K trade agreement would not be based on “essential” trade products or “vital” trade services. The trade is not essential, but it is complimentary.

A U.S. and U.K. trade agreement is based on mutual enhancements or mutual benefits. This is an important distinction to keep in mind because it plays into the larger geopolitical dynamic.

The U.K. is currently in a post-Brexit negotiation phase after they spit away from the European Union. Strategically, it is smart for the U.K. to enter into trade discussions with the U.S. for needed products and services they might currently be gaining from the EU.

The timing of trade discussion with the U.S. gives Prime Minister Boris Johnson leverage toward the EU. President Trump and Boris Johnson have previously discussed this.

Additionally, the U.S. and E.U will eventually have to work out a new trade agreement because President trump is realigning all existing U.S. trade terms.

The U.S. already carries all of the leverage in any discussion with the EU; both in terms of market size, need for EU to retain access to the U.S. market, and the generous one-way tariff benefit currently maintained by the EU (which Trump is about to confront). Enhancing the U.S. leverage by providing a super-highway for transatlantic trade between the U.S. and U.K. puts the EU at an even further strategic disadvantage with the U.S.

https://theconservativetreehouse.com/2020/05/05/u-s-and-u-k-begin-negotiations-on-free-trade-agreement/#more-190922