After Brexit, A Swift US-UK Free Trade Agreement Will Be Economically And Diplomatically Beneficial

The National Review might not be down on all the fine details of Brexit*, and quite possibly put too much faith in the elimination of tariffs as a means of spurring trade, given the modern shift toward non-tariff barriers, but their forthright and optimistic call for a swift US-UK trade agreement is most welcome nonetheless.

(*In which they are hardly alone, joined by most of the UK media and many elected British politicians, who unlike the National Review have no excuse for their ignorance)

Stephen Meyer writes:

First, a free-trade agreement between the U.S. and U.K. would foster trade and growth in both countries without subjecting either to the onerous external regulation and loss of democratic control that Britain has experienced in the European Union. Until now, the exclusive nature of the EU prevented Britain from establishing a free-trade pact with America, its most lucrative trading partner, to the detriment of tariff-paying businesses in both countries.

Nevertheless, under treaties governing EU membership, the U.K. cannot make free trade deals with non-EU partners. It must apply the growth-suppressing common EU external tariff, an average of 4.5 percent, to all imports. Once Britain legally extricates itself from the EU, that can change — and should. An agreement between the world’s largest and fifth-largest economies will create a huge free trade zone, benefiting businesses and spurring growth on both sides of the Atlantic.

Second, an agreement that focuses on eliminating tariffs, but not creating supranational oversight bodies, will protect both countries from the loss of sovereignty that British voters rejected with Brexit and that Mr. Trump has criticized. Such a simplified deal would require U.S. companies operating in (or exporting to) the U.K. to accept U.K. law, and U.K. companies operating in the U.S. to do the same. Since U.K. and U.S. law is so similar and both countries have so many lawyers versed in the commercial law of the other, international oversight would prove largely unnecessary. In a bilateral treaty, significant disputes or grievances can simply trigger provisions to renegotiate terms — or to accept arbitration in limited cases before mutually agreed tribunals.

This, of course, serves to underscore the importance of freeing ourselves from the customs union as part of any interim and permanent Brexit deal. To do otherwise would truly be an act of self-harm, constraining Britain’s ability to negotiate freely with other countries just so that bitter Remainers can cling slightly closer to the vestiges of their European dream, with no commensurate benefit whatsoever.

But as Meyer notes, a US-UK trade deal would matter symbolically and diplomatically just as much as economically:

A free trade offer will also help repair the U.S.-U.K. special relationship after eight years of intentional neglect and decades of slow erosion as the result of Britain’s gradual absorption into the EU. Strengthening the alliance with Britain will promote U.S. national security because it will free the U.K. to act decisively as a bilateral partner when the strategic interests of our two countries align — as they often have.

The Obama years have witnessed a dramatic weakening in the strategic position of the United States and the West, as well as a diminution of U.S. military power. In addition to rebuilding military capacity, as Trump has promised, the United States now badly needs genuine allies with shared interests who have demonstrated the will and capability to stand alongside America in times of international crisis. More than any other ally, Great Britain has consistently demonstrated that proclivity and capability: Apart from France, only the U.K. among U.S. allies maintains an independent nuclear deterrent and the capacity to project significant naval power. Among NATO allies, only the U.K. keeps its treaty commitment to spend 2 percent of GDP on defense.

Whatever else one may think of Donald Trump – and this blog is not a fan – it is at least heartening to hear some vaguely warm sentiments being spoken about Britain again from soon-to-be White House aides.

This blog has generally admired Barack Obama’s temperament (if not his policies), but his thinly-disguised disdain for Britain and the transatlantic alliance will not be missed. President Obama can be as chummy as he likes with Chancellor Merkel, but when the going gets tough, it is the UK with our nuclear deterrent, blue water navy, deployable armed forces and positive disposition toward America upon which the United States will immediately rely. America’s natural closest allies have not always felt the warmth they might have reasonably expected from the Obama White House. Hopefully this will soon change.

Meyer concludes:

Offering the right kind of trade deal to the British — as they negotiate the return of their own national sovereignty — will decisively advance that goal.

A pragmatic assessment of the mutual shared interests of two great powers and firm allies. Now, doesn’t that sound an awful lot better than Barack Obama’s rigid and unimaginative defence of the failing European supranational project, and his haughty insistence that Britain would go to the “back of the queue” in America’s estimation?

 

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American Conservatives For Brexit, Part 4

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Brexit is very much in the American spirit of independence, and in no way harmful to long term US interests

In an excellent piece for Colorado Christian University’s Centennial Institute, James C. Bennett argues convincingly that the US national interest is no longer best served by pursuing the post-war policy of playing midwife to a terminally flawed United States of Europe.

Bennett begins by exposing the sheer implausibility of a stable, functional, democratic European state – the clear and unabashed goal of most EU leaders – ever emerging at all:

To begin with, the idea of a united Europe that would be genuinely federal, which is to say anything other than an empire of one culture over the others, is highly unlikely if not chimerical. To the extent Europe today works, it is an empire of Germans, with the French as their lieutenants, over the rest. The Germans try to be polite about it, unless money is at stake, but the reality is a bit too visible for comfort these days. The British who believe in the idea of their place in a federal Europe, tend to work as lieutenants to the Germans on economic matters, and allies of the French on security matters, except where it comes to cooperation with the US, where they have only minor allies from Eastern Europe, who do not count for much in Brussels.

As many critics of the EU have noted, democracy requires a demos — a distinct national community, which shares the language, institutions, memories, and experiences that make possible a meaningful discussion about the decisions that must be made through political means. There is no such European people, rather, a series of national communities who each have their own discussions. European institutions are therefore particularly prone to decision-making by consensus of elites, many of whom are distant and insulated from the opinions of the people they supposedly represent. However, it is also the case that decisions are often simply not made, and inertia rules, while problems are merely kicked down the road year after year. The Single Currency provides examples of all of these phenomena — it took a long time to come to the decision to launch it; it was only ever wanted by a few elites; popular opinion was almost universally against it; it worked better for some nations than for others, but poorly for most; and there is no momentum either for changing institutions to make it work better, on the one hand, or abandoning it on the other.

This point about the perennially absent European demos is absolutely key. Even if one were to wave a magic wand and instantly make all of the European Union institutions directly elected, properly empower the European Parliament and take other measures to correct what is understatedly termed the EU’s “democratic deficit”, it would not give those institutions any greater legitimacy.

If Britain were suddenly annexed by India and British citizens given a vote in Indian elections this would not be “democracy”, but rather the smashing together of one demos against another. British citizens would not feel part of the Indian state, would have no emotional connection to it and no great political interest in it. And so it is now that Britain is effectively annexed by the European Union. Even building a perfectly modelled federal government for Europe would not erase the stubborn fact that most British people do not “feel” European first and foremost, and therefore cannot participate meaningfully in its political life.

Bennett goes on to criticise the EU as a weak partner to the United States:

Furthermore, the EU is not turning out to be a useful ally for the US, nor is Britain able to influence very much in directions the US desires. To the extent it has ambitions in the security area, these typically create a rival and inferior capability to what already exists through NATO. To the extent it has ambitions in the foreign policy area, it is so hard to establish a consensus among European powers that its policies are usually much weaker than what Britain typically adopts by itself. The European federalists are now agitating for France and Britain to give over their UN Security Council seats to the EU, which will again substitute the weak and uncertain voice of the EU for the more assertive voice of the UK.

While the EU’s leaders clearly have dreams of wielding great influence on the world stage, they are constantly stymied in their ambitions by the fact that they are called on to reflect the squabbling and divergent interests of 28 separate member states. Floridians and Californians are happy to be jointly represented by the State Department because they owe their primary allegiance and affinity to the United States of America. By contrast, Brits and Swedes are not greatly thrilled to be jointly represented on the international stage by Italian former Young Communist Federica Mogherini. On paper, Mogherini speaks for all of Europe. In reality, she speaks only for an EU elite numbering in the thousands, not millions.

Bennett, like this blog and others of The Leave Alliance, believes that an interim EFTA/EEA (or Norway Option) Brexit path is the most likely outcome in the event of a Leave vote, minimising the economic and political risks by guaranteeing Britain’s continued access to the single market:

The international financial community would probably default to the second most desirable option from their point of view, which would be to press for British membership in the European Economic Area and the European Free Trade Association, the so-called “Norway Model.” Although in theory there are a number of potentially viable options for post-Brexit relations between the UK and the remnant EU, the EEA-EFTA model would be the most accessible, best understood, and least disruptive option, and therefore the one the financial interests would prefer. The major European leaders would then come under very strong pressure to announce their support for such an outcome. Once made, along with guarantees to expatriates and other interests, this would restablilize markets and probably become the signal for a sustained rally.

This recognition of economic and political reality immediately puts James Bennett well ahead of serious American journalistic outlets including CNN, USA Today and the New York Times, all of which defaulted to the most apocalyptic and unlikely of Brexit scenarios in their effort to make the idea of Britain leaving the EU seem like a reckless risk with no potential upside.

However, Bennett’s assessment on the impact of Brexit on American interests is better still (my emphasis in bold):

From a short-term perspective, Brexit would have relatively little effect on American interests. Article 50 of the European Union’s current constitutional document, the Lisbon Treaty, provides for member-states to withdraw by giving a two-year notice of intent to withdraw, and mandates the EU to negotiate in good faith for free-trade measures during that time period. During that time period all rights and obligations of membership continue as normal, so US companies operating in Britain would continue to function as normal. The EEA-EFTA option would also permit such companies to operate as normal after EU membership was terminated. Most other US-UK cooperation, such as military and intelligence cooperation, is conducted under bilateral or multilateral agreements having nothing to do with the EU, and would continue to function as normal.

The biggest short-term effect will be on the American foreign policy establishment, in seeing the fundamental assumptions of their world view challenged. Some will cling to the past, and hope that the UK, humbled by life outside of the EU, will repent and ask to rejoin. This is highly unlikely, as it is more likely that the EU, now shorn of the most powerful and stubborn opponent of a United States of Europe, will proceed to greater centralization, although it is also possible that it will shed a few other recalcitrant members, perhaps including Denmark and/or Sweden. The Franco-German core, and the principal Eastern and Southern European dependent states will likely remain. However, this reduced remnant EU will still not become the capable and willing partner the US State Department has always craved. Rather, it will be a medium-large power with problems, somewhat like Japan but with a less capable military.

Exactly so. The only threat posed by Brexit concerns the outdated thinking of certain fossils and arthritic thinkers within the State Department, many of whom seem to be operating based on mental software which has not been updated since the height of the Cold War, when large regional blocs were both the norm and the key to the West’s victory against the Soviet Union. The world has moved on.

And in this age of globalisation, when regulatory harmonisation and convergence are key precursors to unlocking further economic growth, what matters most – though you may not hear many others speaking of it – is ensuring that ordinary people, through their national governments, have the ability to influence these standards and decisions when they are made, and on rare occasions to exempt themselves from them as a last resort. This applies as much to America as to Britain. But from the British perspective, the EU is an active impediment to this process, diluting our influence before we even get to the regional and world bodies which are the source of much new regulation.

And away from the trade sphere, it is self-evident that Britain will remain the only truly indispensable ally of the United States for the foreseeable future. Our shared history and overlapping cultures, together with the fact that Britain wields a military and diplomatic clout far in excess of any other European nation (though recent generations of meek political leaders have often failed to properly leverage this advantage) mean that the idea of Washington pivoting away from London and towards Berlin is pure fantasy. Simply put, you don’t ditch the partner which offers a blue water navy, a nuclear deterrent and a permanent seat on the UN Security Council, no matter how much certain wobbly-lipped EU apologists may suggest that Brexit would somehow damage the special relationship.

Ultimately, a realisation must eventually dawn on the American political elite and foreign policy establishment that the dream of a United States of Europe incorporating the United Kingdom – a term conjured by Churchill but never intended to include Britain – is untenable. A federal Europe may yet emerge from the “core” EU nations, but as James Bennett points out, this will be a distinctly medium-sized power beset with many intractable problems of its own and unlikely to be a great proactive partner to the United States, at least in military matters.

Thus a re-evaluation is necessary. Today, Britain is seeking to assert her independence from a terminally flawed and profoundly, deliberately antidemocratic supranational government of Europe. Americans once knew something about seeking independence from empire and asserting the right of a people to govern themselves, captured in the cry “no taxation without representation”.

America also knows something about turning up a bit late to important, existential fights. And so even at this late hour, it would be gratifying if more American leaders paid heed to James C. Bennett, sought to rediscover that spirit of independence, democracy and national destiny which has been increasingly absent of late, and lent their vocal support to the Brexit cause.

 

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American Conservatives For Brexit

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Daniel Larison joins the ranks:

Personally, I am hoping that the Remain campaign loses. The EU is famously lacking in democratic accountability. If the only way to hold its institutions and leaders in check is by the threat of leaving, at some point one or more of its members has to make good on the threat to leave. Whatever the short-term economic disruption of withdrawing from the EU may be (and I assume there will be some), the case for leaving has always been a political one concerned with the ability of the governed to hold their government to account for what it does. British voters can’t fully do that right now as part of the EU. The Remain campaign has had to resort to constant fear-mongering because it cannot make a positive case for staying a part of a dysfunctional transnational organization for which almost no one feels any real loyalty or affection, and so it has to conjure up nightmare scenarios to frighten voters to their side.

Whatever the result is on June 23, the U.S. should aim to maintain good relations with the U.K. If Britain votes to leave, the U.S. should do what it can within reason to help make the transition easier, and we should do so in recognition that our relationship with the U.K. is a long, well-established, and close one that long predates the EU.

As fair and eloquent a case as you will hear. Though Larison’s expectation of some short-term economic disruption needn’t come true – particularly if we follow the Flexcit model and leave to an interim EFTA/EEA position, maintaining our access to the single market – he is right that the real argument is a democratic one. The crux of the matter is that British voters have no practical way of holding EU leaders to account that is not at least twenty steps removed, relying on other people doing other things. That is no democracy – despite the desperate attempts of some EU apologists to claim that the various elections to EU institutions make the EU a beacon of good governance.

Larison is right too that the United States should and will maintain good relations with Britain after Brexit. For while regained British independence from the EU may thwart the State Department’s dream of having just one telephone number to dial when they want to call Europe, in every important respect – military power, willingness to commit military forces, foreign direct investment, defence cooperation, security cooperation, academic and trade cooperation, cultural affinity – Britain is America’s closest and strongest ally, and in ways which have absolutely nothing to do with our membership of the European Union.

Remainers and EU apologists love to paint Britain as a puny and insignificant nation whose clout only comes about through our membership of international bodies (most of which have existed for little more than half a century, rather undermining the claim), but the special relationship between Britain and the United States is a partnership between two consequential countries which have and will continue to shape world events well into the future – at least if both countries can finally rediscover their national confidence.

And in this fight to make Britain a consequential player in the world again rather than a timid vassal of euro-parochialism, it is good to have the support of Daniel Larison and The American Conservative.

 

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