Lord Mandelson is going to Washington as our Ambassador. What is he up to? We cannot know, but here are some ideas about how he might spend his time.

He is going to be negotiating with Trump’s new appointee as Secretary of Commerce, Howard Lutnick. He should be seeking to turn the UK’s notorious weakness, our inability to choose between America and Europe, into a strength, by getting each to show us some leg.

This means that the UK should enter into parallel conversations with the EU to see what they’ll put on the table to stop us throwing in with the US. There is no harm in letting the Americans know what we’re doing: Trump respects toughness in a negotiating partner.

To anticipate our conclusion, at this point in our history the Americans seem to have more to offer than the EU, as (1) the US economy is motoring; (2) the EU is at a low ebb; and (3) we have largely exhausted our economic possibilities with Europe over the near-fifty years of our engagement from 1973 to 2020.

On the other hand, for all that we share a language, history and many aspects of law, the economic, social and political culture of the US is not ours. In addition, America is currently led by some people who are making a shibboleth out of not liking our government at all. Our new Ambassador will have his work cut out.

We kick off with the following notes on what the UK does not want. Over the next few weeks this will be followed by pieces on:

• What the UK wants and what it can offer.

• Defence.

• Piecemeal inward investment.

• Labour markets.

• Housing.

• Energy.

• Public services.

• A Conclusion.

The Difficulties

America:  A trade deal with the US is a big ask. It is not just politics or Obama’s “back of the queue”. The US is a continental country embracing innumerable commercial interests, which trade officials struggle to marshal into a negotiating position - the EU has similar problems, for similar reasons. The approach we take in the following posts is to focus on specific sectors, where each side has something big to ask or to offer - we hope this can result in a coordinated response. This means that we ignore such incendiaries as chlorine-washed chicken, hormone-fed beef, or “privatising the NHS”, though we do address agriculture and healthcare, and instead look at how a trade deal can come about.

Europe: The position with the EU is simpler: the agony of Brexit makes clear that we do not want surrendered sovereignty, dynamic alignment or suchlike. It has also become apparent to those in the know, that the Customs Union and the Single Market have always been something of a chimera for the UK. International bodies and academics in the field collect econometric data on international trade. This shows that leaving the EU presented the UK with negligible trade downside, if not paving the way to redress drawbacks intrinsic to membership.

• The Customs Union put British exporters of goods to the EU at a consistent disadvantage. This is because the post-WW2 decline in duties from c.12% to under 4% puts emphasis on non-tariff measures (NTMs), where the EU is a notable offender. In 2019, the OECD’s figures showed that the EU had higher internal NTMs than the UK in 20 out of the 22 sectors measured. Such differentials have been present for as long as the figures have been compiled, telling us that other member states could sell goods to us more easily than we could to them.

• In August 2020 the EU’s own analysis of business services showed that internal and external barriers for competition are identical in 104 of 115 measures. This means that by this measure, the Single Market is close to unavailing all round.

Advocates of Britain’s membership of the EU are given to dwell on the sheer proximity and size of the European market, following the “gravity model” of trade, but the reality of the EU‘s rigged or deficient arrangements make this irrelevant. So it will have to be other stuff. 

Next: what the UK does want and what we can offer.