A quick US trade deal will signal that the UK is easy prey

A quick US-UK trade deal would have a clear political pay-off for Theresa May. It would be a grand announcement of the UK’s arrival as a new trading partner on the world stage.

From the perspective of the UK’s longer term strategy, however, it looks substantially less appealing. There is a clear risk that in her haste to sign a deal, Mrs May comes away with an agreement that fails to reflect UK interests and weakens the UK for future negotiations.

The businesses of running negotiations will fall on the newly created Department for International Trade (DIT). While the department recruited staff quickly, it is still in its set-up phase and its new permanent secretary will not start work until March. It still lacks the legislative framework required to do trade policy – for instance to facilitate retaliatory tariffs when foreign companies unfairly undermine domestic producers – meaning that we expect a Trade Bill at some point in the next two years.

DIT is not the only part of government that needs time to prepare itself before launching negotiations. A comprehensive deal with the US would be so broad that negotiations would become a “whole of government” affair. For example, any discussion about agricultural tariffs and regulations would draw on the expertise of staff at Defra, which is staffing up its own trade team (for which, as yet, it has received no extra resource from the Treasury).

The US will take advantage of this lack of preparedness. It has an experienced operation that is very good at getting what it wants from negotiations. This best example of this is the consistency between different agreements where the common denominator is American interests; the US’s agreements with Peru and Colombia share 99 per cent of the same text. Almost half of the text of the (now defunct) Trans Pacific Partnership was copied from previous US deals.

One of the reasons that the US tends to do trade deals so quickly (averaging just one and a half years for talks) is that its partners adopt a tactic of capitulation masquerading as negotiation.

Trump’s election means that US interests may change, but their ability to secure deals that satisfy these interests will be undiminished. Theresa May might have been better advised to warm up by striking deals with some smaller, weaker economies before taking on the US. It will not be a fair fight against the UK’s fledgling trade capacity.

The PM may be undaunted by this prospect, judging that a deal with America is an exceptional prize, worthy of exceptional (and uncomfortable) concessions.

The problem is that other countries will not treat it as an exception – it will set a new standard. Once the UK has revealed its potential concessions to the United States it will be harder to deny them to others.

Canada, for instance, tends to follow the US around the globe, signing deals just after its neighbour (it initiated talks with Morocco, Singapore and South Korea in the wake of US deals). It lets America use its might to reveal a country’s point of maximum concession, then demands the same.

This means that the US-UK deal cannot be viewed in isolation – our first trade deal will set the tone for those that follow.

This is the uncomfortable truth facing Theresa May. If she is prepared to accept American terms and signal that the UK is easy prey for other potential partners, then a US-UK deal could be wrapped up very quickly. If she wants a meaningful deal, one that boosts strategic UK industries and sets a strong precedent, she may have to wait. Whitehall is moving with impressive speed, but it is not ready yet.

This piece first appeared in Times Red Box.