Britain's Prime Minister Boris Johnson welcomes President Donald Trump at the NATO leaders summit in Watford, Britain, Dec. 4, 2019.
Photo: peter nicholls/ReutersThe third round of negotiations between the United States and the United Kingdom for a new trade deal has come and gone and, well, where is it? President Trump and Prime Minister Boris Johnson each say they’re enthusiastic, and both economies could use the boost. Yet a deal is turning out to be harder than expected, and for all the wrong reasons.
What should be causing the hold-up are the contentious elements involved in any high-quality free-trade pact. The two sides should be haggling over banking regulations that would facilitate free trade in financial services. They ought to be ironing out mutual recognition of professional qualifications so British and American architects, engineers, accountants and the like can work freely on either side of the Atlantic. There should be reciprocal recognition of product-safety rules and inspections.
Yet nary a word is heard about those issues. Instead, the problems are political own-goals on both sides, but primarily in the U.K. Agricultural trade remains a needless sticking point. The U.S. has long insisted that Europe impose scientific food-safety standards and allow imports of chlorine-washed American poultry and beef treated with certain medications.
Brexit was supposed to let Britain deviate from the European Union’s unscientific, trade-killing resistance to American imports. Instead Mr. Johnson and Trade Secretary Liz Truss promise British voters these American goods will never appear in U.K. supermarkets. This kowtow to British farmers and environmentalists could scuttle a trade deal.
Another sticking point is Britain’s socialized National Health Service. The U.K. has sworn not to budge on a centralized drug-procurement system that underpays for American pharmaceutical innovations. London’s resistance to any liberalization, market forces or private investment in health care will make it that much harder for Washington to sign a deal—even though the NHS delivers awful health-care outcomes compared to the rest of Europe, and calls out for reform.
Mr. Johnson added a new trade hurdle when the U.K. imposed its version of a digital-services tax on American tech giants in April. These taxes have provoked President Trump’s ire—and retaliatory tariffs—when other European governments tried to implement them. It’s a bad strategy for concluding a deal, and bad economics for British consumers increasingly shopping online from home.
Mr. Trump isn’t blameless in this evolving failure. Targeting U.K. exports for tariffs in Washington’s broader battle against European subsidies for Airbus makes little sense if the goal is to strike a British trade deal quickly. The President’s election poll ratings are also an obstacle, as British negotiators figure they may do better by holding out for President Biden.
But Mr. Johnson has more to gain economically and politically from a good deal soon and the domestic reforms necessary to strike one. The case for Brexit was that leaving the EU would let Britain shed continental protectionism and open its economy to the wider world. Mr. Johnson should do that. The stakes in getting trade politics right on agriculture, health scare and taxation are enormous, and a U.S. pact is the first crucial step.
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