By Charles Jaja-Sackey
Yesterday, US Vice President Mike Pence was mere millimetres from my office. During his International Trade dinner speech, he claimed that a US-UK Free Trade Agreement (FTA) could “quadruple bilateral trade”
Let me just quickly say that it is up there with the most insane claims I’ve ever heard on this issue.
We are not stupid in this country, ok? In order to deliver this “four times growth”, the US-UK FTA would have to generate $550 to $650 billion in new bilateral trade. By way of comparison the UK’s entire global trade volume in 2018 was $1.6 trillion. This is most ridiculous ambition I’ve ever heard.
I’ve taken a look at US figures from the Office of Statistics, in 2018 the US and UK had a total goods and services trade value of $261.9bn. It means “quadrupling” that gets us $1.047 trillion USD. Smh..
Would you like to know what this is in context?
It means the UK and US would have to trade significantly larger than existing US trade with: The People’s Republic of China ($737.1 billion) or Mexico ($671.0 billion) and even a little bigger than bilateral trade with the entire EU 27 ($1.038 trillion).
One of the criticisms about the Referendum in 2016 is that one side of the argument failed to present their points clearly and consistently. It’s important we know what we’re going into now that issues like “no-deal Brexit” is a real possibility.
Free Trade Agreements are always great to have, much better than trading on standard WTO terms. And I agree, a country can certainly increase bilateral trade over time (though in part by diverting trade that would otherwise go elsewhere). What they certainly are not is “magic”. They are not voodoo or sorcery.
The consequences of poor decisions are real. We need to call out these liars and fantasists.
–Jaja-Sackey wrote in from London