It is “delusional” for Britain to expect a favourable trade deal with the United States, a former US treasury chief said on Tuesday, as United KingdomForeign Secretary Dominic Raab seeks to “fire up” Britain’s trade relationship with North America.
Larry Summers, former US treasury secretary and ex-director of the National Economic Council in President Barack Obama’s administration, told BBC’s Radio 4 that Britain has “no leverage” in any trade negotiations and should not hope to be prioritised in a trade deal with the US.
His comments come as Britain’s new foreign secretary embarks on his second major overseas trip since being appointed by Prime Minister Boris Johnson. His trip started in Toronto on Tuesday before moving on to Washington on Wednesday and Mexico City on Thursday.
“In my first fortnight as foreign secretary, I’m travelling east and west to underline that the UK is determined to strengthen our friendships with countries across the world and raise our international horizons,” said Raab, who in his former job as Brexit minister was responsible for negotiating former Prime Minister Theresa May’s famously unpopular European Union withdrawal deal.
“I’m determined that we fire up our economic relationships with non-European partners,” he told reporters.
“That means working with them now to ensure a smooth transition of our trading arrangements after Brexit and [it] means quickly moving to wide-ranging trade deals that boost business, lower prices for consumers and respect our high standards.”
A staunch Brexiteer, Raab sits further to the right of Johnson and was initially his main rival for the top job.
The new foreign secretary stated (while still Brexit secretary negotiating with the EU) that he had not, until that point “quite realised the full extent” to which Britain was dependent on the Dover-Calais English Channel crossing route. About 17 percent of the UK’s entire trade, worth around $150bn, uses this shipping route, which stretches between England and France.
“I also want to build a stronger alliance to uphold international rule of law and tackle the issues that threaten our security, whether that’s Iran’s menacing behaviour or Russia’s destabilising actions in Europe, or the threat from terrorism and climate change,” he said.
However, speaking to BBC Radio 4’s Today programme, Summers said: “I’m not sure what Britain wants from the United States that it can plausibly imagine the United States will give.”
“If Britain thinks that the American financial regulators – who have great difficulty coming together on anything – are going to come together to give greater permissions and less regulation of UK firms, I would call that belief close to delusional.”
He added: “Look at it from America’s point of view: Britain has much less to give than Europe as a whole did, therefore less reason for the United States to make concessions. You make more concessions dealing with a wealthy man than you do dealing with a poor man.
“Second, Britain has no leverage. Britain is desperate. Britain has nothing else. It needs an agreement very soon. When you have a desperate partner, that’s when you strike the hardest bargain. The last thing you do is quit a job before you look for your new one.
“In the same way, establishing absolutely that, as a matter of sacred principle, your leaving Europe has to be the worst way to give you leverage with any new potential partners.”
He said it was “close to inconceivable” that the UK would be able to increase its trade with the US enough to make up for lost trade with the EU.
‘Front of the queue’
Former Conservative leader Iain Duncan Smith, however, said: “This is a classic attempt by Larry Summers to use Brexit for domestic point-scoring.
“Forty-five Republican senators have signed a letter to the prime minister pledging to back a trade deal with Britain once we have left the EU. The president himself has expressed his enthusiasm for a UK-US deal.
“If, as Mr Summers suggests, we were only offered a bad deal by the US, we would not accept it. Trade deals must be mutually beneficial to be acceptable to both sides.
“The Democrats, fortunately, are not in control of US trade deals.”
US Senator Tom Cotton, a Republican, said Britain should be at the “front of the queue” for a trade deal with the US. Cotton told Today: “Many of my colleagues in the Congress would say that Great Britain should be in the front of the queue, given everything our nations have gone through together.
“Obviously it wouldn’t be a matter of days or weeks for such negotiations. It might be months, but I would suspect it would be months, not years.”
Raab said there was a “consistent warmth” for Britain and a “desire to work more closely with us” from 20 foreign ministers from across the Asia-Pacific region who Raab met during his visit to Thailand last week.