As symbolism goes, the physical dropping of the US trade deal was hard to beat.
Donald Trump and Keir Starmer were both at the G7 summit in Alberta, and their officials decided that it was a splendid opportunity for the two men to sign the agreement that was cobbled together last month on the suspension of some tariffs.
There they stood, the leaders of the two greatest Anglophone democracies, breathing the pine and spruce-scented air. Then a sudden gust of that fragrant Alberta air lifted the papers from Trump’s grasp and sent them in a flapping cascade to the ground.
The Prime Minister scampered about, picking them up from around the presidential shoes while Trump grinned down at him. So much for an equal partnership.
It was unfortunate, to say the least. As the younger man, Starmer was doing the right thing. But, apart from the appearance of subservience, the dropping of those pages was a neat representation of the way Britain must constantly pick up after an inconstant and volatile administration.
The arrangement set out in those loose sheets is useful enough as far as it goes. But it is narrow and limited.
British car exports will now face a tariff of 10 per cent in the US, as opposed to the 25 per cent tariff faced by cars made in the EU.
Our steel will face a tariff of 25 per cent, as against 50 per cent had we stayed in the EU. The component parts we make for aircraft can be sold in the US tariff-free.
Apart from the appearance of subservience, the dropping of those pages was a neat representation of the way Britain must constantly pick up after an inconstant and volatile administration, writes Daniel Hannan
Leaders at the G7 summit in Canada. Left to right: Giorgia Meloni, Emmanuel Macron, Mark Carney, Donald Trump and Sir Keir Starmer
These numbers represent a net deterioration in the position we enjoyed at the start of the year, before Trump announced his deranged global tariffs, and many will ask what there is to celebrate.
This is especially true with regard to steel. Because Tata Steel has closed its blast furnace at Port Talbot while it builds a greener version, it is importing semi-finished steel from its sister companies in India and the Netherlands and finishing it in Wales.
It is far from clear that the tariff exemption will apply to such steel – a reminder, incidentally, of how absurd tariffs of any sort are in a world of extended supply-lines, where component parts come from many different places.
Being more favourably treated than the EU is obviously preferable to the alternative. It is hardly a win, though.
Quite apart from anything else, we want our European neighbours to be wealthy. Even if they were not our friends and allies, we would still want them to be rich so as to be good customers.
It cannot be stressed enough that the deal between the two English-speaking allies was only ever intended to be a stop-gap, a temporary suspension of what would have otherwise been ruinous tariffs on British luxury car exports while a more thorough deal was hammered out.
Part of the fuller deal, as Starmer’s spokesman optimistically reminded us, is meant to be zero-for-zero tariffs – or, at least, something much closer to zero-for-zero than we have now. But that is not the most important part of it.
Both our countries have services-based economies. In Britain, manufacturing acc-ounts for around 20 per cent of GDP, and agriculture for less than 1 per cent. This means about 80 per cent is services. The American proportions are similar.
While lifting tariffs matters for the industrial 20 per cent, there are greater gains in removing non-tariff barriers on the invisible 80 per cent. These barriers take all sorts of forms, from divergent rules on data storage to restrictions on professional qualifications.
The chief gains would be in the lifting of obstacles to trade in the main service industries – banking, insurance, investment, shipping, law, education and healthcare. Reducing or removing barriers would substantially boost both economies at a time when, Heaven knows, they need it.
Free trade is about lowering prices and increasing choice. Suppose, for example, that British airlines could fly domestic US routes. Imagine how that would raise the game of the complacent and uncomfortable American carriers.
Suppose that pharmaceutical products approved in one country could automatically be sold in the other. Or that lawyers or doctors qualified in one jurisdiction could work without taking any additional exams in the other.
Because Britain has a relatively open services sector, it is, as diplomats say, the main demandeur here – the country with the bigger ask. American banks and funds can already operate in London more easily than British companies in New York.
What might the US want in return? Its negotiators want us to follow global rules on trade instead of clinging to various protectionist measures that we inherited from the EU and have never got around to repealing.
Rules such as the unscientific ban on one particular growth hormone in beef (British and EU beef uses many other hormones, all equally harmless).
These standards mainly apply to physical goods, and especially to food. Which brings us to Starmer’s dilemma. He has just invited Brussels to set our food and veterinary standards in perpetuity, making us a much less attractive trade partner to the US; or, indeed,anyone else.
This, I think, was Labour’s objective throughout. From the moment he arrived in Washington as our ambassador, Peter Mandelson was talking about doing a trade deal with the US that focused on tech and AI.
This would allow Britain to remain, to all intents and purposes, under EU rule for goods, while joining the rest of the world for services.
The trouble is that, in agreeing to ‘dynamic alignment’ with the EU (in reality, few places are less dynamic) Britain has handed away its most valuable negotiating chips. There is now a real danger that we will never get to the full trade deal promised by Washington last month, and will instead be left with what was intended as the holding position – which, to repeat, leaves us worse off than where we were in March.
I have until now been hopeful about the prospects of a US deal. Partly because of Trump’s fondness for this country (‘The UK is very well protected,’ he declared in Alberta, ‘you know why? Because I like them.’) Partly because we are one of the few nations with which the US runs a surplus – or something very close to a surplus. Partly because our economies are naturally complementary. But mainly because a lot of the work had already been done during Trump’s first term.
The EU, though, has never liked the idea of a UK-US trade agreement. It especially hates the idea of no longer having Britain as a captive market for its agricultural exporters. The conditions it insisted on in the ‘reset’ deal appear to have been drawn up, at least in part, with an eye on foiling any transatlantic deal.
My guess is that EU diplomats and negotiators spotted early on that Starmer was emotionally committed to their project, that he was mortified by Brexit, and that he was ready to sign anything that he saw as ‘bringing us closer to Europe’.
What a tragedy if, in doing so, he has made less likely a trade deal with the world’s largest economy, and Britain’s chief trading partner.
How heartbreaking if, in cosying up to a market that has been in decline for decades, he is ignoring the parts of the world that are growing fastest.
Dropping the deal? Let’s hope it was not a metaphor for what happens next.
