What might a Biden Presidency mean for both global and UK-US trade?
President Trump was supportive of Brexit, critical of the EU, and claimed to want a trade deal with Britain – however a UK-US trade agreement has yet to be signed.
While reports have suggested that Boris Johnson wants to use the threat of a US-UK trade agreement to pressure the EU into signing a new UK-EU trade agreement, the dynamics could change under Joe Biden. If a US-UK deal has not been ratified before Trump leaves office in January 2021, the Biden administration could possibly pressure the UK to sign a trade deal with the EU before agreeing to resume talks on a US-UK trade deal. Such a move would risk weakening the UK’s hand in negotiations.
A Biden administration’s liberal institutionalist approach to foreign policy could see the US re-engage in multilateral, plurilateral and bilateral trade negotiations, and overturn Trump’s vetoes of World Trade Organisation (WTO) appointments. It could rekindle the US-EU Transatlantic Trade and Investment Partnership (TTIP) negotiations and re-enter the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) with 11 Asian and Oceania countries, and possibly the UK.
Even without a US-UK trade deal, there would still be a huge amount of trade and investment flows between the two countries. Regardless of who sits in the White House or 10 Downing Street, the UK and US will remain allies in a number of international governmental organisations and may emerge as partners in a CPTPP agreement. While the initial months could be rocky, once a new relationship is built, both countries' pursuit of trade deals could give much-needed impetus to international trade negotiations.
Professor Syed Kamall
Academic and Research Director, Institute of Economic Affairs
|
|
|
|
IN CONVERSATION.. WITH THE HON TONY ABBOTT
On Tuesday 20th October, IEA Director General Mark Littlewood sat down with the Hon Tony Abbott, former Prime Minister of Australia, to discuss the future of UK and global free trade. We are delighted that the recording is now available on the IEA's YouTube channel.
Mr Abbott began his opening remarks with a message for Britain:
"Do not sell yourselves short.. No country on earth has made a greater contribution to the modern world than this one.. The soft power of this country is immense. And the hard power, economically and militarily, is.. very considerable."
Mr Abbott discussed his current role as an adviser to the UK Board of Trade and the "transformative" Free Trade Agreements – with China, Japan and South Korea – that he negotiated while Prime Minister of Australia.
When Mark asked whether a more successful approach might be to negotiate our trade deals incrementally rather than in one go, Mr Abbott responded: "I've taken the view to free trade that you take what you can get today and you work for what you want tomorrow."
Watch the fascinating discussion here.
|
|
|
COVID-19: WHEN WILL IT END?
Will we have normality by Spring, and herd immunity by Autumn? How optimistic can we be that a vaccine will be developed, deployed and administered by mid-2021?
A thought-provoking webinar, chaired by IEA Director of Communications Annabel Denham, looked back to historical precedent and forward to inoculation with IEA Head of Education Dr Stephen Davies, oncologist and co-signatory to the Great Barrington Declaration Professor Karol Sikora, science journalist Laura Spinney, and The Times's Science Editor Tom Whipple.
Professor Sikora expressed concern on the issue of "health vs health," saying:
"The three diseases you just can't put on the shelf are cancer, heart attack and stroke. If you don't treat those immediately, or in cancer's case within a month, you're going to lose people from those diseases."
His fear is that lockdown scares people to the point where they don't turn up to GP appointments or go to hospitals after a referral:
"We know [this is occurring] because the number of cancer patients has dropped off.. The NHS needs to do three things now: first, treat Covid patients when they come in; second, deal with the typical winter pressures; third, continue treating cancer, heart attacks and strokes."
In his opening remarks, Tom Whipple said that we are likely going to end up with an endemic Coronavirus that will be with us for good. "We've got this for life, but [with the distribution of a vaccine] we'll be back to semi-normality by next winter."
Laura Spinney discussed long Covid and how these lingering symptoms of breathlessness and fatigue, which seem to affect a younger tranche of the population than the acute disease, may strengthen the case for lowering the infection rate through lockdown. She expressed concern over our public health messaging, saying that it might give rise to complacency among those not in the elderly or vulnerable category.
And Dr Stephen Davies argued that "imposing a lockdown is a major failure of public policy, for any government". He emphasised the need for an effective Test, Trace and Isolate system. The issue across Europe, he said, has been with the "I" part, reflecting a lack of state capacity and poor social compliance.
Back in April, Steve authored the IEA briefing paper "Going Viral: The History and Economics of Pandemics," which predicted that this crisis would last 18-24 months. In his view, normality won't return for a year from now, perhaps by May 2021 "if we are lucky". Policy should reflect this.
Read Going Viral here, or watch Steve's webinar based on the paper here.
|
|
|
|
IN THE MEDIA
The second nationwide lockdown is upon us, and with it the announcement on Thursday that the furlough scheme will be extended until the end of March 2021. IEA Editorial and Research Fellow Professor Len Shackleton expressed dismay at the news, saying:
"The renewal of the full furlough scheme means another large addition to government borrowing and increases the likelihood of damaging tax increases in a recession."
Len added:
"It means that we will still be keeping substantial numbers of people in artificial 'employment' when there is little prospect of their being able to return to work in their pre-pandemic job. Of the 2 million still in furlough at the end of October, it has been estimated that about 400,000 will eventually lose their jobs.
"This new furloughing will inevitably increase the numbers of those with no real job to return to, as more and more businesses cut back on planned employment or give up the struggle entirely."
Instead, the labour market expert suggested that:
"It might be better in the long run to give a lump sum or enhanced Universal Credit to workers in this difficult position, to support them while they search for new employment, rather than extending the period of suspended animation."
His comments were covered in The Times, the Financial Times and the Daily Mail.
And as the Financial Times reported that a second national lockdown would dash hopes of an economic recovery in the UK, IEA Economics Fellow Julian Jessop shared his views on the possible impact.
Julian stated that, while the economic hit would likely be lessened by the continued opening of schools and business preparedness, if the damage were only a fifth as bad as the first lockdown it would still deliver a knock to GDP of at least 5 per cent. Read the article in full here.
IEA Director General Mark Littlewood was quoted in the Daily Mail voicing concern that the cure might now be worse than the disease. He added:
"We seem to have learnt the wholly unsurprising lesson that a relaxation of restrictions leads to an increase in the infection rate. Rather than putting the entire economy in the deep freeze while we wait for the miracle of a vaccination to come on stream, we need to find smarter ways to live with the virus."
The economic consequences of these fresh restrictions were also explored and analysed in this week's Live with Littlewood. Host Mark was joined by yet another fantastic cast: Chairman of Reform UK Richard Tice; Spiked’s Brendan O’Neill; John Longworth, Co-Founder of Leave Means Leave and Chairman of the Independent Business Network; Financial writer (and comedian) Dominic Frisby; Forecaster and researcher Jonathon Kitson; and the IEA’s Annabel Denham.
And to offer expert analysis on the US election, John Tillman of the Illinois Policy Institute, Patrick Basham of the Democracy Institute and Michael Carnuccio, founder of the Oklahoma City-based JTK Group also joined the panel. Catch up on the lively debate here.
With a second lockdown thrusting UK welfare policy into the spotlight, Mark wrote in his Times column that there are "reasons to be sceptical" about a Universal Basic Income, alluring though its simplicity may be. Mark argued that a "reboot" of the welfare system following the pandemic would be unavoidable and probably welcome but that a new system would need to be "better at targeting funds and providing incentives". Read here.
|
|
|
|
THE OCTOBER ISSUE
The October issue of Economic Affairs, the IEA's academic journal published in conjunction with the University of Buckingham, is now available online and in hard copy.
This issue includes articles on privatisation of the BBC, regional trade agreements, classical liberals and social justice, the effect of barriers to entry on income equality, and much more.
If you are interested in subscribing to the journal, please follow this link.
|
|
|
|
YOU'RE INVITED
* Institute of International Monetary Research Money Webinar Series
The Institute of International Monetary Research will continue its Money Webinar Series with one more session this month.
On Wednesday, 11th November at 4pm, the Bank of England’s Ryland Thomas will discuss the Bank as Lender of Last Resort in the 19th century.
You can register and find out more here.
* IEA Book Club Webinar with Charles Goodhart and Manoj Pradhan
The IEA Book Club is delighted to host renowned British economist Charles Goodhart and Manoj Pradhan for an upcoming webinar, discussing their latest book "The Great Demographic Reversal: Ageing Societies, Waning Inequality, and an Inflation Revival". The webinar will take place at 6pm on Thursday 12th November, and will be chaired by IEA Senior Academic Fellow Professor Philip Booth. For more details, please follow this link.
This event is strictly for IEA Book Club members. For more information on the Book Club please feel free to contact us with any questions at [email protected].
* The Budget Challenge and Monetary Policy Essay Prize
The Budget Challenge
Teams of up to four A-level students can submit a Budget with taxation and spending policy for the UK in the coming financial year, as well as a brief analysis of the macroeconomic conditions with a broad policy and strategy response. There is a prize of £1,000 for the winning team and their school.
Deadline: Friday 29th January 2021; please submit to [email protected]
Monetary Policy Essay Prize
Will the pandemic be inflationary or disinflationary? The understanding of how central banks make policy decisions is key to analyse a modern economy, particularly since the outbreak of the Global Financial Crisis in 2008/09.
This competition offers a unique opportunity to contribute to the better understanding of money and its role in the making of monetary policy. The Essay Prize is open to current Year 12 and Year 13 students as well as all Undergraduate and Postgraduate Students at UK universities. There are prizes up to £500.
Deadline: Monday 18th January 2021; please submit to [email protected]
|
|
|
|
|
