U.K. Engages U.S. Through State-Level Bilateral Trade

COMMENTARY Trade

U.K. Engages U.S. Through State-Level Bilateral Trade

Jun 3rd, 2022 3 min read
COMMENTARY BY
Anthony B. Kim

Research Fellow and Editor of the Index of Economic Freedom

Anthony B. Kim researches international economic issues at The Heritage Foundation, with a focus on economic freedom and free trade.
In exploring practical economic interaction at the state level, British officials in recent months have visited several U.S. states. Saowakhon Brown / Getty Images

Key Takeaways

It’s regrettable that the Biden administration has shown no interest in moving forward with the United Kingdom on a free trade agreement.

Now is not the time to slow and delay the much-needed economic recovery by employing more protectionist trade and investment policies.

Now is the time to marshal America’s greater security and economic engagements with its willing allies at the state level.  

“We are ready to progress negotiations on [a free trade agreement] when the U.S. is ready to do so, but we weren’t going to sit still.”

That unambiguous point—made by Ranil Jayawardena, the United Kingdom’s minister for international trade—reflects a forward-leaning, pragmatic trade-policy posture of post-Brexit Britain. 

Jayawardena underscored London’s intention to take a “twin-track approach” toward trade with the U.S., particularly prioritizing state-level agreements at this time, while waiting on Washington to pursue a more comprehensive bilateral trade pact.

In fact, it’s regrettable that the Biden administration has shown no interest in moving forward with the United Kingdom on a free trade agreement, undercutting the special relationship between the two longtime, like-minded, and willing allies.

During a White House summit with U.K. Prime Minister Boris Johnson in September, President Joe Biden poured cold water on the prospect of resuming negotiations for a free trade agreement with the United Kingdom.

Speaking to reporters in the Oval Office before the talks, Biden said, “We’re going to talk a little bit about trade today, and we’re going to have to work that through.”

In light of such apparent reluctance, many in Congress have urged the administration to resume the trade agreement negotiations with the U.K., with the latest push coming from Sen. Mike Lee, R-Utah, who initiated a resolution that passed the Senate last week.

Rather than standing still, post-Brexit Britain—which has been securing groundbreaking, innovative trade deals—has proactively decided to move ahead on its own.

In exploring practical economic interaction at the state level, British officials in recent months have visited several U.S. states, including Arkansas, California, Georgia, Oklahoma, and Texas, among others.

Notably, the U.K. signed its first state-level bilateral economic deal with Indiana on May 27. The trade and economic development memorandum of understanding focuses on deepening economic ties between the two and removing trade and investment barriers for businesses.

Although the memorandum is “not legally binding,” Jayawardena pointed out that the deal will “really help increase that bilateral trade even further, particularly by seeking to bulldoze some of those market-access barriers that get in the way.”

This kind of real, pragmatic, state-level engagement merits going far beyond the memorandum dimension—and it should, more than ever. The past two years have highlighted the necessity of pursuing practical ways to promote economic freedom, including more initiatives at the state level that engage the private sector in America’s strategic priorities consistent with free market practices.

From a broader policy perspective, encouraging America’s allies to engage with 50 states requires enhancing America’s competitive economic dynamism through policies that keep U.S. markets open and attractive.

Now is not the time to slow and delay the much-needed economic recovery by employing more protectionist trade and investment policies triggered by the COVID-19 pandemic.  

If ever there was a time to adhere closely to the principles of economic freedom, this is it. Any notion that America can deal with the ongoing pandemic and make the economic recovery stronger and faster without access to international investment and trade flows is wishful thinking.  

The Heritage Foundation’s Index of Economic Freedom has demonstrated for more than 25 years that economic openness and freedom yield better results for individuals around the world. The same is true for America’s states that reduce barriers to economic activities and allow entrepreneurs and companies to trade freely with the world. 

U.S. engagement with the world through trade and investment has been the framework upon which its prosperity rests.

On that note, America’s 50 states should take a more practical, strategic look at the countries that have indicated a willingness to forge closer trade partnerships with the United States.  

Implementing such forward-looking policies would generate and reinforce the economic dynamism and innovation at home and abroad that will lead to an expanded network of free markets and greater economic ties with the like-minded partners of the U.S., such as the United Kingdom.

In what must be a long-term, strategic effort, now is the time to marshal America’s greater security and economic engagements with its willing allies at the state level.  

To that end, Indiana’s signing of an economic partnership with the U.K.—which aims at encouraging greater trade and investment between the state and post-Brexit Britain—is a welcome step forward.

This piece originally appeared in The Daily Signal