The argument that Joe Biden is “bad” for a UK-US trade deal is too simplistic

George Lagarias, chief economist at Mazars, on three things investors should watch this week…

Joe Biden’s emergence as the apparent winner of the US election has been the cause of some scepticism to certain UK observers who feel that this could impede a trade deal with the US. We believe that the argument that Mr Biden is “bad” for a trade deal is too simplistic.

 
Mr Biden, a multilateralist, will seek to strengthen global relationships, not “punish” allies of the previous President.
 
Talks with the EU will probably now get back on track as the rules of the game coming January are known, and will revolve around a solution satisfactory to the Irish Republic. Insofar as Brexit does not threaten the Good Friday Agreement an even better deal is possible.
 
Joe Biden’s emergence as the apparent winner of the US election has been the cause of some scepticism to certain UK observers who feel that this could impede a trade deal with the US. Despite the PM’s very quick congratulatory note to the incoming President, concerns have risen that a trade deal would not be as easy to achieve, given Boris Johnson’s lack of personal rapport with Mr. Biden. Frankly, we believe that particular argument to be a bit simplistic.

It is frankly not plausible that Mr Biden, who will seek to restore global relationships, will seek to “punish” allies of the previous President. The “special relationship” goes far deeper than contemporary personal relationships, stretching into common ancestry, key alliances, language and culture. The United States has often built its global hegemony on the path trailblazed by Britain. It’s about the sharing of trade links, intelligence and a global visions. Acting as the doorway to Europe was only one -significant- way, in which that relationship bore fruit. 

As far as the trade deal itself is concerned, things are less complicated that they seem. 

Under Mr Trump, an “America First” deal would be sought by the US, which already has a trade surplus with the UK and would reasonably seek to expand it, creating a bigger deficit for the UK. It would be quicker and simpler to achieve but, for all the headlines it would generate, it would not necessarily be a great outcome over the longer term. 

Under Mr Biden, a multilateralist, it’s possible that a softer approach might be considered. The US has long sacrificed some growth for influence under all previous Presidents to Mr Trump. Mr Johnson is not a fundamentalist, if anything he has proven to be extremely flexible.

Talks with the EU will probably now get back on track as the rules of the game coming January are known, and will revolve around a satisfactory solution for the Irish Republic. 

We believe that, insofar as Brexit does not threaten the Good Friday Agreement, a truly better deal is possible. In other words, some concessions by the UK to the EU might mean some concessions from the US to the UK. And that’s how multilateralism creates multiple opportunity sets not available to bilateralism.” 

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