“Brexit has caused a lot of uncertainty, a lot of confusion,” Emanuel Adam, director of trade and policy at British American Business, says. The transatlantic network, which represents more than 2,000 companies, asked its members if they thought Britain should leave the EU – 95% said no.
Fourteen months after the referendum, they are trying to adjust to an uncomfortable political reality.
Some of its American members have been working to anticipate the different types of Brexit and what they would mean. “That costs a lot of time and effort,” Adam adds. “That has, at least in certain cases, delayed investment decisions.”
Brexit is ambiguous. The UK could, as now weakened Prime Minister Theresa May still aims, leave the Single Market and the Customs Union and restart its trading relationship with the world. Or it could stay in both and remain party to EU deals.
Whether politicians are for or against Brexit, they have come to understand its success or failure by how fast the UK can agree trade deals once it leaves the EU.
The US is its biggest trading partner outside Europe. Barack Obama warned in 2016 that voting for Brexit would put Britain “at the back of the queue” for a trade deal with the US. Trump said the UK would be at the front of any queue. Last month, he said that he and May were working towards a “powerful” deal to be completed “very, very quickly”.
Voices from the UK-US business community have told HuffPost UK Brexit’s threat to existing arrangements looms larger than any opportunity for better trading it might present. Adam says, despite potential advantages of a new US/UK deal after a Hard Brexit, BAB’s members “more and more” would prefer Britain remain in the Single Market and Customs Union.
He says: “If we could take out the uncertainty that’s being created by Brexit; especially when it comes to the future access to the Single Market and Customs Union, that would be the perfect scenario for US business. But we do acknowledge the political situation is currently different one.”
No two countries in the world invest in each other as much as the US and UK – more than a trillion dollars a year. But part of Britain’s attractiveness to US industry is that it is a gateway to the EU which is a larger and “much more important” market, Adam says.
“There wouldn’t be any interest in the UK moving away from the EU. There’s certainly the feeling among the US businesses that trade agreements… couldn’t make up for the importance of the EU as a trading partner,” he says.
Adam says a UK/US trade deal could bring the City of London and Wall Street closer together. Britain and the US are more aligned in their economic thinking and TTIP, the EU-US trade deal Trump pulled out of, did little for financial services, he adds. But Brexit still poses a grave risk to Britain’s financial sector.
One EU rule that makes Britain attractive to Wall Street investment is the “passporting” that allows banks registered in an EU country to operate in the whole bloc. Andrew Henderson, a financial services lawyer with international firm Eversheds Sutherland, says losing this could mean US banks leave London.
When asked whether Wall Street thought the benefits of the UK being in the EU outweighed any potential gains from Brexit, Henderson said they did, largely because of the value of passporting.
Dr Adam Marshall, the American-born director general of the British Chamber of Commerce, says his American members with operations in Britain are “just as keen” to learn what Britain’s trading relationship with the EU will be as what its one with the US will.
He said: “They use the UK as a base for accessing other European markets. So the terms of trade between the UK and the EU is as much a priority for lots of American companies we see here as it is for UK companies.”
After Trump pledged to do a deal with the UK quickly, Marshall wrote in The Observer that Britain’s inexperience in such negotiations could only hurt it. Britain hasn’t done a trade deal since 1973.
Marshall says trade agreements can take more than a decade to benefit smaller businesses and advocates focussing on “technical, not very sexy things” like simplifying customs procedures rather than rushing to a deal.
“Businesses feel much more keenly what they could lose… than worry about what they could gain hypothetically from a new deal,” he tells HuffPost UK.
“We’ve heard Mr Trump talking about a very big, very exciting deal but there are some very important practical realities that need to be taken into consideration.”
The US has a track record for doing trade deals quickly. It struck a deal with Jordan in just 18 months and one with Israel after 29. For context, Canada and the EU began negotiating Ceta in 2009 and signed it in 2016.
One political analyst, whose Brexit commentary went viral on Twitter, agreed a quick deal would be bad for Britain.
“Steve Analyst”, who lives in Washington and prefers to be anonymous, wrote a thread of tweets about how Britain was the architect of many EU policies and institutions over the decades, only to walk away from the whole project.
He quotes Simon Evenett, professor of international trade at the University of St. Gallen who said: “I can’t think of a more brutal way for novice UK trade negotiators to learn the ropes than negotiating with the Americans.”
“I hate to contradict him, but learning the ropes negotiating with the Americans and the EU at the same time, or one after the other, is going to be more brutal,” Steve Analyst tells HuffPost UK.
“If the UK go into this looking for a ‘quick’ trade deal, then it is very likely they will come out with a bad deal.”
As an example of a quick deal, he pointed to the AUSFTA, the deal between Australia and the USA that, according to one study, reduced both countries’ trade with the rest of the world by $53 billion over seven years. It was particularly bad deal for Australia’s sugar industry.
“It was reported that not a single grain of Queensland sugar had made it onto American soil,” Analyst said. “This is a real possibility if the UK wants a quick completion.”
Emanuel Adam says the US “will not be the easiest negotiation partner” and it tends to apply “a certain template” to its deals. He is keen for the UK to do what it can to preserve UK-based companies’ ability to move employees around their European offices for temporary work. He adds US business would struggle to adjust if post-Brexit Britain had a system of regulation very different to the EU’s.
“I wouldn’t want to see a lopsided deal. If we rush, our inexperience could be a liability,” Adam Marshall says. “A free trade agreement is not a trophy… It’s not the single most important thing you could do.”
He says many US businesses have operations in the M4 corridor, where Heathrow and the EU give them easy access to the continent.
If a theoretical post-Brexit US deal were pitched to businesses operating in the UK, he says, they would likely respond: “Yeah, that’s great but I’m more worried about the fact my house is burning down in the mean time.”