President Trump promised Britain a broad free-trade accord once it leaves the European Union, an offer that would require the U.K. to secure the decisive break with the bloc advocated by prominent Brexit backers in the race to succeed Prime Minister Theresa May.
Such an agreement, though, could take years to materialize even after an abrupt split and would face multiple political hurdles in the U.K. and the U.S. At a press conference with Mrs. May on the second day of a three-day state visit, Mr. Trump talked up close economic links between the U.S. and its ally and said a free-trade pact had “tremendous potential” to boost trade between the two countries.
“As the U.K. makes preparations to exit the European Union, the United States is committed to a phenomenal trade deal between the U.S. and the U.K.,” he said. Brexit backers have long touted the prospect of a free-trade accord with the world’s biggest economy as a major prize from Britain’s EU withdrawal. But negotiating such a deal would require the U.K. to ditch many EU regulations and pull out of the bloc’s customs arrangements, threatening existing trade with the 27 remaining member states.
The issue strikes at the central question in Britain’s tortuous Brexit debate: whether to hug the EU close after Brexit or engineer a decisive, but potentially disruptive, split. Divisions over this choice have riven the main political parties since voters chose to leave the bloc in 2016, leaving Parliament in gridlock. How close the relationship is has far-reaching consequences for the economy, relations with Ireland and the U.K.’s ability to set its own rules on immigration and other policy areas.
Mrs. May presented a Brexit plan to lawmakers she billed as a compromise that would allow the U.K. to strike out on its own while maintaining close economic links to the EU. But lawmakers on three occasions rejected it, critically injuring her premiership. She is due to step down as prime minister on Friday, though will carry on official duties while a successor is chosen, a process that could take weeks.
The U.K.’s break from the EU, originally scheduled for March 29, has been delayed to Oct. 31. Mr. Trump’s promise of a post-Brexit free-trade deal is catnip to advocates of a decisive split, including former Foreign Secretary Boris Johnson and former Brexit secretary Dominic Raab.
Mr. Trump has expressed support for Mr. Johnson, who is considered the front-runner to become the U.K.’s next prime minister, and has said the U.K. should swiftly break with the EU without a deal to smooth its exit. Multiple studies, including analyses by the U.K. government and the Bank of England, have suggested such an abrupt split would damage the U.K. economy.
Mr. Trump spoke with Mr. Johnson for 20 minutes by phone on Tuesday, a person close to the former U.K. foreign secretary said. Mr. Trump is also close to Nigel Farage, a fierce advocate of a decisive break with the EU who leads the U.K.’s upstart Brexit Party. Mr. Farage was seen on Tuesday leaving the U.S. ambassador’s residence in London, where the president was staying during his visit.
British lawmakers who favor close ties to the EU, along with many economists, are skeptical about the benefits of a U.S. trade deal. A 2018 government analysis concluded that leaving the EU would leave the U.K. economy smaller after 15 years than it would have been had the country remained a member state. The size of the hit ranged from 0.1% to 9% over that period, depending on whether the U.K. pursued close ties or opted for a decisive break.
Over the same period, free-trade agreements with the U.S. and other economies were forecast to boost the economy by 0.2%, the analysis found, irrespective of the manner of Brexit. The difference reflects the scope of the EU’s trading relationships, compared with more-conventional free-trade deals and the greater distances to the U.S. compared with Europe.
“The government must ask itself one simple question: Is such a negligible increase [in U.K. gross domestic product] really worth putting so many areas of the U.K. economy on the table for?” said Angus MacNeil, an anti-Brexit Scottish National Party lawmaker who chairs a parliamentary panel that scrutinizes U.K. trade policy. Some in the U.K. are hostile to the trade-offs that a deal with the U.S. could involve. British farmers worry the U.K. will be flooded by cheap U.S. imports, pushing them out of business.
Another British concern is the state-run National Health Service, which voters don’t want to see opened to American corporate involvement in any trade pact. In a sign of that sensitivity, Mrs. May said on Tuesday that parties to a trade negotiation decide what is and isn’t open for discussion. Mr. Trump had a moment earlier said “everything is on the table” in a U.S.-U.K. deal, including health care.
Meanwhile, a trade pact with the U.K. is likely to face resistance in Congress, where some Democrats have said they wouldn’t ratify such a deal if an abrupt and messy break between the U.K. and the EU undermines peace in Northern Ireland by requiring the imposition of border controls between the U.K. region and the Republic of Ireland.