PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Potential U.K.-U.S. Accord Offers Hope on Trade Front

By at 23 June, 2017, 10:28 pm

by Raymond J. Keating-

While nations govern many of the rules in the arena of international trade, it’s critical to keep in mind that nations do not trade, but instead, individuals and businesses trade with each other, within nations and across international borders. So, when it comes to trade accords, the basic idea is pretty straightforward, that is, reduce governmental barriers, such as tariffs and quotas, so that opportunities expand for entrepreneurs, businesses, workers and consumers.

After President Hoover signed the protectionist Smoot-Hawley Tariff Act of 1930, which led to a collapse in global trade, and played a key role in triggering and deepening the Great Depression, the U.S. subsequently played the key role in leading a global move toward reduced trade barriers, particularly post-World War II, with an acceleration during the administrations of Presidents Ronald Reagan, George H.W. Bush, Bill Clinton, and George W. Bush.

Unfortunately, that came to stop during much of the Obama administration, and uncertainty regarding trade has increased with President Trump pulling the U.S. out of the Trans-Pacific Partnership, and uncertainties about the future of the North American Free Trade Agreement.

However, at least one important positive seems to be emerging, that is, a potential trade deal between the United Kingdom and the U.S.

Once the United Kingdom voted to leave the European Union (i.e., the Brexit vote), the door was opened to a bilateral trade agreement with the United States. And in fact, President Trump and Prime Minister Theresa May spoke about a trade agreement in January, and pledged, once again, during the Group of Seven meeting in late May to pursue such a deal once the U.K. completes its exit from the EU. The U.K. and the EU have until late March 2019 to complete a Brexit agreement.

An accord reducing barriers to trade and investment, and further securing property rights (including intellectual property) would be a clear plus for individuals, entrepreneurs, businesses and workers in each nation. According to one report, U.S.-U.K. negotiations are set to start next month. That same report noted that the U.K. wants those negotiations to very much include trade in services, with the same going for hammering out a trade agreement between the U.K. and the EU before the Brexit deadline.

Trade already is considerable between the two nations. On the goods front, the U.K. ranks as the United States’ seventh largest trading partner.

For good measure, small businesses overwhelmingly populate U.S. firms that export to the U.K. (based on U.S. Census Bureau), with 56% of such firms having less than 20 workers, 71% fewer than 50 workers, and 81% less than 100 employees. Reducing barriers with the U.K. would  be good news for small businesses.

In the end, free trade reduces costs through enhanced competition and the removal of trade barriers; expands choices and lowers prices for consumers; keeps U.S. firms competitive; and opens new markets and opportunities for U.S. entrepreneurs, small businesses and workers. That goes for trade with the U.K., nations in the EU, Mexico, Canada, all of the nations around the Pacific Rim, and beyond. It is critical that the U.S. reclaim its global leadership role in advancing free trade. Let’s hope that movement on a U.K.-U.S. trade accord is a positive signal on that front.

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP:  The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.

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