What should she say?

25 January 2017

After seven weeks down under, I return to find the Brexit scene decisively altered. This is not so much by the Supreme Court’s judgement, always expected, less hurtful than it might have been and readily overcome given the parliamentary climate. The game-changer is May’s trip to Washington this Friday, as the first overseas Head of Government to meet President Trump. This establishes that the post-election stumbles have been righted and attests to a mutual interest in constructive dealings.

So what should May say to him? Is she simply trying to cement a personal relationship, or should she get into specifics? This has only to be asked to be answered: any relationship is built upon specifics. In this instance, both sides will also want a concluding press-conference which puts flesh on the bones.

So let’s ask ourselves, what are the two sides after? At this early point, Trump is demonstrating credibility by signing executive orders which begin to do what he promised (parenthetically, not the least by complying with the news values of his antagonists). He’s still keen on differentiating himself from Obama, but the fact of May’s visit achieves that. Friendship with Britain also plays well with many of his core voters - constitutionally well-disposed to this country - but May will do well not to rely on sentiment alone. In the medium term, the success of Trump’s presidency will turn on his central economic promise: jobs for American workers. As to foreign policy, he is less interested in reassuring fractious allies than in pressing his agenda: security for borders, bilateralism for trade, burden-sharing for defence, and defeat for Islamism.

In principle, this poses few challenges for May, bearing in mind her fundamental objectives with the new man: a clear commitment to NATO and trading alternatives to the EU. The former should be fine, though we may have to goose up our defence expenditure to show willing. Trade is more problematic. May’s dilemma is that Trump is raising the stakes with his proposals for border taxes and the American way with trade talks is not encouraging: their negotiators take a notoriously tough line, animated by cues from the private sector. This means that May needs to prevail upon Trump to break the mould in some way, but without challenging his commitment to American jobs. To turn to one or two specifics:

The two countries don’t export much by way of consumer goods or food to each other, so this ought to be upside all round. Of course the Brits are bonkers about GM crops and the Americans might not welcome cheap cars from Nissan, but would these be deal-breakers?

As to capital goods, both sides are already well ensconced with their transatlantic customers. The civil business of our biggest exporter, B.Ae, is entangled in the Airbus joint venture and its European military business is similarly enmeshed in EADS. Rejigging any of this would threaten jobs at Boeing and elsewhere unless B.Ae also brought along new customers. This would be extremely disruptive, as the joint ventures are central to European - in particular French - industrial policy and underpinned by Government to Government agreements.

As to services, the two countries are more or less on the same page about intellectual property rights. By contrast, the Americans have much larger private sectors in healthcare, tertiary education and broadcasting, on which the Brits could not be more sensitive. May is fortunate that Trump may incline to ignore any clamour to open up the UK in these areas as little related to rustbelt jobs.

Finance poses few problems. Each country is already the largest direct and portfolio investor in the other. On the other hand, the commitment of US investment banks to London is up in the air. The PM could ask Trump to lean on them to stay their plans to lighten their City footprint. This has no implication for US jobs so you never know.

Finally, when negotiating TTIP and TPP, the US raised hackles by pressing for the private sector to be able to sue for access. If this is still the thing, the topic lends itself to compromise, as to transition periods, adjudicatory body and so on.

More generally, Trump could press May to sign up to his trade bilateralism. At this point, we’ve got nothing to lose, so there may well be text to that effect. Net, net, May has something to offer, Trump has no reason to mess her up, so stand by for a positive communiqué. Will there, however, be a timetable (other than the well-signalled state visit)? The PM will be bearing in mind that Trump’s clout could have a short shelf-life. After the flurry of executive orders, he’s going to need support from Congress and the civil service he's made no bones of  despising. I’d be looking for serious blow-back from those offended by the man or his works or whose interests are taking a hit. It’s always possible that his opponents will be rattled if his policies begin to speak for themselves (think of the bullish Dow), but it’s equally possible that in short order the new President becomes another lame-duck á la Obama. So May had best push things along.