By Geoffrey Smith
January 26, 2017

British Prime Minister Theresa May flew into the U.S. for a two-day visit Thursday, hoping to receive the blessing of the new leader of the free world for her vision of a U.K. outside the European Union.

With President Donald Trump already on the record as praising ‘Brexit’ and promising a deal on trade “very quickly”, she’s already assured a warm welcome in the White House. And like any British Prime Minister of the last 70 years, she’ll be anxious to talk up traditional ties of language, values, trade and investment to demonstrate closeness with the U.S.

Clarity on a future trade deal is highly unlikely at this stage — but right now, both sides might be happy just to create some positive mood music.

“It’s politically very beneficial on two fronts,” said Rem Korteweg, a trade expert at the London-based Center for European Reform. “It works for Trump in that it shows he’s not anti-trade and not protectionist, and…it’s in the British interest right now to show that it has a hedge in Washington, whoever’s in the White House.”

Leaving the EU and its Single Market threatens to leave the U.K. more dependent on good trade terms with the U.S. than at any time in the last 45 years. Fortunately for May, she has at least three things going in her favor.

Firstly, and most importantly, there is Trump’s wholehearted support for Brexit. Indeed, he may support it more sincerely than May, who campaigned against leaving back in the first half of last year. “I thought the U.K. was smart in getting out,” Trump told The Times of London in an interview at the weekend. “I think Brexit is going to end up being a great thing.”

Secondly, May has an extensive and, until the dollar’s sharp appreciation last year, essentially balanced network of existing trade and investment ties to build on: the U.S.’s annual deficit on goods and services with Britain averaged a comparatively small £27 billion ($35 billion at today’s rates) over the decade to 2015, compared with $367 billion for China and $60 billion for Mexico last year.

Thirdly, neither side has hangups about the primacy of national security in the debate over data retention and privacy. May pushed through the most sweeping surveillance powers in any major Western democracy last year. “U.K. – U.S. pragmatism can offer a path that is globally compelling for the sustainable deployment of data-driven technologies,” according to British-American Business Council CEO Jeffries Briginshaw.

May’s big problem, says CER’s Korteweg, is the same one she will have the world over as she tries to build a new network of trade ties for “Global Britain”: no-one will talk turkey with her on post-Brexit trade arrangements until they know what the U.K.’s final arrangements with the EU will look like. And, as with her EU dealings, the relative weight of the two economies stacks the cards against her. The U.S. economy is over six times bigger than Britain’s.

U.S. companies have invested over £253 billion ($315 billion at current exchange rates) in the U.K., but much of that has been predicated on the assumption that being based in the U.K. ensured access to a Single Market of nearly 500 million people. May confirmed last week that the U.K. will leave that Single Market and try to renegotiate access from scratch. That triggered a flurry of reports about U.S. banks, in particular, relocating operations out of London to other European centers.

“Can you imagine the U.S. Trade Representative agreeing to anything before it has clarity on the value of the U.K. market?” says Korteweg.

It will cost neither Trump nor May anything to defend the current baseline Friday, with a promise that whatever the U.K. agrees with the EU over the next two years, both sides will continue to have at least the same trading rights that they enjoy today. But building on them will be a conversation for another day.

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