Trade is a long game, so we must look beyond FTAs and make marginal gains

New York and London frequently vie for the crown when it comes to the title of the world’s leading financial centre. But as well as competing, we share a special relationship.

The Big Apple was the first stop on my visit last week to the United States, which came at an opportune moment as the City and the UK look to strengthen our international partnerships.

With just over a week to go before parliament votes on the Prime Minister’s proposed Brexit deal, I travelled across the Atlantic to speak to our American cousins about the political landscapes in both our countries and what these environments might mean for the future of UK-US services trade.

While there is still plenty of uncertainty around the UK’s future trading agreements with the EU, on the world stage one thing is clear: post-Brexit, the US will remain a vitally important trading partner with which we can forge new relationships.

The numbers alone indicate the scale of these new opportunities. We are each other’s single largest foreign investors, and more than 2.5m jobs depend directly on those investments. Two-way trade totals more than $235bn annually, more than £16bn of exports to the US are in financial services, roughly a quarter of the total.

Leaving the EU gives us the chance to increase this trade even further, and the ability to forge a world-leading bilateral relationship by integrating our financial markets to generate jobs and growth.

Every time I come to the States, I hear real ambition for a wide-reaching UK-US Free Trade Agreement (FTA).

Travelling to Washington, I spoke to the US trade representatives for Europe about the pending FTA between Canada, Mexico, and the US (USMCA), which is an ambitious agreement that contains some interesting pointers for our sector – most notably on local data storage requirements and investor protections.

While there was agreement on both sides that the USMCA can provide a great starting point for putting together a creative trading relationship between the UK and US, there was also recognition that trade is a long game, with FTAs being just one of several trade policy tools available to us.

In fact, it is possible to build cooperation mechanisms by taking a “marginal gains” approach to strengthen regulatory and supervisory relationships. This could come in the form of MoUs, informal agreements, and regulatory dialogues. There are plenty of existing channels in place to help facilitate these discussions. Let’s not forget that any future UK-US bilateral trading relationship must be underpinned by international standards – another area where our two countries can work together.

Earlier this year the International Regulatory Strategy Group released a report calling for improved global regulatory coherence, highlighting the benefits of ensuring functioning global markets, including increasing choice and reducing costs.

By forging a bilateral “superhighway” in services, powered by nimble application of global standards, the UK and the US can provide future leadership in the international arena, and continue to set an example for the rest of the world in financial services.