What’s ‘ee talkin’ abaht?

Britain should negotiate trade deals with individual US states as a backstop while Boris Johnson tries to seal a post-Brexit free trade agreement with America, a former trade secretary will say on Monday.

Liam Fox will point out that four US states – California, Texas, Florida and New York – would be members of the G20 if they were independent nations, and that many deals could be struck with states, rather than the US as a whole.

While tariffs on goods can only be negotiated by Washington, deals on services, which account for the majority of Britain’s transatlantic trade, can be sealed on a state level, unlocking billions of pounds of business for the UK economy.

Not really, no. The US Constitution means that the Feds are the people who deal with trade. It’s not so much the over the national borders thing, it’s the interstate trade that they’ve a lock on, the Commerce Clause.

They are serious about this too. Back when FDR was trying to screw things up with the New Deal a farmer decided he’d not like to submit to the Feds telling him how much wheat he could produce or not. So, he said it was only for his own consumption therefore bugger off.

The Feds argued, and the Supreme Court agreed, that if he didn’t grow it then he would buy from some other farmer. Who might be across state lines. That therefore made restrictions upon his growing his own wheat for his own consumption a matter of interstate trade and thus something the Feds got to regulate under the Commerce Clause.

Brits selling insurance in NYC is sufficiently different to get around that, is it?

19 thoughts on “What’s ‘ee talkin’ abaht?”

  1. My own experience of this is that the main obstacle to trading into the US is their legal system. The moment you have work , products or, worse still a legal presence in the States you are subject to their courts .
    Decisions made in them are or have to be followed in UK courts .This does not entail the US awards but if you have a presence in the US you can be cleaned out by awards typically ten times the size of the UK . I cannot see how any trade agreement will make any impact on this or on the enormous non tariff obstacles to providing services of all kinds complex products and so on. In areas like Pharmaceuticals a company like GSK already has a huge US presence
    The US trade deal cannot and will,not be anything comparable to the EU and we do of course trade with the US already where it is possible
    The treasury saw almost no advantage in this whole exercise the effect of which( on GDP) is dwarfed by the impact of reduced immigration

  2. My own experience of this is that the main obstacle to trading into the US is their legal system

    If only we’d stayed with the simple, easy to understand, and painless EU legal and regulatory system.

    we do of course trade with the US already where it is possible

    Yes, somehow we manage to trade hundreds of billions of pounds worth every year. It’s like a bumblebee’s flight characteristics – none of the big brains in the civil service can work out how it’s possible to trade with the world’s largest and most dynamic economy.

    The treasury saw almost no advantage in this whole exercise the effect of which( on GDP) is dwarfed by the impact of reduced immigration

    But those Hungarian car washers were going to make us all rich*! Rich, I tells thee!

    *Juicing GDP figures to justify the government piling up ever more debt in our names while eroding per-capita wealth and ratcheting up unfunded liabilities on the welfare state counts as “rich”.

  3. Actually,Tim, selling insurance into New York requires a licence issued by New York and it has a separate insurance commissioner. The regulations vary from state to state. British insurers do deal with each state individually.

  4. There ‘s very good comment somewhere which answers all questions and resolves all issues. Unfortunately I posted it too quickly, so you’ll never read it.

  5. Bloke in Germany in New Jersey

    Oh fuck it. I’m not typing that all out again because I’m supposedly “posting comments too quickly”.

    Fuck this.

  6. The Commerce Clause was a good idea, keeping states from screwing over interstate trade. Shipping chicken wings to Virginia from South Carolina, the North Carolinians couldn’t tax ’em.

    The Feds perverted this authority into their being able to regulate CONTENT. Like what color the wings have to be.

    But the people like fascism. They want the government to regulate chicken wings. Perversion of the Commerce Clause keeps them from having to pass an amendment to the Constitution to give them such authority. And once you let government regulate food color, they can regulate anything they want to. They see the people accept it. And that is really the only thing they need.

    No one questions Washington’s authority anymore. The arguments are on the line of whether or not something is a good idea, not whether government even has the authority. Hence, the government of “The Land of the Free” bans 100w light bulbs.

  7. “The Feds argued, and the Supreme Court agreed …”: the Supreme Court is so often an abomination, ruling the US with a whim of iron. That’s presumably why Toni Blair instituted one for us.

  8. As john77 points out, financial services in the US are largely regulated separately by each state, which is why there are very few national providers.

  9. What a world it is in which we live, a world in which insurance is not a financial service.

    I blame the lawyers/politicians.

  10. @Steve January 20, 2020 at 9:46 am

    Excellent riposte

    @Diogenes January 20, 2020 at 10:00 am

    Rather worrying that Fox doesn’t know this already…

    I lost confidence in Fox when he didn’t resign after “Chequers”; confirmed when he changed tack in Nov 2018 and his slogan became:
    – “Any Deal is better than No Deal”

    @Gamecock January 20, 2020 at 3:12 pm

    Banks need a state licence

  11. @ Gamecock
    As Pcasr said, banking licences are issued by individual states so until relatively recently most banks were limited to their home state. Also different states have different laws on mortgages – which was one of the reasons for the 2007 crash. [Most New Yorkers and Europeans didn’t realise that Californians and Coloradons could just walk away whistling if the house was worth less than their debts so they treated portfolios of mortgages as Investment Grade A securities until they got mass defaults.]

  12. The joys of the American banking system, also one of the reasons why cheques (or checks) are still widely used and automated deposits and direct debit type system and chip and pin lag behind the rest of the world.
    As for state sales tax that’s another mess to deal with, recall dealing with something along lines of company A sells something to company B which A manufactures at site X in another country and ships to B’s site Y in a different state, but if the invoice is sent from A’s office to B’s office and they are in the same state then state sales tax applies or some such.

  13. Insurance is a different kettle of fish. I stick with my original declaration: Chris Miller is wrong. State regulation of insurance is big time. State regulation of financial services is quite limited. The Feds are the big regulators of financial services.

  14. @ Gamecock
    This is clearly a case of American being a different language from English. In English “financial services” includes Insurance and Banking and Stockbroking (often called “Investment Banking”) and foreign exchange and pawnbroking and some smaller categories but not estate agents (“realtors) or lawyers. What does it mean in American?
    Chris Miller is quite correct in English; he is an Actuary with over 40 years’ experience in financial services, both UK and international so he does know what he is talking about.

  15. Newmania
    January 20, 2020 at 8:47 am

    . . .

    Decisions made in them are or have to be followed in UK courts

    No they don’t. No more than decisions made in your courts have to be followed here. And the US has a long and gleeful legal tradition of ignoring UK libel rulings, for example. While the UK will decline to extradite people facing the death penalty over here.

    Now, your US-based assets are certainly at risk. And you might be prevented from trading further in the US, but a US judgement is absolutely not binding on UK courts to uphold and enforce.

  16. john77
    January 20, 2020 at 10:01 am

    Actually,Tim, selling insurance into New York requires a licence issued by New York and it has a separate insurance commissioner. The regulations vary from state to state. British insurers do deal with each state individually.

    They do. But they don’t negotiate trade deals with states that can get around Federal tariffs and import controls. Unless you’re going to get the state to rebate what you paid in Federal tariffs, you’re still paying that tariff. The states can’t even impose additional tariffs on their own.

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