Saturday

17th Nov 2018

Column / Brexit Briefing

Brexit Britain cannot rely on Trump's trade vows

  • The United Kingdom's prime minister Theresa May became the first head of government to sign the White House book under Trump. (Photo: @WhiteHouse)

With or without Donald Trump’s Muslim ban, the sheen of success from Theresa May’s trip to Trump’s disunited states was always likely to wear off quickly.

Aside from demonstrating that the obsession of British prime ministers with the ‘special relationship’ endures, the main ‘victory’ May secured in Washington was an agreement to maintain the trading relationship between the US and UK immediately following Brexit, and the promise of a future trade deal.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

In public relations terms, this was something of a coup. Having pivoted away from Europe, the May government is desperate to bolster its ties with Washington.

Given that Trump’s veto of the Trans-Pacific Partnership (TPP) by executive order surely extinguished what little hope remained of concluding the EU-US transatlantic trade and investment partnership (TTIP), the press conference references to a future UK-US trade deal probably ruffled a few feathers in Brussels.

May and her ministers have vowed to make the UK a leading global free trade champion - Britannia unchained.

International trade secretary Liam Fox has said the UK is “discussing the possible shape of new agreements” with at least 12 countries, including the US, China, India, Australia and New Zealand. Fox’s department - still only six months old - is already sending its civil servants on scoping missions across the world.

TTIP repeated

The process of brokering post-Brexit trade agreements while remaining an EU member will, however, be a tricky balancing act legally and politically.

Finance minister Philip Hammond told reporters last week that Britain remained a “fully engaged member of the European Union” and would follow its rules “precisely”.

The rules he was referring to prohibit countries from pursuing their own trade agreements while they are EU member states. Nothing can stop trade ministers and their civil servants from meeting their counterparts, but the more public the UK’s overtures are to potential suitors, the greater the risk of antagonising the EU.

Just as problematic for the UK is the reality that the politics of free trade is in retreat. Brexit, like Trump’s election, was also borne out of a backlash against globalisation, including unfettered corporate power. For his part, Trump is unashamedly protectionist, not to mention unpredictable. The room for manoeuvre on both sides is already quite limited.

Consequently, a UK-US trade deal will struggle with many of the same problems with public opinion as the TTIP faced. The Americans were unwilling to put financial services - the UK’s most lucrative industry - on the table when talking to the EU, fearing that any deal could undermine their Dodd-Frank omnibus bill on financial regulation. There’s no reason why their stance will be different for the UK.

The prospect of chlorine-treated chicken and hormone-treated beef from America coming into supermarkets will not be viewed with any more enthusiasm by British consumers than their counterparts on mainland Europe.

Similarly, the question of Investor-State Dispute Settlement (ISDS), which derailed the EU-US talks, will be problematic, particularly if the UK sticks to the EU position of demanding a new Investment Court that would prevent companies from claiming compensation simply because government regulation led to a loss of their profits.

In trade talks, the devil is in the detail. Tariff barriers are the low-hanging fruit. Duty barriers between the EU and the US are already low - under 3 percent in most cases.

When talks on TTIP began in 2013, the European Commission estimated that scrapping the remaining tariffs would be worth an additional €25 billion across the bloc. For a UK-US deal to be truly valuable economically, in other words, it would need to cover services, investment, energy and raw materials, as well as regulatory issues. Scrapping tariffs would merely be the tip of the iceberg.

The more ambitious the scope of an accord, the longer it takes to agree. The EU-Canada deal (CETA), widely regarded as the most ambitious the EU has ever agreed, is finally working its way through the European Parliament after seven years of negotiations and an attempted veto last November by Wallonia.

Besides, a blueprint drawn up by Peter Navarro, now Trump’s trade adviser, contains a warning for the UK and, indeed, the EU, by arguing that future US trade deals “must… decrease the trade deficit, and strengthen the US manufacturing base”. The UK, for example, ran a £40bn trade surplus with the US in 2015, despite running a deficit with the EU.

Getting the blessing of The Donald on a future UK-US trade pact was rich in symbolism, but not much else.

EU head calls Trump a 'threat' to Europe

Donald Tusk, the symbolic head of the EU, has described US president Donald Trump as a “threat” to Europe alongside Russia and China.

TTIP's future in Trump's hands

EU commissioners admit they "frankly don't know" what the US president-elect intends to do with the US-EU trade talks.

News in Brief

  1. US warns EU banks and firms against trading with Iran
  2. Merkel urged Romania not to move embassy to Jerusalem
  3. Protesters call for Czech leader to step down
  4. Former German chancellor labelled 'enemy' of Ukraine
  5. French lead opposition to Brexit deal on fisheries
  6. Private accounts of Danske Bank employees investigated
  7. UK's May defends Brexit deal to MPs, after ministers resign
  8. Brexit MP calls for 'no confidence' vote on May

Why 'Spitzenkandidat' is probably here to stay

The power of the parliament to 'appoint' the president of the EU Commission is new, highly-contested - and not universally understood. In fact, even some of the lead candidates to replace Jean-Claude Juncker are against it.

Stakeholders' Highlights

  1. NORDIC COUNCIL OF MINISTERSTheresa May: “We will not be turning our backs on the Nordic region”
  2. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit
  3. International Partnership for Human RightsRaising key human rights concerns during visit of Turkmenistan's foreign minister
  4. NORDIC COUNCIL OF MINISTERSState of the Nordic Region presented in Brussels
  5. NORDIC COUNCIL OF MINISTERSThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  6. NORDIC COUNCIL OF MINISTERSThe Nordic gender effect goes international
  7. NORDIC COUNCIL OF MINISTERSPaula Lehtomaki from Finland elected as the Council's first female Secretary General
  8. NORDIC COUNCIL OF MINISTERSNordic design sets the stage at COP24, running a competition for sustainable chairs.
  9. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  10. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  11. International Partnership for Human RightsCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  12. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs

Latest News

  1. Brexit dominates EU affairs This WEEK
  2. How the EU commission got tunnel vision on self-driving cars
  3. No-confidence calls against May put Brexit deal in doubt
  4. Key points of the Brexit deal (if it ever comes into effect)
  5. Romania heaps scorn on 'revolting' EU criticism
  6. US steps in to clean up Cyprus
  7. 'Decisive progress' on Brexit as British cabinet backs deal
  8. Asylum for Macedonia's ex-PM puts Orban on spot

Stakeholders' Highlights

  1. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  2. International Partnership for Human RightsCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  3. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  4. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  5. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  6. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  7. Mission of China to the EUChina: Work Together for a Better Globalisation
  8. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  9. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma
  10. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  11. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network
  12. Mission of China to the EUChina-EU Economic and Trade Relations Enjoy a Bright Future

Join EUobserver

Support quality EU news

Join us