US-EU Trade Deal In Trouble Before It Even Starts?

from the well,-look-at-that dept

For the last few months, Techdirt has been following the surprisingly rapid embrace on both sides of the Atlantic of the proposed transatlantic free trade agreement, known variously as TAFTA or TTIP. Coming out of nowhere, the agreement is being talked about as if its success and benefits are more or less guaranteed.

But this huge project is being driven as much by politics as by economics: both the US and EU see it as a way of re-asserting their influence against the background of a constantly more powerful and assertive China. And that makes progress highly vulnerable to local political shifts, as a bombshell comment from the US side, reported in the Guardian, makes clear:

The Obama administration has warned British officials that if the UK leaves Europe it will exclude itself from a US-EU trade and investment partnership potentially worth hundreds of billions of pounds a year, and that it was very unlikely that Washington would make a separate deal with Britain.

That refers to UK Prime Minister David Cameron’s growing problems with the UK Independence Party (UKIP), which wants the UK out of the European Union. The sudden rise of the nationalist and traditionalist UKIP, which recently has won seats in local government and is riding high in the opinion polls, has forced Cameron to agree to hold a referendum on whether the UK should leave the European Union in order to blunt UKIP’s appeal to right-wing voters, and to quell a growing rebellion in the ranks of his own Conservative party.

That vote will take place sometime before 2017, which means it may not happen for a few years. But the new uncertainty, coupled with a prospect of the EU being weakened by the UK leaving — and the US losing its main ally there — was apparently enough for the Obama team to issue the veiled threat quoted above: that if the UK does leave, it won’t be part of TAFTA, nor of any separate trade deal.

Some believe that the ramifications of UKIP’s success in forcing Cameron to hold a referendum might be even more significant than simply putting pressure on Cameron to make the case to stay in the EU. For example, Gary Hufbauer, a former US Treasury official, is quoted in the same Guardian article as saying:

the administration’s hopes to complete a far-reaching partnership in Obama’s term may be over-optimistic and would be torpedoed altogether by a British exit from the EU.

“If the UK separates from the EU, I think will go a long way to derail the TTIP project entirely,” Hufbauer said. “There would be a lot of questions raised. The administration has many battles ahead of it. It will add another layer of confusion on an already confused picture, and there will be lots of commercial concerns in the US [from those who] have had their eye on the UK markets.”

This unexpected development is a reminder that nothing is certain about TAFTA/TTIP at this stage, least of all the much-touted benefits, which may well prove just as illusory as those of the free trade agreement between the US and Korea.

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Comments on “US-EU Trade Deal In Trouble Before It Even Starts?”

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Niall (profile) says:

Re: Re:

Yes, but the average ‘Kipper (UKIP voter) thinks about Europe the way the average KKK member views someone darker than a light tan – it’s not going to change with a rational argument. However, a lot of floating voters, many of whom may be embracing UKIP as an ‘alternative’ to established parties they aren’t happy with, may be swayed by the idea of damage to the economy.

Anonymous Coward says:

Re: Re: Re:

There is no doubt that this pressure is targeted at the tories since conservatives in europe have a panical separation anciety from the will of their biggest companies. This is not targeted at people at all, but rather british industry to give ammunition and money for a pro-european campaign to avoid or win a vote on membership.

Zakida Paul (profile) says:

Re: Re:

It certainly looks as though he is trying his best not to. He should remember that he was never that popular as his party never won the election outright and had to form a coalition to get into government.

The NHS is the most important thing to the health of the country and it’s citizens, there needs to be more protests and demonstrations on the streets to show we won’t stand for it being sold off. Unfortunately, the BBC/Guardian et al have been pathetically silent on the issue. There was a demonstration in London a couple of weeks back that got zero mainstream coverage.

Violated (profile) says:

Politicians = Liars

This is just a joke when the UK Government will never do a referendum on the EU. We have already been owed one for decades on if we should be in the EU and things like the Euro.

They never ask the public when they just don’t want to hear the answer. Government after Government on both sides just barge on into Europe regardless.

This is nothing new when to say around 2017 means into the next Government where the entire rulebook changes and long enough for people to forget about their referendum agreement now. By 2017 they will say sure a referendum around 2021.

All this is about is the main parties trying to minimise losing voters to the UKIP in the next election. So they are simply lying to people as they have always done. Had they been serious then within 2 years and already printing the forms they would do.

Zakida Paul (profile) says:

Re: Politicians = Liars

The thing is, though, every debate on the EU that I come across gets boiled down to a shouting match on immigrants, terrorist deportation and other Daily Mail rhetoric.

I don’t think we should have an EU debate until a calm and rational debate of the facts is possible. Or at least until the public has some understanding on what it is they would be voting for.

Violated (profile) says:

Re: Re: Politicians = Liars

I am actually pro-EU myself when I understand the aspects.

I would believe though the day the UK Government actually hold a referendum that they would be pretty damned desperate and at the end of the line.

I would also believe the voters would have so much contempt for Government referendum delays that they would vote simply to cause the Government some pain. You have feared us for years so truly fear us now.

Some Other AC (profile) says:

NO reason to have hidden this post

This was very reasonable and intelligent post. There was absolutely no reason to have “reported” it. While I do not agree with his posts a majority of the time, he did not attack anyone or post inane drivel.

horse with no name, May 29th, 2013 @ 1:14am

Exactly. I don’t think it will be on very many voter’s minds either, because they know not only can another deal be reached some time in the future, but it might end up being even better for the UK.

I can’t imagine this being an issue that really rocks the boat.

horse with no name says:

Re: NO reason to have hidden this post

It appears that there may be an automated system in place that filters posts based on name or similar, such that you see my posts as blocked even though nobody has really down voted them. I think the system was put in place to automatically deal with certain posters that Techdirt crew doesn’t agree with. At the same time, the blocks don’t appear to show to that user, which means they spend a lot of time talking to themselves.

Censorship at it’s finest.

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