TAFTA/TTIP Just Got Harder: Brexit Is 'A Midsummer Night's Nightmare' Says EU Trade Commissioner
from the massive-potential-win-for-humanity dept
After the dramatic and largely unexpected victory of the "Brexit" (Britain Exit) camp in the UK -- those who want the country to leave the European Union -- politicians around the world are trying to work out what the implications will be. For the UK, of course, it meant an immediate trashing of the UK pound against the US dollar; for the US, it meant the loss of a reliable ally within the EU camp. As The New York Times puts it:
No country shares Washington's worldview quite the way Britain does, they say; it has long been the United States' most willing security ally, most effective intelligence partner and greatest enthusiast of the free-trade mantras that have been a keystone of America's internationalist approach. And few nations were as willing to put a thumb as firmly on the scales of European debates in ways that benefit the United States.
As that mentions, trade is one area where the UK played a key role for the US, and its departure from the EU will make negotiations for the TAFTA/TTIP deal, now dragging on into their fourth year, even harder, since the UK was one of the main countries pushing for it. The European Commission is worried: after the results of the Brexit vote were known, the EU's commissioner for trade, Cecilia Malmström, called it "A midsummer night's nightmare," (original in Swedish.) However, she also insisted that she would press on regardless:
Now that quiet diplomatic leverage -- including moderating European trade demands and strong-arming nations to contribute more to NATO military missions -- is suddenly diminished.
I am determined to make as much progress as possible in the months to come. This is particularly true for our negotiations with the United States on a Transatlantic Trade and Investment Partnership.
But as Politico.eu points out, once the UK leaves the EU, TTIP won't be such an attractive deal for the US:
"We certainly lose an important market," said MEP Bernd Lange, the chair of the European Parliament's international trade committee, of the U.K. "In a way, that means losing leverage."
Losing that leverage will make it harder to wring concessions out of the US, which was not particularly keen on offering any even before. The USTR's lukewarm post-Brexit statement hardly gives the EU much hope of the US meeting its main demands:
The importance of trade and investment is indisputable in our relationships with both the European Union and the United Kingdom. The economic and strategic rationale for T-TIP remains strong. We are evaluating the impact of the United Kingdom's decision on T-TIP and look forward to continuing our engagement with the European Union and our relations with the United Kingdom.
The problem is that without some clear wins for the EU, it will be very hard to sell the TAFTA/TTIP deal to Europeans and the Members of the European Parliament (MEPs) who must ratify the deal once it is finished. A report on Reuters is already pessimistic about TTIP's chances:
The historic divorce launched by Thursday's vote will almost certainly further delay substantial progress in the Transatlantic Trade and Investment Partnership (TTIP) talks as the remaining 27 EU states sort out their own new relationship with Britain, trade experts said on Friday.
That view was backed up by the following new report:
With French and German officials increasingly voicing skepticism about TTIP's chances for success, the United Kingdom's departure from the deal could sink hopes of a deal before President Barack Obama leaves office in January.
French Prime Minister Manuel Valls on Sunday blasted a planned EU-US trade treaty, saying the ambitious deal was against "EU interests."
Meanwhile, in an open letter to the EU heads of state and government, 240 European organizations have called for the TTIP negotiations to be abandoned now:
"No free trade agreement should be concluded if it does not respect EU interests. Europe should be firm," Valls told members of the governing Socialist Party, adding "France will be vigilant about this."
"I can tell you frankly, there cannot be a transatlantic treaty agreement. This agreement is not on track," Valls said.
People across the continent have a greater awareness of trade deals than at any previous time. Any move to express renewed support for TTIP will be highly publicised and scrutinised across Europe. We therefore appeal to you to use this opportunity to heed public opinion and urgently withdraw the mandate for TTIP.
The UK probably does not care about the havoc Brexit is wreaking on TAFTA/TTIP, not least because it has its own huge problems in the area of trade. Once it leaves the EU, it will need to renegotiate all the trade deals that it currently enjoys as a result of being part of the European Union, as well as striking some new ones. Naturally, the most important of those would be with the US. Even if some kind of TAFTA/TTIP deal is achieved at some point -- possibly years down the line -- the UK will not be part of it. As a result, it needs to agree something with the US on its own.
That's not going be easy. A spokesperson for President Obama confirmed that the UK would not be getting any preferential treatment when it came to trade deals, and that it would have to wait its turn. As people are already pointing out, the UK's extremely weak negotiating position means that it is likely to end up with a really bad US deal:
Nick Dearden, director of Global Justice Now, said the "right-wing lurch of Brexit" could result in Britain signing up to "TTIP on steroids".
As well as its inability to haggle, there's another reason why the UK may sign up to something that is far worse than the current TAFTA/TTIP: the person seen as a likely successor to David Cameron as UK prime minister, Boris Johnson, thinks such a deal with the US would be an unalloyed boon. In 2014, he wrote a prophetic article in which he gushed as follows:
This pact is a massive potential win for humanity -- the closer economic union between two vast territories that share a tradition of democracy, free speech, pluralism: the Western values that are under threat in so many other parts of the world; and where almost everyone has English as a first or second language.
It now looks increasingly likely that the UK will do precisely that. The big question is: will the US care?
Trade between Europe and the US is already worth $4.7 trillion; this is the chance to go further. If the EU can't pull it off, we in Britain should offer to go first and do it ourselves.