For America, a frustrating lack of clarity from Britain

June 29th, 2016  |  Source: The Economist

The last thing that America needs is more economic turmoil and political navel-gazing in Europe, a continent which—for all that it disappoints and maddens officials in Washington—remains a major trading partner and indispensable ally when the “free West” needs to act as one, for instance by sanctioning Russia over its actions in Ukraine. Turmoil in Britain is especially unwelcome, because, though Germany may be more powerful and France more gung-ho during recent foreign-policy crises, no other big European nation so often shares America’s basic instincts about the world and how to keep it prosperous and safe.

For that reason American leaders of both parties have hastened to play down the shock of the Brexit vote. Visiting London in April, Barack Obama urged the British not to leave, and offered a blunt (and in the end, probably counter-productive) warning that if they did, an independent Britain would find itself at the “back of the queue” when it came to striking free-trade deals with America. All efforts in Washington, he argued, are focused on expanding trade with whole blocks of countries, in Asia and in the European Union.

On June 28th Mr Obama told NPR, a radio network, that he did not share the “hysteria” of some after the Brexit vote, describing the result as “a pause button” pressed on the project of full European integration, which “was probably moving faster and without as much consensus as it should have”.

The president suggested that if, after a two-year negotiation, Britain ended up “affiliated to Europe, like Norway is,” the average American is not going to notice a big change.

On the right many voices, from Donald Trump to members of Congress, have greeted Brexit as a welcome display of independence by an old ally, and an escape from the clammy embrace of a decaying European super-state. The highest-ranking elected Republican, Paul Ryan, the Speaker of the House of Representatives, suggested that America should “show solidarity” by opening talks on a free-trade agreement with Britain, while continuing parallel negotiations with the EU about a long-discussed Transatlantic Trade and Investment Partnership, TTIP.

The politics of such a gesture are straightforward enough. Promising talks with Britain offers Mr Ryan, a leading advocate of free trade, a chance to stress that the Republican Party is larger than Mr Trump, its presumptive presidential nominee and a noisy sceptic about recent free-trade deals. It also allows Republicans to scold Mr Obama for being too harsh towards an ally.

Boosters note that Britain and America might find it rather easy to forge agreement on digital services involving exchanges of data, as British public opinion is less neuralgic about privacy and data protection than is the case in, say, Germany. The British would also be less fussed about such issues as protecting continental beef from American imports, or defending French-language films from Hollywood competition. Britain’s big ambitions for transatlantic trade often involve services, ie, making it easier for British lawyers or architects to bid for work in America.

But those with long experience of trade relations between America and Europe are less sanguine. Even the simplest trade deal takes two to three years, it is noted, and Britain—assuming it does embark on a formal process of leaving the EU—will need to start recruiting trade negotiators from scratch. Running negotiations in parallel would risk overwhelming the available political “bandwidth”.

Also, though Mr Obama was partly playing politics in April by saying that Britain would be at the back of the queue for a trade deal, not least because he will not be president after January 2017, there are large economic and geopolitical reasons why American politicians in favour of free trade will not want to be seen easing up on their support for the biggest trade pact of all. Their efforts are currently focused on forging a big trade agreement with countries around the Pacific Rim, the Trans Pacific Partnership (TPP), which is next in queue—should the mood in Congress allow for its ratification.

More specifically, insiders question the idea that running parallel talks with the EU and Britain would be feasible. Until Britain has confirmed what sort of trading relations it will have with the European single market, British officials cannot answer vital questions that America is sure to pose: how would a supply chain work if it begins in America, runs through Britain and ends with goods entering the European market? What EU regulations and tariffs might products from American-owned factories in Britain face? Will Britain have full legal control over its own trade law, or will it have to pool some aspects of sovereignty with the EU, complicating any deals it might cut with America?

For Britain to be able to answer that question requires clarity about its links to the single market, and that could take years. It is also noted that while Britain is trying to resolve its relations with Europe, its largest market, it could be hazardous for British officials to offer concessions to America that are seen as undercutting European talks on TTIP, a move likely to trigger a backlash—not least because the politics of trade are so toxic across the rich West.

Some voices in Washington, questioning how America might conduct twin-track talks with Britain and the EU, observe that the TPP is an “open platform” agreement, meaning that other countries are legally allowed to apply to join it, once it has been completed. An independent Britain could ask to join TPP and—subject to a vote in Congress and agreement from the pact’s other members—enjoy trading access to America, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The idea is sufficiently ingenious that the same voices in Washington suggest that—should it tempt a future British government—they should take care in talks with the EU about single-market access to avoid deals on video content, labour laws or other contentious issues that might obstruct TPP access.

Fundamental questions need to be resolved on the British side. Will Britain see its role as going it alone and prospering in competition with the EU, or will it regard co-operation with the EU as the best way of enlarging transatlantic trade? Americans see no signs of anything like clarity from Britain, on this or many other issues raised by Brexit.

Philip Gordon, a former assistant secretary of state in charge of European relations during Mr Obama’s first term, notes a dilemma for America as it faces an outcome it did not seek. The Brexit vote is a “real setback” for America, Mr Gordon says, raising risks that Britain and Europe will now be distracted by years of internal debate. Britain has been a key ally in promoting an “outward-facing Europe”, and a reliable voice arguing with America for EU sanctions to pressure such countries as Russia and Iran.

Now, however, America must weigh its desire for clarity about Britain’s future role in Europe against the chance that Britain will rethink its decision. Should America wish the Brexit question to be resolved quickly, “or should one maintain hope that it will be revisited?” Mr Gordon asks. From Britain, for the moment, there comes no answer.




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