A COUPLE of months ago, Barack Obama jumped into the EU referendum debate by suggesting that the UK would be at the ‘back of the queue’ if it tried to cut a trade deal with America once it had left the EU.
The US president’s statement infuriated many Brexiters. After all, they argued, one of the benefits of leaving the EU is that an independent UK should be able cut its own deals swiftly, without the Brussels bureaucracy. And America seemed an obvious place to start. After all, it is already the UK’s biggest export destination, a market worth $60bn.
But it turns out the Brexiters might have been foolish to brush off the warning. Washington has been trying to pedal back from the ‘back of the queue’ comment, not least because it has sparked criticism from some Republicans. “If we have a trade deal with others, we should have a deal with Britain, our ancestral ally,” Tom Cotton, a Republican senator for Arkansas, told the Aspen Ideas Festival a week ago.
Yet, as American officials start looking into the practicalities of any future trade deal, they are warning that it is likely to be fiendishly hard to conclude anything without a long wait. Indeed, there is probably little chance of the US offering Britain much help for years.
One problem is that, since the Out vote, Washington trade officials have become convinced they cannot yet start talks. “A UK-US deal will only be done after a UK-EU deal,” Michael Froman, US trade representative, told the Aspen conference. “It is very hard to think what kind of relationship we will have with the UK until we know what relationship the UK will have with Europe.”
Since any UK-EU deal is unlikely to emerge quickly, any talks between the UK and US are likely to be delayed. There is nothing to prevent informal talks before that but American officials think this is unlikely: the UK does not have enough qualified trade officials and diplomats to start negotiating on several fronts at the same time, Washington observers say. Even for the US, resources might be stretched.
Of course, as Brexit supporters might point out, a bilateral deal is not the only option. Mr Cotton, for example, thinks the better route for the UK would be to become a member of the existing North American Free Trade Agreement that links Canada, the US and Mexico.
Another option, Mr Froman says, would be to offer the UK membership of the Trans-Pacific Partnership. This deal, which the administration signed in February and now needs to pass through Congress, involves 12 countries and 40pc of global gross domestic product. And, while the UK does not sit anywhere near the Pacific, it is possible that it could join if it had US backing. Then there is the Transatlantic Trade and Investment Partnership, which the EU is trying to thrash out with the US. In theory this might also be extended to the UK, even if it sits outside the bloc.
None of these options would offer swift relief, however — and indeed, given the state of US politics, may not offer a solution at all. Donald Trump, the presumptive Republican nominee for the presidency, is fiercely opposed to implementing the TPP. Even Hillary Clinton, his Democrat counterpart, has expressed reservations. Negotiations have been under way for three long years and are still far from completion.
Published in Dawn, Business & Finance weekly, July 11th, 2016
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