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Commentary: Britain stumbles toward a new deal with the U.S.
September 4, 2017 / 2:07 AM / 3 months ago

Commentary: Britain stumbles toward a new deal with the U.S.

To paraphrase a former U.S. secretary of state, Britain has lost a community but not yet found a friend. That the island is adrift became ever clearer last week as British officials made little progress in their third round of talks over the best way to exit the European Union.

U.S. President Donald Trump and British Prime Minister Theresa May at a NATO summit in Brussels, May 25, 2017. May was the first foreign leader to meet Trump after his inauguration. REUTERS/Matt Dunham/Pool

While negotiators wait to get the preliminaries out of the way so substantive talks can begin, the real question may be how much more dependent has Brexit made the United Kingdom on the United States?  

British leaders know they must build trade alliances, and Theresa May’s government is trying. The British prime minister went to Japan this week to press for a bilateral agreement along the lines of the trade treaty Japan is about to sign with the EU, but Japanese leaders are cautious, delaying discussions until Britain’s position becomes clearer.

For the UK government, the United States is the obvious – perhaps the only – port in a storm that may engulf the British economy. The U.S. is Britain’s largest single trading partner, with trade between the two countries worth around $230 billion annually, and investment in each other’s economies amounting to $1 trillion.

In Donald Trump, the Brexiteers have an apparently ideal and strong ally; the president has commended a prospective accord as “very big and exciting” while at the same time condemning the EU as “very protectionist with the U.S.”

The May government is thus respectful toward its big friend. She was the first leader to meet Trump after his inauguration and – unlike the chilly encounter between the president and German Chancellor Angela Merkel – appeared to enjoy the session.

The cabinet follows the same line. The mercurial Foreign Secretary Boris Johnson, having once quipped that he would not go to New York for fear of meeting Trump, has since been ardent in his praise, saying Trump has “gripped the imagination of people around the world.”

The U.S. wants access to the UK market most of all for the export of food, but here there are two large problems.  American chickens are washed with chlorine, a process which the EU regards as a reason for keeping them at bay. And much of the U.S. grain sent to the UK would be genetically modified – another disagreement with the Union.

Were these products to be admitted into the UK, the protests from British farmers and environmentalists would be loud, long and damaging to any trade pact between the UK and the EU.

A further complication is Trump’s international isolation and unpopularity. Even May was moved to protest his many-sides-to-blame comments after a Charlottesville white supremacist march left a counter-protester dead. A state visit, planned for this year, is likely to be postponed after Trump told May he didn’t want to make the trip if mass demonstrations were expected. 

On the European side, the UK’s Brexit secretary, David Davis, is locking horns with Michel Barnier, the European Union’s chief negotiator. Barnier’s charm is legendary. He is a politician with many terms of office in French cabinets and in the European Commission. It is clear that the EU will present a united front, with all 27 other members agreeing to back Barnier. So far, in spite of disagreements between the Central European states (Czech Republic, Hungary, Poland and Slovakia) and the EU on immigration, none has given any sign of following the UK out of the Union.

Britain's Secretary of State for Exiting the European Union David Davis (L) and European Union's chief Brexit negotiator Michel Barnier in Brussels, August 28, 2017. REUTERS/Francois Lenoir

The 27 will be unyielding, demanding a large “divorce settlement” – as high as 100 billion euros ($112 billion) – together with a pledge that EU citizens living in the UK for at least five years gain permanent residence. A “concerned” Barnier warned that the latest talks yielded “no decisive progress on the main subjects.” The UK negotiators say progress has been made, but is impeded by an over-rigid approach from the EU.

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Jean-Claude Juncker, the European Commission president and the most bitterly opposed to Brexit of the EU’s leadership, infuriated the UK government earlier this week by contemptuously dismissing the documents it submitted, saying that he “found none of them truly satisfactory.”

Juncker’s contempt tends to unite the Brits. More divisive are the nation’s fears that the price for Brexit is beginning to be paid even before a settlement with the EU is reached. Banks, both UK and foreign, are discussing moving thousands of jobs out of the City of London. The pound is sinking, and Morgan Stanley thinks it may soon be on par with the euro.

A world in which states make individual trade pacts will cut against the EU’s bloc approach, where trade negotiations are centralized and one size is meant to fit all.

The further logic of the position in which Britain finds itself is that it must hope that the EU fails – if not in the economic sense (that would damage the British economy too) – then in its aspiration to further integrate at least the euro zone states. The conservative vision of international relations that are still based on nation states would be in competition with the idealistic prospect of a post-national space, in which power would be shared among the EU, the nations, the regions and even the cities.

Merkel and French President Emmanuel Macron seem committed to regenerate the Franco-German motor for the EU, pushing toward greater integration and even the appointment of a euro zone finance minister. Merkel, with the whip hand of a healthy economy, is the more cautious, and will make further movement dependent on radical change in France – especially in reforms to the labor market.

The future of a Franco-German EU depends largely on Macron’s domestic success. Though couched in technocratic language, integration would be a huge political leap – the substitution of centralized economic decision-making overriding national priorities, carving deep into what has so far remained largely the prerogative of sovereign legislatures. If it does not succeed, the EU must come to terms with a reality which dictates the continuation of sovereign national states – willing to collaborate on trade and other issues like security and defense, but not to attempt the building of supranational political institutions. It’s the Union most British political leaders always thought the only practical option. Ironically, it may come about in their absence.

The former secretary of state I cited at the beginning of this essay was the Truman administration’s Dean Acheson, who said of post-war Britain that it had “lost an empire but not yet found a role.” Britain has now found, or stumbled into, a role. It is, with the U.S., to make of the special relationship a separate pole of attraction, not just for each other, but also for the rest of the world.

(John Lloyd co-founded the Reuters Institute for the Study of Journalism at the University of Oxford, where he is senior research fellow. Lloyd has written several books, including “What the Media Are Doing to Our Politics” and ”Journalism in an Age of Terror,” published this month by I. B. Tauris. He is also a contributing editor at the Financial Times and the founder of FT Magazine.)

The views expressed in this article are not those of Reuters News.

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