What next for Brexit and transatlantic relations?

This July saw a peak in diplomatic activity in the transatlantic triangle between Washington, London and Brussels. This was followed closely by the media and analysts, attempting to interpret every word and gesture.

All the hype around press conferences, joint statements and important “deals” notwithstanding, the real work on tackling the external ramifications of Brexit is yet to come. This includes readjusting the transatlantic relationship.

First, there was President Trump’s visit to the United Kingdom. Before the American President had met with the Prime Minister, he gave an interview to The Sun in which he appeared to criticize Theresa May for a timid approach to Brexit.

During the joint press conference with the British Prime Minister, however, President Trump painted a different picture. Trump remarked that “whatever you do is okay with us, just make sure we can trade together”. He stressed, moreover, that the UK and US entertained a relationship that was the “highest level of special”.

Two weeks after that, European Commission President Juncker went to Washington to meet with President Trump in an effort to de-escalate the brewing trade war with the US. Juncker had already noted earlier that he considered the use of import tariffs by the US “stupid”, and that the EU would respond in kind (“We can also do stupid”).

During the joint press conference following their meeting, however, both presidents hailed a major breakthrough. The US would refrain from additional tariffs on European cars, while the EU would buy more soybeans and liquified natural gas (LNG). In addition, negotiations on steel and aluminium tariffs, regulatory cooperation and WTO reform were to continue.

Does this mean that, despite tensions and brash words, all is well now in the transatlantic triangle? While some de-escalation took place on trade and the UK and US reiterated their special relationship, little to nothing tangible was achieved.

At the same time, we are left wondering on several fronts: What will the EU do about those extra soybeans, apart from letting ordinary “market forces” take their course? When will these natural gas terminals be built, and by whom? Will there be a UK-US bilateral trade agreement that capitalizes on that “highest degree” of specialness? Will the Transatlantic Trade and Investment Partnership (TTIP) be taken out of the metaphorical “freezer”?

There are a few other things, however, that we do know: the UK is scheduled to leave the EU in less than eight months. Both sides are facing a ‘no deal’ scenario if negotiations do not change tack fast. The UK will fall out of hundreds of international agreements covered by its EU membership.

This includes also the UK’s position regarding the several dozen bilateral US-EU treaties, which range from technical issues such as trade in multi-chip integrated circuits to civil aviation and coordinating the Galileo and GPS satellite navigation systems.

If the UK wants to ensure continuity, work needs to be done with partners around the world, especially those with which the UK enjoys special relationships. While the work on the “internal Brexit”—the arrangements for orderly withdrawal and transition—are far from concluded, the work on the external effects of Brexit—treaty relations with the rest of the world—has barely begun.

In addition, there is an important conclusion we can draw on the way forward from the two visits. During the press conference with Trump, Theresa May stressed that she would like to have good trade relations with both the EU and the US, arguing “we don’t just replace one with the other”. This recognizes the economic reality that the EU will remain by far the largest trading partner for the UK post-Brexit.

President Trump, for his part, made a point not entirely devoid of merit when he told The Sun that a softer Brexit such as the one outlined in the Chequers Plan, would have ramifications on US-UK future trade relations. He said that in such a scenario, the US “would be dealing with the European Union instead of dealing with the UK, so it will probably kill the deal” between the UK and US.

Despite this hyperbolic formulation, it is true that there is a trade-off between, on the one hand, freedom to be gained to redefine relations with the US and other non-EU countries through a “hard” or even “no deal” Brexit and, on the other, continued privileged (though not entirely unrestricted) access to the EU’s internal market through a “soft” Brexit.

Between those extremes, there are many different varieties, including customs unions with different scopes, different regimes for regulatory alignment and different institutional setups. But each model comes with its own price tags, either in the form of more hurdles to access the EU’s market or in the form of less manoeuvring space to negotiate with the US.

In sum, while the UK will “take back control” from the EU to some degree, it will at the same time pass on control to powerful external partners such as the US. Without their consent, there will be neither continuity nor any new bilateral agreements.

 By Joris Larik, Assistant Professor in Comparative, EU and International Law at Leiden University.

 

Disclaimer:
The views expressed in this analysis post are those of the authors and not necessarily those of the UK in a Changing Europe initiative.

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