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By Mark Hauptmann

Negotiating trade deals from outside the EU will be harder than advocates of an exit realise

Published on: June 18, 2016 9:12 PM

 

Globalized problems often require globalized solutions. That’s what makes countries willing to relinquish certain capacities of the state in order to work within the framework of common institutions. They believe that in dealing with global financial flows, climate change or international terrorism, it’s better to belong to a regional organization like the European Union than to go it alone. The U.K. proves that not everyone agrees. Next week, Britons will be going to the polls to vote on whether to leave the European Union. Central to the arguments on both sides is the impact that trade agreements have had on the U.K. Every such agreement requires concessions between national sovereignty and economic benefit. Proponents of “Vote Leave” believe the U.K. has been getting a raw deal, and argue it would be better off negotiating “a new British deal,” as Nigel Farage, the leader of the U.K. Independence Party, has put it-one that would better suit the needs of the country. It’s surprising to see this argument go largely unchallenged. Mr. Farage and his colleagues would do well to learn from Europe’s challenging experience negotiating the Transatlantic Trade and Investment Partnership (TTIP), a US-EU trade agreement that would boost trade between the US and the EU by as much as $500 billion and increase wages on both sides of the Atlantic by approximately 0.5%. Three important lessons stand out that should make proponents of the Leave campaign reconsider their position. First, Europe isn’t the center of world any more. The U.K., even less so. No country, even those within the English-speaking world, can be expected to meet the U.K. with open arms. Even the US, with which the U.K. prides itself on having a “special partnership,” wouldn’t feel any urgency in making a new deal with Britain. The US, like most of the rest of the world, has pivoted the focus of its foreign and trade policy to Asia. The low priority of TTIP reflects that. In its trade policy, Washington has always placed more importance on the Trans-Pacific Partnership, a free-trade agreement covering 12 Pacific Rim countries. Negotiating Mr. Farage’s new British deal would be of even less importance to the US President Obama was pretty clear about this during his recent visit to London, when he said that the U.K. would be “at the back of the queue” if it wanted to negotiate a new free-trade agreement with the US Second, resistance to free-trade agreements is growing around the world. The U.K. is no exception. Jeremy Corbyn, leader of Britain’s opposition Labour party, has already said that should he be elected, he would not support TTIP. Meanwhile, Prime Minister David Cameron has staked his political career on the outcome of the referendum. Thus, even if Washington and Brussels were willing to engage in trade negotiations with London, the U.K. might suddenly find itself with a leader unwilling to participate. Third, free-trade agreements are highly complex. They usually involve lengthy intergovernmental negotiations and take years to be finalized. The problem is that, once the U.K. is out of the EU, it would lack both the necessary negotiating power and the required time to invest in negotiations. Without the clout of the EU, the U.K. wouldn’t have the same kind of capacity to open up markets. And having no privileged access to its main exporting markets, it would be in dire need to conclude trade agreements as quickly as possible. Even if it were able to make new trade agreements, it would be unlikely that these would be as favorable as the arrangements it currently enjoys as part of the EU. Remaining in the EU would serve British interests best. Even those who are enamored by the idea of a new British deal cannot deny that there’s no way to escape EU regulation. Like Switzerland and Norway, the U.K. would be bound to adopt EU law if it wanted to maintain access to the European market. The only difference would be that London would then no longer have any voting rights. Leaving the EU would also put a drag on the British economy, at least in the short to medium term, thanks to the many uncertainties that would arise. Several large companies have already declared that, faced with the prospect of a U.K. outside the EU, they are seriously considering relocating their activities to the Continent. Then there is the existential risk to the U.K. of leaving the EU. If England’s euroskeptic majority caused the whole U.K. to quit, the independence movement in pro-Europe Scotland would regain strength. In the end, the June 23 referendum isn’t just about whether the U.K. will continue to be a member of the EU. It’s also an English vote on Scottish independence. It’s a vote on being Great Britain or Little England. 

Filed Under: Business

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