WASHINGTON, D.C.: The top US trade official said on Thursday (Friday in Manila) that Britain’s vote to break with the European Union opens new questions for negotiations over an ambitious transatlantic trade treaty.
US Trade Representative Michael Froman also said he has already been in contact with British officials over how to proceed in organizing US trade with Britain, given that leaving the EU will remove the country from its trade agreement umbrella.
“There is a lot of uncertainty now exactly how the post-referendum negotiations with the EU or with other trading partners are likely to proceed. We do obviously want to obviously maintain and deepen our close relationship with the UK,” Froman told journalists.
“We are of course, with our special relationship with the UK, going to want to do whatever we can to deepen our relationship there in the most appropriate way.”
But he said the implicit removal of Britain from the EU side in the negotiations over the Transatlantic Trade and Investment Partnership, or TTIP, could shift the balance in the talks already far along after three years of negotiations.
“One issue that we are wrestling with is that the UK is a very significant part of the EU, and is a very significant part of what makes TTIP attractive.”
Britain represents 25 percent of US exports to the European Union, he noted, and is a large part of the public procurement contracts across the 28-nation EU that US companies want TTIP to provide greater access to.
“You have just taken the fifth largest economy in the world . . . out of the equation. That has an impact on the balance of trade at the table,” said Froman.
“We’re going to have to think through what that means, in terms of what we offer and what we require of the EU, because at the end of the day we need a balanced agreement.”
Froman stressed that it was too early to say how the US and Britain would organize their trade.
The exit from the EU will mean the country no longer enjoys a very low tariff regime that governs trade between the two sides. Without a new bilateral pact, US tariffs on imports from Britain could automatically jump.
A bilateral trade deal though would depend on how Britain and the EU arrange their own trade, post-Brexit.
“What precisely they negotiate with their other trading partners will depend in part on what model they develop in their relationship with the EU,” said Froman.
“As a practical matter, the UK will likely be preoccupied with the negotiation with the EU itself for some period of time.”