by THERESA RAPHAEL / pic by TMR FILE
AS BREXIT trade talks enter a make-or-break final negotiating stretch, the impending changes in Washington can’t help but influence things. President-elect Joe Biden isn’t going to express a view over fishing quotas or the impasse on state subsidies. But his election increases the costs for Prime Minister (PM) Boris Johnson (picture) of a failure in the negotiations.
A hard split won’t just damage Britain’s trade and political ties with the European Union (EU); it will irritate the Americans, too — especially if it creates problems with the Irish border.
The contrast in US administrations couldn’t be starker. Donald Trump’s very presence encouraged Johnson’s Brexit brinkmanship with Brussels. Britain could threaten to walk away knowing a friendly White House approved. Trump was openly hostile toward Europe, and he was even promising a quick US-UK trade deal as a reward for splitting from the single market.
The material promises of an agreement with the Americans were always exaggerated. In a bestcase scenario, a free-trade deal would add £15.3 billion (RM83.02 billion) to the British economy over 15 years — a 0.16% boost to GDP (or a little over double the estimated impact of the Japan-UK trade deal). And any agreement would have had to advance the interests of US farmers, which would have carried a political price for Johnson.
With Biden’s election, the best bet for enhanced trade is if both countries join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, a group of 11 nations including Canada, Mexico, Japan and Australia.
Biden’s election is undoubtedly awkward for Johnson. The two have never met, and it’s a little late for first impressions. Biden has opposed Brexit, Johnson’s career-defining project. Then, there’s Ireland, where Biden has roots and loyalties. The president-elect has echoed other Democratic lawmakers in saying that Britain can forget a US trade deal if Johnson undermines the Good Friday Agreement that brought peace to Northern Ireland. The PM is threatening to do exactly that by using the Irish border as last-ditch leverage in his trade talks with Brussels.
For Team Biden and many Democrats, Brexit is an act of self-isolation. The UK and the US will retain plenty of common interests from trade and intelligence to fighting climate change, but losing its seat at the EU table makes Britain less valuable. Even without Trump, Washington won’t have the interest in Europe that it once did.
How the next few weeks unfold will dictate whether a business-like familiarity returns to London and Washington’s relations or the differences are amplified. A no-deal Brexit at the end of the year — piling costs and uncertainty on businesses and consumers on top of Covid-19 — will be seen as a supremely selfish, Trumpian gambit that pulls down the tent rather than accept compromise.
The messy aftermath would probably complicate international preparations for rolling out any new vaccine, for preparing for next year’s United Nations climate summit in Glasgow and for focusing on global economic recovery.
The immediate source of contention is the Internal Markets Bill, a controversial piece of proposed legislation that would let Johnson’s government change how the UK applies the Northern Ireland protocol, a key part of Britain’s divorce deal with the EU. The bill’s offending clauses were defeated in the House of Lords on Monday night, but Johnson has vowed not to back down. The government claims the law is merely a backstop in case there’s no EU trade agreement or the existing mechanisms don’t work (as in, are not to the government’s liking).
Threatening to undermine an international treaty in this way is unlikely to wash with the new White House, any more than it does in Dublin. So, any leverage the bill was intended to give Johnson in the last days of the trade talks has been undermined by the obvious damage it would do to relations with Biden. This makes the choice facing Johnson even less palatable.
Last year’s Brexit divorce deal prevented a chaotic crash out and got him elected in a near-landslide. But the follow-up trade deal offers limited political upside. The compromises involved would put the lie — in black and white ink — to any claims of a world-beating agreement squeezed out of Brussels. And as last week’s National Audit Office report on the state of readiness at Britain’s borders made clear, substantial disruption looks likely even with a deal.
Only the alternative is worse. Johnson might not be able to dress up a deal as a great win, but the economic impact of no deal would inflict heavy political damage on a leader who’s already trailing Keir Starmer’s Opposition Labour Party in the polls. Most Britons have stopped following the details of the trade talks, focusing instead on a new Covid-19 vaccine and when the latest lockdown will end.
Most Brits also found Trump thoroughly distasteful and celebrated Biden’s victory. The political imperative to strike a deal seems even more obvious now, to keep both British voters and the new White House on board. — Bloomberg
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.