Brexit and Trump push world trade deals up EU priority list – Financial Times
Even before the UK’s June 2016 Brexit referendum, EU trade deals were on the horizon with various partners in Asia and the Americas. By threatening to loosen the EU’s commercial and geopolitical moorings, the Trump administration’s hostility to multilateral trade deals and its attack on German economic policies make these accords more important.
Without officially killing it, the Trump administration has in effect frozen talks on a US-EU trade and investment deal that started in July 2013 during President Barack Obama’s second term. For sure, some elements of the proposed agreement were under fire in Europe, anyway.But President Donald Trump is also intent on renegotiating the Nafta free trade accord. And he has pulled the US out of a 12-nation Trans-Pacific Partnership deal. This move shocked Japan’s government and injected momentum into the efforts of Tokyo and Brussels to sign a free-trade agreement before the end of 2017.
The negotiations, which started in March 2013, were held up for a long time by Tokyo’s reluctance to open its economy to European agricultural goods and EU opposition to lower barriers on Japanese car imports. But Brexit and Mr Trump’s actions have concentrated minds.
The Europeans have concerns over data privacy and procurement practices in Japan’s railway market. The Japanese have concerns over how a mechanism for settling trade disputes might work. But the political will to do a deal appears strong.
Progress on an EU-India trade deal is also possible. Talks began in 2007 and rarely seemed a priority for either side. But some obstacles, such as Indian tariffs on Scotch whisky and British resistance to a liberal visa regime for Indian workers, were primarily about the UK. Brexit may smooth the path to an EU-Indian accord.
There is movement on other fronts. Brussels has completed, or almost completed, trade talks with Canada, Singapore and Vietnam. Ratification is by no means straightforward, especially when regional Belgian assemblies are involved. But Europe’s strategic interest in such agreements means that it presses on. The EU is also negotiating an updated trade accord with Mexico and will soon open talks with the four Mercosur nations of Argentina, Brazil, Paraguay and Uruguay.
Seen from London, a post-Brexit trade deal with the EU is highly desirable. It will be needed to clarify the commercial and legal frameworks in which UK businesses and foreign investors will operate after Brexit. After all, almost half the UK’s trade is with EU countries.
From an EU perspective, however, a trade deal with the UK is only one piece of a bigger picture. According to economist Jonathan Portes, slightly less than 16 per cent of the EU-27’s trade is with the UK.
This does not make a trade deal with Britain undesirable for the EU-27. Far from it. But when it comes to global trade, the EU operates on a much bigger scale than the UK. The EU’s stepped-up engagement with Japan and other countries demonstrates Europe’s vital interest in upholding an open, rules-based international trading order.
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Brexit’s frontline Four chief executives reveal the real-life impact from decisions made in Westminster in a two-year project. (Bloomberg)
Juncker’s plan European Commission President Jean-Claude Juncker’s plans for EU integration after Brexit display little willingness to undertake wholesale reform, according to Pieter Cleppe (Open Europe)
Major warning John Major, the former Conservative prime minister, has urged Theresa May to face down Tory Eurosceptics during the Brexit negotiations, warning that they are fickle friends who want a damaging “total divorce” from the EU. Boris Johnson is expected to reply in a speech to the British Chambers of Commerce. (FT, Guardian)
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From the FT’s Chris Giles:
Industries servicing Britain’s shopping habits have accounted for a quarter of UK growth since the Brexit referendum, more than double their normal importance, highlighting the economy’s vulnerability to a consumer slowdown.
Official figures show the unusually unbalanced nature of growth since the vote on June 23 last year: industries accounting for 45 per cent of output were responsible for all of the total growth recorded, while a third of industries were contracting.
The figures come from the Office for National Statistics’ “low-level aggregates” of the economy every quarter, which were updated last week.
Even though the ONS’s measurements are stuck in the 1950s, with disproportionate detail on manufacturing in a service-dominated economy, they provide insight into the unexpectedly strong economic performance since the Brexit vote.
The figures underpin the headline statistics for gross domestic product but are rarely explored — though some caution is needed as Nick Vaughan, chief economic adviser at the ONS, told a conference last week that “parts of the service sector are not just ill-measured but completely mismeasured”.