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29 October 2015

The US’s trade warning to the UK is a hammer blow to EU opponents

Washington's hostility to a separate free trade deal increases the risk attached to exit. 

By George Eaton

Many of the most fervent opponents of the EU are also among the most committed Atlanticists. Uncomfortably for them, the US doesn’t share their view. For decades, Washington has favoured more European integration, not less. Henry Kissinger never actually said “Who do I call if I want to speak to Europe?” but the line captures the US’s view. A country of its size prefers to deal with a bloc of 503 million people than 28 individual states.

At every opportunity, Barack Obama has signalled that he wants the UK to remain a member of the EU. In an interview with the BBC in July, he stated: “Having the UK in the EU gives us much greater confidence about the strength of the transatlantic union, and is part of the cornerstone of the institutions built after [the second world war] that has made the world safer and more prosperous. We want to make sure that the United Kingdom continues to have that influence.”

Obama’s comments were significant but did little to alter the terms of debate. Now, however, the US has inflicted a far more grievous wound on the Brexit camp. In an interview with Reuters, the country’s trade representative Michael Froman has warned that the US would not pursue a free trade deal with the UK if it left the EU (it is close to securing one with Brussels through TTIP). “I think it’s absolutely clear that Britain has a greater voice at the trade table being part of the EU, being part of a larger economic entity,” he said. “We’re not particularly in the market for FTAs [free trade agreements] with individual countries. We’re building platforms … that other countries can join over time.” He added: “We have no FTA with the UK so they would be subject to the same tariffs – and other trade-related measures – as China, or Brazil or India”. 

One of the great contentions of EU opponents is that withdrawal would improve, not hinder, the UK’s trade prospects. They envisage a world in which a swashbuckling Albion strikes bespoke deals with the US and others. Froman’s remarks are a hammer blow to this argument. It is precisely for reasons like this that David Cameron, a lifelong eurosceptic, has no intention of campaigning to leave. As Reuters notes: “The US is Britain’s second-largest export market for vehicles outside the EU. If Britain is not part of the EU and therefore not part of TTIP, British cars exported to the United States, such as those made by Jaguar Land Rover, would face a 2.5 percent tariff and could be at a disadvantage to German and Italian-made competitors.”

The Brexiters can of course accuse Froman of bluffing. Since the US wants the UK to remain in the EU, why wouldn’t it take a hard line? Were the UK to actually leave, they will argue, Washington would think again. But their inability to offer this guarantee means the risk attached to exit has dramatically increased. 

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