The apparent failure of the EU-US trade talks signalled by German Vice-Chancellor Sigmar Gabriel should come as little surprise – for good and bad reasons – and contains some interesting clues about the UK's post-Brexit trading future.
One “good” reason for the negotiators being unable to agree so far on a single chapter of the 27 in the draft Transatlantic Trade and Investment Partnership is that the Europeans are deeply suspicious about how much power will be given to large multinational companies in the process. The secret “court” for settling disputes is absurdly opaque and unaccountable, for example. That would be bad enough across most areas of the economy, but when it impinges on the way the NHS operates for the public good, it is plainly unacceptable.
Anti-business sentiment is often facile and hypocritical, or worse, but TTIP just offers up too many egregious potential abuses to be comfortable with. It could be made more politically palatable, at any rate, and we should always remember that free trade is good for the long-term prosperity of all. Globalisation, unfashionable as it is, has done more good than harm, not least lifting 500 million Chinese out of poverty. TTIP could be made to work, in other words.
The “bad” reason for the difficulties TTIP finds itself in is because the EU's disparate membership can't agree on what they want, as so often. This, then, supports the Leave camp who argue that the very size and complexity of the EU makes important trade deals such as this impossible to secure. They point to similar failures on EU trade with China and India.
So much better, the argument runs, if Britain could negotiate on her own behalf to win a swift and lucrative result, just as Switzerland has, for example. There is a lot to be said for this, but the problem there, of course, is that being usually the smaller partner in these talks, a post-Brexit UK might end up with a far from advantageous agreement. And TTIP reminds us that, even if the UK could strike a deal more rapidly, some loss of jobs and sovereignty is an inevitable price to be paid in every such arrangement. Only the likes of North Korea refuse to accept this.
We can secure good deals with major economic players including the US via a UK-US TTIPN and take advantage of their dynamism and rapid growth, but they will be wanting things in return, as is natural. For an already open economy, the UK will need to swallow even more foreign influence in return for promising new opportunities and inward investment. We ought to be clear about that.
The more the British try to negotiate broad economic relationships on their own, the more they will run into the same issues the EU has over TTIP. Trade in services is much more difficult to secure than old-fashioned deals on mutually reducing tariffs on goods (though even that can be tricky when so much manufacturing is integrated across borders). Britain is three-quarters a service economy, so all this matters. When we talk to Korea or India or China about trade in banking or architecture or medicine, we will need to compromise about mutual recognition of professional qualifications and national licensing and regulation; about movement of people and visas; about access to public sector contracts; and about all the other non-tariff barriers.
Both the TTIP experience and the review of Hinkley Point show that trading life for post-Brexit Britain may need some hard work and, yes, compromise. Brexit will still mean infringements on sovereignty, whether we like it or not, if we want to forge new partnerships worldwide. Rebalancing our economy away from the broken eurozone may be the best thing, and inevitable, for the long term, but it means some uncomfortable changes. Brexit is going to be tougher than many imagine.
Join our new commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies