US President Donald Trump's unique brand of disruptive diplomacy
appears to have shattered the UK government's claim that Britain can
have it all when it comes to trade once it exits the European Union.
Prime
Minister Theresa May probably expected a more helpful stance as she
welcomed Trump to Britain this week, given that the populist leader has
been outspoken in his support for Brexit.
Instead, Trump scorched
her policy towards the EU divorce in an interview with The Sun newspaper
that shocked Britain's political establishment.
May had ignored his own advice on how best to confront Brussels, he said, while praising her departed foreign secretary.
The
colourful Boris Johnson quit rather than take part in turning Britain
into a "colony", after May's blueprint for Brexit was signed off by her
cabinet. Johnson, one of the most prominent Brexit campaigners ahead of
Britain's June 2016 referendum, had said the country could "have our
cake and eat it" by retaining close ties to the EU while also forging
ahead with new trade deals with the rest of the world, including the
United States.
May's blueprint, fleshed out in a government white
paper this week, argued that it was possible through a deal with the EU
that would preclude the return of a hard border between the Republic of
Ireland and Northern Ireland, which is part of the UK.
Trump,
however, torpedoed such thinking in his interview. He said May's plans
to bind Britain's economy closely to its European partners after Brexit
would "probably kill" its hopes of a US trade deal.
Both leaders
tried to brush aside Trump's incendiary language at a news conference
yesterday, insisting they were determined to pursue a post-Brexit pact.
May
stressed London could stay on friendly trade terms with both Brussels
and Washington. "It's not either or," she said at the press conference.
The
allure of a free-trade agreement (FTA) with Washington has propped up
much rhetoric by Brexiteers and kept May determined to go ahead with
Trump's visit despite opposition from thousands of protesters who
denounced the trip.
That was why the government's white paper was
"veiled by strategic ambiguity on trade in goods", said Hosuk
Lee-Makiyama, director of the European Centre for International
Political Economy in Brussels.
"The problem is that FTAs don't
actually go that far," he added. "There is a great misconception in the
Brexit debate about what an FTA can do. Many arguments are hyperbole or
even outright false."
The pound slid 0.6 percent against the
dollar on Trump's interview as the rhetoric of Brexit freedom ran into
the reality of Britain's economic relationships.
"The UK can't
afford to alienate either the US or the EU, its two largest foreign
trade partners, and will not be able to choose an 'either-or' solution,"
commented Fiona Cincotta, a senior market analyst at City Index in
London.
But even if Britain can extricate itself from the dense
web of regulations and tariffs resulting from its decades of EU
membership, a US-UK trade deal would be easier said than done.
Trump
has begun a trade war already with the EU, China and others. There is
nothing to suggest the hard-nosed deal maker would go easier on Britain,
and he may press hard for lower tariffs and easier access for US
industry to Europe's second-biggest economy.
Chlorinated US
chicken has already become totemic of future rows as campaigners line up
against the prospect of Britain relaxing its food-safety standards
under any US deal.
Defenders of Britain's cherished National
Health Service have mobilised against what they see as a US plot to
dismantle the NHS by opening it up to competition from US healthcare
providers, and to allow higher prices for US drugs.
Free-trade
deals that threaten to undermine institutions like the NHS have drawn
mass protests elsewhere. A long-negotiated EU-Canada trade pact is
staring at political defeat in Europe. A separate US-EU agreement is on
ice. So May faces an unpalatable choice.
The United States may be Britain's single biggest national trading partner, but the EU as a whole is far bigger.
"At
first glance, Trump's disruptive approach may make some sense from a
narrow 'America first' perspective. In any bilateral negotiation with
any other country in the world, the US would be the stronger party,"
Berenberg Economics said in a report.
But it added: "Trump may be
his own worst enemy. By taking on many countries at the same time with
behaviour considered unacceptable beyond his own base of fans, Trump may
bring others closer together rather than dividing them."
Indeed,
British lawmakers from both sides of the aisle seized on Trump's remarks
to warn May against placing too much faith in the volatile president as
Britain prepares to exit the EU next March.
"If signing up to the
#Trump world view is the price of a deal, it's not worth paying,"
tweeted Sarah Woollaston, an MP from May's own Conservative party.
