Brexit: For Britain, the worst of Brexit talks is yet to come-by Anand Menon

There’s no need for Britain to panic over Brexit talks — not yet anyway.

After the European Council declared earlier this month that Brexit negotiations have not yet made “sufficient progress,” the good news is that all signs suggest the U.K. can expect Brussels to agree to kickstart talks on the future relationship at December’s summit. The bad news is that that’s when the real trouble will start.

There are still a number of issues to be resolved under the Article 50 talks. There is an increasing, albeit belated, recognition that the issue of the Irish border must be dealt with in the context of talks over trade. And when it comes to the rights of EU citizens living in the U.K., the role of the European Court of Justice remains a point of contention, even if both sides are edging toward some form of compromise.

Then, of course, there is the money. But for all the noise surrounding the issue, here too a compromise is within reach. The probability of continued payments during any transition period should also ease both sides toward a solution.

We’ll have lost a couple months, but ultimately this hardly matters. A trade deal could not have been negotiated between October and March 2019 any more than it could be between December and March 2019. What matters is that the British government’s slow, grudging recognition of the need for a transition period is taking off any immediate time pressure.

Still, if it thought negotiations so far were tough, Britain should be steeling itself for a far bumpier ride ahead.

There is no reason at all to assume that the negotiations to come will be any more straightforward.

Indeed, they promise to be far more problematic than what we’ve seen so far — and that’s leaving aside the inconvenient fact that the British government itself has yet to agree on what it actually wants.

British political debate is treating the transition as if it were something we only need to ask for to get. Yet what Jean-Claude Piris, a former EU adviser, recently referred to as a “full Monty” transition — in which the U.K. maintains its current trade status with the EU — raises all kinds of legal issues.

So far, so challenging. But even assuming Britain gets an agreement in principle on Article 50’s initial divorce issues and can quickly agree on the terms of its transition period, our problems will not be over.

We will be forced to negotiate a trade deal without our strongest negotiation asset — money. Because any Article 50 deal must be signed, sealed and ratified by March 2019, and because no trade deal will be agreed by then, we will have committed to making payments to the EU before we can extract trade concessions in return.


Read more: For Britain, the worst of Brexit talks is yet to come – POLITICO

EU-US Trade Conference: The TTIP trade deal is lost at sea "and has no Public support"

TTIP: No Public and only limited political support

The future of the Transatlantic Trade and Investment Partnership (TTIP) between the US and European Union seems bleak. Beset by doubts and stumbling alongside the UK’s referendum on EU membership, the TTIP is starting to look like an awful lot of effort for unremarkable gains.

US president Barack Obama may have given the negotiation process a shot in the arm in recent weeks, but there is a good possibility that a deal will not be struck during his administration. After that, all bets are off.

So why has such a major piece of international deal-making found it so hard to make headway, and what are the chances of a deal ever being done?

Well, the first reason for the impasse is that no one can agree on what it should cover. It is deeply complex, but there are essentially two choices: should TTIP only apply to the tariffs that countries place on imports, or should it also address other barriers to business, mostly technical regulations on things like car safety, or the procedures for testing new chemicals?

Estimates for the economic benefit to the EU from a tariffs-only deal come out at just 0.3% of GDP for the EU as a whole. If we abolish all non-tariff barriers, then we get a 4% boost.

That makes it seems like an easy decision from an economic point of view, but it’s highly contested.

The reason for the logjam is clear. Going far enough to make it economically valuable drags into play all sorts of political and social issues. Our reading of the draft texts is that it won’t, in fact, lead to significant harmonisation or even mutual recognition of existing rules.

There are procedures to make sure future regulations are as compatible as possible, but there is nothing explicit to say that regulatory decision making powers will be transferred. Indeed, it is hard to see the US Congress accepting anything else.

That might seem like an effective compromise, but of course, any weakening of the approach to non-tariff barriers may in turn dampen the economic advantages.

The less complicated route – a TTIP which only removes tariffs – would bring very limited gains. Both EU and US tariffs are generally very low, except for cars, chemicals and agriculture. Their removal would have only a small effect.

At its heart, the far more valuable non-tariff route drags up fears, founded or unfounded, of a regulatory race to the bottom on things like food safety, and objections from NGOs about the loss of domestic policy power on things like health or government procurement. Crucially, TTIP has also raised the (contested) possibility of major corporations suing states.

There is another obstacle. In short, governments love handing out contracts for public works to domestic companies; it keeps local industries happy, and maybe a few political donors too. No huge surprise then that after 13 rounds of negotiations the TTIP impasse on public procurement remains.

Both the EU and US are parties to the World Trade Organisation’s plurilateral agreement on government procurement but the EU’s big picture was for TTIP to trade access to European state agriculture spending for inroads into highly protected US procurement markets, particularly at the state level. But the US steadfastly refuses to concede to market access demands, due to its traditional and entrenched domestic lobby groups – the steel industry, small and medium-sized firms, and disadvantaged communities.

It’s a missed opportunity. We could have increased transparency with a standardised e-procurement system and tender forms. Much more could be gained through harmonising definitions of integrity and conflict of interest concepts, along with strengthening corruption control measures. It’s a win-win for improving the governance of public procurement markets – but negotiations have been dominated by intractable trade issues and the fears of ISDS.

In such a confrontational atmosphere, it is doubtful that a meaningful TTIP can be concluded. Sceptics’ doubts may be exaggerated, but they still reflect genuine public alarm.

The general confusion is highlighted by supporters of a UK exit from the EU, who argue both that the UK could sign a TTIP deal very quickly after Brexit, and that that leaving the EU is the only way to stop it. In any case, unless a deal is rushed through before the end of 2016, prospects for a deal are bleak.

Of the likely presidential candidates, neither Hillary Clinton nor Donald Trump are likely to make TTIP a top priority in a future US administration.

Meanwhile, public opinion – and crucially the German government – move closer to outright opposition.

Read more: The TTIP trade deal is lost at sea

EU-USA: Transatlantic trading deal

The guns of the long transatlantic beef war are silenced. Last year the European Union more than doubled its quota of American beef imports (so long as it is not treated with hormones) and America removed punitive duties on imports of Roquefort cheese. The Americans should soon ease a ban on beef imports imposed in 1997 to prevent the spread of mad cow disease. In November the EU accepted the American practice of decontaminating meat with lactic acid. A final skirmish, over American beef fat, could soon be settled through plans to allow imports of tallow for biodiesel (but not for cosmetics).

After decades of trade rows and lawsuits, the truce is meant to clear the air for an ambitious transatlantic free-trade deal. EU officials speak of creating “something approaching a transatlantic single market in goods”. Even a less grand pact could help to re-energise struggling economies on both sides of the Atlantic. It could also help America and Europe to set international trade rules in the face of a fast-rising China.

Big business wants a deal. Trade unions and greens are no longer so worried about a race to the bottom. The ever-protectionist French and Italians are on board. And yet there is genuine wariness, particularly on the American side.

The report of a high-level group that is expected to recommend the start of talks has been delayed. Perhaps, think some, President Barack Obama is trying to squeeze concessions out of the Europeans; or, Europeans worry, he cares more about a transpacific deal; or he is busy setting up his second-term administration; or is he waiting for the right moment for an announcement, for instance in his state-of-the-union message on February 12th?

American officials say they want to ensure that any negotiation is both unusually ambitious and unusually fast. The deal, they say, has to be done “on one tank of gas”, by which they mean in the next two years. Neither side wants a repeat of the moribund Doha round, now in its 12th year.

America and the EU make up the world’s biggest and richest trading partnership, accounting for about half of global GDP and one-third of trade. They are the biggest investors in each others’ economies. But this very closeness makes progress harder. Easy deals have mostly been done; what is left is complicated. Tariffs are low (below 3% on average, though higher on farm products) but non-tariff barriers abound. Many have to do with consumers, public health, the environment or national security. Governments are not usually elected to compromise on such matters.

One European aim is to open up America’s public-procurement market, which is more protected than Europe’s; one reason is that the federal government cannot force states to open tenders to foreign bidders.

Another is to dismantle restrictions on services, which represent the lion’s share of output but a relatively small part of exports. European airlines cannot take over American carriers or carry passengers between American cities. Similar restrictions apply to coastal shipping under the 1920 Jones Act. Yet the EU market in services also remains fragmented. A transatlantic deal could spur further integration.

Other difficulties include France’s insistence on the “cultural exception” to protect French-language audio-visual products, and the EU’s wish for America to respect hundreds of “geographical indications” on everything from Parmesan cheese to French wines.

Read more: Transatlantic trading | The Economist