"The initial shock of Brexit is still sinking in across the world. Indeed, the ‘for’ campaigners are exulting as they see the referendum as a sort of reform to save the UK from an unstable EU grappling with migration, security and financial stability issues. Whether they like it or not, the fact is that it is a lot of East Europeans and Asians who work hard to keep the British economy growing."
The initial shock of Brexit is still sinking in across the world. Indeed, the ‘for’ campaigners are exulting as they see the referendum as a sort of reform to save the UK from an unstable EU grappling with migration, security and financial stability issues. Whether they like it or not, the fact is that it is a lot of East Europeans and Asians who work hard to keep the British economy growing. The local guys, instead of upping their game and remaining competitive, have decided to keep the EU guys away who actually work to make a living.
Formally notifying the intention to withdraw, triggering Article 50, sets a two- year clock running. After that, the treaties which govern membership would no longer apply to the UK. The terms of exit will be negotiated between the UK’s 27 counterparts, and each will have a veto over the conditions. Two vast negotiating teams could be created, far larger than those seen in British renegotiation. The EU side is likely to be headed by one of the current Commissioners. The negotiations would be tedious, as it would be hard agreeing to a new trading partnership, establishing tariffs and other barriers, and agreeing on other important issues. In fact, the complete exit would take about five years or more, because the EU wants to make conditions for exit really difficult to discourage others from following the same path.
Future of TTIP
Meanwhile, discussions are on in the academic community on the fate of the Transatlantic Trade and Investment Partnership (TTIP). Indeed, TTIP is an ambitious trade and investment agreement being negotiated between the US and EU. According to the United States Trade Representative (USTR), TTIP aims to bolster an already strong relationship to help boost economic growth and add to the over 13 million American and EU jobs already supported by the existing trans-Atlantic relations. TTIP is expected to provide greater compatibility and transparency in trade and investment regulation, at the same time, maintain high levels of health, safety and environmental protection. The UK and the US are important trading partners and there is skepticism that TTIP negotiations would get affected with Brexit. It is obvious that given the UK’s economic importance, the EU’s market for US products has potentially shrunk, making the EU a less attractive trading partner post Brexit. The first intervention came from USTR Mike Froman, who the day after the referendum emphasised that the “economic and strategic rationale for TTIP remains strong.” Much would also depend on the next US administration.
‘Euro-realists’ associated with the European Conservatives and Reformists (ECR) Group in the European Parliament, whose vision is to reform the EU by further liberalising the single market, may push for the finishing line. They are against hidden protectionism found in national labour laws or trade union practices. They argue, these weaken Europe’s ability to compete in the global market. Hence, if Euro-realism gathers momentum, the conclusion of TTIP could be a reality soon.
It is hard to predict the future course of TTIP negotiations. With three years into the negotiations, 30 chapters discussed and 14 rounds of negotiations complete, the deal is nowhere near completion. TTIP comprises three main blocks: market access for EU and US companies, cooperation on regulatory issues, and global rules of trade such as sustainable development or competition policy.
Striking a deal
However, TTIP has good offers from both the sides, which include 97 per cent of all tariff lines, the remaining 3 per cent is for so-called end-game. Both sides are working on improvements within the 97 per cent tariff lines for speedy removal of tariffs. On regulatory issues, there have been proposals for cooperation in chemicals, cosmetics, engineering, medical devices, pharmaceuticals, textiles and cars. The EU has initiated discussions on trade and sustainable development, including on labour and environment.
Meanwhile the President of European Council has urged member countries to continue with TTIP negotiations and conclude negotiations by the end of the year. On the contrary, it could happen that once Britain triggers Article 50 to quit the EU, both London’s and Brussels’ resources will be diverted on thrashing out a deal on what access the UK has to the single market, at the expense of working on TTIP. Another factor to slow down negotiations is elections in both Germany and France in 2017, where majority are opposed to TTIP. So, a clear picture will emerge only by the beginning of 2018. Though the timeline of end 2016 for TTIP is unlikely to be met, in the long run TTIP will be concluded and survive Brexit. After all, trade between the EU and US is already worth $4.7 trillion and TTIP provides a chance to the EU to increase it.