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Europe in Crisis
The Reality of Brexit and Trade Deals

President Obama is in the UK today, and during his meeting with Prime Minister David Cameron, he has been weighing in on the raging Brexit debate. The Wall Street Journal:

Mr. Obama warned that if Britain exits the EU, it could significantly delay bilateral U.S.-U.K. trade deals, saying that the United States would focus first on negotiating a large, multi-nation agreement with members of the European Union.

The president said a trade deal with Britain “might happen someday.”

“But it’s not going to happen anytime soon,” he said. “The U.K. is going to be in the back of the queue.”

Without opining one way or another on the wisdom of the President’s intervention, we will note that talk about whether the U.S. would negotiate a trade deal with a UK that has chosen to get out of the EU is ultimately misplaced. Of course we would want a trade deal—as would the UK. A trade deal will be negotiated.

However, the UK does need to understand in that case that they would need the deal much more than we would, so they would not get a better deal from the U.S. that way. The same would obviously happen with the EU. Something would no doubt be worked out, but the EU would have better cards in its hand than the UK would. So the UK would by default end up getting a worse deal both with Europe and the U.S. than it has now.

We certainly wouldn’t want to punish our allies or grind their faces in the dust, but it’s in the nature of things that power realities get reflected in the structure of trade deals.

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  • Nevis07

    Obama’s words have had the opposite effect of what he’s trying to affect – much as his words on domestics politics here in the US has an opposing effect.

    TAI is correct. Trade will be done by the three parties no matter what. The structure of the deals will look different and it will causes some economic disruptions in the immediate term, but at the end of the day, nobody is looking not to make a profit.

    The real issue at hand with Brexit is the effect on geostrategic security in Europe. NATO will still stand, but if the EU begins a slow and steady collapse when it’s next inevitable economic crisis rears it’s head, the knock-on effects could be dangerous. That’s we’re America’s true interest in Britain remaining comes from. Obama should have spoken to the Brits concern over domestic sovereignty rather than threaten economic consequences if intended to sway British voters – but then as we American’s know, Obama’s understanding and respect for US citizens concern in context of policies related to domestic sovereignty is not well understood.

  • Jim__L

    During the 2000 election, there was a writing campaign on the part of British pien pensants to the good people of Ohio, who lived in swing districts. They begged them not to vote for George W Bush, as his religiosity would clearly trigger Armageddon.

    Polls indicate that these letters gave Bush a bump that handed him Ohio.

    • ljgude

      I think you will find that happened in 2004 and while there is plenty of evidence that it annoyed Ohio’s voters and the Guardian, which orchestrated the campaign, actually closed the offending website. Since 2004 was not close like 2000 it does not appear that the campaign had any effect on the election.

  • Fat_Man

    “We certainly wouldn’t want to punish our allies or grind their faces in the dust”

    We don’t but Obama does. He hates the British. The essence of Obama’s foreign policy is suck up to America’s enemies and punch its friends in the teeth.

    We can hope that Obama’s comments will work just as well as his efforts to remove Netanyahu from Office in Israel did.

    • ljgude

      Personally I think the Brits would be better off going all in on the Anglosphere than the collective sick man of Europe. But given the damage Obama has done to our reputation with our allies it might be the US that will have to beg to join the Anglosphere – besides it is not entirely clear that we actually speak the language.

      • OldNHMan

        Hopefully we can repair our relations with our cousins after the damage Obama has done. What I find so vexing is that The Won is telling the British “You better not vote for Brexit is you know what’s good for you.” Just who does he think he is? He’s the president of the US, not the EU, and certainly not the UK.

        Should Brexit take place, I can see opening NAFTA or a NAFTA-like trade agreement with the UK. The EU is a large market. The US, Canada and Mexico are much larger. Such an agreement would help shield them when the so far inevitable collapse of the EU as it deals with one bankrupt EU nation after another due to poor economic policy, underfunded social programs, and the disaster of heavy immigration from the Middle East and North Africa by people who have no intention of assimilating themselves into their host culture.

        • ljgude

          I think that is right. I believe the Brits would be right to back a post multicultural model in which they work with other English speakers very much including India. If they have any postcolonial obligation toward the subcontinent it is to help them succeed in India, not in Liverpool. I think the Anglosphere will need India to balance China for starters. Since the US has pretty well botched or deliberately discarded its time as head of a mono polar world I think we have to have an eye for the main chance of creating a stable bi polar world. (No, not that kind of bipolar). And an extension of NAFTA would be a great place to start building an economic NATO for the future.

  • Kevin

    This idea that larger countries or groups strike better trade deals than smaller ones is wrong. The history of the last seventy years is one of the US agreeing to trade deals which favor its smaller trading partner’s interests more than its own.

  • Attila_the_hun

    How arrogant and hypocrite one can be. Hussein O went berserk when Natanyahu spoke again the Iran deal to the congress. He accuse Israel for interfering in U.S foreign policy. He is now shamelessly doing the same to to U.K. Hussein O’s Hypocrisy has no bounds

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