Trump says Brexit deal could hurt plans for US trade pact

November 27, 2018 - President Donald Trump dropped a rhetorical bomb on U.K. Prime Minister Theresa May’s efforts to get a Brexit agreement through parliament, warning the deal she reached with the EU could jeopardize Britain’s ability to strike a trade pact with the U.S.

“Right now as the deal stands she may not—they may not—be able to trade with the U.S. and I don’t think they want that at all, that would be a very big negative for the deal,” Trump said Monday as he departed the White House for campaign rallies in Mississippi.

The president called May’s agreement “a great deal for the EU” and urged the prime minister to reopen negotiations with Brussels, something both she and EU leaders who approved the deal on Sunday have repeatedly declared they would not do. The pound dropped 0.4 percent against the dollar.

“I don’t think the prime minister meant that,” Trump said of the limits the 585-page exit document would put on the U.K.’s ability to reach a trade pact with the U.S.

Trump’s first comments on the Brexit deal since it was unveiled earlier this month came at a delicate time for May. She is facing widespread skepticism from within her own Conservative party and more broadly about the terms of an agreement. On Monday the prime minister announced that the contentious divorce terms would go to parliament on Dec. 11 for a decisive vote many expect her to lose.

Tough Talk

On Tuesday, U.K. Cabinet minister David Lidington said any trade deal with the U.S. was “always going to be a challenge” and sought to play down Trump’s remarks as “not unexpected.”

The U.S. “is a tough trade negotiator,” Lidington, May’s de-facto deputy, said in a BBC interview.

Trump’s comments are also potentially inflammatory as they align him publicly with pro-Brexit campaigners such as Boris Johnson, the former foreign secretary, who are trying to force May to ditch her deal. Some of them are plotting to oust May herself.

The U.S. president’s objections were aimed at the fact that under the terms negotiated by May the U.K. would remain in a customs union with the EU for a 21-month transition period while Britain negotiates a fuller trade deal with the EU. That could be extended in perpetuity and would remain in place if the U.K. failed to reach a longer-term pact with the EU.

May says that her aim is for a new commercial agreement with the EU that will allow the U.K. to strike trade deals with other countries around the world. The plan remains sketchy and the details have not yet been negotiated.

A spokesman for the prime minister responded to Trump’s comments on Monday by saying the U.K. remained committed to reaching a trade deal with Washington. The deal negotiated with the EU was “very clear” in allowing the U.K. to have “an independent trade policy so that the U.K. can sign trade deals with countries around the world—including with the U.S.,” the spokesman said.

No Deals

But for as long as the U.K. remains inside the EU’s customs union, it can’t strike trade deals with other countries such as the U.S. because the EU’s tariffs and standards will still apply to goods the country imports. As a result the deal would at the very least delay Trump’s ability to negotiate a bilateral deal with the U.K.

The decision to remain in a customs union with the EU for a transition period came because both May and the EU agreed it was the best way to avoid new border checks on goods crossing the land frontier between the U.K. and Ireland. Introducing the checks at the Irish border—with all the new infrastructure that would be needed—is something May and European leaders have vowed to avoid because of fears it would endanger the peace deal on the island of Ireland.

The pro-Brexit campaign believes that the cost of that would be remaining locked into the EU’s customs union without a say over its rules and regulations. They argue that would be worse than staying in the EU as a full member.

EU Critic

Trump has been a persistent critic of the EU and has repeatedly grumbled about the U.S.’s trade deficit with the bloc, which he argues is the result of unfair trade practices by Europe.

Monday’s Brexit intervention by Trump was not his first. In 2016 he claimed partial credit for U.K. voters’ decision to leave the EU, which he backed and which came just months ahead of his own election.

During a July visit to the U.K. he also cast doubt on May’s overall Brexit strategy, telling The Sun newspaper in an interview that if she persisted in trying to maintain close trade and economic ties with the EU would “probably kill the deal” with the U.S.

May and Trump sought to repair their ties after that, insisting they would continue to lay the groundwork for a trans-Atlantic deal. Trump also notified Congress in October that he planned to begin negotiations with the U.K. at some point next year.

Source: American Journal of Transportation