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Theresa May’s second lesson in post-Brexit trade realpolitik

British Prime Minister Theresa May | Christopher Furlong/Getty Images

BREXIT FILES INSIGHT

Theresa May’s second lesson in post-Brexit trade realpolitik

US shows it will prioritize economic interests over the ‘special relationship.’

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Updated

London just got another lesson in post-Brexit trade realpolitik.

A week after U.S. President Donald Trump ignored all appeals by Prime Minister Theresa May to block the imposition of a hefty 219 percent tariff on Bombardier, putting about 4,000 jobs in Northern Ireland at risk, Washington has again showed no compassion when it comes to defending its own economic interests. The U.S. has teamed up with six other heavyweights at the World Trade Organization to challenge a joint U.K.-EU plan that London hoped would allow a smooth Brexit transition at the global trade body.

By leaving the EU, the U.K. will become an independent WTO member, meaning it does not only need to set up new trade arrangements with other countries but also settle the terms of divorce when it comes to current commitments as an EU member. High on the agenda is the issue of food quotas, which determine how many tons of meat, grains or sugar other countries can export into the EU at a reduced tariff rate.

London and Brussels insist that they have struck a deal for these food imports. The best way, they argue, is to simply split the existing quotas based on the amounts of food that Britain and the rest of the EU currently import under their joint membership. International Trade Secretary Liam Fox told POLITICO last month that the British idea of splitting the quotas had been “very well received” by EU partners.

It turns out, though, that other countries are not so keen on the solution. In an unusually spicy letter, the Americans, Canadians, Argentines, Brazilians, Uruguayans, Thais and New Zealanders ripped the Brexit plan apart. “We cannot accept such an agreement,” the letter, seen by POLITICO, says, reminding London and Brussels that “none of these arrangements should be modified without our agreement.”

A spokesperson for the U.S. Trade Representative said that “a high priority for the administration” was “ensuring that U.S. exporters of food and agricultural products have the market access in Europe due to them.” That line gives a foretaste for London of the way the U.S. will play future talks on a bilateral free-trade agreement.

Turbulent times lie ahead for both the U.K. and EU as they sort out the consequences of the Brexit divorce in the international trade community.

This insight is from POLITICO‘s Brexit Files newsletter, a daily afternoon digest of the best coverage and analysis of Britain’s decision to leave the EU available to Brexit Pro subscribers. Sign up here.

Authors:
Hans von der Burchard 

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