In September, U.S. Trade Representative Mike Froman repeated President Barack Obama’s pre-Brexit vote warning that a decision to leave the EU would push Britain to the “back of the queue” in terms of striking a trade deal with the U.S. Froman confirmed that the focus of the U.S. is currently on the Transatlantic Trade and Investment Partnership (TTIP) with the remaining 27 EU Member States. “It’s absolutely clear, we have a very special relationship with the U.K., we’re going to want to find ways to maintain and strengthen and deepen that trade and investment relationship over time, but right now our priority is to get TTIP done,” Froman said.
Australia showed initial enthusiasm for bilateral trade talks with the U.K. in July. However, on a recent visit to London to discuss trade relations with U.K. Trade Minister Liam Fox, Australian Minister of Foreign Affairs Steven Ciobo has injected a note of caution, stating: “We can certainly have preliminary discussions and that’s part of what I’m doing here this week – preliminary discussions around what a post-Brexit Australia-U.K. trade deal might look like.” But formal negotiations would have to wait for Brexit to complete.
The U.K. must first focus on defining and negotiating its future relationship with the EU, including whether it remains in a customs union with the EU or whether it regains control over its tariffs and regulations. Although U.K. government officials hope for greater autonomy in the negotiation of new trade agreements and are discussing informally trade deals with a range of Asian and Middle Eastern countries, approximately half of U.K. exports currently remain destined for the EU. For example, the proportion of British exports to India (population 1.3 billion) is much less than that to Belgium (population 11 million).
U.K. Prime Minister Theresa May has announced that Article 50 will be invoked by the end of March 2017, launching the two-year negotiating process on the terms of the U.K.’s withdrawal from the EU. However, beyond agreement on the terms of the U.K.’s legal separation from the EU, agreement must also be reached on the terms of the U.K.’s future trading relationship with the EU, which is likely to take more than two years. Therefore, actual trade negotiations involving the U.K. remain a ways off. Until the above questions are settled, Froman said, “…it’s really impossible for anybody else to negotiate a free trade agreement with the U.K.”