It has been recently reported that the Obama administration has warned that Britain would be excluded from the EU-US trade and investment partnership, if it withdraws from the EU, losing in this way around €8bn a year in trade deals. According to the Guardian, a senior official from the US pointed out, "Having Britain in the EU… is going to strengthen the possibility that we succeed in a very difficult negotiation, as it involves so many different interests and having Britain as a key player and pushing for this will be important."
However, it is important to note that the external trade policy is an exclusive competence of the EU. Therefore, Member States have no way in which to act on this matter. The Commission conducts all trade negotiations with third countries, on behalf of all EU member states.
The Government has been calling for “an ambitious EU Trade policy aimed at opening up emerging markets”. The goal of the Government is to “conclude trade agreements with strategic economic partners such as Canada and India, and launch comprehensive packages of negotiations with the US and Japan, which would tackle the remaining barriers to over half the world’s trade;” However, having the EU negotiating free trade agreements does not mean that such agreements are negotiated according to the UK interests. It is important to note that QMV is the general rule in Council for all aspects of trade policy. Consequentely, the UK does not have such a leading role and influence as the government is claiming. In fact, the Government’s power to influence EU legislation is very limited due to QMV. Presently, the UK only enjoys 8% of the votes. From November 2014, QM will be calculated according to double majority: 55% of EU Member States (15 Member States) and 65% of the EU’s population, and the UK will enjoy 12% of the votes. However, this can hardly be seen as an increase in the UK's voting power as it will be harder for the UK to block proposals. As Bill Cash pointed out,
“The whole policy will effectively be driven by the European Union and its objectives, which are largely dominated by Germany.” Then, he stressed, “It will not be in British interests.”
According to the European Commission if the Transatlantic Trade and Investment Partnership with the United States (TTIP) goes beyond tariff barriers and harmonising standards on goods and services it could generate around €100 billion per year, however it would be worth just around €25 billion if it covers just tariffs. The Centre for Economic Policy Research (CEPR), has also estimated that a Free Trade Agreement with the US could worth up to €119 billion a year if it goes beyond tariff barriers.
Last April, French Culture Minister Aurelie Filipetti said "Europe has nothing to gain from opening up these sectors (audiovisual sector) in an FTA with the United States,". Moreover, she said, "There is no comparison between the US audiovisual sector, backed by massive investment, and its European counterpart which just would not be able to compete”. In fact, she stressed, "The position of France is that we want exclusion from discussion of cultural items. This is non-negotiable. It is not a surprise. I have said it and if we don't have exclusion, we will have no agreement,"
Whereas David Cameron said that all subjects and products should be up for discussion in the coming negotiations on the FTA with the US, the culture ministers from Germany, France, Austria, Belgium, Bulgaria, Cyprus, Hungary, Italy, Poland, Portugal, Romania, Slovakia, Slovenia and Spain, in a letter, called on the European Commission to exclude the audiovisual sector from the talks.
During a plenary debate of the European Parliament on the Transatlantic Trade and Investment Partnership, on 22 May, the European Commissioner in charge of trade, Karel De Gucht, pointed out the EU “should at all costs avoid taking issues off the table before negotiations even start” as, in this way, it “will never be able to also obtain concessions from the Americans.” He stressed that the EU has several red lines with respect to audiovisual services, but noted “that a full-scale exclusion of audiovisual services from EU commitments in the TTIP negotiations is neither necessary nor justified.”
Nevertheless, although the MEPs have recently voted on a non-binding resolution endorsing the launch of negotiations, they also voted for cultural and audiovisual services, including online ones, to be excluded from the negotiating mandate. The European Parliament supports, therefore, the French, as well as other member states’ demands to exclude the cultural sector from the FTA. The Government has reiterated that it favours putting "all sectors on the table at the start of negotiations."
Although the European Parliament report is not legally binding and MEPs are not involved in the negotiations, they stressed that the European Parliament’s position should be taken into account at all stages of the negotiations, as the "Parliament has teeth and can bite". In fact, the European Parliament has to give its consent to all trade agreements (assent procedure). The Council must obtain the consent of the European Parliament before adopting a decision concluding EU trade agreements. The European Parliament present position on the FTA with the US confirms the European Parliament tendency to have a more protectionist outlook than the European Commission.
Last March, the Commission requested formal authorisation from the Council to open negotiations for Transatlantic Trade and Investment Partnership with the United States (TTIP), the so called "negotiating directives", which set out the general objectives to be achieved with the agreement. The Council acts by a qualified majority in exercising its powers in the common commercial policy. The Council is required to act unanimously for the negotiation and conclusion of agreements in the field of trade in cultural and audiovisual services, but just “where these agreements risk prejudicing the Union's cultural and linguistic diversity” and “in the field of trade in social, education and health services, where these agreements risk seriously disturbing the national organisation of such services and prejudicing the responsibility of Member States to deliver them.”
The Council is expected to authorise the opening of negotiations and to give mandate to the Commission to negotiate with the US the Transatlantic Trade and Investment Partnership on 14 June. According to William Hague, “…working with 26 other countries can mean the process is slow, but it also means that when we succeed, that has an enormous impact.” However, it seems the Government has failed to acknowledge that it will face serious difficulties by having the Commission negotiating on behalf of all 27 EU Member States. The member states have different views on the scope of the mandate. It would be impossible to accommodate the interests of all member states, and the Commission will negotiate the deal taking into account the interests of the EU as a whole, which might not coincide with British commercial interests. The UK has limited influence in the shape of this agreement due to QMV. The UK cannot go further when it feels that the EU has been protectionist, as is not allowed to sign a free trade agreement.
The UK is not able to trade with third countries on its own terms due to EU exclusive competence.
The EU is negotiating FTAs with third countries which does not necessarily entail better opportunities for the UK, as they are negotiated on EU terms and decided by QMV. It is vital for the UK to be able to negotiate its own bilateral trading agreements with countries such as the US, China and India.
Britain has more successful trading relationships outside the EU. There has been a continuous trade deficit between the UK and the other EU member states. In almost every year since Britain joined the Common Market it has incurred a balance of payments deficit. The UK’s trade surplus with the rest of the world is now £13bn. It is important to note that the UK imports from outside the EU are increasing significantly faster, particularly from the new emerging economies. The UK must, therefore, refocus its trade away from the EU to the rest of the world.
As Bill Cash said, “Our call for a referendum to fundamentally change our relationship with European into trade and political cooperation only is essential because the relationship as it now exists is patently unacceptable and any prospect of staying in it needs to be put to the British people before negotiations begin.”
