The Grass is Always Greener…British Euroscepticism and the U.S.-EU Free Trade Agreement

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by A.J. Collins

flagsLast month, at a joint press conference, President Barack Obama and British Prime Minister David Cameron expressed their support for the Transatlantic Trade and Investment Partnership (TTIP). The TTIP is a planned free trade agreement between the U.S. and the EU to be negotiated by the end of 2014. U.S. Trade Representative Kirk has hailed the initiative as a “great endeavor…to strengthen our historic partnership.”

However, plans for the TTIP face uncertainty as – among other things – British opposition to membership in the EU grows. During the press conference, Obama stated the importance of British participation in the agreement, highlighting that “extensive trade with the UK is central to our broader transatlantic economic relationship.” Administration officials have even suggested that a separate free trade agreement between the U.S. and the UK would not be concluded if Britain chooses to withdraw from the EU, effectively leveraging the prospective agreement to press for continued British membership in the EU.

At present, the TTIP is supported by the British government. Strong support comes from the Liberal Democrats, the junior partner in the Cameron Cabinet. Baroness Sarah Ludford, a Lib Dem MEP and Vice Chair of the European Parliament’s delegation to the U.S., has cited the job growth potential and economic stimulus for the UK to be derived from the TTIP, including not only the 3,500 pound annual benefit for households from EU membership, but another 400 pounds from the TTIP alone. One report suggests that the UK’s GDP would increase by between 0.14 and 0.35 percent, resulting in a rise in the real wage of between 0.21 and around 0.5 percent.

Yet support for continued British participation in the EU is shaky, according to recent polls. A majority in the UK believes that the EU is headed in the wrong direction, according to Gallup, and 55 percent now prefer withdrawal should a referendum be presented, with only 25 percent opposed. This gap of 30 points is much greater than a previous four point differential found by a survey conducted last month. Cameron has promised a referendum in 2017 should the Tories win reelection in 2015, but has opted against presenting a “status quo or leave” vote. Instead, Cameron would likely push for reforms while keeping the UK in the EU.

Perhaps most alarming is the rapid increase in support for the United Kingdom Independence Party (UKIP), a nationalist pro-withdrawal party, in the polls. Recent numbers place the party in first place in the upcoming European Parliament election in the UK and at 20 percent in the general election, undermining both Tory and Labour support.

Nigel Farage, the leader of UKIP, considers the party to be strongly center-right on economic issues and supportive of free trade. His opposition to regulation and taxation would seem to be in line with the TTIP, but this is not the case. William Dartmouth, a UKIP MEP, stated in a floor debate that EU-negotiated trade agreements are less beneficial to individual member states and expressed indignation at the proposed EU-Canada free trade agreement. Additionally, when the resolution for TTIP negotiations to begin came before the European Parliament, despite the eurosceptic Europe for Freedom and Democracy grouping’s official support, only one UKIP member voted in favor of the legislation, with two openly abstaining and the rest casting no vote. This was one of the largest defections among any European political party.

But the passage of the TTIP is critical and several actors must take steps to ensure it materializes.

The Obama administration should continue to support the TTIP. Not only would it be beneficial for the U.S. and the EU economically, but it would strengthen transatlantic relations. British inclusion in the negotiations is essential, and Obama must persist in leveraging the economic prosperity projected from the agreement in favor of the UK remaining in the EU.

The Cameron Cabinet, Tories and Lib Dems alike, should remain firmly in support of the TTIP, focusing on the domestic benefits the agreement would provide. Although the Tories remain a largely euro-reformist party, should they win reelection, the referendum proposal should create alternative options aside from withdrawal that can neutralize the UKIP but promote a Tory-style EU.

Finally, the European Commission and Parliament must continue their negotiations to pass the TTIP. Securing the swift passage of the TTIP could bolster support for the EU in the UK ahead of the European Parliament election in 2014 and the UK general election in 2015, helping maintain the membership of one of the world’s largest economies within its ranks. It would also serve as an act of transatlantic cooperation and expand employment and investment opportunities across the recession-torn continent, whose recent struggles include alarming youth unemployment rates and delays on deadlines for meeting austerity criteria. Although agricultural, environmental, and other legalities may require tricky concessions as a result of gaps between European and American standards, quick enactment would prove to be a milestone achievement for the world’s two largest economies. 

A.J. Collins is an intern at the Streit Council. Photo credit: kalyan3

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