UK must choose between EU and Trump, trade experts warn

 

UK must choose between EU and Trump, trade experts warn

 

Pascal Lamy, former head of the WTO, says Britain will have to take sides if new US administration slaps hefty tariffs on imports, as fears grow over possible trade war

 

Toby Helm Political editor

Sat 16 Nov 2024 20.10 CET

https://www.theguardian.com/politics/2024/nov/16/uk-must-choose-between-eu-and-trump-trade-experts-warn

 

The former head of the World Trade Organisation (WTO) has said that the UK should side with the European Union over trade and economic policies rather than a Donald Trump-led US, as fears grow over a possible global trade war.

 

Pascal Lamy, who was head of the WTO from 2005 to 2013, said it was clear that the UK’s interests lay in staying close to the EU on trade, rather than allying with Trump, not least because it does three times more trade with Europe than the US.

 

His comments came after a key Trump supporter, Stephen Moore, said on Friday that the UK should reject the EU’s “socialist model” if it wanted to have any realistic chance of doing a free trade deal with the US under Trump and, as a result, avoid the 20% tariffs on exports that the president-elect has promised.

 

In an interview with the Observer, Lamy said: “It’s an old question with a new relevance given Brexit and given Trump. In my view the UK is a European country. Its socio- economic model is much closer to the EU social model and not the very hard, brutal version of capitalism of Trump and [Elon] Musk.

 

“We can expect that Trump plus Musk will go even more in this direction. If Trump departs from supporting Ukraine, I have absolutely no doubt that the UK will remain on the European side.

 

“In trade matters, you have to look at the numbers. The trade relationship between the UK and Europe is three times larger than between the UK and US.

 

“This is a very structural inter-dependence which will hardly change unless – which I don’t think is a realistic assumption – the UK will decide to leave the EU norms of standards, to move to the US one. I don’t believe that will happen.

 

“My answer is that the option to unite politically, economically and socially with the US and not with Europe makes absolutely no sense. I believe that, for the UK’s interests and values, the European option remains the dominant one.”

 

Ivan Rogers, the former British ambassador to the EU, said it was clear that after Trump’s re-election the UK would have to choose between the US and EU. “Any free trade agreement that Trump and his team could ever propose to the UK would have to contain major proposals on US access to the UK agricultural market and on veterinary standards. It would not pass Congress without them. If the UK signed on the dotted line, that’s the end of the Starmer proposed veterinary deal with the EU. You can’t have both: you have to choose.”

 

Their remarks come as Keir Starmer heads to Brazil on Sunday for a meeting of the G20 where issues of global security and economic growth are set to dominate. The prime minister is expected to hold talks with President Xi of China, on whose country Trump is proposing slap huge 60% import tariffs. Trade experts expect that the US will demand that the EU and UK follow suit, which both will strongly resist for their own trade reasons.

 

The UK is seeking to increase trade with Beijing while also stepping up efforts to find greater ways to access the EU single market. Last week, the governor of the Bank of England, Andrew Bailey, made clear that leaving the EU had “weighed” on the domestic economy.

 

A government source said that developing a trade strategy in the new world order was now the top priority. “It has gone from being very important to being number one in the one tray [following Trump’s re-election].”

 

However, João Vale de Almeida, the former EU ambassador to London, said he believed there was common “territory for agreement” which would involve minimal pragmatic deals between the EU and the UK, and the US and the UK.

 

“We know that Trump will try to divide European member states and divide the UK and EU. This is already what [Nigel] Farage is trying to do. But I think we can walk and chew gum at the same.

 

“Given that a fully fledged trade deal with the US is not possible because agricultural issues will get in the way, and an EU deal is limited by UK red lines, any deals will have to be limited. So there may be a way through.”