Britain has been pushed behind the European Union in the queue to strike a free-trade deal with the United States, officials in Washington have said.
President Trump has softened his opposition to negotiating with the bloc as a whole after attempts by his officials to open talks with individual European nations were rebuffed.
During a private conversation last month, Angela Merkel, the German chancellor, convinced Mr Trump that talks on a US-EU deal would be simpler than he thought, sources close to both sides of the discussion told The Times.
This led to a “realisation” in the Trump administration that a trade deal with the EU — allowing the tariff-free exchange of goods and services — was more important to US interests than a post-Brexit deal with Britain, a source close to the White House said.
The Transatlantic Trade and Investment Partnership (TTIP) trade deal between the EU and US, shelved after Mr Trump’s election victory, could now be revived or a new The EU is America’s biggest trading partner: US exports to the bloc last year were worth $270 billion; it imported goods worth $417 billion. In the same period the US exported $55 billion in goods to Britain and imported $54 billion.
The development threatens to embarrass Boris Johnson, the foreign secretary, who after meeting Mr Trump’s advisers in January claimed that Britain would be “first in line” for a deal. A year ago Barack Obama warned that the UK would be at “the back of the queue” if it left the EU. Speaking alongside David Cameron in London, he said: “Maybe at some point down the line there might be a UK-US trade agreement but it’s not going to happen any time soon.”
Mr Trump’s change of heart has been put down to Mrs Merkel’s intransigence. After her trip to Washington, she briefed cabinet colleagues on what she said were “very basic misunderstandings” by Mr Trump on the “fundamentals” of the EU and trade.
“Ten times Trump asked her if he could negotiate a trade deal with Germany. Every time she replied, ‘You can’t do a trade deal with Germany, only the EU’,” a senior German politician said. “On the eleventh refusal, Trump finally got the message, ‘Oh, we’ll do a deal with Europe then.’ ” Cecilia Malmström, the EU’s trade commissioner, will visit Washington next week for informal talks with Wilbur Ross, the US commerce secretary, and other Trump officials. The EU and Mrs Malmström are keen not to appear to plead for the reopening of TTIP negotiations but will discuss the “economic and strategic rationale” for a deal if the American side does the same.
Before last year’s presidential election, the EU and US had made progress with the TTIP deal but Mr Trump’s threat to scrap multilateral agreements appeared to signal its demise. However, six present and former trade officials from the US, UK and EU said separately that the White House had softened its position on striking a free-trade deal with the EU since Mr Trump took office. Of the six, one believed that TTIP talks would resume while five were unsure whether the deal would be resurrected or a new one proposed.
EU rules prohibit Britain from negotiating and entering into trade deals with other countries until it has left the bloc but the government wants to progress with informal talks until then.
There is disagreement in Whitehall about how fast to proceed in seeking a UK-US trade deal. Senior Foreign Office figures are understood to be wary of rushing into a deal out of fear that the UK could be disadvantaged.
On a visit to Britain this week, Paul Ryan, the Republican House speaker, gave the biggest hint yet that TTIP could be resurrected. In a speech to the think tank Policy Exchange, he said: “Now that Article 50 has been invoked, the UK and EU will determine the best path forward . . . We want the parties to come together and strike a lasting agreement. A strong UK-EU relationship is in all of our best interests. In that same vein, the US will continue to work closely with our EU friends and chart a path forward on TTIP negotiations.”
In an interview with The Times in January Mr Trump said that he wanted to have a trade deal with Britain done “quickly and done properly” because it was “good for both sides”.
What is the TTIP?
The Transatlantic Trade and Investment Partnership is a proposed agreement to reduce US-EU tariffs and other barriers to trade. Talks have been under way since 2013 but met opposition on both sides of the Atlantic.
Why have the talks run into trouble?
That is due to the sheer complexity of the issues and the need to align the economic priorities of the EU states and the US. They have also been dogged by a powerful lobbying campaign across the EU by groups who argue that the treaty could lead to the privatisation of state healthcare provision. Labour previously warned that the NHS could be opened up to US private healthcare companies allowed to bid for any contract. This has been denied by negotiators. There has also been controversy over the use of investor-state dispute settlement courts. In a past trade treaty between Australia and Hong Kong, these were used to argue that public health initiatives such as plain tobacco packaging were illegal.
Where is TTIP now?
Most commentators said TTIP was effectively dead after the election of Donald Trump and his antipathy to multilateral trade deals. One of his first acts in office was to pull out of the Trans-Pacific Partnership (TTP) that had just been agreed between the US and Pacific nations. Yet there are signs that position may be changing. Mr Trump is keen for a trade deal with Germany, and TTIP — or a successor agreement — is the only way to achieve that. Brigitte Zypries, the German economy minister, has said that “TTIP is not dead” and she is travelling to the US next month for talks. However, much of the opposition and technical difficulties remain and, after Brexit, the EU will lose one of its strongest advocates for TTIP within the bloc.deal proposed.