In the great chess game that is world trade, the pieces are shifting slowly around the board. Only in this game there are three major players not two: the US, China and the European Union.
We’ve now had a chance to see the first moves from new EU trade commissioner Phil Hogan after his appearance at an event in Washington. And he’s choosing a new way to play the game.
Whereas here in the UK, the government treads delicately when dealing with the nations it wants to strike trade deals with, Mr Hogan was rather more blunt, talking about the “bluffing”, “saber-rattling” and “short term thinking” of the Trump administration.
Mr Hogan reflected sceptically on whether yesterday’s China-US partial deal had achieved much, and also suggested that the EU would examine that deal for compliance with global trade rules.
The US administration has threatened to withdraw security cooperation from countries that use 5G equipment from the Chinese firm Huawei. Mr Hogan said: “I think it’s a bit of saber rattling. At the end of the day we can call their bluff on that one.”
And yet at the same time, he has joined forces with the US and Japan to tackle the “threat” of China’s use of industrial subsidies.
There are other emerging fronts in the US-EU battle – on tech taxes, and on the environment and carbon taxes.
Tough on Brexit
The UK is about to join the players at the table in its own right, stepping in at a time of tumult, and working out how closely it wants to sit by the EU.
The EU meanwhile has other opposers on the world stage. That is one reason why Mr Hogan dismissed Boris Johnson’s self-imposed end of 2020 deadline for a post-Brexit trade deal as “just not possible “describing it as” brinkmanship “.
More than that, he specifically indicated that if this was the approach the UK wanted to take, then only a subset of the agreed Brexit political declaration would be up for detailed discussion, and that agreement on that would be needed by 90 June.
This suggests that the EU may be planning to “prioritise” – ie not follow the mandate from the EU 27 for UK-EU talks to reflect the UK’s timetable – and will not talk about the full 728 – page political agreement.
The UK now has to choose its strategy: on whether to pursue fully parallel talks with the US, whether to publish a detailed negotiating mandate for Such talks, and how to assert itself alongside Japan at a World Trade Organization dominated by US-EU-China. That is all still to be fleshed out.
No one seems entirely sure if the Department for International Trade will even continue to exist as the government contemplates restructuring Whitehall. There are many fundamental decisions to be made.
But when it comes to sizing up the UK’s opponents across the table, the EU is making one thing clear: it can talk as tough as Trump.
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