Biden faces challenges from Brexit

President-elect Joe Biden faces key challenges in reshaping the U.S. relationships with Great Britain and the European Union even after the Brexit trade deal completed last week that concludes the United Kingdom’s exit from the economic union.

The agreement means the U.K. and EU will not have to spend the majority of 2021 or longer duking it out over Brexit, which would have distracted from a slate of looming issues involving the international community ranging from COVID-19 to China.

“It means less of a headache for him. He’s dodged a couple of bullets,” Jacob Kirkegaard, nonresident senior fellow with the Peterson Institute for International Economics, said of Biden.

“It means that two traditional American allies in Europe are not at loggerheads, so Biden doesn’t need to play peacemaker from day one.”

In one regard, the agreement is an early success for Biden, whose victory in November’s election added to the already-high pressure British Prime Minister Boris Johnson faced to strike a deal with the EU before the year ended.

The new deal met one major objective from Biden by ensuring there would be no hard customs border between Ireland, a part of the EU, and Northern Ireland, a part of the U.K.

Biden wanted to ensure the Good Friday Agreement that brought peace to Northern Ireland wasn’t endangered by Brexit.

“The U.K. heard a clear message from Joe Biden: Don’t mess with the Good Friday Agreement,” said Heather Conley, senior vice president at CSIS and former deputy assistant secretary of State in the Bureau of European and Eurasian Affairs under George W. Bush. “They heard that message and responded.”

Yet Brexit still may create more challenges than opportunities for Biden, who along with former President Obama opposed Great Britain’s exit from the EU.

Top of the list will be sorting how the American companies will be affected by the deal. For decades, the U.K. has been a base and conduit for American companies seeking access to the European market. Now that the U.K. and EU have split, the Biden administration will have to sort out rules for American companies involved in all manner of transatlantic trade.

“The next administration will need to be very alert to the negative impact of the new agreement on U.S. companies in the U.K.,” Conley said. “The first priority is to make sure U.S. companies and their employees don’t accidently become collateral damage.”

For example, last week’s trade deal did not cover trade in services or financial issues, both major components of modern economic trade.

The U.K. will be looking to negotiate a trade deal with the United States, but Conley said the absence of a financial services deal between the U.K. and EU will complicate those efforts.

Biden himself has brushed off the idea of a quick trade agreement.

“I’m not going to enter any new trade agreement with anybody until we have made major investments here at home and in our workers and in education,” he told The New York Times earlier in December.

Another complication is that the fast-track law that prevents Congress from amending trade deals — something seen as a necessity to negotiate such pacts — expires in months.

Ben Judah, a nonresident senior fellow at the Atlantic Council, says Brexit presents the U.S. with some opportunities as well.

When it was part of the EU, the U.K. was obligated to side with France, Germany and other EU members against the U.S. in certain trade disputes.

Now, if it wants to side on an issue with the U.S., it can do so and put more pressure on its former colleagues in the EU. The EU and U.S., for example, are now involved in major disputes over aerospace subsidies, digital taxation and privacy.

The same is true on a broader array of foreign policy issues.

“The U.S. doesn’t actually have that many close democratic allies on the world stage that share opinions on China and Russia. There are only a handful of them, and the U.K. is one of them,” Judah noted.

For example, the EU and China are reportedly on the brink of a major investment deal with the support of all 27 EU member countries. Some argue that a pre-Brexit U.K. could have voiced concern or even scuttled such a deal.

Strong collaboration between the U.K. and U.S. could help set a standard when confronting China or on other Biden priorities such as climate change.

Still, the Peterson Institute’s Kirkegaard says the overall thrust of Brexit is a blow for Biden’s foreign policy ambitions. 

“Strategically, it is the reality that for a multilateralist administration, Brexit is a setback,” he said.

In Great Britain, there are also worries that Brexit will make the U.K. less of a priority for the U.S., special relationship or no, because of its size relative to the E.U. as a whole.

“Suddenly, we are no longer an irreplaceable bridge between Europe and America. We are now less relevant to them both,” former British Prime Minister John Major, a Conservative, said last month. “In recent decades, we have consoled ourselves that we ‘punch above our weight’ in international affairs. I think that was true — but that was then, and this is now.”

Kirkegaard said the U.K.’s strategic importance is diminished and that if the U.S. wanted to pick Trump-style trade fights, it would now have an easier time with the U.K.

The Biden administration might also want to think twice about taking steps that might appear to “reward” Brexit, such as striking favorable deals on trade.

“If you’re the Biden administration, you fundamentally view the EU as a strategic partner on anything from China to climate change. So you wouldn’t want the EU to break up further,” said Kirkegaard.

“There is an incentive to signal to other countries that they’re not going to reward you for leaving the EU.”