What do you think? Leave a respectful comment.

What impact will Brexit have on U.S. trade policy?

Britain is the U.S.’s closest diplomatic and military ally and top economic partner in Europe. One-fifth of U.S. exports to Europe go to the UK and so do half a billion dollars in direct investments. Senior editor of Foreign Policy magazine Cameron Abadi joins Alison Stewart to discuss the effects Brexit might have on business relations in the UK and Europe.

Read the Full Transcript

  • ALISON STEWART:

    I am joined by Cameron Abadi, a senior editor of "Foreign Policy" magazine.

    What are the implications for U.S. companies that use the U.K. as a base and an entry point to business in Europe?

    CAMERON ABADI, SENIOR EDITOR, "FOREIGN POLICY" MAGAZINE: Well, you know, a lot of companies use Britain precisely that way. So you cited how important an economic partner that is. But it's hard to disentangle how much of that partnership is about Britain and how much of that is about Europe. And I think it's safe to say a lot of that is about using Britain to get access to this much bigger market in Europe.

    Now that Britain has decided it's not part of that market– or at least temporarily won't be part of that market– a lot of companies are going to have to calculate whether it makes sense to stay in Britain. And a lot of companies have said that in the run-up to the vote — and we'll see in the weeks ahead — whether they start to move their operations away from Britain and move it elsewhere on the European continent.

  • ALISON STEWART:

    Let's talk about trade, what the impact will be on trades. Especially with President Obama's transatlantic trade partnership deal. What does the future hold for that and for U.S. trade with U.K.?

  • CAMERON ABADI:

    Yes, you know, that transatlantic partnership deal was the top priority of the Obama administration with regards to Europe, probably since the beginning of Obama's first term. I mean, that was what he said from the outset was the most important thing on his agenda.

    Now that the European Union is in a crisis, now that the most pro-free trade country in Europe has taken a step back, it's not clear if that trade partnership– which was very close to happening, which sort of, by all accounts was sort of third base– it's not clear what is going to happen to that. And probably not going to be able to be passed before Obama leaves office.

  • ALISON STEWART:

    Let's talk about the U.K.'s and U.S.' political allies as supports one another. How will Brexit affect that relationship, especially when they're dealing with sort of diplomatic issues that maybe other European countries don't necessarily agree with the U.S. on?

  • CAMERON ABADI:

    You know, Britain is a long — has been a partner for the U.S. for a long time and sees a lot of issues in the world the same way as the U.S. does. And to that extent, Britain has been United States' voice in the room in the European Union. When it comes to a foreign policy question like Russia, you have countries in Europe like Germany and France who have had different relations, that have sort of tried to be more warmer rapprochement relationship with Russia. Britain has been our sort of — more voice in the room of having a tougher line against a place like Russia.

    So now that Britain is no longer going to be part of diplomatic deliberations in Europe, I think the United States is going to have a tougher time winning Europe over for those big foreign policy questions, like Russia.

  • ALISON STEWART:

    There has to be a who or a what — a country, and a government that might take advantage of Brexit and take advantage of this turmoil. Who might that be? What are some possibilities?

  • CAMERON ABADI:

    Well, I just mentioned Russia. And Russia seems to be– has long wanted to be the most powerful country on the European continent. That's been their strategy going back centuries. And it's been true in the last couple of years. We've seen them act aggressively on that border with Europe.

    Now that they smell a little weakness in Europe, I think it's safe to say we may soon see them trying to probe that border, trying to find other areas of weakness to test. And now that Britain is no longer a part– strong military like Britain is no longer part of the European Union, they may try to take advantage of that.

  • ALISON STEWART:

    The analogy that everybody has been using is this is a divorce. So the question is, is this going to be a knock-down, drag-them-out divorce? Is this we're going to mediation and we're going to play nice divorce? Or is this going to be a quickie divorce?

  • CAMERON ABADI:

    Well, you know, that is exactly the question people are wondering, and I think it comes down to the law, the provision called Article 50. That was written into the European treaties. When they wrote it, it's not clear they thought anyone would actually use that. But now that they are, we'll see whether it's going to be a smooth process, or it's going to be something where Europe tries to punish Britain for exiting.

    And the reasoning for that would be, well, we want to– European countries might want to deter other countries from taking this kind of step. So the best way to do that may be to punish Britain on the way out. Britain seems to think — or the leave campaign argued — that they would get a sweetheart deal because they're a big enough economy. But I think– I think the incentives to punish Britain may — may win out.

  • ALISON STEWART:

    Cameron Abadi from "Foreign Policy" magazine, thanks so much.

  • CAMERON ABADI:

    Thank you.

The Latest