The UK bids Europe farewell

On June 23 by a small majority, the British people voted toremove themselves from the European Union (EU). The decision has consequencesfor the Caribbean.

After a vitriolic campaign and the tragic murder of onemember of Parliament, a hugely divided Britain decided by 52 per cent to 48 percent that it would stand alone and as it were, reset its relationship not justwith Europe but with the whole world.

While London, Scotland, Northern Ireland and the vastmajority of the young voted in favour of remaining in, those who had notbenefitted from the EU relationship and economic globalisation in the country’sold industrial heartlands and on the coast and at its the rural fringes, votedto leave.

A huge factor was a fear of immigration. Although manyvoter’s emotional response on this issue was linked to concerns aboutovercrowded schools, hospitals and difficulties in obtaining housing, suchviews were significantly less common in the country’s cosmopolitan urbancentres where the migration from Europe and other parts of the world has beenat its highest.

What happens next is far from clear, with even the outlineof the two-year process of leaving uncertain. But having voted for Brexit, asone US commentator noted, a long earthquake will now begin. It will change theway the British see each other, probably break up the Union with Scotland andthe other component parts of the UK, damage the British economy, and perhapsmortally weaken the already shaky foundations of European unity.

Despite all living British Prime Ministers, all of themajor political parties, the majority of business and most world leadersincluding President Obama seeing value in the UK remaining a part of the EU andsaying so, the majority of the British electorate rejected the view of whatmany saw as remote elites, and followed a populist call for change that bearslittle resemblance to the way that Britain presently relates to the world.

As far as the Caribbean is concerned it is clear from theexperts, politicians and officials that I have spoken to over the months sincethe campaign began, that significant uncertainties and problems will now arisefor the region’ relationship with the UK and with the rest of Europe.

The Caribbean will be affected in a number of ways.

These include a possible negative impact on trade anddevelopment flows; a diminution in the region’s ability to influence thinkingon its policy concerns in Europe; a specific range of problems for the UK’soverseas territories in the region; and a long period of uncertainty asBritain’s foreign, trade and development policy is reoriented.

British withdrawal could also have wider consequences forexample for Europe’s future relationship with the ACP, and accelerate the EU’sgeneral trend towards dialogue with Latin America and the Caribbean as anundifferentiated whole.

To begin to understand what may now happen it is necessaryto know something of the process involved in the UK ceasing to be a member ofthe EU.

After a period of reflection and political and economicturmoil, and the Prime Minister, David Cameron stepping down in October, the UKwill have to invoke the relevant article of Europe’s Lisbon Treaty and embarkon an unclear two-year process of withdrawal, renegotiation, and instability.

While the desired objective of most of those who supportedexit seems to be to achieve a free trade relationship with the EU – or oneclose to what the UK has at present, but without the automatic adoption of EUregulations and laws and the financial cost involved – how this or otherrequirements that aim to end free movement can practically be achieved is farfrom clear.

Nor is it certain how other EU member states will react toUK politicians seeking a new relationship. This is because some countries suchas France and Denmark, ruling parties face elections against groups with viewssimilar to those in Britain who promoted a changed relationship with the EU.

More critically, however, for external partners like theCaribbean, the UK would also have to decide whether it would re-join theEuropean Customs Union which determines Europe’s common external tariff andcommon external trade policy; or as some in the exit camp suggest, will operateits own external trade policy.

If this were to happen and the UK were to leave the EUcustoms union, Britain would have to agree bilaterally or multilaterally, ornegotiate again, some or all of the international trade arrangements it haspreviously with other EU states been a co-signatory to. This would include theCariforum Economic Partnership Agreement (EPA), the association agreements withCentral and South America, but more importantly those arrangements Britainwould wish to keep with its major global trading partners. It would be aprocess that could potentially amend existing levels of access or asymmetries,challenging the UK’s limited trade negotiating capacity, most likely givingpriority to the relationships that matter most.

The UK would also have to reapply to join the World TradeOrganisation (WTO) in order to ensure its bindings, tariff levels and other WTOrelated agreements remain in place as its present membership is in the contextof the EU.

In all of this much will now depend on how those in the UKwho will steer the exit process decide to give new weight say to therelationship with the US or the Commonwealth. Brexit will also see the UK ceaseits major contribution to European development funds and probably develop new bilateralprogrammes of its own.

It is also possible also to imagine complications if theparties to any existing bi-regional or bilateral agreements with Europe wantedthe same or better terms or in the case of development linked agreements soughthigher levels of support.

What this vastly over-simplified sketch suggests is thatwhile preferential arrangements would continue to be offered, at a regionallevel Cariforum will have to undertake a rapid analysis of the significance ofBritain outside the EU’s customs union to its flows of trade in goods andservices; whether its companies with manufacturing or other investments in theUK would suffer if free movement into the EU was not available; and determinewhether the UK would seek to change any of its transitional measures with, for example,competitor nations in Latin America or elsewhere.

Just as importantly, because the relationship with adiminished EU would remain in place, the Caribbean will have to decide how itensures its relations with the rest of Europe remain strong.

This is because for many years Britain’s voice for theCaribbean has been significant in Council meetings in Brussels, and with theEuropean Commission and many other EU institutions, helping ensure that theregion has had a better hearing among an increasingly sceptical group of memberstates, that for the most part have no relationship with the region.

Brexit also arises at a time when a wholesale review of EUforeign policy is being undertaken, European trade priorities are beingreconsidered, the future of the ACP relationship with Europe is in doubt, andnew approaches are being developed to respond to the recently agreed UNsustainable development goals: all matters which requiring a supportive voice forthe Caribbean inside the EU.

All of which are themes this column will return to.

David Jessop is a consultant to the Caribbean Council andcan be contacted at david.jessop@caribbean-council.org

Previous columns be found at www.caribbean-council.org