Addressing the reality of Brexit

The European Council President, Donald Tusk, could not havebeen clearer. Following a June 29 informal session of European Union (EU)leaders, minus the UK, he said that there will be no European single market àla carte. Trade access, he observed, requires the acceptance of the freedom ofmovement of EU citizens

His message is one that is important for Caribbean leadersto understand when in the next few days Heads of Government meeting inGeorgetown are likely to consider how best to respond to the UK’s seismic June23 referendum vote to leave Europe.

This is because Mr Tusk’s comments indicate that whoeverfills the political power vacuum now existing in Britain, will have relativelyfew options as to where they can take the country’s relationship with Europe.

It means that practically, the UK has just four genericpossibilities that it must choose between in relation to a future associationwith the EU.

The first is to become a member of the European EconomicArea and have a relationship similar, to a greater or lesser extent, to thatwhich Norway or Liechtenstein enjoy, but requiring free movement in return forfree trade with some exceptions, and a commitment to the EU budget. Althoughpractical, it is an option likely to prove politically unacceptable to thosewho voted leave

The second is an association agreement, for example notdissimilar to those signed recently with Central America, not involving freemovement.

And the third is to trade under WTO rules involving tariffsand non-tariff barriers with Europe, also not involving free movement.

For the Caribbean each alternative has implications and indue course each would eventually require the region to undertake a tradenegotiation with the UK.

Unfortunately, it is far from clear which of these avenuesmight be taken by Britain. This is because the UK referendum was won withoutany idea by those who wanted to leave Europe as to what should happen next;meaning that whoever comes to lead Britain’s Conservative Party will rapidlyhave to propose a plan.

It suggests that only after a new British Prime Minister isin place in September, that the UK will be able to finally establish aposition, determine how it will negotiate a new relationship – a processexpected to last for at least two years – and provide a date when it will giveformal notice that it intends quitting the EU.

What appears to be not well understood in the region isthat despite the strategic implications of the UK’s decision to leave Europe,this means nothing structural will happen suddenly. Moreover, the Caribbean’srelationship with a Europe of 27 member states on trade, through the EconomicPartnership Agreement (EPA), already programmed development support and allelse will continue unchanged far into the future.

Despite this, the Caribbean cannot avoid or wait to takedecisions on rebalancing its relationship with Europe.

Losing Britain’s voice in the councils of Europe means thatthe region will rapidly need to develop viable new political allies, mostnotably in France, Spain and the Netherlands. In doing so it will also have tocalibrate the relative future weight it intends placing on North America, andthe many new global relationships that it has developed.

All of which requires resolution at a time when Caribbeanunity is doubtful, CARICOM has divided itself from its large Hispanic neighbourthe Dominican Republic, a country which enabled it to meet the substantiallyall trade requirements of the Economic Partnership Agreement with Europe, andwhen most of its trade with, and visitor flows from Europe, remain with theUnited Kingdom.

That the UK vote has created existential concerns in theregion about CARICOM speaks volumes about all that has been allowed to driftand has not been addressed.

It is a moment that requires the region to find the claritythat it has lacked for more than a decade as to where it is heading and where itsees its future as a region.

That is to say it requires CARICOM to look beyond theAnglophone part of the region and recognise that as Cariforum with theDominican Republic and Cuba and the Overseas territories – which are now in adeeply anomalous place – there is a basis on which the region might have acritical economic mass; one that could more viably re-engage with Europe, andwith a separated and possibly diminished UK, as well as with the rest of theworld.

The UK and Europe are of historic, cultural and economicsignificance, but this may be the moment, if Caribbean Heads have the courage,to think differently about the region and the world. Brexit encourages aresponse that could result in a new regional narrative that prioritisesintra-Caribbean economic arrangements in such a way that the Caribbeangenuinely becomes a whole.

What happens next in relation to the determining how bestto relate to a changed Britain will be far from easy, as there is presently anear total absence of national leadership in both of the main UK politicalparties. To complicate matters, theBritish civil service, who have to develop objective options and to negotiate,are almost to a man and woman pro-European. In addition, most constitutionallawyers believe that it is going to take ten or more years to unravel EUregulations and laws, and extraordinary additional complications will arise ifScotland seeks independence based on its desire to remain in the EU. All ofwhich is to say nothing of a possible recession, the likely diminution in theshort to medium term of the British economy, the continuing weakness ofsterling, and an alarming upsurge in racism and xenophobia driven by socialmedia that threatens to undermine past political civility.

Despite all of this there are some simple immediateresponses that Caribbean Heads of Government might consider.

The first is to determine in what practical ways a UKoutside of the EU still matters to the region. They could do this bycommissioning with the region’s private sector commission a focussed andgenuinely Pan-Caribbean study that identifies the best future trade and otheroptions for new relationship with the UK for regional debate.

The second is to appoint a very senior political figure -perhaps a former Prime Minister – able to develop and cultivate on a sustainedbasis, relevant high level political contacts in the EU27 and in an expectedBrexit Ministry in London, as well as to open lines for Ambassadors to seniorofficials in the UK’s new cross-Whitehall European Unit that will manage theleave, negotiating process.

The third is to fund and clearly direct a small group ofthird and fourth generation high achievers in the Caribbean Diaspora withproven political reach, to help create a new awareness of Caribbean concerns atthe highest levels.

Space does not allow for more, but I will return in thecoming weeks to the complex strategic, trade and technical challenges that willlikely arise in the region’s future negotiations with London, and theproblematic issues now facing Britain’s Overseas territories in the Caribbean.

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