IN or OUT – WIN or LOSE? Who is really going to feel the Brexit?

by Anne Wesemann LLM European Union Law, PhD candidate (European Union Law) – University of Sussex; Lecturer in Law – The Open University

In the coming referendum on the UK’s membership to the EU, an undecided electorate will struggle to form an opinion. Both campaigns are doing a great job at confusing opinions with facts, claiming one official can speak for a whole nation, and both are taking a more or less educated guess regarding consequences for the UK.

We have read a lot about the views of members of the government, officials or former cabinet ministers. What is missing from the debate is an assessment of the consequences for the European Union. How do the then remaining members of the Union view the prospect of the UK’s exit? Who would be the real big loser, should Brexit become reality? Can it even have an impact on the relations to the USA?

The Members States are each eyeballing Cameron’s approach to the renegotiations with a different agenda. This article is going to attempt to shed some light on the European Union view on the matter by examining selected Member States and the impact Brexit could have on them. It will also look over the pond for possible consequences regarding the UK-USA relationship.

The UK’s impact on the European Union cannot be overemphasized. Despite the impression that the main focus lies on the negative implications of membership, the UK has had a remarkable impact on the European Union and its other Member States. Not only has it strongly and successfully negotiated certain opt-outs but it is also constantly successfully driving European Union policy in a direction that supports its own interest.[1] In doing so, the UK has not just benefited from its membership, but also highly influenced other Member States in their negotiations and dealings with the EU. Those Member States are likely to be effected in more than just their political and diplomatic standing.

The nation that is dreading the Brexit the most is also the UK’s closest neighbour: Ireland. Not so much for economic reasons, although the impact is not minimal with a possible worst case scenario of a permanent loss of GDP of 3.1 % by 2030[2], but rather because of fears over the impact on the Irish peace process and the effect on free movement. Ireland can be seen as the UK’s closest and safest partner in the negotiation process. They are likely to accept most of the government demands as acceptable limitation compared with the impact a Brexit could have.

Poland was always viewed as a partner when it came to supporting the UK’s policies in the European Union. Both have negotiated successful opt-outs and the newly elected government formed by the Conservative Law and Justice Party (PiS) looks like a promising partner for the future. However, the UK government’s demands relating to free movement and the severe limitation of access to in work benefits are impacting on this successful relationship. Poland represents the second largest group of migrants into the UK with 672,033 Poles living in the UK, according to the Census 2011. Current migration data published by the office for national statistics only shows how this number is rising every year.[3] In order to support their national’s best interest, the Polish government will have to move away from a general support of UK European Policy. They are likely to be the UK’s strongest opponent in relation to renegotiations of the right to free movement.

In October 2015 U.S. Trade Representative Froman was quoted saying “[…] I think it’s absolutely clear that Britain has a greater voice at the trade table being part of the EU, being part of a larger economic entity. […] We are not particularly in the market for FTAs [free trade agreements) with individual countries.”[4] Should Froman be correct with his prediction the UK would be facing trade barriers in relation to the USA, just like China, Brazil or India. Ignoring the overall impact the TTIP agreement will have on trade between the two Unions, a non-EU UK would be confronted by tariffs in trade with the USA. The Guardian at the time used the example of British car exports by Jaguar Land Rover, which would be facing a 2.5 % tariff which is not going to make the competition with products coming from the EU to the USA any easier.

Others[5] jumped on the news claiming this to be an argument strengthening the IN-campaign. However, the information one USA representative of the current government is giving has to be taken with a more critical view, rather than just applauding it and using it for propaganda purposes. Dr. Hulsman[6] little later claimed the British media would show deep misunderstanding of American interests and diplomatic culture in spreading Forman’s comments as definite position. According to him it is not the recent but the new government that is going to determine the trade relationship with an EU-liberated UK. Although the outcome is as difficult to determine as the outcome of the coming referendum, Hulsman claims it is arguably obvious that a trade relationship with the UK post-Brexit needs to maintained “as Britain is the largest foreign investor in the US and vice versa”.

When making an attempt to foresee the implications on the USA-UK relationship, looking beyond the economic interest helps. The special relationship of these two nations is down to a shared culture.[1] Historical as well as geographical aspects impact on the UK’s view on the European Union and are at the same time tying in with the American perspective. This historical and cultural link will always support a potential UK-USA trade deal more than a move away from the European Union can diminish the chances.

What we see are opinions. What we hear are the voices of the politicians and economists involved, following their own personal and national agenda. An in depth analysis of the impact on the EU will have to wait until the referendum’s result has been implemented, should the world have to settle to a European Union without the UK.

[1] Tim Oliver, ‘Europe’s British Question: The UK-EU Relationship in a Changing Europe and Multipolar World’ (2015) 29:3 Global Society 409-426, 416.

[2] Open Europe Briefing 11/2015 ‘EU reform heat-map: Where do the EU countries stand on the UK’s EU reform demands?’ p. 9. http://openeurope.org.uk/intelligence/britain-and-the-eu/open-europes-eu-reform-heat-map-where-do-eu-countries-stand-on-the-uks-eu-reform-demands/ accessed 14.01.2016.

[3]Migration Statistics Quarterly Report, November 2015. http://www.ons.gov.uk/ons/rel/migration1/migration-statistics-quarterly-report/november-2015/stb-msqr-november-2015.html accessed 15.01.2016.

[4] Reuters ‘US warns Britain: If you leave the EU you face barriers to trading with America’ The Guardian (2015) <http://www.theguardian.com/politics/2015/oct/29/us-warns-britain-it-could-face-trade-barriers-if-it-leaves-eu> accessed 14.01.2016.

[5] Matthew Holehouse, ‘Major blow for Brexit Campaign as US rules out UK-only trade deal’ The Telegraph (2015) <http://www.telegraph.co.uk/news/worldnews/europe/eu/11962277/Major-blow-for-Brexit-campaign-as-US-rules-out-UK-only-trade-deal.html> accessed 14.01.2016.

[6] Dr. John Hulsman, ‘EU referendum: Don’t be stupid, the US won’t cut Britain adrift post-Brexit’ City A.M. (2015) < http://www.cityam.com/227773/don-t-be-stupid-us-won-t-cut-britain-adrift-post-brexit> accessed 13.01.2016.

[1] Nicholas Startin, ‘Have we reached a tipping point? The mainstreaming of Euroscepticism in the UK’ (2015) 36(3) International Political Science Review 311-323, p. 313.

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