A messy divorce – Brexit the EU and the Caribbean

Sometime this year,most probably in June or September, the UK electorate will be asked if theywant to remain in, or leave the European Union (EU).

Although common sensewould suggest that there should be no fundamental change in the relationship,the outcome could be messy divorce, as the UK electorate, like many othersacross the world, has become volatile, angry and subjective.

Unfortunately, ‘Brexit’,as it is known, has become conflated with deep-seated national concerns aboutmigration and the pressure this may be placing on social services; a beliefthat the financial cost of membership is too high; and an abiding sense thatfor many in Britain creeping federalism through the idea of ‘ever closer union’and the continuing loss of sovereignty, are undercutting the country’straditional sense of independence and identity.

This is not helped bythe fact that the issues involved are technical, mind numbingly dull for mostvoters, hard at times to say yes or no to without qualification, and partiallyconfused by the seemingly marginal concessions that Britain’s Prime Minister,David Cameron, has obtained from Europe’s 27 other reluctant-to-agree memberstates.

There are also significantquestions in Scotland where an independence-minded Scottish National Party andelectorate wishes to remain in the EU so may use a national leave vote, to leverageits independence.

Alarmingly some opinionpolls now show a majority of British voters now wanting to leave the EU.Despite this little if anything has been written or any analysis undertaken on thepotential impact on the Caribbean.

Speaking about this inthe last week to European trade and development policy experts, politicians andofficials, it is clear that if British voters were to decide to leave, significantuncertainties and problems would arise for the region.

Although ‘Brexit’ mayseem a distant issue, the Caribbean could be affected in a number of ways. These include uncertainty and a possiblenegative impact on trade and development flows; a diminution in the region’s abilityto influence thinking on its policy concerns in Europe; a specific range ofuncertainties for the UK’s overseas territories in the region; and a longperiod of uncertainty as Britain’s foreign, trade and development policy isreoriented. British withdrawal could also have wider consequences for examplefor Europe’s future relationship with the ACP, and accelerate the general trendtowards dialogue with Latin America and the Caribbean as an undifferentiatedwhole.

To begin to understand whatcould happen, it is necessary to know something of the process involved if theUK ceased to be a member of the EU.

After a period ofreflection and political turmoil, which could well lead to the resignation ofthe Prime Minister and leading cabinet members, the UK would have to invoke therelevant article of Europe’s Lisbon Treaty and embark on an unclear two-yearprocess of withdrawal, renegotiation, and uncertainty.

While the desired objectiveof most of those who want to exit seems to be to achieve a free trade relationshipwith the EU close to what the UK has at present, but without the automaticadoption of EU regulations and laws and the cost, how this or their otherrequirements would be practically achieved is far from clear.

More critically,however, for external partners like the Caribbean, the UK would also have todecide whether it would re-join the European Customs Union which determines Europe’scommon external tariff and common external trade policy; or as some in the exitcamp suggest, intend to operate its own external trade policy.

If this were to happenand the UK were to leave the EU customs union, Britain would have to agree bilaterallyor multilaterally, or negotiate again, some or all of the international tradearrangements it has previously with other EU states been a co-signatory to.This would include the Cariforum Economic Partnership Agreement (EPA), the associationagreements with Central and South America, but more importantly those arrangementsBritain would wish to keep with its major global trading partners. It would bea process that could potentially amend existing levels of access orasymmetries, challenging the UK’s limited trade negotiating capacity, mostlikely giving priority to the relationships that matter most.

The UK would also haveto reapply to join the World Trade Organisation (WTO) in order to ensure its bindings,tariff levels and other WTO related agreements remain in place as its present membershipis in the context of the EU.

In all of this after a negativevote much would depend on how those in the UK steering the exit process decideto give new weight say to the relationship with the US or the Commonwealth. Brexitwould also see the UK cease its major contribution to European developmentfunds and probably develop new bilateral programmes of its own.

It is possible also toimagine complications if the parties to any existing bi-regional or bilateralagreements with Europe wanted the same or better terms or in the case ofdevelopment linked agreements sought higher levels of support.

What this vastlyover-simplified Brexit outline sketch suggests is that while preferentialarrangements would continue to be offered, at a regional level Cariforum wouldhave to undertake a rapid analysis of the significance of Britain outside theEU’s customs union to its flows of trade in goods and services; whether itscompanies with manufacturing or other investments in the UK would suffer iffree movement into the EU was not available; and determine whether the UK wouldseek to change any of its transitional measures with, for example, competitornations in Latin America or elsewhere.

Just as importantly,because the relationship with a diminished EU would remain in place, theCaribbean would have to decide how it would ensure its relations with the restof Europe were strong.

This is because for manyyears Britain’s voice for the Caribbean has been significant in Councilmeetings in Brussels, and with the European Commission and many other EUinstitutions, helping ensure that the region has had a better hearing among anincreasingly sceptical group of member states, that for the most part have norelationship with the region.

Brexit also arises at atime when a wholesale review of EU foreign policy is being undertaken, Europeantrade priorities are being reconsidered, the future of the ACP relationship withEurope is in doubt, and new approaches are being developed to respond to therecently agreed UN sustainable development goals: all matters which requiring asupportive voice for the Caribbean inside the EU perhaps through a rapidlyconstructed special relationship with France or Spain.

Much more will be knownabout whether the UKgovernment has obtained its hoped for voter-convincing package of measures tokeep Britain in Europe when the EU Council meets on February 18/19.However, the closeness of the UK opinion polls suggests that Caricom andCariforum should take the time to assess the potential impact of an unwelcomeEuropean divorce.

David Jessop is aconsultant to the Caribbean Council and can be contacted at david.jessop@caribbean-council.org

Previous columns can befound at www.caribbean-council.org