Brexit – the big uncertainty

Brexit – the big uncertainty

by Keshia Jacotine (Monash University) and Tim Bale (Queen Mary, University of London)

It has been twelve months since the United Kingdom (UK) went to the polls and made the decision to leave the European Union (EU) – one that came as a shock both to many Brits as well as to the rest of the world.

Since then, we have witnessed one of the most tumultuous periods in British politics, culminating in an unforced early election in which the governing Conservative Party not only failed to increase its majority in the manner most observers expected, but actually lost that majority, forcing it into a controversial deal with the Democratic Unionist Party from Northern Ireland. Partly as a result, we are still no nearer to knowing how negotiations between the EU and the UK will pan out, and what their relationship will look like once the UK finally leaves.

What, then, lies ahead, and what might be the impact of Brexit (and any resulting pivot by the UK back towards its Commonwealth partners) on New Zealand’s relationships with the UK and the EU?

Hard going

Brexit negotiations officially started on June 19, 2017 But Britain had already spent a year debating what type of deal the government would do with the EU: would there be a “hard” or “soft” Brexit?

A “soft” Brexit would ideally involve Britain leaving the EU but retaining some of the benefits of membership, namely access to the Single Market and customs union. An example of this would be the UK being allowed to join the European Economic Area (EEA), which is comprised of the EU, Norway, Iceland and Liechtenstein. While these three countries are not members of the EU, they still have near-full access to the Single Market but this is in return for accepting free movement of people and being subject to certain obligations that arise from EU legislation.

The more likely outcome, however, appears to be a “hard” Brexit. A hard Brexit means the UK would leave the EU, its customs union and the Single Market. The UK would need to renegotiate any free-trade agreements it is currently signatory to as part of the EU, and also negotiate trade agreements with the EU. There are no guarantees with a hard Brexit that the UK would be able to negotiate a free trade agreement with the EU, meaning that after over forty years during which they were gradually broken down, the UK and the EU would end up introducing barriers to trade, such as implementing tariffs , against each other.

Both the Government and Opposition appear committed to a hard Brexit. In the Queen’s Speech, Prime Minister Theresa May outlined her government’s commitment to a hard Brexit with the introduction of eight bills that appear to pave the way for Britain to leave the Single Market, customs union and end freedom of movement between the UK and the EU. Meanwhile, Jeremy Corbyn, left-wing leader of the Labour Opposition, who has been a lifelong Eurosceptic, sacked three members of his shadow cabinet for backing an amendment to the speech which called for Britain to stay in the Single Market and customs union.

The EU has repeatedly left the door open for Britain to change its mind, but at the same time has made it clear that it does not intend to make Brexit a piece of cake for the UK. Recently, the European Parliament’s provocative lead negotiator on Brexit stated that the EU is more than willing to veto the current deal on immigration put forward by Britain. While the rights of EU citizens who have resided in the UK for five years prior to a specified cut-off date are guaranteed, those who arrive after this date are not guaranteed equal treatment (and this includes the children ). The EU has stated that it wants fair and equitable treatment of its citizens, in return for full reciprocity for British citizens resident in the EU.

The EU’s hardline negotiating stance is not driven purely by a desire for equity, it is also driven by a need to protect the European project. Soon after Britain voted to leave, populist far-right parties such as Front National in France began pushing the idea that other member states might follow the British out of the EU. The EU cannot therefore afford to let the exit process look easy, or to let the UK “have its cake and eat it”. As a result, it is difficult to see a smooth or quick road ahead for Brexit negotiations.

Shock result but same old, same old

To widespread amazement, May’s election gamble did not pay off for the Conservatives. Labour, however, came out of the election better than anticipated, as Corbyn was somehow able to attract the votes of two groups who are ideologically opposed on Brexit – young voters, and former UKIP voters. Around three-quarters of voters aged 18 to 24 voted to Remain in the referendum.

Despite Corbyn refusing to budge on his pledge to end freedom of movement and leave the Single Market, his anti-austerity, idealistic style (and generous manifesto promises) helped ensure that young voters, along with well-educated, often well-heeled voters in older age groups, were instrumental in helping him secure a ten point rise in Labour support in comparison to the 2015 general election.

By the same token, Corbyn’s inclination towards a hard Brexit helped stem the flow of former and potential UKIP voters to the Tories. How long Labour will be able to maintain that bizarrely effective balancing act, however, is hard to say. It will be easier in opposition than in government, but sooner or later – especially with votes coming up in parliament on Brexit-related matters – the party might have to risk getting found out.

Our Friends in the Anglosphere?

With the prospect of an exit from the Single Market and customs union seeming more and more likely, Britain will be looking for new trade partners and agreements.

During the lead up to the referendum, the Leave campaign began touting the virtues of a greater engagement with the “Anglosphere” – the “English speaking peoples”, a grouping that includes the UK, the United States, Canada, Australia and New Zealand but which is not coterminous with the Commonwealth, not least because the latter includes non-English speaking countries that were former territories of the British Empire. This putative pivot towards the Anglosphere and Commonwealth is one part nostalgia for the Empire, another part realist since, superficially anyway, it may be much easier in the short term for the UK to negotiate free trade deals one-on-one with familiar countries such as the US and New Zealand.

The UK is currently New Zealand’s second largest foreign investor and its fifth largest bilateral trading partner, and has already made a free trade agreement with New Zealand a top priority after Brexit. But the EU is New Zealand’s third largest trading partner, and it seems more likely that an EU-NZ free trade agreement could be brokered sooner than a UK-NZ agreement. There are already fears from Welsh farmers that a free trade deal with New Zealand could prove to be a “perfect storm” in that UK sheep farmers could not possibly compete with New Zealand competition.

Initially there was also hope that Brexit may facilitate more relaxed immigration laws for those from the Anglosphere, but these were dashed when May made it clear that the UK would be reducing net migration across the board. In any case, New Zealand would almost certainly want to avoid unlimited (and especially unskilled) migration from the UK that would only add to the pressure already felt, especially in Auckland, on housing and transportation. That said, New Zealand and other Anglosphere and/or Commonwealth nations such as Australia stand to benefit from separate free trade agreements with both the UK and the EU. How quickly and easily they can be negotiated, however is another matter – particularly because the UK has no recent experience of negotiating such deals for itself, having contracted them out to the EU for decades.

Conclusions

Brexit will be a long and complicated process. There are no guarantees that a deal will be reached by the March 2019 deadline – or even that a deal will be reached at all. The UK crashing out of the EU on WTO rules remains a possibility, and even the prospect of a soft Brexit seems highly unlikely. At the same time, some wonder if Brexit will ever really happen – at least without a very long, even indefinite transition period.

The Referendum’s impact on British politics has been profound: it has mobilised young voters resentful of the result, causing them to gravitate towards an Opposition Leader who has no intention of standing in the way of Britain leaving the Single Market and ending freedom of movement. The contradictions present in the aftermath suggest that there is no clear path forward, and suggests a long period of uncertainty ahead both for Britain and the EU.

Keshia Jacotine is an MPhil student and Graduate Teaching Assistant at Monash University

Tim Bale is Professor of Politics at Queen Mary, University of London

This article first appeared in Pacific Outlier: Politics and International Relations Blog

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