Britain and the Brexit Problem

On January 31, 2020, the sun shone on British independence from the European Union.  That sunlight is essential to solve the complex and convoluted problems confronting the U.K.  The struggle, as Abraham Lincoln said, is not altogether for today; it is for a vast future also.  The country faces economic, political, and military factors, some of which are pertinent to the United States.  It is dealing with an E.U. that is divided over significant issues, especially defense matters, and over the prominence of French president Emmanuel Macron.  After a 47-year relationship, Britain is leaving the European Union, although it is not clear to what extent it is leaving Europe, or even whether it can prosper economically outside the E.U.  Can the country maintain the lifestyle to which it has been used for so long? 

The U.K. has made its controversial choice of independence, though not resembling the policy of Winston Churchill in 1944, when he told Charles de Gaulle that Britain would always choose the Atlantic over the Channel — the "special relationship," in effect.  This choice was not without its problems.  The U.S. was the stronger power, as U.S. presidents showed: President Harry Truman severing the U.K. lifeline in 1945, President Dwight Eisenhower pressuring Sterling to end the Suez Canal crisis in 1956, President Ronald Reagan ordering U.S. forces into Grenada before telling Prime Minister Thatcher.  Former secretary of state Dean Acheson in a speech at West Point in December 1962 cuttingly remarked that the special relationship was about played out and that Great Britain had lost an empire and not yet found a role.

Britain is now seeking that role.  Among the different formulations is the one by Prime Minister Boris Johnson that Britain will be an independent actor and take no part in disputes among the various sides in the European Union.  His starting position seems clear: to reach an agreement with the E.U. before the end of the transition period on December 31, 2020.  During this transition period, Britain will remain in both the E.U. customs union and single market, and E.U.-U.K. trade will continue without extra charge.  The total amount of U.K. trade was 1.3 trillion pounds — almost half, 641 million, was with the E.U.  It is meaningful that the E.U., which is the U.K.'s most important trading partner, is less dependent on trade than is the U.K.

The U.K. must stop new tariffs or other trade barriers coming into force.  If the negotiations fail, the U.K. will have to trade with the E.U. under the basic rule of the WTO: that tariffs will be applied to most goods that U.K. business sends to the E.U., making them more expensive, and needing full border checks for goods, which means traffic bottlenecks at ports.  The optimal solution is cutting all tariffs to zero, thus increasing trade and economic growth, and keeping the non-tariff barrier low. 

Transition also means that Britain will no longer have members in the European Parliament, nor can it attend E.U. summits.  An initial problem, hotly disputed, is whether the U.K. can exit without a negotiated deal.  This possibility was rejected by Westminster in March 2019, but uncertainty remains.  Another issue is the U.K. proposal not to accept E.U. rules on a host of issues: work rules, environment, jurisdiction of the European Court of Justice.

As formulated at present, the E.U. position is that the U.K. can have a zero-tariff free trade agreement if the U.K. retains the E.U. standards on issues such as workers' rights, environmental concerns, and state aid.  Boris Johnson had stated that the U.K. can negotiate its own trade deals with other countries and that the relationship must ensure open and fair competition, encompassing a robust commitment to ensure a level playing field.  He seeks a new free trade agreement to allow goods to move around the E.U. without checks or extra charges.  If there is no deal, tariffs will be imposed on U.K. goods going to the E.U.  However, a lack of clarity exists in the mutual agreement of October 2019 between the two sides, which said the free trade agreement need not involve the U.K. accepting E.U. rules on competition, subsidies, and the environment, any more than the E.U. should be obliged to accept U.K. rules.

The reality is that the two sides differ on a host of topics: the arrangements for services, especially on postal and environmental issues; the role of the City of London and financial services firms; access to British waters and fishing grounds; the role of the European Court of Justice; Gibraltar, a British territory since 1713, now claimed by Spain; the site of financial exchange to remain in London or not.  Some agreement may be possible on the U.K.'s participation in E.U. programs such as research and the Erasmus student exchange.

However, nuclear defense issues, especially the views of French president Emmanuel Macron, are a formidable problem.  On the 80th anniversary of the appeal on June 18, 1940 by General de Gaulle in London to call for a free France, Macron is coming to London in June to award the city the Légion d'Honneur in "tribute to the immense courage of a whole country and people."  The French, he said, know what they owe the British, who allowed the French Republic to live.

The departure of the U.K. from the E.U. has meant mixed feelings for Macron and a shock and puzzle for Europeans.  Brexit is the first time a country has left the European community.  While U.K. relations with the E.U. have sometimes been turbulent, Britain has been a central player in the European project.  The U.K. had influenced policy on liberalization, market efficiencies, single market, and enlargement.  Moreover, the U.K. has no interest in a weak E.U.  It is not hostile to Macron's call for a sovereign and democratic Europe whose strength will make Europe strong. 

The problem not only for the U.K., but also for the U.S. is Macron's argument for a more committed and coordinate European defense strategy in which France, the only E.U. country with nuclear facilities, will occupy a central role.  He does not plan to reduce the size of France's nuclear arsenal, and he will increase France's military spending.  He calls for a wider role for the French nuclear arsenal in a more coordinated European defense policy.

The problems are evident.  Let me count some of the ways.  Is the E.U. a competitive economic rival or partner?  Will Macron's plan lead to lessening of the importance of NATO?  Will the E.U. negotiate separately with Iran, Libya, Syria?  What to do about Ireland, the Republic and Northern Ireland?  Solutions have to be found in the E.U. over identity cards; the migration crisis; the common strategic culture and shared defense budget; and the consequences of a low birth rate and aging population, which will increase health costs and pensions.

Britain has to deal with internal problems of the regions that are not prosperous London.  Boris Johnson's actions suggest he is trying to remake the U.K.  He deliberately held the first meeting of his Cabinet not in Downing Street, but in the northern city of Sutherland, home to a large Nissan car plant.

One issue is that the division on Brexit is more meaningful than that between political parties, though it is likely that citizens who favor Remain will be mainly Labor and Leavers mainly Conservative, who favor hard borders, protectionism, and nationalist values.  It appears that younger voters favor open borders, liberal values, and multilateralism.

To what extent will the U.K. abide by E.U. rules regarding labor rights, environmental standards, intellectual property, mobility of people, aviation, road transport, energy, cyber-security, and fishing — the last symbolically important for the U.K., with the belief that British fishing grounds are first and foremost for British boats?

The U.K. is in the process of remaking itself.  The crucial question is whether the process will make the country weaker or stronger, politically and economically.  The expectation is that the process will resemble a Foggy Day in London Town that ends with brightness and radiance.

Image: Boris Johnson via Flickr.

On January 31, 2020, the sun shone on British independence from the European Union.  That sunlight is essential to solve the complex and convoluted problems confronting the U.K.  The struggle, as Abraham Lincoln said, is not altogether for today; it is for a vast future also.  The country faces economic, political, and military factors, some of which are pertinent to the United States.  It is dealing with an E.U. that is divided over significant issues, especially defense matters, and over the prominence of French president Emmanuel Macron.  After a 47-year relationship, Britain is leaving the European Union, although it is not clear to what extent it is leaving Europe, or even whether it can prosper economically outside the E.U.  Can the country maintain the lifestyle to which it has been used for so long? 

The U.K. has made its controversial choice of independence, though not resembling the policy of Winston Churchill in 1944, when he told Charles de Gaulle that Britain would always choose the Atlantic over the Channel — the "special relationship," in effect.  This choice was not without its problems.  The U.S. was the stronger power, as U.S. presidents showed: President Harry Truman severing the U.K. lifeline in 1945, President Dwight Eisenhower pressuring Sterling to end the Suez Canal crisis in 1956, President Ronald Reagan ordering U.S. forces into Grenada before telling Prime Minister Thatcher.  Former secretary of state Dean Acheson in a speech at West Point in December 1962 cuttingly remarked that the special relationship was about played out and that Great Britain had lost an empire and not yet found a role.

Britain is now seeking that role.  Among the different formulations is the one by Prime Minister Boris Johnson that Britain will be an independent actor and take no part in disputes among the various sides in the European Union.  His starting position seems clear: to reach an agreement with the E.U. before the end of the transition period on December 31, 2020.  During this transition period, Britain will remain in both the E.U. customs union and single market, and E.U.-U.K. trade will continue without extra charge.  The total amount of U.K. trade was 1.3 trillion pounds — almost half, 641 million, was with the E.U.  It is meaningful that the E.U., which is the U.K.'s most important trading partner, is less dependent on trade than is the U.K.

The U.K. must stop new tariffs or other trade barriers coming into force.  If the negotiations fail, the U.K. will have to trade with the E.U. under the basic rule of the WTO: that tariffs will be applied to most goods that U.K. business sends to the E.U., making them more expensive, and needing full border checks for goods, which means traffic bottlenecks at ports.  The optimal solution is cutting all tariffs to zero, thus increasing trade and economic growth, and keeping the non-tariff barrier low. 

Transition also means that Britain will no longer have members in the European Parliament, nor can it attend E.U. summits.  An initial problem, hotly disputed, is whether the U.K. can exit without a negotiated deal.  This possibility was rejected by Westminster in March 2019, but uncertainty remains.  Another issue is the U.K. proposal not to accept E.U. rules on a host of issues: work rules, environment, jurisdiction of the European Court of Justice.

As formulated at present, the E.U. position is that the U.K. can have a zero-tariff free trade agreement if the U.K. retains the E.U. standards on issues such as workers' rights, environmental concerns, and state aid.  Boris Johnson had stated that the U.K. can negotiate its own trade deals with other countries and that the relationship must ensure open and fair competition, encompassing a robust commitment to ensure a level playing field.  He seeks a new free trade agreement to allow goods to move around the E.U. without checks or extra charges.  If there is no deal, tariffs will be imposed on U.K. goods going to the E.U.  However, a lack of clarity exists in the mutual agreement of October 2019 between the two sides, which said the free trade agreement need not involve the U.K. accepting E.U. rules on competition, subsidies, and the environment, any more than the E.U. should be obliged to accept U.K. rules.

The reality is that the two sides differ on a host of topics: the arrangements for services, especially on postal and environmental issues; the role of the City of London and financial services firms; access to British waters and fishing grounds; the role of the European Court of Justice; Gibraltar, a British territory since 1713, now claimed by Spain; the site of financial exchange to remain in London or not.  Some agreement may be possible on the U.K.'s participation in E.U. programs such as research and the Erasmus student exchange.

However, nuclear defense issues, especially the views of French president Emmanuel Macron, are a formidable problem.  On the 80th anniversary of the appeal on June 18, 1940 by General de Gaulle in London to call for a free France, Macron is coming to London in June to award the city the Légion d'Honneur in "tribute to the immense courage of a whole country and people."  The French, he said, know what they owe the British, who allowed the French Republic to live.

The departure of the U.K. from the E.U. has meant mixed feelings for Macron and a shock and puzzle for Europeans.  Brexit is the first time a country has left the European community.  While U.K. relations with the E.U. have sometimes been turbulent, Britain has been a central player in the European project.  The U.K. had influenced policy on liberalization, market efficiencies, single market, and enlargement.  Moreover, the U.K. has no interest in a weak E.U.  It is not hostile to Macron's call for a sovereign and democratic Europe whose strength will make Europe strong. 

The problem not only for the U.K., but also for the U.S. is Macron's argument for a more committed and coordinate European defense strategy in which France, the only E.U. country with nuclear facilities, will occupy a central role.  He does not plan to reduce the size of France's nuclear arsenal, and he will increase France's military spending.  He calls for a wider role for the French nuclear arsenal in a more coordinated European defense policy.

The problems are evident.  Let me count some of the ways.  Is the E.U. a competitive economic rival or partner?  Will Macron's plan lead to lessening of the importance of NATO?  Will the E.U. negotiate separately with Iran, Libya, Syria?  What to do about Ireland, the Republic and Northern Ireland?  Solutions have to be found in the E.U. over identity cards; the migration crisis; the common strategic culture and shared defense budget; and the consequences of a low birth rate and aging population, which will increase health costs and pensions.

Britain has to deal with internal problems of the regions that are not prosperous London.  Boris Johnson's actions suggest he is trying to remake the U.K.  He deliberately held the first meeting of his Cabinet not in Downing Street, but in the northern city of Sutherland, home to a large Nissan car plant.

One issue is that the division on Brexit is more meaningful than that between political parties, though it is likely that citizens who favor Remain will be mainly Labor and Leavers mainly Conservative, who favor hard borders, protectionism, and nationalist values.  It appears that younger voters favor open borders, liberal values, and multilateralism.

To what extent will the U.K. abide by E.U. rules regarding labor rights, environmental standards, intellectual property, mobility of people, aviation, road transport, energy, cyber-security, and fishing — the last symbolically important for the U.K., with the belief that British fishing grounds are first and foremost for British boats?

The U.K. is in the process of remaking itself.  The crucial question is whether the process will make the country weaker or stronger, politically and economically.  The expectation is that the process will resemble a Foggy Day in London Town that ends with brightness and radiance.

Image: Boris Johnson via Flickr.