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 they want to remain in, or leave the European Union (EU).

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

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

This is not helped by the fact that the issues involved are technical, mind numbingly dull for most voters, hard at times to say yes or no to without qualification, and partially confused by the seemingly marginal concessions that Britain's Prime Minister, David Cameron, has obtained from Europe's 27 other reluctant-to-agree member states.

There are also significant questions in Scotland where an independence-minded Scottish National Party and electorate wishes to remain in the EU so may use a national leave vote, to leverage its independence.

Alarmingly some opinion polls 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 the potential impact on the Caribbean.

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

Although 'Brexit' may seem a distant issue, the Caribbean could be affected in a number of ways. These include uncertainty and a possible negative impact on trade and development flows; a diminution in the region's ability to influence thinking on its policy concerns in Europe; a specific range of uncertainties for the UK's overseas territories in the region; and a long period of uncertainty as Britain's foreign, trade and development policy is reoriented. British withdrawal could also have wider consequences for example for Europe's future relationship with the ACP, and accelerate the general trend towards dialogue with Latin America and the Caribbean as an undifferentiated whole.

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

After a period of reflection and political turmoil, which could well lead to the resignation of the Prime Minister and leading cabinet members, the UK would have to invoke the relevant article of Europe's Lisbon Treaty and embark on an unclear two-year process of withdrawal, renegotiation, and uncertainty.

While the desired objective of most of those who want to exit seems to be to achieve a free trade relationship with the EU close to what the UK has at present, but without the automatic adoption of EU regulations and laws and the cost, how this or their other requirements would be practically achieved is far from clear.

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

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

The UK would also have to 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 membership is in the context of the EU.

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

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

What this vastly over-simplified Brexit outline sketch suggests is that while preferential arrangements would continue to be offered, at a regional level Cariforum would have to undertake a rapid analysis of the significance of Britain outside the EU's customs union to its flows of trade in goods and services; whether its companies with manufacturing or other investments in the UK would suffer if free movement into the EU was not available; and determine whether the UK would seek to change any of its transitional measures with, for example, competitor nations in Latin America or elsewhere.

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

This is because for many years Britain's voice for the Caribbean has been significant in Council meetings in Brussels, and with the European Commission and many other EU institutions, helping ensure that the region has had a better hearing among an increasingly sceptical group of member states, that for the most part have no relationship with the region.

Brexit also arises at a time when a wholesale review of EU foreign policy is being undertaken, European trade priorities are being reconsidered, the future of the ACP relationship with Europe is in doubt, and new approaches are being developed to respond to the recently agreed UN sustainable development goals: all matters which requiring a supportive voice for the Caribbean inside the EU perhaps through a rapidly constructed special relationship with France or Spain.

Much more will be known about whether the UK government has obtained its hoped for voter-convincing package of measures to keep Britain in Europe when the EU Council meets on February 18/19. However, the closeness of the UK opinion polls suggests that Caricom and Cariforum should take the time to assess the potential impact of an unwelcome European divorce.

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

Previous columns can be found at www.caribbean-council.org February 12th, 2016