On 23rd June, British citizens will be voting on a referendum to decide their standing in the EU. For the past six months the Leave and Remain campaigns have been rallying supporters creating a breach within all parties and society. On 15th of June, polls revealed the population was leaning towards Brexit, with 46% for Leave, 39% for Remain, 11% undecided and 4% abstention.
How would Brexit impact the European Union (EU) in the short and long term? Are bilateral free trade agreements (FTA) better than economic and political unions? Is the World Trade Organisation enough when it comes to free trade? What would Brexit mean for Mexico?
A little bit of History.
The European Union was set up with the aim of ending the frequent and bloody wars between neighbours, which culminated in the Second World War. As of 1950, the European Coal and Steel Community began to unite European countries economically and politically in order to secure lasting peace. Denmark, Ireland and the United Kingdom joined the European Union on 1st January 1973.
Two years later after joining the European Coal and Steel Community (the predecessor of the European Union), the United Kingdom voted for a referendum.
Circumstances were very much alike, the Prime Minister promised to renegotiate the terms and conditions of the affiliation of the country to Europe, then let the electors take the decision to remain or leave.
The government urged Britain to remain, and several members of the Cabinet opposed and promoted a “Leave” campaign. In 1975 the leader of opposition Margaret Thatcher supported the permanence of the country to stay in Europe uniting with the cause of the Labour government.
The main issues on the agenda were World War II and closer cooperation with Europe, which was crucial to avoid future conflict. The main matters were: economy, defense, UK position in international affairs, security and future peace.
On 5th June, 1975, Britons voted on membership in the European Economic Community. Sixty-seven percent of voters decided to stay in the common market. A referendum was planned in 2006 to vote on ratifying the European Constitution, but it was canceled after France and Germany voted against the treaty in 2005
A Challenging Global Context.
The global economic crisis strikes hard in Europe. The EU helps several countries to confront their difficulties and establish the 'Banking Union' to ensure safer and more reliable banks.
In 2012, the European Union was awarded the Nobel Peace Prize.
Climate change was still high on the agenda and leaders agreed to reduce harmful emissions. Religious extremism has been increasing in the Middle East and various countries and regions around the world, leading to unrest and wars which result in many people fleeing their homes and seeking refuge in Europe. The EU is not only facing the dilemma of how to take care of them, but also finds itself the target of several terrorist and violent attacks.
What is BREXIT?
BREXIT is the acronym of two English words: Britain and Exit, which means the possible exit of the United Kingdom from the European Union.
The Main Question of The Referendum
The initial question planted by the British Government was: "Should the United Kingdom remain a member of the European Union?”
Who wants to stay?
· Prime Minister David Cameron is in favour of remaining, and 16 of 21 members of his government.
· The Conservative Party has declared itself neutral
· Labour Party, Scottish National Party, the Welsh Plaid Dymru and the Liberal Party.
· Barack Obama, France and Germany are supporters of the UK remaining.
They argue that the UK gains a lot by being a member of the EU, due to the free trade of goods and services with other countries and the UK's international status will be compromised if the UK leaves.
Who wants to leave?
· UKIP, the nationalist party.
· Boris Johnson, half of the members of the Conservative Party, including 5 members of the government.
· Some Labour Politicians
As main supporters of the Brexit campaign they have brought issues such as immigration and terrorism to the spotlight.
Possible affected sectors if a BREXIT occurs:
Education, Agriculture, Banking and Finance, stock markets.
The UK’s main trade and investment partners are EU members, representing 45% of total trade. Not only will leaving the EU drastically change the way the UK trades, it is highly likely to affect the GDP per capita and the pound.
Britain’s net contribution to the European Union budget in 2015 is estimated at £8.5 billion, or about $12.5 billion.
The British economy ranked second in 2015, behind Germany and ahead of France.
Net annual migration to Britain rose slightly, to 333,000, in 2015, according to the Office for National Statistics. European Union citizens made up 55 percent of that figure, or 184,000.
Her Majesty is a constitutional monarch, she is obligated to exercise strict political neutrality.
Members of the House of the Lords may vote in referendums
The three most likely models that would replace the EU after Brexit:
The Norwegian Model. Norway has access to the common market without much interference but without a voice and a veto, conditions the UK will be unlikely to accept.
The Canadian Model. In 2014 Canada reached an agreement with the EU which intends not only to reduce tariffs but also contemplates certain non-tariff barriers. This would enable the UK to have access to the common market without allowing free movement of persons. However, this agreement does not cover all services, which represent 80% of the UK’s GDP. Also an agreement of this magnitude is unlikely to happen between the UK and the EU after Brexit.
The World Trade Organisation (WTO) Model. In this model the UK will trade exclusively under WTO regulations like Brazil and Russia and it would have to pay duty on all exports.
The purpose of this article is to cover and inform about the BREXIT on June 23rd 2016, Chamber of Commerce in Mexico with external sources and panellists. The views expressed in this article do not represent those of the British Chamber of Commerce in Mexico or any of its associates.
The New York Times.
Breakfast-Conference Brexit Article.