Michael Johnson, former UK Government trade negotiator and Advisor on International Trade Policy, discusses the impacts of Brexit on the UK’s voice in the global forum.
22 November 2017
The UK has always been ambivalent about the EU and its three predecessor Communities. Soon after the end of World War 2 Winston Churchill, who was then out of government, publicly supported closer European union; but he made clear that the UK should not be part of it. The express aim of the post-War generation of senior European politicians who worked for unity was to bind European countries so closely together economically and socially that further wars among them would become unthinkable. Britain watched while the original six member states (“the Six”) negotiated the first of a long series of treaties on the road to the present-day European Union. It participated in the early negotiations to establish the EEC but withdrew without warning in 1955. British politicians understood the reasons for negotiating closer union in Europe but were held back from participating by a sense of the inviolability of national sovereignty; by Britain’s post-imperial links with the Commonwealth countries and former colonies; and by the transatlantic alliance with the United States which had been greatly strengthened during the War.
When the EEC of Six proved to be viable, Britain twice negotiated unsuccessfully for accession: under a Conservative government in 1961-62, and under Labour in 1966-67. Finally in 1971-72 the Conservative government led by Edward Heath successfully agreed terms, and the UK (together with Ireland and Denmark) became a member state on 1 January 1973. Nevertheless controversy over EEC (later EU) membership has continued. Both Labour and Conservative parties remain profoundly split over both the principle and practicalities of membership. In 1975 the Labour Government held a national referendum designed to settle the matter, both internally within the party and on the national level. The UK electorate voted 2:1 in favour of staying in.
In 2016 the Conservative-led coalition government under David Cameron, responding to similar pressures from a strongly “Eurosceptic” wing of the Conservative Party and from much of the British press, held a further referendum on continued EU membership. This took place in June 2016 when 72% of the registered electorate voted by 52%-48% to leave the EU. The Leave vote represented 37% of the registered electorate.
The UK as an EU member
During the 45 years of UK membership the European Communities have grown from 9 member states in 1973 to 12, then 15, and finally to the present 28. The original Communities were integrated into the single but many-faceted institution of the European Union and the policy and executive reach of the Union extended into many more areas, not only economic management and competition policy, but also areas such as social policy, cooperation on policing and security, and health and environmental protection. Throughout this period the UK has adapted to changing circumstances and has got on, in both the national and the European interest, with the practical business of being a constructive member state. The efficiency and pragmatism of the UK government machinery – much appreciated by colleagues in the European institutions and in like-minded member states – has been effective in ensuring that Britain exerted a widely positive influence in its own interests and in those of the Union as a whole. Working closely with the European Commission, it was a driving force behind the so-called Single Market programme which was initiated in 1986-1992 and has continued during subsequent years. This has worked to remove more than 300 identified internal barriers in areas including intra-EU provision of services, mutual recognition of national professional qualifications, cross-border establishment within the EU, and harmonisation and mutual recognition of standards. The programme extended to sectoral directives designed to open up EU markets to fair competition in sectors such as telecommunications and energy and the establishment of open and fair competition between European enterprises in government procurement. The process is not yet complete and internal barriers remain in intra-Union trade particularly in some service sectors, but over the years much progress has been made in deepening and rationalising the Single Market.
Internationally the UK has been influential in urging the common commercial policy of the EU in the direction of market opening and removal of damaging restrictions on trade. It was a leading voice within the European Communities in the debates that led to the so-called “Uruguay” Round of multilateral trade negotiations held in 1986-94 under the aegis of the General Agreement on Tariffs and Trade (GATT) and to the extensive agreements which inter alia transformed the GATT in 1995 into the much more influential World Trade Organisation (WTO). In particular it was the influence of the UK, working with similarly liberal-minded member states against powerful opposition from some other EEC members, that helped to secure the inclusion of both agriculture and services sectors within the negotiations and for the first time made possible agreements on effective control of national agricultural support policies and of trade-restrictive measures.
During the 1980s the UK played a leading part in developing EEC policy towards Japan away from regarding Japan as an economic threat to the West, and instead accepting Japan as a viable trade and investment partner. Later, the UK also played a prominent rôle in the EU in formulating policy towards the eventual accession of China to the WTO.
At the same time as contributing actively to the process of opening markets within the EU, the UK has stood aside from other key aspects of progressive integration in Europe. Successive UK governments secured “opt-outs”, on grounds both of national sovereignty and of economic principle, from the “Schengen” agreement on unrestricted cross-border travel within the EU, from the European single currency, and initially from the EU “Social Chapter” (the Labour government of 1997-2010 subsequently accepted this). This reluctance of British governments to go all the way with other member states in the internal integration process might have been expected to undermine its standing and influence within the EU. As explained above, this has not however proved to be so.
Internationally, the UK retains a high individual profile as a permanent member of the UN Security Council, a leading member of NATO, a central Commonwealth member, and a member in its own right of dozens of international regulatory and rule-setting bodies in fields such as industrial standards, health, labour standards, intellectual property protection and environmental protection. On this international plane the UK’s “voice” is strengthened by EU membership, both in areas of EU competence where it contributes to debates on the basis of agreed EU policy, and in other areas where strict EU competence does not apply but the UK benefits from the supporting weight of the 27 partner states and the European institutions. Conversely, the UK’s prominence in international institutions and diplomacy gives it extra clout in debates within the Union. While it is not a member of the Schengen agreement or the European single currency and is excluded from intra-EU debates on these issues, it has overall been a liberalising and internationalist influence on EU policy. It has argued consistently within the Union for open trade policies and the progressive removal of barriers to international trade.
The EU without the UK
In 2016-17 the Royal Institute of International Affairs (Chatham House) in London together with Kantar Public interviewed 10,000 citizens across 10 member states of the EU in order to study the present balance of attitudes to the Union. The results differed among the member states covered by the survey, but in aggregate this research found that while a small minority (14%) of people interviewed rejected EU membership outright, only 23% could be described as contented Europeans. Most of the rest, namely about half of people polled, were fundamentally pro-European but unhappy about various aspects of the current Union, either because it exercised too much power at the supranational level, or in other cases because it exercised too little – on one hand pressures for “less Europe”, and on the other for “more Europe”.
This means that UK withdrawal will take place against a very uncertain background of public attitudes to the EU. These are influenced variously by the overhang of the financial crisis in 2007-8 and in particular its impact on Greece, Portugal and Spain, the impact of the influx in 2015-16 of refugees from conflict zones, and the growth of populist movements in a number of countries. There are widespread pressures for stricter limits to be imposed on immigration from outside the Union.
For a time following the indecisive outcome of the German elections in September 2017 it looked as though Chancellor Merkel, without a working parliamentary majority, would be much weakened on the European stage, if she could remain in office at all. That risk now appears to have been averted by the agreement in February 2018 on formation of a new Grand Coalition between the CDU/CSU and the Socialists, with Merkel remaining Chancellor and the prospect of continuity in German policy.
By contrast, nationalist forces which have become stronger at both ends of the German political spectrum make increasingly strident demands. and openly Eurosceptic parties govern in Hungary, Poland and Greece, while populist and nationalist forces are on the rise (though not in power) in Finland, Italy and the Netherlands. In France, President Macron is in an electorally strong position but may need to pay for the economic and labour market reforms he wants to drive through by offering some social compensation in the form of more nationalist and restrictive external policies, for example on agricultural support and trade.
UK withdrawal will mean profound changes to the Union in several possible respects. Depending on the eventual terms of the financial settlement for withdrawal, there will be a marked impact on the Union budget, probably felt over a number of years but entailing significant changes in what the EU can do, and in how costs and benefits are distributed across the remaining member states. More immediately, Brexit will remove from the EU’s internal debates a pragmatic and generally moderating voice. During 45 years of EEC and then EU membership the United Kingdom, despite many political controversies and the “opt-outs” secured from some key EU developments, has on balance brought an open-minded internationalist and economically liberal position to the negotiating table in Brussels. This has significantly influenced EU policies especially in the areas of economics and trade. It has been supported in particular by the “Northern” group of member states as well as by the European Commission and, as the occasion arose, by other members such as France, Ireland and Spain.
How the EU may fare in future without this generally constructive and moderating influence is problematic. The kaleidoscope of recent political shifts within EU member states suggests that the Union as a whole may be at risk from populist and nationalist trends. It could attempt to counter these by resorting to “more Europe”, becoming more inward-looking and more restrictive in its international policies. For example, there could be a tendency to respond to pressures from EU industries which felt themselves to be hurt by globalisation, especially labour-intensive industries, by resorting to more aggressive use of trade remedies such as investigations into alleged dumping or illicit subsidy of goods exported to the EU and imposition of special duties; or trade restrictions in response to perceived surges in imports of specific goods. There could be pressures to introduce so-called non-tariff barriers such as adapting or manipulating EU standards so as to discourage imports, or to limit the access of foreign suppliers to government procurement contracts in member states. Such measures could have adverse consequences for both export and import trade and for the welfare of European consumers. They would risk provoking trade-related disputes with major trading partners in the Americas and Asia, with which hitherto the EU has been working to open markets and develop trade and investment. They could also place the EU at serious risk of time-consuming and expensive disputes raised in the WTO. How far the UK could have restrained such a trend if it remained within the EU is debatable; but without the UK as a moderating voice, the trend is likely to become more marked.
It is commonly claimed that:
(i) after Brexit the United Kingdom will have stronger international influence because its voice and actions will no longer be restricted by EU membership
(ii) that the EU will continue much as before, only without the UK
Neither assumption looks like being true. As regards the former, the UK will certainly be able to speak, and where appropriate, vote, in its own right in organisations and on topics where it will no longer be bound by EU competence. How far it will do so effectively and be listened to as a market of 65 million people, instead of as part of a market currently of 500 million, has yet to be seen. In cases and institutions where it is not currently bound by EU competence, the UK will be able to continue speaking individually as at present. The task of British diplomacy will be to maximise national influence without the weight of EU support behind it.
As to the second proposition, it is clear that removal of the fundamentally liberal UK contribution to EU policymaking will have an impact on both the substance of Union international policy and its presentation, with wider ramifications for the internal workings and international stance of the EU. Detailed effects of this cannot yet be predicted, but they are unlikely to be beneficial.