Brexit At Last: UK officially leaves the EU
The United Kingdom officially left the European Union on January 31st, 2300 GMT. The day before, the European Parliament ratified the Brexit Withdrawal Agreement, 621 to 49 votes, in an emotional session that concluded with the members of the European parliament singing “Auld Lang Syne.” Several of the departing British members said they hoped their country would one day return. The Brexit Party’s Nigel Farage used the opportunity to say “trade, friendship, co-operation and reciprocity” between European nations could be achieved without “all of these institutions and all of this power.” Signing the EU’s consent letter, European Parliament President David Sassoli said both sides must recognize “there is more that unites us than divides us” and Britain “will always be part of Europe.”
While the UK is no longer a member of any EU political institution, an 11-month transition period begins. London and Brussels will use this time to negotiate the exact nature of their economic relationship. Trade talks are expected to begin in early March. During this period, the UK will be both a single market as well as a member of the EU customs union. Outwardly things will remain the same for individuals in Britain including travel to the EU, working and residency rights. Britain will be governed by EU rules, contribute to Brussels’ budget and even follow judgments of the EU Court of Justice until December end. Johnson has hinted he would like a trade agreement similar to the ones that the EU has with Canada. Sceptics note the Canadian agreement is a nearly 1600-pages long, with 30 detailed chapters and will be a challenge to complete by December.
Panels on Points-Based Immigration
One of the thorniest issues British prime minister, Boris Johnson, has to tackle is the issue of immigration. Johnson has promised a new points-based system that would favour highly-skilled workers and make it harder for poorer migrants to enter the country. Indians have traditionally performed well when such immigration systems are introduced in English-speaking countries like Canada and Australia.
An expert committee on migration, set up by Home Minister Priti Patel, gave its recommendations in January. It argued this would not be as easy a change as Johnson seemed to think. An Australian-style points-based system, said committee chair Professor Alan Manning, “means different things to different people.”
The committee has recommended a mixed immigration system. One part would be a points-based system for skilled workers without an arranged job. The other part would have a minimum salary threshold for migrants who had a job offer. Manning was quoted as saying the new policy would “very slightly increase GDP per capita, productivity and improve public finances” and “reduce pressures on the National Health Service, schools and on social housing.”
A Downing Street spokesperson said: “The government will introduce a firmer and fairer points-based immigration system from 2021 that welcomes talent from around the world while reducing low-skilled migrants and bringing overall numbers down. We will carefully consider the report before setting out further details on the new system.”
Will Foreign Policy Remain Europe-Aligned?
The Johnson government, and UK Foreign Secretary Dominic Raab, have repeatedly said a post-Brexit UK’s foreign policy would walk a different path from the EU. Raab wrote an oped soon after assuming office saying, in effect, that the “EU was not the only game in town.” But this has proven easier to say than implement. Aligning with the US is difficult given President Donald Trump’s unilateral approach to foreign policy. Key US decisions on West Asia, for example, have not been to the UK’s liking but Washington declined to consult with London beforehand.
As a sign of US support for Brexit, US Secretary of State Mike Pompeo visited London the day after the European Parliament voted but his visit was overshadowed by open US criticism over the latter’s acceptance of limited Huawei presence in Britain’s 5G telecom network. The sense is that values, interests and general comfort will lead London to align with Brussels’ worldview even after Brexit. But London also has to decide how to structure its relations with Europe: a set of bilateral relations with the largest European countries or a workaround with the EU that would not be too different from what it was doing before Brexit.
Economic Opportunities for India
Brexit also opens opportunities for a new Anglo-Indian economic relationship. Catherine McGuinness, political leader of the City of London Corporation, outlined some of the interests of the British financial sector. In an interview with BusinessLine she said the UK financial sector was looking at “green financing” in infrastructure and any further opening up of FDI in insurance or related fields. She noted Boris Johnson had said he would make India one of his first destinations for an overseas visit following re-election. “I am sure there will be a post-Brexit trade deal between India and the UK, but do remember these things take time. First and foremost, we need to get an agreement on the future of the highly complex UK-EU trading relationship,” she said.
Indian exporters are waiting to see if any opportunities will arise from the reworking of the UK-EU trade relationship. “A lot will depend on the exact terms of agreement that the UK reaches with the EU. If the UK decides to enter into a customs union with EU, shipment flows will continue unhindered and without much change to the logistics value chain,” said Ajay Sahai, director general of the Federation of Indian Export Organisations. Johnson’s government has so far indicated it would not allow British trade rules to be dictated by the EU’s Common Commercial Policy.
A separate British trade regime would open up the possibility of Indian exports replacing European products in the UK market and replacing British goods in the EU market as they would now all compete on equal terms. Again, this would depend on the nature of the new UK-EU trade relationship and even a new UK-India trade agreement. One possible area of increased competition would be between Indian and Central European firms for IT support work for British companies. The UK and EU constitute India’s second and third-largest markets for outbound IT services, according to Nasscom. Indian firms that have a large investment presence in the UK and have used it as a gateway to the EU market, like Jaguar Land Rover, have been cutting jobs and relocating staff to the Continent well before the final vote.
Middle Power Dilemma
Commentators have argued the UK’s Brexit dilemma is similar to that faced by any mid-sized countries in today’s world. The Atlantic, in a lengthy essay, said the process was “a real-life proxy for some of the most fundamental questions facing all nation states today: How to remain prosperous and sovereign in a globalized economy; how to maintain the corrective power of national democracy within supranational institutions; and ultimately, how ordinary citizens can retain control over their lives and livelihoods in a world in which more and more areas of life are deemed beyond national political control.” Middle powers like Britain face a trade-off between control and influence. Control is maximised by being outside larger institutions and blocs. But if a country has limited capability, it is better off joining a large group of nations and influencing this larger body from within. The eurozone crisis and migration concerns helped strengthen an existing narrative that “Britain had ceded control of its own fortunes without gaining any real influence.” Brexit offers the illusion of a return to control and that is what British voters chose.
Another article, in Prospect magazine, argued Brexit was also about the neglected northern part of England seeking “to leave” the wealthier southern part of the country. “Brexit was a provincial revolt against the over-centralisation of power in England.” Ironically, the result would probably be even more London-centricism. The article compared Britain’s future global position as similar to that of Canada. “Stuck in the orbit of a much bigger economic power that is its immediate neighbour, tugged this way and that by decisions in which it has no say. And if it tries to balance somewhere in the mid-Atlantic it is likely to find itself pulled in both directions.” Other studies looked at the origins of the support for Brexit and argued support was strongest in areas experiencing industrial decline and similar social trends.
Town Caught Between
The BBC profiled the mixed opinions regarding Brexit among the people of Carlingford Lough in Northern Ireland. The northern side of the water body is now in the UK, the southern side in the EU. While traffic between the two sides is not affected, a question remains about whether there is or is not a sea border between Carlingford Lough and larger British landmass. “That means that this tranquil inlet has been, in a sense, on the front line of a fierce debate and an often fraught process.” The Scottish parliament, reflecting that region’s antipathy to Brexit, voted to keep the EU flag flying alongside the Union Jack and the Scottish flag.
(The views expressed are personal)