Publication
Omar Shaban Ismail · Sama News Agency · 2020
Ten days before the 31 December 2020 deadline, Omar Shaban explains the background of Britain's relationship with Europe: membership in January 1973 after its 1963 and 1967 applications were rejected, notably by de Gaulle, keeping the pound and staying outside Schengen, then the June 2016 referendum in which 52% voted to leave. He distinguishes a hard exit without a deal from a soft one and lists the costs of no deal: a UK Treasury estimate (November 2018) that the economy would be 3.9% worse off over 15 years, a £39 billion “divorce” bill, tariffs of 2.8% on non-agricultural goods, 10% on cars and 35% on dairy, Citigroup moving assets and jobs, and the fate of about one million French people in Britain and half a million Britons in France. He notes that the process is complex but conducted in a civilised atmosphere.
Omar Shaban, December 2020: ten days before Brexit, the costs of a no-deal exit for British trade, the economy and citizens.
European and British negotiators continue around-the-clock, highly charged negotiations in an attempt to reach an agreement on the British exit from the European Union before 31 December 2020, the final non-extendable deadline. Will Britain leave with an agreement or without one? So far, there are no indications that an agreement will be reached.
A historical overview:-
Britain became a member of the European Union in January 1973 after several failed attempts to join, having applied for membership twice, in 1963 and 1967. These applications were rejected, especially by the late French President Charles de Gaulle, who justified this by saying: “A large number of the characteristics of the British economy are not compatible with Europe, and Britain harbors great hostility toward any European project.” Britain’s membership was not complete as is the case with most of the 27 states in the European Union. Britain retained its own currency (the pound sterling), and it was not included in the unified European visa system (Schengen) applied in European Union member states. Some studies indicate that Britain benefited greatly from its membership by retaining its own currency and control over entry visas. Nevertheless, Britain’s accession to the European Union was not a matter of consensus among the British people, as the British people were asked several times in referendums (1975, 1977, and 1980) whether to remain or leave, and a simple majority voted to remain. Indeed, several British governments fell over the question of the extent of integration with, or independence from, the European Union. Then came the most recent referendum in June 2016, in which 52% of the British people voted to leave the European Union in what was called the Brexit process.
A hard or soft exit?
Since the British people voted to leave, and the government of former British Prime Minister David Cameron fell as a result, negotiations began between the two sides for a safe (soft) exit in order to avoid shocks in the event of leaving without an agreement. The negotiation period was extended several times because of the failure to reach an agreed exit. The two sides agreed in September 2018 to set the end of December of this year, 2020, as the maximum deadline to reach and sign an exit agreement; otherwise, it would be a hard exit (without an agreement). In the meantime, the United Kingdom remains effectively a member of the European Union but without voting rights. Exit without an agreement (hard) or with an agreement (soft) are informal terms coined by the media to describe the future relationship between the United Kingdom and the European Union after withdrawal. What is meant by a hard exit (without an agreement) is leaving without any agreement between the two sides, with the movement of trade and people subject to World Trade Organization rules, as is the case with other countries. It also means depriving Britain of benefiting from the diverse services provided by the various European Union bodies, such as the European Aviation Safety Agency and others. By contrast, a soft exit (agreement) means Britain’s departure while retaining certain special agreements that allow the movement of goods and people with the European Union, as is the case with Switzerland and Norway.
Costs and repercussions of withdrawal without an agreement:-
According to many studies, the repercussions of leaving the European Union would be bad for the British economy in particular and for society in general. A publication issued by the British Treasury (November 2018) estimated that the British economy would be 3.9% worse off over the next 15 years compared with remaining in the European Union. Other official reports also estimated that the British exit would limit the migration of skilled workers from countries of the European Economic Area to the United Kingdom, which would pose challenges for higher education in the United Kingdom and academic research. Britain is also required to pay the exit “divorce” bill, which is the value of the accumulated unpaid British contribution to the European Union budget, estimated at £39 billion. The British minister in charge of the exit file stated that the British government would not pay this bill in the event of leaving without an agreement. The repercussions of a British exit without an agreement are many; some would be immediate, while others would take time to appear. Some of the main repercussions can be summarized as follows:
- Rising trade costs between Britain and the European Union. This is because Britain and the European Union would trade according to World Trade Organization terms. For example, the European Union would impose customs duties on goods coming from Britain at a rate of 2.8% for non-agricultural products, 10% on cars, and 35% on dairy products. This would reduce the competitive advantage of these sectors in the European market. The issue of fisheries is one of the most prominent points during the trade talks. Without an agreement, British fish exports to the European Union could be severely harmed by customs duties.
- Because of the lack of equivalence in food and pharmaceutical standards between the European Union and Britain, these goods may face obstacles hindering their entry into and sale in European markets. There would also be long queues of trucks at the borders, with additional restrictions limiting the freedom and ease of movement for people and goods.
- It would be difficult for British companies to continue operating in the European Union area, where they would be regarded as foreign. Therefore, thousands of British employees have begun making arrangements to leave their jobs in European Union countries and return to Britain. Dozens of major companies, factories, and banks have also begun leaving Britain for European Union countries, especially France and Germany, in order to ensure their presence in a wider market and enjoy the advantages provided by the European Union. For example, Citigroup has begun transferring European assets from London out of fear that British banks would not be able to sell their services in Europe, and the group plans to transfer assets worth one trillion pounds sterling and seven thousand jobs. The German car manufacturer BMW also expressed concern that a chaotic exit from the European Union (exit without an agreement) would lead to the suspension of operations at its plant in the city of Oxford.
- Tens of thousands of Britons who live and work in European Union countries must decide either to stay and apply for citizenship or residency, or to return to Britain. Around one million French citizens live in Britain, and around half a million Britons live in France. Some of them may have to queue outside citizenship offices in Paris and London to submit applications for nationality. Thousands of mixed families must decide either to continue living in the country of the husband or wife, or to move to the other country.
It is true that this is a very complex and intertwined process, and it will require the allocation of huge budgets to implement it and many years to complete it, but it is taking place in a civilized atmosphere and with a high level of responsibility.
Topic: International Economy — Brexit · European Union · trade tariffs — Text © Sama News Agency — archived here with attribution to the source. — Original source