Brexit and the fu­ture of Europe

Financial Mirror (Cyprus) - - FRONT PAGE -

No one yet knows when the United King­dom will present an agenda for ne­go­ti­at­ing its with­drawal from the Euro­pean Union. But it is al­ready clear that Brexit will re­shape the map of Europe. And, es­pe­cially given Bri­tain’s stun­ning un­pre­pared­ness for the con­se­quences of its own de­ci­sion – its strat­egy, pri­or­i­ties, and even its timetable re­main un­cer­tain – that means that the EU must start fig­ur­ing out how to make the best of it. Here’s how.

Let’s start with the only cer­tain­ties: the Brexit ne­go­ti­a­tions will be long, com­plex, and ac­ri­mo­nious, and the di­vorce will have far-reach­ing geopo­lit­i­cal ef­fects. The im­me­di­ate im­pact is a halt to 60 years of in­te­gra­tion mo­men­tum. Europe will suf­fer in the short and medium term as well, as con­sid­er­able po­lit­i­cal en­ergy is likely to be de­voted to Brexit for the next five years, at a time when the EU needs the strength to con­front in­ter­nal and ex­ter­nal dan­gers. Over the longer term, Brexit is likely to ac­cel­er­ate Europe’s exit from the top ta­ble of global de­ci­sion-mak­ing.

Bri­tain will not es­cape these con­se­quences. Whereas it can leave the EU, it can­not re­lo­cate away from Europe.

That is why, though Bri­tain’s Euro­pean part­ners did not choose Brexit, they must man­age its con­se­quences suc­cess­fully, which re­quires bal­anc­ing two pri­or­i­ties. Their tac­ti­cal goal must be to reach a deal with the UK that main­tains the in­tegrity of the EU. The strate­gic goal is to pre­serve Europe’s pros­per­ity and in­flu­ence.

It is with these ideas in mind that I, to­gether with sev­eral Euro­pean col­leagues – all of us act­ing in an in­di­vid­ual ca­pac­ity – re­cently co-au­thored a pa­per propos­ing a con­cept for Europe in 10-20 years: a con­ti­nen­tal part­ner­ship that would cre­ate a new ba­sis for con­tin­ued eco­nomic, for­eign pol­icy, and se­cu­rity co­op­er­a­tion with the UK.

The ba­sic eco­nomic idea is a tem­plate for a re­la­tion­ship that is con­sid­er­ably less deep than EU mem­ber­ship, but rather closer than a free-trade agree­ment. If adopted, Bri­tain and the EU could not only pre­serve their eco­nomic ties, but also pro­vide a new model for the fu­ture re­la­tion­ship between the EU and neigh­bours that will not join it any­time soon: Nor­way, Switzer­land, Turkey, Ukraine, and even­tu­ally south­ern Mediter­ranean coun­tries.

Any pro­posal re­gard­ing the fu­ture of the EU-UK re­la­tion­ship must start from an in­ter­pre­ta­tion of the Brexit ref­er­en­dum’s mean­ing. Ours as­sumes that UK vot­ers re­jected both the le­gal im­pos­si­bil­ity of lim­it­ing in­flows of work­ers from the EU and the prin­ci­ple of pooled sovereignty.

These two po­lit­i­cal con­straints should be taken as a given. The first im­plies that a last­ing ar­range­ment between Bri­tain and the EU can­not in­clude free move­ment of labour. The sec­ond rules out par­tic­i­pa­tion in a com­mon polity, and thus im­plies that any co­op­er­a­tion must be based on in­ter­gov­ern­men­tal agree­ments.

The first con­straint is a se­ri­ous stum­bling block, be­cause the EU is based on the free move­ment of goods, ser­vices, cap­i­tal and work­ers. The UK’s Euro­pean part­ners adamantly claim that these four free­doms are in­di­vis­i­ble, and that if Bri­tain wants to main­tain free ac­cess to the con­ti­nen­tal mar­ket for its data pro­cess­ing and fi­nan­cial ser­vices, it must ac­cept un­lim­ited ac­cess to its labour mar­ket for Pol­ish or Ir­ish work­ers.

Free­dom of move­ment of work­ers is un­doubt­edly in­te­gral to the EU. In­deed, the fun­da­men­tal right to set­tle and earn one’s liv­ing in an­other coun­try without ask­ing for per­mis­sion does not ex­ist any­where else in the world. For mil­lions, this right most fully em­bod­ies what the EU stands for.

But Bri­tain has made its choice, and the right ques­tion to ask now is whether strong eco­nomic links can be pre­served without free move­ment of labour. From an eco­nomic stand­point, the an­swer is yes: a deeply in­te­grated mar­ket for goods, ser­vices, and cap­i­tal does not re­quire full labour mo­bil­ity. What is needed is only enough tem­po­rary mo­bil­ity to ac­com­pany the in­te­gra­tion of ser­vices mar­kets.

In other words, free­dom of move­ment of work­ers is po­lit­i­cally essen­tial within the EU, but eco­nom­i­cally dis­pens­able when deal­ing with third coun­tries. An eco­nomic agree­ment with Bri­tain does not need to in­clude it.

The sec­ond con­straint is of a dif­fer­ent na­ture. Un­like a mar­ket for nails or screws, a mar­ket for fi­nan­cial or in­for­ma­tion ser­vices must be based on de­tailed leg­is­la­tion that en­sures fair com­pe­ti­tion and pro­tects cus­tomers. A large part of the EU’s task is to pre­pare this leg­is­la­tion. So, the ques­tion here is how Bri­tish pro­duc­ers can re­tain ac­cess to the EU mar­ket (and vice versa) if they are no longer party to the leg­is­la­tion.

Solv­ing this co­nun­drum would be one of the main pur­poses of the con­ti­nen­tal part­ner­ship. Through it, Bri­tain would par­tic­i­pate in a mul­ti­lat­eral process of con­sul­ta­tion on draft EU leg­is­la­tion and would have the right to raise con­cerns and pro­pose amend­ments, so that the out­come of the process would re­main as far as pos­si­ble con­sen­sual. Both sides would be po­lit­i­cally com­mit­ted to lis­ten­ing to the other. The EU, how­ever, would have the fi­nal say, so that its laws would ap­ply and be en­forced.

To en­joy full ac­cess to the EU mar­ket, Bri­tain would need to agree on a pack­age of poli­cies essen­tial to the proper func­tion­ing of an in­te­grated mar­ket: com­pe­ti­tion rules, con­sumer pro­tec­tion, and fun­da­men­tal so­cial rights, for ex­am­ple, and per­haps also min­i­mum tax rules to avoid dis­tor­tions of the type re­cently ex­em­pli­fied by Ap­ple’s prac­tices. Bri­tain would also need to con­trib­ute to the EU bud­get, from which de­vel­op­ment funds (the coun­ter­part to sin­gle-mar­ket ac­cess) are de­liv­ered.

Some ob­ject that the deal would be too harsh for Bri­tain to ac­cept. But would the UK be bet­ter off los­ing ac­cess to the mar­ket of its main trad­ing part­ner? Others worry that the EU would sur­ren­der its de­ci­sion-mak­ing pow­ers were it to con­sult with out­siders. But how would the few without a vote – Bri­tain and others – dom­i­nate the many with a vote?

Still, others claim that such an ar­range­ment would con­cede too much to Bri­tain, com­pelling other coun­tries to aim at a sim­i­lar sta­tus and caus­ing the EU to un­ravel. But why would an EU mem­ber be bet­ter off abid­ing by rules and pay­ing into the EU bud­get without hav­ing a vote on the de­sign of poli­cies? And, far from un­der­min­ing Euro­pean in­te­gra­tion, a con­ti­nen­tal part­ner­ship could sup­port the con­sol­i­da­tion of the EU’s core.

True, there would be a price to pay for ev­ery­one. But it would be far lower than the price, in terms of lost pros­per­ity and di­min­ished global in­flu­ence, of fail­ing to cre­ate a con­ti­nen­tal part­ner­ship.

Newspapers in English

Newspapers from Cyprus

© PressReader. All rights reserved.