Forum: Economic and Social Council (ECOSOC) Topic: The exit of Britain from the European Union and the drop of value of the British Pound Student Officer: Duygu Mercan Position: Deputy President Introduction Brexit - a portmanteau combining Britain and exit - is a situation in which the UK withdraws from the EU. The support of Brexit by British politicians and the rise of the UKIP, which won the British European elections in 2014, thereby becoming the first party to beat the Conservatives and Labor in a nationwide election since 1910 - has put the issue of the UK s EU membership and a potential split high on the British political agenda. The financial crisis of 2008 saw the Conservatives starting to adopt UKIP s anti-eu rhetoric to an increasing degree. David Cameron, the current Prime Minister of the UK, was re-elected in 2015 on the basis of his EU renegotiation and referendum pledge, even though he is personally in favor of remaining within the EU. Article 50 paragraph 1 of the Lisbon Treaty, the Constitution of the EU, provides that Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements. Cameron s renegotiation and referendum bill, referring to this Article, was passed by parliament, creating a constitutional requirement for the UK s government to initiate withdrawal proceedings if the majority of the UK s population votes to leave the EU. It has yet to happen in history that a state withdraws from the EU. Definition of Key Terms Brexit: A word that has become used as a shorthand way of saying the UK leaving the EU - merging the words Britain and exit to get Brexit, in a same way as a Greek exit from the EU was dubbed Grexit in the past. Eurosceptics: Critics of the EU. Referendum: A referendum is basically a vote in which everyone (or nearly everyone) of voting age can take part, normally giving a "Yes" or "No" answer to a question. Whichever side gets more than half of all votes cast is considered to have won. General Overview Why Exit? With disillusionment with the EU at an all-time high, Cameron argues that simply asking the British people to carry on accepting a European settlement over which they have had little choice would only accelerate calls for Brexit. According to Cameron, disillusionment with
the EU is so high because there is "too much cost; too much bureaucracy; too much meddling in issues that belong to nation states or civic society or individuals. Whole swathes of legislation covering social issues, working time and home affairs should, in my view, be scrapped." Those in Britain in favor of leaving the EU argue that the EU is holding Britain back by charging billions of pounds a year and imposing too many rules on businesses. Further objection exists to the free movement principle, core to EU membership, which allows EU residents to go and live in another EU country without needing to apply for visa. The public perception in the UK is that such EU migrants are stealing British jobs. By holding a referendum, Cameron hopes to confront the issue, and solve the EU question that has been present in British politics since 1975. However, Cameron wants to renegotiate the UK s membership of the EU before holding the referendum. This way, he hopes to offer the British people a better deal, ultimately aiming at staying in the EU. A successful renegotiation would also show British voters that their representatives have a say in the politics of the EU and are able to reshape the EU along the line of their voter s wishes. Euroscepticism Since the 1957 Treaty of Rome, and in most every subsequent EU-forming treaty, the ultimate goal of the EU has been an ever closer union among the peoples of Europe. However, an ever-closer union has also resulted in the creation of critics of the EU system, called eurosceptics. The majority of eurosceptics believe that the formation and continual strengthening of the powers of the EU has been met with an equal degradation of the power of individual nation states. In general, euroscepticism can be divided into two classes: Hard and Soft Euroscepticism. Hard Euroscepticism is characterized by the opposition to membership of, or even the existence of, the European Union. The most significant group that reflects these ideals is UKIP. Soft Euroscepticism supports the existence of the EU, but opposes policies that attempt to move the EU into a de facto federated nation. The EU-wide European Conservatives and Reformists (ECR) party as well as the UK Conservative party exemplify such a platform. Renegotiation of Membership Cameron s renegotiations set four objectives: 1. Protecting the single market for Britain and other non-euro countries; 2. Boosting competitiveness by reducing the burden of red tape 3. Exempting Britain from more European integration and bolstering national parliaments 4. Restricting the access of EU migrants to in-work benefits such as tax credits If the above goals are achieved, Cameron has promised to campaign with all his heart to keep the UK within the EU. If they are not achieved, he has been quoted not to rule anything out -including an out vote. Some debate has arisen on the type of referendum to be held. Initially, Cameron ruled out an in/out/ referendum, arguing that the British people should get a wider choice than just that dichotomy. The problem with an in/out referendum is that it
only gives people those two choices. You can stay either in with all the status quo or you can get out. Most people in Britain want a government that stands up and fights within Europe and gets the things we want in Europe; that changes some of the relationships we have in Europe. The problem with an in-out referendum would be that an in vote would negatively affect the UK s strategic negotiating position within the EU, as all further attempts at changing Britain s relationship with Europe would be met with cries that the British people had already spoken. In 2013, however, Cameron gave in and promised an in/ out referendum, but only after he had renegotiated the UK s relationship with the EU. This way, choosing in would be more appealing seeing that Cameron hopes to achieve a better deal for the UK in regards to the renegotiation goals described above. When Cameron achieves a new deal, the UK s people would receive a simple choice between staying under new terms or leaving. Economy When the UK leaves the EU, it would lose the benefits of the many trade-opening agreements the EU has with other countries or expects to conclude in the near future. It would have to negotiate new bilateral free-trade agreements without the negotiating clout of the far larger EU economy. Furthermore, it will have to start paying to receive access to the common free market of the EU. Trade barriers that would be created while an agreement is concluded that allows the UK access to the EU free market could severely harm trade. Seeing that Europe is the core of British investment and trade, and is likely to remain so on the long term even though alternative markets are gaining in attractiveness, this could be a severely negative consequence in economic terms. Foreign Direct Investment (FDI) in the UK could drop, although this is difficult to predict. An Ernst & Young study concluded that the percentage of companies favoring less integration between the UK and the EU is comparable to the percentage favoring more integration, while a 2013 survey by the Confederation of British Industry found that 35% of all firms would reduce FDI after Brexit. However, the EU would lose a lot as well. The British have been very effective in negotiating trade agreements, extending the single market and cutting red tape. Without the UK, the EU s activity in these areas could be reduced. Brexit could well result in an inward turn of the EU, both in strategic and economic terms, discouraging US engagement with Europe and undermining already diminishing transatlantic cohesion. Referendum The referendum, which was held on the 23 rd of June 2016, resulted in an out vote. Right now, the British government should take 2 years to draft the particularities of an exit of the UK from the EU and to negotiate a new partnership. The biggest concern regarding the referendum is that, the out vote causes the UK government to negotiate a new trading relationship with the then EU-27 in order to make sure that trade is not severely hit by import and export tariffs. Several options are available, such as the Norwegian model, in which the UK would join the European Economic Area (EEA), allowing access to the single market without some financial services, and being freed from
EU agriculture, justice, home affairs and fisheries rules. Alternatives are the Swiss model, in which the UK would negotiate trade treaties on an individual sector basis; the Turkish model, in which the UK would enter a customs union with the EU, discontinuing access to the free market in financial services but allowing access in manufactured goods; or a Free Trade Agreement (FTA), in which the UK would negotiate treaties on a sector-by-sector basis but have better access to the free market for financial services and more influence on the implementation of rules and standards. Lastly, and most unlikely, the UK could opt for a clean break with the EU, relying on its World Trade Organization (WTO) membership for trade. Remain campaigners argue that an amicable divorce is a pipe dream. Britain would never be allowed a pick and mix approach to the EU s rules by leading EU nations such as France and Germany. Norway and Switzerland, two of the countries on which the UK could model its trade agreement with the EU if it leaves the union, already have to abide by many rules determined without their influence in Brussels, and also have to pay for their access to the single market. The negotiation of a comprehensive free trade agreement will be a slow process, spanning multiple years, and have an uncertain outcome. Resulting in blows to trade between the UK and the EU, this could have dire consequences for the already economically fragile EU. The UK itself would also suffer from such a situation, losing competitiveness in the business sector and seeing its export industries crippled. The EU is the UK s largest trading partner, accounting for 51% of its goods and services imports and 46% of its exports in 2012. The status of British citizens living abroad - a population of approximately 2.2 million, mostly living in Spain, France and Ireland - would also form a problem, especially if the UK does not keep free movement as part of the new trade agreement. Britons may start to need visas to enter the EU countries and those that have already immigrated to other EU countries may face integration rules. On the other hand, the argument has been made that this is not necessarily the case: rights acquired under a treaty are not necessarily lost due to the conclusion of a new treaty. According to the 1969 Vienna Convention Article 59 Paragraph 2, the earlier treaty shall be considered as only suspended in operation if it appears from the later treaty or is otherwise established that such was the intention of the parties. In other words, long-term residency rights would only come into question if the UK and the EU agree that they should be terminated or reviewed in an out scenario. Major Parties Involved The United Kingdom of the Great Britain and Northern Ireland (the UK) The UK is a country that has a good record of economy, stability, military power, and prosperity. The Kingdom is one of the 5 permanent states in the United Nations (UN) since they are one of the victors of the World War 2. Currently, the UK is 5 th biggest country in terms of Gross Domestic Product (GDP), which refers to the economic position of the country. The Kingdom is one of the most developed states in the world and a vital part of the EU. Although the currency of the Kingdom is Pound, not Euro, the official currency of the
EU, the Kingdom is an integral part of the EU s economy and total GDP. Around 15% of the EU s overall income comes from the UK. The British have been playing a leading role in the EU on topics such as counter-terrorism cooperation and have been very involved in Europol. Furthermore, the UK is one of the EU s serious military powers, together with France. Brexit would thus diminish the EU s performance on security as well as require higher contributions from other member states to keep the EU s military capacity at a similar level as it is today. Furthermore, the expected negative consequences of Brexit in terms of geopolitical stability and the likely further retrenchment of the USA would exacerbate the consequences of Brexit for European defence. European Union (EU) The EEC, one of the predecessors to the EU, was founded in 1958 between France, West Germany, Belgium, Italy, Luxembourg, and the Netherlands, called the Inner Six. In the following 57 years, the evolving Union expanded to its current 28, culminating in the inclusion of Croatia in July 2013. This constant inclusion of countries, some who had only recently gained independence, is reflective of the bicycle theory that many use to examine the EU. It follows in this metaphor that the EU must constantly move forward through a growing union and continually unifying economy. If it stops moving forward then like a bicycle it will fall over. There are currently five candidate countries for EU accession: Albania, the Former Yugoslav Republic of Macedonia, Montenegro, Serbia, and Turkey. Timeline of Events 17-18 December 2015 EU Summit in Brussels. The European Union Referendum Act 2015 receives Royal Assent. Section 1 of the Act contains the referendum question: Should the United Kingdom remain a member of the European Union or leave the European Union? All negotiations fail to reach a consensus. 2 February 2016 18-19 February 2016 March 2016 The European Council (EC) publishes a draft blueprint for the proposed changes to the UK s membership of the EU. The document includes a so called emergency brake on the payment of the in-work benefits and powers for the UK Parliament to join with other countries to block EU regulations. EU Summit in Brussels. EU leaders agree on changes to the UK s membership of the EU. Campaign groups apply for designation. The Electoral Commission is responsible for deciding which groups will be designated as the official leave and remains campaigns. Rival Brexit groups Vote Leave and the GO Movement are vying to be selected as the 'leave EU' group. The deadline to apply for designation was March 31. The chosen campaign groups will get grants of up to 600,000, an overall spending limit of 7 million, campaign broadcasts, free mail shots and access to meeting rooms.
4 April 2016 Government report to be published. The UK Government must publish a report on the negotiated changes, giving its opinion on what has been agreed. 14 April 23 June 2016 Official campaign period. The Electoral Commission will choose the designated leave and remain campaign groups before Thursday April 14. The official campaign period will run from the next day until the in/out referendum takes place in June. 23 June 2016 The UK citizens voted to leave the EU. Relevant Treaties and Documents Copenhagen Criteria Countries that wish to be considered for membership in the Union must meet certain standards, laid out in the Copenhagen Criteria, which was established in June of 1993. These include political, social, and economic benchmarks. First and foremost is the need for democracy, including equal participation at every level of government, free elections with a secret ballot, the right to establish political parties, fair and equal access to a free press, freedom of personal opinion, limits on the power of the executive, and an independent judiciary. The second government criteria are the rule of law: the standard that the government authority can only be exercised in accordance with documented laws. Governments must also have a respect for human rights as outlined by the UNDHR and the European Convention on Human Rights. These focus on the right to life, the right to a fair prosecution, banning slavery, and the right to be free from torture. The respect for minority rights, including the ability to maintain distinctive cultures, practices, and languages, must also be maintained. Finally, the potential member nation must have a market economy that can cope with competitive pressure it would face once admitted into the Union. Conclusion and Possible Solutions The potential scenario of Brexit is a schoolbook example of the EU s systemic fragility. A withdrawal of the UK from the EU could have far-reaching consequences in many sectors, geopolitical stability, economy and defense among them. Many feedback loops could reinforce these consequences over the long term. The future of Scotland in the EU is uncertain, seeing that the Scottish look more favorably upon EU membership than the English. Therefore, for the benefit of the Scottish population, the path for prosperity for the future of Scotland must be designated in cooperation with the EU and UK in order to resolve this issue completely. The precise consequences that Brexit would have are fully dependent on the particularities of the withdrawal agreement that would be reached between the UK and the EU. Therefore, this is very important to research if one wants to understand the consequences that Brexit comprehensively. All models have their positive and negative sides, and it is not ruled out
that an entire new model would be drafted for the UK, as its exit from the EU would be an unprecedented event that would definitely be a changing point in the history of the EU. Wider geopolitical consequences of Brexit, in particular in relation to EU-US cooperation and German and Russian relative power, as well as the international standing of the EU should not be forgotten when thinking about this topic. Brexit would definitely weaken the EU, and probably weaken the UK too. It is however necessary to solve the question, and if a majority of the UK population wants to leave, negotiations of the highest quality will be necessary that all parties come out of Brexit with the least harm. Further Reading http://ec.europa.eu/about/ds_en.htm http://ec.europa.eu/about/index_en.htm http://www.bbc.com/news/world-europe-24636868 http://www.unhcr.org/5592bd059.html http://www.theguardian.com/politics/2014/oct/27/uk-mediterranean-migrantrescueplan http://www.telegraph.co.uk/news/worldnews/europe/france/11998301/parisattacks- France-to-call-for-effective-suspension-of-Schengen-open-borders.html http://www.vice.com/read/paris-attacks-refugee-blame-712 Sources: "Brexit Britain: What Has Actually Happened So Far? - BBC News". BBC News. N.p., 2016. Web. 3 Nov. 2016. http://www.bbc.com/news/business-36956418 "The Economic Consequences Of Brexit: A Taxing Decision - OECD". Oecd.org. N.p., 2016. Web. 3 Nov. 2016. http://www.oecd.org/economy/the-economic-consequences-of-brexit-a-taxingdecision.htm "The Economic Impact Of Brexit ". Woodford Funds. N.p., 2016. Web. 3 Nov. 2016. https://woodfordfunds.com/economic-impact-brexit-report/