Brexit – less talk, more policy, please
Britain’s decision to withdraw from the European Union (EU) has set off an ever-increasing torrent of talk about the impact of the so-called Brexit on the world economy.
Not unexpectedly, concerns about the effects of Brexit on the Caribbean are being expressed. We note the recent webinar at The University of the West Indies which set off further discussions across the region.
Unfortunately, much of the commentary has reflected more panic than preparation or a constructive and proactive policy response.
The most glaring missed opportunity was the recent Caricom (Caribbean Community) Heads of Government meeting which failed to establish a high-level group of experts to monitor and analyse the process of Brexit as it mutates. What is needed is less talk and more policy. Bear in mind that the EU is not the region’s major trading partner, although the UK market within the CARIFORUM-EU Economic Partnership Agreement (EPA) remains important. Exports to Britain, still the most important market in Europe for most countries in the Caribbean, will now have to be conducted outside of the EPA.
The negotiations for the exit are anticipated to take two years, during which time the EPA remains in place. Built into that agreement are various institutional arrangements to review and recalibrate the agreement.
When the UK does in fact leave that agreement, it does not negate the agreement with the rest of the EU. There may be no reason why the agreement has to be renegotiated; Britain has dropped out and will not be applying the terms of the EPA.
What has to be renegotiated is the UK’s relationship with CARIFORUM, but the agreement doesn’t have to be renegotiated. Britain will have to put new arrangements in place to minimise disruptions and ensure continuity of its international trade with the Caribbean.
Given the small size of their combined markets, it is very unlikely that the Caribbean will be a priority among the numerous trade arrangements which Britain has to put in place. Britain will certainly be preoccupied with consolidating trade with the US, the EU, and China. This means that trade relationship with the UK may not be regularised for several of years.
Some in the Caribbean are wondering if a Britain free of the EU would re-establish a preferential regime for the import of bananas, perhaps confined to the smallest banana-exporting countries.
A considerable amount of financial aid has been provided by the EU to the CARIFORUM countries. It is not clear if, when Britain withdraws its contribution from the EU’s pool of development aid funds, it will mean that development assistance to the Caribbean will be diminished by an equivalent amount, and will Britain switch those funds directly to bilateral aid to the Caribbean.
The UK had agreed to contribute 14.68 per cent or €4.478 billion of the €30 billion allocated to all ACP countries for the period 2014 – 2020 under the 11th European Development Fund.
Another consideration is the British, our most influential ally in Western Europe, will not be there to articulate in the EU councils on behalf of the Caribbean. Caricom will now have to pay more attention to diplomatic relations with Europe, whose interest in the small states of our region continues to wane.Finally, the British decision has emboldened those in Jamaica who want to leave Caricom to call for a referendum.
Another consideration is the British, our most influential ally in Western Europe, will not be there to articulate in the EU councils on behalf of the Caribbean. Caricom will now have to pay more attention to diplomatic relations with Europe, whose interest in the small states of our region continues to wane.
Finally, the British decision has emboldened those in Jamaica who want to leave Caricom to call for a referendum.