Faltering UK exit from Europe – possible impacts in Australia
- July 16th, 2018
- Posted by EU Australia
Weakening of accord between Europe and the United States comes at a moment when Australian-EU relations are intensifying – raising thoughts about some future test of loyalty among friends.
British secession from the European Union that is set to become formal on 19.3.19 should complicate things even more.
EU-AUSTRALIA – AMBITIONS
Last month the EU Ambassador in Australia, Michael Pulch, described a current campaign for expanded cooperation as “ambitious” – specifically negotiations on a broad scale trade agreement about to begin at Brussels.
He said a recent vote by the European Council (22.5.18) to move towards the Free Trade Agreement would create a new edition of existing arrangements within the so-called co-operation Framework.
“It will build on the present trade in goods and services between Australia and the EU now valued at A$100-billion a year – or A$280-million each day”, Dr Pulch said.
With increasing business between the two and their “shared outlook” the partners had chosen the “right moment”.
UP-DATING AND EXPANDING AGREEMENTS
Relations have been intensified since the first moves by the then Prime Minister Kevin Rudd in 2008 to get the Framework Participation Agreement.
That has been extended step-by-step with a formal signing by the Foreign Minister, Julie Bishop, last year, (7.8.17, during the Asian Foreign Ministers’ meeting in Manila, attended also by Federica Mogherini, the EU head of Foreign Affairs).
It sets up cooperation on foreign and security policy, trade, counter-terrorism, Pacific issues and development, migration, the environment, fisheries and customs, and human rights. There are detailed plans such as scientific and technical co-operation, certificates and markings of goods, security of information and crisis management around the globe.
The Free Trade Agreement now coming up, was proposed late in 2015 by the Prime Minister, Malcolm Turnbull, who made final representations last April in Brussels, a month before the EU gave it the go-ahead.
Other key contacts include security talks that started in Brussels last month.
USA – A MORE TROUBLESOME PARTNER
European officials might have drawn straws to get to deal with the agreeable Australians instead of the United States — or some of their own truculent member countries bent on breaking ranks over immigration.
In the last week the presence of Donald Trump at the NATO summit in Brussels (11.7.18), then in the United Kingdom on his way to see Russia’s President Vladimir Putin, (at Helsinki), highlighted radical differences.
Demands on the European allies by the American President for more defence spending, (to levels exceeding current US commitments across the globe), were not unexpected but added to disagreements over international commerce (US retreat from multi-lateral co-operation towards tariff wars), climate change (US withdrawal from the global consensus Paris Accord), and containment of nuclearisation in Iran (US withdrawal from the international agreement, demanding extension of its terms to other fields, e.g. Iran’s armed intervention in Syria).
POOR OLD ENGLAND?
It might have been galling to some Brits that they got bumped into fourth place in the Football World Cup, by a team from Brussels, on the French Bastille Day.
On the obverse Ambasssdor Pulch sees the breach with Britain “energising the European Union”, stimulating action like its new series of Round Table discussions among member governments on contentious issues, most recently immigration and security.
In a slow process the British side has got together a proposal to put to the Europeans, to keep up an open trade in goods, a continuing single market, which still leaves services, especially the troubled area fo financial services in limbo.
DUMPING THE “CITY”?
Recent analysis in Le Monde said that left an astonishing admission by default, that the British government would be “dumping the City of London”.
The article provides a round-up of companies that are bit-by-bit moving staff out of London, to such locations as Dublin, Frankfurt or Paris; including Unicredit, Bank of America Merrill Lynch, Barclays and Royal Bank of Scotland, with others augmenting staff in “EU” cities or obtaining licences to operate there.
It concedes that a headcount of 5000 employees “packing their bags” is still only 1.5% of the British finance industry, with its vast resources including a continuing network of invaluable of consultants and financiers – very difficult to replace.
Conclusion: Though most difficult to imagine collapse of the powerful British financial industry, the preparations for possible adverse change have “scratched the surface” but could develop into a major bleed.
The “why” of the issue would be the withdrawal of the European financial “passport” available to members of the EU for their enterprises to trade across the continent free of imposing regulatory blocks, approvals or costs.
The British government’s response to the challenge so far has been to let discussions with the European partners on finance services be delayed, conducting a “dialogue of the deaf”, in effect an admission of weakness.
A process has begun to develop in which individual firms in the sector are being encouraged to talk directly with the European regulators about getting in.
Keeping the United Kingdom within the system will ease pressure on agriculture and manufacturing businesses like cars, through signing-on to EU rules, and levying and passing on external EU import duties.
It would be laced with irony, the realisation of one of the worst complaints of the legion of “little Englanders”, nostalgists or racists who wanted secession: getting told what to do by Brussels, and having to pay EU dues, now without even a place at the table when the decisions are being made.
This has fed into the war within the governing Conservative Party. Even with the trade in goods, within a week of announcing its position the government amended it under internal pressure, stepping back from the planned co-operation with Europe on customs.
It has to be asked once more: could this British government run a binge in a brewery, and is this in-fighting a merciless fiddling with the destiny of a great and large country?
The radical right wing of the governing party has always maintained a separate and aggressive line on leaving Europe: “Great Britain” should go it entirely alone as a free market economy, freelancing after trade deals, keeping out migrants (except where needed to meet labour shortages and hold down wages), permitting unregulated business activity up to expanded limits, tolerating gross inequality of wealth (wrapped in talk about it “trickling down” through the servants).
It is a revival of the “neo-liberal” or “neo-conservative” vision of the 1970s and 1980s, at an ideological level a roughly cut-down version of 19th Century utilitarianism; the same reliance on a market mechanism but without the same concern for social justice and moral outcomes.
As the slogan would go, in abuse of the philosopher Jeremy Bentham: “The greatest wealth for the smallest number”.
BACK TO HOW IT WAS WITH AUSTRALIA?
Whichever faction prevails will be interested to make deals with Trump, if available, and push on with a proposed bi-lateral Free Trade Agreement with Australia.
The parties meeting Down Under might have a lot to offer one another, given in Australia’s case that much of the impressive EU engagement with the Australian economy in trade and investment is British.
Also to be considered, however, is the heavy predominance of Europe in British trade balances; especially under the “soft” separation currently being set up, competition from that quarter would hamper any Australian revival at the bottom line.
Could it really get back to days of Empire, with cheap food and fibre going to England, services in return, even a common currency, and a free pass for citizens walking on and off the boat at both ends?
Disruption of the world trade and financial system built up since the 1940s, with the advent of Trump economics and new protectionism, in any event brings high risk of a down-turn — being hitched to the UK may not be the best place to be.
Yet there is a place for nostalgia.
Boris Johnson for one, the hardline British free-marketeer and proponent of a “hard” settlement, who resigned over it as Foreign Secretary last week (9.7.18), has spoken keenly of Australian links.
Like many English back-packers, although in his case a teacher at the high-cost Timbertop school in Victoria, he spent some time in the country during his youth and carried away fond impressions.
References
https://eeas.europa.eu/delegations/australia/37179/eu-australia-relations-fact-sheet_en (15.7.18)
http://dfat.gov.au/geo/europe/european-union/Pages/european-union-brief.aspx (15.7.18)
Brexit: les banquiers quittent la City au compte-gouttes: sans effet d’annonce spectaculaire, les departs se multiplient; entre 5000 et 10000 financiers devraient quitter Londres d’ici a mars 2019. Correspondence de Londres, Le Monde – Economie et Enterprise, Paris,10.7.18, p 4. (Brexit: bankers are leaving the City step-by-step: the departures are increasing without any fanfare; between five and ten-thousand are set to move out of London between now and March 2019. )
Images
European Commission – Brussels, Dr Michael Pulch (supplied), Australian parliament (gov.au), White House (whitehouse.gov), UK parliament (Wikipedia), Historical.
This article is published also in Independent Australia – “democracy, the environment, Australian identity”.