Pundits all over the world and Euro-bureaucrats have been discussing future scenarios for Europe since the United Kingdom’s vote to leave the European Union in June 2016. It was sidelined somewhat in recent months as a result of elections and discussions over the rise of right-wing populist parties across the European countries. As the election cycles in major European states are over, it is time for Europe to refocus on withdrawal alternatives that would minimize damage for both the U.K. and the EU 27.
To recap, U.K. Prime Minister Theresa May triggered Article 50 of the Lisbon Treaty, which sets out the political process and timetable for a leaving country, with her letter to EU President Donald Tusk on March 29, 2017 and formally began the U.K.’s withdrawal from the EU. The parties have been talking since then to ensure a reasonable withdrawal agreement, though a breakthrough is yet to be achieved after five rounds of talks.
While the whole process needs to finish within two years, the real bargaining part, which everyone expects to be quite bitter and acrimonious, has not yet started after seven months of talks, and the latest round, held in Brussels last week, ended again “without making any great steps forward,” in the words of EU Chief Negotiator Michael Barnier. So far, the U.K. presses to open post-Brexit trade talks, while the European leaders argue that they need to see “sufficient progress” in talks to start negotiations on the future of trade relations.
European capitals set their negotiating framework around three objectives: ensuring the rights of EU citizens after Brexit, the status of the border between the Republic of Ireland and Northern Ireland and financial settlement. It is quite clear by now that without reassuring their counterparts on these points, it would be difficult for the U.K. to receive the green light for the desired trade talks. As it will no longer be a part of the European Single Market once it leaves the EU in March 2019, the U.K. seeks privileges to retain zero tariffs, easy border controls and a manageable divorce bill.
As the world’s fifth and Europe’s second largest economy, the U.K.’s economic prospects are highly crucial for all. The possible costs of Brexit for the U.K. are estimated to be around 40-60 billion Euros and a loss of between 2.2 to 9.5 percent of its GDP depending on the final deal with the EU 27. The existing trade figures also indicate possible problem areas for the EU 27. Currently, the U.K.’s exports to other EU countries are made up of 44 percent of its total exports, while imports from the EU countries consist of 53 percent of its total imports. Considering that the U.K. has been among the top three largest contributors (along with Germany and France) to the EU budget, it would be hard to achieve a soft divorce on financial matters as well.
The European Economic Area, which enables Iceland, Norway and Liechtenstein to be part of the Single Market, or the Customs Union, which enables trade of industrial and processed agricultural products between Turkey and the EU without restrictions, are possible models without membership for the future relationship between Britain and the EU 27. However, the sticking point revolves around how much the EU 27 will be willing to give the U.K. the right to speak in determining rules and principles of the new relationship model.
There are of course other issues to be discussed beyond trade, chief of which is the possible security architecture of Europe after the Brexit. While its geopolitical and political ramifications also need to be dealt with, countries like Turkey, which has its own love and hate relationship with the EU, are watching developments intently to revise, if necessary, their own relationship model with the EU 27 and the U.K. in the mid-to-long term. The U.K., too, eyes them with similar intents and calculations.
Bu yazı 26.10.2017 tarihinde Hurriyet Daily News Gazetesi'nde yayımlanmıştır.