OUTSIDE THE BOX: The implications of Brexit
IN A DEMOCRATIC system, a government can inherit problems of the previous government or perhaps complicatedly as in the United Kingdom because of a referendum, it has to negotiate the fallout of something it neither wanted, nor campaigned for.
This is part of the price of democracy. It is impossible to have a democracy free from this type of anomaly. The UK having decided to leave the European Union (EU), because of a referendum, has now triggered its official divorce as of March 29 this year. The only certainty of Brexit is that there will be uncertainty.
Over the next two years while the UK negotiates with the EU members to agree the terms of the divorce, Barbados as part of the Caribbean Community (CARICOM) should use this window to devise a structured approach and common strategy to prepare for the period that lies ahead.
The UK will have to renegotiate all trade agreements it has been a signatory to as a member of the EU.
Three of its main priorities will include negotiating the terms of its trade and economic relationship with the EU, reapplying to join the World Trade Organisation, and negotiating new trading relationships with the United States.
Given that the UK as part of the EU since 1973 has not had to renegotiate any trading agreements, it is well acknowledged that the UK has limited negotiating capacity in this area. We can assume that the Caribbean and Barbados will be further down the pecking order when it comes to the UK prioritising its negotiations when there is also the risk of the UK as a union itself of England, Scotland, Wales and Northern Ireland imploding as a result of Brexit.
Although Brexit is not likely to affect the Economic Partnership Agreement (EPA) between the Caribbean and EU, as these agreements should remain legally binding with the EU. The economic and trading value of the EPA will, however, be decreased because the UK is the main trading and diplomatic partner of the Caribbean, for obvious historical reasons.
The UK is likely to see Africa and India’s larger markets as more attractive for investment than the Caribbean. The relationship between the UK and the Caribbean will depend therefore on how much relevance the UK gives to its historical relationships with the Caribbean.
The Caribbean should not be overwhelmed by pessimism. Or be underwhelmed by optimism. Action and pragmatism should be the order of the day. It should be remembered that the UK is the fifth largest economy in the world, and having been freed from the regulations of the EU, there will be space for exploration of the UK’s trading and economic ties with the Caribbean.
The region will need to negotiate a free trade agreement with UK. Barbados should take a lead in any preparatory exercise to canvas positions within the Caribbean as to what a UK free trade agreement would look like.
It is painful to point out that Caribbean countries, Barbados for sure, have largely lost out on the EPA because of inaction and, despite posturing, a seeming inability to move to exploit the areas in culture, for instance, that have rich potential for rewards with the EPA.
The free trade agreement with the UK can be similar to the EPA to ensure fast and conclusive negotiations. However, we would need to be clear not only as a country but as part of the Caribbean, of the problems of the EPA.
All of this can only happen once we have clarity on our own governance, so we know what our developmental priorities are, and how these priorities can be furthered through any free trade agreement.
Dr Ronnie Yearwood is a Chevening Scholar, National Development Scholar and Overseas Research Scholar. He has practised law in London, Brussels and the British Virgin Islands and is an international trade specialist, having published and lectured in World Trade Organisation law. Email: [email protected]