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Post-Brexit Britain, like China, recommits to globalisation

27th January 2017

By: Keith Campbell

Creamer Media Senior Deputy Editor

     

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The speech delivered on January 17 by British Prime Minister Theresa May on her government’s negotiating objectives for Britain’s exit from the European Union (EU) – “Brexit” – contained nothing really surprising to anyone who has been paying attention to what she and her key relevant Ministers have been saying for the past few months.

The speech laid out and reiterated more than once London’s core objectives – regain control of the country’s borders (including ending the free movement of EU citizens), regain sovereignty (ending the authority in the UK of the European Commission and the European Court of Justice, or ECJ), and negotiate trade deals with countries all over the world. As the former two objectives were totally incompatible with membership of the EU single market, and the last with the EU Customs Union, these objectives implied that Britain would be leaving both these arrangements. Moreover, during the referendum campaign, both Leave and Remain campaigns repeatedly pointed out that a vote to leave the EU would automatically also be a vote to leave the single market. (A quick digression – the ECJ must not be confused with the totally unrelated European Court for Human Rights, which is not an EU body.)

Now, in her speech, May explicitly stated that “[w]hat I am proposing cannot mean membership of the single market . . . So we do not seek membership of the single market. Instead we will seek the greatest possible access to it through a new, comprehensive, bold and ambitious free trade agreement.” Earlier that same day, Chancellor of the Exchequer Philip Hammond (nicknamed “Spreadsheet Phil” from his mastery of financial figures), in response to a question in the House of Commons, had already stated that “we will go forward understanding we cannot be members of the single market”. Regarding the customs union, May affirmed that “I do not want Britain to be part of the Common Commercial Policy and I do not want us to be bound by the Common External Tariff. These are elements of the Customs Union that prevent us from striking our own comprehensive trade agreements with other countries. But I do want us to have a customs agreement with the EU . . . I have an open mind on how we do it.

“A Global Britain must be free to strike trade agreements with countries from outside the EU too . . . it is clear that the UK needs to increase significantly its trade with the fastest-growing export markets in the world,” she asserted. Although she did not use the word “globalisation”, she clearly endorsed it. “I want us to be a truly Global Britain . . . A great, global trading nation . . . The result of the referendum was not a decision to turn inward and retreat from the world . . . Britain’s history and culture is profoundly internationalist . . . [W]e are also a country that has always looked beyond Europe to the wider world. That is why we are one of the most racially diverse countries in Europe, one of the most multicultural . . . [T]he great prize for this country – the opportunity ahead – is to use this moment to build a truly Global Britain. A country that reaches out to old friends and new allies alike. A great, global, trading nation. And one of the firmest advocates for free trade anywhere in the world.” These, and similar phrases and sentences, peppered her speech. She used the phrase “great, global trading nation” four times and “open successful trading nation” once. She summed up the aim of the Brexit negotiations as “[n]ot merely forming a new partnership with Europe, but building a stronger, fairer, more Global Britain too.”

Polls have shown that the British people want to control, not end, immigration. And the result of the Brexit referendum was not a rejection of globalisation – that phenomenon did not feature as a reason why leave voters voted the way they did. (See my column for July last year.) Indeed, in November, British think-tank Demos and polling company YouGov released a poll showing that almost 60% of Britons polled thought that globalisation had had a beneficial effect on their country. Now May has confirmed it categorically: Britain will remain committed to globalisation.

Most encouragingly for countries seeking to boost their trade, May’s strong re-endorsement of free trade came just a day after Chinese President Xi Jinping had done the same in his speech to the World Economic Forum in Davos. “Any attempt to cut off the flow of capital, goods, and people between economies and channel the waters into the ocean back into isolated lakes and creeks is simply not possible . . . we must have the courage to keep swimming in the global market,” he said. He also used the following simile: “Pursuing protectionism is like locking oneself in a dark room. Wind and rain may be kept outside, but so is light and air.”

For countries outside Europe, Brexit is clearly going to open up trade opportunities with the UK, in all sectors. But agricultural exporters in particular may be among the earliest to benefit. To cite just one example: South African orange exports to the UK will, in future, not be bothered by Spanish anxieties. More generally, quotas for agricultural exports to the EU will no longer include the UK, thus increasing the size of the market in the European continent. But, as the British agricultural market opens up as the country leaves the EU, the competition to supply it will be fierce. The UK now has a population around 64-million, a gross domestic product per capita of $38 920 and an ability to grow only 76% of the food needed by its population, coupled with a desire to consume foods that cannot be grown in Britain at all, because of the climate. A juicy market indeed.

So, South Africa must be prepared to seize the opportunities Brexit will provide and to lobby to ensure the opening of the UK agricultural and fisheries markets as soon as possible. The good news is that Britain’s Department of International Trade (created after May became Prime Minister) has categorised South Africa as one of 50 key markets that the UK wants to strengthen its trade relations with. (The rest of Africa has not been forgotten; it is ranked as a key region.)

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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