Pass the Brexit, Please

“Once we step outside the moral universe of the [post-national, post-democratic] elites, there is no case whatever for Britain to surrender its self-governing democracy to Brussels.”  — the Editors of the National Review

“The vote for Brexit is a vote for sovereignty and self-determination.”  — Nile Gardiner, director of The Heritage Foundation’s Margaret Thatcher Center for Freedom

When I first heard the term “Brexit”, I thought it was a new breakfast “bisquit”. Or, maybe a certain cut of meat? Alas, I was very wrong. (And, apparently, feeling a bit peckish.)

Brexit - for and againstIn the past couple weeks, I’ve learned what Brexit was all about. Well, sorta… I confess, I never got into the details. But, I did learn enough (I think) to be in favor of it — i.e., I would have voted “Leave”, if I were a Briton. Leaving the European Union (EU) seems a bit scary to many. In fact, while 48% of Brits who voted voted “Remain”, I wonder if many were not so much sufficiently informed to make an educated decision as they were frightened — thanks to David Cameron’s “Project Fear” (as the Scots called it) — into thinking that the UK would fall over a financial, economic, and cultural cliff if left to itself. (Sounds like many of my fellow Americans, to be honest.) Rubbish! Those who are in favor of the “progressive”, globalist idea of the EU are/were particularly appalled at the idea of the UK’s secession. To which, I can only say, “Too bad!” (I say that in my best Lt. Worf imitation, hoping that some “Star Trek: TNG” fan out there understands the reference.)

While there are sure to be “bumps” along the way for the UK, the rest of the EU, and even the U.S., I think such fear is largely unfounded in the long term. Particularly, for the UK. I mean, it could go very badly, especially if people panic and make major decisions based on fear and/or spite. But, it doesn’t have to and certainly isn’t inevitable. I’m not about to attempt to detail any path-to-success for the UK, which would be well out of my wheelhouse, but there are other countries in Europe that do not belong to the EU and they are doing OK. (To be fair, a couple of them have tried to join the EU but were either rejected or dropped their bid.) Of course, the UK is a much bigger player — 5th largest economy in the world — so the impact for it and those it does business with is much broader.

Consider this, as explained in a National Review editorial published before the vote:

“Economically speaking, leaving the EU would mean that Britain was outside both a customs union with an average tariff of 3 percent and a system of massive and intrusive regulation. The first would be a trivial disadvantage, the second a strong positive benefit…. [C]omparable countries — Switzerland, Norway, Canada, Australia — are doing much better than those in the EU. Countries in the euro zone are doing worst of all. And Britain’s trade is already being diverted from Europe to the Americas and Asia because that is where the growing markets are. In other words, even if leaving the EU were to produce transitional market disturbances, the long-term fundamentals for Brexit would be fine.

Admittedly, it is true that both the British and the world economies are suffering from a serious attack of nerves about growing debt and, in the case of the U.K., a balance-of-payments deficit equal to 7 percent of GDP. When markets are nervous otherwise, modest problems can send currencies spiraling upward or downward temporarily. In such circumstances, governments should stress the transitional character of any change, pointing out that currencies and other indicators quickly adjust to the economic fundamentals…. Instead of soothing the markets, however, almost all governments and international economic bodies now exaggerate the financial risks of Brexit. That is deeply irresponsible, of course, but it also invites the observation that the current debt levels and higher risks of the world economy are the result of policies pursued by the very authorities that now use them as bugaboos to frighten the voters.”

The whole article is quite informative and a very helpful read for understanding the European Commission’s control over the EU’s member states and “Why Britons Should Vote to Leave the EU”.

Switzerland not in EUThere are at least three directions the UK could go as an independent from the EU. Some (e.g., Andrew Stuttaford at the National Review) have recommended the “Norway option”. Norway is one of four members of the intergovernmental trade organization known as the European Free Trade Association (EFTA). The EFTA has a co-ordinated trade policy which allows its members “jointly concluded free-trade agreements” with many other countries. However, to do business in the EU’s internal market (aka the European “single market”), members must sign onto the Agreement on a European Economic Area (EEA), which is regulated by the EFTA Surveillance Authority and the EFTA Court. Iceland, Liechtenstein, and Norway have done so. (I’m not sure why this is called the “Norway option”, except perhaps due to its being of more comparable size to the UK.)

Polling earlier this month had British voters overwhelmingly in favor of this option, at least for a 5-10 year transitional period. However, Norway’s own Prime Minister warned, “They won’t like.” While such a relationship grants greater flexibility over agriculture, fisheries and external trade, the think-tank Open Europe points out, “it would still be bound by great swathes of the EU regulation that rankles with businesses and the general public, but — and this is the crucial point — without any vote on it.” This would probably include the lax border/(im)migration policies (i.e., “free movement”), which many see as part of the current problems.

Note: According to the survey commissioned by the Adam Smith Institute (ASI), 42% of Britons who said they would vote for Brexit also believed that EFTA membership should be considered, versus 45% of leavers who said it should not.

The second option would be to follow the lead of the fourth member of the EFTA, Switzerland. Refusing to agree to all the EEA stipulations, Switzerland instead independently negotiated a set of bilateral agreements with the EU. This seems like the best option to me. Considering the size of its economy and everything else mentioned by the National Review above, I would think the UK brings a lot to the bargaining table, and the other European nations literally can’t afford to be too picky or proud about their trading partners. (Some are willing to do business with some pretty “bad actors,” too, unfortunately.) However, there is something to be said for a Norway-like transitional period to alleviate short-term impact on GDP.

Another option for the EU-free UK is “relying on the minimum tariff rates secured by the UK’s membership of the World Trade Organisation,” rather than forging new trade agreements. That one doesn’t sound too promising. I’m sure there are other options, hybrid models and the like, but those are the three I’ve seen discussed most — especially the first two.

UK and US flags crossed - sky bkgrdI’m confident that the UK can come out of all this as a much stronger nation, with returned control of their own borders, laws, and trade policies, along with reduced regulations and the accompanying bureaucracy. If the rest of the EU a) doesn’t panic and b) starts making some smarter (i.e., right-leaning and security-minded) decisions, they should survive, too. In fact, if a few more EU members (e.g., France, Netherlands) jump ship and follow the UK’s lead, perhaps partnering up on some things, all the better. As for the U.S., Brexit works in our best interests, as well. Nile Gardiner and Matthew Dunn, for example, believe that Britain can now be a more reliable ally against Russian aggression, Islamist terrorism, and other threats. Gardiner also points out,

“The United States should seize upon Brexit as a tremendous opportunity to sign an historic free trade agreement with the United Kingdom — a deal that would advance prosperity on both sides of the Atlantic…. Britain’s decision to leave the EU should be a cause for celebration here in America. Brexit embodies the very principles and ideals the American people hold dear to their hearts: self-determination, limited government, democratic accountability, and economic liberty. A truly free and powerful Great Britain is good for Europe and the United States.”

British Prime Minister Margaret Thatcher seemed to think the UK was better off outside the European Union, too. For what it’s worth, I agree.

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