This was a long time coming — the growing anger of Brits over uncontrolled immigration and the consequent long queues for public services, especially health services. With its accession to the European Union, Britain had to open its borders to unfettered labour mobility from across the union since 1994. Not only that, but it had to take, on pain of sanction, its share of asylum seekers seeking refuge in Europe from the ravages of war and persecution in the Middle East and Africa.
Is there a reason for Britain’s “madness” against immigration that triggered the unexpected referendum vote to leave the EU?
The EU is founded on four fundamental freedoms that buttress its single market: the mobility of goods, services, capital and labour. The EU has made much progress in the freedom of trade in goods. It also enjoys the mobility of capital and labour. However, barriers to entry and occupational-licensing arrangements across countries have hampered more than 70 per cent of trade in services.
As Britain depends much on its services sector — it constitutes 80 per cent of the gross domestic product — the logic is that since not much progress has been made in the trade in services, for example, setting up shop in legal or financial services, the EU should not be dogmatic about labour mobility. Therefore, Britain should have a say as to who comes through its borders. More so, as its unemployment and social security benefits are generous. “Welfare tourism” should be checked at all cost. Rashila Ramli, a professor at Universiti Kebangsaan Malaysia, sums it cogently as a case of “human insecurity”.
There are always two sides to a coin. So, the contrarian argument is that since Britain has been flooding markets in the EU with its goods and capital, what is wrong, then, for Britain to reciprocate by opening its borders to labour from the rest of the EU?
All these are now water under the bridge. With the vote to leave and Theresa May, the steely British prime minister, closing shut the door for another referendum to reconsider that verdict with the intransigent declaration that “Brexit means Brexit”, what are the options Britain has to gain access to the EU’s single market?
Britain has a smorgasbord of options: from a soft Brexit, having full access to the single market, to a hard one, where its entry to the EU market will be on the terms of the World Trade Organisation (WTO). Notwithstanding, none will be palatable to Britain.
First, the soft Brexit. This arrangement will be similar to that which Norway, Iceland and Liechtenstein have negotiated with the EU. The Norwegian model allows for full access to the EU market, while retaining rights over agriculture and fisheries. However, the access comes at a price. These states are not to restrict labour mobility, while paying a hefty solidarity payment annually. Norway, for example, pays as much as 90 per cent of the contributions paid by Britain to the EU. Even worse, these countries are subjected to the full onslaught of EU rules, over which they have no say.
Will the Norwegian model appeal to Britain, when 70 per cent of Norwegians are unhappy with the arrangement? It was against labour mobility that Britain voted to leave. Although it will have access to the single market, Britain’s submission to rules made by bureaucrats in Brussels and continued substantial contributions to the EU will surely make the Eurosceptics rue whether Britain voted to leave only to obtain something lesser.
Will the Swiss model be appealing to Britain, then? To obtain partial access to the single market, without access to full trade in services, Switzerland had to undertake more than 120 bilateral agreements — some big, some small — with the EU. It has no say over the EU’s single-market rules, including the movement of labour. And yet, it has to annually cough up roughly 40 per cent of what Britain contributes to the EU. Some non-EU Eastern European countries have struck similar comprehensive free-trade deals with the EU.
It will take many years for Britain to negotiate similar agreements. The two-year period for negotiations, upon notice by Britain to leave the EU, seems a tad optimistic. Now, why would Britain want to agree to partial access to the EU market and, yet, be bound to the requirement of labour mobility? We can be sure that Britain will be equally dismissive of this option.
A third option is a customs union that Turkey has negotiated with the EU. Again, this option will prove unattractive to Britain. As with Turkey, Britain will be subjected to tariffs and other trade arrangements, without a reciprocal say over them. Violation of EU rules will invite sanctions, the most severe being a loss of market access. Moreover, like Switzerland and Turkey, which are denied trade in most services, Britain will have only partial access to the EU market.
The fourth option, the hard Brexit, is for Britain to trade with the EU under the aegis of WTO, as what most other countries do in dealing with the EU. It will spare Britain the ignominy of signing away its control over immigration and paying hefty contributions to the EU budget, not to mention being obliged to adhere to EU trade rules, including the common agriculture and fisheries policy. Happily, most tariffs under WTO have been slashed.
If these options remain intractable, then, the last alternative would be to get the Brits to change their minds, despite May’s refusal to consider such a possibility. As Confucius said: “If you make a mistake and do not correct it, this is called a mistake.”
This approach will require the EU to be empathetic to Britain’s concern over unrestrained migration and welfare largesse to its migrants. So, if the EU can agree to the United Kingdom having some control over immigration and welfare payments to non-citizens, then, the Brits can be persuaded to reconsider the exit vote.
Many deals that the EU has struck with neighbours, such as Norway, Switzerland and Turkey, were based on the assumption that the countries will eventually join the EU. Britain has thumbed its nose at the union. So, why would the EU want to be generous to Britain in its negotiations to formalise Brexit? Such a concession will set a dangerous precedent for others in the EU. If you relax one part, you may end up unravelling the whole. That will be a death knell for the EU.
Notwithstanding, as Vera Nazarian, an American writer, said: “Was it you or I who stumbled first? It does not matter. The one of us who finds the strength to get up first, must help the other.”
Datuk Dr John Antony Xavier is head of the Strategic Centre for Public Policy at the Graduate School of Business, Universiti Kebangsaan Malaysia