EUROPEAN UNION AND BREXIT

Picture courtesy: http://www.thenews.coop/collection/brexit-uk-leaving-eu-affect-co-ops/

This article was written by Krishna Sharma a student of Faculty of law, University of Delhi.

Recently, the hot potato in the world media was European Union and “BREXIT”. After a historic referendum, in which Britain decided to leave European Union. We need to understand, what are European Union and Brexit? What are aftermaths of this decision?  Just like one of the interesting things that came out after Brexit vote was that the most googled term in the UK after the vote was “What is EU”?  Some people who actually voted did not know the purpose and consequences of the vote. With this article, we will try to understand these issues covering all aspects.

• EUROPEAN UNION? BACKGROUND -:

 After the Second World War there was a new movement to create unity between Germany and France, which would ultimately lay the foundations for the European Union four decades later.  The EU can trace its origins from the European Coal and steel community (ECSC) and the European Economic Community (EEC) formed in 1951 and 1958 respectively by the Inner Six countries of Belgium, France, West Germany, Italy, Luxembourg and the Netherlands. French Foreign minister Robert Schuman led the formation of the ECSC with the Schuman Declaration in May 1950 in which he declared that peace can be achieved only through economic integration. Basically countries that trade with each other would be less likely to fight with each other. The organization was the forerunner of several other European Communities and what is now the European Union.

WHAT IS EUROPEAN UNION?

The European Union is an economic and political union of 28 countries. Each of the country within the Union is independent but they agree to trade under the agreements made between the nations. The EU has developed an internal single market through a standardized system of laws that apply in all member states. The EU was initially known as the European Economic Community (EEC).  In 1993, after Maastricht treaty which established European Union in its current form and introduced European citizenship. Since then, European Union grown in size because of the accession of new member State.  The latest major amendment to the Constitutional basis of the EU is the treaty of Lisbon which came into force in 2009.

Twenty- two of the member states also belong to the Schengen Area, which comprised of 26 European Countries that have abolished passport and border controls at their common borders. Of these countries that are not part of it, Bulgaria, Croatia, Cyprus and Romania all intended to join, while the United Kingdom and Ireland opted out.

There is European Economic Area (EEA) which includes EU countries and non- EU members like Iceland, Liechtenstein and Norway. It allows them to be part of the EU’s single market. Switzerland is an exception which is neither an EU nor EEA member but is a part of single market which implies Swiss nationals have the same rights to live and work in the UK as other EEA nationals.

PURPOSE OF THE EU -:

The European Union operates a single market which allows free movement of goods, capital, services and people between member states. It also aims to Human rights protection and prevent wars and Strengthen Economic bonds.

KEY FEATURES OF EU -:

 A Monetary Union was established in 1999 and came into full force in 2002 and is composed of 19 member states which use the euro currency. The economy of the European Union generates a GDP (nominal) of around € 14. 303 trillion according to IMF. It has been argued that this makes it the largest economy in the world if treated as the economy of single country. European Union consists of several decision making bodies, also known as the institutions of European Union are – The European Council, The Council of European Union, The European Parliament, The European Commission, The European Court of Justice, The European Central bank and The European Court of Auditors.  These institutions have their own role and functions to perform such as European Council is made of the leaders of each member state, organize summit and discuss issues affecting EU. European commission draft new laws and enforce them. European Parliament passes these laws. European Court of Justice ensures that these laws applied in the same way in each member state. Because of such huge economy and global influence, the European Union has been described as a current or as a potential superpower.

WHAT IS “BREXIT’?

“Brexit” is a shorthand way to referring to a possible British exit from EU. It is a word that owes something to the term “Grexit” which has been used for several years to refer to the possibility that Greece might leave the euro zone.

As a Serious as the Greek debt crisis, United Kingdom which is one of the biggest and richest economies in the European Union which decided to leave EU in historic referendum needed to be understood.

British withdrawal from the European Union is a political goal that has been pursued by various individuals, advocacy groups and political parties from across the political spectrum.

BACKGROUND -:

 Initially, UK was declined to join the EU as a founding member. However, in spite of the veto on British membership by then French president Charles de Gaulle in 1961, Britain finally joined the EU in 1973.

WHY REFERRENDUM?

This was not the first time that referendum has taken place between EU and Britain; in 1975 also referendum took place regarding EU membership which resulted continuation of EU’s membership of Britain, people in voted in favour. But road to referendum to 2016, was long and tortuous one.

In 2006, as a leader of opposition, Mr. Cameroon gave a “cast iron guarantee” that we would hold a referendum on the EU’s Lisbon treaty but labour Government ratified that accord without such vote but again British prime minister David Cameroon promised one when he ran for re-election in 2015. One more reason to this is “EUROSCEPTICISM”, let’s understand what is it? Euroscepticism is the opposition to the EU and the notion that integration with a multinational politico- economic union weakens a member state. It is neither a new ideology nor it is limited to the UK. It has gain popularity recently due to various issues faced by member states. Britain have unique history to EU, starting from its late membership – has meant that politically Europeanism and Euroscepticism have never predictable ideologies. For example, Britain’s left mainly labour party was initially opposed to Britain joining the EU. 1973 saw ugly splits in the labour party over this issue. Today, however labour is of the strong voices for Britain staying in EU. The Conservative Party has many Eurosceptic elements; nearly half of conservative MP’s has publicly declared support for Brexit. The debate has questioned party’s unity under David Cameroon who remains convinced that a vote to leave will be a “the gamble of the century”. Much of the British Euroscepticism stems from nationalism, opposition to the EU’s immigration policies and British Contribution to the EU budget.

ISSUES THAT ARE RESPONSIBLE FOR BREXIT –

THE ECONOMY –

Economic growth, bureaucratic red tape, corporate independence, the EU budget, fiscal policies and EU membership fees are contentious issues. For example, In EU to be and remain member of it, member states have to pay some annual fees. Britain pays annual fees of € 12.9 billion per year and which in return receives €4.5 billion per year in form of subsidies and grants from the EU. This is one of the issues that have been raised for leaving EU. Brexit supporter say leaving would get rid of job- killing regulation and free Britain to decide its own laws and trading partners.

IMMIGRATION:

One of the founding principles of EU is free movement for European citizens between EU members States. Record level of EU immigration to the UK are also are important issue to vote. Pro EU parties keeps the positive economic benefits of immigration while anti EU parties counters it that immigrants take away local jobs and hurt individual wages.

SOVERIGNITY –

Anti- EU parties raising one more slogan which is “TAKE BACK CONTROL”. The relevance of EU laws over British ones and deceased national autonomy are main talking points for leave campaign while stay campaign has advocated Europeanism and oneness.

BREXIT AND EUROPE -:

However, the short term effects of a vote in favour of Brexit are bound to have negative implications on British and World economy. Even the leave campaign accepts that jobs would be affected and trade in rest of the Europe would be hit. However, long term and precise affect on Brexit is difficult to say because of a lack of agreement on what would be the concrete alternative to EU membership.

BREXIT AND INDIA: –

This is one of the most crucial topics to be understood for us.  Our Prime Minister Narendra Modi has spoken in favour of Britain remaining in the EU, calling the UK India’s “gateway to Europe” and affirming that “India always stands in support of a strong and united Europe”. India is one of the fastest growing economies and one of the EU’s biggest trading partners. Indian companies are the third largest source of FDI for UK. Some of the analyst says that Britain leaving EU could set the stage for a free Trade agreement between Britain and UK. FICCI has warned about “considerable uncertainty for Indian businesses” and “adverse impact on investment”. As, we have seen how stock market reacted as 4 lakh crore of investor wealth. However, these are short term effects and India is expected to bounce back from this plunge.

One of good news is that all companies that borrowed in pounds, they will have to pay less now given the 10% slide in the currency.

“ARTICLE 50” CONTRAVERSY AND PROCESS TO LEAVE EU

Article 50 of the treaty on European Union provides that “Any member state may decide to withdraw from the Union in accordance with its own constitutional requirements”. Article 50 was inserted by the Lisbon Treaty in 2007, before which the treaties were silent on the possibility of withdrawal from the European Union. Once a member state has notified the European Council to its intent to leave the EU , a period begin during which a leaving agreement is negotiated setting out the arrangements for the withdrawal and outlining the country’s future relationship with the Union. For the agreement to enter into force it needs to be approved by at least 72% of the continuing member states representing at least 65% of their population and consent of the European Parliament. The treaties cease to apply to the member state concerned on the entry into the force of the leaving agreement or in the absence of such agreement; two years after the member state notified the European Council of its intent to leave, although this period can be extended by unanimous agreement of the European Council.

Now, the point of contention arises with invocation of “Article 50”. A close examination of the article shows vagueness, almost as if the drafter had thought it unlikely that it would ever be invoked by the member state. Apart from the fact that there is a period of two years from the date of withdrawal is communicated to the European Council, there is no real quantifiable detail in the five provisions of the article.

It specifies that the existing shall notify European Council of its intention to leave, negotiate a deal on its withdrawal and establish legal grounds for future relationships and this two year period, EU laws will still apply to the UK. The final agreement, subject to both sides being acceptable of the terms will need a qualified majority of member states and consent of the European parliament. In the case where no acceptable agreement is finalized, would it then mean that once the two-year period is over, the existing state would do so without a clear forward plan in place? This is very unlikely, as the member states may be obliged, on the strength of past alliances forged with the existing state, to extend the period of negotiations. Britain is not under any immediate pressure to invoke article 50. As David Cameroon in his resignation stated in his speech said that “a negotiation with the EU will need to begin under a   new prime minister” and it is very unlikely that the new Prime Minister Theresa May will be in hurry to “push the button” so to speak. This is due to that fact that the country’s political class is in disarray and the parties need to be calmed and strengthened  before making a move to invoke article 50.

However, two parties that are pushing for quick exit. One is UKIP (UK independence party) and other is the chairman of the European Commission and some country leaders. It is understood that European Commission would like that have quick deal set up to prevent an exit contagion and give vent to its utter disappointment with Britain for its self- imposed exodus.

However, point to be noted is that referendum results do not represent the formal notification. The official notification has yet to be triggered. One group to this issue says that there is no established, formal process for holding second referendum to “confirm” the decision to leave following negotiations. Alan Renwick of the Constitution Unit of University College London argues that Article 50 negotiations cannot be used to renegotiate the conditions of future membership and that article 50 does not provide the legal basis of drawing a decision to leave. They believe that there should be no parliamentary vote as people have spoken to this issue whereas group of 1000 prominent lawyers have written letter to PM David Cameroon that “it is for lawmaker in Parliament to decide whether Britain leaves the European Union or not?. They say lawmaker should have free vote in parliament before British leader takes the decision to invoke 50”.

CONCLUSION: –

  The implication Brexit will undoubtedly affect that European politics, trade and the global economy. Short term affect have been predicted but it’s very hard to predict the long term affect and things are uncertain till now. But when we go through some facts it seems to be bad decision as economic benefits or impacts was too large and complex of the masses to understand in lieu of the fact that people started googling “what is EU”? Only after Brexit vote. Second, The imbalance in the resources at disposal for various political parties to advertise regarding the reasons to stay or leave EU.  It is worthwhile noting that mass mobilization is easier when you are up against something that when you stand for something irrespective of the strength of the argument on both sides.

 Brexit has also raised a challenge of reunifying the country because it has divided the country as England and Wales voted to leave and Scotland and Northern Ireland voted to remain in EU. Scottish leader Nicola Sturgeon said “Brexit means Brexit” does not apply to Scotland.  It will challenge for May to tackle this problem peacefully and Scotland and Northern Ireland view need to be respected? As we have already seen Scottish referendum in 2014.

As economist argue that this decision to leave EU will diminish both Britain and Europe, can harm to the politics, economy of Britain and Europe also. As it happened, it caused roiled to stock market and sent pound to 31 year low in the immediate aftermath.  This decision of referendum need to be given second chance where people need to understand this issue first, and then decide. This decision is not limited to Europe or Britain and its has a global impact and need to negotiated well so that best decision can be made which is not seems to be made right now. Congress Jairam Ramesh in his interview to Hindustan times termed “Brexit” as a “suicide” committed by Europe which we wish not to be true. Let’s see, how new PM Theresa May tackle this whole new scenario who herself supported the campaign to remain in EU?

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