Brexit: The Genesis of a Return to Pre-Globalisation Nation-States?

Brexit has undoubtedly been on the tips of everyone’s tongues ever since the shock vote last year sent rippling chills throughout Europe and the rest of the globe. This subsequently gave rise to mass panics in many European countries due to the fear of far-right political demagogues being provided impetus to produce a similar outcome in their respective countries. Notable countries that had been afflicted by this collective fear include the Netherlands and France. In the case of the latter, perhaps a potential “Frexit” would have come to fruition had President of the National Front Marine Le Pen defeated current French president Emmanuel Macron in the election earlier this year. Yet after the initial jitters, waters appear to have settled and ardent opposition to the European Union is less present in the public sphere than it was a year ago. The main contention of this article will be that Brexit aims to signify the potential dawn of a new era of international politics, one in which the “bloc” approach so dearly embraced by the European Union for decades could be replaced by a more individualistic framework, that revolves around nation-states cutting individual deals between each other without any extraneous pressure from a union of states. Time-wise, I shall be considering Britain’s current course of action, both in respect to the EU and other economic spearheads that it has targeted for trade deal negotiations, notably the United States, Japan and China.

 

The roots of Britain’s withdrawal from the European Union may be traced all the way to the inception of the United Kingdom Independence Party (UKIP), a collection of fervent Eurosceptic politicians, in 1993, and the rise in popularity that it saw over the past seventeen years. For example, it earned second place in the 2009 European elections and first place in the 2014 European elections, winning 27.5% of the total vote. UKIP’s surge in popularity should therefore come as no surprise given that its nationalistic and British unionist agenda resonated with the nostalgic wishes of many ordinary citizens of Britain going back to a time resembling the British Empire in terms of power and influence. As such, many saw the institutions created post-Second World War such as the International Monetary Fund and NATO as having become redundant because they do not serve Britain’s national interests and threaten to take away its ability to control affairs both internal and external. The revitalisation of British nationalism was intensified by rising immigration that was itself catalysed by the 2015 migrant crisis. For a while many saw the housing of refugees escaping their war-torn land as a moral obligation, many Eurosceptics saw this as a threat to national security. Such feelings are understandable, yet the execution of the immigration rhetoric during the Brexit campaign was founded upon overexaggeration. When it comes to the issue of opposition to immigration, many come to view the problem in black and white, in other words, whether there should be immigrants in the country or not. However this is an erroneous approach because exchanges of migrants form a vital part of any open economy. It is more a question of scale, yet a lot of anti-immigration remarks were coated in racism and xenophobia that took the form of “they took our jobs”-type public exclamations.

Indeed, UK immigration does need to be curbed. While there is the common argument that increased migration equals increased economic growth due to a larger contribution to labour, this does not necessarily increase the GDP per capita, and thus it does net necessarily serve the purpose of improving the economy. For example, the most recent report published by the Office of Budget Responsibility indicates that should net migration continue at such high levels, the economic benefits would only equate to 1/10 of 1% GDP per individual. Furthermore, and what is likely the core of concern for Eurosceptics, is the fact that the continuous large pool of outside labour is contributing to a low growth in employee earnings because employers have not had to increase wages yet, despite an expansion of employment opportunities. As I mentioned in the second part of my assessment of the global financial crisis, xenophobic, racist and otherwise discriminatory views are given momentum at times of acute monetary crises. Thus, both the credit crunch and the Eurozone crisis that followed shortly thereafter and austerity measures implemented by the post-2010 Conservative government led to immigrants being scapegoated by increasingly frustrated people that have suffered severe bouts of unemployment. This augmenting frustration reverberated in the months leading up to the EU referendum and the refugee crisis provided the best justification for Eurosceptics to promote a British withdrawal from the European Union.

  

Forward the clock a year and we can find Britain being pursuant of Brexiteers’ goals. The European Union has recently expressed dismay over Prime Minister May’s neglect of the importance of attempting to attend to issues such as Britain’s exit fee and migration as soon as possible. The former appears to have caused a massive row among both British politicians and the British public, as well as causing great discord in the latest divorce talks after an as-of-yet unrevealed British official disputed the legal basis of the demand. Despite no figure having yet been put on the payment, various sources estimate to amount to as much as €100 billion whereas Jean-Claude Juncker estimated the fee to be about €60 billion. Tensions also began to arise after David Davis announced that the UK will be conducting a “rigorous” examination of EU demands in response to the apparently extortionate amount of money demanded by Brussels. 
Britain is depicting the European Union as the oppressor yet its bully stance was made evident a short while after the decisive vote, chiefly via Foreign Secretary Boris Johnson’s boisterous comments. Given the current trend in British political action, one may be led to believe that this antagonisation of the European serves as a distraction from Theresa May’s move to build rapport with economic forerunners; In the hope of signing bilateral trade accords once Britain breaks away from the EU. Mrs. May’s courting efforts directed at U.S. President Donald Trump, Japanese Prime Minister Shinzo Abe and Chinese President Xi Jinping no doubt reflect the UK’s intentions to show the world that not only can it recover from a temporary setback, but that it can be independent in deciding the future of its economy. Taken even further, this could signal to other countries that they could perhaps follow suit, which would eventually lead to a blocless and individualistic Europe. As a matter of fact, President Trump was the first leader May courted following the vote of the referendum and this was likely in response to his comments praising Brexit due to the EU’s apparently protectionist stance towards the United States. However, this solidifying friendship between the two nations is likely to further fuel tensions with Brussels as a result of America’s export intentions.

 

For example, America desires access to the UK’s market for all its food exports but this brings with it two major problems. First of all, American chickens are washed with chlorine as part of the production process, which is the reason that the EU offers for refusing U.S. chicken imports. Secondly, the United States would flood the UK food market with genetically modified grain, which equally transgresses EU wishes. This is likely what Trump was referring to when he described the EU as being “very protectionist” towards the United States. 
 

  A key argument proposed by Brexit supporters is that Britain will see far greater trade benefits from an economic accord with emerging markets such as China than it would if it remained in the EU. However, the optimism of potentially bringing Britain to a pre-European Union state of sovereignty ought to be diminished because the potential of reaching a wholly beneficial bilateral deal is slight. China did not take too kindly to last year’s referendum vote, especially after President Xi himself had been promoting Britain as a leading European force. Equally, Chinese companies that have invested a lot of capital in Britain in the hope of seeing it as the backdoor to European markets do not want to see Britain veer off into a completely new direction that brings with it a lot of uncertainty. Such favouritism towards the British had not been driven by sentimental appreciation, but rather by China’s vision that the former would play a great role in the next stage of its development plans that fall under the “Chinese Dream” mantra that I discussed in my article on the U.S. – North Korea nuclear tensions. Such plans include China’s shift to a service-based economy, not unlike the UK, as well as the move to promote currency convertibility by yuan trading in London. Britain would also act as an advocate of Chinese policy in worldwide governance affairs.

Therefore, Britain’s continuous antagonisation of Brussels does not bode well with Chinese interests, given that it would want the UK to continue providing it with access to the EU single market, thus creating favourable conditions for investment, without having to be confronted with threats of American and European sanctions. As such, a “hard Brexit” could potentially dampen British-Chinese relations. For example, according to the Financial Times, approximately 23% of the €101.5 billion worth of Chinese investment into the EU went into Britain for the past 17 years. Germany only received 18.5% of said total.

Furthermore, the EU currently ranks as China’s second-largest export market after the U.S.A. albeit current projections believe it become the third in a year, after Hong Kong. Regardless of such changes, it is highly likely that China will continue to favour Brussels over London for two reasons. Britain is significantly smaller geographically speaking and secondly, Britain is not the EU’s leading economic force. That said, due to May’s close relationship with Donald Trump, China may still have security interests in the UK, namely using Britain as a buffer in light of the U.S. president’s threat to call for sanctions on Chinese companies that do business in North Korea.

 

Britain is likely aware of the potential negative outcomes listed above, and it thus makes sense why May has also begun to court Japan recently after her meeting with Shinzo Abe. Being the world’s third-largest economy by nominal GDP and a forerunner of scientific and modern technology, successfully brokering a trade deal with the Japanese could be hugely prosperous for Britain. The optimism surround a British-Japanese trade accord surged last week after Abe’s somewhat derisive comments towards the EU. In what was a brutal blow to Brussels, the Japanese PM praised the “profound trust” that Japanese companies have put into the UK economy post-referendum as well as reasserting that there are plans to strengthen economic ties with Britain once the latter fully breaks away from the EU. That said, representing Japanese corporate interests, Abe asked for a smooth transition so as to not disrupt Japanese businesses. This could mean that Japan, like China, may wish for Britain to remain within the customs union.  

However, Britain’s closeness to both Japan and America may potentially put its relationship with China in jeopardy, especially in light of the recent roil over North Korea’s nuclear arms programme. Similar to Trump’s remarks last month, May and Abe united in their call for China to bring to an end Kim Jong-un’s aggressive foreign policy by recognising the immense political and economic influence it has over North Korea. Despite arguing in my article on the U.S. – North Korea nuclear tensions that China was capitalising on the whole affair by distracting the former from its plan to revitalise the Silk Road and reduce its dependence on America, I now partly retract said comments. China may well succumb to this increasing political pressure that could potentially put its development plans on hold for an indefinite period. On the other hand, in terms of Sino-Japanese relations, Japan could profit from a potential escalation of this conflict. If China refuses to halt North Korea’s belligerence, this may convince other powerful nations to abandon China, thus eliminating its lead competitor both in Asian and European markets.

One might argue that the Britain is forcing itself between a rock and a hard place by wooing both rivals. This is especially true given that tensions between Japan and China are rooted in historical events such as the Second Sino-Japanese War, with the Chinese bitterly resenting Japan for not admitting its guilt in the atrocities committed. As a result, people have tended to over-inflate the gravity of the relationship by reading too much into minor events. For example, in August 2016, Chinese fishing vessels were accompanied by various Chinese coast guard vessels as they entered territory disputed with Japan as parts of their Exclusive Economic Zones near the Senkaku/Diaoyu Islands. Some interpreted this as sign of potential conflict but this is as far as escalation goes. Japan has no real interest in the South China Sea apart from China becoming too dominant. Thus the relations between the two nations ought to be classed as rivalrous rather than discord. Britain, in this scenario, ought to trade lightly in dealing with the two rivals given that it has attracted capital from both nations, even though at first glance one may favour a partnership with Japan due to its technological superiority.

   To conclude, does Brexit signify the ushering in of a new era characterised by fervent nationalism that was prevalent before the Second World War? By looking at current trends, one would think not. Indeed, the initial shock that permeated the globe pointed in this direction, especially after the rise in optimism among far-right parties in France and Netherlands yet this settled after a short while. People around the world want to expand their businesses and subsequently seek the most cost-effective way of flourishing. This therefore means that outdated ideals are not embraced. As was mentioned above, China’s likely favour of the EU over Britain post-divorce validates this assessment. Consequently, the UK needs to put aside its euphoria and its dreams of reaching the sovereignty associated with its imperial days for globalisation has impacted the world in such a way that interdependence is vital, and isolationist policies would serve no other purpose than plunge a nation into turmoil.