A ‘hard Brexit’ may lead to closer Sino-UK ties

By Jeremy Garlick Source:Global Times Published: 2017/1/23 23:43:39

Illustration: Liu Rui/GT

Illustration: Liu Rui/GT

After a six-month wait, British Prime Minister Theresa May finally revealed her plan for the United Kingdom's exit from the European Union last Tuesday.

To say that her speech had been long awaited would be an understatement. In the absence of clear indications of the direction in which she intended to lead her nation, Europe and the world were confused, even frustrated. May was accused of dithering and indecisiveness. The change the British public had voted for seemed no nearer to realization than in June last year.

What does it all mean?

Well, to say that May's speech cleared up all these problems would not exactly be accurate. There is still a great deal of uncertainty swirling around Brexit, with a multitude of unsolved problems relating to Britain's future relationship with the EU.

Nevertheless, a picture has emerged from the speech of a future Britain which is going to operate as a sovereign entity entirely separate from the EU. The island, which once had an empire on which the sun never set, will seek to negotiate bilateral free trade deals and to become, once again, a global hub for finance and investment.

This is the so-called "hard" Brexit: a Britain which does not answer to Brussels; a Britain disentangled from EU bureaucracy; a Britain which can begin to believe in a renewed destiny as a major actor on the world stage in an era of globalized trade networks.

At least this appears to be the story which May is trying to tell.

What is difficult to know is whether this narrative of Brexit representing a new dawn in Britain's relations with the rest of the world is realistic.

On the one hand, once Britain is out of the EU, it should indeed be free to set out its stall as it sees fit, in the same manner as European countries which are not EU members (such as Switzerland and Norway) are doing. Apparently, according to Liam Fox, the international trade secretary, the negotiations have already begun with "dozens of countries." This seems to indicate a strong possibility of Britain establishing itself on a new footing as a free trade hub.

On the other hand, will it really be that easy for Britain to clamber out of the EU's clinging embrace? Some are talking of an extended process of disentanglement which may take up to 10 years to sort out because of issues relating to existing obligations.

There is also the question of Britain losing out in trade with the 27 remaining EU members. The frosty reception given by Europeans to recent speeches by May is suggestive of the uncooperative attitude the EU is likely to take toward the UK. This may mean that Britain, while looking to improve ties with some non-EU countries, is going to suffer a deterioration in trade relations with some of its biggest European partners, such as France and Germany.

The question then is whether the improvement in trade relations with the rest of the world is going to offset the potential losses connected with detachment from Europe.

One possibility is that the British government will have to make Britain more attractive by offering a favorable tax regime to non-EU companies. This could potentially draw investors and create economic growth and jobs. It would, however, also risk alienating the EU to an even greater extent than is already the case.

Another aspect of May's "hard" Brexit is that it would naturally suggest an intention to increase economic interactions with China.

According to some estimates, China now has the world's largest economy in terms of overall GDP (when measured by purchasing power parity). There is an obvious incentive for the UK to boost ties. As an independent actor, Britain would have a free hand in finding innovative ways to do this.

If a UK free of EU restrictions can make itself attractive enough, for instance by following Switzerland's example and granting China market economy status, then there is reason to believe that Chinese interest in Britain might intensify. This could also draw some Chinese business attention away from Europe.

Of course, there is also a distinct possibility that Britain would be less attractive to Chinese investors if it was no longer linked to the European single market.

On a related note, coming as it did just a few days after Chinese President Xi Jinping's well-received speech promoting the continued expansion of globalization, one had a feeling listening to May's oratory that she was riding on the Chinese president's coattails.

This is not necessarily a bad thing. President Xi presented a compelling case for the benefits of globalization, as well as carefully outlining the downsides.

If Britain and China can follow through on their leaders' promises of increased free trade, and if Britain needs to be outside of the EU to do this, then new synergies can be created which may make a sizeable contribution to re-stimulating global growth.

However, as with everything related to Brexit, the chef is still in the process of preparing the menu, and the proof will be in the pudding - whenever it is finally ready for consumption.

The author is a lecturer in international relations, Jan Masaryk Centre for International Studies, University of Economics in Prague. opinion@globaltimes.com.cn

Posted in: VIEWPOINT

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