Alternative history (2): More on the Brexit

This post is, mostly, conjecture. I remain convinced that a hard head says that the Brexit is a mistake but I am also persuaded that Britons voted, in a slight majority, with their hearts, not their heads, and I hope they were right.

Lawrence Summers, a noted economist, the former president of Harvard University and also a former United States Secretary of the Treasury says, in an article in The Independent, that “it is “delusional” for the UK to expect a favourable trade deal with America after Brexit … [and Mr Summers added that] … Boris Johnson’s “do or die” strategy of leaving the EU in October whatever the circumstances had robbed the “desperate” UK of any leverage in future trade talks.

The article says that “His comments came as foreign secretary Dominic Raab began a three-day tour of Canada, the US and Mexico in an effort to “fire up” the UK’s trade relationship with North America … [and] … Mr Raab said he was hoping to ensure a “smooth transition” of trading relations with non-European states following Brexit, and move “quickly” to extensive new trade deals … [but] … Mr Summers told BBC Radio 4’s Today programme: “Look at it from America’s point of view: Britain has much less to give than Europe as a whole did, therefore less reason for the United States to make concessions. You make more concessions dealing with a wealthy man than you do dealing with a poor man.” And there is the entire Brexit dilemma … soft or hard. Britain is a large and important global trading nation, we should all want to do business with Britain, but Britain is not anywhere near as large and important as is the EU (or America or China) and, therefore, nations will not make trade deals with Britain that might hamper their access to the EU. That applies to Australia, Brazil, Canada and all the way down the list through the USA to Yemen and Zambia.

Meanwhile, on social media, the British historian Simon Schama, says that:

Screen Shot 2019-08-06 at 07.20.42

Professor Schama implies, of course, that Brexit will go ahead, very probably or at least quite possibly on 31 Oct 19.

If that’s the case what will the world look like on All Saints’ Day 2019?

Well, I suppose, Britain’s trade with the whole world will be done on the basis of WTO rules. Those rules allow Britain and all of its trading partners to regulate both standards and tariffs on all imports: imports into Britain from every country in the world and, for all the other countries, imports of British goods and services into their countries. That’s the easy part.

The hard part is socio-political.

Britain will need to negotiate deals with e.g. Australia, Brazil, and Canada and, especially, the global “big three:” America, China and the European Union. Ironically it may be the EU which is most anxious to make a good trade deal with the UK because, leaving aside the European Union itself, more than half (8) of Britain’s top 15 trading partners are EU members:

Screen Shot 2019-08-06 at 08.03.34Source: 2015 data from HM Revenue and Customs

China, is looking for big, modern Belt-and-Road partners, it already has a deal with Italy, amongst others, why not with Britain, too? It might be interested in giving Britain a decent trade deal. Australia, too, has expressed an interest in being “one of the first cabs off the rank when it comes to doing a free(er) trade deal with Britain. Why worry about America? Well, America accounted for £80+ Billion of Britain’s £360+ Billion foreign trade (that’s 20+%) in 2015. But America, in 2019/20 is not keen on making free trade deals, not unless they clearly benefit America.

My guess, and that’s all it is, is that the EU will not reopen negotiations this summer and, therefore, Britain will “crash out” ~ the “no-deal Brexit” ~ on 31 October. I suspect (and this is pure speculation, nothing more) that:

  • Urgent negotiations with the EU will commence on about Monday, 4 November ~ both sides, Britain and the EU will feel internal pressure to do something, quickly;
  • Wales, Scotland and Northern Ireland will all announce referenda on separation from the United Kingdom. Those referenda will be held in mid-December. Wales will votes, by a solid majority to remain in Britain; Scotland will vote, by a very slight margin, to leave the United Kingdom and Northern Ireland will vote, by an even smaller margin to stay;
  • Britain, or whatever is left of it, will, fairly quickly, conclude free(er) trade deals with Australia, China, the EU and Norway;
  • Scotland will be required to renegotiate its way back into the EU and the Europeans will not be as generous as the Scots had hoped, plus Scotland will discover that its primary trading links are with England, not Europe;
  • Northern Ireland will discover that its primary trading links are with the Republic of Ireland, not England;
  • Norway, which is not an EU member, will offer a very generous free(er) trade deal to Scotland coupled with a proposal for England, Iceland, Ireland, Norway and Scotland to form a ‘North Sea Union‘ which will allow real near free trade and considerable freedom of movement between the countries;
  • Ireland will leave the EU;
  • Northern Ireland will have a second referendum, this time it will vote to unite with the Republic of Ireland;
  • The ‘North Sea Union‘ will be established. It will be a customs union but will not include a currency union. England (including Wales) and Scotland will form a military and defence production-sharing alliance;
  • The North Sea Union will conclude free(er)-trade deals with Canada, the EU and several other countries, including China, India and Japan, but free(er) trade with America will not be on the table until after 2024; and
  • The European Union will begin, in the early 2020s, to fragment, leading to a major realignment of the whole shebang into some kind of multi-tiered arrangement that will even have room for the new North Sea Union and, perhaps, even Russia, on the bottom ~ free(er) trade only ~ tier.

Now, that’s just idle speculation, a bit of ‘alternative history,’ but I like to think that there is some geopolitical and economic logic to it all.

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