What is Brexit and its Legal Ramifications for the UK?

Economists for Brexit, a group of UK and other economists, recently asserted that the UK should not bother striking new trade deals but instead unilaterally abolish all its import tariffs (let’s call this policy ‘Britain Alone’). The UK would simply pay the tariffs imposed by other countries on UK exports. This is usually the worst-case scenario that other economists have examined. Nevertheless, Brexiteers adhere to their positions like die-hard Trump supporters adhere to his every tweet. Economists at the London School of Economics maintain that under the ‘Britain Alone’ scenario of unilateral liberalization after Brexit, UK real incomes still fall by 2.3 percent. In other words, there is a gain of only 0.3 percent from eliminating tariffs compared to just trading under WTO rules and the British people are still considerably worse off as a result of Brexit. In fact, according to a survey by the Chartered Institute of Procurement and Supply, published in Reuters on March 19, 2018, one in seven (or 14 percent of) businesses from EU countries with hard assets in Great Britain (e.g., offices, warehouses and factories), have relocated parts of their business out of the country because of concerns about disruption after Brexit. The UK’s Position in the Negotiations The European Commission has been pressuring London for months to proffer its ideas for new relations with the EU after the UK exits in March 2019 and after an agreed transition period of less than two years ends. In early March, PM Theresa May was understood to be trying to convince her divided Tory colleagues to back a “three point” plan, under which the UK would examine all existing regulations and decide whether it may desire to keep them the same, whether it may prefer to modify its regulations while achieving the same goals, or whether its goal is a complete break with the EU in certain areas of business relations. The UK vehemently opposes reintroducing border controls between Northern Ireland and the Republic of Ireland and vigorously advocates maintaining the status quo during a transition period following Brexit. Most of the major points necessary for a Brexit agreement are still unresolved but the UK is pushing hard to cease allowing free entry by non-UK citizens or residents on the Brexit effective date. As expected, the EC negotiators confirmed the EU’s position that the proposal breaks several of the nonnegotiable conditions set by the remaining EU nations: (i) preserving the autonomy of EU decision-making; (ii) preserving the role of the European Court of Justice; and (iii) preserving the integrity of the single market.. The EC’s President, Donald Tusk, has repeatedly stated that the UK cannot “cherry pick” which aspects of the EU it agrees to retain. In other words, certain UK demands are “non-starters.” Until now, it appeared likely that the UK government will pursue a policy putting the UK outside a customs union with the EU but accepting EC rules in certain sectors in an attempt to achieve frictionless trade. In Conclusion Finally, the United Kingdom and the European Union (EU) announced on March 19 that they have agreed on several key terms of an agreement that would result in Britain leaving the EU. The tentative deal, which remains subject to formal bilateral ratification, establishes a “transition period” from the effective date of March 29, 2019 (when the UK will formally leave the EU) until December 2020. For those in support of a so-called “hard Brexit”, the UK has limited leverage in its negotiations with the EC, as its acceptance of the continued application of the four freedoms of the single market — goods, capital, services, and labor, at least until December 2020,demonstrates. There also seems no hope for Brexit supporters to apply a “divide-and-conquer” strategy to exploit the different positions of the other 27 EU member nations in the talks, as some in London have been advocating from the beginning of negotiations. Most importantly, the UK will remain within the EU’s single market throughout the transition, avoiding a disruptive “hard Brexit” in case no final deal has been agreed by then. Thus, the transition deal ensures that no major disruptions of business activities will take place, bolstering the chances of an orderly UK exit from the EU. However, extraneous issues have been introduced recently by foreign secretary Boris Johnson, a leading “Vote Leave” advocate during the referendum campaign. In an attempt to smooth over the clearly negative economic implications of Brexit Johnson and other Conservative Brexit supporters including Jeremy Hunt, the UK Health Secretary, claim that the money saved by not having to help support the EU through membership contributions can be the basis of a “Brexit dividend” that can be applied instead to sustain Britain’s National Health Service. This position responds as well to growing bipartisan concerns that key health services are being overwhelmed by rising demand, a categorization Prime Minister May categorically rejects.

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