Whether Brexit Is a Good Idea - Essay Example

Is BREXIT a Good Idea? Name Institution Course Date Is BREXIT a Good Idea? BREXIT is a term that explains the decision of the United Kingdom to leave the European Union. After the referendum vote done in 2016, the United Kingdom is in the process of putting the country on course to leave by 2019 (Hobolt, 2016). This decision will shape the future of UK’s relationship with other countries. The concept of BREXIT has brought about widespread debate among the public and scholars. Proponents argue that the decision to leave European Union will have immigration, trade and sovereign benefits and the country will not suffer much. However, the opponents say that BREXIT will reduce trade costs, cause danger to jobs, and affect the financial market etc. (Hobolt, 2016). The impacts of United Kingdom decision will largely depend on the new relationship with the European Union. Being a member of the EU, the United Kingdom has enjoyed many benefits. For instance, the relationship has eliminated tariff barriers and created a single market for all EU members (Booth et al., 2015). The United Kingdom has enjoyed these benefits for a long time now and leaving EU will have a huge impact on the country. This essay will determine whether BREXIT is a good idea by reviewing it impact on the United Kingdom. The impacts of BREXIT are not clearly known. Its impacts can only be determined by estimations and assumptions (Baier et al., 2008). It is not known how the relationship between the United Kingdom and the European Union will change after the exit. There is therefore lack of clarity over the impacts of BREXIT on trade. Proponents assume that the UK will have a good relationship with the EU similar to that of Norway (Dhingra, Gianmarco and Sampson, 2015). Norway has free trade agreement with the European Union and trade tariffs are minimal although it is not a member of EU. Therefore, although the United Kingdom will face some non-tariff barriers such as anti-dumping duties, BREXIT will still enjoy some benefits if it is successful in negotiating new trade agreements Norway (Dhingra, Gianmarco and Sampson, 2015). However, critics argue that there is a possibility, although minimal, that the country will not be able to negotiate trade agreement with EU (Dustmann and Frattini, 2014). If this happens, the trade between the two parties will be governed by rules implemented by World Trade organization. UK will incur more trade costs since the WTO has not made any progress in minimizing non-tariff barriers. In addition, in the recent years, the trade costs between EU countries have reduced by about 40% more than between OECD countries (Dhingra, Gianmarco and Sampson, 2015). And as such, the United Kingdom will not benefit from any forthcoming declines in trade costs. Proponents of BREXIT also argue that the Britain’s connection to the EU is preventing the country from focusing on trade opportunities on emerging markets (Dhingra, Gianmarco and Sampson, 2015). For instance, UK has not significant trade agreements with potential countries such as China and India. Exiting from EU will offer an opportunity for the country to diversify its international links (Dhingra, Gianmarco and Sampson, 2015). Being the leading beneficiary of foreign direct investment, the decision to exit the European Union will minimize the attractiveness of the United Kingdom as an entryway to Europe (Scaub, 2016). In 2013, European Union made up about 46% of foreign direct investment in the United Kingdom which will be influenced by BREXIT. The UK will have to struggle to attract new investment to compensate EU share. Furthermore, not only will UK’s decision affect investments it will negatively impact European companies that have invested in the country (Dhingra et al., 2016). The cost associated with adjustment for these companies could be very high. However, proponents contend that the UK has many benefits that will not be affected by decision to exit EU such as language and deep capital markets. The country will not face problems when looking for new investments due to its economic attractiveness (Dhingra et al., 2016). British will not have the power to control immigration until it exits the EU and therefore, BREXIT is a good idea when it comes to solving the migration crisis (Dhingra et al., 2016). Immigration has been politicized in the country as the costs and benefits are unevenly distributed (Dustmann and Frattini, 2014). The ability to solve the migration problem will depend on the BREXIT model. The United Kingdom has enjoyed the benefit of free labor that has eliminated the problem of skills shortage caused by increase in aging population. Allowing free movement of refugees to the country allows the country to enhance productivity of high-value added industries. About 1.5 million jobs will be occupied by high-skilled migrants by 2022 due to high population of retirees (Dustmann and Frattini, 2014). Migrants are net contributors to public finance in the United Kingdom. If the country adapts the Swiss or Norwegian rules after BREXIT, it will still be able to allow free movement of labour. However, free movement of labor will have negative impacts on remittances on countries that are sources of refugees including Poland (Ellison, 2016). The impacts of BREXIT on immigration will create hostility in other states. Other countries might face pressure to follow UK’s migration model. According to opponents of the BREXIT, millions of jobs for Britons are connected to the European Union (Schaub, 2016). The relationship between EU and the UK has been beneficial in the labor market. The decision to exit EU will affect jobs availability. Employment will be plunged into uncertainty and companies would fear investing if the country was outside Europe (Dustmann and Frattini, 2014). However, proponents argue that the danger of BREXIT to employment has been exaggerated. The country can look for other ways to sustain employment opportunities. For instance, United Kingdom can incentivize investment through low corporation tax which will ensure it flourish like other countries outside EU (Dhingra et al., 2016). BREXIT is a good idea for the United Kingdom since it will give the country an opportunity to establish its own trade policies (Baier et al., 2008). However, compared to EU, UK would have lower priority for major markets. Leaving Europe will reduce the country’s strength when settling disputes with other economics. The European Union has gained knowledge in negotiating complex trade agreements (Peers, 2016). It has negotiated more than 30 bilateral and regional agreements including trade deals with countries such as Japan, China and Canada. The United Kingdom will be flexible in negotiating trade agreements, but economic size matters a lot due to the increasingly bilateral nature of trade deals (Peers, 2016). The country benefits from being a member of EU when addressing complex issues related to trade deals especially where regulatory obstacles limits its ability to access markets. In an event of BREXIT, negotiating work will go to other bodies such as World Trade Organizations (Booth et al., 2015). The United Kingdom will not have leverage when negotiating trade deals. Negotiations without the involvement of the EU will expose United Kingdom to danger since it may trigger retaliation especially in cases that involve technical trade deals (Dhingra, Gianmarco and Sampson, 2015). In addition, the United Kingdom will have an additional task of negotiating EU trade deals since these will not automatically apply after BREXIT. Nevertheless, proponents of BREXIT argue that United Kingdom may be a strong negotiator with a better chance of getting good deals without the help of the EU (Dhingra, Gianmarco and Sampson, 2015). The United Kingdom enjoys numerous international influences under the umbrella of the bloc. The decision to leave Europe will diminish these privileges. The country may lose its influence and privileges in international fora including UNFCCC (Dhingra et al., 2016). Although the UK will remain an important military partner of the United States, its diplomatic heft may reduce and it may be unable to pursue broader international objectives. The United Kingdom is known for its soft and hard power. Soft power is the ability of a country to influence the behaviour of others through persuasion instead of coercion (Dhingra et al., 2016). If the country leaves Europe, it will damage the soft power assets of EU. Hard power assets of UK include military and financial policy which benefits the EU. Its exit will diminish EU leverage in terms of international influence (Dhingra et al., 2016). British advocates have argued that the decision to exit Europe is a cost worth bearing. The concept of sovereignty and self-governance supersede the negative impacts. Under the umbrella of EU, the British parliament is under strict laws. With the growing economy integration in Europe, it is best for the country to exit before ties deepen (Schaub, 2016). Some advocates argue that complete sovereignty is impractical. States are often interested in participating in treaties and agreements in order to yield international benefits. In this regard, EU will be worse when it separates from the bloc (Booth et al., 2015). However, proponents of BREXIT highlight that the United Kingdom does not need the European Union to prosper internationally. There are several ways the country can be able to yield benefit as a separate and independent state. For instance, by winning the support of the Commonwealth, British will have more much influence that it does inside the bloc (Booth et al., 2015). The Chinese leaders, however, explain that UK will not survive in the globalising world without being protected by EU bloc. Although BREXIT comes with a number of negative effects, it has the potential to lift British to high heights. Although the decision to exit the bloc limits its ability to access single market, it will magnify its independence and will be free to re-negotiate better trading deals with powerful economies. Countries like Switzerland have instituted independent markets and have had major economic growth (Booth et al., 2015). In conclusion, the decision of British to leave the European Union is now certain. Although it is unclear how this decision will affect the country, assumptions and estimations establish that BREXIT will have both negative and positive effects. The effects of BREXIT will depend on the future decisions made by British after the exit. The exit is associated with diminished international influence, reduction in foreign direct investment, and increase in trade costs. These factors will negatively impact the economy of the country. Apart from the negative impacts, BREXIT will tighten the immigration policy, increase trade independence, and enhance sovereignty. The future of the United Kingdom is uncertain. The country may either make favarable or unfavorable decisions that can be rectified through parliamentary votes. It is therefore a good idea for the country to exit the bloc. However, the United Kingdom should implement effective policies to ensure positive economic growth after BREXIT. The country should make rational decisions to recalibrate its trade, investments, immigration and export policies. References Baier, S. L., J. H. Bergstrand, P. Egger and P. A. McLaughlin 2008, ‘Do Economic Integration Agreements Actually Work? Issues in Understanding the Causes and Consequences of the Growth of Regionalism’. The World Economy vol. 31, no. 4, pp. 461-97. Booth, S., C. Howarth, M. Persson, R. Ruparel and P. Swidlicki 2015, What If..? The Consequences, Challenges and Opportunities facing Britain outside the EU. London: Open Europe. Dhingra S., Gianmarco O. and T. Sampson 2015, Should we stay or should we go? The economic consequences of leaving the EU. The London School of Economics and Political Science, London. Dhingra, S., Huang, H., Ottaviano, G., Pessoa, J., Sampson, T and J Van Reenen 2016, The Costs and Benefits of Leaving the EU, Centre for Economic Performance Technical Report. 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