With Brexiteers blaming European integration for loss of jobs and struggling industries, the force of the movement has come to dominate Parliamentary proceedings and make waves across the United Kingdom. Remain voters argue that the uncertainty caused by Brexit, which has harmed the UK economy, shows the faulty nature of the decision to leave the EU. Moreover, there are many plus points in staying in the EU, which will be lost with Britain’s imminent departure. Having said all that, the Brexiteers have a point.
Free trade is a great idea with many benefits, such as export friendliness and greater trading output. However, it is not without its disadvantages. The costs of free trade, include, but are not limited to, different legislations, like different minimum wages, in two nations providing unfair advantages to one in terms of trade. The benefits, arguably, outweigh the rewards. With protectionism and mercantilism also being heavily criticised, the scope of the problem of trade policies becomes apparent. This article argues that Brexit will be resolved with more, and not less, integration.
Of the many advantages of free trade is the favourable import policies that states implement in return for similar policies in their trading partners’ countries. This mean that exports should be boosted by the lower tariffs and import duties attributed to exporters’ products. David Ricardo also spoke of increased specialization giving states a comparative advantage in trade. That is to say, that although producers in different companies could compete, free trade favours those who specialise. That makes trading a positive-sum, as opposed to a zero-sum, game.
The disadvantages of free trade include cruel conditions for local producers. States do not have to align their economic policies with each other. That means that some states could set a lower minimum wage than another one it has signed a free-trade agreement with. The lower costs of production give the first state an unfair advantage, and could stifle local business and industries in the affected state. This is all to say that free trade has an ugly side.
Alternatives to free trade include protectionism and mercantilism. Protectionism solves the effects of loss of productivity, but only in the short-run. Protectionism leads to more protectionism, meaning that global markets will make way for industrial protection as more countries close their borders in response to self-preservationist strategies. Mercantilism promises greater exports, but, likewise, is found wanting due to its lack of sustainability. With everyone exporting, who will import to make this zero-sum game possible?
With free trade being criticized by Euro-skeptics, integration has, in turn, come under attack. Market forces have a negative effect on its participants in the absence of political and legal harmonization. Different legislation creates different rules for economic actors. More social and security integration is also positive. Some even make the case for a Common Security and Foreign Policy to ensure greater security in an emerging multipolar world; the point is that more integration will favour all, create a European demos and lead to increased prosperity, success and growth.
Brexit is a mammoth of a problem, but it can be boiled down to two issues: one real and one constructed. The real issue is the effect of free trade. The constructed issue deals with the outcome of the referendum, honouring democracy and avoiding a constitutional crisis. Both issues are solvable, but have come to depend on each other to be finally resolved. Solving the real issue while honouring the constitution will solve both, while working around current legislation could see popular solutions, like holding a second referendum, come to light.
The solution to the real issue surrounding brexit is greater integration. That will create a level playing field, thus protecting actors from the bad side of free trade. It will also see that benefits of free trade are reaped, as well as ensuring the avoidance of the not export-friendly and unsustainable nature of protectionism and mercantilism respectively. The solution to the constructed issue surrounding Brexit is not holding a second referendum, which is unconstitutional, or accommodating for the British constitution in a manner that is only technically permissible without upholding the spirit of the law. It is to vote on the future of the Britain’s relationship with the European Union post-Brexit in a separate, and not second, referendum.
Some people argue that Britain should be all in or all out. Both of those options cause problems because, although the EU is a great organisation, it is not complete. Integrationists also criticize the EU for lacking a Common Security and Foreign Policy while also having not yet created a unified European Demos. More integration along political and legal lines will create the atmosphere for greater growth, prosperity and quality of life for all. Being all out, also, has apparent issues. Protectionism breeds protectionism, and, while it may help industries in the short-run, it harms exporters’ efforts and negatively impacts a nation’s economy.
All in all, integration is not to blame for the consequences of free trade, and Brexit can be solved with more integration. There are advantages and disadvantages of free trade and other trading policies, such as protectionism and mercantilism. The benefits of integration outweigh its costs, though, and it solves the real issue of failing industries in the wake of regional competition. The constructed issue can also be resolved, by pursuing the first solution and by honouring the constitution. Brexit is a rainy cloud hanging over the heads of Europeans, but, with so much at stake and hanging in the balance, the most fitting and best deal must be struck to put this issue to bed.