Brexit and the EU: what Think Tanks are thinking

The United Kingdom’s vote on 23 June to leave the European Union has stirred lively debate on the implications of Brexit for the institutions, policies and global role of the European Union.

In what follows, some recent commentaries and reports by major international think tanks on the future of the EU without Britain are presented:

Centre for European Reform: “Brexit is a momentous event in the history of Europe and from now on the dominant narrative will be one of disintegration not integration.

That does not mean that the EU will fall apart, or even that another country will leave, which is highly unlikely in the foreseeable future. But the centrist politicians who run nearly every EU member-state are now on the defensive against the populists who oppose them and the EU.

This will greatly weaken the ‘federalists’ who wish to press for further integration. The European Commission, led by President Jean-Claude Juncker, generally seeks to respond to crises by pressing member-states to accept ‘European’ solutions that involve extra powers for EU institutions. This is not necessarily cynical – the Commission genuinely believes that many problems require ‘more Europe’. And sometimes it is right.” More here.

Centre for European Policy Studies: “The prospect of Brexit has kicked up a lot of dust around the now famous Article 50 TEU withdrawal procedure, and the form, scope and sequence of the ‘divorce’ and future framework agreements between the EU and the UK.[1] One issue that has received far less attention is whether the international agreements concluded by the EU will continue to apply to the UK after Brexit, and if so, how.

The EU has concluded 1,139 bilateral and multilateral agreements with third parties, ranging from trade, development and sectoral economic issues like aviation, energy and fisheries, to matters related to visa, human rights, and the Common Foreign and Security Policy (CFSP).[2] For those accords that fall squarely within the realm of the EU’s exclusive competences (e.g. classic free trade agreements) there is in principle no discussion: thanks to its single international legal personality, the EU and the third parties are the sole signatories to the agreements and will remain bound by them. A simple notification by the EU to the third parties might thus suffice to inform them that the EU no longer consists of 28 but 27 member states.

The situation is far more complex for ‘mixed’ agreements, however. These are agreements concluded by third parties, on the one hand, and the EU and its member states, on the other, because these agreements cover elements of both exclusively EU and member state competence. The procedural consequence of ‘mixity’ is that the 28 member states have to ratify the agreement alongside the EU, each according to their own ‘constitutional’ ratification procedures. In some cases, for example Belgium, this will require the consent of the constituting parts of the federation. When more than 35 national and regional parliaments are involved on the EU side alone, one can imagine that this renders the disentanglement of mixed agreements much more vulnerable, requiring negotiations that provide an opportunity for each of the respective third parties too to try and squeeze out a better deal. Unfortunately, a considerable number of EU international agreements are mixed, namely almost all the Association Agreements ever concluded by the EU and most of the recent trade and investment agreements. Brexit may thus open up Pandora’s Box.” More here.

Foundation for European Progressive Studies: [Massimo D’Alema. President] “The negative result of the UK-EU Referendum is the biggest signal for leaders to develop enhanced cooperation along with institutional reform. It means tangible reforms for citizens who consider the Europe Union as their present and future.

Brexit is currently the most tangible sign of the European crisis in Europe. But we know that this crisis does not consist exclusively of Brexit. In fact, elements that emerged during the UK referendum campaign are far from being exclusive to the UK. Distrust towards institutions, mistrust towards the elites and the political establishment, fear of immigration, perceived inability by governments to provide viable solutions to the many challenges that the EU and its member states are facing are far from being simply British issues.

At the same time, since the financial crisis in 2008, the social situation has not been taken as a serious issue, inequalities have been growing, economic recovery has proceeded too slowly, and investments have remained too low.

What is the conclusion we can draw from this? That the neoliberal recipe made of austerity and structural reforms has failed. Nonetheless, the progressive recipe does not appeared as a viable and credible alternative because we are increasingly identified with the political establishment. The differences between left and right are also fading away, mainly due to the politics of government coalitions, and, additionally, progressive parties are increasingly seen as losing the capacity of representing those parts of society they are still supposed to represent, people who feel betrayed and not protected by globalisation.” More here.

Bruegel: “The impact of Brexit on competition policy depends on what kind of agreement is secured between the EU and the UK.

One option could be a European Economic Area (EEA) agreement, which the EU has signed with Iceland, Lichtenstein and Norway. The EEA agreement establishes a dynamic and homogeneous European Economic Area, based on common rules and equal conditions of competition. It would mean that that two separate legal systems would be applied in parallel within the EEA.

Common laws are applicable whenever trade between EU member states is affected. In merger cases the European Commission has exclusive jurisdiction in the EEA to deal with all cases that have a community dimension.

Leaving the EU and joining EEA would not have a major impact on how competition policy is applied in the UK and the EU. However, the UK would lose its ability to directly influence future developments of EU competition law.

A second option would be a series of bilateral trade agreements that allow partial access to the single market under conditions that do not require the full adoption of EU competition law, as in Switzerland.

But the Swiss example illustrates the close collaboration of competition authorities that such trade agreements involve. A cooperation agreement on competition matters between the EU and Switzerland was signed in 2014, providing a framework for coordination on enforcement of competition, and strengthening cooperation in the fight against breaches of competition law. The European Commission and the Swiss Competition Commission have also agreed to notify each other of concrete enforcement activities affecting each other’s major interests.

A third option is full Brexit, an exit from the EU without any agreement in place. This would drive Britain out of all EU treaties and may change the way that competition law is applied. I will focus on its potential impact in the rest of this article.

Current UK competition rules are largely modeled on the equivalent EU rules. It is unlikely that there will be a major change in the near future, as the UK is expected to continue relying on the Competition Act of 1998, given the traditional British view that free markets and undistorted competition are the best way to ensure efficient allocation of resources.” More here.

Brookings Institution: “Is Brexit proof that Europe is not working? In fact, what Brexit demonstrates is rather that, in some cases, national democracies can become dysfunctional—when complex decisions cross national boundaries and have huge effects, for instance. This is a problematic and confusing finding. It only follows that the EU cannot work if its constituent national democracies do not work.

Thomas Jefferson was the most famous advocate of the need for a well-informed electorate in the functioning of a democracy. Well-informed voters must be able to trace a rational link between their choice, whatever it is, and its consequences. We now know that the rational link was unknown to many British voters, as well as to their political representatives—not only before the vote, but even after it, since we discovered that they had prepared no post-Brexit plan.

When national democracies work this badly, the consequences reach well beyond their borders. The effects of Brexit on the governance of Europe are clear at least in one way: Brexit increases the risks around Europe. When risks increase, what changes is the balance between the two strategies that we pursue to govern the EU: risk reduction at the national level and risk sharing at the community level. Those two strategies need to advance hand in hand. However, the higher the risks, the lower the willingness to share them. For stronger countries, solidarity becomes more costly; weaker countries are left to fend for themselves. During recent years, we have already seen mistrust and antagonism produce recession and rebellion against Europe. Another bout of uncertainty on the future of Europe would be politically and/or economically unsustainable.” More here.

Rand Europe: “David Cameron, Barack Obama and Hillary Clinton have all expressed respect for the decision of the United Kingdom voters to leave the European Union. The public has spoken, and it is appropriate to recognize their right to decide. There is, however, no reason to regard their choice as irreversible — particularly given that leaving the EU is not in the interest of the U.K., its European partners or the U.S.

EU member states have an established method for dealing with unsatisfactory referendums. It’s called a do-over. In 1992, the Danish people voted 50.7% to 49.3% against ratifying the treaty that established the EU. A year later they voted again, this time to ratify, by 56.8% to 43.2%.

Ireland has voted twice to reject treaties expanding EU powers, once in 2001, with 53.9% opposed, and again in 2008, with 53.4% opposed. In both cases, Ireland held a second referendum and ratified the treaty, with 62.9% and then 67.1% (PDF) voting in favor.

Last week’s Brexit vote was purely advisory. Any change in EU membership will need to be initiated by the government and approved by Parliament. Most members of Parliament do not want Britain to leave the EU.

Cameron, the British prime minister, has said that he will step down by September and leave his successor to initiate the process of withdrawal. Theresa May, the leading candidate to replace Cameron, has made clear that she will be in no hurry to trigger formal negotiations on withdrawal. She insists that these should be preceded by informal talks with other EU members. That could take months.

Even if and when formal negotiations are initiated, there will then be two years to reach an agreement. That agreement could result in something short of a British withdrawal.” More here.