LONDON — After several decades of covering Latin American affairs, I’m pretty used to seeing developing countries that are deeply divided over where they should fit in the global scene. But I never thought I would see one of the world’s most developed countries as split over what to do when it grows up as Britain is today.
During a four-day visit to Britain, I heard more than half a dozen proposals by British officials and pundits to seek new trade alliances with the country following its June 23 vote for the Brexit, its decision to leave the 28-country European Union (EU).
As in a game of musical chairs, the British are desperately seeking an empty chair in non-European trade agreements before the music stops (and Donald Trump or other anti-free-trade populists close the door on new trade agreements.) Nearly 45 per cent of British exports currently go to EU countries, and may face high custom duties once Britain formally leaves the EU bloc after its exit negotiations are completed.
On July 11, Britain’s Chancellor of the Exchequer George Osborne, the country’s equivalent of a treasury secretary who resigned last week following the appointment of new Prime Minister Theresa May, proposed that Britain join the US-Mexico-Canada North American Free Trade Agreement (NAFTA). “We should begin the conversation now with the US and other members of NAFTA,” Osborn wrote in The Wall Street Journal.
Meantime, several British columnists floated the idea that Britain join the Trans-Pacific Trade Partnership, or TPP, the trade agreement recently signed by President Obama with another 11 Pacific Rim countries of Asia and Latin America, including Japan, Canada, Mexico and Chile.
Others suggested that Britain should seek to become an independent associate member of the Trans Atlantic Trade and Investment Partnership, currently being negotiated between the Obama Administration and the EU. Yet another group of pundits proposed separate bilateral trade marriages with Japan and India, while others said the future was in Africa, and in signing free trade deals with African nations.
At the same time, the Swiss Bankers Association is proposing to create a financial alliance between Switzerland, London, Hong Kong and Singapore — which it calls the “F4” group — to help mitigate the impact of Brexit on London as a financial centre. Major US banks have long used London as their hub for European operations, and have said they may move thousands of jobs to Frankfurt and Paris if Brexit prevents London-based banks from fully operating in the EU.
My opinion: Britain is adrift, disoriented, and fantasizing about an easy transition to other trade blocs. With isolationism and anti-free trade rhetoric rising in the United States and other rich countries, and others fearful of re-opening existing regional trade agreements in the current anti-free trade political climate, Britain’s chances of joining NAFTA or other major trade alliances in the near future will be very small.
Many of those who voted for Brexit are now regretting their vote. Pro-Brexit voters bought into the populist illusion that curbing immigration and erecting a commercial wall with the rest of Europe would make Britain great again — a message similar to that of Donald Trump in the United States — and are now shocked by the consequences.
Since the Brexit vote, the British pound has fallen to its lowest exchange rate in 30 years, major business plans have been put on hold indefinitely, British universities are facing major cuts of EU funds, and hate crimes have risen to unprecedented levels as a result of the pro-Brexit campaign’s anti-immigration rhetoric.
Now, Prime Minister May will have to negotiate with the EU the terms of their divorce. The best thing she could do is, once the divorce negotiations with the EU are concluded, call for a second referendum offering Britons several choices, including one that would allow Britain to in effect remain in the EU with some cosmetic changes.
Otherwise, if May carries out an all-out separation from the EU, Britain will go the way of all countries that succumbed to the siren calls of isolationist demagogues: Its economy will fall further, and the British people will become poorer and more divided than ever. Britain’s current disorientation will only be the beginning of worse things to come.