A Straits Times report on the panel discussion can be found at http://www.straitstimes.com/news/business/more-business-stories/story/seminar-gauges-brexit-impact-singapore-firms-20150519. An EU Centre publication on the implications of a Brexit can be found here.
The EU Centre in Singapore and the Singapore Business Federation (SBF) organised a panel discussion on the Brexit dilemma and what it would mean for Singapore businesses.
The event kicked off with a short keynote speech by the European Union Ambassador to Singapore Dr Michael Pulch. Dr Pulch gave a brief overview about what may happen with UK-EU relations in future, and noted that the idea of the referendum had gone as far back as during Chris Patten’s time as a European Commissioner. From the current uncertainties, Dr Pulch said two lessons should be taken to heart – first, that governments should never ‘sleepwalk” into a referendum; and second, that governments should not make last minute promises ceding to emotional appeal.
Dr Tim Oliver (LSE) started off by talking about the recent Conservative victory in the 2015 UK General Elections, stating that many senior Tories were shocked by their party’s decisive victory in the polls. Now that David Cameron’s leadership is secure and the Tories have the majority that they desire, the issue of the promised EU in-out referendum is back on the cards. The idea of the referendum is certainly not solely a Tory one – Labour and the Liberal Democrats have promised in-out referendums if there were further changes to the treaties, but in Cameron’s case it was a deal to appease the demand of his eurosceptic backbenchers.
The question of Britain’s relationship with Europe has long historical roots and is also tied to many intricate factors, from issue of identity, security and Britain’s place in the world.r. One of these is the dominant historical narrative of the UK “going alone” in Europe during the Second World War and this impact on how it sees the European Union today. To be sure, British politicians see themselves as European but at the same time they do not share the EU’s own narrative that its creation was a “peace project”. Ethnic identities are also becoming stronger in the past decade, as can be seen with Scottish and English nationalism during the Scottish Independence Referendum and the General Election respectively. Scotland, though slightly Eurosceptic, wants to remain in the EU while English nationalism has been revived by anti-EU sentiments. London, too, weighs into the equation – being the most cosmopolitan city in the United Kingdom the city’s inhabitants are mostly in favour of the EU.
Dr Oliver also talked about the economics and security aspects of the UK’s membership of the EU. The EU is seen by the UK as more of an economic bloc rather than a coherent political entity- this was true when it joined in the 1970s and saw the bloc as the future of economics, but this is less true today with the resurgence of countries such as China and India. These, of course, may partly explain why the UK is less keen on greater integration. Militarily, the UK remains a major component of NATO and a major contributor to EU security policy. Even so, a Brexit would not harm security as the UK would still contribute to the defence of Europe – and itself – through NATO
So why does Cameron want a referendum? Besides using the talk of the referendum to appease his more Eurosceptic colleagues, the referendum is a tool that Cameron thinks he can use to get more leverage (or blackmail) on the rest of the EU for his own political purposes. However, he has also never articulated clearly what kind of reforms, and thus far, his demands were a mixed bag of issues. . Some of his demands, such as a British opt-out from “an ever closer union” is vague, while there are others such as, further cuts to benefits for in-work migrants from the EU will not be acceptable to other member states. The demand for the repatriation of powers had ironically given birth to a report by Cameron’s coalition government that actually stated that the balance of powers is acceptable. The latter may be used against the UK should Cameron broach the topic in the coming months.
One must also consider the British peoples’ support for the EU – Dr Oliver noted that Nigel Farage may have actually made voters feel more “pro-EU”, and the “Out” vote may still remain a minority if Cameron can package the “In” vote as essential to the UK after he has obtained some concessions from Brussels. However, Dr Oliver also gave his reasons as to why the “Out” vote may succeed. Cameron may not be trusted by his people to seek reforms within the EU and may not even win any concessions at all. Furthermore, continued crisis in the Eurozone or other future problems in Europe may swing the pendulum to the “Out” campaign, and whether the media will go along with the big Westminster parties in campaigning for an “In” vote. The campaign could see a lot of negativity, with the “In” campaign working the fear factor in order to succeed.
There are major implications for the UK leaving the EU. The UK will have to renegotiate with the EU to be a member of the European Free Trade Area (EFTA) or the European Economic Area (EEA) in order to enjoy access to markets in Europe, but this will come at the cost of losing the right to determine policies whilst paying to enjoy the privilege of the single market.
Dr Oliver also noted that there would be implications for the EU should the UK leave. , A UK exit might shift the balance of power decidedly to Germany, made France the awkward one, and provoke a renegotiation by other member states of their positions. Also, the EU will have more to contend with within a multi-polar Europe consisting of Russia, Turkey and the UK. Dr Oliver ended by noting that not much is written about EU disintegration, but cautioned that UK exit from the EU might set off some serious rethinking, and according to an analysis written by a collegue, Prof Douglas Webber, a disintegration of the EU is likely one that is “made in Germany”. .
Dr Reuben Wong (NUS) was next and he talked about the effect of a Brexit on Singapore. He was of the view that even if the UK were to leave the EU, it would not have a major effect on Singapore businesses, as the UK is neither in the Eurozone nor part of the Schengen zone. An exit in the future would not lead to instability in trade ties between both countries as there is no need for the UK to develop a new currency to trade. Furthermore, the UK remains the main destination of Europe bound investments from Singapore – three quarters of Singapore’s Europe based investments are in the UK, and these are concentrated in the property, transport and tourism sectors. He argued that the Asian nation that would be most affected by a Brexit would be Japan, as multinationals from that nation have invested heavily in manufacturing plants as a springboard into the rest of the EU.
The Singapore Government’s position towards Brexit is not clear – it may not know what to expect nor feel there is a sense of crisis should the UK make its exit from the EU. Over the decade or so, Singapore’s relations with Europe have diversified, and there have been moves by the government to shift its focus away from London towards continental Europe. For example, the defence attache is now based in Paris rather than London, and Singapore has a partnership with France with regards to defence training. Hence, Singapore’s position towards and in Europe, should not be seriously affected by the British exit.
Dr Wong noted that there might in fact be some positives for the UK exiting the EU – it can have a freer hand in deciding labour policies and even pursue the FTAs that it wants. Still, there will be questions about the UK’s role in the world after the end of its empire building days. As Dr Wong points out, the UK has been riding on the coattails of the United States since the Second World War and has been content to be a junior partner, while France has “built” an empire through being part of a larger project in the European Union.
Mr Shivaji Das from Frost and Sullivan, an international management consulting firm, gave a business perspective towards the impending Brexit. There is strong interest from Singapore in investing in the UK but investors see it as a market in itself and not a springboard to the rest of the EU. As for the impact of a Brexit and thus a British exit from the EU-Singapore FTA, Mr Das noted that the impacts of FTAs were negligible and few businesses are aware of their benefits.
However, should the UK leave, Mr Das expected the British government to seek a string of FTAs and Singapore is likely to be a top target for an FTA, be it a UK-Singapore FTA or part of a “Greater Commonwealth” FTA. For the EU, English speaking Ireland could benefit from a UK exit – Mr Das quoted a report that suggested the Republic would enjoy 2.5% GDP growth per year should the UK exit the EU, and Dublin would then be able to benefit from TTIP in order to attract more investments from the United States.
Some other trends that the business community here so looked out is the debate over repealing the Human Rights Act and withdrawing from the European Convention of Human Rights. . Also, one has to consider the impact of the US elections and current negotiations for the Transatlantic Trade and Investment Partnership (TTIP) – if progress is smooth, the UK would do better to stay in the EU as it would take some time before they can get a US-UK FTA inked.
While the short term impact of a British exit is minimal, in the long term, however, a British exit may prompt questions within ASEAN with regards to the trajectory of the ASEAN Economic Community. ASEAN members may begin to question the desirability of deeper integration, and issues such as human rights, and civil society lobby against FTAs, might gather momentum.
In terms of specific sectors, Mr Das noted that should the Conservative government further restrict immigration, property prices may be driven down due to the lack of immigrants and therefore it might be a sector to avoid. In terms of education, Singapore students may feel less inclined to study in the UK as there may be less post-study work opportunities in such a scenario.
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