John Phipps Brexit Part 2: Breaking Down the Issues With Brexit

February 19, 2019 06:00 AM
 
 

Last week we looked at the geography of Brexit. This week we’ll identify some of the issues the British vote to leave has spawned.

The first is people. Citizens of the European Union are able to travel and move to other EU countries with only a passport – no visas or even questions at borders. After Brexit this could change so that UK citizens are treated the same as other non-EU travelers, like the US.

The larger question of people movement is the right to do business in other EU countries. For example, many British dentists opened offices in Spain where they work during the winter. For British farmers, high-labor farms like dairies were able to hire workers from Poland and other countries easily.

The second big issue is trade. There are zero tariffs between EU countries, and the EU alone negotiates with non-EU countries like Japan. One possible outcome is UK farmers whose markets include a lot of exports, like meat and dairy, could suddenly face tariffs as high as 40% on those products sent to Europe.

Third, London is not just an EU financial center, but globally dominant in banking, investment, and insurance businesses. A large portion of that business done with EU countries could be subject to drastic changes in rules. Many large financial firms have threatened or already moved from the UK.

British farmers are part of CAP, the Common Agricultural Policy and now receive the same subsidies as other EU countries. While UK officials have promised equivalent payments until 2022 in the event of Brexit, nobody truly knows what ag policy and payments will look like after that. While the UK is an overall contributor to the EU – that is, it pays more to Brussels that it gets back, some British farmers think those saving could be used for more and different subsidies. Most observers believe that surplus would more likely go to more popular needs like the National Health Service.

Finally, Brexit would focus attention on one of the most difficult border problems of the last century – Northern Ireland. A hard border inside the island of Ireland could reignite the long and difficult sectarian strife called “The Troubles” and spill over into political and cultural confrontation.

The most important thing I have learned is nobody, and I mean nobody, knows what will happen next. In fact, they don’t even have a good idea of what the possible outcomes are. We’ll visit with some UK farmers next week.

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Comments

 
Spell Check

Bijaya Shrestha
Dexter, OR
3/9/2019 04:03 PM
 

  EU subsidies benefit the landowner and not the farmer. The former is an investor in capital, the latter is a tradesman in a skill. Subsidies keep the inefficient landowner who farms his own land in business. Without it, market competition would have put him out of business. This should make way for the next generation of more efficient farmers.

 
 

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