Brexit and its effects around the world
Brexit or Britain’s exit from the European Union (EU) was a referendum, a vote in which everyone with the legal age can take part. It was held on Thursday June 23rd to decide whether the United Kingdom (UK) should leave or remain in the bloc.
The departure from the free trade area could send shock waves across the global economy, threatening more than a trillion dollars investment and trade with the United States (US), the largest single investor in Britain. Britain has cherished this role as a transatlantic bridge between Europe and America and many firms consider this as a gateway to free trade with the nations from the EU, but Brexit would jeopardize access to these markets potentially reducing revenue and adding thoughts of relocating European operations elsewhere.
The two-year countdown to leave is set, meanwhile UK will continue to follow EU treaties and laws, but will not take part in any decision-making, as it negotiates a withdrawal agreement and the terms of its relationship with the current 27 nation bloc.
The main deals happening right now between UK-EU are:
•Rights of EU migrants and Brits living abroad
•Border controls
•Budgets and debts
•New market relationships
We must not forget that Britain has maintained relevance in international affairs dealing with international change geared towards promoting stability and predictability.
On the other side of the Atlantic, while Donald Trump continues as a candidate in US 2016 presidential election, people hope for a greater union between UK and US because of the solidity of their trade agreements and the commercial ties they have. “We are the closest allies in the world,” Nigel Farage, the former leader of the UK Independence Party said when referring to the anglo-saxon relationship. He added that it will “actually get stronger” in the wake of the vote, but there is a feeling of isolation as Britain could focus on its empire and stand apart of the continent, attitude linked to the “America First” policy by Trump.
US might not reciprocate this new enthusiasm for closer ties as they would seek partnerships with France, Germany and Poland in an effort to maintain influence in the larger EU bloc. Brexit makes the UK notably less useful to America.
Markets went into a tailspin with the surprise of the Brexit voting results. On the other hand, on July 1st, while the EU entered into a period of uncertainty, Latin America started to reach integration in opening new trading channels with other markets. “Brexit shows everyone we need to benefit from integration”, Mexican president Enrique Pena Nieto said in Chile in the XI Pacific Alliance Summit.
Presidents from the Pacific Alliance trade bloc composed by Chile, Colombia, Mexico and Peru, met in southern Chile to discuss financial services, innovation and cross-border investment in the region’s market that is about 220 million people. Argentina’s president Mauricio Macri is also attending for the first time as an observer, after saying he wanted to improve collaboration with the bloc. “Just as Europe discusses disintegration, we are discussing integration”, Chile’s Finance Minister Rodrigo Valdes said after the meeting: “I think this is very important as a sign of unity.”
The Pacific Alliance is exploring an eventual fuse with MERCOSUR, integrated by Uruguay, Paraguay, Argentina, Venezuela, and Brazil, and are also analyzing an approachment with the Association of Southeast Asian Nations (ASEAN) to increase investment and setting better trade agreements with this part of the world. Actually, UK has already made contact with the Pacific Alliance in order to make a trade agreement to supplement and mitigate their exit from the UE.
UK has to negotiate its trade agreements with the EU and dozens of other countries, a deal with the bloc is essential for Britain. The best outcome would be to retain much of its preferential access, which means maintaining contributions to EU’s budget and abiding most of their regulations. Brexit consequences depend on how negotiations are being solved and if the customs union agreement between UK and the European Union is ended or continued.
