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Diplomacy in times of BREXIT

FAC-Headshot-without-glasses-21-3-2016Ambassador of the Dominican Republic 
Dr Federico Alberto Cuello Camilo offers a heartfelt account of the 
potential consequences for his country and region

As I write, British bookmakers are offering odds for the UK staying or 
leaving the EU: 2/5 and 15/8 respectively. In recent months, no topic – whether it be at seminars, cocktail parties or diplomatic dinners – has been more discussed than a potential Brexit. Few, however, have a clear position on how it will affect their own country’s relations with the UK, especially if the diplomat in question represents a non-EU 
member state.In preparing for the referendum on 23 June 2016, HM’s government reviewed the balance of competences between the UK and the EU in key areas such as trade, justice, subsidiarity, competition policy and culture in order to determine how the UK is affected by ‘everything deriving from EU law.’ It was a government-led effort open to contributions from experts and special interest groups. Its conclusions leave no doubt as to why the UK benefits from EU membership; how EU and non-EU members benefit from UK’s membership; and why the UK will never participate in the ‘ever-closer union’ called for in the preamble of the 1957 Treaty of Rome – as it is understood by both opponents and supporters of Brexit to mean closer political relations leading to a European federation, with EU institutions concentrating further supranational powers.

So what if UK voters decide to leave the EU? What would happen to the bananas, cacao, cigars and rum that Caribbean countries like mine sell in the UK? How would it all affect, conversely, the booming UK exports of cars, chemicals, electronics, pharmaceuticals or whisky to the Dominican Republic (DR)?

Trade relations between Caribbean countries like the DR and the UK are governed by the Economic Partnership Agreement (EPA), which was signed in Georgetown, Barbados, on 15 October 2008. Since then, 14 members of CARICOM, including the DR, have the right to export to any EU member state without tariff barriers or quotas.

“Being part of the EU is central to how we in the UK create jobs, expand trade and protect our interests around the world. It enables us to drive and shape a single market of some 500 million people, with a combined GDP of £11 trillion, in which British citizens can trade, travel and work freely. It is a key reason for Britain’s attractiveness as a global business hub and place to invest.” (FCO, 2012: Review of the Balance of Competences between the UK and the EU)

Because of lengthy periods for tariff liberalisation, it has taken a while for EU member states to unleash their export potential. But as of 2015, EU exports to the Caribbean were growing 28 per cent, closing the year at €5.1 billion.

Because of the lengthy – and still ongoing – economic difficulties in Europe, the Caribbean has yet to recover the ground lost after exporting over €5.6 billion in 2008, the year the crisis started. By 2015, Caribbean exports to the EU closed at €4.1 billion.

Chart 1: Total Trade Between CARIFORUM Member States and the EU, 2008-15
In this gloomy picture of bi-regional trade, the performance of the UK is absolutely stellar. 90 per cent more British exports entered the DR in 2015 than the year before. Only Spanish exports to the DR grew at a faster rate. The UK has tied with Germany for third place in the ranking of EU exporters to the DR (Chart 2).

Chart 2: Imports from Selected EU Member States to the DR (2008-15)For the DR, 2015 was the year in which the UK became its most important European export market, well above Spain, Germany, France or Italy – or even Belgium and the Netherlands, which are mostly important entry points into the rest of the EU (Chart 3).

If Brexit were to take place following the referendum, UK exporters to the DR would feel the impact almost immediately. Our EPA – an agreement for EU Member States with Caribbean countries like mine – would cease to apply the minute the UK signs a Withdrawal Agreement under Article 50 of the EU Lisbon Treaty.

Chart 3: Exports from the DR to Selected EU Member States (2008-15)
Faced with such uncertainty, DR importers would take no time to find alternative sources for competing products in markets such as the US, who we also have a free-trade agreement with under DR-CAFTA. The prices for such products in the DR would be much lower because imports from the US would be subject to lower tariffs than the much higher tariffs negotiated by the DR in the WTO – applicable to UK exporters upon Brexit.

“The key benefits included: increased impact from acting in concert with 27 other countries; greater influence with non-EU powers, derived from our position as a leading EU country; the international weight of the EU’s single market, including its power to deliver commercially beneficial trade agreements…” 
(HM Government, 2013: Review of the Balance of Competences between the UK and the EU – Foreign Policy)

There would, however, be tragic consequences for DR exporters. Having invested so much time and resources to meet strict UK quality and fairtrade standards, tens of thousands of smallholder farms producing bananas and cacao in cooperatives would be left without access to their most important European market.

British charter and regular flights returning to the UK with their full cargoes of fresh avocadoes, exotic vegetables and mangoes ripe and ready to sell in Bristol, New Covent Garden or Spitalfields, would see their freight business evaporate overnight, as trade barriers would return upon Brexit, and the ensuing UK withdrawal from our EPA.

Even sadder would be the void left by Brexit in the tables of EU institutions. Without the UK, the undisputed champion of free trade, small government and deregulation, the future of the EU would never be the same – for its members, its extra-regional partners and, most importantly, the very citizens on whose behalf it was conceived in the first place.[/vc_column_text][/vc_column][/vc_row]


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