Depth report

　　

Theresa May has formally served a notice to Brussels announcing her intention to terminate the 44-year relationship between the United Kingdom and the European Union in order to find a new position for the United Kingdom in the global order. This started the two-year countdown to the breakup of Britain and Europe.

    Germany has tightened its stance on Brexit. The German Chancellor Angela Merkel, who made a tolerant statement after the Brexit referendum last year, took a tough stance on issues such as the United Kingdom’s withdrawal bill and the order of negotiations. This is to a certain extent. Responding to the growing expectations that the UK will seek a hard Brexit.

    German Finance Minister and Merkel’s close ally, Wolfgang Schäuble (Wolfgang Schäuble) said in an interview with the Financial Times recently: “We are not interested in punishing the UK, but we also have no intention of letting the UK issue European integration is in danger."

    "That's why our top priority must be: with a heavy heart, keep the rest of Europe-after Britain withdraws-united as closely as possible."

    Brexit is just one manifestation of the serious problems the European Union has been caught in recently. Despite its shortcomings, the European Union has always been an indispensable factor for European peace and prosperity. As a well-intentioned but imperfect test of the shared sovereignty of all countries, the EU is unique in the world. Britain needs the European Union if it wants to remain strong after Brexit.

    Long before the Brexit referendum, the United Kingdom had acted half-heartedly, as if it hoped that one foot would be inside the EU and the other would be outside the EU. This kind of ambivalence reflects the geographical situation, the culture and the pattern formed over the centuries. However, the United Kingdom has played an important role in promoting the EU’s single market, encouraging the EU’s inclusion in emerging democracies, and consolidating the EU’s foreign and security policies.

    Now, by triggering Article 50 of the Lisbon Treaty, the government of British Prime Minister Theresa May is embarking on a dangerous journey. If not done properly, the Brexit negotiations could lead to disastrous consequences, including the breakdown of the 310-year alliance between England and Scotland and the loss of peace and stability in Northern Ireland. The impact of the failure of the negotiations on the British economy is likely to be serious. This result will weaken Britain’s influence and reputation when the global liberal system after 1945, of which Britain is an important part, needs unprecedented enhancement.

    In her Brexit speech at Lancaster House on January 17, May listed her Brexit goals and the price the British government is prepared to pay for achieving these goals. The goal is to control immigration, get rid of the jurisdiction of the European Court of Justice, and the freedom to reach its own trade agreements. The price is to withdraw from the single market and the EU Customs Union, but the UK will seek preferential market access in certain areas and hope to avoid costly cross-border trade controls.

    Even if the British government does get the special arrangements it wants, the British economy will pay the price. A month before last year's referendum, May once extolled the benefits of the single market to bankers. Since then, May and the majority of the British Conservative Party have changed their opinions, and the poor leadership of the Labour Party has not held the government accountable. But the British government should not be blinded by its own political good fortune and forget this: It is in British interest to maintain the greatest degree of intimacy (within the range listed in January) with the 27 EU member states.

    The British government led by May must resist the temptation to portray the EU as insignificant to Britain, which has just bid farewell to the free trade empire. Some government ministers have hinted that the negotiations will be smooth sailing, or that it does not matter if the UK and the EU-27 fail to reach an agreement before the end of the two-year negotiation period. They are wrong on both points.

    We have every reason to predict that the Brexit negotiations and related negotiations on the relationship between the UK and the EU after Brexit will be a test of willpower. Few people familiar with the relevant details think that by March 2019, the two sides will be able to work out a complete framework for the relationship between the UK and the EU. It takes many years of transitional arrangements. Compromises need to be made because Britain does not have a good hand. If the British government does not frankly inform the British voters of these realities, then the people will have grievances-they will think that the government has not kept its promises.

    Failure to reach an agreement will plunge both parties into uncertainty. Risks include: serious disputes over the UK’s “break-up fee”, which is expected to be tens of billions of euros in the EU; millions of EU citizens living in the UK and Britons living in EU countries face uncertainty regarding the legality of their identities; Northern Ireland The customs border with the Republic of Ireland reappeared. "Failure to reach an agreement" also means returning to the framework of the World Trade Organization (WTO) rules. This is a real concern for British companies, which are highly integrated with other EU companies in terms of supply chain, regulatory standards and labor.

    The main problem is not tariffs. Under the WTO framework, tariffs will be at a low average level (although agriculture and other industries are still high). The main problem is the regulatory obstacles, which will stand out in the absence of an agreement. For many companies, these obstacles will cause significant costs. Failure to reach an agreement will make Britain less attractive as a destination for foreign direct investment. The ability to export to the EU market is a key component of Britain’s appeal.

    British negotiators must show flexibility to the extent permitted by the government’s commitment. This means compromising on the "break-up fee", allowing EU citizens living in the UK to stay and retain their rights (in exchange for the same treatment for British citizens in Europe). This will require May to face the hardline Brexit people in his party. But showing sincerity on two points (in essence, historical obligations) will help the Brexit talks to gather in the future, especially trade and regulation. Britain’s goal should be to sign a trade agreement that maximizes the integration of the two economies, far beyond any previous agreements reached by Brussels (including the recent agreement with Canada).

    The 27 countries of the European Union pointed out that no agreement reached with the United Kingdom can meet (let alone exceed) the conditions that it enjoyed when it was a member of the European Union. However, it is not in the interest of the EU to "punish" the UK or allow domestic pressure from individual countries to disrupt negotiations. For the British government, its task is that it must not ignore the benefits of maintaining mutually beneficial and sustained relations with its European partners and neighbors after Brexit. If the British government and the EU both take a constructive attitude towards the negotiations, this goal is possible.