The European Union finds itself in the most perilous quandary sine the immediate post–World War II period. The risk is a split between the Central European and Eastern European member states and the majority of the others over a diverging interest. The changing U.S. world outlook, in particular, its European policy, may play a decisive role. To weather the storm five major challenges, calling for determined leadership, clear visions and statecraft must be overcome.
The first one is to negotiate the future relationship between Britain and the EU. The EU will reject a deal with a neighboring country using low taxes, low labor standards, lavish state aids and subsidies and a “soft” regulatory framework for the environment, safety, etc., to enhance its competitive position. In reality, access to the single market with seven of its ten top export markets requires Britain to shadow EU rules without participating in decisionmaking. That will be hard to swallow as the obvious question is “why did we leave if we have to apply the EU ruleset anyway?”
Britain says prices on its products sold in the EU will go up and barriers may arise for its financial sector, which accounts for 10 percent of its total export to the EU. Concluding free trade agreements with other countries will be more difficult as they may ask for less stringent rules than applied by the EU, forcing Britain to choose between the EU rule set and what third countries demand. That is likely to happen for agriculture and food in a free trade agreement with the United States. The EU will not allow American agriculture and foods with lower standards to enter its market via Britain.
Inside Britain, devolution means that a trade deal with the EU might have to be approved by the British parliament and by the Scottish parliament. The door opens for exacting concessions about more powers to be transferred from Westminster to Edinburgh or even a second referendum about seceding from Great Britain. The border between Northern Ireland and the Republic of Ireland will take up time and attention. For the first time ever, nationalists got more votes than the unionists (pro-Britain) raising the prospect of Northern Ireland following the Scottish example.
Carbon Neutral and Recycling