Editorials

The Brexit debate takes shape

The British Parliament has commenced debate over Brexit, the United Kingdom’s divorce from the European Union. In keeping with the entire Brexit experience, the outcome of that discussion remains unknowable. Britain remains deeply divided about the wisdom of Brexit in general and the particulars of the deal that Prime Minister Theresa May has worked out with the EU. For all the uncertainty, one thing is clear: Failure to reach a deal with the EU, for whatever reason, would be a disaster for the U.K.

Ever since the U.K. voted narrowly for Brexit in 2016, the country has remained deeply divided and almost evenly split. Not surprisingly, that division has been reflected in the ruling Conservative Party. May has lost seven Cabinet members over Brexit negotiations, the most recent quitting at the beginning of the month. And while all those who resigned believe that the deal — still very much an outline — does not protect British interests, they do not agree on the appropriate remedy. Several ministers believe that a second referendum is the solution, an option that May has rejected and for which there is little legal basis (and it is unlikely that the EU would agree).

More revealing, the most hard-core Brexiters cannot articulate a deal that they prefer and has the slightest prospect of winning EU approval. Supporters of Brexit made incredible promises that had no basis in reality. They asserted that the U.K. could maintain all the positive features of association with the EU — the trade advantages — while reclaiming the pieces of sovereignty that they wished to protect (immigration in particular). The EU resoundingly rejected this a la carte approach and with good reason: If London could keep the bits of membership that it liked and reject those policies it did not, then the organization would unravel as all its members sought similar arrangements.

Last month, EU leaders agreed to a deal that settled the most important issues concerning the split: the status after breakup of U.K. citizens living in the EU and EU citizens in the U.K.; the amount of money London would pay Brussels for the “divorce” (£39 billion); the transition period to work out details of the new relationship between the U.K. and the EU (which is different from the terms of the split and can only be agreed after the U.K. leaves); and the status of the border between Ireland (an EU member) and Northern Ireland (a member of the U.K.), a critical issue for those two polities.

Brexit supporters in the Conservative Party have been outraged by the agreement, arguing that it subjects London to EU rules without giving it any say in their promulgation. Donald Tusk, the president of the European Council, said the deal is “the only possible one,” warning that it if is rejected, then the alternative is “no deal, or no Brexit it all.”

Failure of the House of Commons to back May’s agreement — and it is reckoned that 90 MPs in the ruling coalition are opposed — would be a political disaster. Rejection by her own party would mean that the Tories are unable to govern. The Labour Party has said that it would call a vote of no confidence, and that would very likely force a general election, which it would likely win. Conservative Party members would reject the no-confidence vote, but that would not prevent the “no-deal Brexit,” an outcome that has terrified most observers. It is anticipated that this would leave the U.K. economy 9.3 percent smaller in 15 years compared to no breakup, and would cause the worst economic downturn since the global financial crisis of a decade ago. There would be planes grounded, shortages of food, medicines and all sorts of daily necessities. The country would be buried in chaos.

This matters greatly to Japan. Britain is the gateway to Europe for many Japanese companies. This country is second only to the United States among non-European investors in the U.K. That investment has created 160,000 jobs. Many of them are in the auto industry: Japanese car manufacturers build nearly 50 percent of the cars produced in Britain and most of them are exported.

In one survey, 55 percent of Japanese companies said they anticipate Brexit will have a negative impact on their operations. Fearful of losing access to the European market, 13 percent of corporate respondents said they expect their British business to shrink after Brexit; European operations will expand in contrast.

The prospect of a deal has given them some hope. Prime Minister Shinzo Abe praised the British prime minister’s “leadership” in sealing the Brexit agreement. After last weekend’s Group of 20 summit, Abe was especially insistent that Britain “avoid no deal, as well as to ensure transparency, predictability as well as legal stability in the Brexit process.” With the deal struck last month, May is trying to do just that. It is not clear if her party understands all that she has accomplished, nor the price of rejecting it.