Brexit and the Philippines

The other day I came across a lost looking langka in my favorite north London shop. It looked terribly out of place among the small vividly colored raspberries and strawberries, placed close to the floor in a corner below crates of rosy-skinned apples – gargantuan, awkward and plain, its tropical pleasures hidden from view. The massive fruit’s presence is evidence of the long and rich story of trade between south east Asia, including the Philippines, and the UK. The jackfruit, or more accurately its presence in a London shop, just shows how such trade is part of the fluid world of human movement but has become subject to the hard borders of nation-states, and will become part of the difficult diplomacy accompanying the chaos that is Britain’s attempted exit from the European Union aka Brexit.

For some time now, with varying degrees of noise and outrage, the government and businesses here have been preparing in case Brexit happens without an agreement between the UK and the EU. It’s potentially a nightmare scenario that could mean there will be long lines of people and trucks waiting to cross the borders, where previously they could just pass unchecked because of EU membership. Since the Brexit referendum in 2016, the British government has negotiated with the EU to come up with a plan that they could both agree on, that would try to mitigate the trauma of leaving, but the government of outgoing Conservative Prime Minister, Theresa May, failed to get the deal approved in Parliament, so she’s resigned and the prospect of Britain leaving without a deal is more likely than ever. Both the candidates to take over her job have said they would prefer to leave without a deal on the designated date (October 31st 2019), than delay the departure any further.

There may just be opportunities for other economies in the confusion. Take the case of one of the most high-profile advocates for Brexit as an example. Inventor James Dyson, whose fabulous machines have made him a billionaire, has even called for Britain to leave the EU without a deal; but then in January his company (of which he owns 100 percent and from which he has amassed a fortune equivalent to P617 billion) announced it was relocating its headquarters from the UK to Singapore. There was a bit of an uproar as you can imagine; though Dyson senior management said the decision had nothing to do with Brexit, it’s difficult to believe the deep uncertainty for business here had nothing to do with it.

Both the European Union and the UK are important partners for the Philippines, bilaterally and through Asean. A briefing paper for businesses in the UK written by experts at the London School of Economics reported that the EU “has been a generous partner to Asean. In the current budget cycle, the EU has allocated €170 million (P9.2 trillion) (2014-2020) to support Asean integration and the Secretariat – more than double the amount under the previous cycle (€70 million)… This is in addition to the €3 billion (P175 trillion pesos) the EU has also pledged to reduce poverty and address development gaps in low-income ASEAN member states.”

EU-Asean relations between the two regions have developed over more than 40 years with histories and identities that are rather similar. Both are seen as essential organisations to promote peace between member countries and to strengthen each region’s leverage against superpowers such as the United States and China. It’s extraordinary to witness the UK now choosing not to be a part of the EU project and such programs with the rest of Europe, instead following a popular, insular agenda. It’s not at all clear how or how much of a say it will have in global affairs if and when it leaves the EU. While for Brexiters, this has been a matter of “taking back control” and saving money for services in the UK for people in the UK, observers with an outside perspective, notice the inevitable weakening of the UK’s leverage and the actual cost of Brexit, estimated at £2 billion or P130 billion so far.

This is not to mention the trade flows between Asean and the EU. We are important trade partners. Preliminary data shows that the ASEAN-EU total two-way trade in 2017 reached $257.4 billion (13.2 trillion pesos) making it the second largest trading (dialogue) partner for Asean, the EU was also the largest source of foreign direct investment among Dialogue Partners in 2017 with a total inflow amounting to $25.4 billion (P1.3 trillion) according to preliminary data.

Post-Brexit, UK government officials have spoken about a “global Britain” that would seek ties outside of the EU on its own terms. There are lots of possibilities for the UK to build a formal partnership with Asean and/or pursue trade liberalisation with Southeast Asia from scratch through bilateral and multilateral trade arrangements. Crucially however, before the UK can commence future trade negotiations with the rest of the world including the Philippines, because of its current status as an EU member, it has to agree on a deal for Brexit. But the ruling party appears to be rejecting the current deal which took two years to reach! Who knows how much longer this is going to take!

That’s still not the end of it, the UK will also need to disentangle its World Trade Organisation (WTO) membership from the EU… I could go on but suffice to say it gets even more complicated and challenging the more deeply one investigates.

Which brings me back to that lonely jackfruit in north London and the ideas and policies behind its presence; Brexit presents a historic moment, it seems to me, for people in the UK, the Philippines, the EU and Asean to rethink and renew our commitment to the ideas and terms of free movement of people, goods and services. It is fundamental to the global sense of peace, stability and prosperity.