Syed Kamall is Chairman of the European Conservatives and Reformists Group and is an MEP for London.
Last Thursday, I stayed in Brussels for the referendum in order to attend a meeting of the European Parliament’s political group leaders early on Friday morning. It’s safe to say that most MEPs and officials were genuinely surprised and shocked. Some were also worried about the future of the EU.
Inevitably, we have heard from the EU enthusiasts who now wish we would trigger Article 50 and leave quickly so they can proceed with building a political union. They tell the media that the UK should be punished in order to deter other countries from leaving. But the last few days have seen cooler heads prevail amongst the EU heads of government. Just like HM Government and Vote Leave, the EU itself also has no unity on what to seek from a post-Brexit arrangement.
So what should our future relationship look like? There are plenty of options out there to govern our future trade with EU countries, including an UK-EU trade agreement with cooperation in other areas; the European Economic Area (EEA) option; customs union; and the World Trade Organisation (WTO) option.
However, as David Cameron rightly said this week, it is hard to argue – regardless of the merits of the case – that EU free movement played no part in many people’s voting decision.
Britain benefits from immigration, and it is far too easy to blame those working in jobs that British people don’t want, or we have limited skills to fulfil. With our demographics and globalisation, immigration is a necessary reality but politicians need to address legitimate concerns and restore public confidence in it. Some voted leave since they were against all immigration, more immigration, or the unfairness of the current immigration system that discriminates against the 6.5 billion non-EU citizens who may have a major contribution to make. Between the extremes of closed borders and completely open borders, we should be looking for a controlled but fair immigration system that ends this passport discrimination.
With some compromise inevitable, once Article 50 is invoked, we should enter negotiations on the basis of seeking a UK-EU trade agreement. On goods, the UK has a record trade deficit with the EU, widening to £23.9 billion in the first three months of 2016, so a deal should be relatively straightforward here. However, for services, governments in Berlin and Paris will be under pressure from financial districts of Frankfurt and Paris to reduce London’s role as the global financial centre. Here I believe there will need to be a trade-off on other areas, such as support for EU programmes on research and innovation, student exchange, maintaining our participation in the European Investment Bank, aid to ‘new’ EU states, and perhaps cooperating and offering assets for EU operations of mutual interest, such as protecting the EU’s borders.
Of course, for financial services there will be other issues to consider such as regulatory equivalence and passporting of services, since all companies wishing to sell into the EU’s Single Market would need to show that they meet the standards set within it. Initially, this would present no real barriers since as all EU legislation and type approval standards are already applied in the UK. Over time, we would be in a similar position to the USA, which has recently adjusted its data protection standards to allow US companies to access European digital markets.
We also need to take account of the large number of British people living in the EU and EU nationals living in Britain. British or EU expats concerned about the extra red tape already know that even EU free movement is not entirely free. EU migrants must either have a job or the ability to finance themselves, and in many countries they must register for ID cards, have medical insurance and so on. This agreement will be one of the most politically and technically sensitive areas to negotiate but I believe it to be the solution that most closely respects the outcome of the referendum.
There should be no doubt that negotiations will be arduous and will take time. It will have to be approved by the European Parliament, and it would face the usual vested interests within the EU that stand in the way of open trade. We will not be negotiating with the EU of today, but a more protectionist EU that has lost a free trading member. In part, that is a worry, but it should also be an opportunity to compete with a continent where increased protectionism and red tape will suffocate enterprise.
So whilst we must work on trade with the EU, in the meantime we must also work on opening trade with the rest of the world. First, that means we need trade negotiators. Even before the new Prime Minister comes into office we should be firing the starting gun on this process with major investment. Secondly, we must not delay in beginning talks with as many countries and trade blocs as possible. However, we must never forget that trade is not between countries or blocs, it is between people and businesses in one country with people and businesses in another country for mutual benefit. Governments can either ‘facilitate’ trade or get in the way in the form of tariff and non-tariff barriers.
Britain should also think more about how we equip our economy with skills and infrastructure to become a global nation, with Chinese and other languages becoming a major fixture of our school curricula, and airport capacity being expanded ambitiously.
Within the confines of word limits, I have barely scratched the surface here. How would our environmental relationship work? What about energy interconnections? How would we ensure data sharing and extradition work, and would that require agreements similar to those we see with the USA on flight passenger records, and terror financing? How would our police forces continue to cooperate with others outside of Europol?
At the moment there are many questions. However, as my father used to tell me, we can achieve anything we want as long as we believe in ourselves and work hard. We now owe it to the British people to deliver the new relationship with the EU that they voted for and to ensure that we in Britain become good neighbours as we cease to be reluctant tenants.