Anti-Brexit protesters stand outside Parliament in the rain in London on April 2, 2019. Photo: AFP / Robin Pope / NurPhoto

With just 10 days to go before the UK is scheduled to end over 40 years of European Union membership, there is still little clarity in London over what that means – or even if it will really happen.

Indeed, the last few days have seen the EU Withdrawal Agreement that UK Prime Minister Theresa May negotiated with EU leaders fail to win approval in Britain’s ancient parliament for a third time running.

Meanwhile, alternatives proposed by opposition and cross-party groups have also failed to garner majority support.

This leaves a default position under which the UK will crash out of the EU on April 12 without any transitional arrangements, agreements or procedures in place.

On Tuesday, May appealed to opposition parliamentarians to get behind the Withdrawal Agreement, adding that she would try to delay withdrawal beyond April 12, after the EU’s chief Brexit negotiator, Michel Barnier, told reporters earlier that a ‘no-deal’ Brexit was becoming “more likely by the day”.

A no-deal outcome would likely have a serious impact on the UK’s trade with Asia, too – and vice versa.

“It’s a shambles,” Dr Michael Reilly, a Senior Fellow with Nottingham University’s Taiwan Studies Program, told Asia Times. “In terms of the UK’s relationships in East Asia, too, Brexit has already had a very negative effect – and it beggar’s belief that the UK’s politicians didn’t think about all this beforehand.”

Winners and losers

The uncertainty Brexit creates for trade was well illustrated last Friday in Manila, half a world away from the debates raging in London.

There, the chairman of the British Chambers of Commerce in the Philippines (BCCP), Chris Nelson, was addressing journalists at the Chambers’ offices, before heading back to the UK for an investment roadshow highlighting opportunities for British companies in the Philippines.

“Trade and industry between the UK and the Philippines continue to grow,” Nelson said, “and we’re very positive for the future.”

Yet, while the Philippines’ might provide opportunities for both UK and regional businesses, the country also illustrates some of the difficulties Britain’s July 2016 decision to leave the EU creates.

The two countries currently trade under an EU agreement known as the Generalised Scheme of Preferences+ (GSP+), which grants many Filipino goods tariff and quota-free access to EU countries.

“GSP+ has been quite beneficial for the Philippines,” said Nelson, “really helping to open markets.”

Yet, when – and if – the UK leaves the EU, Britain will no longer be part of GSP+.

Similar agreements are also in place for Sri Lanka and Pakistan, with the UK also dropping out of these when and if Brexit happens.

At the same time, too, GSP+ is also only one of a whole family of EU agreements under which the region currently trades with the UK.

The EU has a more comprehensive, free-trade agreement (FTA) in operation with South Korea, while it has also successfully negotiated FTAs with Vietnam, Japan and Singapore, due to come into force soon.

Currently, the UK is a part of these, but post-Brexit, it won’t be.

The UK has therefore been trying to ‘roll-over’ the trading terms and conditions that currently apply under these deals to cover a post-Brexit UK.

“New agreements will need to be negotiated,” Ying Staton, head of the Global Counsel Asia in Singapore, told Asia Times. However, “Some countries have made it clear that the UK will need to offer deep concessions, if they are to secure the same preferential terms that were extended to the EU.” 

Indeed, as a sign of the difficulty ‘roll-over’ presents, by the start of March, UK Trade Secretary Liam Fox had agreed to such deals with only seven out of 69 countries, worldwide.

Tough negotiators

In parallel with this, the UK has also been making efforts to reach new trade deals with regional countries that do not have EU deals in place. Yet, so far, these have also run far from smoothly.

Indeed, “When you look at the larger economies in Asia in particular,” said Associate Professor James Crabtree, from the Lee Kwan Yew School of Public Policy in Singapore, “it’s very unlikely that the UK will get better ties, post-Brexit, than it would have got as an EU member.”

The UK has tried to secure new trading terms with India, yet the Indian government has pushed for easier access to the UK for its citizens in return – something that is anathema to many Brexit supporters, who wish to further restrict immigration.

With China, relations have also been souring, as “China had looked at the UK as a gateway to the EU, so straight away, following Brexit, the UK becomes less valuable to Beijing,” says Dr Reilly.

That access is a major concern for others, too. 

“Asian companies or investors using the UK as an entry point to trade with the EU Single Market will no longer be able to do so under the same terms,” says Staton. “This is part of the reason Japanese carmakers have put a stop to plans for new models to be assembled in the UK.”

After initially deciding to build its new X-Trail car in Britain, Nissan reversed its decision in February, citing “Brexit uncertainty”.

At the same time, financial services companies in Asian hubs such as Hong Kong and Singapore that use London to “passport” their services into the EU – gaining access to EU financial markets via a UK address – will no longer be able to do so, post-Brexit.

Yet, in addition to the potential negative impact on business and trade, there is also the damage the Brexit process may have done to a more intangible British asset – it’s ‘soft power’ in Asia.

“The ineptitude of the British political system to deliver anything akin to a rational and timely outcome has done the most serious damage to the reputation of the UK in the region,” says Staton. “People’s reaction is almost universally one of pity and dismay.”

The week ahead may, indeed, see much more of such emotions, both in the UK and in Asia.

Asia Times Financial is now live. Linking accurate news, insightful analysis and local knowledge with the ATF China Bond 50 Index, the world's first benchmark cross sector Chinese Bond Indices. Read ATF now. 

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