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Brexit, Europe and the World: Implications for Asia and Thailand

 

 “Brexit, Europe and the World: Implications for Asia and Thailand”

Thursday, 29th September 2016 at 09.30 a.m. – 11:30 a.m. 

 

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Video : Brexit, Europe and the World: Implications for Asia and Thailand

Brexit, Europe and the World: Implications for Asia and Thailand

Part 1/3 : https://youtu.be/AXJAmgfyJVs 

Brexit, Europe and the World: Implications for Asia and Thailand

Part 2/3 : https://youtu.be/iuFevl1aZYc 

Brexit, Europe and the World: Implications for Asia and Thailand

Part 3/3 : https://youtu.be/MK0oC9gq5_M    

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Power Point Presentation

https://drive.google.com/file/d/0B6IBC2CbNt-bQzRfSWJDV0ZFVXc/view?usp=sharing

Summary report “Brexit, Europe and the World: Implications for Asia and Thailand”

ISIS Thailand Public Forum

Thursday, 29th September 2016

 

Opening Remarks

Assoc. Prof. Dr. Ake Tangsupvattana

Dean, Faculty of Political Science, Chulalongkorn University

 

Speaker

Professor Paul Kelly

Pro-Director (Vice President) for Education and

Professor of Political Philosophy

The London School of Economics and Political Science (LSE)

 

Discussants

H.E. Mr. Peter Prügel

Ambassador Extraordinary and Plenipotentiary

The Embassy of the Federal Republic of Germany

                                                               

Mr. Simon Landy

Executive Chairman, Colliers International Thailand

Vice Chairman, The British Chamber of Commerce Thailand (BCCT)

                                                               

Mr. Kavi Chongkittavorn

Senior Fellow, ISIS Thailand

Columnist, The Nation Newspaper

 

Moderator: 

Assoc. Prof. Dr. Thitinan Pongsudhirak

Director of ISIS Thailand

Faculty of Political Science, Chulalongkorn University

 

 


 

 

 

OPENING REMARKS:

Assoc. Prof. Dr. Ake Tangsupvattana

Dean, Faculty of Political Science, Chulalongkorn University

 

As we know, Brexit refers to the United Kingdom’s referendum last June to leave the European Union. Brexit is a big deal because when the UK decides to leave the EU, the future of Europe is cast in doubt. We are all affected by Brexit because the EU has been the basis of our international system, of a path to global peace and prosperity away from war and violence. Brexit was much more than the differences between the UK and the EU because the European Project became the anchor for the international life that has more or less defined and sustained our collective era. The EU has been the crowning achievement of the settlement that reconfigured and rebuilt the world after the Second World War. It was the culmination of integration efforts that set out to turn our backs on the horror of war once and for all.

 

This is why when a major member like the UK wants to leave, we have to pay attention. It is still early days, and we don’t know yet what Brexit will entail. It is important for us to stay on top of Brexit and the EU because it matters to us in Asia and Thailand.  For example, will the UK be more interested in doing business with other countries outside the EU in view of Brexit? And to what extent will the UK still be tied into the EU’s single market.  How long will Brexit actually take to unfold? These are just a few questions and issues we seek to tease out this morning.

 

 

KEYNOTE SPEAKER:

Professor Paul Kelly

Pro-Director (Vice President) for Education and

Professor of Political Philosophy

The London School of Economics and Political Science (LSE)

 

 

Between 2010 and 2015, forming government for the first time in 20 years, the Conservative Party was the majority party in a coalition government with the Liberal Democratic Party, who are a very strong pro-European party. The coalition government was supportive of the European project, but factions in the majority Conservative Party were increasingly hostile to Brussels and the European Union.

This goes back to 1975. Britain entered the European Economic Community under the Conservative Prime Minister Edward Heath. The Labour Party was originally hostile to joining what was considered then as a small, closed, capitalist club. In 1975, Britain held a referendum of which the result was a strong endorsement for membership of the EEC. In the late-1970s under Margaret Thatcher, the Conservative Party formed three successive governments in a period which transformed British politics; Britain’s economy was opened up to a more laissez-faire economic policy with more free trade in a globalising world. She was also supportive of the European Community, with some caveats. At the same time, the Conservative Party was changing – it had a small faction of very strongly traditional opponents of European integration who believed that ceding sovereignty to Europe would damage national identity. Over a period of time, this group exercised quite a significant influence on the shape of British politics and transformed the character of the Conservative Party.

In 1997, Tony Blair began a landslide shift away from the Conservative Party and began a long period of Labour dominance of British politics. Labour under Blair was supportive of the European project. Labour’s dominance during this period catalysed a generational change in the Conservative Party – this ushered in a transformation of the Conservatives, which lead to the core group of anti-European traditionalists consolidating their positions in the party. So by 2010, when the Conservatives return to power, there is a political elite in the party supported by a profoundly Euro-sceptic membership. Alongside that, on the right there is the UK Independence Party (UKIP), a party committed to leaving the European Union and campaigning strongly in areas where the Conservatives had traditionally dominated. David Cameron’s adopted a conservative and pragmatic approach to balancing these forces; to try to keep Britain within the existing constitutional landscape, but also adopt a more sceptical view towards Europe. Thus, he entered the 2015 election with a manifest commitment to hold an in-out referendum on Britain’s membership of the European Union in order to keep his party together, to position his party in relation to the Euro-sceptic opposition from the political right, but with the underlying thought that he would not have to act on that commitment. The expectation of the Conservative Party was that they would be the dominant party, but leading a minority government – the assumption was that the bottom line for any coalition agreement with a minority party partner (for example, the Scottish National Party, the Liberal Democrats or even Labour) would make cancellation of the referendum a condition.

The surprise was that Cameron won an outright majority in the 2015 election, and was therefore required by his party to act on the referendum commitment. Consequently, Britain had a rapid move to the referendum, which ultimately took place in June 2016. David Cameron’s attempts to renegotiate the terms of Britain’s membership of the EU failed to provide a deal good enough to retain Britain’s access to the European single market but with controlled migration.

On June 23, 2016, nearly 52% of the population voted to leave the European Union. Looking at the breakdown of voters, in the group aged between 18-24, 73% were in favour of remaining in the European Union. In contrast, in the more elderly cohort of the population, there is a clear demographic towards enthusiasm for leaving. Another divide in the population was on social class – the professional class or those with a university education significantly supported remaining in the European Union. The key issue underlining this is actually education. Both the larger cohorts of the younger population which are university educated and the older population with a university degree were more likely to vote remain. This perhaps reflects that those with an education are best able to understand the benefits of globalisation, understand the challenges of economic transformation in ways that are less threatening to them, and see opportunities in mobility and investment.

Furthermore, the areas which voted to leave were primarily rural, agricultural regions with very few significant urban areas – these are regions which experienced large-scale immigration from eastern Europe, but have also had a drain of younger populations which have generally left of London or other major cities. Northern Ireland, Scotland and London, in contrast, all split strongly towards remaining in the European Union.

The divides between age, education, and nations within the United Kingdom reinforces how divided a union it really is. This gives a snapshot of British public opinion, and it shows that there are ‘very different Britains’ reflected in this referendum.

A result of the referendum was a change in Prime Minister from David Cameron to Theresa May. Her first response to the referendum was to announce that “Brexit means Brexit,” implying that despite the referendum technically being advisory (referendums in Britain do not bind the Parliament as the sovereign body to a decision), the result of the referendum would be honoured. However, neither side had developed a plan for how Brexit would unfold. David Cameron had expected to win the referendum, so he and his team (including Chancellor of the Exchequer, George Osborne) made the conscious choice not to prepare a policy for Brexit, in fear that such a plan may leak to the press. The Leave campaign was a loose coalition of various individuals and groups posturing for their own political advantage all of whom wanted just one thing: to get out of the European Union. However, these groups still have little idea about what that actually means, and now how to progress in the process of leaving the EU.

At the most basic level, Britain needs to trigger Article 50 of the Lisbon Treaty on leaving the European Union, which is followed by a two-year process of negotiations. Those negotiations will be about Britain’s exit from the Union, but they do not necessarily settle Britain’s future relationship with the EU, particularly on long-term trade negotiations. There is a lot that the both the electorate and leading politicians on all sides are unaware of; they have entered this Brexit process, and now they are realising that this means a lot of work in very concrete legal, judicial and constitutional terms that they had not expected.

The major debate in the UK is about a ‘hard’ versus ‘soft’ exit. The ‘hard Brexit’ refers to a quick leave – the former Chancellor Nigel Lawson has said that Britain should trigger Article 50 immediately, quickly pass an enabling act in Parliament which repatriates all European legislation, and then over time Britain will sort itself out. It is quick, brutal but it gets done. Hard Brexit means that the UK would not be in the European Economic Area or the European Free Trade Area, it would receive no benefits from being in the Single Market, but it would also have complete freedom to regulate mobility and legislation. Many of those who support Hard Brexit have a very high opinion of the UK’s standing in terms of its bargaining power in relation to Europe – they take the view that Europe want to continue to enjoy benefits from its association with Britain.

The ‘soft Brexit’ are concerned about the impact of leaving on the city of London and the UK’s financial industry. They see the risks that come from losing passporting rights for financial services and mobility for students and staff in the education sector.

There is also a more complex and nuanced third way forward which Theresa May seems to be pursuing. This can be considered a more ‘bespoke’ approach, where the UK pinpoints exactly which of the various parts of the Single Market it wants, which regulations and relationship it ought to continue – it is not a straight forward in or out deal. However, the deal that the UK can negotiate is also conditional on Europe. The idea of a bespoke deal for Britain is politically problematic for Europe, because every member state would like a deal where they enjoy the parts of the EU that suit them without the parts that they don’t like. Benefits and no costs.

Looking at the balance of trade figures, there are certain countries which will want to continue such as Germany, Spain, the Netherlands and the Benelux countries. This suggests that there is an advantage to Britain in the negotiations, because there are countries and leaders who will have an interest in retaining some very close trading relationship. However, one of the biggest issues reflected in the referendum result was concern about migration. Prime Minister May has thus committed to restricting migration from the European Union. Poland is the largest source of inward migration into the UK by a long way, followed by Romania, Spain and Italy. All of these countries are going to have a national interest to take into the negotiations, and are therefore going to have views about how much they are prepared to give in relation to curbing free movement.

There is a wider context – as Prime Minister, Theresa May’s initial response to foreign policy was to hold up the Hinkley Point nuclear power station that was to be built with Chinese money through the French company EDF. This sent a very strong and unhelpful signal to the Chinese about a possible change in direction of British policy towards China. David Cameron and George Osborne had been very eager to build up an economic relationship with China, and envisaged Britain as the portal through which Beijing could access the European market. After the G-20 in Hangzhou, Prime Minister May has been keen to show that Britain is still open to Chinese business. The Japanese government, also, released a memorandum reminding the British government that Japanese investment was not conditional, but was on the basis of access to the European Union, and therefore future investment (especially in the automotive industry) could be cancelled.

However, there are also opportunities. The Malaysian government indicated that it could be interested in a free trade deal with the UK, indicating opportunities to rekindle colonial connections with Britain.

What does the future hold? One thing we have learned is that it is not all doom and gloom. Economic catastrophe did not happen and the global financial system did not crash. For now, we are still some way from seeing what Brexit implies for Britain and its global position, or the impact it has on stability in the European Union. There remain serious challenges, but mature economies are dynamic. They can adjust.

 


 

DISCUSSANTS:

H.E. Mr. Peter Prügel

Ambassador Extraordinary and Plenipotentiary

The Embassy of the Federal Republic of Germany

 

 

After the referendum, in Germany and across Europe there has been a deep sense of disappointment over Brexit, because it not only affects the economic situation in Europe, but also the Europe Union. However, it is not the turning point, nor is it the beginning of the end for the European Union. It should be thought of as an “historic break” and a kind of “wake up call” for those who believe that the integration of the EU is irreversible. Therefore, we must be neither paralysed by the shock of the result of the UK referendum, nor should we rush too quickly into action simply for the sake of action. Politically, the EU and the UK must now work together to make sure the right conclusions are met for the future of the Union.

 

As per Article 50 of the Lisbon Treaty, Brexit negotiations will be extensive. On September 16, 2016 at an informal meeting in Bratislava, the 27 heads of state or government of the European Union discussed the wide-ranging political and practical implications of Brexit. Leaders started a debate on the future of the European Union. They have already laid down its terms and clearly articulated that conclusions need to be rapid. The key question raised is concerning the exact characteristics of the future relationship between the EU and UK. Indeed, internally, the UK must first clarify themselves what it is that they want.

 

Germany wants the UK to retain a close relationship with the European Union, but we also need to establish a foundation for fair rules for future relations. The outcome of negotiations on this rule cannot be that the UK freezes itself from its duties and obligations while maintaining the rights of an EU member state. Therefore, we need to discuss it very clearly on both sides, so that there will be no room left for illusions. Prime Minister Theresa May has consistently declared on every statement that she does not want to rush in the negotiations. May wants to establish a concrete roadmap first before undertaking negotiations to leave under Article 50. On the other hand, the EU has begun preparations, not least of all because European leaders are eager to clarify the timeframe to head off the negative consequences of ongoing insecurity and instability.

               

The referendum has not only impacted the UK, but also all European citizens across the continent. Many EU countries are still facing a high unemployment among its youths. Moreover, the EU is still experiencing problems on the influx of hundreds of thousands of refugees and migrants, which has exacerbated existing social and economic problems throughout Europe, stimulated the growth of nationalist political movements, and caused greater divides between EU countries. These concerns must be taken seriously. 

 

The EU has so far worked through its economic and financial crisis, and the Eurozone has held firm. From the perspective of EU member states, the single market, which includes the free movement of goods, services, labour and capital, cannot possibly be divided; the EU must speak together with a single voice on financial and economic issues.

 

However, we must take heed of the fact that there are many who have not been the beneficiaries of the last three decades of globalization – for them, globalization leads to fear, so grasping onto nationalism and national interest is somewhat of a shield against this process. Overcoming this narrative is a growing challenge, despite the clear benefits of European integration over the past sixty years. Today, we realise that EU integration and the peace project are not irreversible; it still requires active engagement and commitment. Therefore, we need to stand up for our European Union and we had better explain its benefits to regain the trust of the people.

 

It is increasingly commonly accepted among many politicians to blame the EU for causing difficulties, while also claiming for credit for achievement in the last decades. On the contrary, the member states have to show the people in our countries that a side-effect of membership of the EU is not a loss of sovereignty, national identity or control over one’s own domestic legislation, but rather that it is best instrument available to us to drive growth, actively shape the world around us and benefit from globalization. It also is a vehicle through which we can strengthen our strategic relations with our partners.

 

One of the good examples that the EU has in shaping regional and global order is the upcoming ASEAN and the EU Ministerial Meeting next week in Bangkok, which aims to raise the relationship to the level of Strategic Partnership.

 

It is time for the EU to revise and reorganise itself in a way that is more flexible to further progress of the European, including allowing some countries to join the integration in specific areas without excluding the existing members. Despite Brexit, the EU will remain a centrepiece of German foreign policy. The past has shown us that the European Union always come out from each crisis

stronger than before – hopefully that trend follows after Brexit.

 


 

                                               

Mr. Simon Landy

Executive Chairman, Colliers International Thailand

Vice Chairman, The British Chamber of Commerce Thailand (BCCT)

 

 

In Thailand, government have tended to be voted in by the countryside and then thrown out by Bangkok. A similar phenomenon occurred in the UK referendum, where a stark divergence between rural and urban voters was evidenced. Votes were split depending on location, age and education; those who are younger, more educated and living in metropolises in the UK not only appreciate the benefits of globalisation, but are also its beneficiaries. In major cities like London and Manchester, voters tended to want to remain in the EU, because they are aware that Brexit could collapse finance sector and all the jobs will be shipped off to the EU.

               

The impact in Thailand over Brexit is both good and bad. The UK exports to Thailand account for only 1.8 percent of the total UK exports; exports from Thailand to the UK is just one percent. Seeing that UK-Thai investment is very small, the immediate impact to Thai companies is probably negligible.

 

However, more medium-term, there will be an impact, since there is tremendous interest from the UK in continuing to try to build up bilateral trade. Moreover, the UK has a kind of “soft power” influence over Thai society in three dimensions. First, Thailand and the UK both retain a functioning monarchy. This still carries a huge weight of respect in the Thai community. Secondly, there is a preference for Thai wealthy families to send their children to study in the UK. And third, Thai entrepreneurs are interested in investing in British icons, for example, there are three Thai businessmen who have purchased prominent English association football teams.  Therefore, it is evident that the UK will remain of interest to Thais and Thai businesses.

 

What impact will the Brexit have on Thailand and Thai investors? One is the massive flow of currency into the UK during the post- Brexit period; Thai people are looking to invest in the UK on the expectation that there will be good times to come. On the other hand, there is some evidence of corporate and manufacturing investments into the UK which have been put on hold pending completion of negotiations between the UK and EU. This shows that in anticipation for post-Brexit EU negotiations, hot money is coming to the UK while cold money is on the line for the upcoming decision.

 

In the long-term, Thailand and the UK should be preparing for further negotiation on an FTA, since the EU has held-up FTA negotiation since the 2014 coup and cannot take place again until after a democratic transition takes place. The UK will still be bound by the EU policy on bilateral trade negotiations, so no formal negotiations can take place because it will breach EU regulations. However, business communities are likely to start discussions.

 


 

                                                               

Mr. Kavi Chongkittavorn

Senior Fellow, ISIS Thailand

Columnist, The Nation Newspaper

 

 

I am very happy to see the United Kingdom leave the European Union. For the first time in a long time we will be able to see the real colour of the UK policy towards Thailand and ASEAN. Now the British government has the freedom to conduct negotiations and tailor policies directly towards Thailand. Since the 1970s, UK has complained that its policy towards ASEAN and its member states is hampered by its membership of the EU, so the next 15 months emerge as a period where Britain can show its true colours towards the region. The UK should now be more proactive and constructive towards ASEAN, a region with 625 million citizens.

During this time, the UK should establish an envoy and formulate a specific policy towards ASEAN. The UK can provide some specialised technology and capacity building, particularly on nuclear power. The EU has tried to become a member of the East Asia Summit, but for now it has been rebuffed. Now that the UK is alone, it should try to apply for membership and accede to the Treaty of Amity and Cooperation. It is also encouraging that there are some underground discussions on free trade with Thailand.

One common question is whether ASEAN will have the ‘Brexit Problem.’ There is no way that ASEAN will follow the route of the EU. ASEAN is focussed on national sovereignty and interest, institutionalisation of the regional architecture. ASEAN does not have free movement of labour. ASEAN will learn a lot from Brexit, but there will not be a repeat.

 

 

QUESTION and ANSWER

PUBLIC QUESTION: Education was identified as a major factor in the way that UK citizens voted. My question is, is it fair and legitimate to ask people on this very complex issue to make a major decision about the country? Is this constructive and productive? Second, because of poor education, it makes it easy for crafty politicians to manipulate and mislead less-educated people – should campaigning in this fashion be an offence? Third, in other countries, we do not make a decision of this magnitude based on an in-out vote with a 48-52 split. What is your take on the legitimacy of not having a super-majority on a decision like this?

PUBLIC QUESTION: My question is about the Trans-Pacific Partnership. Can TPP be the rival of the EU? Could it also challenge ASEAN unity and ASEAN’s ability to balance against China?

 

KAVI CHONGKITTAVORN: RCEP has a lot of difficulties as its 16 member states had planned to complete it by the end of 2016, but may not be complete for 1-2 years. TPP is now going through a lot of uncertainty as it has become a political flashpoint in the US Presidential and Congressional elections.

SIMON LANDY: The Brexit vote was such a shock that a democratic system such as the UK could lead to a result that was so unexpected. But this seems to be a growing trend, not just in the UK, but worldwide. If we have a President Trump at the end of this year, this question about education becomes even more relevant. It comes back to a debate which has been raging around Thailand for many years, which is, ‘What is democracy and is “majority rules” a productive means to determine legitimate government?’

Results like Brexit do call into question the definition of democracy and its legitimacy. It also calls into question the notion of the UK, the United States and Europe as being strong safe-havens for democracy and rule of law.

MODERATOR: This is a global phenomenon. On one hand, the European project is being challenged. On the other hand, the democracy project around the world is being challenged. There is frustration that in a democracy, the simple majority rules or a number of years, often at the expense of the minority.

 

PAUL KELLY: How could we allow, in an enlightened 21st Century Britain, such an important issue be decided simply on an in-out majority rules vote? This goes back to trying to understand what democracy is and what populism is. We face claims for democratic decisions and democratic voice, but we should remember, when we go back to the founding texts of Western political tradition (Thucydides), it is the story of how democracies undermined themselves. For 2500 years, democracy was considered the worst form of government. It was only in the 19th Century that representation was brought in, where the democratic element was incorporated in stable political systems that allow political elites to hear from people, but manage their concerns without constantly asking what they think.

 

If we look at the referendum result, 52% of the population voted to leave on a 76% turnout. That means that roughly 36% of the relevant electorate have decided to leave the EU. If you look at people’s preference ordering in the UK, there are about 35% who are hostile to immigration and who do not like the European Union. There is about 30% who think that globalisation and cosmopolitanism are fantastic. The remaining 40% are willing to be persuaded on either side – most democratic elections are about that middle group who are generally open to debate, and who have myriad concerns and interests. Representative democracy allows political parties and the elite selection process of government to filter these various concerns and interests with manifestos and policies. So if we look at the referendum, if you ask people a straightforward question, you will get a very straightforward answer, but it lacks important nuances, such as, the importance of this issue within a broader context, how much the public is willing to sacrifice to see it through, and the concerns and checks that ought to be made in line with views of the minority.

 

This all comes back to education. It is not to say that those without education are less informed or cast a less legitimate vote than others, but education tracks mobility and the kinds of things that allows people to benefit from globalisation. The educated people of the next generation believe that being excluded from the possibility of working in Europe is a constraint in a way that wouldn’t be an issue for the previous generation. Also, the electorate in some respects expanded during the referendum (76% versus 66% in the last general election. A lot of people who were not otherwise engaged in politics came to the referendum after the Leave campaign were able to galvanise its 35% of supporters to vote – the young and educated are busy, they did not have time to join!

 

So, overall, that is why referendums are bad things. In the UK system, they can only be advisory. But once you’ve asked people, it’s hard to ignore what they say. A very simple binary question leaves open the possibility of manipulation, and that populist single-issue votes are allowed. This goes back to the heart of the question about what democracy really is – democracy is much more complex that simply asking people what comes into their heads at the time they are asked. In Western representative democracies, we have developed processes to try to manage these whims and single-issue votes, but we have lost some confidence in their ability to do that political work for us. The big lesson here, which is a global challenge, is that we need to regain trust in systems of representative democracy.

 

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