John Bruton on Brexit: What will happen if UK leaves EU?

What would happen if the UK votes to leave the European Union?

Many believe the immediate effect would be a change of government in London. It is hard to see how prime minister David Cameron would retain authority if his advice on a central matter had been rejected in a referendum, especially as his party had been so divided by the issue that it could not take a position as a party.

He would be seen abroad as someone who no longer speaks for the majority of his people and this would weaken his negotiating ability on their behalf

How long would it then take to elect a new Tory leader? Possibly months.

First the Tory MPs would have to narrow down the field to two names, and then the entire party membership would have to decide between those names in a postal ballot. The Tory party membership has a different profile to Tory party voters. It is much older, for one thing.

So the sort of tensions that arose in the UK Labour Party after the election of Jeremy Corbyn could be repeated on the other side of the house, namely the election of a leader who has the confidence of members but not of MPs.

Until the Tory leadership issue is decided, no decisions can be taken by the UK government on what new deal to seek from the EU. The new party leader and the majority of his/her MPs might not agree on which option to choose.

Basically, the choice would be between three options:

1: The UK could ask to leave the EU and instead, like Norway, join the European Economic Area (EEA);

2: It could try for a wholly new special trade agreement, like the agreement Canada or Switzerland has with the EU;

3: Or it could leave the EU without any trade agreement.

The first option could be put in place quickly and would not disrupt trade all that much. The EEA is a ready-made model for external association by a non- member with the EU. It could be taken down from the shelf, so to speak. But the UK would still have to implement EU regulations and contribute to the EU budget. It would not allow curbs on EU immigration. This option has been dismissed by Leave campaigners.

That said, joining the EEA would involve leaving the EU and would thus comply with the literal terms of a Leave vote in the referendum .

It would buy time, allow all to see whether the fears being stoked up in the present campaign have substance or not, and would not preclude leaving altogether eventually.

Detailed negotiation

The second option, a special trade deal, would be much more disruptive. It would require a detailed negotiation on every type of product or service sale between the UK and the 27 member countries of the EU, including across our Border.

Such an agreement would take years to negotiate (probably seven or eight years), and would be subject to domestic political constraints and political blackmail attempts in all EU countries, because each of them would have to ratify it. We can see with the Transatlantic Trade and Investment Partnership, which is a much narrower negotiation, how a trade deal can become the subject of fears, misrepresentations and lobbying. If the proposed agreement allowed curbs on immigration from the EU, the EU countries affected by the curbs would make difficulties with other aspects of the deal.

It is unlikely that a trade agreement would allow the UK to sell financial services into the EU. Indeed, it would be in the interests of EU countries, such as Ireland, that might hope to attract financial services out of London and into their own capitals, to make sure the UK got no concessions on that.

The third option – leaving the EU with no agreement – could come about, either because that was what the UK chose, or because the negotiations on a special trade deal broke down or were not ratified by one or two EU states.

It would require the application of the EU common external tariff to UK or Northern Ireland products crossing the Border into the Republic.

Average EU tariffs are about 4 per cent, but on agricultural goods the mean tariff is 18 per cent and the highest tariff (on isoglucose) is 604 per cent. The imposition of these tariffs is a key part of the Common Agricultural Policy, which protects the incomes of EU farmers. We would have no option but collect them at customs posts along our Border.

This would disrupt patterns of trade on these islands that grew up over centuries. All forms of food manufacture and distribution within the two islands would be disrupted.

Mixture of ingredients

I heard someone, who holds a very senior position in the Irish food industry , say that products as simple as sandwiches sold in a service stations, now contain a mixture of ingredients produced in the Republic of Ireland, Northern Ireland and

England

. The same applies to biscuits sold as “English”. The disruption of the complex supply chain of the modern food industry would be dramatic and the knock-on effects impossible to calculate. It would be like having to unscramble an omelette.

A similar effect might be felt by the car parts industry, so important to the north of England.

Will this happen? It all depends on which option a post-Brexit UK government chooses and it is, quite literally, impossible, to answer that question now, because no one can say what option a future UK government would choose, nor what terms it might get from the 27 EU states. There is also the possibility that a post-Brexit UK government might delay its application to withdraw from the EU but, in the meantime, still an EU member, start, as a policy, to selectively repeal parts of 5,000 pieces of EU legislation, now in force in Britain, that it does not like.

This would provoke an existential crisis for the EU, because the EU exists only because states respect its laws and its court decisions. National authorities in other EU states might then refuse to allow UK goods on to their markets and that could happen quickly, whereas a legal case against such a move by the UK might be very slow.

John Bruton is a former taoiseach and EU ambassador to the US