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The Brexit Alarm

The British campaign to leave the European Union is tapping into the same primordial sentiments as Donald Trump is in the US. Exposure to international trade and finance, which is what EU membership entails, may have benefited the UK as a whole, but it has not worked to everyone’s advantage.

BERKELEY – I have no special expertise on the question of whether Britain should leave (or “Brexit”) the European Union. True, I did live in the United Kingdom until a bit less than a year ago. And here in California, we have our own Brexit-like debate, with a movement to place a proposal to secede from the United States on the November ballot. But while the idea of California independence might seem comical, the Brexit referendum on June 23 is no laughing matter.

Most obviously, Brexit would damage Britain’s export competitiveness. To be sure, ties with the EU would not be severed immediately, and the UK government would have a couple of years to negotiate a trade agreement with the European Single Market, which accounts for nearly half of British exports. The authorities could cut a bilateral deal like Switzerland’s, which guarantees access to the Single Market for specific industries and sectors. Or they could follow Norway’s example and access the Single Market through membership in the European Free Trade Association.

But Britain needs the EU market more than the EU needs Britain’s, so the bargaining would be asymmetric. And EU officials would most likely drive a hard bargain indeed, in order to deter other countries from contemplating exits of their own. The UK would have to accept EU product standards and regulations lock, stock and barrel, with no say in their design – and would be in a far weaker position when negotiating market-access agreements with non-EU partners like China.

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