STANFORD – In this, the 400th year since William Shakespeare’s death, the United Kingdom faces an existential question: To be or not to be “European.” When Britons vote in June on whether to remain in the European Union, making the right choice will require them to cut through the hyperbole on both sides of the debate and consider carefully what so-called “Brexit” would really mean for their country.
The main issues that will shape voters’ decision relate to trade relations, regulation, and the budget; foreign policy and security; and domestic policies, such as welfare and immigration. Then there are questions about the substantive and emotional benefits and baggage that attend EU membership, with all of its rules, regulations, and bureaucrats. The choice is stark, but the questions at issue are not all black and white.
The UK is deeply connected by trade to the rest of the EU, which accounts for the largest share of Britain’s total global exports and imports, each amounting to about 30% of British GDP. Brexit would therefore have significant consequences for trade flows not just between the UK and the EU, but also in the rest of the world. What those consequences would be depends upon the terms and timing of new trade agreements.
When the EU’s predecessor, the European Economic Community, was created in 1957, it linked just six countries (Belgium, France, Germany, Italy, Luxembourg, and the Netherlands). Given high tariffs at the time, the EEC brought substantial gains. Today, the EU has 28 members and is the world’s largest market, but tariffs generally are much lower.