Peter Moloney: Why Should Americans Care About Brexit?

The events now unfolding in the UK have been described as the most significant political and constitutional crises there since the Second World War. Undoubtedly, this is an accurate reading of the situation, with the public polarized, parliament prorogued and the prime minister promising closure at any cost. Even the Queen herself has been sucked into this interminable Brexit black hole, as the British Supreme Court recently ruled that the suspension of parliament that she ordered, on the advice of her ministers, was in fact unlawful. We can only surmise that “one is not amused” to be placed in such a spotlight!

Although Brexit dominates the news in the UK and Ireland, it has been less of a media obsession this side of the Atlantic. Obviously, the cauldron of controversy surrounding the current Administration has pushed all other stories onto the back burner and I suspect that most Americans see Brexit as an entertaining but distant issue, with no real impact on their lives. While this is understandable, I would argue that it actually does involve Americans more directly than most might believe. To illustrate my point, I will limit myself to two areas of direct interest.

First, in economic terms, a few basic numbers help illustrate the significant interdependency that has developed between the US and the EU. Half of all global consumption occurs between the U.S. and the EU alone, with European companies creating over 4 million jobs in the U.S., including 327,000 in New York State alone. Moreover, 45 US states export more to the EU than they do to China, indeed New York exports nine times more to Europe. Finally, in a world where the U.S. deficit has attracted much attention, it’s interesting to note that the U.S. actually runs a trade surplus with the EU in services. If the UK crashes out in a few weeks, or even if it leaves in an orderly fashion, these numbers will be at risk as the UK will effectively leave cross-Atlantic trade agreements and will have to renegotiate over 60 current trade agreements it has signed as an EU member state with foreign economies since 1973. At the very least, this will have a destabilizing impact on American jobs and growth.

At present, thousands of American companies are directly invested in the UK and Europe. Many of them choose their European base in Britain because it offers an English-speaking, educated population. However, more importantly, since the early 1990s, American companies based in Britain have benefited from free access to the Market of 500 million European consumers, without the cost and inconvenience of paying tariffs. With Britain planning to leave the EU Customs Union after Brexit, this key advantage will no longer be available to American firms in the UK, as Britain will then be outside this Customs Union. This represents a significant dilemma for American companies who will have to shop around for alternative EU locations.

Second, in political terms, the special relationship that has existed between the U.S. and Britain will be compromised. Until recently, one of the great advantages enjoyed by the U.S. has been British involvement in the key decisions guiding the EU in trade, politics and security. After Brexit, Britain will no longer have a seat at that table and the U.S. will therefore lose a reliable ally within the EU. In a sense, the U.S. is losing its eyes and ears within its greatest global political ally and trade rival.

Over the past 70 years, the U.S. and Britain have been recognized by many as the twin guardians of global democracy and pillars of global stability. This has been most apparent over the past 30 years with key American participation, along with Britain, the Republic of Ireland an the EU, in the Good Friday Agreement, which ended the Irish Troubles. While all sides have confirmed their support of the Agreement, it is hard to see how a post-Brexit situation of a divided island of Ireland can help maintain the current hard-won stability. Make no mistake, the return of customs posts along the Irish border, which is currently invisible, will provide a tempting incentive for smugglers, troublemakers and militant movements who are still very much alive and well.

For Irish-Americans, this situation forces them to choose between their British friends and their Irish cousins. This is clearly an unwelcome and awkward position. Based on the reaction of the Irish-American caucus in Congress, the weakening of the GFA represents a red line, for which they are determined to veto any future U.S.-British trade deal, a key incentive held up by successive British governments as an alternative to Europe.

With the Brexit storm now picking up intensity, it is not just the interests of British, Irish and mainland Europeans that stand exposed in its path but also American jobs, trade and security. On this side of the Atlantic, the luxury of disinterest is no longer a viable option.

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