Brexit: The Economic and Political Implications for Asia

Abstract

Abstract:Often trumpeted as a bastion of modern economic and political integration, the European Union (EU) has played an integral role in the development of the United Kingdom's (UK) economy. However, in recent times, the relationship between the EU and the UK has become increasingly fragile, particularly on issues of national sovereignty, immigration, and the general bureaucratic reach of Brussels. Tension surrounding these concerns meant that on 23 June 2016, the British public voted, by way of a referendum, to leave the EU. This decision, often referred to as Brexit, has created a watershed moment in the history of the region, with implications that may have a significant impact on not only Europe, but also Asia and the wider global community. In order to make better sense of the issue, this study provides a brief synopsis of Britain's decision to leave the EU, before providing a detailed analysis of how the Brexit decision will impact the Asian region. As part of this discussion, a series of relevant policy issues are considered.

Reshaping Institutional Arrangements for the Trade Policies of the US and their Implications for the Asian Region

“…In the US, President Trump has implemented an array of neo-protectionist trade measures as part of wider America first policy agenda. In the United Kingdom, the Brexit referendum result indicated their nations desire to retreat from European Market integration (Wood, 2018).…”

“…Broadly speaking, this neo-protectionist trade policy reflects US attempts to save domestic jobs, by placing tariffs on imported goods and restricting the flow of foreign workers and people. Nowhere in the world have these anti-trade measures been more apparent than in the US, where the ideals of free trade and globalism ideals have almost become dirty words (Wood, 2018). Since the 2016 US Presidential Election, there have been growing concerns about the type of rhetoric and policy measures being put forward by the Trump Administration.…”

“…The US government has also been very active in its critical portrayal of China's trade and monetary policies. In particular, the belief that China is a currency manipulator, whereby it systemically devalues its currency to a bid to take unfair advantage of the US and other countries (Wood, 2018). Many members of congress firmly believe that China's exchange rate policy has been a key cause behind significant job losses and the gradual decline in US competitiveness (Ramirez, 2013).…”

“…In March of 2018, the US government ordered trade officials to increase tariffs on some 1,333 Chinese imports, predominantly steel and aluminum products, totaling more than US$50 billion (USTR, 2018). China in response showed little fear, acting swiftly to impose an equivalent US$50 billion of tariffs were placed on a range of US imports including soy beans (the US' largest agricultural export to China, worth US$14 billion annually), automobiles, and aviation sectors amongst others (Wood, 2018). However, not to be outdone, President Trump instructed the Office of the US Trade Representative whether it was appropriate to enact an additional US$100 billion of tariffs, citing the country's unfair practices of obtaining US intellectual property (ICTSD, 2018a).…”

“…While that presents some obvious challenges for the region (DBS, 2018), the large domestic markets of Indonesia and the Philippines may provide some insulation for these economies however, countries like Singapore, Malaysia, South Korea, and Taiwan, which rely more heavily of the exports would potentially be worse off. Moreover, those manufacturing machine parts and components for communications equipment used in the production of items that China then sells to the US, would be particularly vulnerable (Wood, 2018). In addition to this, local steel producers may put pressure on their respective governments to launch an anti-dumping case at the World Trade Organization (WTO) Dispute Settlement Board.…”