Some thoughts on Brexit

It has been a little over ten years since I made a trip to London. Early May, and very warm.

A few months before that, I had published my book ‘The Case for Commonwealth Free Trade’. In the days and weeks that followed, I had made the acquaintance of a good number of people – many of which I am still proud to count as valued colleagues and friends.

During that trip I met with a great number of individuals involved in government and business who told me that they liked the book and it’s general direction (although some felt that the idea of a Free Trade bloc encompassing the entire Commonwealth was far too ambitious).

Almost to a person, they told me that it was a great idea and that Canada should partner with Australia and New Zealand, and possibly a couple of other member states. They also said that it was a shame that they could never contemplate any involvement in such a venture. They explained that membership in the EU precluded them from ever contemplating signing on, but that they wished us every success.

During a few candid moments in private, I asked whether or not they saw a day when this might change.

Almost all of them, regardless of party stripe, remarked that they didn’t see this as a possibility, although they would certainly back a change.

For years, I had the sense that the sentiments in Britain were akin to what you would see at a grade school dance. Boys lined up along one wall, with girls along the other. A slow dance is playing, but the only thing dancing are the lights reflecting from the mirrored ball.

Possessing perfect knowledge and some degree of mind reading, you determine that there are at least a half-dozen cases where a boy would not be refused a dance by the girl he likes and vice versa. A dispassionate and neutral observer might see the attractions, but they don’t. What they see is the prospect of humiliation and disappointment. Given the notorious degree of self-consciousness among adolescents, those involved sit through ‘Stairway to Heaven’, moving either to the washroom or the refreshment table, not to the opposite wall.

Almost every Briton I spoke to was unhappy with the European Union. Yes, they wanted to trade freely with the continent, but the whole incremental move toward a United States of Europe was an entirely different matter.

The thing is that in the spring of 2006, the call to have a referendum was a decidedly minority view, and the push to quit the EU even more exclusive.

Today, ten years and about five weeks later, not only is there a vote on the issue, it will be decided in less than a week and if polling is to be believed, that departure is a real possibility. In short, a significant portion of the British electorate has summoned the courage to cross the dance floor and seize the moment.

What changed?

A lot of people will have their own views on what represented a pivot moment, and many theories are equally valid. Having said that, I have my own.

In October of 2008, while celebrating our 9^th wedding anniversary, I lay in a hotel suite in a Cuban resort. The television was turned to CNN and the camera was panned to a group of Congressmen and Senators in Washington. At the same time, to the side of the image, one could see the Dow Jones and NASDAQ dropping like a two ton boulder off a sheer cliff face.

Like a great deal of the world, we were shocked and nervous, although the abundance of rum and sun were effective distractions.

The biggest crisis to the global economy dictated a concerted response, and the world through everything it had at the situation. Interest rates at near zero, deficit spending and ‘quantitative easing’ on a historic scale.

The good news is that it worked, but even the most effective medicine has some nasty side-effects. When using chemotherapy, doctors can kill cancer cells (which is good), but the tradeoff is to knock your immune system down to nearly nothing.

In fixing the global economy, governments and authorities did something else. They exposed their weaknesses. Like the proverbial receding tide at a nudist beach, modesties and shortcomings were revealed.

The Eurozone had always had its inconsistencies and contradictions. Harmonizing currencies among still sovereign states with greatly differing economies and economic policies was going to be a difficult task at the best of times. The difficulty lie in the fact that abandoning a significant symbol of nationhood – a currency – meant rolling back the cause of an ‘ever closer union’. That’s what it’s been all about – a European Parliament, European Courts, European laws, and yes – European money.

The Euro was not so much a deception, but a delusion – that you could harmonize the currency before you harmonized the forces that controlled and regulated it. But delusions are as stubbornly held as deceptions, and are defended just as vigorously. The defense is also similar in its pathology – defend a deception by laying down another one to cover it. If that doesn’t work, then add another.

The problem is that a delusion, no matter how stubbornly held it is, is just that – a delusion.

The delusions in this case led to drastic economic measures, and it is in the effects of those drastic measures that everyday citizens felt the pain – higher unemployment, bank failures and credit constrictions.

Had 2008 not happened, I doubt that Britons would be presented with the referendum. There would certainly have been calls for one, but they would have been dismissed by the powers-that-be as a ‘fringe’ opinion.

Delusions have a short shelf life, and even with that, require a great deal of energy to sustain. For those fighting to create a ‘United States of Europe’, the delusions have been plentiful, and the effort to keep them up equally demanding.

The delusions that you could ignore national and cultural identities and histories, that you could introduce a single currency without fully merging economic and political power, that you could create political institutions without giving them democratic legitimacy are all significant, but they pale in comparison to the one that – for Britain – started it all.

It is the delusion that you must give up your flag, your Head of State, your currency, your laws and your system of government in order to sell 10 percent more widgets.

This coming Wednesday, the world will learn if the delusion holds, or if it collapses under the weight of its own inherent inconsistencies.

Take two pills and vote in the morning

This may sound bizarre, but in following the news coverage of the US Presidential campaign, I am reminded of bacteria. I realize that in penning this I am also being more than a tad bit insulting. For that, I apologize. There is a point to this, but it requires a bit of a detour down analogy lane, so fasten your seatbelt.

One of the emerging issues in the field of medicine is how to deal with MRSA’s – drug-resistant bacteria, in layperson’s terms. The advent of penicillin in the early 20^th century meant that people could take a couple of pills a day for a week and survive potentially life-threatening illnesses. When my son was 4, he was admitted to the hospital with the same ailment that killed my grandfather’s older brother in 1927. Three pills a day for five days, and that was that. Antibiotics may have grown in number and in potency, but they are also declining in effectiveness.

There are a number of opinions regarding what happened, but they seem to fall into two categories – one, that overuse or improper use of the drugs has lessened their punch, and two – that the bugs themselves have begun to mutate and build immunities of their own. The truth is likely some combination of the two phenomena, but the outcome is the same. What used to work no longer does, and the experts are left scratching their heads over what to do.

And so back to politics.

Political insiders and professional advisors are often called 'spin doctors' by others and by each other. I know some who view the moniker as some mark of favour, some source of pride. The term really owes to the fact that like practitioners of traditional medicine,  they deal with complex interactions and know what ‘remedies’ to employ when a campaign gets sick (i.e:  goes off the rails). Their patient’s health and wellbeing is what counts, even if it is a campaign and not the human body

For years, they have prescribed the same types of messages, targeted the same demographics, and pushed the same particular issues. The strategies have been repeated because, to this point, they have always worked. 'Play to your base' has been standard operating procedure since before most of us were born. Do it effectively, and you get 4 years and then, come the next election, it's more of the same.

What if, like their medical counterparts, the treatment that these ‘doctors’ are prescribing are losing their potency?  What if all of the pills in the ‘spin doctor’s’ black bag don’t deal with the infection?


Donald Trump, Bernie Sanders and Ted Cruz should never have – in the eyes of the American Spin Doctor Association – gotten this far, this fast, and with this much potency. Like their medical counterparts, the politicos have thrown every textbook treatment at them. Endorsements from former candidates and current office-holders, nods of support from powerful interest lobbies, and the unleashing of surrogates to the 24 hour news channels and talk radio circuit are the equivalent of following an article in the latest edition of the New England Journal of Medicine or The Lancet. They look for what the professional consensus declares to be the ‘gold standard’ treatment, apply, then sit back and wait.

But if polls and delegate counts are the blood work and diagnostic tests of the ‘spin doctor’, it is clear that the treatment is not working.

The patient, of course, is not sick – but they are ‘sick and tired.’ They don’t respond to the Bill Clinton pill, and they seem to have developed a severe reaction to the Mitt Romney medication as well.

In this case, people are not the bacteria – but their problems are. Declining living standards, the hollowing out of industries – and communities – as well as the devaluation of what many considered the ‘American Dream’.  The treatments on offer have been the same for four decades, and if they had worked even a fraction of the amount they have been purported to, you would not have seen this phenomenon unfold.

The ‘spin doctors’ say they are as surprised as anyone, but should they really be? When you stake a career on political consulting, when you work 50+ hours a week on K Street, collecting hundreds of thousands of dollars from clients, and you get to sit in a studio where Wolf Blitzer or Anderson Cooper ask you what it all means, do you have the luxury of shrugging your shoulders and muttering “I dunno”?

My take is this – the bacteria is ‘anger’. It has been made stronger by a combination of inaction and indifference. The bug gets stronger with each ‘I don’t know’ and ‘I don’t care’ that comes from the governing class. They, in turn, calmly declare that they’ve seen it all before and administer a treatment of ‘we care, seriously we do’, of actors and singers appearing on stage and doing a rendition of their last Billboard top ten tune, or referencing the catch phrase that helped their last picture earn $100 million, and a heavy duty course of surrogates ‘explaining’ what the ‘real’ issues are.

The treatments used to alleviate the discomfort. Joe Q. Public’s overdue mortgage payments didn’t miraculously catch up just because Fleetwood Mac queued up ‘Don’t Stop’ for the umpteenth Bill and Hillary whistle stop, but he felt that much more positive about his situation that he could actually see light at the end of the tunnel.

Today, the light at the end of the tunnel feels a lot like the headlamp of a speeding locomotive.

Joe Q. Public has grown weary of the medicine he’s been taking for the past four decades, and like someone with a long term illness that defies conventional treatment, he’s willing do the equivalent of going to some third world country where a doctor has declared that they have a new experimental drug that the medical community back home won’t certify. If you’re that sick and that frustrated, you might just borrow fifty grand and fly halfway around the world for the ‘extract of the adrenal gland of the whatchamacallit’ because the hospital back home is full of people in white coats who just shrug and mutter ‘I dunno.’

The political establishment, I believe, brought this on themselves. The spin doctors over prescribed answers to tough socioeconomic issues with treatments barely stronger than a placebo. They allowed the ‘anger’ to grow and metastasize. Just as important, they failed to come up with something strong enough to give the patient – the middle class voter – any real relief. Instead, they have tried to manage the anger, much like a doctor tries to manage pain.

And that’s the thing. If all you are doing for your patient is managing their pain, you are admitting that curing their condition is not in your purview. The patient knows that, and that’s why he and she are willing to take the risk.

A letter to my British friends

As a Canadian, I am loathe to make any comment about the affairs of a foreign country, even if that country’s head of state and mine are one in the same.

The fact is, though, the current campaign regarding whether or not Britain should – or should not – remain in the European Union has already had such influence insinuated into it. There are those in EU member states who have declared their opinion as to what Britons should do, and what they may do if the answer is not to their liking.

More importantly, those in the Remain camp declare that “the Commonwealth wants us to stay.” As a citizen of a Commonwealth nation, I do not recall being asked my opinion on this matter. On the other hand, if people in the UK have declared that the feelings and sentiments of Commonwealth kith and kin are valid, then I no longer feel that I have any particular prohibition on stating my views.

In 2006, I travelled to the UK and met with several people in relation to my book “The Case for Commonwealth Free Trade.” I received a very polite and sincere welcome, but also a warning. I was told that while the idea sounded splendid, and that Canada, Australia and New Zealand should certainly avail themselves of the opportunity, the EU meant that Britain could only stand at the sidelines and give its well wishes. There was a sense at the time that the move toward an ‘ever closer union’ was inevitable and that little could be done to halt the inexorable march of time.

Two years later, while my wife and I sat in a hotel room in the Caribbean, we tuned into CNN and the unfolding economic crisis – the precipitous crashing of stock indices and the impromptu gathering of bankers and politicians to show solidarity. Just like the proverbial receding tide at a nudist beach, much came to be revealed. For eight years, we have been treated to terms like ‘stimulus’, ‘quantitative easing’ and ‘liquidity’ on an all too regular basis. That may have been the obvious result, but something else happened.

Theories and plans that had been treated like articles of faith began to be questioned. Like Sir Karl Popper’s theory of falsification, people began to discover limitations to assumptions, where things began to break down. That included the ‘European project.’

To this interested observer, the origins of ‘Brexit’ trace back to the very beginning of the UK’s membership in the Common Market back in the early 1970’s.

It was based on two assumptions and a bit of a finesse.

The two assumptions were that:

• Europe was in economic ascendency while the Commonwealth was in decline; and,
• Economic unity in Europe was necessary to ensure political solidarity against the threat of Communism

The finesse was not necessarily to deny that the planned end-game of the EEC was a ‘United States of Europe’, but to suggest that Britain could sign up for the economic access without taking on the political project.

Four decades later, the reality is as follows:

• The European Union’s long term growth prospects are moribund while Commonwealth nations are among the star economic performers; and,
• The end of Communism eliminated the ideological threat, and what military threat may or may not remain falls within the purview of NATO – not the EU

The finesse, as well, has shown itself to be ineffective. 

Skeptical minds might question how Britain is not part of a nation-building project when it must submit its national laws to a European Court, adopt laws passed by a European Parliament, and elect legislators to said Parliament. Suggestions that Britain is not heading toward inclusion as a province or state of a larger federation is reminiscent of the Black Knight in ‘Monty Python and the Holy Grail’ who, after having had his arms and legs lopped off, dismisses the injuries as ‘but a scratch’ and insists that he’s still up for a fight.

You can say that you belong to a trade agreement, but that trade agreement has a flag, an anthem, a Parliament, a President, a currency, courts and a body of laws. If it waddles like a duck, and it quacks like a duck, then one can only be drawn to a particular conclusion.

Free trade agreements exist around the world and in different guises. In the past decade, Canada has signed more free trade agreements than I can count on my fingers. That, incidentally, includes the recently negotiated agreement with the EU. In none of these instances were we told that we would no longer have a Prime Minister, or that we should stop singing ‘O Canada’, or that Her Majesty would no longer appear on the front of our 20 dollar banknotes.

Understand that Canada kept her sovereignty and political independence when concluding the Canada-US agreement in 1988. Also bear in mind that it was an agreement between a nation with half the UK population versus a nation with ten times our population, who had amassed more economic and political power than any other country or empire in the annals of human history. Yes, 35 million Canadians managed to secure free trade access to the world’s only superpower without having to change our flag or sing a different song at sporting events. There is no NAFTA flag, no NAFTA Parliament full of NAFTA MP’s – never has been and never will.

The experience of jurisdictions in North America and around the world is that you can do trade without a political merger. The EU does trade deals with non-member states all the time, so a post-Brexit UK should not be any different.

And that is the central question – one of politics, not economics.

To this outside observer, leaving means you don’t want Britain to become a like a Canadian province or an American state to a larger federation. Remaining means you are supportive of Britain becoming the jurisdictional equivalent of Ontario or Alberta, Ohio or Massachusetts.

What this outside observer cannot tell you is what you should do. That is fundamentally a decision for the British people. If you believe that the world has evolved in such a way that the future of your society is better served under a different construct that is a decision that you can make. If you feel that the future of Britain – economically and politically – is better served by maintaining political independence, then you have your choice as well.

Canadians and Britons have gone through much over the decades and generations, and the result of this vote will not alter that. It is your choice, and those of us beyond your border wish you luck in this monumental decision.

Anger versus hubris

*** In this politically charged atmosphere, it seems ridiculous to put a disclaimer, but here it is. I do not think Donald Trump is a good choice and if I were an American and a Republican, he would not receive my vote. On the other hand, I do not think his supporters are some strange sub-species that inhabits sewers, or should be publicly shamed and herded off a cliff. In fact, I think that such disdain actually has the unintended consequence of fuelling that movement. Understanding their motivation is not the same as agreeing with it.***

Long ago, I began my first campaign – to secure a party nomination in my local provincial constituency. A supporter had lined up a meeting between myself and a key contact - a local restaurant owner and political activist. In short, an extremely important person. I went to the restaurant and met with the man, along with a few others – two of which would be elected to municipal councils in future votes. It was a good conversation. We talked about the issues, the nomination race, and had time to talk about some personal connections we shared.

I did not win that race, but came very close. I can say without a doubt that I would not have done as well without the backing of this group. We remained friends beyond the vote.

A couple of years after, sitting down in the restaurant, we talked about that race. It was then that the man told me exactly why I got their support. He told me that my competitor had gone to pay a visit the week earlier. He went on to say that there was one particular difference between the two of us that made the difference. I asked him what it was, and he answered “you didn’t wipe off the seat.”

I was a bit confused by this, but he went on to explain that when the other candidate came and pulled out a chair to sit down, he grabbed a napkin and proceeded to wipe off the seat before sitting. The man was a proud business owner, and his restaurant was a focal point for the community. In that one gesture, the candidate gave the impression of haughty disrespect, of looking their nose down at them, and his establishment. The owner said that I showed up, sat down without ceremony, and talked informally.  The bottom line is that I won their support because I showed respect, and my opponent lost it because he didn’t.

It has been about two decades since that time, and I never really thought much about it. That is, until I started watching both the rise of anti-establishment politicians and the tone of those who are opposed. Although I do think that there are a number of people who ‘get it’, one of the better summations was made by Brendan O’Neill of The Spectator magazine in his piece “From Trumpmania to Euroscepticism: Revenge of the Plebs”:

“In both Middle America and Middle England, among both rednecks and chavs, voters who have had more than they can stomach of being patronised, nudged, nagged and basically treated as diseased bodies to be corrected rather than lively minds to be engaged are now putting their hope into a different kind of politics. And the entitled Third Way brigade, schooled to rule, believing themselves possessed of a technocratic expertise that trumps the little people’s vulgar political convictions, are not happy. Not one bit.”

For me, the direction of political debate in America and elsewhere creates a great deal of conflict in my own mind. By full disclosure, I have a bit of a foot in both camps. I do have a degree from a highly rated school, and I have had many an occasion to associate with people who exercise a great amount of ‘resources’. In short, I’ve been relatively lucky. I am also the child of working poverty, of a rural family that struggled to pay the bills and faced the kind of adversity that many of my university friends would not have first-hand knowledge of. Most times, it leaves me a bit cold and frustrated with both camps, but it also provides an insight.

When those in positions of authority say that the answers aren’t always that simple, they are right. When they say that anger and emotion are not helpful in the development of public policy, they are also right.

The thing is that when people living on the margins say they are angry and feel disrespected, they are speaking sincerely. When they say that they feel victimized by a system that certain people game for advantage, they are right. When they say they feel scapegoated for every ill of the world and feel as though they are being told to take the blame for every problem in society, I cannot disagree.

The truth is that if those who are considered part of the socioeconomic ‘elite’ feel at liberty to make the argument that the ‘average’ voter is naïve and uninformed, it must also be acknowledged that they also come off as arrogant, insulting, and oblivious to the life experience of a significant part of the population.

Let’s also broaden the dialogue a bit, because this is not about left wing versus right wing either.

My argument is thus: The activists in the Tea Party and Occupy movements are different signs of the same anti-establishment coin. They differ only in their ideological approach, but they have little use for the same group of people; and that people are drawn less to a political program than a desire to:

a)      fix what they think is broken;

b)      humble the people they feel have kept them down; or

c)      all of the above

If you think that there is an establishment elite stifling legitimate political debate and dissent, you may be drawn to Donald Trump. If you think the problem is that the same establishment elite is lining their pockets and reserving social and economic privilege for themselves at the expense of you and others like you, then you may have considered showing up for a Bernie Sanders rally. Same anger, different direction.

In martial arts, you are taught you can defeat your enemy by channeling their momentum to your own benefit. The faster someone runs at you, the higher you can fling them in the air. Trump (on the right) and Sanders (on the left) have succeeded by practicing politics like a martial art. The harder people who are identified as ‘establishment’ run at them, the more they are able to use the attack to solidify their own position. This creates a feedback loop where the attacks feed the entrenchment, giving rise to more attacks and more entrenchment. If a feeling of disconnect and disrespect by the establishment is what drove people into those camps, then a doubling down by the establishment is not going to do anything but boost those numbers.

But there is something more to this – something that is making the debate more intractable and potentially more volatile.

My father worked for years as a Stationary Engineer. In simple terms, he worked on and maintained steam boilers. Beyond all of the specific duties of care and maintenance, his job was to ensure that the boilers worked under a constant and steady pressure. Run too cold and they do nothing. Run way too hot and you’ll get anything from a heavy blast of steam from a release valve to an explosion that could take out part of a city block.

Democracies work the same way. Polite and vigorous debate generates healthy heat. On the other hand, apathy makes them run cold and if you stifle or prohibit debate, expect the gauge needle to go into the red. The anti-establishment direction is like the water in the boiler. It lies dormant on its own, only boiling when it come into contact with heat.

And like boilers, the Trump and Sanders campaigns are driven by the steam generated by the establishment elite that not only provided heat to the disaffected, but pressurized them by constricting what constitutes fair and socially acceptable debate.  The lack of opportunity and socioeconomic mobility is the flame, and the inference that people lack the intelligence or moral grounding to legitimately complain about their lot in life serves to ratchet up the PSI’s.

While leaders are creations of their own particular time and circumstance, the forces that put wind in their sails have come before and will likely do so again.

In many respects, the US (along with a number of countries) is going through something akin to the ‘Gilded Age’ (1870’s to roughly 1900), where life got exceedingly good for some while not so much for others. During that time, the Democrats produced William Jennings Bryan, who advocated ‘free silver’ in order to alter the Gold Standard, while the Republicans had Theodore Roosevelt, the ‘trust buster’ who went toe to toe with men like Morgan and Rockefeller. In other words, both major political parties in the US fielded Presidential candidates who made shaking up the status quo a major priority.

Disenfranchisement leads to reaction, leading to more feelings of disenfranchisement. Of course for some it will officially end in November when an individual is elected US President, but that is a merely milepost along a much longer road.

We live in the political age of the irresistible force meeting the immovable object – lots of heat and light with no respite from the fireworks.  Unless one group loses their anger, or the other loses their hubris, we will continue to live in interesting times.

Walking the Fine Line: The Challenges and Opportunities of a ‘Brexit’ to Canada’s European Policy

On January 23, 2013 British Prime Minister David Cameron delivered a long anticipated speech on his country’s relationship within the European Union. Cameron’s speech outlined the intention of his government to enter into a negotiation with EU member states in order to ensure that the balance of powers and authority rests with member governments, and not with the EU Commission or the European Parliament.  In the past day, Cameron has announced that an agreement in principal has been reached, thereby triggering a long promised referendum – one that presents the choice to stay in the EU under the newly negotiated terms, or to leave the Union and, presumably, seek a successor trade agreement.

Based on polling data, as well as the outreach of already mobilized campaigns, it is not entirely clear what scenario will unfold on June 23. The most recent surveys place both sides in a statistical ‘dead heat.’ As with most votes of this nature, it will be driven as much by emotion as by economic arguments, and with a little over 100 days to make their respective cases, much can happen.

Britain’s status as a major economic power, its global trade and investment connections, as well as its significance in transatlantic geopolitical affairs, makes it an important – almost indispensable – player on the world stage. A ‘Brexit’ would most certainly challenge existing foreign policy totems, and would require countries such as Canada to engage in a serious re-think of our own affairs with both Britain and the EU.

Decision-makers in Ottawa will be pressed to develop a policy framework that maintains a healthy and positive relationship with both Brussels and London no matter the outcome of this issue. Should the status quo remain, so, too, would Canada’s existing European policy, that of fostering significant trade and strategic ties with the EU.  If Britain were to exit the structures of the European Union, Canada would need to work to put in place complimentary arrangements with the UK, while still maintaining good relations with Brussels. Some thought to what that relationship would entail would be advised.

The purpose of this paper is neither to speculate nor advocate on the efficacy of any of the scenarios. The question of EU membership for Britain properly belongs with that nation’s people and their representatives. The focus of the paper is in asking what the impact of a ‘Brexit’ may mean for Canada’s relationships with Britain and the European Union. More specifically, what should Canada’s response be if such a situation was to develop?

The Potential for a ‘Brexit’

For a long period there has been a growing movement in the United Kingdom to redefine their relationship with Europe.  The idea of Britain choosing to leave the political structures of the European Union has been referred to as a British exit, or ‘Brexit.’

While an overwhelming majority of Britons do wish to preserve trade links and economic cooperation with the European Union, they are increasingly opposed to the political project - one that would inevitably see their country become a province of a larger European Federation.

In May of 2012, British polling firm YouGov conducted a survey for the Sunday Times which found that only 28% of respondents would vote in a referendum for Britain to stay in the EU, and that 51% would vote to leave. Their polling results - after having tracked the question over a one-year period - reveal a rather stable distribution pattern.[i]

	% who would vote for Britain to...
	Stay in the EU (a)	Leave the EU (b)	(b) minus (a): majority for leaving
June 2011	35	48	13
August	30	52	22
September	33	47	14
October	31	52	21
December	41	41	0
January 2012	34	44	10
April	31	49	18
May	28	51	23

On the eve of EU negotiations, polls indicate that the difference in support for remaining in the EU as opposed to leaving is within the statistical margin of error – with 52 per cent in the "remain" camp and 48 per cent wanting to leave.[ii]

In juxtaposition to this, those member states firmly committed to the future of the EU have been clear and consistent in their aspirations. From the pioneering work of Monnet, Schumann, and Spaak shortly after World War II up to the present, the economic integration of Western Europe has always been a prelude to something more comprehensive and encompassing. Comments by EU Commission President Juan Manuel Barroso were very explicit in this regard:

"Let's not be afraid of the words: We will need to move towards a federation of nation states. This is our political horizon. This is what must guide our work in the years to come"[iii]

It would not be wrong to say that many in the European Union have always seen economics more as a means to an end, one that would see the formation of a single European federal state.

Whether or not these intentions have been fully appreciated by British decision-makers over the decades is difficult to ascertain. There are those in the UK who support greater economic and political integration with their EU partners. Their appraisal of Britain’s EU future is based on a view that Europe provides economies of scale in an increasingly competitive and regionalized global economy. They assert that British interests are better served within that relationship. There are others who see the relationship in a much different light, and advocate leaving the EU full stop. The majority opinion, however, distinguishes between the political project and the economic partnership. Its preference would be for Britain to transition from being a EU member state to one that enjoys a free trade relationship with Europe, either by rejoining the European Free Trade Agreement (EFTA) or negotiating a separate bilateral deal. Key to this view is the desire to preserve trade links with the EU while being free to pursue bilateral and multilateral agreements elsewhere.

This debate is now fully underway, and is experiencing what can only be referred to as a ‘preference cascade.’ Opinions that would have been considered marginal and highly speculative prior to 2008 are now being discussed in the British mainstream – in the media, and in the halls of Westminster.  The UK Independence Party has now supplanted the Liberal Democrats as Britain’s third-largest party. That party has already fought a British general election on a policy platform that included both a withdrawal from the European Union, as well as support for the creation of a Commonwealth Free Trade Area. Many leading figures in the British Conservative Party, as well as a number of Labour MPs, publicly support replacing Britain’s EU membership with a successor UK-EU free trade treaty.

The response to this emerging trend has been sporadic and lacking focus.

EU President Herman van Rompuy has suggested that a 'Brexit' would have catastrophic consequences for the Union as a whole, adding that member states cannot simply ‘cherry pick’ those policies they wish to retain for themselves.[iv] At the same time,  the Group of European Federalists, an umbrella organization representing 19 pro-EU federation constituent groups and including several Members of the European Parliament (MEP’s), openly floated the idea of Britain assuming an ‘associate member’ status within the EU, with a looser association.[v]

In addition, former EU Commission President  Jacques Delors has stated publicly that nothing is to be feared by the possibility of a ‘Brexit’, and that a EU-UK free trade deal is entirely workable.[vi] The conclusion of an agreement against this backdrop would suggest that the EU does not speak with one voice, and that the possible negotiating position taken by Brussels in the event of a ‘Brexit’ will depend greatly on what pressure is exerted, and by who.

Potentialities for 2016

With a majority mandate, Cameron has had more latitude in dealing with Europe. Having said that, his task remains incomplete. While he may have tentative success in dealing with the demands and expectations of EU partner states, the same must also be accomplished among those who will determine the agreement’s final fate – the British people. Those who have determined to either stay in the Union or to depart it have declared their intentions. What remains are the majority of Britons, many of whom are genuinely conflicted on this question. While what was hammered out among EU leaders may have satisfied the government’s main points, will it have done the same for those casting a ballot on June 23^rd?

Canada’s position on Europe and Britain

In this environment, Canada must consider its position should a ‘Brexit’ occur.  Given the political and economic realities of our relationship with Europe as a whole, a great deal of forethought and caution should be exercised. This means considering the possibility of having to forge a policy that keeps the lines of communication open in both London and Brussels.

For Canada, the status quo presents no policy challenges. Britain is currently part of the European Union. By virtue of its commitments made through the Lisbon Treaty, it is unable to enter into any trade agreement outside the rubric of a EU-negotiated treaty. Our foreign and international trade policy has, over the past decades, adjusted to this reality. If the current state of affairs continues, then the existing policy requires no great rethink.  The successful ratification and implementation of CETA provides a free trade environment between Canada and the United Kingdom by default.

If, however, political developments in Britain do lead to an ‘in/out’ referendum, and a formal exit from the European Union, Canada’s trade relationship with both Europe and Britain would need to undergo a significant change.

In 2015, Canada’s exports to the EU totaled C$39.47 billion.[vii] Any opportunity to grow this trade is vital to our national interests. It would not be an exaggeration to say that involvement in the ‘Brexit’ debate would be ill-advised and counter-productive.

This trade number, however, also belies the importance of maintaining a strong trading relationship with Britain. Nearly 43 percent of Canada’s exports to the European Union are specifically destined for the United Kingdom, some C$16.60 billion in 2015.[viii] By any practical measure, a ‘Brexit’ would immediately cut Canada’s exports to the EU by half. While the proposed Canada-EU Trade Agreement (CETA) will enhance trade volumes overall, it is doubtful that the loss of British markets to Canada would be compensated for by increases in exports to the remaining EU member states.

The reality is that Canada-EU trade, as it is currently constituted, is actually Canada-UK trade. If the EU includes Britain, then the CETA can deliver what its proponents expect. If Britain is removed from the equation, then none of the assumptions that underpin CETA's benefits can hold. In fact, given that Canada’s EU imports during this same period were C$52.94 billion, and that Britain accounted for C$8.60 billion, a ‘Brexit’ would have the effect of increasing the trade imbalance that already exists with the EU even further.

The UK is a significant economic player in the world, with London serving as the pre-eminent centre for international capital markets.  A reluctance to join the Eurozone has not diminished this status, and it is highly unlikely that a redefined relationship with the EU would cause a collapse of London's status as a global financial capital. It is highly unlikely that Canada would not contemplate the possibility of partnering with such a close ally and fellow Commonwealth power should a ‘Brexit’ occur.

This issue may also be unavoidable for Canada to address.  For the UK, a ‘Brexit’ will definitely involve an immediate negotiation for some form of new free trade agreement with the EU.  Beyond that, Britain will almost certainly involve an active promotion soon after of free trade relationships with select Commonwealth states and possibly with NAFTA. On both counts, Canada figures pre-eminently. Indeed, it is very likely that a post-EU Britain would promote an initial agreement with Canada as a template for future extra-European trade treaties.

Even if Canada does not actively court London after a ‘Brexit’, it is clear that British overtures to Ottawa would occur very soon after. Whether the initial phone call is placed from 10 Downing Street or 24 Sussex Drive, a call would most certainly take place.  The Federal Government has a small window of opportunity to consider what will be said when the phone does ring, something that will ease thoughts and attitudes in both Brussels and London.

The Quebec Precedent

In October of 2012, the then newly elected Premier of Québec, Pauline Marois, travelled to Paris to meet with French President François Hollande. For frequent observers of politics in that province, this trip has become somewhat of a time-honored tradition – regardless of party stripe.

The meeting at the Elysée Palace was typically warm and cordial, and it gave an opportunity for Hollande to reiterate a policy as enduring a tradition as these get-togethers. When it comes to the question of Québec sovereignty, the French answer is “ni, ni.”[ix]

“Ni, ni” is an acronym that stands for ‘non-interference, non-indifference.’ In its simplest terms, it means that France will not offer any support, material or otherwise, in the cause of Québec’s separation from Canada. On the other hand, it also promises not to turn a blind eye to Québec should it ever achieve its own independence. In short, it means no help to leave Canada, but also includes implicit promises of assistance if it ever did make that choice.

The policy was born of a difficult set of circumstances in the 1960’s, when Québec’s ‘Quiet Revolution’ was beginning to transform the province’s francophone society, and its political discourse.  The lapse of the decades-long Duplessis era and the rise of Jean Lesage’s Liberals not only changed government policies, but also expectations and attitudes among Québecois. This transformation still largely informs politics in Québec to this day.

The natural linguistic and cultural affinities between France and Québec make any attempt at neutrality on the sovereignty question nearly impossible. On the other hand, as witnessed by the fallout from President Charles de Gaulle’s ‘Vive le Québec Libre’ speech from Montréal City Hall in July of 1967, any outright support for Québec separation – whether real or implied – has its own dangers.

Politically, France cannot afford to be seen to ‘abandon’ Québec, and yet it cannot risk alienating Canada as a whole. The four-decade old policy may not perfectly suit either the tastes of the most adamant federalists or separatists, but it does succeed in creating a normalized state of relations. It keeps doors open in both Ottawa and Québec City, regardless of what party is in power, Péquiste or not.

A policy of ‘non-interference, non-indifference’ has succeeded reasonably well under often difficult circumstances, and for a lengthy period. It is not a perfect approach, but it is one that offers all parties concerned the opportunity to move beyond an issue that is both difficult and, at its heart, irreconcilable. Quebec is satisfied that should it embark on the path to independent statehood, that it will have a sure ally. Canada is also satisfied that such goodwill will not extend to tacit and proactive promotion of sovereignty.

Like France’s policy regarding Québec, Canada would do well to consider a similar position toward the UK on the possibility of their exit from the European Union proper.  Ottawa should continue to make clear that the question of Britain’s membership in the EU is one properly considered, debated and settled by the British people through whatever mechanism they choose – Act of Parliament, or popular referendum. To date, political leaders in Canada have not involved themselves in this debate, nor should they. On the other hand, Britain forms the most significant share of Canada’s European trade. Cultural, linguistic, historical and political affinities bind English-speaking Canada with Britain just as France and Québec share indelible and enduring bonds. If a post-EU Britain made overtures to Canada regarding a free trade agreement, it would be counterintuitive not to respond positively in kind.

There are, of course, striking differences between the British and Québec cases. While Québec is an integrated part of a constitutionally mandated federal state, Britain is still a sovereign national entity in its own right. Dealing with the consequences of a nation leaving a customs union is not on the same scale as a constituent part of a federal state seeking nationhood in its own right. Nevertheless, we do live in a world where the political realities of a situation often trump all other considerations, and that reality is based largely on perceptions and aspirations.

The Way Forward

Canada’s long-term economic and strategic interests lie in fostering strong and mutually beneficial relationships with Europe. This includes both the European Union and the United Kingdom. Current trade policy presumes a continuation of British membership in the EU, and is equal to the challenge should that situation continue. If, however, Britain decides to leave the European Union, then that policy will need to undergo a careful and necessary re-think.

Canada can, and will, benefit from enhanced trade with the European Union, with or without British membership. Beyond the financial gains, CETA will help further cement the broader transatlantic relationship, one that encompasses partnerships on a myriad of global policy imperatives.

We must also recognize, however, that should Britain leave the European Union, the anticipated gains from CETA will be significantly diminished. Given the magnitude of Britain’s portion of Canada’s EU trade, it is highly unlikely that other member states would be able to increase their Canadian trade to such an extent as to compensate for the loss.

The challenge for the Trudeau government is, simply put, to develop a contingency that preserves the market access assurances obtained under CETA regardless of the outcome of the June 23^rd referendum.  The status quo depends on a majority of Britons voting to accept the agreement and remain in the EU. Should the result differ, then the federal government will need to act quickly to preserve Canadian interests.

For Canada to realize the economic benefits promised by CETA in its current form, it will have to ensure that its European market access remains ceteris paribus. In the event of a ‘Brexit’ this can only be obtained by concluding a successor Canada – UK treaty that mirrors the arrangements included in CETA.

In the end, Canada’s policy on Europe needs to be flexible enough to ensure a good and productive relationship with both London and Brussels without alienating either one, even if Britain chooses a future outside the formalized governance structures of the European Union. In this regard, the long-established example of France’s Québec policy provides a useful, effective and proven path.

---

[i] “Will Britain vote to leave the EU?”,YouGov – 21 May, 2012 http://yougov.co.uk/news/2012/05/21/will-britain-vote-leave-eu/

[ii] EU referendum: polls remain tight as Cameron heads to Brussels, The Week, February 18, 2016 http://www.theweek.co.uk/eu-referendum/65461/eu-referendum-polls-remain-tight-as-cameron-heads-to-brussels

[iii]“Europe must become 'federation of states', Barroso says”, Daily Telegraph, 12 September, 2012, http://www.telegraph.co.uk/finance/financialcrisis/9538077/Europe-must-become-federation-of-states-Barroso-says.html

[iv] " 'UK can't 'cherry pick and choose powers to claw back from Brussels', EU president warns," Jason Groves, Daily Mail, 27 December 2012.   http://www.dailymail.co.uk/news/article-2253956/UK-cherry-pick-choose-powers-claw-Brussels-EU-president-warns.html?ito=feeds-newsxml

[v]“EU federalists: UK could be ‘associate member’,”  BBC News, 31 December 2012.

 http://www.bbc.co.uk/news/world-europe-20875755

[vi] "It’s OK for Britain to quit EU, says Delors," David Charter, The Times, 29 December 2012.  http://www.thetimes.co.uk/tto/news/politics/article3642769.ece

[vii] Statistics Canada, Imports, exports and trade balance of goods on a balance-of-payments basis, by country or country grouping (last modified 19 February 2016)

http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/gblec02a-eng.htm

[viii] Ibid (downloaded 19 February 2016).

[ix] “France’s president embraces traditional ‘ni, ni” stance on Quebec’s future,” Kevin Dougherty, Montreal Gazette, 15 October, 2012, http://www.montrealgazette.com/news/Quebec+sovereignty+France+President+Hollande+returns+position+meeting+with+Premier+Pauline+Marois/7390753/story.html