Why a Remain vote in Britain is best for NZ

By Nicholas Ross Smith, University of Auckland

COMMENT:

For New Zealanders born before 1960, the decision by the UK to join the European Economic Community (EEC) likely remains a vivid memory of the 1970s.

At that time, the UK was undoubtedly our most important international partner. For instance, in 1970 - the year Britain started negotiations to join the EEC - 34 per cent of New Zealand's exports went to the UK, with the United States (15 per cent) and Japan (11 per cent) the next most important destinations.

Even more startling a statistic is that of total exports to the UK in 1970, roughly 97 per cent were agricultural goods.

Thus, when the UK decided to join the ultra-protectionist EEC - particularly with regards to its infamous Common Agricultural Policy - it was an earth-shattering event for New Zealand at that time.

Fast forward 45-odd years and the UK, if the polls are to be believed, is a serious chance to leave the EU (which evolved from the EEC) via a referendum on Thursday.

While a vote in favour of a Brexit will have implications, negative and positive, for New Zealand, any suggestion that it could be analogous to the shockwaves that occurred in 1973 is hyperbolic and does not stand up to scrutiny, in isolation at least.

Due to what went down in 1973, when compiling a list of most important international partners for New Zealand in 2016, the UK out of the EU would definitely lie outside of the top five and potentially outside of the top 10.

This is partly because New Zealand now has a dominant Asia-Pacific focus in its foreign policy, a focus which will only strengthen further in the wake of the TPPA and RCEP (if it eventuates).

As of 2016, the UK is our 6th most important trade partner, and could easily be overtaken by Malaysia, Singapore, Indonesia, Thailand, the Philippines and even India over the next 10 years.

Thus, although New Zealand might suffer from a bit of short-term collateral damage due to the likely downturn in markets across the globe, the long-term effects of a Leave vote will probably be minor to our economy.

The local optimism that a Brexit would result in more British trade with New Zealand betrays the fact that most exit-scenarios foresee the UK remaining closely linked economically with the EU. Nevertheless, a Brexit still could have one fringe benefit for New Zealand.

As key Brexiters like Nigel Farage have championed, a post-EU Britain could adopt a more favourable immigration policy for its Commonwealth, which would be a boon for young New Zealanders looking to do that Kiwi rite-of-passage, the OE.

The EU's future is shrouded in uncertainty right now. In addition to the threat of a Brexit, the EU has still yet to safely navigate its many financial crises, and the influx of refugees coupled with the perceived rise of terrorism has led to a spike in anti-EU sentiment across the continent

A second important relationship, one barely mentioned here, which will be affected by a Brexit is New Zealand's relationship with the EU.

Whereas our relationship with the UK has been on a negative trajectory over the past four decades, our relationship with the EU has arguably strengthened.

Despite the EU remaining restrictive to our agricultural products and outside of our top three economic partners, its enlargement to encompass 28 member states has nevertheless strengthened our relations with previously unfamiliar countries in Central and Eastern Europe.

Furthermore, plans are afoot for the negotiation of a free trade agreement between the EU and New Zealand.

Given that the EU sans-Britain accounts for roughly NZ$14 billion in two-way trade, even if a Brexit occurs such an agreement would have potentially positive economic outcomes for us.

However, the EU's future is shrouded in uncertainty right now. In addition to the threat of a Brexit, the EU has still yet to safely navigate its many financial crises, and the influx of refugees coupled with the perceived rise of terrorism has led to a spike in anti-EU sentiment across the continent.

Subsequently, EU secession movements inspired by the Brexit campaign have sprung up in many of the 28 EU member states, with some fearing that France (Frexit) and Czech Republic (Czexit) could follow the UK if it chooses to leave.

Here in lies the true threat of a Brexit to New Zealand.

While we could easily withstand the potential worst-case negative consequences of the UK leaving the EU, the collapse of the EU would cause a seismic shift that probably no country would be safe from. The domino effect would be so great that the world would be plunged into a second global financial crisis in the space of a decade.

Britain's Prime Minister David Cameron, left, and Opposition Labour Party leader Jeremy Corbyn, have campaigned for a Remain vote. Photo / AP
Britain's Prime Minister David Cameron, left, and Opposition Labour Party leader Jeremy Corbyn, have campaigned for a Remain vote. Photo / AP

There is no guarantee that the UK leaving the EU would precipitate the Union's collapse.

Far from it, I believe it would actually strengthen it as it would remove a less than committed member and allow the Franco-German engine to steer the Union towards further integration.

Indeed, the EU does have a track record of coming back from seemingly fatal crises even stronger.

It was thought to be on the verge of collapse in the late 1970s after suffering from the prevalent stagflation of the time. Yet by the mid-1980s it had admitted three new members (Greece, Portugal, and Spain) and had signed the Schengen Agreement and the Single European Act, two key pillars of the EU today.

However, this is a theory few would want to put to the test right now given the multitude of problems facing the EU.

This explains why so many EU countries have been trying to persuade the UK to remain. Even Hungary, led by noted admirer of Vladimir Putin, Viktor Orban, took out a full-page advert in the Daily Mail to plead with the UK to vote to remain in the EU.

Thus, while, in reality, the potential Brexit will probably not affect New Zealand too much either way, we should nevertheless err on the side of caution and hope for a Remain outcome in order to mediate the remote possibility that the UK leaving the EU starts a chain reaction which ends with global uncertainty.

- Nicholas Ross Smith is an honorary academic in politics and international relations at the University of Auckland

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