Brexit: How Australia could benefit AND fight European populism

The vicious cycle between political and economic uncertainty and populism in Europe needs to be broken and Australia can help.

By Dr Evgeny Postnikov
School of Social and Political Sciences, University of Melbourne

The Brexit process ending the UK’s membership in the European Union has officially started.

The contours of the final deal negotiated between London and Brussels are yet to be seen as the British government and its counterparts in the EU are gearing up for some hard bargaining over the next two years. But the hard Brexit option with the complete loss of single market access is now inevitable.

In the meantime, the depreciating pound and rising inflation - and stagnating wages and job losses that will likely ensue - are making investors nervous. This economic uncertainty, together with the perception that the British government does not have any concrete plans to manage the divorce, is sending negative signals throughout global markets.      

Uncertainty also persists on the continent, as France prepares to hold presidential elections in a matter of weeks; and Germans go to the polls in national elections in September.

The French presidential election is historically unprecedented, with the polls indicating the possible win of the Front Nacional’s leader Marine Le Pen, a far-right populist who wants to end France’s membership in the EU. Her victory would signify the triumph of the same populist and protectionist forces that shook American politics last year.

In Germany, the position of Chancellor Angela Merkel, who lately assumed de facto leadership in the EU, is shattered (although her defeat in September is not very likely). The future of the EU that always depended on Franco-German leadership could be at stake. The results of recent Austrian and Dutch elections, where populist and far-right candidates were narrowly defeated, are mildly reassuring but do not change the long-term socio-economic dynamic in Europe that propels populist ideas forward.  

Political and economic uncertainty can undermine much needed economic growth leading to more populist victories

The Transatlantic Trade and Investment Partnership (TTIP) that promised to restore growth and create new jobs might be the next casualty of populist protectionism in the EU and the US. The vicious cycle between political and economic uncertainty and populism needs to be broken.

Amidst this uncertainty, a tremendous window of opportunity exists for Australia, Europe’s traditional economic and political ally, to extend a helping hand fighting against populism by promoting economic prosperity while advancing its own interests. Trade is a crucial area where Australia needs to act swiftly and assertively. Free trade can contribute to economic growth and job creation, allaying populist forces on the continent and minimizing the harmful impact of Brexit.

In the world where the United States, embroiled in internal quagmire, is quickly sliding into protectionism and has virtually abdicated from its traditional role of the guarantor of liberal economic order, the stakes are high in both Europe and Australia, some of the main beneficiaries from this order.

First of all, it is critical for Australia to negotiate a free trade agreement with post-Brexit Britain. The UK will remain an important trading partner for Australia and solidifying economic ties would be mutually beneficial. The deal should be prepared now, as the EU-Britain negotiations are happening, so it could be enacted as soon as Brexit happens.

Australia is in a unique position to negotiate a very favorable deal

The Brexiteers campaigned on signing independent trade agreements with important strategic partners once outside the EU. They would be desperate for such deals with a number of countries, including Australia, especially if preferential access to the EU’s single market is lost due to hard Brexit. Australia’s bargaining power would be larger as UK politicians’ hands are tied by their promises to the British electorate. At the same time, trade with the rest of the EU is more critical for Australia, so its dependence on a potential agreement with the UK is lower, enhancing its negotiating position. Consequently, Australia could try to push for preferential access for its agricultural products in the British market which was lost in the 1970s when Britain joined the European common market. Considering that agricultural trade liberalization is long overdue, as tariffs on most of manufactured goods are already low, and with the support for British farmers through the EU’s Common Agricultural Policy ending after 

Brexit, now would be a good time to pursue this goal

Second, Australia should strengthen its efforts to negotiate a free trade agreement with the EU. The EU is Australia’s second most important trading partner after China. Australia has been actively signing free trade deals with multiple trading partners, and there is no good reason not to have one with the EU. The time is very ripe for this. Considering that high hopes for the much anticipated Transpacific Partnership (TPP) between the US and eleven other nations in the Pacific did not materialise, and the TTIP’s fate is uncertain, an agreement between the EU and Australia would be even more important.

Australia could confirm its commitment to liberal internationalism

In today’s world of declining American leadership, the EU, who has traditionally played an active global role as a promoter of liberal internationalist values, is left on its own. Considering multiple internal crises that it is simultaneously dealing with, the EU needs a helping hand, and Australia could provide it through such an agreement, confirming the joint commitment to liberal internationalism. Negotiating with the EU, Australia could look at the example of Canada that was recently able to secure the Comprehensive Economic and Trade Agreement (CETA) signed last year.    

In a world where American power might be no longer underpinning liberal norms and economic interdependence, leadership needs to be exercised collectively if we want to avoid the downward spiral of harmful protectionism and economic autarchy. Both Brexit and Europe’s need to affirm its global role provide a great opportunity for Australia to secure its economic interests and pull its weight as a middle power more fully in global affairs. Not to mention that providing such a helping hand could also have a positive knock-on effect on stability on the European continent and restrain future populists.

Image credit: Jan Buchholtz/Flickr


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