Brexit does matter here

The world is closely watching to see if a Brexit - the United Kingdom’s departure from the European Union - will really occur. British Prime Minister David Cameron on Saturday announced that his government will hold a referendum on June 23 on the economic future of the country, asking the people if the UK should remain as a member of the union.

Alarmed by the British move to stay away from the politico-economic union of 28 member nations, EU leaders took action to accommodate most of the prime minister’s demands, including suspension of welfare benefits to immigrants. But they couldn’t stop the Brits from pushing for a plebiscite on whether to quit the union. Given the evenly split public opinion on the issue, we can hardly exclude the possibility of a Brexit being realized.

Though Brexit may sound remote to us, we cannot sit on our hands. First of all, if the UK decides to leave the union, Korea’s trade with the country will be adversely affected in the framework of the Korea-EU FTA. For instance, the UK last year accounted for 15.2 percent, or $7.3 billion, of our total $48 billion exports to the EU. But after a Brexit, our exports to the country cannot receive tariff benefits as agreed in its FTA with the EU five years ago.

What would pose a problem for our companies is not only the apparent disadvantage in tariffs but also the expected downsizing of the EU economy as a whole. In 2015, when the possibility of a Grexit - Greece departing from the EU - was raised after the country faced an unprecedented fiscal crisis, a renowned economic research institute forecast that our exports to the EU would decrease by 7.3 percent if that happened. The size of the British economy is more than 10 times larger than Greece. A Brexit
will inevitably have a much bigger impact on our export.

We also cannot rule out the possibility that a Brexit may bring other significant changes around the globe. The United Kingdom has been taking steps in sync with the European Union’s common diplomatic policies, not to mention having a greater say in the international stage as a permanent member of UN Security Council. If such a country is excluded from the union, our foreign policy will likely be affected.

For our part, it would benefit us more if the United Kingdom remains as an EU member. U.S. President Barack Obama is expected to urge the Brits to stay in the union. Considering apparently harmful repercussions from a Brexit, our government needs to consider the idea of delivering a message in support of the UK remaining as an EU member in the future.

JoongAng Ilbo, Feb. 22, Page 30