As Britain debates whether to quit the European Union or stay, Asia can only hope its appeals to remain are heard, writes Raymond Whitaker
When British voters go to the polls on June 23 to decide whether to remain in the European Union or leave, 43 years after joining, most are unlikely to be aware of the implications for Asia. Yet billions of dollars in trade and investment, not to mention a great deal of history, are in the balance.
Recently the most visible impact of Asian business on the ordinary Briton was the decision of India’s Tata Steel to withdraw from the steelmaking business in the UK, with the potential loss of thousands of jobs. This highlighted the extent of Tata Group’s involvement in Britain, where according to some estimates, it earns as much as 60 per cent of its revenues. Since India is the third largest direct investor in the UK, after the United States and France, the country’s largest conglomerate could be expected to have a large stake, but it came a surprise to many British people that Tata also owned famous brands such as Jaguar Land Rover and Tetley tea.
The episode had a direct bearing on Britain’s relationship with the EU, however. Why was Tata Steel seeking to sell its British plants? Because it could not compete with cheap steel flooding into Europe from China, where a slowing economy has snuffed out domestic demand. In the midst of the controversy over potential loss of steel jobs from Port Talbot in Wales to Rotherham in South Yorkshire, it emerged that the British government, which has gone out of its way to build a ‘special relationship’ with Beijing, had prevented EU proposals to impose anti-dumping tariffs on Chinese steel.
It was a stark illustration of the confused approach to Europe among the ruling Conservatives. While the Prime Minister, David Cameron, and his Chancellor, George Osborne, call for Britain to remain in the EU, they are contradicted every day by senior Cabinet colleagues campaigning for ‘Brexit’. The more Cameron and Osborne issue apocalyptic warnings about the economic, political and security dangers of leaving, the more the public wonders why the Prime Minister ever felt it wise to call the referendum in the first place. The answer is that he was seeking to silence his own party’s Eurosceptics, but if he scrambles through on June 23, it will be thanks to support for ‘Bremain’ among most of the opposition – apart from the anti-Europe, anti-immigration United Kingdom Independence Party (Ukip).
However it is achieved, a vote to remain will be a relief to Asia’s leaders, none of whom have encouraged Britain to withdraw from the EU. India’s Prime Minister Narendra Modi said during his visit to the UK last November that Britain was ‘the entry point for us to the European Union’. Though he was not more specific, he hardly needed to be: the EU is India’s main trading partner, ahead of China and the United States, and he was assumed by his British audience to be supporting continued membership of the union. Indian business has reinforced that message. Dr A. Didar Singh, secretary general of the Federation of Indian Chambers of Commerce and Industry (FICCI), said recently that the UK was ‘a valued economic partner for India’. Leaving the EU ‘would create considerable uncertainty for Indian businesses… and would possibly have an adverse impact on investment’.
Sudhir Dhingra, chairman of Orient Craft, one third of whose clothing exports go from India to Britain and other EU countries, said London was ‘the number one place’ for those wanting to establish offices and businesses in Europe. Thanks to the rich historical links between the two countries, some 800 Indian businesses are estimated to have significant investment or trading relationships with Britain. That stake has increased sharply in recent years with the rapid expansion of the Indian economy – in 2014 alone, Indian investment in Britain increased by as much as 64 per cent.
Pointing out the advantages ‘in terms of the law, the judicial system, taxation, the language above all’, Dhingra said he was very anxious about a British exit from the EU, predicting it would mean a decline both in his company’s businesses in the UK and those of his customers. But Brexit campaigners claim that precisely because of Britain’s close relationships with countries such as India, the UK will not only be able to survive outside the EU, but can negotiate its own more favourable trade deals individually.
No longer forced to accept unlimited immigration from the rest of the EU, say the ‘out’ camp, the doors could be opened to the Commonwealth instead. Priti Patel, Cameron’s employment minister, said: ‘Many members of the Indian diaspora find it deeply unfair that other EU nationals effectively get special treatment. This can and will change if Britain leaves the EU. A vote to leave the EU is a vote to bring back control over immigration policy to the UK.’ This echoed the comment of a Ukip spokesman, Steven Woolfe, who said: ‘If granny wants to come over from Pakistan or India for a wedding, they have got more difficulties in terms of getting visas than would a granny from either Spain or France.’
But many, if not most, of those who will vote for Brexit, especially Ukip supporters, are against practically all forms of immigration to the UK. Patel was contradicted by many other British parliamentarians of Indian origin, who pointed out that restrictions on arrivals from the subcontinent were imposed by Britain, not the EU. The columnist Yasmin Alibhai-Brown, who like Patel was born in Uganda, asked whether she and others making the same claim ‘really think that if we leave the EU, Britain will become less hostile to those from the East and South? Dream on’. Singh, the FICCI secretary-general, even expressed the view that a British exit could be harmful to the ‘movement of professionals to the UK’ from India.
, and is equally reluctant to see Britain leave. President Xi Jinping, who visited Britain the month before Modi, told Cameron, in the words of Beijing’s foreign ministry: ‘China hopes to see a prosperous Europe and a united EU, and hopes Britain, as an important member of the EU, can play an even more positive and constructive role in promoting the deepening development of China-EU ties.’ After June 23 was announced as the date of the referendum, an official spokeswoman was asked whether Beijing was concerned that Britain could vote to leave the EU. She replied that ‘China has consistently supported the European integration process, and would like to see Europe play an even greater role in the world’.
These comments were remarkable in more ways than one. Because China is extremely intolerant of anything it sees as interference in its internal affairs, it is normally very careful to avoid being accused of the same thing. But Beijing views the EU as an essential counterweight to the US, and is concerned about the effect of a departure by Britain, which is a voice within Europe for free trade.
Beijing’s stance also emphasised to those arguing for Britain to ‘go it alone’ that China, again like India, is far more interested in negotiating a comprehensive trade deal with the EU than with just one of its 28 members, even if it is the second largest economy in Europe after Germany. President Barack Obama, another visitor to Britain, made this explicit when he said that the UK would be ‘at the back of the queue’ if it quit the EU and wanted to negotiate its own trade terms with the US.
The US and China are two of the four economies larger than Britain’s. Then there is Japan, whose Prime Minister, Shinzo Abe, visited Britain in May. During a joint press conference in Downing Street with Cameron, he echoed Modi, saying that Japan’s business sector saw the UK as a ‘gateway’ to Europe. Abe pointed out that more than 1,000 Japanese firms had invested in Britain, creating 140,000 jobs, and warned that the UK would be ‘less attractive’ to Japanese investors if it voted to leave the EU.
Japan wanted to negotiate a trade treaty with the EU as a whole rather than ‘individual states’ in Europe, Abe added, further undermining the assurances of those supporting Brexit that it would be easy to do bilateral deals. Dr Paul James Cardwell of the University of Sheffield, an expert on the EU’s external relations, described this as a ‘very dangerous’ assumption, saying: ‘There simply aren’t enough hours in the day to negotiate individual trade agreements with dozens of countries.’
Cardwell, who worked with the EU in Japan, said that during his time Tokyo had embarked on a dialogue with the US and the EU as part of a programme of deregulation. This took account of the concerns of individual EU countries – ‘the Dutch wanted to talk about cut flowers, for example, the French and Italians about luxury goods. The Japanese were persuaded to change their culture and work in a certain way. The British embassy was clear that the UK would never have achieved this on its own. Not even Germany could have
But those urging British voters to leave the EU are relying less on economic arguments than emotive ones. The latest came from the Justice Secretary, Michael Gove, who claimed that up to five million extra people could come to the UK by 2030 if the country remained in the EU. His opponents pointed out that this assumed that five applicant nations, including Turkey and Albania, all joined by 2020, whereas in reality it would be decades, if ever, before they were allowed into the EU. While Brexit supporters have described the gloomy economic projections of the Bremain camp as ‘Project Fear’, this controversy showed the scaremongering was not all on one side.
At the same time as playing on fears about immigration, and aware that Commonwealth citizens in Britain will have a vote on June 23, the ‘out’ campaign has sought to appeal to ‘kith and kin’ sentiment, implying that Australians and New Zealanders, for example, would prefer to see the UK turn away from Europe in favour of nations with which it shares cultural and historical ties. But the prime ministers of both countries have supported continued British membership of the EU.
‘We welcome Britain’s strong role in Europe,” said Malcolm Turnbull of Australia. Though relations would be ‘very, very close’ whatever the outcome of the referendum, and it was ‘absolutely a decision for Brits’, having a close ally in the EU was an ‘unalloyed plus’. He added: ‘The EU is an enormous economic and political entity, and from our point of view – you might say from our selfish point of view – having a country to whom we have close ties and such strong relationships… is definitely an advantage. As for New Zealand, premier John Key was in no doubt. ‘If we had the equivalent of Europe on our doorstep,’ he declared, ‘we certainly wouldn’t be looking to leave it.’
So the opinion of Britain’s friends, allies and trading partners in Asia and the rest of the world is all but unanimous: on June 23 British voters should be putting their cross next to ‘in’, not ‘out’, on the ballot paper. But is the electorate paying any heed to outside voices? If it does not, and the verdict is to leave the EU, the effects will be felt not just in the UK, but far and wide.