Last week, UK citizens voted to leave the European Union (EU) in a referendum called by the British Prime Minister, Mr. David Cameron. The referendum, which was held on Friday June 24 was to give millions of UK citizens the opportunity to decide whether or not the UK should leave or remain in the EU, the world’s foremost economic union.
As it turned out the majority of UK citizens voted ‘Leave’ much against the counsel of many political leaders, military chiefs, directors of think tanks, central bankers and business leaders in and outside the UK, all of whom warned in apocalyptic terms of the risks of exiting the European Union and the severe economic repercussions from “Brexit.” The US President, Barak Obama used the opportunity of his official visit to the UK weeks before the referendum to also weigh in and delivered a stark threat that England on its own would fall to the “back of the queue” if it tried to negotiate trade deals with the United States.
The reasons put forward by the ‘leave’ campaigners that yielded the current referendum outcomes are well known but perhaps the key ones need be re-stated here. First, the ‘Leave’ campaigners complained that the UK has surrendered her sovereignty to the EU headquartered in Brussels and by that her rights to act alone in her own best interests. So leaving the EU would give the UK greater control over her own laws and regulations, they claimed. Second, leaving the EU would give the UK more global influence. They claimed that the UK currently has less than 10% of the vote in the EU Legislature and thus her ability to influence EU policy is limited. Thirdly, the ‘Leave’ campaigners stated that the UK would be better off leaving the EU as she would have greater freedom to make her own global trade deals. They posited that the EU is in economic decline and that the UK’s exports to the rest of the world are growing twice as fast as the UK’s exports to the EU, with the UK’s three fastest growing export markets outside the EU. Last key point was that leaving the EU would give the UK the opportunity to control EU migrants, especially the unskilled ones, who the UK is obliged to accept under the EU treaty. They stated that 1.5million EU migrants, many of which were low skilled workers entered the UK between 2004 and 2010 and took up jobs in the low-skilled end of the market that could have been filled by UK citizens.
The case stated above was of course stoutly countered by the ‘Stay’ campaigners but majority of Britons did not care. At the end the ‘Leave’ campaigners had their day. The US-based Fox News aptly captured the mood when it stated: “A great many people in the UK and elsewhere blame establishment business and political leaders for championing decades of globalization which has led to stagnant wages and declining fortunes for working people. While expanded trade has brought great opportunity to businesses, it has arguably subjected workers in developed countries to competition from low wage earners elsewhere. At the same time, automation has wreaked havoc with high-paying manufacturing jobs. Blue-collar workers who used to have confidence in their futures feel cast adrift, because they have been cast adrift.”
The ‘Leave’ vote has caused so many ripples around the globe with concerns about the continued existence of the EU. There are clamours already in Germany and France for referendum similar to the Brexit to be organised in those two countries. While analysts do not believe the EU is about to break up, the Brexit vote would certainly force reforms in the union to address some of the concerns raised by the ‘Leave’ campaigners.
The outcome of the UK referendum is likely to challenge the concept of globalization and regional integration. Globalisation and regional integration arose from the ashes of World War 2 to challenge the pre-existing world order based on the classical concept of sovereign states. The old global political and economic order was based on the concept of sovereign states as defined in the 1648 Treaty of Westphalia. The Westphalia state system saw power and autonomy residing in the nation-state.
Regional integration, as defined by Wikipedia, is “a process in which neighbouring states enter into an agreement in order to upgrade cooperation through common institutions and rules. The objectives of the agreement could range from economic to political to environmental, although it has typically taken the form of a political economy initiative where commercial interests are the focus for achieving broader socio-political and security objectives, as defined by national governments. Regional integration has been organized either via supranational institutional structures or through intergovernmental decision-making, or a combination of both. The degree of integration depends upon the willingness and commitment of independent sovereign states to share their sovereignty.”
It appears that what the British people have done in Brexit is a return to the Westphalia sovereign state model. Ironically, it was Britain, in league with the United States and other major powers of Europe that championed regional integration as a hedge against such global catastrophes as World War 2. Thus was born, in 1957, the European Economic Community (the EEC), which was the pre-cursor to the EU. Other regional groupings of various shapes and sizes have since sprung up.
Africa was not left out in the race for regional integration. Several regional groupings sprang up in the ‘60s and ‘80s across Africa with many of them metamorphosing into the regional bodies as we know them today. In West Africa, there are the Economic Community of West African States (ECOWAS) and the West African Monetary Union (UEMOA). In Central Africa, there is the Economic and Monetary Union of Central Africa (CEMAC) and in Southern and Eastern Africa, there are the Common Market for Eastern and Southern Africa (COMESA), the Southern African Development Community (SADC) and the East African Community II (EAC).
Regional integration has been identified as a key vehicle for helping Africa to raise its competitiveness, diversify its economic base and create enough jobs for its young, fast-urbanizing population. This much was contained in a report, the Africa Competitiveness Report 2013 released in Cape Town, South Africa on May 9, 2013. The ECOWAS was established in 1975 with the signing of the Lagos Treaty. The treaty was revised in 1993 with a vision for the establishment of a common market patterned upon the EU. The actualisation of the common market vision was set in motion at Abuja Nigeria in 2000 where the Authority of Heads of State and Government of ECOWAS (the highest decision making body) resolved to adopt a Common External Tariffs (CET) that will allow free movement of goods across the region. The ECOWAS CET became a reality on January 1, 2015 having been scheduled to commence on that date by the Authority of Heads of State and Government at its Extraordinary Session held in Dakar Senegal on October 25, 2013.
It should be noted that the ECOWAS is yet to become an economic union like the EU. It is still at the level of a customs union, which is the second of a four-level process to becoming an economic union. The ECOWAS is a customs union by virtue of the adoption of the CET. It still has to scale the common market level in order to get to the level of economic union. What this means is that whereas in a customs union like ECOWAS there is free movement of goods, in an economic union there are no barriers to internal trade, free movement of labour, harmonised tax rates and common monetary and fiscal policy. The EU is an example of the latter, although in a partial form.
How then will the outcome of the Brexit referendum affect ECOWAS, if at all? The major impact I see and which is the main point of this article is the impact Brexit would likely have on the ECOWAS journey towards becoming an economic union. Brexit may become a tool to be wielded by those in the region opposed to the fast pace of integration to slow down the process. Most of this opposition are in Nigeria. They have always used the fact of Nigeria’s un-competitiveness due to high cost of production and poor infrastructural development in the country to truncate milestone deadlines in the ECOWAS integration process. A typical example was the many shifts in the take-off date of the ECOWAS CET. It is generally believed that the ECOWAS group would have moved faster on the path of integration if not for obstacles put in the way by Nigeria. The EU-ECOWAS Economic Partnership Agreement (EPA) suffered the same fate when Nigeria became the clog in the wheel that led to it almost being still-born. As ‘big brother’ Nigeria causes others to listen.
To mitigate this potential impact of Brexit, it might serve ECOWAS well to study the Brexit issues carefully and learn from the experience to proactively review the ECOWAS treaty for greater flexibility. Nigeria’s points in causing delays in the regional integration are valid, although the internal lapses are self-inflicted. For instance the EPA, which was designed to incrementally remove all tariffs to EU products, would have put Nigeria at a disadvantage because of its huge manufacturing base compared to the other member states of ECOWAS many of which are hugely dependent on imported products. The influx of cheaper EU products into Nigeria could mean closure of local manufacturing facilities and loss of jobs.
That’s not to say that regional integration would not benefit Nigeria. In fact if Nigeria could get its acts together, it could be the greatest beneficiary of an ECOWAS economic union because of the huge market for its manufactured products and more space for her teeming population.
NB: Michael Onuoha was until recently Head of Policy and Public Affairs at Guinness Nigeria Plc and a public affairs/policy analyst.