By Dr Annmarie Elijah, Associate Director, ANU Centre for European Studies, Australian National University and Dr Ben Wellings, Deputy-director, Monash European and EU Centre, Monash University.
The full ramifications of the events of 23 June, when a majority of British voters elected to leave the European Union, will not be clear for months, and perhaps years.
In part this can be attributed to the way the referendum took place: while the particulars of the 'Remain' option (including renegotiated EU membership) were set out, the 'Leave' option did not extend to clearly defining next steps. Further, political elites in the UK and the EU did not expect a 'Leave' vote, and seemed to regard even entertaining the possibility as only encouraging the Brexiteers. On reflection this was a colossal misjudgement of public sentiment, and the latest unfortunate example of the gap between the leaders of the EU institutions, their member state governments, and the public who fail to identify with the European project.
The Australian government's position on the British referendum was that, while EU membership 'was a matter for the British people', Australia would benefit from an active UK membership of a strong EU. As it turns out, the government was whistling in the dark on both counts. A majority of UK voters clearly did not agree that the UK is best served by remaining inside the EU, shaping and reforming European integration.
The EU is diminished by the prospect of the departure of a key member state. The EU28 was already contending with sluggish economic growth, a migration crisis and a complex strategic environment; the EU27 can now look forward to battling the contagion effect of Brexit as radical groups across the continent seize the momentum to push diverse political agendas. It is a gloomy portrait.
Since the result became clear on Friday, the Australian government has appealed for calm, tried to restore confidence, and noted that the implications for Australia would not be known 'for several years'. Discerning the practical implications of Brexit for third countries such as Australia is difficult.
The first question might justifiably be about whether this is the end of the matter. If history is any guide, probably not. The British were debating 'in' and 'out' for all of the 1960s, and half the 1970s as well. The 1975 referendum on (then) European Community membership did not settle the issue, and the deep divisions inside British political parties persisted. Within a a few days of last week's vote, Westminster was petitioned for a further referendum. We can say with certainty that Britain is divided over the EU, but little else about where UK policy might go from here.
Second, Brexit's impact on Australia is all about the terms. These will not be clear for at least two years from when the UK invokes Article 50 of the Treaty on European Union. The timing for notification is not yet clear either. The EU27 and the UK will need to negotiate the terms of British exit and the relationship to take its place: economic area membership, trade agreement, or some other model entirely. The free movement of people is likely to be a sticking point.
From Australia's point of view, the best Brexit would be one that was swift and smooth. However the EU is a complex set of institutions and an advanced single market. Agreement over the terms of Brexit could be protracted. Before negotiations with the UK even commence, the position could be hard fought among the EU27. And some member states and EU leaders are in no compassionate mood. The UK is heavily integrated into the single market and dependent upon trade with the EU. It will find itself once again on the receiving end of EU terms and conditions.
Implications for Australia are somewhere downstream of these negotiations. The discontinued UK-Australia Trade Agreement (1932–1973) cannot easily be revived into a modern, comprehensive trade agreement. Noises about the revival of the Anglosphere were made during the campaign. Nevertheless, the Australian government should not assume that Australia would be on the top of the list of the UK's prospective trade partners despite the fact that a post-EU Britain will need friends — and quickly. Even if the UK and Australia were immediately inclined to seek bilateral trade negotiations, it is not clear when the UK will be at liberty to begin genuine negotiations, or even know the parameters of its trade policy.
Third, the vote for Brexit complicates Australia's relationship with the EU. This messy triangle is old news. Successive Australian governments were once irked by UK intentions to join the Community; the present government must now deal with the disruption of UK intentions to leave it. Most immediately the Brexit profoundly changes the backdrop to the proposed EU-Australia free trade agreement, currently under consideration in Brussels and Canberra. Prime Minister Turnbull has stated that he is 'very confident' that these negotiations will continue. The truth is this agreement could be on the backburner. Instead of negotiating collectively with Australia, the EU27 and the UK are instead negotiating with each other. Further, the EU-Australia trade agreement is less attractive from an Australian point of view: the UK still predominates in the trade statistics with the EU28, with the services and investment dimensions particularly strong. Extracting the UK from the single market alters the dynamic, and almost certainly delays the negotiations.
This is unfortunate given that goodwill had perhaps begun to prevail in Australia-EU relations, as evidenced by the recently completed Treaty-level political agreement and the moves towards the trade agreement.
The intricacies of the UK's extraction from the EU will begin to become apparent in the coming months. The incoming Australian government will find itself on the horns of a dilemma. Brexit will absorb time, energy and resources in Europe and the UK. Australia may find itself low down in the list of priorities. But both the UK — or what remains of it — and the EU will need new friends. The Brexiteers need alternatives to Europe and Australia will be in their sights. Maybe it will be just like old times after all.