Brexit: Why Justin Trudeau should start talking

On June 23, British and Commonwealth citizens resident in the UK, as well as expatriates who’ve been abroad for fewer than 15 years, will vote on whether or not the UK should remain within the European Union.

Since the official launch of the referendum campaign, a wide range of broadly respected individuals and institutions – HM Treasury, the IMF, the governor of the Bank of England, and the president of the United States – have warned of the negative consequences, chiefly economic but also geo-political, of a vote to leave. They have been joined by the governments of India, New Zealand and Australia. Indeed, it is impossible to cite any national government, or serious serving non-British politician, who believes that leaving the European Union is in the UK’s interest. 

Given these developments, the silence of the government of Canada is mystifying. It is also inexcusable, for the interests of this country lie squarely with Britain’s continued membership in the EU. These interests are both economic and political. Economically, Britain is the second-largest recipient of Canadian FDI, and the country is our third (with Germany) most important trading partner. As is the case with American companies, language and similar legal systems make London and the rest of the UK natural bases for access to the EU single market – the largest in the world, with over 500 million consumers.

But the political interests are even more important. Within the EU, the UK is a natural ally of Canada. A common history, Westminster institutions, a similar liberal economic outlook and a common culture (Anglo-Canadian culture is essentially English) mean that the UK is a reliable vote for Canada within the EU. When other EU member states have turned on us – the Spanish government over the mid-1990s fishing war, the Hungarian and Czech governments over Canada’s visa requirements – the UK stood staunchly by this country. If it leaves the EU, that support will be gone.

The political implications of Brexit will not be limited to European politics. It could have direct and deeply unappealing consequences within Canada. If the United Kingdom leaves the European Union, there will almost certainly be a second Scottish referendum on independence. Given how close the last referendum was, and the much greater support for ‘remain’ within Scotland (75 percent vs. less than 50 percent in England), we can fairly safely assume that Scotland would leave the UK following a British exit from the EU. Such a result would embolden sovereigntists in Quebec. Support for sovereignty in Quebec is, to be sure, very low, but we know from past experience (separatism has been declared dead many times) that events can trigger a sharp rise in sovereigntist support. The successful separation of social democratic Scotland from the UK might be just what the sovereigntist movement needs and, therefore, the last thing that Canada needs.

Canada has a further, and less self-regarding, interest in Britain remaining in the EU. The United Kingdom is Canada’s ally and friend, and the vast majority of this country wishes it well. There is not a shred of evidence that the UK would economically benefit from leaving the EU. Two scenarios are in play. Under the first, the UK would leave the Union but remain within the single market, following the Swiss or Norwegian models. It would have to pay substantially for access, but would be excluded from the institutions – the Council, the European Parliament and the European Commission – that draw up rules governing the single market. The economic consequences might not be disastrous, but they would be negative: there would be a protracted period of negotiations and much political instability, which investors detest. And at least some companies would leave London for Frankfurt or Paris in order to be within a state that can actually shape the regulatory environment. 

Under the second scenario, the UK would leave the single market and attempt to negotiate a bilateral free trade deal with the EU along the lines of the Transatlantic Trade and Investment Partnership (TTIP). The negotiations could take a decade and the outcome would be uncertain: the TTIP has still not been adopted, and the protests within the EU are growing. In the meantime, capital and jobs would flee London. The effect of Brexit would be, as Christine Lagarde of the IMF put it, somewhere from pretty bad to very, very bad for the UK; the government of Canada should oppose it on these grounds if no other. 

The government of Canada is well placed to make a profound contribution to the debate because of this country’s close relationship with the UK, its oversized role in the Commonwealth and, importantly, its current prime minister. Justin Trudeau has a powerful – at times it seems messianic – appeal to younger voters. And young people, whose low propensity to vote is well established, will play a decisive role in the referendum. They will also live for much longer with its consequences.

Canada can offer further lessons, as we have been here before. For 25 years, Canada and Quebec tore themselves apart over the question of whether Quebec should leave the federation. All the while, money, jobs, people, and influence drained from Montreal, transforming what was once one of North America’s most glorious cities into a parochial shadow of its former self (lovely though it remains). In many ways, the current referendum is a repeat of the 1995 referendum in Quebec. Michael Gove and Boris Johnson are rough equivalents of Jacques Parizeau and Lucien Bouchard. Gove is an extreme and unappealing man who is principled in his commitment to exit and prepared to see his country poorer in order to get there; Johnson is a charismatic but unscrupulous politician actuated above all by a desire for power. Gove wants out; Johnson wants to stay in, using a ‘leave’ vote to secure a better deal.

As in Quebec, there is a great danger that the UK will spend years on a bitter and divisive debate whose only real achievement will be lost economic growth and a great distraction from the real problems facing the country – low productivity, a national and individual addiction to debt, crumbling infrastructure, and inadequate schools for the 90 percent of the population than cannot afford a private education. These, and not an imagined despotic rule by ill-intended foreigners, are the country’s real problems, and they have nothing, absolutely nothing, to do with the EU.

Brexit would do direct harm to both Britain and Canada. It is time for Prime Minister Trudeau to speak.