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Australia’s Options in the Context of Brexit

11 Jul 2018
By Dr Laura Allison-Reumann, Dr Margherita Matera and Professor Philomena Murray

Brexit will fundamentally transform the European Union and will change how the UK relates to Europe and the rest of the world. What are the implications for Australia at this critical juncture?

The momentous decision of the UK to leave the European Union will have long-lasting consequences for Australia’s relationship with the EU and the UK. It raises questions about how Brexit will influence geopolitics and drive reconsiderations of diplomatic possibilities for the UK and its partners. Once the UK formally exits the EU, Australia will be obliged to work separately with both the UK and the EU.

How will Brexit affect Australia’s current relations with the UK and the EU, and what are the prospects for cooperation? Whilst Brexit is causing much uncertainty, it also provides an opportunity for a revitalisation and recalibration of Australian national interests in its relations with the UK and the EU.

In relation to the UK, Australia is in a position of strategic advantage. Australia will have some years to prepare for trade negotiations with Britain (there will be a two-year transition period following the UK’s exit from the EU, during which time the UK will be unable to conclude trade deals). Australia is not in a position of exclusive dependence on the UK, as a result of its other trade partnerships and agreements, particularly in Asia.

When it comes to continued engagement with the EU, Australia will need to ensure that Brexit does not adversely affect the progress it has made. This is particularly important regarding free trade agreement (FTA) negotiations and further defining its interests in the recently upgraded relationship with the EU with the signing of the Australia–EU Framework Agreement in August 2017.

There are three major considerations going forward. Firstly, Australia must take a pragmatic rather than nostalgic approach towards future relations with the UK and the EU. Secondly, Australia must avoid pursuing one relationship at the expense of the other and creating a zero-sum dynamic – something which it has managed to do thus far. Finally, Australia’s strategy moving forward must consider broader global developments, such as events and power rivalries within its own region and the Trump presidency.

Pragmatism over nostalgia

The UK and Australia have a long and robust relationship, but historical nostalgia cannot override trade realities. While seeking to maintain and strengthen its trade relations with the UK, Australia will also need to draw on recent developments as a chance to diversify its trade links within Europe and foster greater connections to other European countries within the EU and non-EU countries such as Norway and Switzerland.

Commonwealth ties may well be one useful basis from which to recalibrate Australia–UK relations, although overemphasising their Commonwealth heritage is fraught with uncertainty given Australia’s and the UK’s trade realities. UK political narratives on Brexit have at times centred on a mode of identity-framing that has invoked images of the UK as an empire, and encouraged former colonies to revive their relations with the UK. Such an approach has been labelled ‘Empire 2.0’ by critics. Australia’s perception of the UK after Brexit, however, does not reflect an image of the UK’s imperial past as the basis of a future partnership with the UK.

Although Australia and New Zealand together amount to less than 2 per cent of the UK’s exports, there have been signs that Australia, as a Commonwealth member, will be a priority for UK trade relations post-Brexit. However, Australia will need to keep in mind that British resources and capacity after Brexit will be pushed to their limits and it will likely become preoccupied with a plethora of new deals and negotiations in the coming years.

Avoiding zero-sum arrangements

There is no need for Australia to make a choice between the UK and the EU of 27 member states. Australia can ill afford to shift its focus to the UK at the expense of the rest of Europe. The Australian government, in its 2017 Foreign Policy White Paper, pointed out that the UK is one of Australia’s most important partners, and that Brexit will not fundamentally change the relationship, while also acknowledging the importance of a strong EU and Australia–EU cooperation. Prime Minister Turnbull made it clear that the government will pursue trade deals with both Britain and the EU. Holding steady will be a crucial task for the government, as trade agreements with the EU and the UK are important for Australia’s national interests and preferences.

Recalibration in perspective: global trends

On a multilateral level, Australia will need to closely monitor how the rest of the world responds to the implications of Brexit. Australia is already actively closely observing trade developments that occur beyond Europe, in particular in Asia, as a result of the UK’s decision.

Shortly after the referendum, Ian Bond commented that ‘Brexit will damage both Britain’s international standing and the ability of the EU to influence the world around it’. Although there is some truth in this statement, we must also be careful not to attribute a decline in the UK’s global standing to Brexit alone. Although the UK will no longer have a seat within the EU, it will continue to have an impact within some of the most important political, economic and security forums in the world, a permanent seat within the United Nations Security Council, a place at the Group of Seven and Group of Twenty tables, and a seat within NATO. Given these roles, the UK will continue to be an important political and security ally for Australia.

Australia and the UK have established strong security and defence ties through bilateral and multilateral partnerships and through formal and informal bonds. They also have a long-standing foreign policy relationship. Since 2009, the premier forum for the discussion of high-level foreign policy, defence and security issues has been the annual Australia-United Kingdom Ministerial Consultations framework. Bilateral Australia–UK security and defence cooperation was formalised in January 2013 with the signing of the Defence and Security Cooperation Treaty, which seeks to promote defence cooperation, the exchange of information, and facilitate consultation on threats to international peace and security. The multilateral UKUSA Agreement, known as the Five Eyes treaty, represents the core framework through which the intelligence communities of Australia, Canada, New Zealand, the USA and the UK cooperate. In addition, Australia and the UK are members of the military Five Power Defence Arrangement, along with Malaysia, New Zealand and Singapore. These two arrangements represent important pillars in the bilateral relationship between the UK and Australia.

New dynamics

At a time when the UK is negotiating its exit from the EU, attempting to carve out its own place outside of the EU and maintain national unity, Brexit represents a significant challenge for Australia.

Forging political relations with an altered EU and changing UK will need to be a top priority for Australia in the coming years. Australia’s relations with the EU should as much as possible follow a ‘business as usual’ tactic amidst the unusual business of Brexit.

Australia will need to work hard on its engagement with the UK and, at the same time, ensure that the ‘UK lens’ through which it has previously viewed the EU is put to one side. The Australian government and its agencies are paying close attention to, and forging close working relations with, the other 27 EU member states and the EU’s institutions across a broad range of policy areas.

Australia must now face this reality head-on. It must prepare how it will advance and strengthen its relations with the EU and the UK, balancing ideological imperatives with practical realities, and ideational values with material interests.

Dr Laura Allison-Reumann is a Research Associate at the Public Policy and Global Affairs Programme at Nanyang Technological University, and an Associate Fellow at the EU Centre, Singapore.

Dr Margherita Matera is a Lecturer and Honorary Fellow in the School of Social and Political Sciences at the University of Melbourne.

Professor Philomena Murray is Professor in the School of Social and Political Sciences at the University of Melbourne. 

This article is an edited extract of a journal article titled “Assessing Australia’s options in the context of Brexit: engaging with the UK and the European Union” published in Volume 72, Issue 3 of the Australian Journal of International Affairs.