Word in the New$: Article 50
by Ryan Ong
AFTER two World Wars and several centuries of armoured men trying to stab each other to death, you’d think Europe could finally be unified. It was kind of on its way to doing just that; then in 2016, UK Prime Minister David Cameron held a referendum on whether the UK should leave the European Union (EU). It was to prove some point or other, which nobody now nor ever will care about. Now, current UK Prime Minister Theresa May had exercised Article 50, which will bring the UK out of the EU, and have longstanding repercussions:
What is Article 50?
Article 50 of the EU’s Lisbon Treaty covers the process of any state leaving the EU. Up till now, it’s existence has mainly been academic; no one has left the EU since the earlier incarnation of the organisation (called the European Economic Community, formed back in 1958. It was re-christened the EU in 1992).
Even then, the departure of Algeria, Greenland (partial withdrawal) and Saint Barthelemy (an island in the Carribean) has no parallel to the departure of a major state like the UK.
In fact, before the Treaty of Lisbon was signed in 2007 (and became law in December 2009), there was no legal way for any EU state to leave.
So this is a historical moment, as it’s the first time we’re seeing a state actually exercise Article 50. It’s also extra dramatic, because there was some hesitation as to whether Britain would actually do it.
UK Prime Minister Theresa May triggered Article 50 with a letter to Mr Donald Tusk, President of the EU, on 29th March this year.
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But I thought they voted to leave back in 2016?
Yes, the UK did, in a special referendum, vote to leave the EU on 29th June 2016. However, that referendum couldn’t properly get them out of the EU. In order to do that, the UK had to leave under the terms of Article 50 in the Lisbon Treaty; and anti-Brexit types fought it as best they could.
For example, the decision to leave still had to be approved by Parliament (you can’t make all decisions instantly via referendums. That’s called mob rule). Pro-EU Members of Parliament, it was thought, could still prevent the UK from actually invoking Article 50.
However, it would have caused chaos in the UK, because that would mean the British Parliament didn’t respect the opinion of the public. As such, despite the last hopes of pro-EU types, it was a bit of a foregone conclusion that Prime Minister Theresa May would push it through.
Even now, Article 50 doesn’t mean the UK is out of the EU
The first important part of Article 50 is that it takes about two years to fully kick in:
“The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.”
This means that, even with Article 50 triggered, the UK will only fully leave the EU in 2019. This assumes that the timescale is not extended: The UK and the EU member states can, during negotiations, agree to prolong things if neither side is ready to conclude.
The UK will be eager to cement as many trade deals as it can, as it exports almost 40 per cent of its products to the EU. It will want to retain as much access to the EU’s single market (the potential customer bases of all the EU members combined) as the EU will allow.
On the other hand, the EU has to decide how to limit the UK’s access to the single market after it leaves, by imposing certain restrictions (otherwise everyone will up and leave the EU, as there’s basically no point). If this can’t be settled by 2019, it’s quite possible the UK will stay on longer.
What happens to the global economy now?
Everything now hinges on how the negotiations related to Article 50 turn out. If the UK and EU decide to be harsh on each other, global markets could see a lot of volatility. This is a worst case scenario, in which the EU punishes the UK for leaving by cutting off trade, or the UK decides it’s had enough of this crap and slams the phone down.
Thousands of businesses, which are reliant on trade between the UK and the rest of Europe, could see their profits plummet (along with rising unemployment, and a plunging British pound).
On the other hand, if a more amicable arrangement can be reached, the disruption of Brexit may be far less significant than the doomsday prophets claim. The financial markets will be holding their collective breath over the next two years.
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