Gary Shapiro is president and CEO of the Consumer Technology Association (CTA), the U.S. trade association representing consumer electronics companies.
Stock market gyrations on both sides of the Atlantic in the days following the “Brexit” vote notwithstanding, the sky isn’t falling, and it won’t fall. Amid the uncertainty, global investors need to keep their heads — and their wits —about them, and double down on the future of a free, unleashed Britain.
While the road ahead is uncertain and there will be challenges along the way, Britain will negotiate in its own interest to create a new partnership with the EU. Meanwhile, on this side of the Atlantic, the U.S. should take advantage of the situation to strengthen our ties and formalize a strong trade agreement with Britain.
To the extent that the “sky is falling” storyline has taken hold at all, in the form of a supposed wave of “Bregret” or “Regrexit” on the part of U.K. “leave” voters, it’s largely a defensive reaction to what Adam Taylor, writing in a Washington Post this week, called “a global media that deems their decision unimaginable and foolish.”
While unchecked immigration from the Eastern Europe and elsewhere was undeniably a factor in the Brexit vote, it was about much more than that. It was a rebuke on being told what to do by an aloof, elitist bureaucracy in Brussels and a rejection of the socialism that impedes European innovation and productivity.
With respect to the latter, you need only look to the fact that Google is facing yet another antitrust complaint on the other side of the pond. Bloomberg reports that the EU is now investigating the mechanics behind Google’s advertising services, based on criticisms filed by competitors. The tech giant is already fighting an ongoing battle against charges related to its shopping-search services and its Android mobile operating system software.
“Leave” voters apparently had had their fill, and their vote was a shot across Brussels’ bow. Theirs was a loud and clear rejection of an unfair, unbalanced, unsuccessful system and against overregulation.
Moreover, Britain’s decision to leave the EU is a referendum on the EU’s trade policies, which have been painfully slow to formalize. This is because trade deals with the EU need to be approved and ratified by all EU member states, whereas an independent UK will be free to pursue bilateral deals with those major markets. While the EU has a couple of dozen trade deals in force, they are mostly with smaller countries, and none are in place with major markets such as China, India, the U.S. or Japan.
Britain’s economy won’t collapse just because it has opted against continuing a full participation in the EU. Moreover, there is precedent: Switzerland and Norway have thrived despite their refusal to join the EU. Breaking free of the command-and-control bureaucracy in Brussels will likely foster British innovation, as the government will be more free to experiment with policies that tech companies and investors in and outside the U.K. could find attractive.
From the U.S. perspective, the Brexit actually offers the opportunity to strengthen the historic “Special Relationship” between our two countries. In fact, U.S. political leaders on both sides of the aisle say they don’t expect the Brexit to seriously disrupt our day to day or the upcoming presidential election.
Hillary Clinton said she doesn’t anticipate the vote will have a “direct impact” on her presidential campaign. And in a pair of radio interviews about the Brexit vote, House Speaker Paul Ryan articulated the benefits of Brexit, highlighting the potential benefits of formalizing a trade deal with Britain while the U.S. pursues the Transatlantic Trade and Investment Partnership with the EU.
“It’s very important that we maintain our very strong alliance with England,” Ryan said. “I think we should make sure that our trading relationship is stable, so that our respective economies are not affected, but actually improved.”
Indeed, Rep. Charlie Dent (R-PA) said he’ll introduce a resolution next week urging the Obama Administration to begin the process of negotiating a free-trade agreement with the U.K.
History has proven time and again that political partnerships change and countries do what they must to adjust and benefit from “new normals”. The doom and gloom Brexit naysayers will quickly be proven wrong. Britain has at least two years to create a path forward that promotes both trade and innovation.