Brexit: Development hitherto

Reading time: 6-8 minutes.

The term Brexit is the short form for the term ‘Britain Exit’ which means that the Britain’s exit from the European Union. It refers to the referendum that was passed by UK in 23 June, 2016. Nearly 52% of the people voted for Britain to leave European Union while 48% were against leaving.

Ever since, there has been controversy spinning around the territory. The then Prime Minister, David Cameron from the conservative party resigned the post in lieu of controversy.

Later, Theresa May invoked Article 50 which states the procedures for officially leaving EU which resulted in vain. Owing to severe pressure May resigned. It was Boris Johnson who put an end to all the speculation with respect to Brexit. He, being a strong supporter of Brexit, has made sure that the Britain is set to leave European Union by January 31, 2020.

History of Brexit:

One has to understand the reason why European Union was formed in order to understand the recent controversial issue of Brexit which has been in news for a very long time. The history of European Union dates back to the formation of European Economic Community (EEC) which is the predecessor to the European Union.

The EEC was formed by signing of Treaty of Rome in the year 1915 by countries like France, Belgium, West Germany, Italy, Luxembourg and Netherlands. The main aim of the EEC was to foster economic cooperation among these countries in order to overcome the losses faced by these countries in the First World War.

Britain later joined EEC in 1973 but they left in 1975 over the conflicting opinion that the Britain will always extend their support to the Americans. Later on, the Maastricht Treaty which took effect in 1993 resulted in the establishment of the European Union (EU).

The main aim of the EU was to integrate the European countries both economically and politically. It also guarantees common citizenship, united foreign policy and common currency of Euro for most of the nation countries which does not include UK.

Current developments:

While Theresa May and David Cameron failed in bringing a proper Brexit deal, Boris Johnson the present Prime Minister has made stern statement that Brexit will be carried out on January 31,2020 and the process will not be delayed any further.

The present brexit deal effectively creates the customs and regulatory border in between North Ireland and Britain which means that the goods are subjected to the EU import taxes. This deal was not made by Theresa May which was one of the main factors for her resignation. The renegotiated deal of Theresa May also allows UK to sign and implement its own trade agreement with other trading nations across the world.

The new withdrawal agreement bill was passed in the parliament on December 20 2019, and with a thumping majority of 124 MP’s (358 to 234). When the European parliament also nods for the bill, the UK will leave EU on January 20, 2020. After this, the UK will enter into a transition period during which free trade agreements will be entered in between UK and EU.

The negotiations regarding law enforcement, security and data sharing will be discussed in between the nations. After achieving a proper consensus, UK leaves EU. Boris Johnson has made a statement regarding the transition period stating that there will not any extension regarding the transition period. This leaves UK with whole lot of pressure that requires all the aspects of trade and security must be sorted out within the said time.

What is it for India?

Advantages- Once the Brexit deal is signed, the UK would have to develop trade relations with different emerging trade markets around the world. With a large domestic market and a better economic foundation, India would be a profitable trader.

The IT industry is flourishing in India as it adopted the policy of Foreign Direct Investment in the wake of LPG (Liberalisation, Privatisation and Globalisation.  In the event of UK leaving the European Union, UK has to be dependent on the Indian investment. It will offer India more incentives by relaxing the regulations, tax break and other such offers which may favour in opening of the market.

Disadvantages- However, there may be certain disadvantages as well. As UK accounts only for 3% of the global market out of 17% shared by the European Union, the IT industry will suffer certain distress. With the divorce of UK from Brexit, the import prices of commodities may also increase which affects in Indian companies.

It may also result in currency volatility as there may be devolution of Pound and Euro with the separation of UK from the European Union. Indian companies have to setup separate operating companies within the European Union to recalibrate European operations. Large numbers of students are studying in UK for undergraduate as well as postgraduate courses. The visa procedures will get difficult with this Brexit deal.

Probable future for brexit:

The future of Brexit depends on the decisions that are arrived in between the UK and European Union during the transition period. The free movement of people between UK and EU will remain unaffected during this period. During the transition period the EU laws will remain enforceable in UK.

Trade relations between world nations will suffer a great blow after Brexit. Britain has to formulate proper and legit trade agreements to prevent other countries from incurring losses. Some scholars are of opinion that the deal may lead to political and economic instabilities. The deal is also considered as a threat to the concept of globalisation as the climate change agreements will have a great effect on UK leaving EU.

Conclusion:

The Brexit deal is one of the most significant political and economic incidents of world history. The leaders of the UK are under a greater responsibility to endure safe withdrawal from EU. Considering how big UK is and how their decision affects the world economy must be taken into account during the negotiations that are to be made during the transition period.

Author: J.Shuruthi from SASTRA Deemed to be University-School of Law, Thanjavur .

Editor: Tamanna Gupta from RGNUL, Patiala.

Unravelling the Hong Kong conundrum

Reading time: 6-7 minutes.

Hong Kong is a semi-autonomous southern Chinese city. It lies on the eastern side of Pearl River estuary. Officially it is known as ‘Hong Kong Special Administrative Region of the People’s Republic of China’. It was a former British colony which was returned to China in 1997 under the principle of ‘one country, two systems’. This meant that Hong Kong could have its own political and legal system, own currency and borders. In fact, the legal system of Hong Kong guarantees to its people many rights and freedom like freedom of speech and expression which are non-existent in the Chinese mainland.

Hong Kong is one of the most densely populated cities in the world and one of the world’s significant economic hubs. Currently the city of Hong Kong is witnessing huge protests and social unrest which was triggered by the introduction of a controversial piece of legislation, namely, the Fugitive Offenders and Mutual Legal Assistance in Criminal Matters Legislation (Amendment) Bill 2019 (hereinafter referred to as the Extradition Bill).

What began as just resentment against a law has now assumed bigger proportions and has turned into a social and pro-democracy movement. So far, a large number of civilians have been injured in the protests. But the protestors have vowed that they would continue their fight their demands have been fulfilled.

What is the Extradition Bill, 2019 all about?

The Extradition Bill, 2019 was passed by the Hong Kong government in February this year. The Bill states that Hong Kong government will accept legal request from other countries for extradition of criminal suspect, who have fled to Hong Kong after committing a crime in their territory, to face trial. The Bill allows extradition to mainland China and even to those countries with which Hong Kong does not have an extradition treaty.

The Bill allows extradition of only those fugitives who are accused of offences that are punishable with a sentence of at least seven years. Extradition of people accused of political and religious crimes is also not allowed. The Bill grants the power to decide on an extradition request to Hong Kong’s Chief Executive whose decision would then be reviewed by the courts.

The Bill came to be introduced in the wake of an incident in February 2018 when a 19-year-old man, after murdering his 20-year-old pregnant girlfriend in Taiwan, fled to Hong Kong. Though the Taiwanese officials sought help from Hong Kong to extradite the criminal, Hong Kong government could not comply with the request due to lack of an extradition agreement with Taiwan.

What was the reaction of the people of Hong Kong to this Bill?

The Bill was introduced to plug the loophole which allowed criminals like the 19-year old to avoid the law. However, the opponents of the Bill are of the opinion that the enforcement of this Bill would subject the people of Hong Kong to arbitrary detention, unfair trial and torture under the China’s harsh and biased judicial system. They justify their view by citing the case of Lam Wing Kee who, in 2015, was abducted, detained and charged by China with the allegation that he was operating a bookstore illegally in China. Mr. Lam was reported to have made the statement “I don’t trust the government to guarantee my safety, or the safety of any Hong Kong resident.”

This Extradition Bill comes amidst the growing Chinese influence in the governance of Hong Kong and also the increasing authoritative tendency of the Hong Kong government. Therefore, this Bill is widely viewed as another blow to the democratic rights of the people of Hong Kong.  

People from all walks of life have strongly opposed the Bill. The public unrest against the Bill which started as marches on street has turned uncontrollable with the protesters striking at the government headquarters and forcing the shutdown of the international airport for two days. Few road ways and tunnels were also shut down. The continued protest has completely paralysed Hong Kong, the international finance hub.

How has the government responded to the protests against the Bill?

Though initially the government refused to back down, the widespread nature of the protest compelled the government to reconsider its stand. On 15th June, 2019, Carrie Lam Cheng Yuet-ngor, the present Chief Executive of Hong Kong, suspended the controversial Extradition Bill and on 9th July, she declared the Bill as dead. The Bill was formally withdrawn on 4th September 2019.

However, the withdrawal of the Bill has done little to pacify the protestors with them terming it as an action “too little, too late” and one of them commenting that “it is like applying band-aid on rotten flesh”. The protestors say that the withdrawal of bill will not compensate the blood and tears of the protestors.

These statements imply that the public resentment is not just about the Bill anymore but about the threats against the larger democratic rights of the people of Hong Kong as a result of the increasing Chinese influence. Due to the continued disappointment and unrest among the people, Ms.Lam suggested “to replace conflicts with conversation”.

What has been the response of the international community?

The US and other Western countries have extended their support to the Hong Kong protestors and have called for a peaceful resolution of the issue.

Nancy Pelosi, the Speaker of the United States House of Representatives, said “Democrats and Republicans continue to stand united with the people of Hong Kong in demanding the hopeful, free and democratic future that is their right.” The US is also looking forward to expedite the passage of the Hong Kong Human Rights and Democracy Bill, a bipartisan Bill, the stated objective of which is “to renew the historical commitment of the United States to uphold freedom and democracy in Hong Kong at a time when its autonomy is increasingly under assault.”

The British Foreign Secretary, Jeremy Hunt, asked China to grant basic freedom to Hong Kong. Hunt warned China of severe consequences if it did not respect the Sino-British Joint Declaration, 1984, which enshrined the “one country, two systems” principle.

Beijing has not taken this external support for the protestors very well. It views them as unnecessary interferences by external actors which have only encouraged the protestors to continue with the chaotic situation. Beijing sees the current crisis as an internal issue which it wants to deal with internally without any external meddling.

What are the human rights concerns that the public protests in Hong Kong raise?

Human Rights in Hong Kong are enshrined in the Basic law and the Bill of Rights Ordinance (Cap. 383). It is generally perceived that the people of Hong Kong enjoy greater civil liberties than those in mainland China. However, there is a concern over freedom of assembly in Hong Kong as it has been restricted by the Public Order Ordinance.

Unfortunately, the ongoing civilian protests have witnessed gross human rights violations. It is reported that the police authorities are using harsh power to suppress the protestors. This disproportionate use of power by the police muzzles the fundamental human rights of freedom of expression and assembly. It also puts into jeopardy the principle of participatory democracy.

It is been argued that human rights violation in Hong Kong is a failure of the ‘one country, two systems’ rule.

What are the demands of the protestors?

Hong Kong has been witnessing continued mass protests for the past few months now and it has resulted into chaos, public unrest and major political predicament. The frustrated protestors have been demanding the following:

  • The controversial Extradition Bill must be withdrawn
  • The Chief Executive, Ms. Lam, must resign
  • The government must retract its characterisation of violent clashes as “riots”
  • There must be full independent inquiry into the actions of the police.
  • All those who are arrested in connection with the clashes must be unconditionally freed.

Though the first demand has been fulfilled, Ms. Lam has refused to fulfil the other demands of the protestors so far.

The way forward…

Over the years, China has been trying to undermine the autonomy that is guaranteed to Hong under the “one country, two systems” rule. The Extradition Bill is just another example of China attempting to meddle into the internal affairs of Hong Kong. Therefore, the present public outrage in Hong Kong is a show of resistance to not only the Extradition Bill but also to the repeated attempts of China to suppress the democratic rights of the people of Hong Kong. Therefore, this movement has the potential to decide the future of Hong Kong’s democracy and autonomy.

As rightly said by a report, “there is no reward to be gained by silence on the Hong Kong conundrum”. Significant support for peaceful resolution will reassure the people of Hong Kong that what they are doing is right and this will lead to a good outcome.

Therefore, the international community must come out in strong support of the people of Hong Kong who are fighting for justice and democratic rights. They want a bright future for their country with proper governance. Compromise and wise decisions would be the contributing factors for peace in the present conditions.

-This article is brought to you in collaboration with Rutuja Gujar from Sandip University, Nashik.

Decoding Brexit: What’s in it for India?

Reading time: 5-6 minutes.

Boris Johnson, the UK’s new Prime Minister will be dealing with a lot of issues left over by his predecessor, Theresa May. May was forced to resign after the UK’s lawmakers rejected to ratify the Brexit deal that she secured with the EU three times and also failed to agree on any alternative outcome.

At a glance, Johnson’s Brexit plan is simpler than May’s: Get a new agreement with the EU or crash out on October 31 with no deal. Given that the EU has said numerous times that May’s deal, formally known at the Withdrawal Agreement, is not open for negotiation, no deal seems on the cards.

When Parliament returns from its summer holiday on September 3, Johnson could well face a motion of no confidence in his government. It’s a vote that Johnson and his team can’t expect to win. He currently has a parliamentary majority of just one and some of his own Conservative lawmakers have implied they will put blocking no deal ahead of party loyalty.

But why is Britain willing to leave EU in the first place?

Brexit is the abbreviation of the term “Brtiish Exit” from the European Union. It mirrors the term Grexit, a term which was coined and used to refer to the possible exit of Greece from the EU. Britain decided to leave the EU after the result of the referendum which stated that 51.9% of the voters favoured exit of Britain.

A referendum denotes voting in which everyone of voting age can take part, normally giving a ‘yes’ or ‘no; answer to a question. After growing calls from many MPs of the Conservative Party and the UK Independence Party (UKIP), the referendum was finally held on June 23, 2016. A similar referendum was held in 1975 in which 67% of the voters voted to stay in the EU.

While there is no specific reason why Britain took this decision, people who voted for leaving the EU argued that it was necessary to protect the country’s identity, its culture, independence and its place in the world. They essentially were opposed to immigration of people into Britain for work related purpose. The Eurozone crisis added to their resentment.

Which international law is involved in Brexit?

Article 50 is a clause in the European Union’s Lisbon Treaty that outlines the steps to be taken by a country seeking to leave the Union voluntarily. Invoking Article 50 kick-starts the formal exit process and serves as a way for countries to officially declare their intention to leave the EU.

The procedure applies to each of the 28 nations of the EU; “in accordance with its own constitutional requirements’. The first step along the road to departure is for the departing Member State to notify the European Council of its intention to do so. The UK did this on 29th March 2017, after the assent of 498 MPs in the House of Commons. The next step was for the EU to negotiate and conclude a Withdrawal Agreement with the departing state, setting out the arrangements for its withdrawal.

What can be Brexit’s repercussions on Indian economy?

Brexit was one of the biggest global macroeconomic events in June 2016. The decision of Britain shook markets worldwide and had a major economic impact. This was clearly reflected in rebound the Indian stock markets showed post referendum results.

The UK has been an attractive centre of business and international finance due to its strong legal system and contract enforcement practice. India is one of the top investors with UK on account of UK being part of the European Union. With its strong investment climate and relationship with EU, it was considered the gateway to do business in Europe.

Many Indian companies like Rolta, Tata Steel, Bharti Airtel Ltd (UK) have set up operations in the UK and derive revenue from European operations. A no-deal Brexit is likely to cause some disruption in the operations and may also cost a few jobs. Jaguar Land Rover plc, owned by Tata Motors ltd. plans to eliminate 4,500 jobs in response to sales slowdown caused by Brexit and slowing Chinese demand.

Indian companies would need to recalibrate European operations, like setting up an additional operating company within European Union. This means short term disruptions will have a financial impact, as also take up management time. Similarly, Indian companies who have used London as their base to raise capital abroad may face issues and may need to work harder on the process.

Given that this risk has been around for a while, Indian investments in 2017 were at the highest level since 2008. This is partly driven by the depreciation of GBP (British pound sterling) against the rupee post the Brexit vote. Indian companies will need to focus on their merger and acquisition deal efforts across Europe while tackling the British market.

India would also need to negotiate a free trade deal with the UK as it proposes to retain the same goods and services schedules post Brexit. The concessions agreed upon by WTO members’ prior to Brexit may not hold the same value once Brexit happens.

All the additional costs and tariffs agreed upon may need to be rescheduled. India exports around USD 9.6 billion worth of goods and services to the UK. Though there may be other factors looming, Brexit may be another reason why the trade surplus of USD 4.6 billion in 2017 almost dropped by half to USD 2.5 billion in 2018.

The road ahead…

India sees the British exit as an opportunity to expand its trade and economic relations with the UK. British and Indian officials have been signalling that Brexit will make the conclusion of a bilateral free trade pact much easier. This is because Brexit provides a fresh opportunity to India to strengthen its economic relationship with the UK through an India-UK trade and investment agreement.

On the other side, a no deal Brexit and the uncertainty it produces would have many adverse impacts on the Indian economy in general and Indian businesses in the UK in particular. For instance, at present, roughly 800 Indian companies operate in the UK. The UK serves as an entry point for many Indian companies to the European market. A disorderly British exit would shut the direct access of these companies to the EU market. That may force some of the companies to relocate or shut down their businesses.

Finally, the doubt of a no deal scenario and risk aversion tendencies across markets can further depreciate the already fragile rupee. Economists note that the US Dollar would be the only currency that benefits from a hard Brexit and the subsequent uncertainty in global markets. Such an outcome will not only affect the pound sterling but the currencies of emerging markets as well, including the Indian rupee.

A no deal scenario will, therefore, have an adverse impact in the short term. However, in the longer run, Brexit is expected to provide an opportunity to India to reset its trade and economic relations with the UK and the EU.

-This article is brought to you in collaboration with Shivaang Maheshwari from Gujarat National Law University, Gandhinagar.