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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.
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.
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.