Implications of the referendum on EU membership for the UK's role in the world Contents

3Stay or go? The next steps

The day after a vote to leave…

Negotiating a new relationship with the EU

13. Only Greenland (part of Denmark) (1985) and Algeria (on independence from France) (1962) have left the EU or its earlier incarnations. If the UK withdraws from the EU it would almost certainly follow the procedures set by Article 50 of the Treaty on European Union, which establishes a two-year timeframe for negotiations between the withdrawing state and the EU. This can be extended by mutual agreement, but that requires unanimity from our former EU partners.12 These negotiations would cover both the specific arrangements for the UK’s withdrawal and the framework for future relations between the UK and EU.13 When complete, the agreement would need to be agreed by qualified majority in the Council of Ministers and to obtain the consent of both the European and UK Parliaments.

14.Leaving the EU would pose three key challenges in the two-year period immediately after the referendum: negotiating a new UK-EU relationship, re-negotiating frameworks for relations with the rest of the world, and navigating our allies’ perceptions of the decision.

15.The political climate after notice of UK withdrawal from the EU would probably not favour quick agreement of mutually beneficial trading arrangements, despite the strength of the economic rationale for both sides.14 Open Europe, for example, ran a role-playing exercise in January 2016 which suggested that negotiations to leave the EU and establish a new relationship could become “acrimonious” and even “hostile”, with remaining Member States aiming to punish the UK for leaving, to capture slices of industries with strong UK bases (especially financial services), and to deter other Member States from following the UK’s example.15

16.Many of our witnesses, as well as other analysts, have suggested that the existing templates for non-EU states to gain full or partial access to the single market—often referred to as the “Norwegian” and “Swiss” models—would not be appropriate or advantageous for the UK.16 This was the view taken by our predecessor Committee in its 2013 Report on the Future of the EU.17 Norway, along with Iceland and Liechtenstein, is a member of the European Economic Area, while Switzerland’s relationship with the EU is defined in a series of bilateral treaties. In exchange for access to the single market, both the EEA states and Switzerland must pay into the EU budget and adopt a large proportion of EU law—including free movement of people—but they have no say in how those laws are made. From a UK perspective, these models would thus bring few benefits in terms of repatriating sovereignty over law-making and immigration, while still imposing many of the costs associated with the status quo.

17.Rather than following these existing templates, the UK ought therefore to opt to pursue a bespoke arrangement, including a comprehensive Free Trade Agreement (FTA) taking into account the interests of Gibraltar, the other Overseas Territories and the Crown Dependencies. Detailed and possibly lengthy negotiations between the UK and the remainder of the EU would be required in order to achieve a deeper settlement than the terms of the European Free Trade Association (EFTA), which offers tariff-free trade on goods but—crucially, from a UK perspective—excludes services.

18.The economic case for concluding a wide-ranging UK-EU FTA would be very strong from both EU and UK perspectives. According to estimates published by the Office for National Statistics, between 42.1% and 49.7% of UK exports in 2014 went to the EU,18 while 53.2% of UK imports that year came from the EU.19 The UK therefore has a large total deficit on trade in goods and services with the EU—£59 billion in 2014—although it has a surplus of £21 billion in services.20 For these reasons, an extensive analysis by the Open Europe think tank, which has remained neutral on the referendum, concluded that there is a “high likelihood” that the UK and EU could conclude preferential trade deals covering goods sectors after UK withdrawal (but added that securing seamless market access in services might be “more difficult” because of the UK’s trade surplus).21

19.In the light of these challenges and the many unknown variables, it is difficult to predict with certainty the type and terms of the new relationship between the UK and EU after a decision to withdraw. In our view, it cannot be assumed that the UK would retain full or partial access to the single market if it left the EU, or that it would wish to do so given the restrictions and costs that such an arrangement could potentially incur. It is nevertheless probable that, due to the strong economic imperative, the UK and EU would seek to negotiate some form of trade deal as quickly as possible in the light of the political climate. The Government should recognise the probability of no mutual interest deal being concluded within the two-year notice period. If no deal could be concluded within the two-year notice period, the UK would move to standard WTO relationship terms and would then need to decide which of the 6,987 directly-applicable EU Regulations would need to be replaced by UK law.22 It is, however, a reasonable assumption that in the medium term a suitable mutual interest deal would be concluded. It is possible that the transition process could be fully co-operative and disruption minimised, but this would depend on how well EU countries respond to a perceived rebuff by the British electorate. As time heals, mutual interest will progressively trump any short-term hurt feelings and both the climate for, and interest in, agreement in the mutual interest would improve.

Relations with the rest of the world


20.The EU currently has preferential trading agreements or free trade agreements (FTAs) with more than 50 countries. These aim to facilitate trade by, for example, reducing or removing tariffs, agreeing on product, labour and intellectual property standards, and mutual recognition of qualifications. It is negotiating or close to concluding FTAs with over 80 more.23 Examples include the EU-South Korea FTA, which entered into force in 2011. The EU-Canada Comprehensive Economic and Trade Agreement (CETA) has been concluded but awaits formal approval. The largest ever attempted is the EU-US Transatlantic Trade and Investment Partnership (TTIP), for which negotiations are ongoing. Professor Sir Alan Dashwood QC told us that if the UK leaves the EU, it would lose access to those agreements and would revert to trading with those countries under basic World Trade Organisation (WTO) rules.24 According to Professor Dashwood and other submissions of evidence—both to our inquiry and to a parallel inquiry by the Treasury Select Committee—the UK would have to start from scratch if it wished to negotiate successor agreements (albeit potentially using the existing EU FTAs as templates).25

21.Since the UK has not negotiated FTAs on its own behalf for over 40 years, the Government does not currently possess the knowledge or capacity to manage such a large-scale undertaking. It would have to acquire it in a hurry and to scale. This would be relished by international legal firms who would benefit from a substantial temporary consultancy requirement until this capacity could be provided by HMG itself. It could take about a decade for the demand for new deals to move into long-term equilibrium, once the backlog of replacement EU free trade deals had been cleared. The President of the Board of Trade would be a key Cabinet appointment requiring support from other senior Ministers. In parallel, outside the EU, the UK would be capable of being, and would need to be, an advocate for global free trade.

22.This view of the consequences of withdrawal for FTAs is not universal; a paper published by the Institute for Economic Affairs argued that the UK would retain its obligations under FTAs it signed as an EU Member State even after a “Brexit”.26 In either case, however, those agreements would face significant operational complications if it took many years to establish the terms of the new relationship between the UK and EU, since the extent of the UK’s access to the single market would affect the terms of its FTAs with third states. Whilst multilateral negotiations to agree new trading rules for all 162 members of the WTO have largely stalled, the UK could promote plurilateral deals whereby groups of countries make agreements on certain areas of trade; for example, 25 WTO members (including the EU) are currently negotiating a plurilateral Trade in Services Agreement.

Relations with the EU’s neighbourhood

23.In addition to FTAs, the UK is a party to hundreds of international political agreements between the EU and other states and organisations, as well as so-called “mixed competence” agreements to which the UK is a signatory alongside the EU. According to our witnesses, these agreements would, in practice, cease to apply after “Brexit”. If the UK wished to replace them with successor agreements, these would also have to be negotiated from scratch.27 These agreements include those governing the framework through which the EU engages with sixteen countries in North Africa, the Middle East and Eastern Europe. This European Neighbourhood Policy (ENP) is intended to underpin the EU’s bilateral relationships with its neighbours, using a wide range of Commission-run financial instruments to encourage political and economic reform. Given what has happened in the region since this policy was adopted, it has hardly been an unqualified success, but it remains an important way for the EU to support fragile economies, not least a close ally such as Jordan. Leaving the EU would limit the UK’s international reach, not least by removing the UK’s influence over those European Commission-led instruments.28 Given the current crisis across these regions, establishing new agreements and frameworks for UK relations with these states after a “Brexit” would be a matter of urgency. The UK would also need to re-assess its sanctions regimes, for example against Russia, as it would no longer be bound by the EU’s collective rules.

24.This positive and negative use of EU economic weight would no longer be subject to UK influence. EU sanctions on Russia, for example, would probably have been weaker without the UK’s Prime Minister arguing within the EU for a robust response to the Russian seizure of the Crimean peninsula from Ukraine.

Managing perceptions of the UK and EU

25.Withdrawal from the EU would not change the UK’s formal status in other key global and regional alliances and networks, including NATO, the United Nations Security Council, the Commonwealth, the G8 and G20 groups of leading states, the Organisation for Economic Cooperation and Development, and the Council of Europe. The UK would retain its existing seat on the World Trade Organisation and would regain the capacity to represent itself independently in WTO negotiations, where it is currently represented by the EU.29

26.All UK partners, however, have said that they would not welcome UK withdrawal from the EU. It is clearly in most other countries’ interests that the UK should stay in the EU, which constitutes a key element of the rules-based international order to which the UK is committed.30 For this reason, some allies may perceive a decision to leave the EU, rightly or wrongly, as a “retreat” from world affairs or “shrinking” of the UK’s international role.31 Richard Haass, for example, a prominent US commentator and President of the Council on Foreign Relations, has written that “it is hard to envision Brexit resulting in anything other than a more parochial and less influential UK,”32 expressing a view that is shared by many—although not all—of his compatriots.33 Dr Tim Oliver of the LSE and Almut Möller of the European Council on Foreign Relations submitted evidence citing a wide range of views on “Brexit” from experts around the world, which concluded:

We found next to no support for the idea that a Brexit would enhance Britain’s international standing. Many of the views were clear the UK would remain a valuable ally, friend or economic partner with whom they could do business. However, these would be lesser deals and overshadowed—and largely framed by—relations with the remaining EU.34

27.As the Rt Hon Dr Liam Fox MP noted, however, our allies’ views on “Brexit” represent their own interests, which do not necessarily align with the interests of the UK. He told us:

In any case, we are here to do what is in Britain’s national interest, not other people’s national interest. I have taken particular note of what has been said in the United States: there is no shortage of American political opinion telling us that we ought to remain in the European Union—an organisation that no American politician would ever tolerate.35


28.Such a perception would be magnified if a vote to leave the EU triggers a second referendum on Scottish independence, leading to Scotland’s withdrawal from the UK.36 The European and External Relations Committee of the Scottish Parliament, for example, has recently concluded that “there is more support for EU membership in Scotland than in many other parts of the UK”, which is reflected in recent opinion polls in Scotland.37 In 2013, our predecessor Committee concluded that although it was “difficult to measure the impact” of Scottish independence on the international influence and role of the remaining UK, “some degree of reputational damage [would be] inevitable.”38 It is difficult, however, if not impossible, to make credible or specific predictions on this question, given the uncertainty involved at every stage of the process, from the political context in which a second referendum might take place, to the type of settlement the remaining UK would agree with the EU.

A blow to the EU?

29.Any short-term reputational risks of “Brexit” would probably extend beyond the UK, as the departure of one of its largest and its most globally oriented Member State could damage the credibility of the EU as well. The EU today is facing potentially existential challenges, including a migration and refugee crisis that threatens to unravel the Schengen border-free zone and a Eurozone crisis that has not yet been fully resolved. As the Foreign Secretary has suggested, the UK’s departure could also strengthen political parties and groups in other Member States that favour leaving the EU, leading to widespread destabilisation.39 Even if such a “domino effect” could be avoided, the war-gaming exercise carried out by Open Europe in January 2016, in which senior diplomatic and political figures simulated negotiations following a “Brexit”, suggested that UK withdrawal could deliver “a serious blow” to the remainder of the EU.40 Instability in the EU would be likely to have negative knock-on effects for the UK as well, as it sought to negotiate the terms of its exit and its future relationship with the EU.

30.The loss of the UK, generally regarded as a driver of economic liberalism and supporter of good transatlantic relations, could change the balance of power in the remaining EU. This could, for example, lead towards a more protectionist approach to single market or trade policy issues, with implications for the UK trading with the EU and the rest of the world. It could also, for example, affect foreign policy if a different, perhaps less robust approach, were taken in relation to Russia (including sanctions) or other countries in the EU’s neighbourhood.

Effect on Overseas Territories

31.UK withdrawal from the EU would also affect Britain’s overseas territories and the Crown Dependencies. We received a submission from the Crown Dependencies which did not take a view on what the UK should do, but did note that it would be “essential” for the UK to consult them closely in the event of a decision to leave.41 To discharge its duty to the Crown Dependencies, the UK should consult on the principles enshrined within Protocol 3 of the 1972 Treaty of Accession, recognising their interests during any future negotiation of our relationship with the EU. We also received evidence from the Governments of the Falkland Islands and of Gibraltar, both of which argued against UK withdrawal from the EU for economic and political reasons. The Government of the Falkland Islands particularly noted the benefits of the EU for its economy, adding:

The provisions of the Treaty of Rome, and its successor Treaties, provides HMG/FIG [Falkland Islands Government] with considerable certainty and support from EU Member States because of these provisions.  Were the UK no longer a member of the EU that support would be much less certain from a large number of those EU Member States, and might encourage Argentina to be much more aggressive in its approach.42

The submission from the Government of Gibraltar asserted that the “overwhelming majority” of the people of Gibraltar, who are entitled to vote in the referendum, will vote to remain in the EU.43 It also highlighted the importance of the EU to its economy, and expressed concern that Spain would take advantage of a UK exit from the EU to “further undermine, isolate and exclude Gibraltar from the European mainstream.”44 The UK must immediately act to protect Gibraltar from such actions in the event of a vote to leave the EU.

Challenges and opportunities for the FCO following a “Brexit” vote

Building independent capacity

32.Although the challenges outlined above are considerable, none are insurmountable. In our view, swift action by the Government and FCO could mitigate many of these potential problems, and indeed open up new opportunities for the UK to redefine its international role. As Peter Hargreaves of the Hargreaves Lansdown investment management firm has said, the insecurity resulting from a “Brexit” vote could provide a “fantastic stimulus” and “a great incentive for us to go out and prove that it’s right.”45 However, a vigorous response would require resources and a decision to double, or even treble, the budget of the FCO. This could have a powerful, positive impact in the event of a “Brexit”—potentially guided by re-allocating some of the money that had hitherto been included in the UK’s contributions to the EU budget. As already referenced in paragraph 22, committing significant resources to hiring teams of skilled negotiators to manage the EU withdrawal process and to pursue new international agreements and FTAs would go some way towards ensuring successful outcomes. London probably possesses the largest global concentration of such ability in its legal and financial services firms.

33.It would also be necessary for the FCO to ensure strong representation in Brussels and in EU countries—reversing the recent trend of down-sizing its European network—to maintain positive relations, to ensure UK interests are represented, and to facilitate bilateral political co-operation in areas of mutual interest.46 Significantly boosting the FCO’s capacity would, moreover, send a strong signal of the UK’s commitment to an outward-looking, globally engaged foreign policy, thereby helping to reassure our allies and to mitigate the reputational risk associated with EU withdrawal. Indeed, the FCO would have to take the opportunity of withdrawal from the EU to launch a wide-ranging review of the UK’s position in the world (and in our view the apparent lack of such contingency work in government has been regrettable). In so doing, it could identify the particular areas of UK interest and strength around which specific goals to be achieved could be set, either alone or through one of the many other international alliances and networks of which the UK would remain a part.

The day after a vote to remain…

34.It is clear that a vote to stay in the EU would be met with widespread relief among both our EU and NATO partners. The majority of evidence we received, moreover, argued that the UK’s influence in the world is largely helped, rather than hindered, by its current position as an EU Member State,47 although this view was not universal.48 This echoed the balance of evidence heard by the Government in its 2013 Review of the Balance of Competences between the EU and UK in foreign policy.49

35.There remain significant flaws in the EU’s external relations regime, however, which could pose considerable challenges for the UK even in the immediate future. We identify three, in particular: the apparent decline of UK influence in driving EU foreign policy, the slow and cumbersome character of EU policy-making, especially in trade, and the EU’s failure to grapple with extreme instability on its borders. If not addressed in the near future, these pressing problems could evolve into major long-term risks for the UK inside the EU.

UK influence?

36.Most witnesses—including the FCO—said that the UK was perceived as an influential player in driving EU foreign policy.50 The FCO stated:

As a large Member State with global interests and membership of many key international organisations and groupings, the UK is in a strong position to influence EU common action.51

Similarly, the Rt Hon Alex Salmond MP told us that the EU “delivers more freedom, more prosperity and more ability to influence the world environment than we would have if we weren’t members.”52 Heather Grabbe, Jean Monnet Fellow at the European University Institute, argued:

UK goals in foreign policy have rarely been at odds with those of the rest of the EU over the first two decades of EU collective action. Much more often, the UK has pushed other EU members towards collective responses, and British politicians have taken the lead. This was the case at the beginning of the Common Foreign and Security Policy in trying to stop the Balkan wars in the 1990s and reconstruction thereafter, with Paddy Ashdown in the prominent role of High Representative in Sarajevo. It was also the case very recently when William Hague played a leading role in the Foreign Affairs Council in forging a common EU response to Russia’s invasion of Crimea. And of course Baroness Ashton was the EU’s lead and negotiator with Iran and also in forging the deal between Kosovo and Serbia while she was High Representative for Foreign and Security Policy for five years. In all of these cases, EU membership not only helped the UK to achieve far more in its foreign policy than it could have done as one country, but it allowed the UK to shape the responses of many other countries, some of which would have been passive or non-contributory otherwise.53

Asked about EU foreign policy in the event of Brexit, Federica Mogherini told the Committee:

It is extremely difficult today to imagine, first, what EU foreign policy will be without the UK, because today the UK shapes EU foreign policy a lot. Foreign policy will need to be revised and reviewed somehow, in a way that is quite impossible for me to predict, because the UK is a fundamental part of it. It is also very difficult today to say what kind of relation or interaction there could be between a different EU foreign and security policy and a UK that is outside the European Union, because that situation is extremely far from the reality of today, when the UK’s contribution is at the heart of our daily work.54

37.Several witnesses also told us that the EU’s current commitment to pursuing free trade and economic liberalisation is strongly driven by UK priorities.55 This view, however, was not universal; Conservative MEP David Campbell-Bannerman argued in his written submission that “the claim of great British influence in the European Union machine is delusory”,56 while Professor Patrick Minford of Cardiff University told us that while the UK may be “a force for liberalism inside a fundamentally illiberal EU political and economic philosophy,” its influence on EU policy did not outweigh the costs of membership.57

38.At the same time, a number of witnesses also suggested that the UK is less influential than it could or, arguably, should be in driving some aspects of EU foreign policy. Charles Grant, Director of the Centre for European Reform, told us:

Frankly, in the past five to 10 years or so, Britain has become more inward-looking and been less willing to engage and lead the EU and shape EU foreign policies. When I talk to people around the table in the European Council and the Foreign Affairs Council, they say that the British often do not say very much, are quieter than they used to be and seem quite happy for others to take the lead.58

A submission from a group of academic experts at the London School of Economics and Political Science (LSE) noted that the UK had become “somewhat disengaged” from EU foreign policy-making.59 Graham Avery, meanwhile, a UK national and former senior Commission official, told us that the referendum process had “rightly or wrongly” given other EU states “the impression…that Britain is disengaging itself.”60 This view was echoed in evidence taken recently by the House of Lords EU External Relations Sub-Committee.61 Our predecessor Committee, moreover, found in 2013 that the UK was “significantly under-represented” among the staff of the major EU institutions, concluding that this posed a “serious problem” for the UK’s ability to influence EU decision-making.62

39.The FCO told us that the EU, acting collectively, had “an important comparative advantage” in its ability “to muster the weight of 28 Member States” in pursuit of common policy goals.63 This argument recurred throughout the evidence we received.64 Such potential advantages are of little use to the UK, however, if it cannot or will not take the lead in shaping those goals. If the apparent decline in UK influence continues, moreover, it could lead to the increasing adoption of stances and policies that run counter to British interests, particularly in areas that are sometimes governed by qualified majority such as trade and development.

A tanker or a yacht? The EU’s trade policy

40.Even when the EU’s policy choices reflect UK interests, it can be very slow to act. In the Common Foreign and Security Policy and Common Security and Defence Policy, the requirement for consensus within the Council of Ministers has often been described as leading to “lowest common denominator” outcomes.65 Both the current and former HR/VPs, Federica Mogherini and Baroness Catherine Ashton, rejected this characterisation,66 with the latter in particular insisting that EU common positions represented the “highest common factor” on which Member States could agree.67 Baroness Ashton also conceded, however, that the EU was more like a “tanker” than a “yacht”: slow to move and not particularly nimble although—she claimed—powerful and effective at sticking with its decisions in the long term.68

41.This analogy also applies to international trade policy, though trade is largely governed by qualified majority voting rather than unanimity. Many submissions argued that the size of the single market gives the EU powerful leverage in negotiating favourable terms in its FTAs with third states.69 Nick Witney of the European Council on Foreign Relations, for example, summed up this argument as follows: “the EU, the largest trading bloc in the world, offering access to its single market, has a massive in-built advantage.”70 However, the size and heterogeneity of the single market also makes it relatively slow to negotiate these agreements. The EU-Canada Comprehensive Economic and Trade Agreement, for example, began with an impact assessment in June 2007, followed by the launch of official negotiations in 2009; it took five years to complete the draft text, and as at April 2016 the agreement still awaits ratification.71

42.Meanwhile, there remain major substantive obstacles to concluding the Transatlantic Trade and Investment Partnership,72 and debates in other Member States currently threaten to slow or even block agreement (particularly if it eventually requires ratification by each Member State, which is likely but not yet certain).73 Already, French cultural concerns have led to audio-visual services being excluded, which, given the UK’s success in the creative sector, would appear to be a reverse for UK policy. It is a good example of how the EU’s FTAs need to accommodate the interests of all members. Failure to conclude and ratify TTIP would represent a substantial blow to the UK, which has been among the agreement’s strongest supporters. If the FTA process continues to be as slow and cumbersome as it has been thus far, the EU—and, by extension, the UK, which cannot conclude FTAs on its own—risks becoming a follower rather than a leader in international trade, including on standards and regulation setting.

A neighbourhood on fire

43.Falling behind on international trade would also risk damaging the EU’s foreign policy clout, especially in its immediate neighbourhood. According to some of our witnesses, the EU’s ability to use financial and economic instruments such as trade and aid as levers constitutes an important advantage in dealing with countries in its region.74 Federica Mogherini cited EU policy towards Jordan as a specific example of the EU adding value to what the UK could achieve alone, telling us:

[The UK Prime Minister] is co-hosting a conference in London next month to provide support for Jordan which is faced with a massive refugee influx from Syria. Both the refugees and Jordanians need jobs, without which the former at least will be tempted to migrate on to Europe.  So, on top of cash, the biggest help Jordan can get is greater access for its exports to the EU market of 350 million consumers. Only the EU can deliver this.  But greater textile or agricultural imports could hurt the interests of other EU members with similar industries. Only with Britain arguing for this measure from the inside can we be sure of getting an outcome that is good for Britain, good for Jordan and good for the stability of the region.75

On Ms Mogherini’s last point, we cannot of course be sure of such an outcome: UK advocacy just makes it more likely.

44.Twelve years after the launch of the EU’s Neighbourhood Policy, however, the neighbourhood is in flames. From Libya, to Syria, to Ukraine, the weaknesses in the EU’s policies toward the countries in its immediate region are starkly evident. As the House of Lords EU Select Committee recently noted, for all the EU’s alleged potential to combine a range of instruments in pursuit of policy goals, its record in using these instruments coherently is somewhat poor.76

45.These problems have been thrown into further relief by an unprecedented migration crisis. As Nick Witney of the European Council on Foreign Relations wrote in his submission, “If Europe does not wish to be faced with repeated mass population movements from the South and East for years to come, it will have to put a lot more effort into doing what it can for stability and prosperity in the Middle East and Africa.”77 This suggests that the EU will have to do more in using all its policy levers, including liberalising its agricultural markets. The migration question is likely to dominate the EU’s agenda for some time to come. As a non-member of the Schengen border-free zone, the UK has thus far stood somewhat aside from the disputes over the crisis. Both if it remains inside the EU or leaves, however, it cannot remain unaffected by the overall damage that the crisis is doing to the EU’s reputation, internal cohesion and external relations—most recently demonstrated by the deal reached between the EU and Turkey in March 2016, about which we have previously expressed some concern.78 At issue is UK interest and influence on the future cohesion of the EU.

Challenges and opportunities for the FCO after a vote to remain

Making the most of the EU and its institutions

46.The UK will not be in a position to help address the substantial problems outlined above if, after a vote to remain, its influence inside the EU continues its apparent decline. If the UK decides to stay in the EU, the FCO should counteract this decline by launching an immediate and broad review into its handling of EU-UK relations, and its operations in Brussels. Building on the considerable volume of expert analysis that has been produced in advance of the referendum, the FCO could identify key weaknesses both in its own approach to the EU and in the EU’s external relations more broadly, and propose concrete solutions to those problems. In particular, it could address the ongoing under-representation of UK nationals in the EU institutions,79 and could make a renewed commitment to driving an EU foreign policy that is more flexible, more effective, and more in line with British and global priorities. Conversely, complacency on the part of the Government and FCO could ensure that the immediate risks we have outlined here become much more severe and entrenched challenges for the UK in future, if it remains inside the EU.

12 Cabinet Office, The process for withdrawing from the European Union, Cm 9216, February 2016, p 13

13 In Brief: Leaving the European Union, Standard Note SN/IA/6089, House of Commons Library, October 2011

14 Prof. Richard Rose, EUM0012, para 15; Matthew Karnitsching and Nicholas Hirst, “A long, costly and messy divorce”, Politico, 2 March 2016; “Brexit and EU foreign policy: the view from other Member States”, Report of workshop at the London School of Economics and Political Science, 15 March 2016, accessed 17 March 2016

15 “A rocky rehearsal”, The Economist, 30 January 2016; Pawel Swidlicki, How the EU ganged up on Britain in our Brexit wargame—and denied ‘Cameron’ a deal, The Telegraph, 27 January 2016; Raoul Ruparel, Stephen Booth and Nina Schick, EU Wargames: the challenges facing UK negotiators inside and outside the EU, February 2016, pp 27–30

16 Qq122–124; Dr Andrew Glencross, EUM0002, paras 3–6; Prof. Richard Rose, EUM0012, para 16; Dr Federica Bicchi, Dr Nicola Chelotti, Prof. Karen E. Smith and Dr Stephen Woolcock, EUM0014, para 12; Jean-Claude Piris, If the UK votes to leave: the seven alternatives to EU membership, Centre for European Reform, January 2016; “Alternative Lifestyles”, The Economist, 17 October 2015

17 Foreign Affairs Committee, First Report of Session 2013–14, The future of the European Union: UK Government policy, HC 87-I, para 164

18 The variation in figures represents the range of estimated impact of the so-called “Rotterdam effect”, whereby exports from the UK to non-EU countries that travel via the port of Rotterdam are counted as exports from the UK to the EU. Please see: In Brief: UK-EU economic relations, Standard Note SN/6091, House of Commons Library, January 2016

19 Office for National Statistics, “How important is the European Union to UK trade and investment?” 26 June 2015

20 Exiting the EU: impact in key UK policy areas, Standard Note SN/7213, House of Commons Library, February 2016

21 Stephen Booth, Christopher Howarth, Mats Persson, Raoul Ruparel and Pawel Swidlicki, What If…? The consequences, challenges and opportunities facing Britain outside EU, Open Europe, March 2015, p 6

22 EUR-Lex, Directory of European Union legislation, accessed 13 April 2016

23 European Commission, “EU trade relations worldwide—a map, accessed 19 February 2016

25 Qq196–198; Dr Federica Bicchi, Dr Nicola Chelotti, Prof. Karen E. Smith and Dr Stephen Woolcock, EUM0014, para 13a; Richard Rose, EUM0012, para 19, Oral Evidence taken before the Treasury Select Committee on 27 October 2015, HC (2015–16) 499, Qq47–51 [Mr Rees-Mogg and Mr Kerevan]

26 Iain Mansfield, A Blueprint for Britain: Openness not Isolation, Institute for Economic Affairs, 2014, p 14

28 House of Lords, Europe in the world: Towards a more effective EU foreign and security strategy, Eighth Report of the European Union Committee, Session 2015–16, HL Paper 97, para 101

29 All 28 Member States of the EU, including the UK, are members of the WTO in their own right. The EU has also had a seat on the WTO since 1995. Since the EU is a customs union with a single trade policy and single tariff regime, the EU speaks for all of its Member States at almost all WTO meetings.

30Exclusive: Obama wants the UK to remain part of the EU”, BBC News, 23 July 2015; “The Geopolitical Question”, The Economist, 17 October 2015; Stefan Wagstyl and George Parker, “EU Referendum: US Secretary of State urges UK to stay”, Financial Times, 13 February 2016; TheCityUK, EUM0022, para 25; Dr Tim Oliver and Almut Möller, EUM0019, para 5; Dr Wyn Rees, EUM0009, para 20

31 Q22; Prof. Richard G. Whitman, EUM0015, para 15

32 Richard N. Haass, “Brexit and the Special Relationship”, Project Syndicate, 15 February 2016

33 Benjamin Oreskes, “America’s Brexit Blahs,” Politico, 15 February 2016; “An interview with Ian Bremmer”, The Economist Bagehot blog, 23 February 2016; David Francis, “Here’s what happens if Britain dumps the EU”, Foreign Policy, 10 March 2016; Ned Simons, “Britain’s EU membership ‘vital’ for security of United States, says Senator John McCain”, Huffington Post UK, 18 March 2016

34 Dr Tim Oliver and Almut Möller, EUM0019, para 31

37 The Scottish Parliament, European and External Relations Committee, Second Report of Session 4 (2016), EU reform and the EU referendum: implications for Scotland, SP Paper 978, para 248

38 Foreign Affairs Committee, Sixth Report of Session 2012–13, Foreign policy considerations for the UK and Scotland in the event of Scotland becoming an independent country, HC 643, para 8

39 George Parker, “UK ministers warn of ‘domino effect’ if Britain leaves EU”, Financial Times, 18 February 2016

40 Raoul Ruparel, Stephen Booth and Nina Schick, EU Wargames: the challenges facing UK negotiators inside and outside the EU, February 2016, p 35

41 The Crown Dependencies, EUM0031, para 7

42 Sukey Cameron MBE, Representative of Falkland Islands Government, EUM0033, para 7

43 HM Government of Gibraltar, EUM0029, para 5.1

44 HM Government of Gibraltar, EUM0029, para 4.1

45 Jack Gilbert, “Peter Hargreaves: Brexit would be ‘fantastic stimulus’ for UK”,, 18 March 2016

46 Dr Heather Grabbe, EUM0030, para 12; Graham Avery, EUM0027, para 4; Prof. Richard Rose, EUM0012, para 21

47 Q2; Ian Bond, EUM0023, paras 1–2; Prof. Richard G. Whitman, EUM0015, paras 1–4; Dr Federica Bicchi, Dr Nicola Chelotti, Prof. Karen E. Smith and Dr Stephen Woolcock, EUM0014, para 2; Dr Dermot Hodson and Dr David Styan, EUM011, paras 1–4; Dr Heather Grabbe, EUM0030, paras 2–8; Nick Witney, EUM0010, para 4; Robin Porter, EUM0028, paras 1–7

48 David Campbell-Bannerman MEP, EUM0028, para 1; Mark Langan, EUM0016, paras 19–22

50 Q16, Q238, Q242; Ian Bond, EUM0023, para 2; Dr Tim Oliver and Almut Möller, EUM0019, para 33; Prof. Richard G. Whitman, EUM0015, paras 16–17; Dr Federica Bicchi, Dr Nicola Chelotti, Prof. Karen E. Smith and Dr Stephen Woolcock, EUM0014, para 5; Dr Dermot Hodson and Dr David Styan, EUM011, paras 1–4; Dr Heather Grabbe, EUM0030, para 2; Foreign and Commonwealth Office, EUM0024, para 2

51 Foreign and Commonwealth Office, EUM0024, para 5

53 Dr Heather Grabbe, EUM0030, paras 2–3

55 Q25, Q119; Dr Tim Oliver and Almut Möller, EUM0019, para 33; TheCityUK, EUM0022, para 13; Dr Dermot Hodson and Dr David Styan, EUM0011, para 3

56 David Campbell-Bannerman MEP, EUM0028, para 5

59 Dr Federica Bicchi, Dr Nicola Chelotti, Prof. Karen E. Smith and Dr Stephen Woolcock, EUM0014, para 5

61 House of Lords, Europe in the world: Towards a more effective EU foreign and security strategy, Eighth Report of the European Union Committee, Session 2015–16, HL Paper 97, paras 96–97

62 Foreign Affairs Committee, Second Report of Session 2013–14, The UK staff presence in the EU institutions, HC 219, paras 11 and 18

63 Foreign and Commonwealth Office, EUM0024, para 4

64 Q2, Q250, Q277; Dr Federica Bicchi, Dr Nicola Chelotti, Prof. Karen E. Smith and Dr Stephen Woolcock, EUM0014, para 2; Prof. Richard G. Whitman, EUM0015, para 2

69 Foreign and Commonwealth Office, EUM0024, para 4; CBI, EUM0018, para 5; Dr Federica Bicchi, Dr Nicola Chelotti, Prof. Karen E. Smith and Dr Stephen Woolcock, EUM0014, para 14; Prof. Richard G. Whitman, EUM0015, para 13; Dr Heather Grabbe, EUM0030, para 4

70 Nick Witney, EUM0010, para 11

71 Government of Canada, “Chronology of events and key milestones in CETA, accessed 7 March 2017

72 Hans von der Burchard, “EU, US claim TTIP progress, but sticking points remain”, Politico, 26 February 2016

73 Sarantis Michalopoulos, “Athens says TTIP should be ratified by national parliaments”, EurActiv News, 15 January 2016

74 Q81; Foreign and Commonwealth Office, EUM0024, para 4

75 Footnote to Q274 (Note by witness)

76 House of Lords, Europe in the world: Towards a more effective EU foreign and security strategy, Eighth Report of the European Union Committee, Session 2015–16, HL Paper 97, paras 224–228

77 Nick Witney, EUM0010, para 30

78 Foreign Affairs Committee, Third Report of Session 2015–16, The UK’s role in the war against ISIL following the Cessation of Hostilities in Syria in February 2016, HC 683, para 26

79 Foreign Affairs Committee, Second Report of Session 2013–14, The UK staff presence in the EU institutions, HC 219, para 11

© Parliamentary copyright 2015

Prepared xxprepareddatexx