BREXIT will have minimal effect on the Pacific: Academic

Transcript

A British exit from the European Union will have little or no effect on the Pacific according to an economic professor at New Zealand's Victoria University of Wellington.

Ilan Noy says it is Britain and not the EU that will experience the biggest impact of a separation and since the EU is the bigger player in the region the effect on the Pacific will be minimal.

Mr Noy spoke with Koroi Hawkins about BREXIT and the Pacific.

ILAN NOY: I think actually not a lot. I think in general the fear we have seen in the last three days about the UK leaving the EU has from an economic perspective has been overblown. This is not going to be a major calamity, economic calamity globally. The only country that will be affected significantly is the UK and nobody else, that is to a dramatic extent. And definitely in the Pacific for the Pacific the UK is not a very big trade partner it is not a very big donor or aid partner. The EU is much more important for the Pacific and I don't think that the UK leaving the EU is going to change much of that. Now of course if you can imagine a cascade of sort of disasters in which the UK leaves the EU and then France votes to leave the EU and then Greece leaves the EU and the Euro collapses and so on and then we can, we can think of scenarios in which it is going to have a big impact on the Pacific. On globally on everybody. But the Pacific is largely I think isolated.

KOROI HAWKINS Right and maybe looking indirectly at other things relating to trade and economics in the Pacific like the Australia and New Zealand brokered PACER PLUS free trade agreement that is still being negotiated. What about the ethos behind protecting sovereignty and some of the other issues. Non economic related issues related to Britain breaking away if it does from the EU. Would that make an impact do you think on negotiations at this late stage in the PACER PLUS negotiations?

IN: You know my guess and I am not a forecaster and actually there is a famous economist who said economic forecasting was invented to lend some credibility to astrology. So it is very difficult to know what the future will hold. But it seems to me that if anything there will be a, globally there will be a backlash against, you know xenophobic, nationalistic, isolationist sentiment that to some extent has been expressed in the BREXIT vote. So I don't see everybody, especially if you look at the last few days where the pound has collapsed and or depreciated dramatically and then the stock markets have fallen significantly. That means that people are not viewing it as something very positive which suggests that people will not gonna say. People elsewhere in Australia in New Zealand in France in the US are not going to say oh that is a perfect example we should follow in their footsteps. So I if anything I would say there will be a backlash and there will be an attempt to strengthen international cooperation in things like the trade agreements and the PACER PLUS and things like that.

KH: Going forward which way are we heading now in terms of Britain beginning negotiations or even thinking of going down the path that the referendum suggests is the popular one?

IN: The fears about an economic collapse are overblown. So even if they do decide to leave the EU they will leave under conditions that will not change dramatically the kind of policies that they are already doing. So they are not going to renegotiate their trade agreements with the rest of the world. So they are largely going to grandfather all their trade commitments that they have made through the EU the same is true for the financial systems and so on. So it is not going to have the large economic implications. The one thing I think that is troubling potentially is that for a few years now we will not exactly know what will happen. And we know that when firms want to decide what they want to do and where to invest they don't like uncertainty. And that is going to be a problem for Britain it is not going to be a problem for the Pacific because the UK is not a big player in the Pacific it is not even a big player for Australia and New Zealand. What happens in Australia and New Zealand will affect the South Pacific a lot but the UK is not even a very big trade partner for New Zealand and Australia nowadays.

KH: Right but the EU is a big player in the Pacific as you were saying and would Britain's if it does leave would that be a significant  reduction in the money and the power influence etc that the EU has?

IN: To some extent it would but you know the UK for years has been a sort of not the main pivot of the European Union largely because they were outside the Euro right. Will it weaken the EU yes it will weaken the EU but the EU is still going to be the second biggest gorilla globally after the US. So it is going to be a slightly weaker gorilla but unless more countries decide to follow in the UK footsteps and I don't see that happening anytime soon. Then it is not going to have a very significant impact on the EU. The UK was already a bit of an outsider in the EU to start with. It is going to weaken the EU but only marginally.