On 27 July 2016, RSIS’ Centre for Multilateralism Studies (CMS) organised its inaugural seminar under its Seminar Series on Multilateralism Studies entitled “Brexit and its Aftermath”. The event sought to identify the possible consequences of the United Kingdom (U.K.) leaving the European Union (EU). This Policy Brief builds on the discussions at the seminar and identifies the potential impact of Brexit on Asian countries. It also derives a number of policy implications for these countries.

On 23 June 2016, the people of Great Britain and Northern Ireland went to the polls in a historic in/out referendum to determine whether the...

The referendum result has triggered a chain of events that will eventually lead to Britain leaving the EU. The formal withdrawal process will begin only when the government invokes Article 50 of the Lisbon Treaty. The European members want the process to begin as soon as possible, while the U.K. government wants more time to develop more concrete plans. The latest proposed date is End-March 2017, but a recent High Court ruling of 3 November has put this timeline in jeopardy as the Parliament may have to discuss and vote on invoking the Article. This would only delay the process...

It is not possible to predict accurately what the relationship (both economic and political) between the U.K. and the EU will look like in the future. We can, however, draw up three broad potential scenarios that could evolve in the next five years or so.

The “best case” scenario is that the economic implications from Brexit are largely limited to the British Isles. If negotiations go well with the EU, and the U.K. can swiftly resolve an exit package, we have a “Soft Brexit” scenario where investor confidence will be restored soon. The loss of economic output will be minimised...

The direct impact of Brexit on Asian countries can be assessed by analysing the shares of their total exports which go to the U.K. and the EU.

The data in Table 1 show that the share of Asian countries’ exports destined to the U.K. is relatively low (only about 2-3 per cent). The only exceptions are India (5.3 per cent) and Cambodia (6.5 per cent). Besides, in most cases, the export share of the U.K. in Asian exports has been falling in recent years. Therefore, the impact of Scenario 1 on Asian countries would be modest and manageable.

The data...

Some have argued that the main lesson to Asia from Brexit is that Asia should be cautious and slow its pace of regional economic integration. But this is not correct. The main lesson is that Asian countries should be more aware of the benefits and costs of economic integration and try to ensure that these are more evenly distributed, so that the groups of people will not be left behind. In the EU, many of the rules, including those related to immigration, were agreed at the supranational bodies in Brussels and were implemented by the member countries without regard to...