What We Can Learn From the First Brexit

Long before Brexit, a country did leave the EU.

And it wasn’t easy.

Greenland’s Brexit

The referendum was close and the negotiations were going to be rough.

The year was 1982 and the place was Greenland. As a province of Denmark, it was a member of the European Economic Community, the EU’s predecessor. After getting home rule in 1979, Greenland decided to leave the EEC. The reason was EEC fishing quotas.

It took three years of tense domestic politics to negotiate an exit. On the plus side, Greenland retained control over its fishing waters and got 200m euros annually. However, EEC members got fishing rights that angered the deal’s opponents.

Perhaps proving the doubters wrong, Greenland’s economy continued to grow after they left the EEC:

Our Bottom Line: Brexit

Last week, the U.K. formally filed for an EU divorce. By triggering Article 50, they began the separation process.

Imagine though that you’ve got 27 nations, the European Commission and the European Parliament negotiating with the U.K. And they just have two years because an extension is doubtful. At stake is €60 billion that some say the U.K. owes from prior obligations. There are the outstanding commitments that relate to scientific research, court cases, financial deals. And of course, they have to decide how freely to let people, goods and services move across borders.

Complicating Brexit further is the sequencing of issues. Some want everything on the table while others support a step-by-step-approach.

Below, FT Punk Economics takes a brief look at Brexit:

All of this returns us to Greenland. With a population of only 57,000 people and a tiny $2.5 billion GDP, its exit took three years.

My sources and more: The articles on Brexit are endless. Starting with Greenland’s exit, this Bloomberg article and Politico provide the facts. Then for Brexit, if you just read one column, I recommend the FT’s Martin Wolf. Finally, though not explicitly mentioned, David Riccardo’s comparative advantage is always an issue when we constrain international trade.

The post was slightly edited after publication.