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#CRCC Trade Proposals and Update

Disclaimer: This post was not endorsed by the British Government. (Yet).

In this first update for the Commonwealth, Realm & Canzuk Campaign, we are proud to announce that the United Commonwealth Society and CANZUK International have joined, and we have received a lot of interest from a number of other groups and associations, along with many individuals. The CRCC is still under development, but the Daily Globe has been kind enough to offer to host our website, so we anticipate the campaign growing and building inertia.

Here at the CRCC (Commonwealth, Realm & CANZUK Campaign) one of our goals is the benefit of Commonwealth Trade. We have received questions in relation to why this is an economic and not a political project and if the Commonwealth has an integral economic benefit. In this update, we will explore the potential trade agreements the UK can sign with Commonwealth nations, and it is of note that the majority of nations the UK is in negotiations with, or has proposed closer ties are all Commonwealth nations.

For the post-Brexit UK to succeed, a well organised trade strategy with a number of equally eager partners is crucial. It is to this end, that the similarity in cultural norms amongst the UK and the Commonwealth is an asset of considerable importance. These commonalities have been shown to increase trade between two members by up to 30% (Bennett, et al, 13). By investing time and effort into Commonwealth connections, the UK will reap greater economic rewards when compared with most other non-Commonwealth nations. Such benefits are not limited to the UK. There are numerous economic opportunities to Brexit, especially for the Commonwealth. In this article, we will examine these opportunities on a nation-by-nation basis.

On the 29th of March 2017, the United Kingdom of Great Britain and Northern Ireland (UK) gave official notice to the European Union (EU) that it was leaving the EU as per the result of the referendum. Brexit has therefore begun. While we all aim for the best possible outcome for both sides in future UK-EU relations, it would be a mistake to continue fighting the referendum over again. It would be advisable to examine how the UK can improve its relationship with its traditional partners and allies.

The first point is to dispel the myth that most nations are not economically interested in the UK. According to research by Tim Hewish and James Cleverly MP, the UK is the primary EU destination for Canada, Australia, New Zealand (the CANZUK nations) along with South Africa, Pakistan, Sri Lanka and Jamaica (Cleverly & Hewish, 6). Therefore, a new bilateral trading arrangement would be sought by all parties and should be treated with the necessary importance.

Unfortunately, the importance of deepening relations with the African-Caribbean and Pacific (ACP) nations has been questioned, with concerns regarding the size of their economies. However, to view UK-ACP relations as merely second rate continues the faulty logic which resulted in Brexit. Without the support of the BAME (Black, Asian & Minority Ethnicity) population in the UK, Brexit would not have occurred, and their grievances as part of the Vote Leave coalition must be heard. Part of this was the growing feeling of being second class citizens, an error that ought to be addressed swiftly.

Echoing the comments by Professor J.A. Frankel in his landmark paper, Assessing the Efficiency Gains From Further Liberalization, research conducted by Dr P. Ghemawat states that nations that share a language typically trade 42% more (Schumpeter, economist.com). A similar benefit exists for nations with a similar legal code. While the term “common” in Common Law referred to its use and development by “Commoners” in the network-centric, globalist and interconnected 21st Century, ‘Common Law’ has taken on a new definition.

The summed accumulation of these benefits is known as the ‘Commonwealth Advantage,’ and in the research paper, “Trading Places: the ‘Commonwealth Effect’ revisited” it is stated that “the value of trade is likely to be a third to a half more between Commonwealth member states compared to pairs of countries where one or both are not Commonwealth members” (Bennett, et al, 13). It is therefore deducted that a ‘special relationship’ exists between these nations. Due to the benefits of international trade, increasing by between 30-50% would offer greater returns from negotiated agreements than with most other nations.

The few options here are listed from lowest “cost-benefit” analysis to most to the UK. The  nations mentioned have all stated they wish for a new agreement with the UK, and in most cases low key negotiations have already begun. It is of note that many other Commonwealth nations have also shown similar interest, so the list is by no means comprehensive.

The Commonwealth itself is an IGO with fifty-two member states, concentrated in the Pacific, Southern Africa & Caribbean regions. Its lack of geographical proximity has developed from the British Empire’s and remains its greatest asset (through diversity) and liability.

CARICOM

All but two of the 15 full, and all five of the associate members of the Caribbean Community, commonly known as ‘CARICOM’, are members of the Commonwealth. These are: Antigua and Barbuda, The Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, St. Lucia, St Kitts & Nevis, St. Vincent and the Grenadines, and Trinidad and Tobago.

Sir Ronald Sanders, the ambassador for Antigua and Barbuda to the US, expressed concern that the Caribbean would be viewed as too small a market and overlooked by the overworked British negotiators (Sanders, The Implications of Brexit…). Current EU-CARICOM relations are at a low, mainly due to the current treaty, the EPA. This ‘Economic Partnership Agreement’ is viewed as an “unequal treaty” in the Caribbean and according to Sir Ronald Sanders, its signature was “a matter of fear, not faith” (Sanders, The Implications of Brexit…).

Therefore, a new basis for trade, development and investment is needed, as although the Caribbean is not of essential importance to the UK, the reverse is true; 21% of their exports to the EU go to the UK (Madden, Barbados Today). The option for a new treaty to replace the one-sided EPA offers great opportunities to the CARICOM nations. This could include replacing & augmenting older bilateral treaties such as bilateral health care coverage, which has taken a step backwards in recent years.

Botswana

Botswana exports between 54 to 56% of all its goods to the UK (Baatweng, Sunday Standard). This phenomenon and the potential threat from cheap agricultural goods has created a counter-intuitive scenario The nations within the European Single Market become significantly less attractive for trade arrangements giving a Brexit-Britain an advantage. As current EU trade regulations in the Common International Trade Policy are deemed to be sufficient by both sides, it would be wise to grandfather in the existing CITP arrangements, as this would involve nothing new and there should be no sticking points. ‘Grandfathering’ refers to the process where the UK would take the EU – other nation treaty and duplicate it so as to ensure the terms continue between the UK and other nation. The benefit of the process is that it is rapidly signed and finalised as no new terms need to be negotiated, and therefore UK-Botswana and any other nation relations are precisely the same before and after Brexit. The drawback is that no new processes or terms can be added, for that would require new negotiations. It seems that Canada, however, has proposed an unusual two stage plan where the CETA (Comprehensive Economic Trade Agreement) is grandfathered in, and then a entirely new agreement is developed.

Kenya

UK-Kenya relations are among the strongest in East Africa. The UK has emphasised the importance of Kenya and has made a series of suggestions for future relations, including relaxing EU restrictions on importing flowers and tea. Current UK government investments in the tea industry are expected to increase exports from the 45 million kilograms imported in 2015 (Cornel, The Star). Kenya, like most Commonwealth nations, complains about the restrictive UK visa policies. For this and many other reasons, it is believed that a much delayed and needed visa policy reform is being considered.

Kenya, due to its size and open market economy (one of the most economically open Commonwealth Republics after Singapore), is deemed to be a primary candidate for membership in the hypothetical C11 trade area based off the proposals by Tim Hewish (24). This would be a Free Trade Zone between the UK, Australia, Canada, New Zealand, India, South Africa, Kenya, Nigeria, Ghana, Singapore, and Malaysia. The groundwork of the C11 is already being laid due to the large number of bilateral trade arrangements signed and under development.

As the C11 would be an entirely new arrangement, Kenya should be a priority for the UK negotiation team. It is feared, however, that the C11 will take more than two years to finalise after the granting of the official go-ahead so a separate UK-Kenya trade agreement is being proposed and worked upon by the Foreign & Commonwealth Office.

India

India is one of the two Commonwealth BRICS nations, and historically was the Jewel of the Empire. To this day, India is the largest Commonwealth nation by population. With a GDP of $2.1 trillion, it is the second largest economy in the Commonwealth (Trading Economics) and the largest democracy in the world. India is a nuclear power, will be the largest nation by population in the future and developing with a rapidly increasing middle class. The current value of UK-India trade is $14.3 billion, and UK-India trade is currently increasing (Banga, 3). What is most notable is the genuine desire to boost bilateral trade, a key part of this being a new trade agreement.

Despite providing the second largest number of doctors to the UK and numerous other close ties, further attempts to broaden and deepen UK-India ties stall, mainly due to the restrictive UK Visa system. Following Brexit, the government has the chance to construct a fairer immigration system that does not discriminate against non-EU nationals, and it is being supported by the Conservative back-benches (Hope, Telegraph.co.uk).  It is to be hoped that PM May will accede to this request from both the Indian Government and her own MPs.  Such a liberalisation will be key to the much vaunted UK-India Free Trade Agreement, which would offer great benefits for all, with tUK exports estimated to increase by $2 billion, and Indian Exports by $1 billion (Banga, 4, 6).

India is also one of the three Commonwealth nuclear powers, and a great asset to the geo-political stability in the region. The UK has close defence relationships with India, yet these could be greatly strengthened. An option might be to offer India membership of the Five Power Defence Agreement. A more comprehensive proposal might be the creation of a Commonwealth Defence Pact, a mutual defence & development treaty similar to NATO and the failed American SEATO.

South Africa

Another of the old Dominions & BRICS nation, South Africa is a developing country well situated to play an important role in UK trade. UK-South African ties have greatly improved since the election of the majority ANC government, which has also seen considerable domestic development, and healing of internal divisions, possibly best seen in recent electoral victories of the Democratic Alliance, the multi-ethnic opposition party. Already the ‘gateway to southern Africa’, it’s the UK’s largest African trading partner (Hewish, 64). The UK is also the largest EU destination for South African exports at 18% (Cleverly & Hewish, 13). These two facts led to the swift proposals for closer ties following Brexit by both sides, a powerful riposte to the common allegation of Brexit being a racist & xenophobic reaction: It is hard to imagine the ANC-led government to be in favour of closer ties with a white-supremacist populated nation.

Closer UK-SA economic ties would also benefit from the African dislike of the EU’s agricultural policies and strengths, and Britain’s new position outside of the EU is a considerable asset to South Africa, as well as many other African nations. Hewish concludes that it would be simplest to build off the current EU-South Africa deal (the European Free Trade Area – Southern African Customs Union agreement), as opposed to constructing an entire new agreement (Hewish, 64). It is also of note that South Africa would be a member of the conceptual ‘C11 Free Trade Area’. Closer UK ties with the Southern African Customs Union should also be considered, as, like Caricom, it would offer the UK the ability to reach agreements with several nations with only one agreement.

Singapore & Malaysia

The UK’s relation with Singapore and Malaysia are firmly established and remain very close. Both have open and developed economies, the most developed in the region. Both nations use the foundation of Common Law, and have high levels of English literacy.  In relation to language, English is an official language both but it is in much more common use and 80% of Singaporeans are fluent in English (Singapore Market). When these key advantages are taken into account, they are two of the best Commonwealth Republic markets, open and eager for closer economic ties with the UK. It’s relations with the UK are also unusually good for a decolonised nation, possibly due to the fact both were a UK protectorates and not colonies.

Indeed, the sole pact that could be described as a “Commonwealth Defence Treaty” is the ‘Five Powers’ Defence Arrangement’ between the UK, Singapore Australia, New Zealand and Malaysia.

Malaysia

In relation to Malaysia, the reasons for closer UK-Malay ties have again manifested themselves; security issues in the Malay Peninsula, Borneo and South China Sea. In relation to trade, repeated statements by Cabinet members of both the UK and Malaysia during state visits have echoed a mutual desire for closer ties.

The UK currently exports £2.4 billion to Malaysia with a trade surplus of £0.9 billion, and is currently in “advanced talks” for economic agreements (Hewish, 38, 54). On the Malaysian side, they have purchased around 10% of the commercial property in London and there are 17,000 Malaysian students in the UK (Fox, gov.uk). The Commonwealth Exchange’s expectation on achieving a UK-Malaysian & Singapore trade agreement by 2021 was ⅘ (Hewish, 50).

UK-Malaysian ties developed from the threat posed to the Malay States by Colonial powers, and to some extent, this threat has surfaced again. Although the Dutch & French are no longer potential adversaries by any means, the South China Sea & Indochina region has again become destabilised by the actions of a hegemon – the People’s Republic of China, whose expansionist policies have created much concern.

Singapore

Singapore, like Malaysia is an economically-open nation, topping the World Bank’s Ease of Doing Business list, and leads many other similar series (Hewish, 40). It is an extremely open and competitive nation, and well worth closer economic ties. Singapore was able to transfer into being a first world nation in a short period of time and remains one of the most developed nations in the region, with a remarkably high GDP and GDP Per Capita. UK-Singapore trade has continued to grow in terms of value, and Singapore currently exports $3.3 billion to the UK, while the UK exports £7.2 billion worth of goods and services to Singapore, meaning the UK’s surplus is £3.8 (Trading Economics) (Hewish, 38).  As an economic superpower, closer ties with Singapore should be a primary goal with the UK and would offer considerable benefits for few hardships due to the openness and economic policies of the modern trading city-state.

Australia, Canada & New Zealand (CANZUK)

Canada, Australia, New Zealand and the UK (CANZUK) are, in many respects, remarkably similar. It is one of the few cases where a “one-size-fits-all” policy would likely work successfully, as when all four nation’s statistics are viewed, they show similarity. For this reason, the creation of a ‘Single Economy,’ with free movement of goods, services, capital and persons would be an easily achieved, workable goal.

Reinforcing this is the considerable level of support for these ideas in all four nations. All four CANZUK nations have a similar culture, standardised norms and economic policies unique in the modern world. Indeed, the former Australian Prime Minister Tony Abbott suggested that a UK-Australia agreement could be merely one page long, which must be a record by a considerable length (Cleverly & Hewish, 4). When viewed from a socioeconomic standpoint, these four nations are considerably more developed that other Commonwealth nations and this is the foundation for any CANZUK idea.

CANZUK International, the group advocating Free Movement has researched the four nations in great detail and their masterly proposals are available on their website, and we at the CRCC wholeheartedly recommend their goals.

It would be worthwhile to point out that ‘Free Movement’ as espoused by both the CRCC and CANZUK international (previously the CFMO) is fundamentally different from the European model of Free Movement; each nation involved would maintain complete sovereignty and control over their borders, the ability to refuse individuals or limit net migration. Furthermore, the goal of a CANZUK single economy would not be to create a single state, but rather to assist in economic development, closer ties, mutual defence and offer greater opportunities to the citizenry of each nation.

It should be noted that from a historical point of view, India, Pakistan, and South Africa all ought to be included in any ‘CANZUK’ proposal. From a political standpoint, all 16 Commonwealth Realms should be included in such a single economy. Yet, regrettably, neither would work at the moment. The Indian government would not be interested, as it would lead to “brain-drain”. For the other nations, the life expectancy, GDP per capita, crime rates, population size, average wage, and unemployment rate would place such a single economy under considerable strain. The final, and ultimate, reason why such a wide proposal would not work would be the lack of popular support in all the nations for such a Realm or Dominion Free Movement Area at the current date. The goal of the single economy is to lead to greater economic development and offer smaller nations greater geopolitical standing as part of a mutual association. It a matter of sovereignty and economics, and is most definitely not a political project.

A further point is that the CANZUK Single Economy would not be limited to the four nations. As mentioned above, when any Realm reaches a similar socio-economic standing, they would be able to apply to join the ‘Single Economy’. Furthermore, it need not even be expressly limited to the 16 Realms; South Africa, Kenya and Singapore, are  Commonwealth Republics, which could also most likely join the agreement if they wished. Pakistan, merely by the population size, would place great strain on the system as they have 3 and 20 times the population of the UK and New Zealand respectively. India’s population, six times larger than Pakistan’s, would be ten times larger than all four original nations combined. It needs be pointed out that there is a middle-ground between the current restrictive visa policy and complete free movement.

Conclusion

For both the developing and developed Commonwealth nations, Brexit offers an opportunity to grow trade, bilateral investment and relations with the UK. The above list is by no means exhaustive. Many other Commonwealth nations have expressed support for a new geopolitical and economic relationship. It is to be hoped that mutually beneficial trade links are developed for the good of all, and this is the aim of the Commonwealth, Realm & Canzuk Campaign.

Works Cited

1. Baatweng, Victor. “BREXIT: NO IMMEDIATE IMPLICATIONS FOR BOTSWANA BEEF EXPORT.” BREXIT: No Immediate Implications for Botswana Beef Export | Sunday Standard, Sunday Standard, 27 June 2016, www.sundaystandard.info/brexit-no-immediate-implications-botswana-beef-export. Accessed 16 Apr. 2017.

2. Banga, Rashmi. “Brexit: Opportunities for India.” Commonwealth Trade Competitiveness Briefing Paper, 2017, doi:10.14217/ca804af9-en.

3.  Bennett, Joanna, et al. “Trading Places: the ‘Commonwealth Effect’ Revisited.” Trading Places: the ‘Commonwealth Effect’ Revisited, thercs.org/assets/Uploads/Trading-Places-the- Commonwealth-effect-revisited.pdf. Accessed 7 Mar. 2017.

4. Cornel, Ernest. “Kenya’s Trade with UK to Rise Post-Brexit.” The Star, Kenya, The Star, Kenya, 25 Jan. 2017, www.the-star.co.ke/news/2017/01/26/kenyas-trade-with-uk-to-rise-post-brexit_c1494100. Accessed 30 Apr. 2017.

5. Cleverly, James and Hewish, Tim, Reconnecting with the Commonwealth: the UK’s free trade opportunities, Free Enterprise Group. Found at http://www.freeenterprise.org.uk/wp-content/uploads/2017/01/FEG_Commonwealth-Trade_web-1.pdf

6. Fox, Liam. “Malaysia and Britain: Partners in a Post-Brexit World.” Malaysia and Britain: Partners in a Post-Brexit World – GOV.UK, UK Government , www.gov.uk/government/speeches/malaysia-and-britain-partners-in-a-post-brexit-world. Accessed 27 Apr. 2017.

7. Hope, Christopher. “Commonwealth Citizens Should Have UK Visas Fast-Tracked after Brexit.” The Telegraph, Telegraph Media Group, 11 Feb. 2017, www.telegraph.co.uk/news/2017/02/11/commonwealth-citizens-should-have-uk-visas-fast-tracked-brexit/. Accessed 3 May 2017.

8.  Madden, Marlon. “Regions Anxious for Trade Deal with Britain Post-Brexit.” Barbados Today, 6 Apr. 2017, www.barbadostoday.bb/2017/04/07/regions-anxious-for-trade-deal-with-britain-post-brexit/. Accessed 3 May 2017.

9. Sanders, Sir Ronald. “The Implications of Brexit for the Caribbeanâs Future Relationship with Britain and the EU.” The Round Table, vol. 105, no. 5, Feb. 2016, pp. 519–529., doi:10.1080/00358533.2016.1231313.

10. Schumpeter. “The Power of Tribes.” The Economist, The Economist Newspaper, 28 Jan. 2012, www.economist.com/node/21543487. Accessed 16 Apr. 2017.

12. “Singapore Exports By Country.” Trading Economics, www.tradingeconomics.com/singapore/exports-by-country. Accessed 30 Apr. 2017.

13. .“Singapore Market.” Trade Guide Series, static1.squarespace.com/static/5305fde9e4b09fae2c90af6b/t/5624c943e4b018ac1e04282f/1445251395331/Singapore+trade+guide+-+FINAL.pdf. Accessed 27 Apr. 2017.

About Isaac Anderson

Profile photo of Isaac Anderson
Isaac is a British undergrad studying Political Science and Business on the US-Canadian border. Having been an expat since 2010, he's a globetrotter who enjoys visiting different cultures. Describes himself as a Classical Liberal / Conservative, Messianic, history fan, with a passion for the Commonwealth & Anglosphere. He also probably spends too much time on political issues.

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2 comments

  1. Brilliant as usual, Isaac.

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