The shimmering prospect of the Commonwealth replacing the European Union as the primary trading bloc for Britain became a little more real for its advocates as the Commonwealth Secretariat and the Commonwealth Enterprise and Investment Council hosted ministers and representatives from ‘more than 35 countries’ at Marlborough House on 10 March.
The Commonwealth Secretary-General, Patricia Scotland, declared: “There is a 19% trade advantage within the Commonwealth. We must see how the global trade landscape can be changed in favour of that advantage.’ She added, however, that ‘no country should be left behind.”
With a proviso that obliquely acknowledged the difficulties of harmonising trade between Commonwealth members as diverse as Canada and Papua New Guinea, the trade secretary, Liam Fox, told the event: “While our diversities might make a single trading model difficult, if we work together to communicate the benefits of free trade, while addressing the challenges of globalisation, then we have the opportunity to build a global economy that works for everyone.”
Jonathan Marland, the Conservative peer who is chairman of the Commonwealth Enterprise and Investment Council, called for an ‘Agenda for Growth’ to promote trade, investment and job creation. He said: ‘There is an opportunity for the Commonwealth to demonstrate global leadership on free and fair trade.’
While research commissioned by the Secretariat in 2015 – and much quoted at the meeting – found intra-Commonwealth trade was ‘likely to surpass $1tn by 2020’, the response outside the Commonwealth ‘family’ was far more cautious. The Guardian reported: ‘Many British officials are despairing of the newfound political obsession with the Commonwealth, warning that its mostly small, far-flung and underdeveloped markets are little substitute for lost access to the EU single market.’ The Times reported: ‘The “Empire 2.0” description was coined by sceptical officials worried about the high priority given to trade deals with Commonwealth nations.’
Alarmed at the rather mocking tone of much of the coverage of his department’s efforts to build stronger trading links with Commonwealth countries, Fox warned civil servants not to use the term ‘Empire 2.0’, PoliticsHome reported. But scepticism has still predominated. As reported in September’s Commonwealth Update, the UK’s potentially disastrous new terms of trade may mean that Brexit will hit hard those Commonwealth nations that export to Britain, not just through worse terms of trade but in losing an ally within the EU.
James Blitz, Whitehall editor of the Financial Times, said: ‘There are good grounds for Britain to try and strengthen Commonwealth trade links following Brexit … But any politician who thinks the UK can replace its 40-year relationship with the EU by returning to nostalgic dreams of empire needs to think again.’
Jim O’Neill, a former Tory Treasury minister and Goldman Sachs chief economist, was scathing, calling Theresa May’s pivot towards the Commonwealth for post-Brexit trade ‘embarrassing’, the Times reported. He said: ‘Greece is bigger than New Zealand. Banging on about a free trade deal with New Zealand is going to make zero difference to Britain’s future in terms of trade.’
O’Neill, who was until recently commercial secretary to the Treasury, urged the UK to look for opportunities among the BRIC nations – Brazil, Russia, India, China and South Africa – and said the decision to leave the EU was a ‘reality check which the government is choosing to ignore’. He dismissed the government’s principal justification for Brexit – that it would control immigration – as ‘madness’.
The EU is the world’s largest economy, accounting for more than 20% of global gross domestic product. It is the world’s largest exporter of manufactured goods and services, and is itself the biggest export market for about 80 countries. Accordingly, about 45% of total UK exports of goods and services went to the EU, compared with less than 10% to Commonwealth states. The EU has more than 20 free trade agreements covering 50 countries. The US and China have 14 FTAs.
“Until we negotiate new agreements with them,” Sir Simon Fraser, a former mandarin at the FCO and Department for Business, Innovation and Skills, noted in his recent Tacitus lecture, “we risk being in the odd position of having worse trading terms with these Commonwealth countries than the EU. Second, these EU trade agreements are vital for their development goals.’ He added: ‘If we were to lose 5% of our trade with the EU, we would need a 25% increase in our trade with the BRICs, or with the Commonwealth, to recoup that loss before any new gains were made.”
With the British government poised to trigger Article 50, which starts the two-year negotiations on leaving the EU, the implications of implementing the referendum result is also throwing up ever more problems elsewhere in the constituent parts of the UK. One is the looming threat of another referendum on Scottish independence, after Scotland’s first minister, Nicola Sturgeon, called for a second vote in 2018 or 2019. “Our efforts at compromise have been met with a brick wall of intransigence. There has been talk of special deals for the car industry and others but a point-blank refusal to discuss in any meaningful way a differential approach for Scotland,” she said, according to the Glasgow Herald.
Ireland has enjoyed 19 years of peace and rising prosperity, helped by the removal of the checkpoints and towers that used to mark the very ‘hard’ border between the Republic and Northern Ireland. Now it is bracing for a return to those days, with all the attendant fears for the peace process, if the Brexit envisioned by May and Fox turns what is now a largely nominal border into the frontier between the EU and UK.
Dermot Ahern, Ireland’s former foreign minister, told RTÉ: ‘One way or the other, I think there is going to be some sort of a hard border which would be terrible for us … Whoever decided to put that referendum before the people in Britain didn’t think out the implications for Ireland, both north and south.’
One implication was put in stark terms by Gerry Adams, the Irish MP and Sinn Fein president, who said: ‘Taking the North out of the EU will … destroy the Good Friday [peace] agreement,’ the Herald reported.
[Oren Gruenbaum is the Editor of Commonwealth Update. The Update appears in full on the Round Table Journal website.]