Why not the #Commonwealth?

Surely the obvious choice for the UK's international partnerships should be countries of the British Commonwealth. Some are settled by British people with as near identical ties of culture and law as can be imagined. Many others have inherited legal and business practices and the English language from the days of Empire. Commonwealth countries more or less by definition, have more positive than negative attitudes to the UK. Only the French have something similar. The Spanish, Portugese and Dutch have no such thing. The Russian experience to try to create something similar through various measures has had very partial success. The British Empire was largely about trade, not conquest and tribute. Most conflict took place as a struggle for power between local elites when the British were withdrawing. We have fought and died together in the same causes. Until 1968, we had total freedom of movement for Commonwealth citizens. There are ties of shared blood sacrifice between Britain and all races of the Commonwealth. So why not the Commonwealth?

Following the end of the Gold Standard and unilateral Free Trade in 1931, in 1932 at the Ottawa Conference the UK tried to form a Free Trade Area with the Empire and Commonwealth. By 1958, despite continuous discussion that still hadn’t happened due to fundamental differences that still exist. Prompted by two wars, the UK was subsidising farming in an attempt to be more self sufficient. Commonwealth food was not entirely welcome and faced quotas if not tariffs. The UK didn't want Commonwealth manufactures either. This was seen as unwanted competition. Commonwealth countries were not prepared to be simply quarries sending raw materials and tropical produce to the UK. For most, agricultural land was their biggest asset. They also wanted their own manufacturing industries. Even New Zealand.

Meanwhile, in 5 quick years, the 6 core Europeans had put together a free trade area as a peace reinforcement project. So the UK changed direction towards Europe, founding EFTA in 1960 as a temporary measure and a way to increase negotiating clout with the EU. De Gaulle said No in 1962 to British entry. The UK tried going it "alone" with EFTA, Commonwealth preferences and the "Special Relationship" with the USA. This didn't work in a world with higher tariff barriers for goods than now. Britain's industrial decline relative to Germany and France became even more obvious.

The UK was accepted in 1972 and joined in 1974, minus the rest of EFTA, the larger members of which joined later over time. Since then, the Tory Far Right has done everything it can to prevent reform and deepening of the EU structures, deliberately paralyzing decision making. Motivation seems to vary. Some seem to be nostalgic for the return of a Commonwealth that never was. More than a few, especially fellow travellers in UKIP, seem to be still fighting the Second World War. Freed of this burden, the EU has already made progress. For example, the EU has reached unanimity on a creating a defense force distinct from NATO. The UK far right has constantly opposed this some as some sort of German occupying power. It was lobbying by the Tory Right that led to expansion beyond the EU15 to Eastern European countries such as Romania and Bulgaria. The core EU was more interested in deepening its structures. Recently the UK was lobbying for Turkey to join to promote expansion rather than deepening. Ironically, UKIP used this prospect as yet another stick with which to beat the EU. With Brexit that project has died. It was the Tory far right that pressed for the removal of national sovereignty by lobbying for Qualified Majority Voting. Without the UK the EU is going to make accelerated progress in deepening. The Commonwealth dwindled. Canada in particular was at times more active than the UK itself. The Commonwealth lost economic significance for its members.

Brexiters were fond of pointing out the difficulties of the sovereign debt in the Eurozone following the rise in the price of oil in 2007. The rise exposed private debt in the USA and the UK (all the major banks went broke (nicely described, as in the case of Greece as illiquidity), Barclays happened to find its solution in the Gulf) and sovereign debt in Europe. The rise in oil price triggered the financial crisis and made the, oil dependent, Eurozone in particular sluggish. That’s over. In 2014 the price of oil fell. The trigger in this case was the peaking of the Chinese workforce in 2011. Due to the one child policy it is now in steep decline taking raw materials prices with it. Professor Sir Patrick Minford, a raw materials specialist, formerly Chief Economic Advisor to the UK Government during the 1980's believes in a 25 year raw materials cycle. So for the next 20 years, the EU and its attachments will boom. So will Japan and India and especially S Korea. Extractive economies which have enjoyed booms like Canada and Australia are in trouble. Industrial economies with a large raw materials sector like the UK and US, maybe Russia, will limp along. The Commonwealth is on the wrong side of this cycle for the next 20 years. The period of high raw material prices is typically 5 years and low prices 20 so the Commonwealth is usually on the wrong side on any such cycle - part of the original problem. The timing to leave the EU couldn't be worse.

It is also the case that Canada, Australia and New Zealand added together amount to about the same GDP as Germany alone. India although still economically not yet large has potential and needs advanced services and goods but India wants Freedom of Movement for workers as part of any deal. As resistance to FOM was the main plank of the Leave vote (items 2 & 3 in Lord Ashcroft's assessment, easily outweighing item 1 - sovereignty) that is a non runner. The UK blocked the EU's deal with India because of it. For those who want more detail there is a link at the end of this blog. The UK exported much more to Germany alone (£48.5 billion) in 2015 than Australia, Canada, India, Malaysia, New Zealand and Singapore combined (£32.8 billion). As, food imports apart, there is nothing material by way of tariffs to stop UK trade with Commonwealth countries now, it seems unlikely that the UK can grow this trade substantially.

It is deeply to be wished that the UK makes more of its Commonwealth ties but so far as economics is concerned there is no question that the EU is the better partner. And it is not only the EU that Britain proposes walking away from in a Hard Brexit. It is the 56 other countries with which the EU already has a trade agreement. In total, 74 countries, almost half the world. Including deals in the pipeline EU trade deals amount to 75% of world GDP.

A link to a report on the Ottawa Conference beginning as it meant to go on for 26 years.

UK Trade with the Commonwealth and the World

EDIT - Addendum
There is no legal barrier to stop the UK setting up Freedom of Movement agreements with Commonwealth (or any other countries) now from inside the EU. This would be extremely good for trade in services as they depend strongly on Freedom of Movement. There appears to be little appetite for this, except from India. Freedom of Movement with India would be politically unacceptable in the UK. The much touted CAN-AUS-UK-NZ has no serious political support even in the UK. Such a racist version of a Free Movement area would create strong criticism and maybe retaliatory actions. To avoid this, a Free Movement area should use wealth as a measure and thus include countries like Hong Kong, Singapore, Malaysia and closely connected non Commonwealth countries like the UAE (Citizens not guest workers).