Originally published October 2022.
Winston Churchill once said Britain should never escape from the United States, Europe and the Commonwealth. However, with the UK no longer a member of the European Union and the news that there will be no trade deal with the United States for some time to come, Britain must place itself at the forefront of a trading bloc with the Commonwealth.
During her campaign to become Tory leader and prime minister, Liz Truss said she would launch a ‘New Commonwealth Deal’ by creating bilateral trade agreements with Commonwealth countries to strengthen economic ties and counter China’s growing economic power. If the United Kingdom were to go further and work closely with all 54 countries in the Commonwealth, we could restore our position as a trading giant.
On 31st January 2020, the UK left the EU, one of the largest trading blocs in the world. The belief that Britain will form a new trade deal with the United States has sadly failed to materialise, but Britain is provided with an opportunity.
The recent death of Queen Elizabeth II has proven just how respected and admired the United Kingdom is around the world. The whole of the Commonwealth grieved our Queen and now greet the King with open arms.
“The Commonwealth must evolve into a free-trade area that actually benefits Britain and all member states with no tariffs”
But for too long, the Commonwealth has lacked a coherent modern purpose. Created to promote human rights and freedom for former British Empire countries, the Commonwealth has little influence on global affairs or its member states. The Commonwealth must evolve into a free-trade area that actually benefits Britain and all member states with no tariffs.
The Commonwealth is home to 54 countries and includes a population of 2.5 billion people. If all Commonwealth countries are counted as one entity, it makes for 17% of the world’s GDP, with India and the UK as the wealthiest participants.
As a free trade area, it would be one of the largest trading blocs in the world. Already, the combined GDP of Commonwealth countries is estimated to reach $19.5tr in 2027, nearly doubling from $10.4tr in 2017. And when the UK signed a free-trade deal with Australia, it removed all tariffs and opened an estimated £10.4bn of additional trade for the UK. That change could be repeated in all Commonwealth nations. Just think how universal free trade within the Commonwealth would be a strength for all sides.
A free-trade area would allow all members of the organisation to trade with one another without prohibiting countries from opening their own trade agreements with other organisations and trade blocs. For example, the 11 countries that are members of the African Free Trade Zone would be able to join a club of economically linked Commonwealth nations.
Some of the world’s poorest countries are members of the Commonwealth. Although the sixth-largest national economy worldwide, the UK would benefit from the natural resources and sustainable energy sources available in Commonwealth nations.
Collaborating with poor countries would remove tariffs and allow goods to be transported cheaply, benefitting some of the poorest countries, like Sierra Leone and Mozambique.
One criticism of this idea is the distance required for such a free trade area. Currently, Liz Truss wants Britain to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a trade agreement uniting several Commonwealth nations with Asian countries. The perk of such an agreement is that it reduces tariffs by 95%.
“By creating a free-trade area with low or no tariffs as in the CPTPP, a Commonwealth union can create sustained growth and prosperity”
It may be difficult, with the voices of protectionism likely calling for tariffs to protect sectors like agriculture, but the gains could be enormous if Truss is willing to be ambitious. By creating a free-trade area with low or no tariffs as in the CPTPP, a Commonwealth union can create sustained growth and prosperity.
Liz Truss is determined to unify the Commonwealth nations economically against the growing power of the Chinese economy. But joining the CPTPP is not the answer. Britain’s strength in a Commonwealth free-trade area would mean that trade deals could be formed with Asian countries without having to enter the CPTPP.
As Churchill said, Britain must be forever linked to America, Europe and the Commonwealth. Although the UK may no longer be directly linked to the EU, that does not mean our status should fall. By uniting Britain’s economy with the Commonwealth, Britain and its allies would be back on the map as a world power.
Originally published by capx.co and reprinted here with permission.
