duskily As we approach the final few days and weeks of 2020, our time in the Brexit transition period is coming to an end. Being a fully signed-up EU member has gone, and we now need to look to what our future is outside the European family. There is now a growing swell of support for CANZUK (a free trade deal encompassing Canada, Australia, New Zealand, and the UK). The question is should the Lib Dems support CANZUK?
The premise of CANZUK is to build a free trade deal that brings together the UK with some of her commonwealth allies. CANZUK is not a new idea and is certainly not a knee-jerk reaction born out of Brexit. The idea is that the member countries have lots in common, in terms of trade, history, culture, politics, and so should work together to improve the lives and opportunities of their citizens.
The UK already trades with the other CANZUK nations; all with varying levels of agreements. In 2019, the UK was the fourth biggest source of foreign direct investment for Canada with $29billion in trade. In 2018-19, two-way goods and services trade between Australia and the UK was valued at $30.3 billion, making the UK Australia’s seventh-largest trading partner. However, the relationship between New Zealand and the EU (including the UK), made up only 8% of New Zealand’s imports and 12% of their exports in 2019. Of course, these could be up-scaled in any trade deal from 2021.
The Lib Dems, rightly, supported the UK’s place in the EU passionately. Not only was the EU a political project to find peace in a previously warring continent, but it is also the world’s largest free trade zone (and right on our doorstep, too). So, can we, as a party that supports the concept of free trade, see CANZUK as a way forward for ‘global Britain’?
CANZUK has many benefits. Firstly, it is not held back by the rigidity of the EU. There is no doubt that the bureaucracy of the EU was a major turn-off for many Britons. There would be no commission-style organization or federal parliament associated with CANZUK. It also brings together anglo-spheric countries that have much history and heritage together. There are also no ‘basket case’ members (such as Poland and Hungary in the EU’s case), and, as it is not in any way tied together like the EU, should a member become less aligned with the ambitions of the other CANZUK members, it could be dropped.
However, there are two obvious flaws for CANZUK – size and distance. Firstly, the joint population of CANZUK (including the UK), is only a fraction of the EU – 136 million compared to 500 million. This means that trading opportunities are not as great as being in the European Single Market. Economically, it also does not compete as the GDP of CANZUK and the EU is $6.4trn and $20.7trn respectfully. Secondly, whereas the EU is a short ferry or train journey away for the UK; Canada, Australia, and New Zealand are thousands of miles away. This limits the ease of freedom of movement, meaning that even though trade might be tariff-free, it will still cost a lot in exporting as well as have a large impact on the environment.
So far, most of the noises around CANZUK come from those on the right of the political spectrum. However, there is support from across the spectrum in respect to national leaders of the CANZUK nations. These include New Zealand’s left-leaning Jacinda Ardern and Canadian liberal, Justin Trudeau.
So, we return to the ultimate question of whether the Lib Dems should support CANZUK? The answer should be a cautious, yes. The deal would have to be right and include freedom of movement alongside tariff-free trade. As a party that believes in free trade, it would be foolish for us to reject this opportunity. It is in no way a ‘like-for-like’ replacement for the EU, but it does have some real positives that could benefit our economy. For many Britons, the notion of having a more laissez-faire deal with countries that are culturally close to ours is a welcome one. If backed by the Lib Dems, this could go some way in proving that we are pro-business, pro-free trade, and pro-internationalism.
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