After Brexit: reinvigorating the Commonwealth

Queen Elizabeth II touring Papua New Guinea.

Will the UK’s prolonged divorce from the European Union be an opportunity to restore the country to global eminence by reinvigorating the Commonwealth as a trading network?

The UK’s international trade secretary Liam Fox is these days busy spruiking the possibilities of the Commonwealth.

Fox, a proponent of Brexit, told a meeting of Commonwealth trade ministers in March 2017 that, freed from the constraints of European Union (EU) membership, Britain will, “[for] the first time in over 40 years … have our own, independent trade policy, allowing us to renew bonds of trade and commerce with our partners across the globe.”

The key question is, however, does the UK still matter to Commonwealth states?

Mutual trade, mutual advantage?

The Commonwealth’s 53 members have a combined population of more than 2.4 billion people but it is not at all clear that the UK wants what most Commonwealth countries have to offer, and vice versa.

British imports from Commonwealth countries are declining. In 1999 almost 12 per cent of all Commonwealth exports ended up in Britain. By 2015, that had dropped to less than 5 per cent.

The EU buys almost 45 per cent of the goods and services Britain exports, and seven of Britain’s top 10 trade partners are in the EU. Sales to Germany alone are seven times those to India.

Commonwealth countries too, have charted their own course since the UK joined the European common market. 

Canada is part of the North America Free Trade Agreement and 75 per cent of its merchandise trade is with the US. The EU, its second most important export market, accounts for 7.5 per cent and the UK comes a distant fourth with less than 3 per cent of sales.

Australia’s largest trade partner is China, accounting for about 23 per cent of total trade, followed by the US (10 per cent) and Japan (9 per cent). The UK has just 4 per cent of Australia’s total trade.

The International Monetary Fund forecasts that India’s GDP will overtake that of the UK in 2019.

More than 80 per cent of the exports of all Commonwealth countries are to non-Commonwealth markets. 

Growing apart: Britain and the Commonwealth

Chakriya Bowman, senior research fellow at the Center for Island Pacific Research and Development, says it is unsurprising that Britain and the Commonwealth have drifted apart in trade terms, given how economies and global markets have evolved since the early 1970s.

Britain no longer needs the huge volumes of commodities and raw materials it once did when it was one of the world’s great centres of manufacturing, she says.

Before it even gets around to starting on the Commonwealth, Britain first needs to sort out its post-Brexit relations with the EU.

Breaking up is hard to do 

Fox hopes to get transitional arrangements in place by 2019, allowing UK trade negotiators to turn their attention to, in order of priority, the US, Australia and New Zealand.

Brendan Vickers, trade advisor in the Commonwealth Secretariat’s Trade Division, speaking to INTHEBLACK.com in a private capacity, says it is “near impossible” for the UK to begin negotiating trade deals with other countries until the future of its relationship with the EU is settled.

As one example, Britain will have to decide whether it will adopt the EU’s standards regime, or that of the US. What it decides will significantly affect its scope to negotiate other trade deals.

“Since the EU is expected to remain the UK’s largest export market for the foreseeable future, the UK’s regulatory regime should align closer to the EU,” Vickers says. “This implies less scope for deep agreements with third countries, such as the US.”

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Britain’s trade with the Commonwealth

It is unlikely Britain will seriously engage with other Commonwealth members on trade until at least the early 2020s. In the meantime, the EU has been negotiating trade deals with small and poor Commonwealth states in Africa, the Pacific and the Caribbean for more than a decade.

These Economic Partnership Agreements give these countries quota- and duty-free access for many of their products.

At the very least, Britain will have to negotiate deals which match these terms and British negotiators will not have the clout of their EU counterparts, who are negotiating on behalf of 28 markets.

Bowman thinks Britain will need to offer much more generous terms, such as allowing the free movement of people, to get many Commonwealth countries to the negotiating table.

“That is unlikely because Brexit, after all, was about stopping the free movement of people from Europe into Britain. Why would they all of a sudden open their arms to members of the Commonwealth?” she says. “At that point, you have to wonder what Commonwealth countries would have, to benefit from these arrangements.”

A failure to launch

Lecturer in international business at Monash Business School, Giovanni Di Lieto, thinks the economic and political barriers to turning the Commonwealth into what some like to describe as “Empire 2.0” are insurmountable.

Aside from the mismatch of economic and trade interests, Di Lieto thinks those promoting the idea in Britain misjudge the mood in Commonwealth countries, where the days of the Empire are remembered much less fondly.

He says recent attempts to put a kindly slant on British rule in India have been met with outrage in that country, and the idea of a reinvigorated Commonwealth with the UK at its centre is unlikely to be popular.

“It sounds like a nice idea from the British side if you are being nostalgic, but it is a fantasy; no more than that.”

Read next: After Brexit: Five ways to really ruin an economy


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