11 August 2014

UK needs more free trade with Commonwealth


The Commonwealth is thriving, as the successful Games that closed in Glasgow earlier this month illustrated. Might it be time for the UK to improve its trade links with these former colonies and other friends outside Europe?

At present Great Britain’s largest trading partner is the US; or the EU if you consider the whole of Europe to be one nation. However, as countries such as India, Canada, South Africa and Australia grow their economies can the EU afford to maintain restrictions on imports and exports from those countries? India is expected to grow at 6.4% this year, outstripping anything in Europe. The UK should be looking out to the world as globalisation takes off; not naval gazing in the EU as it diminishes in importance.

The EU cannot stand still if it wants to keep pace with international rivals, so it must be more outward-looking, signing more trade deals to reach new markets. If the EU won’t, or can’t, open up to the world then the UK must do it on its own.

Non-EU markets should be central to the UK’s trade priorities. We have a long history of close ties with these nations. As they come into their own the UK should seek to deepen those connections. More free trade would be mutually beneficial.

But when it comes to trade, the EU negotiates on behalf of all member states, even those with whom the individual country has close ties. These negotiations tend to be slow, complicated and laborious. Just take the EU and US Transatlantic Trade and Investment Partnership (TTIP). The negotiations have become bogged down over disagreements on regulatory issues and there is no end in sight.

Or look at the EU and Canada: the Comprehensive Economic Trade Agreement (CETA) has taken years and now, just as it is due to be signed, it is threatened with collapse owing to a rumoured German veto. This is also true of the EU trying to negotiate a free trade agreement with India which has, after seven years, seemingly got nowhere. Bilateral agreements can be more effective and easier to agree. Singapore, a relatively small economy, negotiated a trade deal with the US in 2004.

The demographics of the Commonwealth versus the EU are also compelling arguments for looking outwards to the world. Europe is facing an ageing population and a pensions’ time bomb. The Commonwealth is made up over a billion young people ready to start being productive members of the global society.

It is also worth remembering that as most Commonwealth countries have a Common Law legal system it is often much easier for the UK to deal with them directly rather than relying on Acqui Communautaire to translate between different legal protocols. The shared history and linguistic ties aid understanding too.

The UK’s Prime Minister, David Cameron, faces tough decisions in the near future, should he win the general election taking place next year. If the UK is to have the promised referendum on its future with the EU in 2017 he has to crack on with negotiating a new relationship. The issues in the spotlight are the freedom of movement of people and the European Convention on Human Rights. However, trade should also be a priority for the renegotiation. The UK should be free to sign agreements with its former colonies on a bilateral basis.

The Commonwealth Games reminded us how close the member countries have been in the past, and should be again.

Annunziata Rees-Mogg is a freelance journalist, focusing on finance, economics and European politics.