23 January 2017

Why CANZUK is Britain’s best hope after Brexit


Britain is leaving the EU, its main geopolitical partnership for the past 40 years. Within the EU, we faced down the Warsaw Pact, absorbed the post-dictatorship states of Iberia and Greece, and the post-Communist states of the East. We also played our part in liberalising world trade and capital flows and setting up today’s global regulatory architectures.

Now we’re moving on. So should we go it alone? Or should we seek some new geopolitical partnership?

On the latter front, probably the two main partnerships proposed are the “Anglosphere” and “CANZUK”.

The “Anglosphere” would be a loose alliance of English-speaking countries, including the US, UK, Canada, Australia, New Zealand, the Caribbean and possibly Ireland. “CANZUK”, by contrast, would be a smaller and tighter-knit affair, in which Canada, Australia, New Zealand and the UK formed a new and deep geopolitical partnership.

In one version of the plan, we would begin with a free trade deal, an agreement that our citizens could move freely between our countries to live and work, and a new military alliance. If that worked well, we could move on to deepen our connections in other ways, perhaps with an “ever closer union” principle similar to that in the EU – though in the case of the CANZUK countries we might never need EU-style regulatory harmonisation, because our much greater natural affinities, and shared legal and cultural histories, might mean convergence and mutual recognition would happen automatically, without needing to be forced via directives from on high.

As an advocate of CANZUK, I have been encouraged by the burgeoning support for the idea, particularly in Canada and New Zealand. In Auckland, the leader of one of the coalition parties is an explicit advocate of CANZUK, including both the free movement and free trade elements. In Australia, former prime minister Tony Abbott is – as he wrote on CapX – an advocate of a free trade and free movement area between the UK, Australia and New Zealand. Other notable advocates of CANZUK include the businessman and author James Bennett and the historian Andrew Roberts.

Meanwhile, the broader, looser but less deep “Anglosphere” concept has received a boost from President Trump’s proposal for a US-UK trade deal – with some suggesting that the UK might join the US and Canada in a new North Atlantic Free Trade Agreement (NAtlaFTA).

Perhaps the best sign that these ideas have struck a chord is that this month’s edition of Prospect magazine has devoted a long article by Duncan Bell, the noted historian of “Greater Britain”, to attacking them.

Bell’s piece contains much that is of interest and plenty to disagree with – the mark of most good writing. I don’t have space here to argue against everything he says. Instead, I’ll focus on one of his central claims.

He notes that the idea of some form of close political association between the CANZUK states, or perhaps the CANZUK states plus the US, was previously mooted in the late 19th and early 20th century by the advocates of “imperial federation”. He argues that we can see many of the same nuances and challenges in the schemes circulating today – and that those same disagreements or fundamental errors of view will bring down CANZUK and the Anglosphere, also.

Let’s take one issue in particular. Bells insists that:

“The boosters of the Anglosphere are as bewitched as their Victorian forebears were by the belief that technology has dissolved geography. Contradicting the research of those derided experts, Davis and Fox blithely lecture us that distance is now largely irrelevant in securing the most fruitful trading relationships. The current generation of imperial federalists repeat the mistakes of their ancestors.”

This is a “wrong then, wrong now” argument. The notion is that late Victorians thought technology had made it feasible to have a close partnership that was geographically dispersed. But their failure proved them wrong, because geographical proximity remained vital then, as it does today.

There are at least four ways this could be wrong – and I think it’s probably wrong in all four.

First, just because the imperial federationists’ schemes failed, it doesn’t follow that they were wrong to believe a geographically dispersed political federation could work. Losing a political argument does not demonstrate that you were wrong on the technicalities – as the ongoing arguments about the economic implications of Brexit remind us.

A variant of this point is that they might have been right that a geographically dispersed federation could work in principle, but failed to recognise that that would only be so if the components were sufficiently balanced in population, power and wealth. With one overly large player, geographic dispersion might naturally concentrate even more of the wealth and power in the player that was already large.

Perhaps, for example, such schemes would not have worked in the late 19th century such because the UK was too large relative to the other players. But today, with Canada and Australia having grown so much, the greater balance means it could now work. (This point might, on the other hand, be a decisive objection to any deep political integration within an Anglosphere that included the US.)

That brings us to the second point, which is that Victorians felt that many technological transformations were within their grasp when they were in fact quite a few decades away. They imagined computers (think Babbage), robots (think of the fairground automata), mass international holiday travel (Great Eastern), vast increases in life expectancy, journeying to the moon, and many other things.

But they weren’t wrong to believe these things possible – they were just early. In much the same way, it’s possible that imperial federationists were wrong to believe that the technologies of their day made a geographically dispersed federation feasible – but modern technologies might.

To provide just one illustration, legend has it that when Fred Astaire and Ginger Rogers’s movies were first shown in London, they required subtitles in some areas so Londoners could understand their accents. Modern mass communication means we can all watch President Trump’s inauguration today – and Australians and New Zealanders and Canadians will have read many of the same articles, seen many of the same news broadcasts, even seen Trump on The Apprentice.

In other words, our ability to engage politically across the CANZUK states is of a completely different order from that of the late 19th century. And that is before we even consider tomorrow’s technologies, such as space planes or 3D-printer-manufacturing.

This brings us to a third point, where Bell’s article shares a confusion with a piece by Ian Birrell on CapX from a few days ago. The “research of those derided experts” Bell was referring to concerns the significance of geographical proximity in trade.

Birrell, similarly, points out that “Australia, Canada and New Zealand are today worth about $3 trillion, and growing at the same unexciting speed as other mature nations – perhaps 2 per cent over coming decades”. The logic is that rather than looking to build ties with its old friends, Britain should focus on new partners – countries such as Nigeria and India that will be the drivers of global growth.

Yet the error here is to believe that these schemes are mainly about trade. To be sure, the volume of trade would be non-trivial. CANZUK would, at around $6.5 trillion in GDP, be the fourth largest economic grouping in the world, behind the US, EU and China – and their total trade volumes would be of the order of $3 trillion, versus $4.8 trillion for the US, $4.2 trillion for China or $1.7 trillion for Japan.

But ultimately the CANZUK scheme is not mainly about trade. The US and EU, and quite probably China, are going to be much larger trading partners for all of the CANZUK states than any of them will be with each other.

What we are talking about is a geopolitical partnership, not just a trade deal. And the technologies and cultural practices that make geographical proximity less important for a geopolitical partnership are not the same as those facilitating geographically dispersed trade.

Of course, the Anglosphere probably would be more trade-focused than CANZUK – but it would also be so large as to be obviously economically worthwhile, vastly dwarfing any other economic or trading bloc in the world. And in that instance, the US would be so large relative to the other players, and to the rest of the world, that the issue would not be the distance of the Anglosphere’s members from each other, but their distance from the US.

Fourth, Bell argues that across the world, geographical proximity is vital for both trade and political partnerships. But it could still be that there is space for one geographically dispersed player. Think of a rectangle of felt from which we cut a series of circles. At the end, there may be one large piece left over, that “fills in the gaps”. A CANZUK geopolitical partnership could be the equivalent in global affairs.

In other words, it might be true that for all players but one, geographical dispersion won’t work. But CANZUK might be that one player.

Bell’s piece offers many other objections to CANZUK and to the Anglosphere that I haven’t addressed here, and I urge you to read it for yourself. But please also take away the point that just because the late Victorians couldn’t make this kind of federation work because of the distances involved, it doesn’t follow that the same is true today.

Andrew Lilico is an economist and political writer