Something in common: Thinking outside the EU box
As people wake up to the possibility of a Britxit, could politicians wake up to the potential in the Commonwealth?
As I said last week, the argument has always been the cost to the UK in the case of a Britxit and the reverse was hardly mentioned; but one argument that seemed to pop up in comment boxes was that without the EU we would be roller-coasted in trade agreements.
Now aside from the giddy idea that we could adopt the GATT stance and become a completely free trade area without any tariffs, I cannot see why any other country would put existing business interests at risk by penalising the UK.
UK trade figures showed that there was £16.5bn of imports to the UK in September from non-EU countries resulting in a trade deficit of £4bn while in Q3 the deficit stood at £11.8bn with £50bn coming in (£50.9bn for the EU).
The UK market was worth £5.2bn to the US and China in September, while China exported £8.2bn to the UK in Q3 and America exported £7.7bn for the same period.
OK, not that much in relative terms but still, why would these countries penalise us in trade negotiations?
Away from the traditional markets, there is one area that commentators, barring a few honourable exceptions, seem to always pass by. Let me ask you a question: What organisation has members on every continent in the world? Which organisation has two of the largest ten economies, two members of the G7, and five members of the G20? And, for good measure, which organisation has English as its official language?
I am, of course referring to the Commonwealth.
The shift in economic power away from the west has been well documented but it beggars belief to me that hardly anyone appears to have considered the advantages that the Commonwealth could give us if we had the political nerve to utilise this historic tie.
There is already a fair amount of trade with the Commonwealth with total exports of goods and services accounting for 8 percent of UK trade at £37bn in 2010 but this figure could be so much more.
In his evidence to the Foreign Affairs Committee, Royal Commonwealth Society director Dr Danny Sriskandarajah said that there was already a “Commonwealth advantage” and that "the trading volume between two Commonwealth members is likely to be a third to a half more than trade between a Commonwealth member and a non-Commonwealth member”.
But why do we not do more?
Think about it; the raw materials that sit in Australia, Canada, and Africa, in which other nations are busy gaining an advantage on us - most notably China in Africa. What about the technology and financial expertise in Singapore? The growth story in Nigeria? Mobile banking in South Africa and other countries?
We know that the Commonwealth could represent a market over nine times greater than that of the rest of the EU by 2050 and it is this market that the rest of the world will be trying to tap into whilst we get bogged down in the mire with a declining Europe.
Think of the sovereign wealth funds and oil-rich regimes that could invest in our infrastructure. Think of the potential in properly tying up with the likes of Singapore’s Temasek in ventures or introducing our brilliant engineering and hi-tech companies to the Indian space programme.
Of course our companies already reach out to these territories but until recently our government has been scandalously ignoring them -- our partners in the Commonwealth -- so bedded is the FCO and its political masters to le grand projet.
Since we begged an allowance for New Zealand lamb, we have turned our back on our own with no thought on the economic realities that the golden age of Europe was probably over by the time we joined and is certainly over now unless something truly radical can be achieved across the Channel.
The government spends about £37m on engagement with the Commonwealth, some 50p per every man, woman, and child in the UK which compared to the billions we waste in Europe is ludicrously low.
As John Baron put it in committee, we are seeing immigration caps on professionals and students coming in from the Commonwealth; closing smaller Commonwealth embassies, particularly in the Pacific region; and we are reducing funding to the BBC and the British Council.
He added: “ Meanwhile, you could argue that some of our competitors, such as China, are throwing aid at Commonwealth countries -- a £400m programme in Trinidad and a £150m hospital in Jamaica. Why the disconnect?”
And it is not just strictly the Commonwealth. We should be able to gain advantages with the neighbours of our Commonwealth friends as well. Think of China. We have a relatively low engagement economically with the country and more could and should be done to get UK companies into China given our knowledge and presence in Hong Kong and neighbouring countries
At the moment, on government level we are tied by the diktats of the European customs union and cannot decide for ourselves what is the best for our country.
If we have to leave the customs union, so be it.
A combination of having a historical tendency to have war with most of the world and an almost innate need to travel and trade has left us with this unique legacy.
Rather than fancy photocalls in nice locations, it is imperative that we look to the seas once more, not only engaging in the global economy but, once more, properly engaging with our brothers in commonwealth.
Simon Miller is a Contributing Editor to The Commentator
Read more on: UK international trade, commonwealth trade, the commonwealth, foreign and commonwealth office, Hong Kong, nigeria, China, the rise and fall of China, The rise of China, China's investment in Latin America, China and the eurozone, EU holding UK back, European Union, and Simon Miller
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