Aid and trade: Our future with India

Why can Canada, Australia, and New Zealand deal with India, yet the UK not?

There's money to be made in partnership with India
Tim Hewish
On 26 November 2012 13:00

It is a great time to celebrate this country.

Its Monarch, Queen Elizabeth II, celebrated her Diamond Jubilee this year. Its Royal Armed Forces are supported by being a key transatlantic power in NATO. And it is supplemented with G7 membership.

It has one of the world’s largest economies, while the City is one of the foremost financial capitals of the world and leads in the technology and SME sectors.

Politically, it is a coalition led by a Conservative Prime Minister that is trying to weather the economic storm. It is also fortunate to have a special relationship with the United States.

And it was also recently given the green light to pursue a free trade deal with India.

An FTA with India makes sense. India is the world’s ninth largest economy according to the United Nations (2010) and an emerging nation – it is only right that this nation seeks to establish such ties. Both countries share a core language and are united by history. As members of the Commonwealth this is amplified by goodwill and a commitment to democratic values.

One would rightly think that with these linkages the bilateral FTA could be conducted within a few years. India is also in the process of FTA deals with other English-speaking partners, such as Australia and New Zealand, and so it was about time this nation got in on the act. It is clear thinking from the government to understand that it cannot get left behind when the Asian markets boom.

The country in question…Canada.

Apologies for leading readers on, it was prank worth playing.

I want to highlight the fundamental difference between an independent free trading nation and one in economic servitude.

Despite Canada’s many similarities with the UK, outlined above, it has the freedom to conduct free trade deals while the UK, remaining in the EU, does not. Canada’s trade agreement with the USA, as part of NAFTA, doesn’t forbid economic association with third partners. Our EU bind does.

Perversely then, the UK is tied to an out-dated customs union in the EU, which means that we hide behind a punitive tariff wall, have no seat at the WTO, and Brussels conducts deals in our name.

This is the biggest aspect that irks me about the UK-EU relationship – economic freedom.

Europhiles say that being in a bloc makes us stronger. It doesn’t when our economic views are so diametrically opposed. The EU cowers in a single market within itself. Businesses do not lift their heads above European perspectives. The CBI is myopic.

While the EU stagnates, Asia booms. It takes decades for a poly-lateral trade agreement to take place – just ask the Caribbean or members of ASEAN when dealing with the EU. Bilaterals are quicker, easier, and based on a larger amount of trust.

The UK has a small window in which to operate or it risks getting left behind its Commonwealth partners. It is better to be a dominant power in a bilateral agreement when your nation is the world’s sixth largest economy, not when it is overtaken. This will happen in the next five years.

The simple question should be why can Canada, Australia, and New Zealand deal with India, yet the UK not? Once you know this - the answer is simple.

Our only lever of power is to stop giving India aid. Bravo; but where’s the trade? Thankfully, BoJo is at least trying.

To compound the problem, this week’s edition of the Economist rubbished the Commonwealth connection saying it was better to stay in the EU. It played the cheap imperialist card. Ironic then that the Economist was founded upon the diehard support of free trade and globalisation against the Corn Laws and the forces of protectionism. If it could put slavish EU closed-market ideology to one side it would see that it is not history – “It’s economics, stupid.”

I want to be more like Canada. Who’s with me?

Tim Hewish is the author of Common-Trade, Common-Growth, Common-Wealth. He is a Parliamentary Researcher of a Conservative Member of Parliament and read for a Masters in Imperial & Commonwealth History

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