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Brexit and Commonwealth: Challenges and Opportunities

Written by Robert Jackson

Robert J Jackson argues the Commonwealth’s role in the future of UK trade should be promoted more enthusiastically. The 53 Commonwealth countries include a third of the world’s population and 40% of people under 30 and 14% of global GDP.

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Most newspaper articles about Brexit have concentrated too heavily on the negative aspects of withdrawal from the EU. The approach has created an exaggerated focus on the uncertainty of Britain’s future after Brexit rather than a discussion of positive and upbeat ideas about wider alternatives.

On occasion, government politicians and Ministers have called for balanced approaches, but few have offered the degree of idealism that could move large numbers of people to believe they can have a better future after Brexit. Prime Minister Theresa May’s approach has not emphasized enough her endorsement or future vision for an “outward looking and Global Britain”.

Since the referendum, three topics have predominated– citizens’ rights, Britain’s financial obligations, and the border between Northern Ireland and the Republic of Ireland. It is generally agreed that the details of future trading arrangements between the UK and EU can be settled out only after agreement is reached on these three issues. But a rancorous and selfish debate is already well underway about a possible customs union between the two entities, with some Brits – especially in the House of Lords – advocating a clean break with Brussels and others demanding a continued close association.

Politicians also seem to believe that it is too soon for the UK to begin negotiating new trade arrangements with non-European countries while this heated debate continues.  But this is a political mistake. As soon as possible, and certainly before the culmination of this initial negotiating period, the Prime Minister should promote a public, optimistic approach for the future.

The major problem with British leadership since the referendum has been its appearance of negativity. Often exaggerated arguments about what Brexit will cost the UK have dominated the mantra of the opposition and reduced the public’s appetite for leaving the EU. This pattern needs to be reversed as soon as possible.

Instead of waiting for the boring but important conclusions that are bound to come from negotiations with EU officials, Mrs. May should follow the advice of her Foreign Minister Boris Johnson and strike out now with a positive, optimistic, stance about Britain’s future relations with the rest of the world.

Of the few possibilities at hand for accomplishing this task, the Commonwealth is the best option. The United States is preoccupied with its own trade issues with NAFTA and the EU, Russia is useless on economic issues, and China is pushing its own agenda of authoritarian capitalism, even within some Commonwealth countries.

There are difficulties with the Commonwealth option but—it is the best immediate strategy forward. Check the facts.

The Commonwealth consists of 53 states that, with few exceptions, derived from the former British Empire. Its total population is about 2.5 billion people, making it approximately five times as populous as the entire European Union. It contains about a third of the world’s total population, and about 40% of those under the age of 30. These facts make it a significant future market for most competing international powers.

The Commonwealth and EU exhibit very wide variations in terms of size, population, and wealth. The total Gross Domestic Product of the Commonwealth is currently only about 14 % of global GDP, while that of the EU is around 22%. By comparison with the 28-member states of the EU, the 53 Commonwealth states are widely distributed across almost all continents and major land formations. All the EU states are clustered on one continent, and almost all are relatively wealthy economically. The disparate Commonwealth states include several rich states (five are members of the G20), 31 very small states, and 13 LDCs or Least Developed states.

These broad differences in wealth and population are bound to make it difficult, but not impossible, for UK leaders to develop policies in concert with the Commonwealth. The most complicated issue may well prove to be the field of immigration. But this is a surmountable challenge that can be resolved to most people’s satisfaction, and it is in the interest of the UK to be proactive in doing so. Brexit also deprives some Commonwealth countries of a gateway to Europe. But that access was never very easy. India, Nigeria, and South Africa, for example, do not yet have free trade agreements with the EU.

Commonwealth officials have concluded that the potential downsides of Brexit will include only marginal negative effects for most members, and then mainly for the smallest countries such as Botswana, Belize, Seychelles, Mauritius and Bangladesh which send 10% or more of their exports to the UK.

While not a formal trading bloc, former members of the Commonwealth have close economic, historic, language, and political ties with the UK. Such variables can, to a large extent replace economists’ traditional determinants of the extent of trade, namely larger economies and the geographical distance between countries. Most Commonwealth members wished to continue their close ties to Britain at the time the UK shed its responsibilities to them and joined the EU many years ago, and to a large extent they have done so.

The Commonwealth Secretariat has shown the way forward. It concluded in a recent major Report on Brexit that intra-UK Commonwealth trade in goods and services could increase from about $US 600 billion in 2015 to 1.3 or even 1.9 trillion US dollars by 2030, even under a low trade growth scenario. That is, more than double the present situation!

The Prime Minister needs to find new ways to build on this fact and increase economic relations with Commonwealth countries as soon as possible.

While Brexit will create stresses for some Commonwealth countries, it will bring advantages for many others. Overall, the UK now has an opportunity to greatly expand trade with the Commonwealth and to a large extent make up for its loss of EU membership.

Mrs. May should shout that news from 10 Downing Street and the galleries of Westminster.

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About the author

Robert Jackson