We have written in the past about the importance for the UK of fully executing an independent trade policy outside of the EU. One of our recommendations has been accession to the Trans-Pacific Partnership which includes many Commonwealth countries. As the heads of state of the 53 Commonwealth countries gather in London this week, they converge at a time of great uncertainty in the world. While there has been some speculation that the UK faces a choice between the Commonwealth and the EU, we do not believe there is such a binary choice. But in a great coincidence, the UK’s leadership of the CHOGM process will continue until 2020, concurrent with the Implementation Period in the UK-EU negotiation. Most importantly, there is an important role the Commonwealth can play in solving some pressing global problems. The direction of travel of global regulation is negative. Countries are embracing more local content laws and regulations that force foreign firms to use local content if they want to trade.
The more anti-competitive market distortions damage the competitive landscape and lead to wealth destruction, the more damage is done to consumers and the overall business environment, the less innovation there is and the more entrenched the “new normal” stunted growth becomes. While large firms and incumbents can manage the costs of increased barriers to trade and compliance, smaller firms will be forced to exit the market.
This anti-competitive harm ultimately increases inefficiency and costs for consumers. The Commonwealth is uniquely positioned to play its part in reversing these trends because it is an alignment of nations around concepts such as the rule of law, in particular English common law. Its diversity – containing some of the most developed countries in the world, as well as the smallest micro-states – is a source of strength. While not necessarily agreeing to a particular approach, they may subscribe to similar philosophies and broad positions.
It is the network effect of the Commonwealth, not necessarily formal agreements among members that is where its power lies. In a briefing released today, How the World can benefit from the Network Effects of the Commonwealth, we state that the Commonwealth nations can contribute in the following ways, by meeting before global meetings so that they can start to influence their various affinity groups in these meetings to achieve more liberalisation, pro-competitive regulation and property rights protection. They could also develop a trade barrier regulation mechanism to deal with internal barriers that they face from each other.
They could also use their meetings to better influence the financial services regulatory agenda so poorer countries and regions like the Caribbean and Africa have better access to finance. Finally, we propose that UK farmers could be better integrated into global supply chains, which they have been out of during the 40 years of EU membership. While UK agriculture has struggled inside the Customs Union, the rest of the world has moved on with more and more efficiency in its supply chains. Increased protein demand will be a function of the global economy for the foreseeable future, and it is important for UK farmers to be ready for this.
As Britain prepares to leave the European Union, her neglect of the Commonwealth must change. It is a built-in network that is unique both in its global reach and in the depth of its relationships and interconnections with the UK itself.
Most Commonwealth leaders have had some educational experience (sometimes for many years beyond University) in the UK, and can be said to have been partially formed here. This is not a network that would be easy to replicate, and it is one we must nourish. A successful trade policy for the UK after Brexit involves a good agreement with the EU, US, potential TPP accession, and potentially India. Many of the countries in these new UK trade partnerships are Commonwealth countries. This week would be a good time to start making this a reality.