The campaign for stronger ties between
Canada, Australia, New Zealand and the United Kingdom

CANZUK: A bold idea for a new kind of trade bloc

Canada, Australia, New Zealand and the UK can form an innovative trade network

"Sydney" by Jason Tong is licensed under CC BY 2.0

Thinking of CANZUK as a sort of alternative to the EU is selling it short – it would be something new

Trade is lifeblood of nations, and the CANZUK nations have the chance to achieve something unique in the modern world.

If you're familiar with the CANZUK concept, you will be aware that trade deals would certainly form part of any such agreement, along with freedom of movement. Australia and New Zealand already have a far-ranging free trade deal between themselves, and the UK is keen to strike new deals coming out of Brexit. A large proportion of Canada's trade is with the United States (75% of exports), but with President Trump being unpredictable and an opponent of NAFTA, Canada may wish to look at other options. These can never replace the deep economic relationship with the US, but they can help protect against absolute worst case scenarios.

Let's assume that Australia, Canada, New Zealand and UK manage to sign a wide-ranging free trade agreement between themselves, modelled on the Australia-New Zealand Closer Economic Relations Trade Agreement (indeed, this could be widened to include the UK and Canada).

The four countries have similar cultures and legal systems, facilitating trade – and have complementary economies, with the potential to work well together.

The other arena is trade deals with the rest of the world. Here is where CANZUK really gets interesting. Australia and New Zealand have extensive trade deals with the rest of the Asia-Pacific region, whilst Canada is heavily focused on the US and the rest of North and Central America.

The UK's eventual exit from the EU is the real wildcard in all this – whether it ends up with a something like EFTA membership, or a lesser agreement, or nothing at all, is unknown at this point. The EU itself may not survive intact. For the sake of argument, let's assume a lesser agreement.

So, each of the CANZUK nations have focused on their local geographic regions with their trade deals, for reasons of proximity and ease of transport. But there would seem to be a huge opportunity here – for collaboration in free trade deals with each other's home regions. For example, Australia and New Zealand already have free trade deals with China – Canada and the UK could hitch a ride onto these existing channels. And all four nations are interested in a trade deal with India – why not combine efforts?

These would have small effects to start with; but when combined over three regions – Asia-Pacific, North America and Europe, the effects would accumulate. Essentially, trade deals which would be too marginal to be worth pursuing on an individual national basis (for example, Australia-Norway) could be wrapped into a CANZUK framework. In this case, the UK would be the lead partner, opening their region to the other CANZUK partners.

Exactly how this would work remains to be seen. You could have a single CANZUK trade delegation, working together to land bigger deals, or a piecemeal approach, where the region lead partner(s) initiates the approach, bringing the others along for the ride as negotiations proceed.

It is worth noting that New Zealand is already offering to loan the UK its trade negotiators for the post-Brexit dealmaking, and the Australian negotiating team are giving guidance as well. Why not take the extra step, and turn these informal acts of assistance into a semi-formal alliance?

Having said that, it is not necessary to ferociously bind the CANZUK nations into a overly centralised bureaucracy, as is the case with the EU, with all the drawbacks and distance this entrails. I would certainly envisage each member being able to strike their own trade deals, if they so chose.

But what's unique about this? At present, all the major trade blocs; the EU, MERCOSUR, ASEAN, NAFTA, Caricom, etc are regionally focused. They seek to bring close geographic neighbours into a bound agreement. CANZUK would be completely different – a global club of developed nations with a similar culture and outlook, already linked into their regions, and seeking trade deals on a global scale. Thinking of CANZUK as a sort of alternative to the EU is selling it short – it would be something new.

The three regions the CANZUK nations are linked into, Asia-Pacific, Europe and North America, are the most important economic regions of the world. If you include India with Asia-Pacific, you have a potential combined market of 4.5 billion people – two thirds of the world's population, and 80% of the world's economic output.

Suddenly, CANZUK goes from being just another trade bloc, in a world awash with them (with varying levels of success), to something greater. With protectionism returning, this would take CANZUK in a different direction, a true trade network rather than a protectionist bloc.

History has shown that taking a turn against the norm can often be beneficial. A CANZUK network, rising above pending trade wars and driving its own course, could help smooth the course of world affairs in the 21st Century, amidst the prowling cacophony of neo-nationalism.

Sometimes you have to sail against the wind, after all.

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