Commonwealth free trade is a bad idea by itself

One reason a lot of people support Brexit has been for the United Kingdom to create a European Union-like organization among its commonwealth realms, and they argue this will increase the United Kingdom’s power projection.

Let’s compare what this will be compared to the European Union which the United Kingdom has left.

 

European Union Commonwealth Realms
GDP $21.52 trillion $7.96 trillion
Population 447 million 151 million
GDP per capita $38,000 $52,578

 

What is the Commonwealth Realms?

From what we can see here, the commonwealth realms are significantly smaller than the European Union.

Of these 15 realms, only 4 are significantly wealthy large democracies, those are the UK, Canada, Australia, and New Zealand. The only other countries with over a million people in the Commonwealth Realms are Papua New Guinea, which has a GDP per capita of just under $4000, and Jamaica, which has a $9000 GDP per capita. The rest of the Realms are small island nations and Belize. While some have high GDPs per capita (like the Bahamas) they don’t have the population to project power globally. Most of the Commonwealth Realms are not going to significantly increase the power projection of the United Kingdom from where it is today.

Over 40% of the population of the Commonwealth realms is in the United Kingdom. Over 80% of their population is located in the United Kingdom, Canada, and Australia.

What this is really about is deepening economic relationships between the United Kingdom and Canada. This is going to run into a massive problem however because the United Kingdom doesn’t even appear in the top 5 largest trading partners of Canada. Over 70% of Canadian exports and over 50% of Canadian imports are with the United States, so anything which moves trade from Canada from the US to the UK will probably hurt the Canadian economy, and cost jobs overall. Not only that but 7% of exports and 11% of imports are with the European Union, so if trade with the EU is harmed through this agreement, it will kill Canadian jobs. Given the choice between over 700 million people in the US and EU together or 67 million in the United Kingdom, the Canadians are going to pick the economy which is over 10 times the size of the United Kingdom. The fact is that Canada borders the United States, we already have a free trade agreement with them, and millions of Canadian jobs are dependent on keeping trade with the United States as open as possible. If this threatens trade with the United States… forget it.

Canada has no reason to join CANZUK if it harms the vast majority of its trade with the US and EU. CANZUK is bad for Canada.

Australian trade is more diversified, with China as its major trading partner. While the United Kingdom does generate 4% of Australian imports, this pales in comparison to the 32% of exports and 19% of imports from China, along with 5% of exports and 12% of imports from the United States. While they’re not nearly as highly dependent on one other country as Canada, the United Kingdom is not a major trading partner of Australia. Also, the overall impact of deepening UK-Australia ties is unlikely to have much of an impact on the United Kingdom. While Australia is massive in area, its population is less than a third of that of the United Kingdom. The average Briton in Sheffield will probably think about trade with Australia less than a cattle farmer in Enid, Oklahoma thinks of trade with Canada. Never. The United Kingdom and Australia signed a free trade agreement last year. We will see if it deepens their relationships, but Australia’s population is going to be the major barrier to having a significant impact on the British economy.

Canada won’t threaten its existing relationships with the United States and the European Union, and there is very little benefit to deepening already fairly open trade relationships between the United Kingdom and Australia.

The remainder of the Commonwealth will have no impact on the United Kingdom economy. New Zealand is smaller than London, Papua New Guinea, the Solomon Islands, and Jamaica are poor, and every other member is smaller than Cardiff and on the other side of the world.

You should not expect anything more than a standard Free Trade Agreement between the UK and the rest of the Commonwealth Realms in terms of economic integration.

On top of this, the European Union already has free trade agreements with Canada, Australia, and New Zealand, so leaving the European Union will provide no benefit regarding the CANZUK relationship.

Future growth of the Commonwealth

This is where things become significantly different… the commonwealth realms have been steadily shrinking since Queen Elizabeth became Queen. When she became the Queen, she was not just the queen of the 15 current commonwealth realms but also Ghana, Nigeria, Sierra Leone, Tanganyika, Uganda, Kenya, Malawi, Mauritius, South Africa, The Gambia, Trinidad and Tobago, Barbados, Pakistan, Ceylon, Malta, and Fiji. Most of these countries left the Commonwealth Realms in the 1950s and 1960s, but Fiji left in 1987, Malta in 1974, Ceylon in 1972, Trinidad and Tobago in 1976, Mauritius in 1992, and most recently Barbados in 2021. The Commonwealth realms have been shrinking over the last 50 years, and are not going to grow. They will probably continue to shrink in numbers as more members gradually decide they don’t want to be a constitutional monarchy anymore.

The United Kingdom could set up free trade agreements with any country it wants, but this would not provide any real benefit to them which outweighs leaving the European Union.

Could former British colonies which would have a significant positive impact on the British economy decide to join the Commonwealth Realms and form a new institution that would deepen their relationships with the United Kingdom?

First of all, we cannot include any countries which are already part of existing free travel agreements, so India, Pakistan, and Bangladesh could not unilaterally join an EU-like Commonwealth organization without disturbing its existing free trade area.

Nigeria could potentially join if that is of any interest to the British public.

Tanzania, Kenya, and Uganda are part of the East African Community.

South Africa, Namibia, and Botswana are part of the South African Customs Union.

Malaysia is part of ASEAN.

The remainder of the countries in the Commonwealth Realms are smaller than Canada, and most are extremely poor. There would be no impact on the British economy from the remainder.

The Commonwealth of Nations is not a place where the British government is going to see any progress in building deeper relationships like what they had with the European Union unless it wants to be the central pillar of a bunch of small and poor island nations most people have never even heard of.

The Commonwealth is not going to grow either.

 

The United States?

Could we see a deepening relationship with the United States? I highly doubt it because the State Department hasn’t mentioned it in its last press briefing, and there have been no meetings regarding the proposed free trade agreement for two years now. It might be picked up, but I don’t anticipate a free trade agreement between the United States and the United Kingdom any time soon. If we don’t even have a free trade agreement, don’t expect anything deeper.

China?

Forget it. Most people in the UK have very unfavorable views of the People’s Republic of China.

Japan

Japan and the UK already have a free trade agreement, just like they had when they were in the European Union. This is merely a continuation of what was the status quo.

Russia

Don’t make me laugh. Russia is poor and currently invading Ukraine, and failing at it.

South Korea

The EU has a trade agreement with South Korea. This provides no benefit to leaving the European Union.

 

Besides these countries, there are no other economies with a GDP over a trillion dollars… except for…

The European Union

The one foreign move which is likely to work and provide a benefit is undoing Brexit and rejoining the European Union. There are no countries of significance that are likely to do more than a free trade agreement with the United Kingdom, which means that the United Kingdom is likely to become more isolated. Being part of a larger bloc creates advantages in trade, and anytime you ask for reasons you end up with a few examples, which usually range from nonsensical blabbering about tea bags to ridiculous claims the EU is undemocratic (despite having direct elections in Parliament, of which all power is derived),  downright ethnonationalism of Nigel Farage, or flat out lies about how much money the UK sends to the EU (it adds up to about a pound per day per person). For this pound per day which pays for European Union institutions, the UK received (and hopefully will again receive) massive economic benefits with less trade friction, and a more fluid labor market increases wages for everyone in the United Kingdom according to all data-based economic theories.

The only foreign policy move which has a snowball’s chance in hell of happening and will improve the economy for the average Briton is rejoining the European Union.

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