The United Kingdom has left the European Union. There will be a transition period that is expected to last until 31 December 2020. After being in the European Union for 47 years, the United Kingdom are in uncharted territories. This can be both exciting and nerve wracking. I am certainly more excited than nervous. The United Kingdom has its fate in its own hands. That means both opportunities and risks.
I have written several posts about Brexit. In my post What’s going on with Brexit?, I describe the Brexit process and the possible steps forward. In my post Brexit – Still hanging around, I discuss the extension of the departure date to 31 October 2019 and the events leading up to this extension. In my post Brexit confusion continues, I discuss the negotiating position of both the United Kingdom and the European Union. I discuss how the United Kingdom’s parliament’s push to prevent a ‘no deal’ Brexit greatly weakened their negotiating position. In my post Is Brexit actually going to happen?, I discuss the newly proposed withdrawal agreement as well as the third extension to the United Kingdom leaving the European Union. In my post The Brexit Election, I describe the result of the United Kingdom General Election also known as the Brexit Election. I explain both the positives and negatives from this outcome. I also explain that the strong majority obtained by the Conservative Party guaranteed the United Kingdom would leave the European Union at the end of January. I have also provided several short updates and expressed several opinions in my Actifit Posts.
So far, my posts have focused on the Brexit process and all the problems that have come with it. I have not discussed what happens next after Brexit. In terms of the process, the next step is the trade deal and political alignment negotiations between the United Kingdom and the European Union. I believe a Canada Style deal will be the focus (explained in my post What’s going on with Brexit?) of the trade negotiations. However, what happens away from the European negotiating table might be more interesting. Many are predicting that the United Kingdom will be eager to make deals with the USA. I believe other opportunities are just as likely to be explored.
The United Kingdom consists of four countries. These countries are England, Wales, Scotland and Northern Ireland. The United Kingdom also has a relationship with a much broader group of countries. This group of countries forms the Commonwealth also called the Commonwealth of Nations. Almost all of these countries were former British colonies, with the exceptions of Mozambique and Rwanda.
The countries in the Commonwealth are connected through the recognition of Queen Elizabeth II as the Head of the Commonwealth, the use of English language, democratic process (i.e. elections), and independent judiciary. The nations of the Commonwealth are aided by more than 80 Commonwealth organisations. The Commonwealth Secretariat helps member nations to achieve development, democracy and peace. The Commonwealth also intends to grow the economies and boost trade of the member nations (The Commonwealth Org).
Membership to the European Union hinders the functioning and closeness of the United Kingdom to the member nations of the Commonwealth. As the control of European Union tightens, the more difficult it becomes for the United Kingdom to maintain close relations to Commonwealth countries outside of the European Union (almost all of them).
Brexit creates a massive opportunity for the United Kingdom to reconnect with the other Commonwealth countries. A hard Brexit such as a Canada Style Deal or even a ‘no trade deal’ provides the greatest opportunity to strengthen the Commonwealth relationship. A softer Brexit such as a Norway Style deal would still hinder the growth of a stronger relationship with the Commonwealth. Any form of deal that keeps the United Kingdom tied to European Union rules (i.e. to force a level playing field), in the single market, or in the customs union will hinder the building of a stronger relationship with Commonwealth countries.
CANZUK (Canada, Australia, New Zealand, and the United Kingdom)
CANZUK is a theoretical political and economic union of Canada, Australia, New Zealand and the United Kingdom. These four countries are part of the Commonwealth and share several other similarities. These include language (English), ethnic descent (more than 30% British descent), religion (predominantly Christian), and political structure and institutions (derived from the Westminster System). Each of these countries has a Governor-General who represents the British monarch as a head of state. These countries also have similar Gross Domestic Product (GDP) per capita.
Figure 1: Characteristics of CANZUK countries
These four countries have so much in common that the formation of some form of economic and/or political union is a logical next step. These countries are located in very different parts of the world. The United Kingdom in Europe, Canada in North America, and Australia and New Zealand in Oceania. The different locations provide both advantages and disadvantages. The great distance between countries could be considered a disadvantage because of transport costs and time taken to move goods between countries. The different locations also could be considered an advantage because of the different climates and terrain, different natural resources, and different seasons from different hemispheres. These differences create a much wider variety of goods and the availability of many seasonal fruits and vegetables all year round.
In my post Trade Bloc or Trade Block?, I discuss the benefits of free trade as well as the dangers of large trade blocs. CANZUK presents an opportunity for free trade between a small group of countries, which would be beneficial to all the countries in the group. I would not expect CANZUK to be anything like the European Union, which has strong centralised control. I would expect the countries in CANZUK to remain as sovereign as they are today.
CANZUK has both political and public support from all four countries. According to CANZUK International, the union could become reality in less than 2 years. This version of CANZUK is intended to boost trade, ease migration, and increase defence cooperation between these countries. Canada, Australia, New Zealand, and the United Kingdom also share a close relationship with the USA. This would help facilitate a trade deal between the USA and CANZUK.
Building relationships in the Commonwealth
CANZUK would be a great start to bringing the Commonwealth closer together both economically and politically. The next step involves bringing other countries in the Commonwealth closer through other trade deals and alliances. The Commonwealth has several countries in Africa such as South Africa, Namibia, and Nigeria. The Commonwealth also has countries in Asia such as Singapore, India, and Malaysia. These countries vary greatly in terms of population, natural resources, and wealth. All these countries could benefit from increased trade with each other based on their diversity and strengths.
Figure 2: Relationship between world trade and world GDP, 1995 - 2016
More trade, freer trade and fairer trade generally creates more opportunities for prosperity. All countries have some form of comparative advantage. Enabling trade allows countries to benefit from their respective comparative advantages. In my post Trade, money, debt, waste, and power, I discuss the basic economic principles as to why trade is essential for the growth of all societies.
Building a closer Commonwealth could also facilitate freer movement of people and capital between Commonwealth countries. Initially, I would not expect free movement between all Commonwealth countries but it is possible to have free movement between particular groups and blocs such as CANZUK. I would expect the entire Commonwealth to promote an immigration program that supported pull migration (i.e. people attracted to their destination and not running from somewhere else). In my post Free movement of people, I discuss the advantages of migration from pull factors as well as the dangers of mass migration.
What could go wrong?
I have discussed the dangers and problems of large trade blocs in my post Trade Bloc or Trade Block?. I feel that a close economic and political relationship between Canada, Australia, New Zealand, and Australia would not suffer from the problems I have previously outlined, as this union is only between four countries and it is unlikely that one country would dominate the others. However, a broader Commonwealth Union could run into a few problems. This is more likely to occur if all the Commonwealth countries are subject to the same rules, for example, a customs union or single market. This is more likely if the Commonwealth Union is centrally controlled from one or a couple of the more powerful countries.
Figure 3: Example of trade relationships
I would suggest multiple trading groups, alliances and deals within the Commonwealth itself. These deals would differ to cater for different countries based on their relationship, characteristics, and needs. CANZUK would be an example of such a group. Countries could be part of several groups as long as these groups are compatible. The larger groups should have broader and less defined relationships. The small groups could have far more closely defined relationships.
Building a stronger more unified Commonwealth is going to take many years. It will involve many steps before it becomes all-inclusive. CANZUK appears to be the most logical first step based on the arguments presented in this post and other linked materials. The next steps should involve reaching out to the other Commonwealth countries to form trade deals with the United Kingdom or amongst themselves.
The overall outcome should be to help all countries in the Commonwealth prosper and grow in ways that was not possible with the United Kingdom bound by European Union rules. A key to the success of a Commonwealth union/group/s is to avoid restricting overarching rules for all countries. Instead, this union should consist of flexibility and freedom for countries to structure trade relationships with each other. Countries should also have the freedom to build relationships outside the Commonwealth and only be bound by terms they have agreed upon with countries within their respective political and trading groups. Countries should also retain the right to leave the Commonwealth as under the current conditions.
These are just some of my ideas regarding the direction United Kingdom might take after Brexit. It is quite possible that a completely different direction is intended. However, if what I am predicting is correct or attempted, we could be living in a very different world a few decades from now. I am mostly optimistic but it is quite possible that we could be heading towards the rise of new centralised global power. At this early stage, we are in position to put our efforts towards a Commonwealth relationship that benefits all.
If you want to read any of my other posts, you can click on the links below. These links will lead you to posts containing my collection of works. These posts will be updated frequently.
Guide to the Steem Ecosystem (Udemy Course)
I have launched my Udemy course ‘Guide to the Steem Ecosystem’. This course takes you on journey through the Steem Ecosystem. The course consists of 6 sections. These sections are as follows:
- Getting Started
- Navigating Steem Frontends
- Becoming a Steem User
- Behind the Scenes
- The Wonders of the Steem Ecosystem
- Additional Content (SteemFest 4, SMTs, Communities, etc.)
The course contains 56 video lectures (about 13.5 hours of viewing), 56 multiple-choice questions (10 to 12 at the end of each section), and 59 downloadable resources (presentation slides and additional material such as white and blue papers). The course is free-of-charge. Click the link above to access the course.
I also have an economics course, titled Economics is for Everyone, which contains about 4 hours of video content.