CANZUK – a terrible name but a promising idea

Every so often, an editor desperate for copy runs a feature promoting some Commonwealth-revival initiative.  Most of these are bad ideas. But a recent one is worth thinking twice about.

CANZUK is a proposal for arrangements, or even a pact, leading to freedom of movement, free trade and foreign policy coordination between Canada, Australia, New Zealand and the United Kingdom (the “CANZUK” countries).  It has its own global think tank and advocacy body (Canzuk International) with a modest profile in the four countries.  It got a bit of coverage on Stuff last year.  Now its getting more air time in the UK as Boris Johnson’s government seeks to exit the EU by 31 October.

In the short term, the case for new trade arrangements between the UK and the other three countries is compelling.  Johnson has signaled strongly that the UK wants to open up to the world to compensate for the likelihood of future EU trade strictures. Greater volumes of primary imports at lower tariffs would help mitigate the impact of Brexit (while heaping competitive pressure on the EU’s agri-businesses).  If the UK follows through on Johnson’s urgency, it will be one of the more promising trade opportunities for the CANZ nations (the much-ballyhooed  Canada-EU free trade agreement was estimated to increase Canada’s real GDP by a maximum of 0.36% and Europe’s by a microscopic 0.03%).

But the even more interesting question is whether CANZUK – or something like it – really could be a promising long-term approach for these four countries. There are some reasons for thinking it might be so.

To generalise horribly, economically successful countries will be those in which the workers acquire valuable skills and businesses produce high value products for competitive global markets.  Specialisation will continue to increase.  Tech will play an increasingly dominant role. Openness to the world will be essential to this success.

So far, this sounds very much like the weary IMF-led global consensus.  But the recipe for openness is changing.  First, trade multilateralism is dormant and the recent crop of FTAs suggests traditional bilateralism hasn’t much to offer. Secondly, western electorates are uncomfortable with their governments’ management of immigration-led social change. Thirdly, there is little sign of international consensus: China is challenging US dominance in areas like tech systems and standards; the US in turn has rejected China’s current participation in the international order (and shows every sign of requiring others to choose sides); and the EU has retreated into a carefully sealed model from which it believes it can lead in invention and entreprenurialism by elite fine tuning of social and economic development.

Against this backdrop, the promise of something like CANZUK is that it is based on shared values, rather than political and economic calculus. If it acquires some popular momentum, it will be harder to stop.  Moreover, it would most likely take the form of a step-by-step voluntarist approach, rather than an explicit political project (like the EU with its formal constitution and its goal of ever-closer union).  This may make for a slower process but the resulting arrangements are likely to be both more adaptable and more durable, being closer in form to the compromises of domestic politics (for example, the way Australia and New Zealand have sought to manage the issue of welfare payments to each others residents). Furthermore, such arrangements increase economic integration and maximise the benefit of closer relations, without necessarily prejudicing the participants’ ability to open up to and cooperate with third countries. Think of it as the next stage in bilateralism.

In a world of sharper ideological and economic divisions, and more open competition for global power, arrangements based on shared values might gain traction with the voting public.  Its not clear whether pointed references to the Anglosphere and the White Dominions by critics would encourage or discourage support.

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