In a period of trade uncertainty, the Commonwealth’s 53 countries and over 2.4 billion people could be the basis of a new Canadian trade network.
British Foreign Secretary Jeremy Hunt recently reiterated that a post-Brexit United Kingdom will look to leverage its global networks including, significantly, the Commonwealth. As Canada faces its own trade uncertainty, we should do the same.
With 53 member countries, representing over 2.4 billion people, the Commonwealth could serve as the basis of a major Canadian trade network. Although Canada has preferential access to several Commonwealth members, the potential remains largely untapped. According to the Commonwealth Secretariat, the combined gross domestic product for all member countries was pegged at US$10.4 trillion in 2017 and is projected to exceed US$13 trillion by the year 2020 — roughly equivalent to the GDP of China. The secretariat also estimates that intra-Commonwealth trade could rise to US$1 trillion by 2020, up from only US$687 billion in 2016. Moreover, it sees the potential for even greater intra-Commonwealth trade as a result of Britain’s exit from the European Union.
Canada has access to the British market through the Canada-EU Comprehensive Economic and Trade Agreement (CETA), as well as to Australia, New Zealand and Singapore via the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
But if and when the UK formally exits the EU, it will no longer be part of CETA. To bridge any resulting gap, Britain and Canada have committed to work together to put in place a transitional arrangement to maintain CETA-like access. Yet Canada’s ambitions shouldn’t be limited to simply preserving the CETA status quo. Both countries should aggressively seek a more expansive economic partnership, perhaps through a strengthened Canada-UK (“CANUK”?) free trade agreement.
With respect to the CPTPP, Canada will soon obtain preferential access to two additional Commonwealth members, Malaysia and Brunei Darussalam, once those countries formally ratify the agreement (possibly in 2019).
What, then, should Canada do about the remaining 46 Commonwealth countries? In certain cases, work is already under way. For example, Canada and India have been slowly negotiating a comprehensive economic partnership agreement since 2010. Canada has also been gradually negotiating a free trade agreement with the Caribbean Community (CARICOM), a group that includes a further 12 Commonwealth members, among them Jamaica, Trinidad and Tobago, Guyana and the Bahamas.
Of course, trade agreements aren’t the only way to enhance economic ties. Canada has signed or sought foreign investment promotion and protection agreements with Commonwealth countries including Nigeria, Pakistan, Tanzania and Kenya. To realize the full potential of a Commonwealth trade strategy, Canada must move forward with these efforts and do more to engage with other populous Commonwealth-member-country markets such as South Africa, Bangladesh and Sri Lanka.
Without question, the rewards of increased trade with certain Commonwealth countries may come with risks. Some of the most interesting markets may even be those that are currently experiencing periods of political or economic instability. That said, Canada can’t afford to shy away from these opportunities, particularly at a time when even our most established trading relationships are subject to higher risk. Canada’s trade and investment portfolio must be balanced and diversified.
To be clear, strengthening economic ties between Commonwealth members wouldn’t be a return to the past. The old system of preferential reciprocal tariffs known as Imperial Preference — and, later, Commonwealth Preference — that was envisioned and advocated a hundred years ago is a relic of colonialism best consigned to our shared history. For this reason, a top-down exercise directed from London or the Commonwealth Secretariat will never come to fruition. Canada must proactively seek to build its own web of bilateral and mul
In doing so, we must be creative. One view gaining traction is that we should urge other Commonwealth countries, most notably a post-Brexit UK, to seek entry into the CPTPP — an idea suggested and supported by the government of Japan.
Whatever approach is taken, a Commonwealth focus offers a conceptual framework for Canada’s trade priorities: a targeted list of markets in Africa, Europe, the Asia-Pacific and the Caribbean sharing common values, a common language and the common law.
A Commonwealth trade agenda would serve as a clear and comprehensive blueprint for how to allocate Canada’s finite trade resources. Seizing on our commonalities, we can make the Commonwealth a source of greater common wealth.
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