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A CANZUK Trade Deal Favours Nostalgia Over Potential

In short: There is potential for a diplomatic union between Canada, Australia, New Zealand, and the United Kingdom (CANZUK), but the benefits of a CANZUK free trade area are significantly weakened by low populations and geographical distance. Trade based on shared history would be strengthened by the inclusion of more Commonwealth countries.

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On Wednesday, Conservative Party leadership candidate Erin O’Toole released his full platform. Like most Tory leadership contenders, Mr. O’Toole’s platform repeated many of the traditional conservative talking points such as:

  • Privatising CBC programming,
  • Reintroducing mandatory minimum sentences, and
  • Scrapping carbon pricing,

But one point stood out in particular: Mr. O’Toole is proposing a political union between Canada, Australia, New Zealand, and the United Kingdom (CANZUK).

CANZUK InBrief: The concept of CANZUK has been growing in popularity over the past few years, especially as the UK seeks to establish itself as a foreign power outside the European Union. Mr. O’Toole has captured the interest of CANZUK supporters because the proposal seeks greater collaboration among “like-minded countries” from the Commonwealth in the pursuit of sovereign interests and democratic values.

Mr. O’Toole notes that a CANZUK agreement could:

  • Provide benefits such as free trade,
  • Visa-free work and study,
  • Increased defence and intelligence cooperation, and
  • Greater visibility as a voting bloc at the UN.

A diplomatic union between CANZUK countries would undoubtedly offer significant benefits to its citizens and the world.

  • CANZUK has already demonstrated its potential in improving security coordination (representing four of the ‘Five Eyes’ in the international intelligence community) and advocating for democracy and human rights.
  • On June 3, a joint letter to the UN was signed by the foreign affairs committee chairs from each CANZUK country. The joint letter called for the establishment of a UN Special Envoy for Hong Kong to address Beijing’s draconian security law for the territory.
  • Further collaboration between the four governments on these issues would support Canadian foreign policy.

A formal diplomatic union would legitimate future multilateral endeavours between CANZUK members.

Despite the diplomatic benefits associated with Mr. O’Toole’s plan, CANZUK’s highly exclusive demographic and cultural barriers limit the union’s free trade potential.

  • The countries of CANZUK do not benefit from the large population bases and geographical proximity of other trading nations.
  • CANZUK International, an organisation based in Vancouver, notes that CANZUK would become the world’s largest geographic diplomatic union, covering a surface area of 18.2 million km2 .
  • Despite having a larger landmass than Russia, this statistic fails to address for one of CANZUK’s main economic drawback: CANZUK comprises less than 2% of the world’s population.

CANZUK negotiations would divert trade department resources away from deliberations with higher-value partners.

  • The UK is under immense pressure to negotiate a trade deal with EU, the US, and larger Asian countries (whose world populations shares range between 4% and 20%).
  • Having left the world’s largest trading bloc, the UK now has a weakened bargaining position; negotiations for future deals will take months and, in some cases, years.
  • Prioritising CANZUK trade comes at a high opportunity cost for the UK.
  • This is a critical period in British trade proliferation, and UK policymakers must not lose sight of the prospect of striking bilateral deals with bigger actors such as the EU, the US, and India.

CANZUK’s limitations can be overcome by expanding the scope of its potential trade area to the rest of the Commonwealth.

  • By incorporating larger partners such as India and Nigeria, a Commonwealth free trade zone would be more populated and less dispersed.
  • Significantly, 6 of the world’s 20 fastest growing economies are Commonwealth members.
  • The rapid growth within the former British Empire offers tremendous potential for a Commonwealth trade area.

Excluding these emerging economies will undermine the value of any trade deal involving CANZUK countries.

Unfortunately, CANZUK is characterised by cultural arguments rather than economic ones.

  • The four constituent nations have similar demographic characteristics, characterised by ethnically White and English-speaking majorities.
  • The CANZUK International web page asserts that English-minority countries such as South Africa would “find it difficult to assimilate into British/Canadian/Australian/New Zealander lifestyles,” and vice versa.
  • While public opinion demonstrates approval for the establishment of a CANZUK union, this support is skewed towards conservative and nationalist voters.

The bottom line: The premises of a CANZUK agreement offer enormous potential in the areas of diplomacy, international security, and travel, but less in the domain of multilateral free trade. If Canada, Australia, New Zealand, and the United Kingdom are serious about considering free trade on their shared British Empire history, they should not leave the rest of the Commonwealth behind.