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Closer Economic Relations – The Road To CANZUK Free Trade

CANZUK International’s independent researcher, George Colvin-Slee, examines why the Closer Economic Relations Trade Agreement (CER) between Australia and New Zealand is the ideal agreement for Canada and the UK to join and accomplish CANZUK free trade.

Canada and the UK joining the CER trade agreement would accomplish trading relations within CANZUK (photo: Reuters/Thomas White)

Written by George Colvin-Slee

George is a UK based independent researcher specialising in Diplomatic History

            

While discussions on the idea of CANZUK free trade have grown apace since the UK’s decision to withdraw from the EU, specific ideas about the route by which this could be achieved have remained somewhat theoretical to date.

The United Kingdom and Canada’s accession to the Closer Economic Relations treaty however, could offer one of the swiftest routes to a comprehensive free trade area.

Signed in 1983 by the governments of Australia and New Zealand, CER agreed the gradual abolition of all tariffs and quantitative restrictions, which was completed ahead of schedule in 1990. Since then, goods have largely moved freely between the two countries with later protocols and agreements achieving a near compete mutual recognition of standards on goods and services.

Today, as still one of the world’s most ambitious economic agreements, the treaty has been cited by many as a “model” free trade deal and proved popular with businesses and the wider public in a way European trade negotiators could only dream of – TTIP anyone?

From a UK perspective, the benefits of acceding to CER are clear and interestingly also consistent with advice HM Government has received in forming an independent trade policy. Tim Wallace, writing for The Telegraph last year, reported that one of the key planks of guidance from officials in Canada and Australia has been to join “off the shelf” multilateral agreements, thereby simplifying negotiations and speeding trade liberalisation. Moves towards such an approach were confirmed in January, with suggestions that the UK may seek to join the reformed Trans-Pacific Partnership Treaty which would then include all four CANZUK countries, along with other key economies, in a regional free trade area.


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While this does, of course, represent a positive first step, a treaty such as CER would however provide for a far greater depth of market access and arguably better reflect the closer CANZUK relationship.

Aside from goods, a particularly significant element is also the inclusion of services within the scope of the treaty. Given the importance of this sector to the UK economy specifically, the ability for British companies to operate freely in Australia, Canada and New Zealand provides a key additional incentive for a post-Brexit accession, beyond the traditional focus on goods. Such an arrangement also comes without the concerns surrounding a UK-US FTA of mass buyouts and asset stripping by larger corporations in industries such as banking and publishing.

While it is important to note that to date, outside of the TPP, Australia and New Zealand have not concluded any full free trade agreements with Canada, this does not necessarily mean that a Canadian accession would be fraught with difficulty either. Some may, of course, remember the 1995 Canadian-Australian Salmon dispute, as one of the first disguised protectionism disputes before the WTO, however this case was now settled two decades ago, with both countries going on to conclude numerous comprehensive free trade agreements with third counties.

The political landscape has also changed dramatically since the era of Keating and Chrétien, with Brexit and wider global uncertainty, providing a new impetus for greater CANZUK co-operation. Economically, the benefits of a Canadian accession to Australia alone are also clear with trade in goods between the two countries already valued at nearly $4bn and services at close to $2bn.

It cannot be denied however that hurdles do exist in adopting the whole series of CER protocols and agreements. For the UK in particular, agreeing to recognise food standards in Canada, Australia and New Zealand could well be hampered by its future relationship with the European Union and a potential need to continue with elements of harmonisation. While in Canada, agricultural market access has also recently proved controversial in both TPP and NAFTA negotiations.

Nevertheless it must be remembered that these agreements were never intended to enter into force at once and therefore scope may exist for the UK and Canada to join the core free trade agreement first, applying the additional protocols, or amended versions, in stages over a number of years. Adoption of complimentary agreements to the CER, such as the Trans-Tasman Travel Agreement, which provides for labour mobility between Australia and New Zealand, would also be highly desirable, fulfilling that central aim of labour mobility within CANZUK.

A brief review such as this cannot, of course, capture all the considerations of joining perhaps the most comprehensive free trade area, outside of the European Single Market, however further investigation of its feasibility is clearly warranted.

True, much will depend on the outcome of the UK’s withdrawal from the EU, but with Britain able to open negotiations from March, supporters of CANZUK free trade must certainly work to ensure that accession to CER is given the full consideration it deserves.

      
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