Most Read of 2021: The Rise of a CANZUK Trading Bloc
The rise of the CANZUK concept coincides with recent global events such as Brexit and the protectionist Buy America policy. Political elites from potential member states are far from dismissing the concept, which might bring into being a powerful economic bloc rivalling the European Union, China, and the United States.
CANZUK is a novel idea based on the creation of a new free trading bloc between the countries of Canada, Australia, New Zealand, and the United Kingdom. The idea for CANZUK is not entirely new, but it has taken on a new dynamism given recent world events involving these four countries. In the context of this new enthusiasm, there has been a push to explain what a CANZUK agreement would look like and a website devoted to its promotion.
Like most free trade zones, CANZUK would reduce tariff barriers, facilitate free flow of goods and people, and presumably contain provisions to enhance military, diplomatic, and scientific cooperation. The economic power of a possible CANZUK trading bloc would be immense, contributing a total GDP of 6.3 trillion US dollars (2019), thus placing it in third position in the world behind the Asian giant, China.
What has happened to stimulate interest in CANZUK?
Never before has the work of CANZUK been taken up by so many political elites. British Prime Minister Boris Johnson and several Conservative Party backbenchers have voiced interest in the proposed agreement. In Canada, Conservative opposition leader Erin O’Toole, with his party’s grassroots backing, has expressed support. In January 2021, the New Zealand parliament was in receipt of a positive CANZUK report it commissioned. In Australia, several political leaders have expressed interest in fleshing out the CANZUK concept.
Without knowing the exact economic, political, social, and military components of such an alliance, it is difficult to project what a detailed plan of CANZUK might look like. Nevertheless, in economic terms, it would propel its four partners into the status of a world economic power bloc just behind the formidable Chinese economy. Unlike the European Union, there would be little need for an overarching CANZUK parliament or bureaucracy or a dense regulatory framework for movement of goods and persons. Simplicity over complexity is the watchword, with minimal ideological differences which could spark issues over human rights or possible immigration glitches.
Individual CANZUK Partner State rationales
The UK has just completed long and arduous Brexit negotiations with its former European Union partners. It is now on its own, facing international economic forces that dwarf its national economic power. CANZUK offers strength in numbers, and represents for some a nostalgic return to Empire and Commonwealth leadership by the UK. Great Britain is already negotiating free trade deals with New Zealand and Australia, so CANZUK would not be a logistical leap. CANZUK may also help blunt the edge, or perhaps delay the onset, of Scottish independence by bringing it into a powerful alliance of more homogenous nations with a diluted UK leadership role. It would offer a more homogenous Anglophone grouping with similar histories and political ideologies than those connecting the 27 European states to the European Union, beset with immense differences in language, political ideologies, culture, and historical development.
For Canada, CANZUK is a chance to up its game internationally, as the country has been suffering after decades of decay. CANZUK would provide Canada a platform to transition from being a middle power to a major power overnight, equipped with new diplomatic, economic, and political tools to assert its independence vis à vis the United States and the world. Recent decrees by the new US president, Joe Biden, have once again illustrated Canada’s near total dependence on trade with America. President Biden has already quashed the Keystone Pipeline project designed to move Canadian oil south and signed the ultra-protectionist “Buy America” policy. Such actions exemplify how the Canadian economy is exposed to tumults south of the border. CANZUK might be a way out of the economic straight jacket that geography has created for the Canadian economy and create new markets.
Like Canada, if CANZUK can achieve greater trade links among its members, Australia could reduce its dependency on trade with China by creating new markets elsewhere. The growing militarism of China in the South Asian region and its trade monopoly could finally be tempered by a powerful liberal democratic bloc capable of achieving consensus on a host of international issues including support for a free Hong Kong, the Uyghurs, Tibet, and political liberalisation in China.
New Zealand would multiply its influence in the region and in the world more than any other of the three other partners. Free trade negotiations could be simplified and improved by joining a trade bloc with similar political and social values.
Sharing common values and a British colonial history, CANZUK members are also part of a key intelligence network. The “Five Eyes Network” is an anglophone intelligence network including the United States. Commonality of language, liberal democratic values, and potential diplomatic power are attractions leading to adhesion to CANZUK. Despite Canada’s unsuccessful attempts to obtain a United Nations Security Council (UNSC) non-permanent seat, CANZUK might be able to do far better. Based on its projected economic and political might, CANZUK could even obtain a permanent UNSC seat, if ever its present outdated structure is changed. As well, increased economic and diplomatic leverage of a CANZUK agreement might work to advantage in a COVID-19-type crisis by leveraging pharmaceutical vaccines for its citizens.
Many observers point to geography as a reason why CANZUK might not work. The distances between the partners are indeed vast. Yet, in 2021, this factor has decreased in importance as transportation technology and communications have vastly improved. The capitals of Ottawa and London are only a six-hour flight away. The other two partners are further away, but can be reached at any moment using an endless array of communications technologies.
Additionally, Canada’s French-speaking Province of Québec is unlikely to support CANZUK. The presence of the UK and the historical connection to British domination in North America would appear like a replay of the historic 1759 Battle of the Plains of Abraham in Québec, where the British defeated the French and asserted the dominance of English language and culture. French-speaking Québec has never and will never accept a role as junior partner in any transboundary Anglophone alliance. All political parties in Québec have refused to sign the Canadian Constitution repatriated from Westminster in the 1980s. Without Québec’s political assent, no political party can hold power in the country for long in an increasingly decentralised confederation. Québec could also be counted on to refuse to accept the Queen as head of state, one of the common binding elements of CANZUK.
The economic argument against CANZUK relates to the uneven development of members’ economies and trade relationships. Some trade links are quite weak, and the four economies are not necessarily symmetric in any way. For example, English agriculture may be submerged by agricultural imports from the other three members if tariff barriers to incoming goods are dropped. In fairness, however, increasing trade amongst the member states, and enhancing mutually complimentary economic sectors is one of the long-term objectives of CANZUK.
In Canada, CANZUK might get its first test soon. 2021 will likely see a federal election challenge to the minority Liberal government of Justin Trudeau as it continues to fumble its way through the COVID-19 pandemic, political scandals, and economic devastation created by American economic protectionism. CANZUK will certainly be one of the election issues. While ten years ago CANZUK was a dream, recent events have highlighted it cannot be discounted and continues to grow in importance.
This article was originally published on 2 February 2021. It is one of the top ten most read articles published in Australian Outlook in 2021.
Dr Bruce Mabley is the author of more than 50 published articles on international political and security issues since 2016. He is presently Director of the Mackenzie-Papineau Group, a grouping of international specialists, diplomats, journalists, researchers, and activists. Dr Mabley is a retired Canadian Foreign Service Officer, university administrator/professor, and international education specialist. Dr Mabley resides in Montréal, Québec.
This article is published under a Creative Commons License and may be republished with attribution.