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The idea of a trade bloc between Britain, Canada, Australia and New Zealand gained traction after the 2016 Brexit vote. Small when compared to UK-EU trade, proponents say it could help counter a rising, aggressive China.
CANZUK — a theoretical new trade alliance between the United Kingdom, Canada, Australia and New Zealand — has been described as everything from an “absurd fantasy” created by Brexiteers to a “truly modern, future-facing project” in the wake of Britain’s departure from the European Union.
First mooted a year before the 2016 Brexit referendum, CANZUK would see the four countries build on the Five Eyes intelligence alliance — which also includes the United States — while bolstering trade, foreign policy and defense cooperation.
Five years on, the proposal has yet to become a serious policy objective of any of the four governments, but as the end of the Brexit transition period approaches, where Britain leaves the EU’s single market and customs union on December 31, momentum for CANZUK is growing.
“You’d have the second-most-powerful geopolitical union in the world behind the EU and quite possibly the fourth-largest economic union behind China,” Craig Tiedman, director of policy and research at the trans-Atlantic think tank The Henry Jackson Society, told DW.
After all, the proposed bloc would meld three of the world’s top 15 economies — along with New Zealand, which lies in 54th place — and cover more than 136 million people. Combined, CANZUK would have the world’s largest landmass and therefore supply of natural resources.
Mobility across four continents
Tiedman said the proposed alliance would benefit from a common cultural heritage and the shared use of the English language, while other proponents think CANZUK could permit the increased mobility of the four countries’ citizens for work, study and retirement, similar to the EU’s Freedom of Movement, and even a common passport.
While the cultural benefits are potentially enormous, what Britain really needs after Brexit is an economic shot in the arm. In September, the London School of Economics warned that UK gross domestic product (GDP) would take a 5% hit over the next 15 years, even if the country finalized a new trade deal with Brussels by the end of the year. In a no-deal scenario, where the country trades with the EU according to World Trade Organization rules, GDP would shrink by 7%.
While CANZUK offers some hope of securing Britain’s future economic strength, it can in no way compensate for EU market access. In 2019, Britain exported £274 billion (€304 billion, $370 billion) worth of goods and services to EU countries. The bloc is the country’s largest trading partner, accounting for 47% of the UK’s total trade. Canada, Australia and New Zealand together account for just 3.5% of UK trade.
Iain Begg, a professorial research fellow at the European Institute, London School of Economics and Political Science, told DW that those arguing that CANZUK could replace the loss of EU-UK trade are just “tinkering.”
“Even if you double that 3.5%, you’re barely going to compensate for, let’s say, the loss of the Polish market and the Romanian market, let alone the fact that a more significant proportion of British trade goes to countries like Germany, the Netherlands, Belgium and France,” he said.
The distance between the four countries is an obvious weakness of the CANZUK concept