Brexit Will Give Global Free Trade A Boost

Consider this: are there any big issues where the interests or values of the principal English-speaking countries clash? Obviously, the US has a greater stake in Mexico than Australia does. Britain can leave the EU but it can’t ignore the rest of Europe as the US conceivably could. But does the US want something from Mexico that Canada would deplore; or does Britain seek anything from Europe that Australia would oppose? I doubt it.

Of course, the perspective of a left-of-centre government will often differ from that of a right-of-centre one. Still, my instinct is that left-wing governments in English-speaking countries are often closer to right-wing English-speaking governments than they are to left-wing ones beyond the Anglosphere.

True, the new left-leaning Canadian government stopped air strikes in Syria. But Tony Blair’s Labour government was in lock-step with George W. Bush’s Republican administration on Middle Eastern policy, and David Cameron’s Conservative-led coalition government was no less zealous than Barack Obama’s Democrat White House about tackling climate change. A centre-left Australian government under Bob Hawke backed George H.W. Bush’s liberation of Kuwait scarcely less strongly than a centre-right government under John Howard backed George W. Bush’s removal of Saddam Hussein.

New governments in all the English-speaking countries change policy but they rarely change orientation. All the Anglosphere countries are committed to the rule of law, the importance of markets and the benefits of trade, responsible government, and a high measure of individual freedom. My contention is that these aren’t so much “Anglo” values as universal ones — as their incidence around the globe strongly suggests. It’s no mere chance that the world’s most globally-oriented cities — after London and New York — are Singapore and Hong Kong, both of which have well and truly assimilated the rule of law and the English language.

At the heart of Western civilisation, especially its English-speaking version, is the notion that every person is worthy of respect and should be treated decently. The notion that you should treat others as you would have them treat you or that you should “love your neighbour as you love yourself” is inherently attractive. Perhaps this is why authoritarian or theocratic cultures find the West so threatening.

Yes, it’s important not to get too starry-eyed about a tradition of political and social stability or a long history of shared endeavours in common causes. Putting it mildly, it’s hard to be enthused about this year’s US presidential campaign. The Brexit vote was widely (but wrongly, in my view) construed as Britain turning away from the world. Much slower economic growth since 2008 has bred frustration with democratic governments everywhere and spurred more populist politics. Still, the less secure and less certain the world becomes, the more important it is that like-minded countries continue to work together to make a difference.

In a recent forum in the UK, I was asked about creating more formal links between the main English-speaking countries. Having just voted to leave one union, I responded, the British are hardly going to rush into another one. In my judgment, by far the best way to improve the well-being of the world is for free and sovereign countries to cooperate more closely to advance their mutual interests. There’s no doubt, though, that it’s easier to work together when countries have so much in common.   

As Australian prime minister, I tried to build all the bridges I could. As the world’s 12th largest economy with commensurate military, scientific and cultural clout; as the world’s largest exporter of iron ore, natural gas and coal; and as one of the biggest providers of international education, Australia is strong enough to be a useful partner, but is rarely an intimidating one. My view was that Australia should do all it reasonably could to work with other countries to create a safer, more prosperous and ultimately freer and more just world.

Because it came down in our search and rescue zone, Australia made the largest contribution to the international effort to locate the missing airliner MH370 and its 239 passengers and crew, including more than 150 Chinese. Because there were 39 Australians on board, we worked very closely with the Dutch, Malaysians and Ukrainians in responding to the shooting-down of flight MH17 by Russian-backed rebels. Because of the global threat it posed, Australia swiftly became the second-largest contributor to the US-led coalition against the evil caliphate in Iraq and Syria.

In little more than a year, we finalised free trade agreements with Korea, Japan and China. All of them covered services as well as trade. The Japan FTA was their first to liberalise agricultural trade. The China FTA was their first with a big developed economy. My government reached out to India, which is the emerging democratic superpower of Asia. We offered Singapore much more extensive access to military facilities in Australia as part of a move towards a “family” relationship akin to that with New Zealand. We created a scholarship scheme to send bright Australians to Asian universities to complement the Colombo Plan scholarships that had brought potential leaders to Australia and was a triumph of Australian soft power. 

In all the countries of our region I stressed that “we would all advance together or none of us would advance at all” and that “you don’t make new friends by losing old ones”.

My view was that it was always better to build trust than to nurture suspicion but on the basis of a clear recognition of Australia’s interests and values. My government turned back people-smuggling boats to Indonesia but offered our big neighbour a closer intelligence partnership. We began modest military exercises with China but protested vigorously against the declaration of an air defence zone over disputed islands in the East China Sea. We took no sides on territorial disputes but strongly supported the US in maintaining freedom of navigation. I tried to build the closest possible partnership with China while maintaining the primacy of our strategic partnership with the US. I suppose my approach could be characterised as “be helpful to everyone but know who your friends are”.

Despite the slowdown in economic growth since 2008, by objective standards there’s probably never been a better time to be alive. In 1980, less than 50 per cent of the world’s population had access to safe drinking water; now it’s over 90 per cent. In 1990, 37 per cent of the world’s population were living in absolute poverty; now it’s just 9 per cent. In the last quarter-century, global GDP has increased by as much as in the previous 25,000 years. Still, while things have never been better, at least in the West, people have rarely been more discontented. Perhaps it’s because there’s never been more to lose.

There is the global challenge of militant Islam reaching into Western cities from its bases in the ungoverned spaces of the Middle East, North Africa and Central Asia. There’s Russian bullying of former Soviet states in Eastern Europe. There’s China’s assertiveness. There’s ongoing doubt about the real state of the world economy and about America’s commitment to under-writing a rules-based world order. Poor people in rich countries think that globalisation has mostly helped rich people in poor countries. The mood has darkened; perhaps because the consequences of mismanaging a crisis have never been greater.

The duty of every government — to keep economies strong and communities safe — has rarely seemed more challenging. Robust measures against potential domestic terrorists offend traditional notions of civil liberties. Effective steps against people smuggling offend the ingrained instinct to be generous. Austerity in public finances offends voters who think they’re already having it tough. Most countries’ finances are a sea of red ink yet increasing taxes would just depress economic growth while finding significant savings seems a political suicide mission.

Under these circumstances, anything that might strengthen a strategic partnership and boost economic growth becomes an opportunity too good and too rare to be missed. Much freer trade between the English-speaking countries, provided it was not accompanied by new barriers against outsiders, would be a good way to dispel the economic and strategic gloom. A free- trade-agreement with post-Brexit Britain would give both Britain and Australia a much-needed win: for Australia, it keeps reform alive in a difficult parliament; and for Britain, it shows it’s still an attractive partner without the European Union.

Britain joined the EU during its long post-imperial funk. It had lost an empire but not yet found a role. It embraced the EU out of weakness but is leaving in strength; with the self-confidence that the world’s fifth-largest economy is more than capable of making its own way in the world. With the English language, the common law and the mother of parliaments — all made in Britain — and more Nobel Prize winners than any country except America, how could anyone doubt it? With English now everyone’s second language and the modern world virtually made in English, how could Britons possibly feel strangers in it?

A Britain-Australia FTA should have two key elements: first, there should be no tariffs or quotas whatsoever on any goods traded between our two countries. And second, there should be full recognition of each country’s credentials and standards. The objective would be an entirely seamless economic relationship based on free entry of goods, mutual recognition of services and standards, and easy entry of qualified people.

Because Australia and Britain are like-minded countries with similar systems and comparable standards of living, there should be no need for tortuous negotiation and labyrinthine detail. Because Britain and Australia have comparable attitudes to job qualifications and to product and service standards, mutual recognition should be unproblematic. British and Australian workers have comparable expectations so there should be few problems with free movement provided it’s movement to work and not to go on social security.

With all the anti-growth factors now at work and with so much that’s sapping confidence — from terrorism, to protectionism, to banking tremors — the world desperately needs good economic news, like two big economies that are serious about really free trade. A fast-track FTA between Britain and Australia could help to create the conditions for Britain to accede to the North American free trade area, which could become a North Atlantic one. A North Atlantic free trade area could be a magnet for other market-oriented countries that choose to leave a statist and rule-ridden EU.

Australia and Britain have just set up an officials’ working party to put together the elements of an FTA. To comply with EU rules these are “discussions” not “negotiations”. Still, the objective is to finalise an agreement that comes into effect on the day Britain leaves. Freer trade is a really important economic reform waiting to be grasped by any country that wants to be more open for business. And the easiest FTAs are between like-minded countries with comparable standards of living.

More trade means more jobs. More jobs mean a stronger economy. A stronger economy means a better society. More trade means more investment, and more investment means more trust. More trust means more openness and more openness is likely to lead to more common values and more shared ways of thinking. A better world is rarely the result of some singular global event. It’s the product of myriad good choices that individuals and countries make. If individuals and countries choose to deepen the relationships they already have, over time, the whole world should become more harmonious. Most of what goes on in the world is beyond our capacity to change; but where change for the better is within our grasp it’s our duty to get it done.  

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