Sunward I’ve climbed, and joined the
tumbling mirth of sun-split clouds

NB: this post is by Tim Hewish, my Parliamentary Researcher.

Both on the Left and the Right, there is a growing case for Britain to reassess her position in the world. One only needs to look at The Economist’s posters at tube stations and the recent Henry Jackson Society’s report: The Tipping Point: British National Strategy and the UK’s Future World Role. So the question needs to be asked: Where do we turn for investments, foreign policy objectives, and more importantly – growth?

The solution may lie in the restructuring of the Commonwealth.

At a recent meeting chaired by Lord Howell, Minister of State for the Foreign & Commonwealth Office, we heard about this new vision. It was explained that we now live in networked world and that the international landscape has changed. Subsequently, Britain needs to be extremely agile to discover the new centres of power and finance.
A vehicle for achieving this is the meeting of the Commonwealth Heads of Government in Perth later this year.

Perth will be a transformative moment in the Commonwealth’s history. Here are some quick reasons why:

• The Commonwealth as a whole has tripled in population since 1945.
• 54 nations of the Commonwealth speak English.
• 51 have the same English Common Law backgrounds; therefore it is much easier to do business and proves that the Commonwealth Factor can bring a 30% discount when doing business.

In support of this, the Royal Commonwealth Society’s 2010 report Trading Places documents the economic potential in the Commonwealth and offers a template on how to improve trading relations between members.

In Education, we have The Commonwealth Scholarship and Fellowship Plan. Although, under the previous Government, David Miliband, withdrew support for this Scholarship Programme for the more developed Commonwealth nations. He did this without consulting the Scholarship Commission. This needs to be overturned to restore a more harmonious relationship.

In a more supportive action, an example of successful Commonwealth inter-cooperation is Canada currently looking at policing reform in the West Indies. While in the sporting domain we have the thriving Commonwealth Games.

We must however, remain good Europeans and loyal Atlanticists, but beyond both is a new world to rediscover. The most powerful network to tap into this brave new world is the Commonwealth and it provides us with the tools to do so.

As documented by Professor Niall Ferguson in his book Colossus, the sad truth about so called globalisation is that it is not truly global at all. Direct capital investment in poor countries is at an all time low. Between 1865 and 1914 more than £4bn flowed from Britain to the rest of the world (only 6% of that went to Europe). And in 1915, 25% of the world’s stock of capital was invested into poor nations – up to recent times that figure is now 5%.

To quote Colossus:

Whereas today’s rich economies prefer to swap capital with one other, largely bypassing poorer countries, a century ago the rich had very large, positive net balances, with the less well-off countries of the world.

Therefore, we must upgrade our own position in the Commonwealth. It is no longer a club of the past. It now has seven of the new high tech emerging economies.

Furthermore, we are constantly reminded that the Chinese are everywhere. What is our answer to that? The US and the EU will not be a full counterpoint to China as they can no longer do the democratic job alone. The Commonwealth has potential to be this counterpoint.

However, there are small nuanced changes afoot. Note that the Gulf States, normally with Anglophone historical ties, are being signed up to Paris not London. More positively, South Sudan, a country not even a week old, wishes to be a member of the Commonwealth. Even in Rwanda, they have thrown off their Francophone ties. There is also a growing desire to bring Zimbabwe back into the fold. This shows that the Commonwealth is the Club of tomorrow.

Finally, there need not be the false divide between democracy and development. Through free and fair trade we can utilise the Commonwealth of Nations as a gateway to new opportunities. In an increasing multipolar world the case for a more muscular Commonwealth is there to be made. The 57^th Commonwealth Parliamentary Conference on the 25th July is one such springboard.

I met today with the excellent think tank OpenEurope, along with other MPs of various parties:

Open Europe is an independent think tank, with offices in London and Brussels, set up by some of the UK’s leading business people to contribute bold new thinking to the debate about the direction of the EU.

While we are committed to European co-operation, Open Europe believes that the EU has reached a critical moment in its development. ‘Ever closer union’, espoused by Jean Monnet and propelled forwards by successive generations of political and bureaucratic elites, has failed.

The EU’s over-loaded institutions, held in low regard by Europe’s citizens, are ill-equipped to adapt to the pressing challenges of weak economic growth, rising global competition, insecurity and a looming demographic crisis.

Open Europe believes that the EU must now embrace radical reform based on economic liberalisation, a looser and more flexible structure, and greater transparency and accountability if it is to overcome these challenges, and succeed in the twenty first century.

The best way forward for the EU is an urgent programme of radical change driven by a consensus between member states. In pursuit of this consensus, Open Europe will seek to involve like-minded individuals, political parties and organisations across Europe in our thinking and activities, and disseminate our ideas widely across the EU and the rest of the world.

It was all very encouraging. Through The Cobden Centre, I advocate free trade and peace in addition to our work on honest money, so naturally I am keen to promote a more open and dynamic Europe which is actually accountable to  the people, instead of trampling their democratic rights whilst issuing ever more regulations, raising nationalism to the continental level.

Apparently the EU is now ripe for radical reform. Good.

This post originally appeared on cobdencentre.org.

Razeen Sally’s Trade Policy, New Century (PDF) succeeds magnificently in explaining the 21st-century case for free trade and, specifically, unilateral trade liberalisation to the interested, non-specialist reader.

From the IEA home page of the book:

The World Trade Organization (WTO) is failing to deliver the trade liberalisation desperately needed to bring prosperity to developing countries, according to a new study released today by the Institute of Economic Affairs. The WTO is hamstrung by a cumbersome negotiating model and the influence of vocal protectionist lobbies who oppose free markets. At the same time, increasingly popular regional ‘free-trade agreements’ often create as many barriers as they remove by erecting new obstacles to trade with countries outside the blocs concerned.

In the context of policy paralysis at the WTO, the author, LSE trade expert Dr Razeen Sally, argues that governments must take back the initiative from supranational institutions. The priority must be unilateral liberalisation – removing trade barriers to benefit domestic consumers rather than waiting for tortuous international negotiations to be resolved. Governments can also help maximise the benefits of free trade by liberalising their economies and strengthening key institutions.

But what is the imperative for the UK? Surely, European Union citizens enjoy free trade?

The EU is a customs union: we trade ostensibly freely within it, but, as can be seen from the EU’s TARIC database, we find ourselves behind a complex system of tariffs on, for example, wheat, notwithstanding the battle long since won by our inspiration, Richard Cobden, to repeal England’s Corn Laws in the general interest.

And this is the key point: free trade is in the general interest. We may make the political and economic arguments in detail, but the public good is our ultimate aim, and not just at home. Razeen Sally explains (pp179-180, emphasis mine):

Adam Smith fortified his presumption in favour of free trade with an explicit political argument. Protectionism is driven by ‘the clamorous importunity of partial interests’ who capture government and prevent it from having ‘an extensive view of the general good’. Free trade, in contrast, tilts the balance away from rent-seeking producer interests and towards the mass of consumers. It is part of a wider constitutional package to keep government limited, transparent and clean, enabling it to concentrate better on the public good.

As important to Smith and Hume was the moral case for free trade, centred on individual freedom. Individual choice is the engine of free trade, and of progressive commercial society more generally. It sparks what Hume called a ‘spirit of industry’; it results in much better life-chances, not just for the select few but for individuals in the broad mass of society who are able to lead more varied and interesting lives.

To sum up: free trade is of course associated with standard economic efficiency arguments. But the classical-liberal case for free trade is more rounded, taking in the moral imperative of individual freedom and linking it to prosperity. Finally, free trade contributes to, though it does not guarantee, peaceful international relations. Freedom, prosperity, security: this trinity lies at the heart of the case for free trade.

In a short article, I can scarcely do justice to this monograph’s insight in relation to the case for classic liberalism nor to its observations on emerging geopolitics: I heartily recommend the book.

Further reading

• Dr Razeen Sally at the European Centre for International Political Economy (ECIPE)
• The ECIPE blog