Brave New World of Trade

24 Apr Brave New World of Trade

Tim Fischer — The Australian — 24 April 2018

 

Post the Commonwealth Heads of Government meeting and post Brexit, trade manoeuvres should build now and encompass lateral thinking with Singapore, Canada, Australia, New Zealand and the United Kingdom.

Australia can benefit greatly from Brexit with new concepts and international trade linkages, as Malcolm Turnbull has stated. To deliver on this we need to be on  he front foot early, and by degrees
we are.

In this regard we need to pick up on the fact Britain will be open for new linkages, subject to the final arrangements with the EU. It is near the Ides of March 2019 when Britain is out of the EU, one way or another, and that is now less than a year away.

We also must not ignore the fact Europe itself is back in business, notably France, Germany and Spain. Even Greece and Hungary are showing GDP growth at long last.

Recently senator James Paterson raised a refreshing creative idea: apply a closer economic relations (CER) trade agreement as in
Australia and New Zealand free trade arrangements to a larger homogeneous group of Canada, Australia, NZ and the UK. All share much in common, including the Westminster system and British-orientated mercantile laws.

This does have much to commend it and would help reverse years of inadequate focus, in particular on the Australian, NZ and Canada triangle. The “Canzuk” countries would embrace a total
GDP of $US6.5 trillion and global trade of $US3.5 trillion, as the senator correctly points out.

However, it can be argued a new trading block with no touchdown in Asia would be to quote Sir Humphrey Appleby of Yes Prime Minister fame: Very brave, very brave indeed.

The super hub of Singapore jumps to mind. It has a Westminster system of a kind, British mercantile-type laws and English is the dominant business language. Singapore should be added to create “Scanzuk”. Total GDP of the group would top $US7 trillion, with global trade of about $US4 trillion. Note that careful arrangements would need to be negotiated to ensure the majority
of traded product value was created in country, usual rules of origin to apply to ensure that, say, the huge port of Singapore is not just a transfer backdoor hub without checks.

Singapore produces a surprisingly wide basket of goods and services, notably on the computer front, and represents a stable hub in Southeast Asia, even allowing for the odd family tiff at the top. So Scanzuk should now go to DFAT and the think tanks for rapid analysis and response as a next step.

DFAT and its ministers are always on the lookout, generally with a lateral thinking outward-looking mantra. In this troubled world, this is needed more than ever before.

As the Queen exits as the outstanding head of the Commonwealth and HRH Prince Charles — a man who knows the Commonwealth more than anyone I know — was ratified as the new head in London last week, Australia can float the idea of Scanzuk as well as pursuing the EU.

Scanzuk is a perfect stepping stone as an FTA that can deliver quickly and in a way that builds investment and trade to create a win-win situation. Dairy processor Saputo has already arrived here from Canada. Expect many more in both directions.


This article was originally published at The Australian.

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