A New Year: A New Common Market

Commentary, Ian Madsen, Trade

Britain is leaving the European Union, and Canada may be forced to leave Nafta. At least that is likely if President Donald Trump’s conditions for Canada’s membership become either meaningless or too painful. There are several other nations that are in unsatisfactory trade and investment treaties, and many are democracies similar to Canada. That provides a definite opportunity for all these countries.

Efficient, frictionless trade in goods is generally beneficial to consumers no matter what country they live in. Trade in services is often less visible but no less important. Exchange of financial capital, data, technical know-how, and even skilled, employable people, while more contentious, is normally a requirement for a prosperous, dynamic, growing economy.

Why, then, not think big and bold about developing and refining this idea? One of the major reasons for not allowing the free flow of goods, services, capital, and people across borders is the concern that some poorer nations will simply flood richer nations with unskilled people and shoddy or subsidized goods. Or corporations will flee higher-tax, higher-standard of living countries for lower-tax, lower-standard of living countries.

Yet, if free trade arrangements were between similarly advanced nations, there would be little fear of disruption. In fact, little now stops employable people seeking to emigrate from Canada to Australia, New Zealand, or Singapore, or from these countries to Canada. So, why not develop the potential for free flow of everything from these countries? Such flows should be as unimpeded as possible.

There has never been a better time to have free trade, investment, and work permit regime between Canada, Australia, New Zealand, and Singapore. All four nations are democracies, have similar standards of living, similar GDP per capita, similar laws based on Anglo-Saxon common law, and considerable experience as trading nations, and international banking.

They are also free of exclusive or near-exclusive common markets such as the European Union. In fact, the United Kingdom is the ‘Mother Country’ of all these former British Commonwealth nations, and soon will be free to join such an arrangement. Together, Canada, Australia, New Zealand, and Singapore would have over seventy million people, a GDP rivalling that of Germany, and exceeding the GDP of Russia, Brazil, and even India. Moreover, these countries have enormous natural resources and human and intellectual capital.

With common product licensing and standards, and a few other adjustments to laws and regulations to ensure equivalent treatment of companies and workers, this market union could have enormous economic power and influence, introducing much-needed competition into the domestic markets of all these countries particularly in banking and financial services, and increasing the demand for skilled and semi-skilled workers. With free flow of labour, capital, resources, energy, knowledge, technology, the economies would quickly find their best and most productive use.

Soon, other countries at a similar level could join – Chile, Israel, Mauritius, and perhaps even Botswana and the United Kingdom when it leaves the EU. This type of development could bring challenges, bold new ventures, and economic opportunities to all these nations.

It is a new year, it is time for a new market.