Three warnings for the UK from Down Under

Posted in: Australia, Commonwealth, Trade

‘Brexit is just more proof the Poms have gone mad. As if we needed it’ said my colleague at Flinders University. And then she laughed. A lot.

Obviously this was banter – and no self-respecting Aussie is going to pass up an opportunity to poke fun at the British – but there was an element of seriousness about it. As the UK approaches the sharp end of Brexit, the shenanigans around Theresa May’s attempts to sell her Brexit deal has attracted a lot of media coverage. Some of it makes for great TV: the impeccable but arcane manners of Jacob Rees Mogg or the blustering Bunterisms of Boris Johnson are relatively alien to culturally egalitarian Australia. But there is also concern. For in this young, optimistic, and diverse country, the UK’s increasingly chaotic Brexit journey is also watched with puzzlement and dismay. Through talking to friends and colleagues, as well as media coverage and expert comment in Australia, here are three warnings for the UK from the Down Under.

One: It hurts to be shut out of a Customs Union

Former Australian High Commissioner to the UK, Alexander Downer, reminds us that Australia was ‘wounded’ by the UK’s decision to ‘turn its back’ on the Commonwealth when it, along with the Republic of Ireland and Denmark, joined the EEC in 1973. Some of this hurt was cultural and symbolic: Australia, New Zealand, Canada, India, South Africa and the rest of the Empire helped save Britain from Nazi Germany and subsequently felt betrayed by the UK. But the hurt was also economic and very real. The UK’s entry into Europe meant that Australia’s horticultural, dairy, beef, and lamb exports were replaced by goods from inside the EEC.

This had considerable short-term impact on rural economies in Australia and, even more badly hit, in New Zealand. More importantly, as the newly enlarged EEC carried more weight in the world, Australia and the other old Commonwealth countries were adversely affected by the increasingly malign impact of the CAP on world trade and commodity prices. And, crucially, as outsiders they could do little or nothing about it. Partly as result of this shock of the UK’s joining the EEC, Australia and New Zealand subsequently underwent painful periods of economic reform and doubled down on what was already an increasing share of trade with Asia and the Americas. Both countries recovered but being on the wrong side of customs and other non-tariff barriers hurt. Many Australians who remember that economic pain cannot imagine why a country would inflict it on itself as a policy choice.

Two: The UK is no longer the Mother Country and the Commonwealth is no replacement for the EU

Australia has moved on. It has had to. The recent Royal Tour of Australia by the Duke and Duchess of Sussex was a resounding success; Australians who visit the UK tend to love it (I have been pleasantly surprised by how many people I meet in Australia who have been to Bath and adore it) and, by-and-large, Australians still like us. The Lowy Institute’s annual poll of Australians’ views on foreign affairs shows that Aussie feelings of warmth and trust towards the UK are far stronger than those felt for France, Germany, Japan, or the US. Only New Zealand, with its common ANZAC heritage - built on shared suffering at Gallipoli – is more trusted and liked.

But Australia has a population of just under 25 million, which is a little more than that of Romania and a fraction of the more than 400 million inhabitants of the EU 27. On its own, it cannot replace lost markets. Elsewhere in the Commonwealth, however, there are larger countries such as India that could fill the gap. But as the Prime Minister’s attempts to woo India have demonstrated, attitudes towards the British are complex and the UK cannot rely on historical ties anymore.

Three: The big economic blocks matter; medium size economies with chronic productivity problems not so much

Australia is an Asia-Pacific nation and sees itself as such. It projects influence through APEC, ASEAN, and the Asian Development Bank and would regard any suggestion that it withdraw from these regional organisations in the name of ‘Global Australia’ as supreme folly. Most Australia politicians seem to understand what many in the British political class appear to have forgot – that scale is important when trying to exert leverage in world affairs. The USA has scale and Australia has made a point of staying close to the Americans since the fall of Singapore in 1942 revealed the weakness of British power East of Suez. China also has scale and the Australian economy has become reliant, perhaps too reliant, on Chinese trade relations as China’s still growing economy sucks up Australian resources. And, of course, the EU has scale. Australia’s links with the EU are increasingly dense. Cultural links have grown over decades with the waves of migration from EU member states and every Australian city has its Italian, Greek, and Croatian social clubs and Soccer teams.

Academic links are also flourishing, with the EU funding or part funding EU Centres at the Australian National University, the University of Melbourne, and other institutions in Australia and also New Zealand. But it is economic links that really matter and the EU is Australia’s second largest trading partner after China, with total trade in good and services running at around 79 billion Euros in 2017.

In May 2018, the Council of the EU authorised the opening of negotiations for a Free Trade Agreement between the EU and Australia. For Australia, this Free Trade Agreement comes before any future agreement with the UK. As a report on Brexit for the Australian Joint Standing Committee on Foreign Affairs, Defence and Trade puts it ‘from the Committee’s perspective, the timing of the UK’s departure from the EU is entirely coincidental to the scoping work and ongoing development toward a free trade agreement between Australia and the EU’. That puts the UK’s post-Brexit pretensions in perspective. Global Britain is going to have to wait its turn.

Charlie Lees is Dean (People and Resources) in the College of Business, Government, and Law at Flinders University, Australia and Visiting Professor in PoLIS, University of Bath. He writes on comparative party systems, coalition government, environmental politics and policy, and has contributed to debates on the methodology of single-country studies. He has provided research and advice for the Centre for American Progress, Australian Labor Party, Green Party of Aotearoa New Zealand, the UK House of Lords and the Scottish Executive, amongst others. He holds or has held visiting fellowships at the University of Sussex, University of California San Diego, the Australian National University, the University of Sydney, Cardiff University, and the University of Birmingham.

Posted in: Australia, Commonwealth, Trade

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