James Paterson (Victoria, Liberal Party) Share this | Link to this | Hansard source

I rise tonight to discuss a unique opportunity that Australia has been presented with by the United Kingdom's decision to leave the European Union. Firstly, I would like to commend the Turnbull government and the Minister for Trade, Tourism and Investment, Steven Ciobo, for their decisive action to begin discussions for a post-Brexit free trade agreement with the UK, putting us at the head of the queue to form closer economic relations after the Brexit referendum in June last year. But, as I suggested in the Financial Review last week, we have a rare opportunity to go one step further, too. With multiple Commonwealth nations looking to sign post-Brexit trade agreements with the UK, we could also form a new global trade bloc with our closest Commonwealth allies. The Commonwealth countries which would most easily fit into this new bloc would include Canada, Australia, New Zealand and the United Kingdom—a group collectively known as CANZUK. Collectively, these four countries have a combined GDP of $6.5 trillion. They account for US$3½ trillion in global trade. It means that a CANZUK global trade bloc would be the fourth-largest economy in the world behind only the US, China and the EU.

Removing existing tariff barriers could substantially increase trade between these countries, particularly between Australia and the UK, which is currently our seventh-largest trading partner, despite the tariffs imposed by their membership of the EU Customs Union. But there are more fundamental reasons for a CANZUK trade agreement than just the collective size of our economies. Canada, Australia, New Zealand and the UK all share close political, cultural and institutional ties that are based on our shared history and values. We share common legal systems, parliamentary democracies, free market economies, respect for individual liberties, language and even head of state. It is this common history in culture and these shared institutions that have made us among the most free and prosperous nations on earth. These close ties have also provided the basis for a defence and intelligence-sharing relationship that is epitomised, along with the US, in the Five Eyes alliance. It is only appropriate that these close ties also extend to trade. The only reason it hasn't is the UK's past inability to negotiate their own trade agreements. But with article 50 already invoked, it is only a matter of time before this changes.

Unlike many multilateral trade agreements, a CANZUK agreement shouldn't require what are often long, difficult and drawn-out negotiations. This is because we already have a highly successful agreement to base it upon—the Closer Economic Relations agreement between Australia and New Zealand. The CER agreement already prohibits all tariffs and trade restrictions on goods originating in a free trade area. It contains measures to minimise market distortions such as export subsidies, and it has protocols to reduce barriers to investment such as higher screening thresholds. Rather than drafting an entirely new agreement from scratch, Australia should advocate adding Canada and the UK to the CER agreement, with only a few major changes, if required. Taking this approach would limit the need for regulatory harmonisation. This is because the CER is based on the mutual recognition of goods and occupations. This would distinguish it from the ever-closer political union of the European Union, which the British people understandably rejected last year because of the way it eroded their democratic sovereignty.

Like the CER, CANZUK would include free movement of people between the four Commonwealth countries. This may sound controversial, particularly given the role that immigration played in the Brexit referendum. But polling conducted by the Royal Commonwealth Society has shown that CANZUK freedom of movement has clear majority support in all four countries: 82 per cent support among New Zealanders, 72 per cent support among Canadians, 70 per cent support among Australians and 58 per cent among citizens of the UK.

The final reason Australia should pursue a CANZUK agreement is that it could act as a strong voice in favour of the rules-based liberal order that is under attack by populist movements, from both sides of the political aisle, around the world. Over time, this is a group which could grow. In the past week I have had many good suggestions of countries that would make logical additions to CANZUK. Getting the core building block in place first, though, makes sense. Brexit provides Australia with a unique opportunity to create deeper ties with our closest Commonwealth allies. It's an opportunity we shouldn't pass up.