CANZUK: An EU for Canada?

(Alessandro Lai/Dreamstime)
The press is fascinated by a gimmicky idea also involving Britain, Australia, and New Zealand.

In the wake of President Trump’s recent tariff binge, much criticism has been leveled against what we might call “nostalgia economics” — that is, the belief that sentimental instincts are just as useful as market-tested evidence when it comes to setting economic policy.

It’s a philosophy not unknown elsewhere in the Western world. In Britain and Canada in particular, there exists a long history of believing that trading too much with the wrong sorts of countries reflects a deep character flaw, and that the wisest flow of goods is one dictated by cultural anxiety.

Canadian pathologies about trading too much with the United States, which is often fantasized as a prelude to annexation, are as old as the country itself. Canada’s first prime minister, Sir John A. Macdonald, built much of his agenda around anti-American tariffs, and his party demagogued for years after his death that any government that made it easier for Canadian merchants to trade with customers a few miles south was engaging in a form of treason. It was only after the dismal failure of Pierre Elliott Trudeau’s much-ballyhooed 1972 “Third Option” plan for trade “diversification” (the first and second options being grim resignation to Americanization) that an unabashed proponent of free trade, Brian Mulroney, was able to get elected and lay the foundations for NAFTA.

Flash forward to today, where a certain sort of Canadian has interpreted decades of American-fueled prosperity as proof of the need for a “CANZUK Union,” in which Canada, Britain, Australia, and New Zealand ween themselves off the United States with some manner of EU-style zone of free trade and human movement. The press is fascinated by the gimmicky idea, as are a faction of Anglophilic politicians. Former defense minister Erin O’Toole ran for head of the Conservative party last year promising to implement the scheme, and though he didn’t win, he now serves as the Tories’ shadow foreign minister. It’s easy to see his fingerprints on the party’s recent high-profile push for free trade with Britain.

The idea has its share of fans among British Brexiteers, as well, many of whom conceptualize trade with Europe in the same frightened way many Canadians conceptualize trade with the States. The notion that even a severe blow to U.K.–EU relations can be easily compensated by deepening ties to “our friends in the Commonwealth” has been a stock answer of the Nigel Farage set for years.

Could the four CANZUK countries stand to trade more with each other? Sure, why not. They could probably stand to trade more with Mongolia, Paraguay, and Turkmenistan, too, none of whom they do much business with at present. Yet at some point, it’s hard to avoid wondering if the status quo maybe exists for a reason.

The United Kingdom trades more with many European nations than it trades with Canada, Australia, and New Zealand combined. In 2016 its trade relationship with Holland alone was valued at over £73 billion, compared with just over £15 billion for Canada. Holland is located just 150 miles from the British coast and the two countries have enjoyed a thriving commercial relationship longer than London’s been aware of the New World’s existence.

Canada, meanwhile, trades more with the next-door U.S. than it trades with every other country put together — as it has for most of the postwar period, aforementioned anxieties notwithstanding. New Zealand is mostly in Australia’s economic orbit, and Australian trade is mostly Asian, with their Japanese, South Korean, and Chinese relationships more valuable by orders of magnitude than those with the Brits and Canadians on the other side of the globe.

Rejiggering these geographic realities would require more than new treaties — it would basically require sci-fi technology, since there’s simply no other way any self-respecting businessman is going to be persuaded it’s more cost-effective to ship widgets across vast oceans than to countries a few miles away. Inefficiencies on this scale can be rationalized with the logic of empire, as when Canada, Australia, and New Zealand existed to export raw goods to Britain, but independent nations have interests of their own.

Though we often speak of decolonization as a win for political freedom, equal liberation comes from the ability to opt out of economically regressive relationships. A powerful byproduct of the British Empire’s end has been active competition among its former dominions, now free to be as redundant as they wish. In 2010 the Canadian government vetoed an Australian Potash firm’s attempted acquisition of a smaller Saskatchewan one, while New Zealand has long pressured Ottawa to liberalize its cartel-like dairy industry so Kiwi farmers can profit at the expense of Quebec ones.

Fantastical notions that a CANZUK-wide “free movement” space would affect much of anything seem similarly dated. Among those culturally uneasy about the Western world’s increasing intake of Third World migrants, a pragmatic solution often offered is to simply steer the immigrant inflow back to what are sometimes euphemistically called “traditional sources.” Though its official activists deny this up and down, a desire to make the increasingly multicultural CANZUK nations ethnically Anglo again is obviously an enormous subtext of the plan and its appeal. Yet even using this metric, the test of sound policy is not simply an ability to declare your dream outcome attractive.

Nostalgic delusions come in many flavors, not all of which are necessarily flamboyantly destructive.

Given most immigration to the West is driven by migrant desires for socioeconomic betterment, decades of dwindling inter-CANZUK migration presumably has more to do with life satisfaction within those countries than any legal barriers to entry. The per capita income of CANZUK nations is basically identical across the board, so to function as anything beyond an open invitation, a free-movement scheme would need to offer a powerful incentive capable of persuading comfortable citizens of advanced industrialized democracies to abandon careers, friends, and credit ratings. The best CANZUK activists can offer at present is schmaltz about a “shared sovereign” and “the same Westminster parliamentary system.”

Nostalgic delusions come in many flavors, not all of which are necessarily flamboyantly destructive. Assuming the four countries could get it together, a CANZUK deal wouldn’t make anyone bankrupt, or cause blood to rain from the heavens. It would, however represent an immense waste of time and resources for the sole purpose of building a sentimental monument to economic ignorance.

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