Lord Lilley
Main Page: Lord Lilley (Conservative - Life peer)Commonwealth
Lord Lilley Excerpts
Lord Bilimoria (CB)
My Lords, the Minister of State for the Commonwealth, the noble Lord, Lord Ahmad of Wimbledon, whose presence we miss today, said on Commonwealth Day on 11 March:
“The UK has an unbreakable bond with the Commonwealth; a unique network bound together with the ties between people, common values and shared history. Our common vision for the 2.4 billion people who make up this family of 53 nations is the opportunity for all citizens to thrive regardless of race, religion, gender or any other status”.
In her message, the Prime Minister referred, as did the noble Baroness, Lady Goldie, in her opening speech, to this being the 70th anniversary of the Commonwealth. The Prime Minister said, referring to the theme of a connected Commonwealth:
“In an increasingly interlinked world, the bonds between Commonwealth citizens, organisations and governments provide a uniquely valuable network for international co-operation”.
Her Majesty the Queen talks about it being the “face of the future”. As I will come to later, 60% of the Commonwealth’s population of 2.4 billion are under the age of 30.
Huge thanks, credit and respect should go to Her Majesty for the part she has played over 67 years. She has seen this institution grow and develop in an extraordinarily flexible and fluid manner. The combined GDP of the Commonwealth countries is predicted to reach $14 trillion by 2020. Intra-Commonwealth trade, which was $525 billion in 2015, is set to double to $1 trillion by 2020.
His Royal Highness the Prince of Wales has said that the Commonwealth is vital to the health of the world and the future of humanity. He is now of course the future head of the Commonwealth and has said that it has been the cornerstone of his life. It is serendipity that at the age of 70 he is now the head of a 70 year-old organisation of 53 countries. His Royal Highness is on a tour of the Caribbean and will visit Cuba, which will be an historic first for a member of the Royal Family. He has said that, representing a third of the world’s population, the Commonwealth has real power to tackle the global challenges that impact on all of us.
At the CHOGM that we hosted here last year, the Heads of State were very worried about the risk of protectionism to the global economy, and they underlined the importance of resisting all its forms. They reaffirmed their commitment to free trade in a transparent, inclusive, fair and rules-based multilateral system. This is where intra-Commonwealth trade and investment is so significant.
We now come to the Foreign and Commonwealth Office’s global Britain campaign. Building on what the noble Baroness, Lady Prashar, said, does the FCO see the Commonwealth as a high enough priority? Is it sufficiently well resourced? I do not think that it is. It could do so much more if it had more finance behind it from all its member countries, including the UK and, in particular, India. It would be able to do so much more than it does at present. It is a great organisation but it is underresourced. To be able to rejuvenate it even further, enabling it to play a role in global Britain, the Commonwealth needs to be better resourced.
On the subject of free trade, we now have the EU trade agreements that need to be rolled over. Can the Minister tell me how many of those agreements exist at the moment? About 17% of our trade is through EU free trade agreements with over 50 countries, depending on how you cluster them; 50% of our trade is with the EU; two-thirds is with or through the EU. How many of these arrangements are ready to roll over should we Brexit?
To put this into context, 50% of our trade—roughly 45% of our exports and 55% of our imports—is with the EU and, as I said, a further 17% is through the EU. Most people do not realise that the whole Commonwealth makes up less than 10% of our trade. That is the reality. It shows how little trade we do overall with the Commonwealth and how much more we could do. There is a Commonwealth advantage, where researchers found that transactions between two Commonwealth countries cost approximately 20% less than those between non-Commonwealth nations. That is of course because of the commonality of our legal systems and English as the language of business that we share.
Today the EU is negotiating trade deals with more than 80% of Commonwealth countries, including India; that has been going on for more than a decade. Deals have just been signed with Singapore and Canada. UK-Commonwealth exports were almost £50 billion with the five larger economies—Australia, Canada, Singapore, South Africa and India—accounting for 70% of our Commonwealth exports and 65% of imports. Of 53 countries, just those five make up the bulk of our Commonwealth trade.
Does the Minister agree that the Commonwealth cannot replace our relationship with the EU? This has been a con. The British people have been sold this myth: “Leave the EU and we will just trade with the Commonwealth instead”. It has never been about “instead” or “either” but always “and”. Generally, what underlines the Commonwealth charter is that it is a force for good. Historically, the accusation was that Britain left the slow-growing Commonwealth countries to join the European Community. Today, we are told that Europe is growing slowly and we should go for the faster-growing countries, many of which are in the Commonwealth, in Africa and Asia. Even if one takes those altogether, one still has to remember the 50% of our trade with the EU, versus less than 10% with the Commonwealth. However much that might grow, there is a big gap that will take a long time to fill.
We have to remember the gravity model of trade, where countries will naturally trade with larger countries close to them. That is why the EU at our doorstep—a trading bloc with 500 million people, the biggest in the world—is where we trade. The same thing goes with countries such as Australia, which are trading more in the Asia-Pacific area using their trade deal. That said, the Commonwealth has always enjoyed strong political, cultural, sporting, family and study links with the UK.
When it comes to studies, our Immigration Rules genuinely hamper our ability to do more trade with the Commonwealth. I speak as president of UKCISA, the UK Council for International Student Affairs—the noble Baroness, Lady Prashar, was my predecessor—and as co-chair of the All-Party Parliamentary Group on International Students. The APPG produced a report highlighting where we are falling down with our Immigration Rules and how, in particular, if we had reintroduced a two-year post-graduation work visa, we would be able to attract so many more of the brightest students from the Commonwealth, who are now going to Canada and Australia instead.
India of course is the giant of the Commonwealth, making up half the population. This year it will probably overtake the UK in absolute terms as the fifth-largest economy in the world. We have to be real about the position of this country. We have been at the top table of the world, and are still, through the European Union, the Commonwealth and NATO, as a permanent member of the UN Security Council and part of the G7, G8 and G20. We punch well above our weight. We are a world player. We are a global power, not a superpower. But being a member of the European Union was never an impediment to carrying on right at the heart of the Commonwealth.
Again, putting things into perspective, Belgium and Germany are bigger trading partners for India than the UK. Italy trades twice as much with Ghana as does the UK. There is a lot more we could do. Going back to history, the noble Baroness, Lady Prashar, mentioned Prime Minister Jawaharlal Nehru. He said that Commonwealth membership meant,
“independence plus, not independence minus”.
It is so important that countries that belong to the Commonwealth do so voluntarily, and that there is no compulsion. Frankly, there is a queue of countries that would love to be members of the Commonwealth. It is spread over a fifth of the world’s land surface, contains a third of the world’s population and produces 15% of the world’s wealth. It is phenomenal.
I cannot resist mentioning that, in 2010, UKIP’s manifesto promised a Commonwealth free trade area that would account for,
“more than 20% of all international trade and investment”.
That would be brilliant, if it were possible. How realistic is it? Well, UKIP’s then leader Nigel Farage later described the manifesto as “drivel”, so let us move on from that. By the time the referendum came around, several prominent leavers including Boris Johnson and Daniel Hannan were happy to say that the UK “betrayed” the Commonwealth when it joined the European Community in 1973 and that now was the time to “embrace the Commonwealth”—again, this nonsense about either/or.
Australia has 1.6% of UK exports out of the 9.5%. To use a specific example of one region—one part—of the United Kingdom where we want to increase trade with the Commonwealth, what of Wales? Wales currently exports more than three times as much to France as it does to Canada, Australia, India, New Zealand, Singapore and South Africa combined. The Commonwealth is not a trading bloc; that is the reality, much as it would be great if it could be. What we have with the EU cannot ever be taken for granted.
The youth of the Commonwealth is also very important. Trade between countries such as India and the 27 other countries of the EU has tripled since 2010. At the same time, UK-India trade has not grown as much as it could and should have; I say that as a founding chair of the UK India Business Council. The Secretary-General of the Commonwealth, the noble and learned Baroness, Lady Scotland, said that,
“whether the UK was within the EU or without the EU, the Commonwealth [trade] advantage would be and is still there”.
This is what I want to stress: it is not either/or.
Kevin Rudd, the former Prime Minister of Australia, wrote an article recently on Commonwealth Day, entitled: “Think the Commonwealth can save Brexit Britain? That’s utter delusion”. It stated:
“Australians want the UK to do well. But there’s no way free trade with us or others can make up for the hit of leaving the EU”.
He goes on to analyse it in great detail. I know from the horse’s mouth that, to India, the EU-India free trade agreement that he talks about is far more important than any potential UK-India free trade agreement.
Lord Lilley (Con)
Can the noble Lord tell us more about this EU-India free trade agreement, which I do not think exists?
Lord Bilimoria
The EU-India free trade agreement is what has been tried to be negotiated for over 10 years now.