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It’s starting to heat up in Brexit-land after 17 months of jockeying for position, and this month more than any month since June 2016 might indicate whether UK Prime Minister Theresa May’s critics are right or wrong.
Will Theresa May travel confidently to the European Union this week to explain what she expects to receive in exchange for offering a £40 billion divorce payment? Or will she arrive and meekly accept whatever crumbs fall from the EU master’s table?
The result will determine what Prime Minister Theresa May will be called for the rest of her political life — she’ll either be known as ‘Theresa the Brilliant’ or ‘Theresa the Appeaser’ — or worse variations of those two titles.
Why Would the UK Choose to Offer £40 billion to the EU?
Certainly, the UK has pension and other legitimate obligations to the European Union that must be covered in the post-Brexit timeframe, no one is disputing that.
Also important to this discussion is that the UK has been and remains the second-largest contributor to the EU budget and is thereby part owner with the European Union of many shared buildings and properties — like the EU Parliament building in Brussels, for instance. (Total UK equity in the EC/EEC/EU institutions and real estate could be as high as £9.65 billion, although it’s difficult to find agreement on the amount)
So the question becomes; What’s the UK paying for, when it offers apropos of nothing, £40 billion?
Clearly, it isn’t to cover the legitimate obligations of the UK post-Brexit which amount to £6.15 billion, nor does it factor-in the UK’s share of the EU’s institutional equity — some £9.65 billion worth of land, buildings, and other holdings.
Indeed, Germany (#1) and the UK (#2) have paid the largest share of the EC/EEC/EU’s operating budget since 1972, and in recent years the UK’s annual net payment to the EU has hovered around £8 billion.
Therefore it would seem that the £40 billion offer to the EU isn’t to pay future obligations, but that PM Theresa May has decided to pay in advance for (a) a bespoke free trade agreement with the European Union, (b) a bespoke Northern Ireland border agreement, and (c) to clear every single miscellaneous issue so that Brexit can proceed quickly.
And if that’s the Prime Minister’s thinking, it seems sound logic although it could be seen by some pundits as an expensive way to go.
Q: “Could I Have a Nice and Clean Brexit?”
A: “That Will be £40 Billion, Please.”
If Prime Minister May gets a nice clean Brexit, the UK can then sign free trade agreements with most of the countries and trading blocs in the world, in addition to maintaining a healthy trading relationship with the European Union which accounts for 15% of all global trade.
In addition to that, such a bespoke Brexit payment should guarantee perfect cooperation on a soft border between the Republic of Ireland and Northern Ireland.
It should guarantee that the European Court of Justice won’t comment or interfere on UK matters, and it will simply become one of many global courts that UK judges consult when making precedent-setting rulings.
And because in the whole history of the world there has never been such an unprecedented £40 billion divorce payment, Prime Minister Theresa May and every subsequent UK Prime Minister should be entitled to the utmost respect in EU capitals until the year 2100.
It Sounds Expensive, But It Isn’t
Once the UK signs free trade agreements with China, with all of the UK’s Commonwealth partner nations, with the United States, and perhaps ASEAN nations, MERCOSUR, Russia and its CIS partners, African Union member nations, and with other free trade associations like the Pacific Alliance, the UK will dramatically ramp-up exports to more than five billion people around the world.
If the Prime Minister and her negotiators can sign reasonable free trade agreements with much of the world immediately post-Brexit, it means that instead of paying the EU a net annual payment of £8 billion — increased exports and other positive economic activity (such as increased tourism) will boost the UK economy by £10 to £20 billion annually.
Making Theresa May’s present plan look brilliant, in retrospect.
A Slight Lag, Followed by Economic Boom
Although the first year won’t show instant results, and it depends on the quantity and quality of those free trade agreements and upon how quickly UK exporters can respond to the changed market, as time rolls forward, paying £40 billion to the EU in order to gain a bespoke Brexit and Free Trade Agreement might seem like an exceptionally wise decision by Theresa May.
At the very least and to get the ball rolling in the first few days after Brexit, the United Kingdom could coordinate military procurement with other Commonwealth of Nations countries so that navy destroyers, frigates, coastal patrol craft and army tanks required by Commonwealth countries could be sourced from the United Kingdom. The bonus of such a plan is that through bulk purchasing power and common design parameters, such military equipment costs could be reduced for all member nations.
That plan has ‘instant success’ written all over it because there is a real need among those countries for new and used UK military equipment.
Either Theresa May is one of the brightest politicians of our century (paying £40 billion to get free of the EU more quickly and completely, and by obtaining a bespoke UK/EU free trade agreement) or she’s heading off to Brussels this week to accept whatever crumbs the EU mandarins toss her way.
As the entire country waits this week for the news reports, let’s hope she’s the former.
Well, ‘Brexit is Brexit’ as they say, and it looks like it’s going to take a while to finalize details between the UK and the EU. But no need to panic. Brexit will happen and the two sides will be legally divorced within 12-months.
It might turn out to be a good agreement, it might turn out to be a bad agreement, or negotiations might go so awry that the UK leaves without any agreement; In which case WTO rules would automatically apply until superceded by bilateral agreement.
Which wouldn’t be too bad actually, because with no time constraints to worry about post-Brexit, and with no concern about loss of face for politicians (on account of missing the Brexit deadline) powerful industries on both sides of the English Channel could then push their respective governments to create a number of à la carte bilateral agreements pursuant to their sector. Secondary and tertiary industries would then follow the lead of the powerful primary industries.
Eventually, every CEO would be heard by their respective government, and elected representatives on both sides would be compelled by their own political self-interest to present their case to the other side — a very pure way of streamlining trade between Europe’s (by then) newly divorced economies.
Whichever way it goes, in approximately 12-months Britain will be alone in the world save for its Commonwealth partners which it hasn’t cherished enough over the past 86-years, but it’s not to late to change that.
In fact, now is the time for the UK to take huge strides forward with its Commonwealth partners and begin to deliberately favour them over non-Commonwealth nations, especially in regards to trade and immigration.
“The latest net migration statistics show that in the year ending December 2016, net migration to the UK was 248,000.” — Migration Watch UK
The majority of immigrants to the UK since 1999 came from eastern Europe and the benefit for British employers is that these workers accept low-paying jobs and (although it is unethical and in some cases illegal; regardless, it still happens) that a farm or factory could replace all UK-born workers and on the next week hire immigrants who work for far lower wages. This can save companies significant amounts of money especially in the case where the UK-born employees have years of seniority and full benefit plans.
(Want to save 25% on your annual labour expenditure? Fire everyone below the level of General Manager and fill those positions with immigrant workers. Sure, it may be hairy for a while until the newcomers learn their jobs, but think of the money you’ll save! Even with having to pay significant severance pay to UK-born workers that have seniority, and maybe a bit of ‘hush money’ — over time the company will show better profits. If you think this hasn’t been done, you’re naive in the extreme. Whether it’s legal or not, whether it’s ethical or not, or whether it’s the ‘right thing’ for Britons to do to their own countrymen and countrywomen is a completely different matter)
In the end it hurts the UK economy, although it helps UK businesses to earn higher profit, but much of the money earned by the immigrants is sent to their families in eastern Europe or wherever they migrated from.
The name for these kinds of transactions is ‘foreign remittances’ and billions of pounds sterling leave the UK economy for foreign nations every year. That money is gone and is never returning.
The amount of wealth leaving the UK every year via foreign remittances is astonishing and may total as much as £20 billion annually (or more) and as the accounting is imprecise it’s almost always found (years later) that the estimates were extremely low.
The UK is one of the Top-Ten foreign remitting countries in the world
In some countries with heavy remittances from the UK, the amounts are so large that certain developing nations receive up to 6% of their GDP via foreign remittances, and the UK is one of the top-ten foreign remitting countries in the world.
Think how much money Britain’s governments (Labour and Conservative) have allowed to leave the UK via foreign remittances over the past quarter century…
Wouldn’t it be smarter to lower immigration from non-Commonwealth nations?
Why, yes it would. It would be much smarter.
Commonwealth nations have historic links with Britain and it looks better when former colonies (and new Commonwealth members that were never colonies of Britain) are faring well thanks to British largesse.
Following is a short list of UK benefits if immigration from non-Commonwealth nations is replaced by Commonwealth nation immigrants:
- Tens of billions of pounds sterling will no longer leave Britain annually to be used by non-Commonwealth countries
- Foreign remittances from the UK would go to Commonwealth nations instead of non-Commonwealth nations
- Commonwealth nations might choose to source more military equipment, machinery, etc. from the UK
- Commonwealth nations with boosted foreign remittances are more likely to stay within the Commonwealth
- Immigrants to the UK from Commonwealth nations are more likely to understand the British worldview
- Commonwealth immigrants are more likely to integrate well into British society
- Commonwealth nation citizens will have a better opinion of the UK and of Britons
- Commonwealth nation economies will see a corresponding economic benefit
- UK GDP would increase, as would GDP in the other Commonwealth nations
- Commonwealth nations would become politically strengthened
- Commonwealth links between businesses are likely to increase
- Links between Commonwealth citizens are certain to increase
And that’s just the short list.
Yes, billions of pounds sterling will still leave the UK but at least it will be going to Commonwealth member nations that have a similar worldview to Britons and are nations that are more likely to support British policies instead of opposing them.
If the money is going to leave anyway, the smart money would arrange to keep it ‘in the family’ with countries that don’t have adversarial relations with the UK.
Why should the UK be adding to the GDP of non-Commonwealth nations, when it could be adding to Commonwealth nations GDP?
The UK is a member of that august organization and membership itself implies that each member should favour other members.
Commonwealth governments, big business and consumers should always try to shop at Commonwealth businesses first, before trying anywhere else. If something can’t be found for sale in your own nation, then try to purchase it in another Commonwealth nation. If it can’t be found at all, then maybe it’s time for another Commonwealth member nation businesses to pool their resources and build/sell that product.
The UK should cut immigration from non-Commonwealth nations and simultaneously make it one order of magnitude easier for Commonwealth nation citizens to immigrate to Britain.
While the total immigration levels might stay the same, the definite bias should move quickly towards Commonwealth nations and NAFTA countries.
Commonwealth citizens should have UK visas fast-tracked after Brexit, MPs argue (The Telegraph)
Up to 200,000 immigration applications from Commonwealth and NAFTA nations should be accepted each year via a simple online form, a successful criminal records background check, and payment of an immigration fee of £100 per year.
One for all, and all for one!
Instead of strengthening people and nations that have no interest for or against the UK, Britain should quickly move to support Commonwealth members and NAFTA countries.
In this way, countries that are pulling for the Britain’s success will be rewarded by Britain — and vice versa.
The UK should respectfully request NAFTA associate membership the moment Britain formally leaves the EU. And within 5-years, all other Commonwealth nations should make the same request of NAFTA.
That’s how you Build a Better Britain, Build a Better Commonwealth and Build a Better NAFTA!