Leaders of the Commonwealth countries’ main trade bodies said in a joint press release on Monday that EU-membership makes the UK a more attractive place to invest as it provides access to the single market of 500 million consumers.
The pro-EU stance of Commonwealth business leaders is a blow for Brexit campaigners, who repeatedly have suggested leaving the EU would lead to an increase in trade with Commonwealth countries. However, Commonwealth business leaders now suggest Brexit would instead result in a reduction in trade with the UK.
The EU has agreed free trade deals with Canada, Singapore and South Africa, and will start negotiating with Australia and New Zealand next year.
“Canadian companies invest more in the UK than anywhere else in the world except for the US, and they do so in large measure because they consider the UK a gateway to the rest of Europe,” said John Manley, president and chief executive of the Business Council of Canada. “The recently completed EU-Canada Comprehensive Economic and Trade Agreement would only increase the UK’s importance to Canada,” he added.
These European trade agreements currently in progress with Commonwealth nations will give the UK greater access to established and high growth markets, according to Carolyn Fairbairn, director-general of the Confederation of British Industry (CBI), the UK’s main trade body.
The best of both worlds
“Remaining in the European Union and trading with some of our closest Commonwealth allies are not mutually exclusive – they are mutually reinforcing,” she said.
“The UK has the best of both worlds by being able to trade easily with nations both from the Commonwealth and from the EU,” added Fairbairn.
Similarly, India invests more in the UK than in the rest of Europe combined, emerging as the UK’s third largest FDI investor, said Chandrajit Banerjee, director-general of the Confederation of Indian Industry.
Access to European markets is therefore a key driver for Indian companies. “Anything that lessens this attractiveness may have a bearing on future investment decisions. It is important also to ensure continued border-free access to the rest of Europe for the many hundreds of existing Indian firms that have manufacturing bases in the UK,” said Banerjee.
Moreover, Britain remaining in the EU helps make the region more “outward looking”, as the Commonwealth businesses see the UK playing an important role in driving market liberalisation in the EU.
“We already do £40bn of trade with some of the Commonwealth’s largest economies each year, so by pushing the EU to continue removing current barriers, we can create more jobs and drive growth in the UK. And as part of the EU, trade deals open up the whole single market to our Commonwealth partners,” said Fairbairn.
Apart from the issue that a Brexit would entail lengthy negotiations to secure new deals which could take many years, the Commonwealth countries point to how having a strong voice in the EU benefits them.
“And there’s no doubt that by being a central stepping stone into the EU, the UK is an even more attractive destination for Commonwealth trade and investment,” said Fairbairn.