Why Britain must invest time in an FTA with India

A new report released the UK's Free Enterprise Group makes the case for Britain to prioritise free trade agreements (FTAs) with key Commonwealth nations like India following Brexit. 'India Global Business' explores the rationale behind this strategy.'Reconnecting with the Commonwealth: The UK's free trade opportunities', released by the British MPs led Free Enterprise Group, suggests a five-step plan for the UK government as it gets ready to leave the European Union (EU).The first suggested step is to begin with striking pacts with the Commonwealth's open economies of Australia, Canada, Singapore, and New Zealand to secure FTAs in time for Brexit. As a second step, the UK should pursue an FTA with India.“The UK's largest Commonwealth export destination [India] is a prize worth pursuing. Significant time should be invested by the UK into a trade-only deal. However, this will take time. Australia, Canada, and New Zealand are all in the process of FTAs with India that have already taken five to six years,” the report notes.Co-authored by Conservative party MP James Cleverly and Tim Hewish, executive director of Commonwealth Exchange, the report highlights the importance of shared language, common law tradition, diaspora networks, and historic cultural links with countries like India as a key to forming new ties following Britain's exit from the 28-member European economic bloc.“The best way to ensure that free trade has few losers, even in the short term, is to begin with much freer trade between likeminded countries with comparable standards of living. Free trade agreements with economically advanced Commonwealth countries are the obvious place for Britain to start,” says Tony Abbott, former Australian Prime Minister, in his foreword to the report."The government must a publish a plan to utilise the 'Commonwealth Advantage' and build our trade links with the Commonwealth. A market of 2.3 billion people and some of the fastest growing economies in the world is too big an opportunity to ignore," adds Cleverly.The report says the UK is the largest EU goods export destination for numerous Commonwealth countries such as India, Australia, Canada, New Zealand and South Africa. It is also the second-largest for Bangladesh, Kenya, and Papua New Guinea, providing a strong motive for Commonwealth countries to form trade deals with the UK.#Five step Brexit plan:1.The UK should look to the Commonwealth's open economies of Australia, Canada, Singapore, and New Zealand to secure FTAs in time for Brexit.2. An FTA with India; the UK's largest Commonwealth export destination is a prize worth pursuing. Significant time should be invested by the UK into a trade-only deal. However, this will take time. Australia, Canada, and New Zealand are all in the process of FTAs with India that have already taken five to six years.

3/4: The UK will need a number of African, Caribbean, and Pacific (ACP) deals to mirror or better the existing EU options, which it will undoubtedly lose post-Brexit unless it can secure grandfathering rights. Failure to do so will damage the UK's standing with developing markets especially when the UK represents a major European export destination. The UK should offer deals that are tariff-free with no quota access with a view to more favourable asymmetric liberalisation on the ACP side. Special attention and priority should be given to South Africa given its strategic trading importance to the UK.5: The UK should join the under reported Trade in Service Agreement (TiSA). It is the first international agreement of its kind and presents the second generation of trade deals. Led by Australia, the US, and the EU it is in the UK's interest as the world's second largest service economy and one which is geared to 80 per cent services. Petitioning those Commonwealth nations that are a part of TiSA will be critical.The Commonwealth Advantage:

• Whilst the EU is the UK's largest trading partner, the Commonwealth's share of global GDP overtook that of the EU in 2004 and the gap between these figures will grow when the UK leaves the EU in 2019.
• Although Anglo-Commonwealth trade accounts for just 8 per cent of UK exports, a long way behind exports to the EU and US, it is growing and is already larger than exports to China (3.5 per cent of 2014 exports), a market the UK has been aggressively pursuing for years.

The best way to ensure that free trade has few losers, even in the short term, is to begin with much freer trade.-Tony Abbott, former Australian Prime Minister

• Importantly, the UK is the largest EU goods export destination for numerous Commonwealth countries: such as Australia, Canada, India, New Zealand and South Africa. It is also the second largest for Bangladesh, Kenya, and Papua New Guinea, providing a strong motive for Commonwealth countries to form trade deals with the UK.
• The importance of shared language, common law tradition, diaspora networks, and historic cultural links become more important as trade becomes mores service sector focused. This “Commonwealth Advantage” has been estimated to provide an uplift of 19 per cent in trade compared to that with non-Commonwealth nations of similar economic circumstances.
• The geographical spread of the Commonwealth is another advantage. Covering both hemispheres and a multitude of time zones, the member states should be seen as nodes in a network rather than as a block. Greater Commonwealth trade can be the jumping off point for expansion of British economic activity into the regions they inhabit.