page_title: Commonwealth free trade
section_title: Historical origins
hierarchical_section_title: Commonwealth free trade / Historical origins
caption_attribution_description: English: Vision of Imperial Trade
context_page_description: Commonwealth free trade is the process or proposal of removing barriers of trade between member states of the Commonwealth of Nations. The preferential trade regime within the British Empire continued in some form amongst Commonwealth nations under the Imperial Preference system, until that system was dismantled after World War II due to changes in geopolitics and the pattern of global trade, and the United Kingdom's entry into the European Economic Community. The idea of promoting renewed inter-Commonwealth trade emerged in the late 20th century as a response to the evolution of the global economy. At one extreme, proposals have been raised for the creation of a multilateral free trade area comprising all member states of the Commonwealth of Nations.
  Today, most Commonwealth countries are pursuing regional integration projects, including the European Union, Caribbean Community, Southern African Customs Union, East African Community, and the South Asian Association for Regional Cooperation.
context_section_description: Throughout the 17th, 18th and 19th centuries, Britain exercised an informal trade system with her colonies and self-governing dominions.
  During the early 20th century, several political figures in Britain, led by Joseph Chamberlain, argued for a policy of Imperial Preference – both to promote unity within the British Empire, and to assure Britain's position as a world power. The policy was controversial as it pitted proponents of Imperial trade with those who sought a general policy of trade liberalisation with all nations.
  The schism helped contribute to the defeat of Prime Minister Arthur Balfour and his Conservative-Unionist government in 1906, and had serious ramifications for Conservative prospects in the 1923 and 1929 general elections. One notable victory had been the establishment of the Empire Marketing Board in 1926, which encouraged Britons to 'Buy Empire'.
  In 1933, in the midst of the Great Depression, representatives of Britain, the Dominions, and the Colonies met in Ottawa, Canada to hold the Commonwealth Conference on Economic Consultation and Co-operation. There had been an initial agreement on Imperial Preference, but a comprehensive agreement failed to materialise. Many of the Dominion leaders attributed this to the attitude of the British Dominions Secretary J. H. Thomas during the negotiations.
  In 1935, the Canadian Prime Minister, R. B. Bennett, a Conservative who endorsed Imperial Preference, was replaced by a Liberal, William Lyon Mackenzie King. King responded to pressure from U.S. Secretary of State Cordell Hull and abandoned Imperial Preference.
  In the case of the Commonwealth, the U.S. was hostile to it from its inception, notwithstanding the fact that in the cases of Canada, Australia, New Zealand and South Africa, there was an overwhelming preference for a trade system based on the United Kingdom rather than the U.S.
  The conclusion of World War II drastically affected the prospects for an agreement Commonwealth trade. The United States emerged as the foremost political and economic power, and its policy was to promote generalised free trade, primarily through the General Agreement on Tariffs and Trade (GATT). The Bretton Woods conference, held in New Hampshire in 1944, had also created a direct link between the value of gold and the US dollar, thereby establishing it as the world's reserve fiat currency.
  The war had also left Britain heavily indebted, economically weakened, and unable to absorb the flow of exports from Commonwealth jurisdictions. The Dominions, primarily Canada, directed their trade more heavily to the US market as a consequence.
  The idea of enhanced trade between Canada and Britain was explored in the mid-1950s by the Conservative government of Prime Minister John G. Diefenbaker. The plan, in response to the Canadian government's concern with over-reliance on the United States, was to adopt policies that would see up to 15 percent of Canada's US exports diverted to the UK. Representatives for both Diefenbaker and British Prime Minister Harold Macmillan held exploratory talks, but no agreement was ever reached.
caption: Vision of Imperial Trade
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