Commonwealth model a solution to trade tensions
Friday, October 11th, 2019
Global uncertainties and tensions are affecting trade in every region. We see rising protectionism, while multilateral cooperation is increasingly under threat.
Meanwhile, the resilience of many smaller or less developed countries is being undermined by the impact of climate change and extreme weather together with other natural disasters.
These factors make the outlook for economic growth and prosperity sombre. Yet through the gloom, Commonwealth cooperation shines as a beacon of hope guiding towards safer and saner waters.
This year, the world GDP is projected to grow 2.6 per cent, down from 2.9 per cent last year, while world merchandise trade volumes are expected to rise by only 1.2 per cent in 2019 – the weakest growth since the global financial crisis.
Our citizens experience the effects of these trends in their day-to-day lives as the prices of food, fuel and basic services rise, jobs become harder to find, and there is reduced potential for businesses to grow.
Against this backdrop, this week in London the UK will chair a meeting of trade ministers from the 53 countries of the Commonwealth.
The ministers will consider ways of tackling pressures on international trade, and for making even more of the Commonwealth Advantage enjoyed among member countries.
Most importantly, the ministers will review progress towards the target agreed by Heads of Government at CHOGM 2018 for annual trade within the Commonwealth to be worth at least $2 trillion by 2030 – a goal linked to achieving the UN Sustainable Development Goals.
The challenges may seem daunting, but our governments know that through coordination and with the right policies in place, the prizes can be brought within reach.
Collective strategic action can unlock opportunities for all members of Commonwealth countries.
Studies have shown that on average, Commonwealth nations tend to trade 20 per cent more with each other than with non-members.
This very real and valuable tendency is an important factor in Commonwealth Advantage.
It is the product of historical ties, shared language and similar legislative, governance and administrative systems based on the common law.
As a result, trade costs are on average 19 per cent lower between Commonwealth country pairs than comparable non-Commonwealth counterparts, and our member states also invest on average 10 per cent more in each other than they do in non-members.
These benefits are further bolstered by our Commonwealth Connectivity Agenda, which provides powerful mechanisms for structured dialogue, sharing of best practices, networking and collaboration on trade and investment among member countries.
Intra-Commonwealth trade in goods has increased by around $100 billion over the past three years, reaching almost $450 billion in 2018.
With rapid population and per capita income growth in developing countries, especially in Asia, trade in goods and services is expected to reach the $700 billion mark by 2020.
With more than 60 per cent of the Commonwealth population of 2.4 billion under the age of 30, these drivers of growth are unlikely to slow for a considerable time.
The digital economy holds key to untapped opportunities, with the number of internet users globally trebling over the past decade.
Yet in low-income Commonwealth countries, only 18 per cent of the population currently have internet access, compared with 85 per cent in high-income countries.
So the economic case for tackling the digital divide is persuasive: full access to broadband internet could add up to $1 trillion to combined Commonwealth GDP.
Certainly, with 49 of our members belonging to the WTO, the Commonwealth can play a strategic role as a champion of free trade, advocating for a transparent, inclusive, fair and open rules-based multilateral trading system.
Commonwealth discussions provide space for broader wide-ranging dialogue in the spirit of goodwill and an atmosphere of trust rather than a treaty.
It is within this context that we can look forward to Commonwealth trade ministers, when they meet this week, offering messages which, while rooted in reality and notwithstanding the diverse economic interests represented, proffer the prospect of progress.
By enhancing opportunities for enterprise and investment among all member nations, and by working together for the common good, we shall truly live up to the ambition and aspiration of being a Commonwealth. — The writer is Commonwealth Secretary-General