Commonwealth model offers hope for easing multilateral trade
October 7, 20191K views0 comments
By Patricia Scotland Commonwealth Secretary General
Global uncertainties and tensions are escalating and affecting trade in
every region. We see rising protectionism, while multilateral
cooperation – including through the World Trade Organisation – 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 unprecedented in living memory, together with
other natural disasters.
These factors combine to make the general outlook for economic growth
and prosperity sombre. Yet through the encompassing gloom, Commonwealth
connection and cooperation shine as beacons of hope guiding towards
safer and saner waters.
This year, world GDP is projected to grow 2.6 per cent, down from 2.9
per cent last year, while world merchandise trade volumes are now
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. Building
on the distinctive nature of Commonwealth connection and cooperation,
ministers will consider approaches for tackling pressures on
international trade, and for making even more of the Commonwealth
Advantage enjoyed among our member countries.
Most importantly, 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 closely
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 promising
opportunities for all members of our diverse and geographically
widespread family of 53 Commonwealth countries.
Our studies have shown that on average the nations of the Commonwealth
countries tend to trade 20 per cent more with each other than with
non-Commonwealth countries. 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 now 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 our 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 combined Commonwealth
population of 2.4 billion under the age of 30, these drivers of growth
and prosperity are unlikely to slow for some very considerable time.
The digital economy holds further 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 an increasingly 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 treaty. This means deadlocks are less
likely to hinder pragmatic progress towards practical solutions. Our
member countries gain advantage through cooperation and coordinated
action, and remain free to move forward with their preferred domestic
reforms unfettered by obligations, deadlines or legally binding
commitments.
It is within this context that we can look forward to Commonwealth trade
ministers, when they meet this week, offering powerful messages which,
while rooted in reality and notwithstanding the diverse economic
interests represented, proffer the prospect of progress towards hope and
harmony within a broad unity of purpose. For while the global trading
system may be far from perfect, it is the most potent pathway towards
eradicating poverty. That is a prize not be lost. By enhancing
opportunities for enterprise and investment among all our member
nations, and by working together for the common good, we shall truly
live up to the ambition and aspiration of being a Commonwealth.
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Patricia Scotland, QC is the sixth Secretary-General of The Commonwealth