This coming Monday – 9 March – is Commonwealth Day, the annual celebration of the voluntary association of 53 countries.
The Commonwealth is a not a natural trade bloc, given its dispersed geography and with countries at different stages of economic development. However, this doesn’t mean that trade between Commonwealth countries cannot flourish as it once did.
Trade between Commonwealth countries was once as high as 11 per cent of global exports in 1950, but this fell dramatically to about 1.9 per cent in 1990. However, in the last 25 years, trade has increased from around 1.9 per cent of global exports in 1990 to 2.3 per cent today.
While this is only a small increase, we hope commonwealth trade continues to rise, as it could be a tremendous boost for global economic growth.
There are geographical barriers which will impede closer trade and financial integration
According to a report on the Commonwealth by Standard Chartered’s economists, 47 of the 53 member countries are emerging markets, which as a bloc will increase their share of global GDP from 40 per cent to 60 per cent between now and 2030.
But there are geographical barriers which impede closer trade and financial integration. Fast-growing Asia trades mainly with Europe, the USA and within the region. Meanwhile, trade ties with Commonwealth countries in the Caribbean are currently negligible.
So what can governments and the private sector do to make more of this untapped trade potential? As we build up to the bi-annual Heads of Government meeting in Malta in November, the Commonwealth has been exploring whether a trade finance facility can stimulate trade.
Additionally, other regional trade agreements are on the table: the Trans-Pacific Partnership (TPP) – which will bind trade links between the USA and fast-growing economies in Asia and Latin America – and bilateral EU free agreements with several Commonwealth countries in Asia, both of which could boost intra-Commonwealth trade.
Boosting intra-Commonwealth trade and investment ties should be front and centre of everything
As Commonwealth Secretary-General Kamalesh Sharma said recently: “The Commonwealth is open for business and to business.”
I couldn’t agree more, but the potential is unfulfilled.
Today the Commonwealth has only 14 per cent of world GDP, but in the future it can and should have more. Boosting intra-Commonwealth trade and investment ties should be front and centre of everything that the grouping says and does in the next few years.