Commonwealth: It’s time to talk trade
Posted by AlexT - 30/09/09 at 11:09 amFor a group of nations that share a remarkable number of attributes such as language, legal architecture, and a myriad of other bilateral and multilateral relations it has always seemed remarkable that the topic of Commonwealth free trade has not taken a more prominent place in our public debate.
A study commissioned for the CHOGM in 1997 found that Commonwealth economies experienced an average of ten to fifteen percent lower costs in doing business with another Commonwealth nation than with a non-member state. The various shared attributes created what the study’s authors named the ‘Commonwealth Effect.’
If the Commonwealth today were an economic bloc, it would be equal in size to the United States; it would have thirteen of the worlds fastest growing economies; it would possess most of the world’s leading knowledge economies outside of the US; it would have one third of the world’s population; and would represent forty percent of the membership of the World Trade Organisation.
If an agreement were achieved and it could bring per capita incomes up to a level comparable with the developed world, the Commonwealth would have an economy valued at over US$45 trillion - the equivalent of adding the combined GDP’s of the European Union with that of NAFTA - then doubling it.
For small and developing nations of the Commonwealth, such an initiative is a positive reaction to their calls for ‘trade, not aid’ and a genuine response to such programmes as NEPAD and individual national targets for UN Millennium development goals.
Already, Australia has negotiated, or is negotiating, FTA’s with New Zealand, Singapore, and Malaysia. New Zealand is doing likewise. Canada, at present, is pursuing similar arrangements with Singapore and the members of CARICOM.
In November of 2005, at the Commonwealth Business Summit in Malta, the final communique stated that countries should consider ‘the possibility of establishing a Commonwealth preferential, or free trade area’ should the WTO’s Doha Round prove fruitless. Four years on, the success of that round has been as elusive as the action to make good on that statement.
We may not see a Commonwealth Free Trade Agreement, with full participation, any time in the immediate future. On the other hand, the promotion of a CFTA pushes the debate for freer trade among Commonwealth countries. That, in itself, is worth some discussion.
This article was written by Brent Cameron, a former assistant to a member of the legislature in the Canadian province of Ontario. He is the author of ‘The Case for Commonwealth Free Trade’, published in 2005.
Category : Economic Development, homepage items, The Commonwealth's Relevance
Stay Updated : 
RSS 2.0 feed.
September 30th, 2009 at 4:44 pm
very interesting article. I’m just wondering what the reaction of countries who lie outside the commonwealth would be? I don’t really know enough about economics and free trade though…any pointers welcome
September 30th, 2009 at 4:57 pm
I guess its one of those things, like the Commonwealth more generally, that you don’t think about until someone actually mentions it to you.
This is a compelling argument. Not just for free trade within the Commonwealth, but for us to think more seriously about the organisation as a whole. These links between countries should be used more by our politicians. There are very real and tangible benefits to membership that are never discussed or mentioned.
Pity its such a misunderstood and maligned organisation.
September 30th, 2009 at 7:33 pm
Interesting article. It begs the question what would a Free Trade agreement add? If it is already cheaper to trade with other Commonwealth countries, is it necessary to add any extra incentives? Why not get the Commonwealth to make more of the benefits that already exist? Is this simply a failure of the Commonwealth to communicates its successes?
On a related point, are the findings of that report accurate? Is it really cheaper to trade with Vanuatu than France? I find that hard to believe.
October 1st, 2009 at 8:54 am
Randolph – yes, i think these figures need to be scrutinised further.
Or perhaps better – brought up to date to reflect current realities.
October 1st, 2009 at 1:11 pm
Lundan, Sarianna M. & Jones, Geoffrey, ?The ‘Commonwealth Effect’ and the Process of Internationalisation,? in The World Economy 24 (1), (London: Blackwell Publishing, January, 2001), 99-118.
A reference for the ‘Commonwealth Effect’
October 1st, 2009 at 1:20 pm
Randolph,
Vanuatu V France is an unfair comparison.
What about in West Africa… the relative ease for Britain or Canada to trade with Ghana versus Benin? Ghana will be easier.
Language… laws… politics. All the same or similar.
Or India versus China?
A seperate issue is that in the globalised world, where everyone speaks English, everyone is connected at the push of a button… these latent connections will not be so important.
Does the Commonwealth have a place in a globalised world? This is an interesting issue.
October 1st, 2009 at 5:51 pm
It is important to bear in mind that there are other factors, including what type of trade, economies of scale, levels of industrialisation, etc.
The best example of an optimised relationship would be the bilateral trade between Canada and the United States. While the US is not a Commonwealth country, it shares many attributes. This relationship does, at present, run in Canada’s favour. It is important to point out, however, that Canada runs a lower surplus against the US than does China, despite the fact that Canada-US trade volumes are greater.
One need only look at the trade flows between the UK and Eire, and compare them with that of other EU states. There are EU countries that do less overall trade with Britain than the Irish, and yet possess greater surpluses against the UK.
When Commonwealth states trade with one another, they sell more, but they also buy more.
Intra-Commonwealth trade is, for a variety of reasons, more reciprocal in nature. This is important to developed nations in deficit, but even more vital to developing nations needing access to global markets.
October 1st, 2009 at 6:10 pm
the entire question of dismanteling the commonwealth seems utterly rediculous to me as any one with a skerrick of intelligence would be aware that if you have a powerful alliance of nations who work and co-operate together instead of a number of fragmented and dissolusioned states without a central body of control half the world would go down the s**t chute thank you that’s all i have to say peter
October 2nd, 2009 at 1:08 pm
Very compelling arguments.
October 2nd, 2009 at 1:59 pm
Peter,
I do not think anybody has suggested dismanteling the Commonwealth – merely make it realise its potential.
This is certainly true when it comes to the trading relationships within the former british dominions.
October 2nd, 2009 at 2:01 pm
Also..
Brent, yes the potential is there to help developing nations grow their way out of poverty.
I certainly agree with this.
October 2nd, 2009 at 2:07 pm
The so called Commonwealth effect would still apply if countries left the association.
The reasons behind the relative ease of trade between members is actually nothing to do with membership – meerly the same things that bring about membership. History, laws, langauge, as pointed out by others.
If Canada thought enough is enough, we’re leaving- it would not impact at all upon UK-Canadian trade.
October 2nd, 2009 at 3:11 pm
That is correct, David, but I tend to believe that the organisational needs of such an agreement could be enhanced by the Commonwealth.
The Secretariat already does a fair amount of work in trade analysis, good governance, harmonisation of credentials and the like – especially for the smaller states who lack the internal resources to do same.
It can be done from outside the structure, but I believe that the organisation gives such an initiative a leg up.
I must admit a bias on this issue, though.
http://books.trafford.com/04-2084
October 2nd, 2009 at 3:12 pm
My apologies for the link. It was supposed to connect to a book of mine, “The Case for Commonwealth Free Trade”…
October 2nd, 2009 at 10:45 pm
A Commonwealth Free Trade agreement would provide a very real link between member states where at the moment there is some disillusionment about the more ‘airy-fairy’ concepts of shared history and shared culture (which many member states seem to have a juvenile desire to delete from history in any case)
Commonwealth Free trade could be linked in with a variety of other initiatives. Part of the agreement might also include a commitment to FAIR trade, as well as free, and even a measure of security cooperation. After all, we live in an age where piracy and slavery are once again profitable business models.
But we must be careful to take a lesson from the creeping development of the EEC into the EU. At no stage must the Commonwealth become a ‘super-state’ unless another treaty is drawn to that effect. One of the risks for supra-national organisations is that they often expand beyond their mandates if they involve themselves too much in the politics of their members. Since politics is inextricably linked with economics, the Commonwealth must tread carefully.
October 5th, 2009 at 11:15 am
“The report by the Globalisation and Economic Policy Centre found that 84 per cent of exports from Commonwealth countries end up being sent to non-member states.”
This is an interesting statistic
October 5th, 2009 at 12:40 pm
A trade agreement will never happen across all member countries- it is something which you could never achieve concensus on.
However- the Commonwealth could act as a bargaining forum through which trade agreements are created – not-pan-Commonwealth- but within regions.
October 5th, 2009 at 1:06 pm
Finch,
Not only “could” the Commonwealth act as a deal-maker for regional trade links, it “should” do this.
It would make it entirely relevant to its peoples, and foster closer ties between member states.
lex86,
The figures you quote are disapointing.
And finally,Brent,
If trade is so important, why not open the Commonwealth open to every potential member?
Why restrict trade between member countries who happen to share a bit of history?
October 5th, 2009 at 5:22 pm
gb
I agree that the widest possible reach of free (and fair) trade should be an end goal. How we get there, however, will depend more on countries who can reconcile their activities and their interests more easily.
The shared attributes of Commonwealth states, does speed the flow more than with those who do not share those attributes.
Luckily, as the Commonwealth is present in every geographic region of the world, they, in turn, can act as peer facilitators. I am thinking of Canada and the majority of CARICOM member states in the Western hemisphere; South Africa in its region; and India, Pakistan, Bangladesh, Malaysia, Indonesia, and Singapore from south-east Asia to the Pacific.
Commonwealth members can, at present, provide a link between the EU, NAFTA, CARICOM, and APEC. How robust that link is should be a matter for the CHOGM to discuss.
October 6th, 2009 at 5:41 pm
I remain to be convinced that the Commonwealth is a forum for trade.
Thats upto the member countries. The good offices do good governance. The organisation is spread too thinly.
People see what they want in it. “Trade” for certain people… namely the Rwandans who want to join. “Climate change” for Miliband, going by this site.
It doesnt have its own identity.
October 9th, 2009 at 2:47 pm
I think the commonwealth should look at this issue so seriously that it should be a priority. My experience of trade in the UK is that which I see in the EU as a free trade area. The power of free trade in the EU is immense and it means the UK works with some relatively very poor parts of the EU (bulgaria, romania, lithuania), to the economic benefit of both. The potential to achieve and generate wealth with a free trade area would be vast, but how developed members (UK, Canada, Australia, etc) would be attrached to a commonwealth free trade area, if it compromised their involvement in their other trade areas, is likely to be a massive issue. For example, I am not sure the UK acting as a gateway for commonwealth goods into the EU would be acceptable to other EU members whose own competing industries could be undermined by the cheaper labour in commonwealth countries. Although, personally I would not have a problem with it.
October 9th, 2009 at 8:54 pm
The UK must know the potential of this but chooses to have its hands tied by the EU in an attempt to prevent the continent from going to war again. There is massive potential in the Commonwealth and we musn’t overlook it in my view.
October 11th, 2009 at 11:31 pm
not just a question of EU or commonwealth. why not keep EU and move forward with commonwealth?
October 12th, 2009 at 2:34 pm
At Brent:
Thank you Brent. A very lucid and substantial argument. You may recall that you held a public meeting about this topic at the Royal Commonwealth Society, London, back in May 2006 – a meeting I organised. Back then, I thought the topic was relevant. And it certainly remains that way. Except… what has been the impact of the economic downturn on the CW member states? I haven’s come across any studies looking at this aspect of the credit crisis.
We know the traditional big economies (UK, Canada, Aus) have suffered badly. We know the big emergent powers (RSA, India) have been hampered but still doing well. What about the rest – the little states that are supposed to be equals and punching above their weight? On the whole, I wonder if the inclusion of small states in CW Free Trade would have any real impact on them. Already, ACP countries are scrambling about to sign Economic Partnership Agreements. Under Don McKinnon’s watch, this was carefully condoned and supported in avuncular fashion, no doubt to butter-up the likes of Lord Mandelson (then EU Trade Commissioner) just to lap up any crumbs thrown the Commonwealth’s way by the EU chiefs. And then came the global recession.
So where do things stand now? Please Brent, your thoughts. Thanks, Dev
October 12th, 2009 at 10:07 pm
A free trade agreement would be marvelous, My country has become too dependant on trade with the US that this “buy american” thing may hurt our economy, of the americans don’t want our trade we should takle it elsewhere unstead of begging for them to reconsider all the time, it’s humiliating.
October 13th, 2009 at 11:26 am
this would be very good, because it gives poorer countries an opportunity to grow their way out of the poverty. its another extensive of the commonwealth of ‘equals’ theme.
October 13th, 2009 at 2:00 pm
Dev, good to hear from you!
Good points on small states in the CW. Personally, I think that the Secretariat’s work in providing logistical and research support (like at the UN) should be enhanced. A CFTA could assume the work of the Secretariat’s trade research unit, and act as a pooling resource for all members. Canada, Australia, the UK, New Zealand, and the like could contribute a great deal of their non-nation sensitive data and research to the Secretariat, where these states could tap in. Also, these states could contract services from the more developed powers in their dealings outside of the Commonwealth.
One topic that I am keen on exploring is the ‘fair’ trade element to the relationship. I am noticing a correlation among Commonwealth and Anglospheric nations in their bilateral trade, as opposed to those outside the cohort. If my suspicions are correct, then smaller states in the CW would do well to focus their attentions to sister members.
On a personal note, Dev, if you still have my e-mail, drop me a line.
Cheers!
October 13th, 2009 at 5:31 pm
This article in the UK’s Telegraph Newspaper today about the importance of language in trade is an interesting addition to the debate….
http://www.telegraph.co.uk/finance/yourbusiness/uk-trade-investment/6306887/Trade-month-will-Britain-overcome-its-linguistic-trade-barriers.html
October 14th, 2009 at 2:03 pm
Good article, and it stresses the point.
Unfortunately, they fail to mention that those “53 Commonwealth countries” make up over 1/3 of the planet’s population. Add 300 million in the US, and a few million from Eire and elsewhere, and you cannot easily dismiss lingustics.
Mind you, the Commonwealth advantage extends beyond – the English systems of common law, political and historical ties – those cannot be easily translated into Mandarin or Portuguese.
October 14th, 2009 at 4:09 pm
It would be very interesting to see what India’s trade with fellow Commonwealth countries is.
It will soon be the dominant trading member of the Commonwealth.
Most Indians – certainly the majority in business – speak English, and hold very favourably views towards Britain in my experiences.
October 14th, 2009 at 7:03 pm
In my view…The Most Important thing which India expects from fellow Commonwealth Countries is advancement towards Global Peace and than we could talk about the more liberate issues like that of Trade and Cooperation..
As long as the 20/11 Mumbai blasts, Attack on Sri Lankan Cricket Team in Pakistan & many other examples which unfortunately occur every now & then & create an air of suspecion, doubt, intrique around everyone….
Lets keep our fundas clear and talk of Long term issues that could very well make commonwealth a power to recon with globally and we as in commonwealth should be innovative and trendsetters rather than followers….
Overall we are proud of having same past…glorious histories that makes our bonds even more stronger…If we talk economics we have always been poor with calculations but when it comes to values, traditions & history, COMMONWEALTH has a Distinct Identity…of which we are PROUD of…!!
Hari Om Dahiya
President & Youth Chairman
Commonwealth Studnts’ Welfare Group of India
October 15th, 2009 at 3:48 am
I thoroughly enjoyed reading this article, and would strongly urge Canada and the Commonwealth to support a Commonwealth trade bloc, in order to promote trade within this unique organization of ours for economical prosperity for all!
Happy “60th” to Our Commonwealth!
October 25th, 2009 at 6:01 am
‘I agree with James Alcock. A Commonwealth Free Trade would open up valuble new markets for developed and developing member states. It would also bring the spotlight back on the Commonwealth as a vibrant and relevant organisation.
October 25th, 2009 at 8:09 pm
‘A Commonwealth Free Trade would have the possibility to achieve great things.
October 27th, 2009 at 9:49 am
AlexT has brought out a very thorny issue that defines or collapses the future of the Commonwealth.And he has right knocked the nail on the head initiating that there may never be A Comonwelath Free Trade Agreement. There is a suggestion to have the Comonwealth Free Trade Area, but that on its own would not achieve alot since we need to have sound policies in place to ensure that we just do not have a free trade area but also a fair tradng system. And I underscore the Fair Trading System because how do you expect a farmer in Central or rift of Kenya to plant Coffee that is auctioned for say $2 for 1kg to the UK and other Commonwealth countries and then the same coffee finds itself on the Kenyan market for $2 for 250mg packet labelled make in the United Kingdom. If, and when, and this is where I agree with AlexT that the Commonwelath Trade Agreements or the Commonwealth Free Trade Area is a mirage; a pipe dream! that is very elusive if we cannot make our leaders discuss more of these issues and to move from very rigid opinions to a level of a common playing ground.
November 2nd, 2009 at 10:49 pm
This is an interesting discussion but I would like to bring in another dimension. As it has already been rightly said, the Commonwealth is a unique organization with some special strengths, which when properly channelled, can be advantageous to its diverse member countries.
You see, the 53 member states of the Commonwealth hold about one third of the world’s population, and we have countries occupying the full developmental spectrum ie. some members among the most developed in the world, others among the least developed and some in between.
On the other hand, countries within the Commonwaelth carry a disproportionate share of the global burden of diseases like HIV/AIDS, Malaria and Tuberculosis, which if not addressed, stand to threaten their socioeconomic development and sustainability.
The Commonwealth for example, carries about 60.5% of the global burden of HIV/AIDS. Sub-Saharan Africa is the hardest hit region; being home to 68% of both the people living with HIV/AIDS (including 88% of children) and new infections globally, as well as 76% of AIDS deaths in 2007. Additionally, 80% of the global 15 million AIDS orphans by 2007 were also living in sub-Saharan Africa.
It is therefore important that a Commonwealth-wide initiative to stem the spread of HIV/AIDS and other developmental diseases be a major priority. Why, because a healthy nation will be a more profitable trading partner within the Commonwealth. We can use our numbers and our diversity to the mutual benefit of all member states to negotiate for better prices for essential medicines for these priority diseases. We can also exchange technological skills and competencies, such as transfering technology among member countries for the local production of essential medicines as allowed by the Doha Declaration.
So what we need moving forward is a Commonwealth that will work in innovative ways to stay relevant by finding ways to meet the diverse needs of its 53 member countries.
An association which will seek to stregthen itself by supporting and assisting the weak links in the chain of its membership to at least attain a certain minimum standard of living and of health for its citizens.
Long Live the Commonwealth!!
November 4th, 2009 at 12:03 pm
My comment on this issue somehow got deleted, so I will post it again.
I think that a Commonwealth Free Trade Area should be set up among the Commonwealth’s leading economies such as the UK, Canada, Australia, New Zealand, India, Singapore and Malaysia. (the whole EU should be part of it if the UK can’t join individually). Criteria should be established for joining the free trade area and more countries should be allowed to join it as they meet the criteria. It should be overseen by a permanent council and will help to really make the Commonwealth relevant again. It will help member countries to diversify their economies and it should be done now. A Commonwealth Science Council to investigate new technologies should also be established.
November 4th, 2009 at 5:49 pm
Following up on Jim’s post, I am curious as to whether there is interest in some sort of ad hoc group dedicated to promoting Commonwealth Free Trade.
Certainly, Facebook provides a platform for that sort of on-line organisation, and being done through grassroots means allows for a flexible approach, and a frank discussion.
Any thoughts?
November 4th, 2009 at 6:46 pm
I would support that, Brent.
November 5th, 2009 at 10:38 pm
As would I. Free trade would be extremely beneficial to all member states.
Could there be a possibility for introducing a single trading currency? This would be good for Fair trade as well – it would mean that developing member states are able to get a decent price for their goods – so many times International Trade is rendered irrelevant by an exchange rate which renders costs disproportionate to actual value. The Commonwealth could set the example for the world – not a back-scratching exercise like the Euro, but a lubricant for trade between both MADCs and LEDCs.
November 17th, 2009 at 6:46 pm
Further to that idea, a Facebook group has now been established.
While I am not able to post a link from where I am right now, if you are a Facebook user, go to the groups section and query “Commonwealth Free Trade Association”, and please consider joining.
December 2nd, 2009 at 11:30 pm
I would be very much pro this if it included an incentive for sharing technical and scientific information as well.
(feel Ive joined the party a bit late)
February 3rd, 2010 at 3:25 pm
Interesting possibilities. because there so many geographically determined blocs. the commonwealth bloc may not succeed in a short period, it might take a very long time
September 24th, 2010 at 10:02 pm
A free trade area/agreement is esential for the Commonwealth to move forward in the 21st century.
February 18th, 2011 at 3:05 pm
The commonwalth as a trading bloc would equal the USA in size, other nations could and no doubt would have trade agreements within this structure, they could not ignore the bloc its size is to big and diverse, remember that the USA is in theory allowed to join the commonwealth as are a number of others such as Ireland, who needs Europe!.
Its time UK polititians stopped and thought seriously before the UK is too late