Building capacity to help Africa trade better

Trade ministers pledge to harness Commonwealth advantage at historic meeting


Trade ministers pledge to harness Commonwealth advantage at historic meeting

Trade ministers pledge to harness Commonwealth advantage at historic meeting
Photo credit: Kevin Sutherland | Bloomberg

Commonwealth trade and investment ministers concluded their two-day meeting in London on 10 March 2017 with a commitment to make full use of the ‘Commonwealth advantage’ to boost trade within the 52-member bloc.

Ministers and representatives from more than 35 countries attended the meeting, jointly convened by the Commonwealth Secretariat and the Commonwealth Enterprise and Investment Council.

In her address to ministers, Commonwealth Secretary-General Patricia Scotland said: “On trade, our family has never been more needed that it is today. We all know that we’ve been living in troubled times and together we will have to look very carefully at what advantages there are within our family. Intra-Commonwealth trade has never been more important.

“There is a 19 per cent trade advantage within the Commonwealth. We must see how the global trade landscape can be changed in favour of that advantage and the particular factors that drive and differentiate intra-Commonwealth trade and investment be improved.”

At the meeting, ministers focused on opportunities for the Commonwealth to strengthen collaboration by promoting intra-Commonwealth trade and investment flows. They identified key challenges hindering trade competitiveness and discussed how to overcome them through mutual support.

Ministers underscored the importance of building a global economy that benefits all of the Commonwealth’s 2.4 billion citizens, noting that developing countries need an enabling global trading environment to achieve the Sustainable Development Goals.

Against a backdrop of global economic uncertainty and a slowdown in worldwide growth, the Commonwealth is currently assisting more than 30 countries on their effective integration into the global trading system. It is building their capacity to take advantage of opportunities, including improving trade competitiveness.  

Ministers also noted the important role of the private sector in facilitating trade and investment. They welcomed Commonwealth initiatives to forge business to business links and pledged to continue to engage with the private sector in a pan-Commonwealth setting. 

Lord Marland, Chairman, Commonwealth Enterprise and Investment Council said, “there is an opportunity for the Commonwealth to demonstrate global leadership on free and fair trade. Businesses want to see stability, transparency, predictability and the rule of law and the Commonwealth can work together to improve the ease of doing business in all member countries. This will allow companies, particularly Small and Medium Enterprises, to have the confidence to trade and invest across the Commonwealth. Creating a conducive business environment and helping businesses find a route to market is core to the enabling role of our organisation. It was essential to have the private sector fully engaged in the Trade Ministers Meeting.”

Discussions took place on the likely impact of the UK’s withdrawal from the European Union, which could disrupt market access into the UK and Europe. 

The Secretary-General stressed that “no country should be left behind” in the post-Brexit trade landscape. Ministers acknowledged that Brexit provides opportunities for broader cooperation on trade and investment between Commonwealth countries and committed to examining specific recommendations for practical initiatives that can be recommended to the next Commonwealth Heads of Government meeting in 2018.

Towards a free trading future

Speech by Liam Fox at the first Commonwealth trade ministers’ meeting

I would like to begin by thanking the Commonwealth Secretariat and the Commonwealth Enterprise and Investment Council, chaired by Lord Marland, for their efforts in arranging this event, which I am sure will be a great success.

It comes at a time where we, in the UK, are at a truly historic moment. Following our referendum on EU membership, and the decision of the British people to forge a different future, our Prime Minister has set out a vision for a truly ‘Global Britain’.

This country has long been associated with both the concept and practice of free-trade. A small island perched on the edge of the European continent became a leader of world trade. For over a century the terms ‘Britain’ and ‘free trade’ were virtually synonymous. It was from here that those such as Adam Smith set out the intellectual case for free and open commerce, arguments that are just as valid today as they were in 1776 when he published The Wealth of Nations.

Those of us, represented here today, have, through our shared history and experience, witnessed the transformation that trade can bring and have a duty to ensure that the benefits that we enjoy today are made available to future generations.

There are 52 member states in the Commonwealth, boasting a combined population of over 2.4 billion people. Moreover, 1 billion of those Commonwealth citizens are under the age of 25, a vast pool of talent and resources that can help transform the world, if we ensure they have access to future trade and investment opportunities.

The case for free trade

It is easy for us to take for granted the system that created the modern global economy and set the conditions for globalisation itself. Yet, many of our citizens question the benefits of these free trading arrangements so we must constantly remind them of the advantages that it brings.

So much of what has become our accepted way of life are the products of a free trading system – every piece of clothing you wear, and every piece of technology you use, is the product of a supply chain that stretches across the world.

Citizens of all our countries will, perhaps unknowingly, be using products that originate from across the Commonwealth, their components and raw materials drawn together by the global economy into a finished item.

Every individual, too, is an actor in free trade. When a family from Canada holidays in Barbados, they are engaging in international trade.

When an Indian student in Australia withdraws money from their home bank account, they are part of the global economy.

When someone in South Africa uses their mobile phone, they are able to do so because of technology created here in the UK.

The explosion of research, innovation and manufacturing across the world has done away with the constraints of geography.

And while the world has shrunk, our ambitions have grown.

Liberation from poverty

Yet free trade is about more than the simple provision of goods and services – it has also been the means by which we have liberated millions of our fellow human beings from poverty.

According to the World Bank, in the 3 decades between 1981 and 2010, we witnessed the greatest single decrease in material human deprivation in all of history. At a time when the population of the developing world has increased by almost 60%, the number of those in extreme poverty has dropped from around 50% to around 20% – still too many, but a phenomenal achievement in which we should take great pride.

I have long believed that free trade is one of the most powerful tools we have to help those in greatest need around the world. As we establish our own position after we leave the European Union, Britain will proudly carry the standard of free and open trade as a badge of honour. As we, one of the world’s largest economies, take our independent seat at the World Trade Organisation we will seek to achieve continuity in our trade and investment relationships with developing countries.

The UK remains committed to pursuing free trade. That includes seeking to achieve continuity in our trade and investment relationships with third world countries, including those covered by EU FTAs or other EU preferential arrangements. Yet we understand that trade can never be an isolated policy objective. It is an unavoidable truth that prosperity, including an open and free trading environment, social stability, political stability and security are part of the same continuum.

By that I mean that you cannot disrupt one element without disrupting the whole.

That is why we recognise that trade and development form a fundamental and synergistic partnership. We know that free trade by itself will not be the only empowering and liberating tool that we will need to build that secure future. While trade does indeed reduce poverty, it does so most effectively with a number of pre-existing conditions. These include – high levels of education, developed financial sectors and, hugely importantly, sound governance and minimal corruption. The good news is that there are many more developing countries that satisfy the tests.

According to the IMF, the Commonwealth countries whose imports of goods and services are likely to grow fastest over the next 5 years are Mozambique, Bangladesh, India, Brunei, Ghana and Sierra Leone. Many more countries represented here today are also experiencing rapid economic development.

This represents not only a great opportunity for their citizens to share in the proceeds of global prosperity, but it represents tremendous opportunities to importers and exporters from across the whole Commonwealth, a genuinely win-win situation.

It is not the concept of globalisation, nor the liberalisation of free-trade, that should be the target of those who rightly want to see the elimination of the scourge of global poverty but the elimination of corruption and the improvement in governance in many developing countries. But at the same time we need to ensure that we have the tools in place to help and protect those who do not materially benefit from the global age.

The threat of protectionism

It is worth reminding ourselves of this positive economic narrative and the improvement of the human condition that it has brought about because in the world around us there is a rising chorus of protectionism which threatens to drown out the case for a free and open global trading system.

New barriers, often invisible, are emerging around the global economy providing new impediments to the open commerce that is the key to global prosperity.

What is worse, many of these impediments are being introduced by G7 and G20 countries, the very nations who have prospered most from free-trade itself.

Research by the OECD has shown that protectionist instincts have grown since the financial crisis of 2008. By 2010 G7 and G20 countries were estimated to be operating some 300 non-tariff barriers to trade – by 2015 this had mushroomed to over 1200.

Protectionism can be a seductive but a false friend. I have described it as the class A drug of the trading world – it can make you feel good at first but you will pay a terrible price in the long term.

It is economically destructive, preventing us from reallocating global resources effectively. It is also socially regressive because those on lower incomes spend a higher proportion of their money on goods than services so tariffs and barriers will hurt the poor more. And we will all pay the price if those denied the opportunity of global prosperity turn their backs on the partnerships and cooperation that underpin global security. We all must ensure that those who have most benefited from open and free trade do not pull up the drawbridge behind them and deny the same benefits to others.

The strength of the Commonwealth

And here lies the strength of the Commonwealth. Our 52 member states include some of the largest and richest countries on earth, as well as some of the smallest and least developed. While our diversities might make a single trading model difficult, if we work together to communicate the benefits of free trade, while addressing the challenges of globalisation, then we have the opportunity to build a global economy that works for everyone.

This Commonwealth of Nations has the opportunity to lead the defence of free trade, working together to shape new policies and approaches, showing the world a route to prosperity that lies through partnership, not protectionism.

Our trade ministers’ meeting is the first step in realising this vision. Our joint discussions and bilateral meetings will be a foundation upon which to build. Every agreement that we reach and every barrier that can subsequently be removed will materially improve the lives of our peoples across the globe.

Indeed the Secretariat has also organised a summit next month, designed to help developing Commonwealth nations benefit from India’s global value chains, tapping into the diversification of their export markets and improvements to their supply chain capacity.

There is not only an economic but a moral dimension to our mission. Liberation from poverty and the sharing of prosperity are both achieved by the same policy of free and open trade in a liberal, rules-based system.

At a time when there are renewed threats to the achievements of recent years, we – some of the world’s oldest and most resilient friendships and partnerships – can provide the leadership that will guarantee the opportunities that the next generation deserve to have and with them our own prosperity and security.

We have seen, in our own time, what can be achieved by a free and open global economy with the support of our international partners.

Our diversity is our strength – we have much to learn from one another, and a vast wealth of experience, knowledge and talent to draw upon. We must leave no stone unturned and no challenge avoided on our quest to ensure that those who come after us are given every opportunity that we can leave to them, a world rich in prosperity, security and opportunity.

I cannot conceive that there is a more worthy challenge for us to face and conquer together.


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