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Ask the Expert: Unlocking trade opportunities in the Commonwealth

24 August 2018
The ‘Ask The Expert’ series features some of the leading specialists who work at the Commonwealth Secretariat in various areas. In this first edition, Sujeevan Perera, Adviser & Acting Head of the Trade Competitiveness Section at the Commonwealth Secretariat, shares insights into how the Commonwealth is working to maximise trade between its members and with the world

1. At the Commonwealth Heads of Government Meeting (CHOGM) 2018, leaders committed themselves to the vision of increasing intra-Commonwealth trade to US$2 Trillion by 2030. Given the current trends in multilateral trade, how can this ambition be realised?

The global economy is increasingly threatened by a prevalence of protectionist trade measures, a surge in anti-trade rhetoric, and a continuing slowdown in global growth. CHOGM provided a timely opportunity to demonstrate the Commonwealth’s ability to respond to these global economic challenges and set the shape and pace of global trade policy.

The Declaration on the Commonwealth Connectivity Agenda for Trade and Investment was launched to affirm the role the Commonwealth can play in supporting global growth, creating employment, the sharing of best practices and learning and promoting development among its members.

This Agenda will be guided by the principles: co-operation should be pragmatic and practical, leading to credible results; take into account regional integration initiatives; take into account the needs of small and vulnerable economies and least developed countries; avoid duplication with initiatives where other organisations are already working; add value in areas of engagement; and adopt a progressive approach towards a long term vision for closer trade and investment ties.

It should also recognise the vital role of the private sector in delivering the 2030 Agenda and facilitating the promotion of the blue and green economy.

In pursuing the Connectivity Agenda, member countries will structure dialogue around five clusters (Physical, Digital, Regulatory, Business-to-Business and Supply Side Connectivity).

2. What sorts of challenges do Commonwealth developing countries face in trying to increase the benefits they get from trade?

The new global competitiveness is the ability of governments and businesses to effectively implement policies, plans and strategies which consequently improve productivity and raise living standards. In this context, a stable, market friendly environment is a key tool for achieving inclusive development.

In other words, to be competitive in trade, countries need a stable market environment and well-conceived policies and regulations, well-functioning institutions that are cost effective and widely accessible, as well as the appropriate mechanisms to track or resolve issues.

Yet, the majority of member countries lack the expertise in key government ministries on how to design and implement enabling environment policy frameworks. The policy, regulatory and institutional framework in many Commonwealth developing countries still lags behind the demands of a vibrant internationalised private sector.

For example, many countries lack a national framework to guide coordinated planning and support for export development and diversification, investment facilitation, expanding trade in services, implementing obligations under international agreements such as the WTO Trade Facilitation Agreement and providing effective access to finance for MSMEs (micro, small and medium enterprises) and this makes sustained improvement in export performance difficult if not impossible to achieve.

3. How does the work you and your team do help to address these challenges?

CHOGM recognised international trade and investment as an engine for generating inclusive and participative economic growth and a means to deliver the 2030 Agenda for Sustainable Development.

The Trade Competitiveness section supports member countries in expanding their trade through:

  1. Improving market access
  2. Supporting trade facilitation initiatives
  3. Facilitating investments
  4. Supporting trade in services
  5. Support member countries in designing national trade programmes

We also help countries to access finance for MSMEs through the Commonwealth Small States Trade Finance Facility, and enhance the participation of MSMEs, including women and young people, in global trade

Increasing member countries’ access to existing and emerging markets requires identifying barriers to market entry and developing strategies which address the barriers constraining export development. A lack of technical capacity and financial resources has been an obstacle to developing the required expertise for many member states.

Furthermore, poor understanding of the barriers MSME exporters and producers face in accessing the inputs and services to develop business, has acted as a constraint to developing well-targeted interventions which will enable them to increase their productivity and compete better in international markets.

A few examples of how the Trade Competitiveness Section has supported member countries include developing a maritime hub strategy and framework for Jamaica, boosting Sierra Leone’s export competitiveness through improved product packaging, and building the capacity of Sri Lanka’s export credit insurance industry. Our experts also supported the Common Market for Eastern and Southern Africa (COMESA) to set up a regional design studio to overcome the supply side constraint of limited designing capacity.

4. How can Commonwealth countries exploit the so-called “Commonwealth trade advantage”, i.e. the fact that if you trade within the Commonwealth, exporting from one member to another, it is approximately 19% cheaper to do so than it would be outside? What do you do to help them?

Commonwealth members enjoy a formidable trade advantage without any formal collaboration, facilitated by historical ties, familiar administrative and legal systems, and the use of largely one language. Intra-Commonwealth trade as a proportion of global trade is rising and is now 20 per cent of Commonwealth countries’ total trade with the world. This underlines the growing significance of Commonwealth markets for many member countries.

Greater digitisation in the Commonwealth can improve the prospects for trade-led sustainable development in many member countries, especially if measures are taken to address the gender disparity in digital access and connectivity.

To enhance the Commonwealth advantage, we provide assistance to member countries in expanding ICT capabilities, identifying areas for developing their national digital economies, improving their regulatory framework and building digital infrastructure, inter alia through capacity building and promoting investments, to enable all members to take advantage of the opportunities presented by digital trade (for examples, the development of an E-Commerce strategy for Cameroon).

We also help countries to understand various regulatory regimes, increasing the ease of doing business, promoting good regulatory practice. For example, we recently helped to develop a Mutual Recognition Agreement for accounting professionals in the East African Community.   

More about the Trade Competitiveness Section of the Commonwealth Secretariat

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