Intra-Commonwealth trade and productive greenfield investment is expected to reach US$1.6 trillion by 2020, in spite of the global trade slowdown caused by the 2008 financial crisis.
This rising share of intra-Commonwealth trade and investment underscores the growing significance of Commonwealth markets for member countries, according to a new report by the Commonwealth Secretariat.
Commonwealth Trade Review 2018, which will be published this month, says proactive policy measures such as improving trade facilitation or tackling non-tariff barriers could trigger even greater gains for member countries.
In 2017, cumulative intra-Commonwealth greenfield foreign direct investment was estimated at $700 billion, creating 1.4 million jobs through 10,000 projects. The Secretariat projects intra-Commonwealth greenfield investment - when a parent company establishes its operations in a foreign country - could reach $870 billion by 2020.
Trade among Commonwealth countries grew to just under $600 billion in 2016 and is expected to increase by at least 17 per cent to around $700 billion by 2020. Together, intra-Commonwealth trade and greenfield investment is expected to surpass $1.5 trillion.
“This is a remarkable indication of the power of Commonwealth connection and of the benefits that accrue to member countries as a result of Commonwealth Advantage, particularly with world trade only now emerging from the unprecedented slowdown triggered by the financial crisis a decade ago,” said Commonwealth Secretary-General Patricia Scotland.
She added: “With rising protectionist sentiments and a backlash against globalisation in many countries, the role of the Commonwealth becomes increasingly important as a positive influence for strengthening trade links across boundaries and building prosperity in which all can share.”
The review found that Commonwealth countries, overall, are less protectionist and tend to apply fewer harmful measures against fellow member countries.
On average, Commonwealth members enforce commercial contracts much faster, taking 20 per cent less time compared to the world average. “This finding is a significant selling point for boosting investor confidence in the Commonwealth,” the report’s authors said.
Their research also explores how Commonwealth members can harness new technologies, especially digitisation, to strengthen their domestic trade governance, further reducing costs and fostering new trade and investment.
The new research reinforces earlier studies into ‘Commonwealth Advantage’ by which Commonwealth members tend to trade 20 per cent more, save around 19 per cent in costs and generate 10 per cent more foreign direct investment inflows.
Secretary-General Scotland said: “Our trade review shows that economic and governance ties in the Commonwealth provide ready and robust foundation fabric from which collectively as a family of nations we can tailor a future that is fairer, more sustainable, more prosperous and more secure”.
The new research was prepared ahead of this month’s Commonwealth Heads of Government Meeting, taking place in London. Intra-Commonwealth trade and investment will be a major issue under discussion with member countries seeking to expand markets and increase growth.
Strengthening the Commonwealth Advantage: Trade, Technology, Governance will be officially launched on 11 April in London.