The growing prospects for trade across the Commonwealth are becoming especially attractive and important

The growing prospects for trade across the Commonwealth are becoming especially attractive and important

When Commonwealth Trade Ministers met at Lancaster House in London recently – for the first time ever – there were those who questioned whether the gathering was worthwhile. The Commonwealth was not a trade bloc and surely never would be. What possible common trade interests, some asked, could giant India or Nigeria have with tiny Vanuatu or struggling Mozambique? And what was the UK’s economic interest in such a disparate grouping of 52 nations?

But the nay-sayers were missing a central and all-embracing point about the forces shaping international commerce and exchange in today’s world. What they were, and are, ignoring is that the nature of global trade has changed in the last decade: radically, fundamentally and disruptively, and it is still doing so – fast.

The spread of almost total and continuous connectivity and the plummeting cost of communications and information transfer inside global value chains has utterly altered the world trade pattern, producing a new wave of globalisation which demands new kinds of networks and pushes old trade bloc thinking into increasing irrelevance. In effect production has become largely internationalised, with the separate stages and processes being spread between different countries. Gone are the simple days when one country made a product and exported it to another.

McKinsey’s calculate that the soaring trade flows of data and information connecting up this transformed world of fragmented and dispersed production actually now generate more economic value than the whole of global goods trade – a crucial shift for an economy like the UK, with 80 percent of its GDP from services.

These are conditions in which like-minded countries, with minimum language and culture barriers, and maximum similarities in legal and commercial procedures, are bound to be the winners. By luck rather than by good judgment or planning, the modern Commonwealth network fits like a glove onto this new pattern and framework.

Add in the fact that over the last two decades or so there has been a staggering shift of almost 20 percent of world GNP away from the G7 and the West to a number of developing countries, brought about as companies have sourced out components and stages of their production processes to lower wage cost areas. Add, too, the colossally-expanded dominance of China trade in the supply chain nexus, as the One Belt, One Road programme opens up Central Asia, and it begins to be obvious just where trade strategies should be taking us – towards the closest possible ties with our friends, old and new, in Asia and Africa.

Of course the Commonwealth network is not the only beneficiary of this new trade landscape. But with English as the working language, with dozens of Commonwealth-wide professional links, its common legal systems, its shared values, its network of 530 universities operating within a linked system and its ferment of digital exchanges of deals and initiatives expanding daily, it cannot but be the ideal and superbly-fertilised seed bed in which both trade and investment of every sort are bound to flourish.

Two further trade enhancing prospects now open out. First, the Commonwealth network has a gateway role to the other major growth markets, notably China, where even now, for example, the Hong Kong connection remains invaluable.

Second, there is no reason why groups of nations within the Commonwealth should not form pluri-lateral free trade groupings, which others can join later. One such grouping – Australia, New Zealand, the UK (after Brexit) and Singapore – was put forward at the Trade Ministers’ gathering. Endless possibilities open out. Existing WTO rules not only permit but encourage this kind of trade agreement. The newly launched WTO Trade Facilitation Agreement offers still further encouragement and opportunities for open and free trade for everyone.

All this is what is bringing Commonwealth Trade Ministers together in a manner which would have been inconceivable a decade ago. Unsurprisingly, it is also attracting interest in the Commonwealth ‘club’ from a growing number of countries outside who would like to be associated with it in some way, one striking example, amongst several, being the Republic of Ireland.

Meanwhile, for the UK, the opportunities and prospects offered by expanding consumer markets in the larger Commonwealth countries are becoming especially attractive and important. Of course they are no substitute for continued access to the EU Single Market – which is available to all non-EU countries and which, contrary to much confused comment, will be fully available to the UK, although possibly with some special terms added.

The Head of the Commonwealth, Her Majesty The Queen, with more percipience than many of her Ministers, has described the modern Commonwealth as ‘in many ways the face of the future’.

The description, and the prediction, are both right and far-sighted. It could be said that while the recent London assembly of Trade Ministers, and the planned Commonwealth Summit to which it leads up next year, are about the future, the negotiations which are about to commence in Brussels to escape the clutches of the EU are about the past.

Quite soon all this may dawn on the policy experts and the commentariat – and show them where our real trade priorities now lie.