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Global uncertainties and tensions are escalating and affecting trade in every region.
Global uncertainties and tensions are escalating and affecting trade in every region.

Commerce: There is hope for easing trade tensions

ECONOMIC NEWS

By Patricia Scotland - Oct 9th, 16:13

Global uncertainties and tensions are escalating and affecting trade in every region.  

We see rising protectionism, while multilateral co-operation – including through the World Trade Organisation (WTO) – is increasingly under threat.

The resilience of many smaller or less developed countries is being undermined by the impact of climate change and extreme weather unprecedented in living memory, together with other natural disasters.

These factors combine to make the general outlook for economic growth and prosperity sombre. Yet through the encompassing gloom, Commonwealth connection and co-operation shine as beacons of hope guiding towards safer and saner waters.

This year, world gross domestic product (GDP) is projected to grow 2.6 percent, down from 2.9 percent last year, while world merchandise trade volumes are now expected to rise by only 1.2 percent this year, the weakest growth since the global financial crisis.

South Africans are experiencing the effects of these trends in their day-to-day lives as the price of food, fuel, and basic services rise, jobs become harder to find and there is reduced potential for businesses to grow.

This week in London, the UK chairs a meeting of trade ministers from the 53 Commonwealth countries. They will consider approaches for tackling pressures on international trade and for making even more of the Commonwealth Advantage enjoyed by member countries.

Ministers will also review progress towards the target agreed by heads of government at CHOGM 2018 for annual trade within the Commonwealth to be worth at least $2 trillion (R30trln) by 2030, a goal closely linked to achieving the UN Sustainable Development Goals.

The challenges may seem daunting, but our governments know that through co-ordination and with the right policies the prizes are within reach. Studies have shown that on average Commonwealth members tend to trade 20 percent more with each other than with non-Commonwealth countries. This valuable tendency is an important factor in Commonwealth Advantage.

As a result, trade costs are on average 19 percent lower between Commonwealth countries than non-Commonwealth counterparts, and member states also invest on average 10 percent more in each other than in non-members.

Intra-Commonwealth trade in goods has increased by about $100 billion in the past three years, reaching almost $450bn last year. With rapid population and per capita income growth in developing countries, especially in Asia, trade in goods and services is tipped to hit the $700bn mark by next year. With more than 60 percent of the combined Commonwealth population of 2.4 billion under the age of 30, these drivers of growth are unlikely to slow for some time.

The digital economy holds more untapped opportunities, with the number of internet users globally trebling in the past decade. In low-income Commonwealth countries only 18 percent of the population have internet access, compared with 85 percent in high-income countries. So the economic case for tackling the digital divide is persuasive: full access to the internet could add up to $1trln to combined Commonwealth GDP.

With 49 of our members belonging to the WTO, the Commonwealth can play an increasingly strategic role as a champion of free trade.

While the global trading system may be far from perfect, it is the most potent pathway towards eradicating poverty. That is a prize not to be lost.IOL 

Read more about: trade | industries | economy | commerce

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