Caribbean Trade Law and Development

Category: Barbados

  • WTO Nairobi Ministerial leaves Caribbean Small Vulnerable Economies Empty Handed

    Alicia Nicholls

    The ‘Nairobi Package’ has been hailed as having secured “an historic agreement on a series of trade initiatives”. Without doubt, the delegates of the WTO’s Tenth Ministerial held in December last year in Nairobi, Kenya sought to draw inspiration from the historic conclusion of the Paris Agreement on climate change at COP21 and to capitalise on the euphoria of the first WTO Ministerial on African soil to achieve consensus in the few areas where it was deemed to be possible. However, while there were a few mostly modest achievements, particularly for Least Developed Countries (LDCs), most Caribbean countries would be justified in opining that they came away from Nairobi with very little to show for their efforts.

    Issues for Caribbean SVEs

    Caribbean countries have been strong supporters of the multilateral trading system and of the Doha Development Round. As stated  by Senator Arnold J. Nicholson of Jamaica on behalf of the Caribbean Community (CARICOM) at the Ministerial’s Opening Plenary session, some of the key issues of importance to CARICOM going into Nairobi were:

    • Adoption of decisions relating to the G-90 proposals on Special and Differential treatment provisions including those related to small, vulnerable economies and least developed countries
    • Agricultural issues, including the Special Safeguard Mechanism, which was proposed by the G-33 in November, 2015
    • Fisheries Subsidies
    • Work Programme on Small Economies
    • Special measures for least developed countries

    So what did the Nairobi Ministerial achieve?

    Export Competition in Agriculture: Developed countries have committed to immediately eliminating their remaining scheduled farm export subsidies with some exceptions. It is the first major agricultural agreement to be concluded since the WTO came into being at the conclusion of the Uruguay Round two decades ago. Developing countries have been given until 2018 to eliminate their farm export subsidies and up to 2022 for certain products and groups of products. Least developed countries (LDCs) and the net food importing developing countries have a longer period. Additionally, the decision also includes disciplines on export policies to prevent their use as subsidies in disguise.

    LDC Package: Of benefit to Haiti as the only LDC within the Caribbean, the ‘LDC Package’ includes enhanced preferential rules of origin which build on those in the Bali package and a fifteen year extension of the waiver for preferential treatment of LDC service providers. Developed and developing country Members which have declared themselves in a position to do so have agreed to grant duty-free and quota-free market access for LDC cotton from January 1, 2016, to the extent provided for in their respective preferential trade arrangements. Developing country Members which have declared themselves not in a position to grant duty-free and quota-free market access for cotton produced and exported by LDCs are to consider the possibilities for increased import opportunities for LDC cotton from January 1, 2016. Developed countries are to immediately eliminate export subsidies on cotton, while developing countries have until January 1, 2017 to do so.

    Information Technology Agreement (ITA-II): In the biggest IT trade deal since the Information Technology Agreement was agreed to in 1996, 53 WTO members representing a mix of developed and developing countries (including Mauritius) agreed to eliminate tariffs on 201 information technology goods which account for a reported $1.3 trillion in trade.Tariffs on an estimated 65% of tariff lines will be fully eliminated by July 1 of this year, with the majority of the remaining tariff lines to be gradually phased out in four stages within three years. As the ITA-II was agreed on a Most Favoured Nation (MFN) basis, all WTO members will enjoy duty-free access for those covered goods to the markets of countries which have signed the Agreement.

    WTO Members also adopted the reaffirmed Work Programme on Small Economies. Additionally, two LDC countries, Liberia and Afghanistan, completed their accession negotiations. This shows that despite the stalemate in the multilateral negotiations states still view the WTO as having value.

    Unresolved Issues

    Despite these modest results, the Nairobi Declaration does leave many  issues unresolved and it would not be unfair to say that the Caribbean SVEs left the Ministerial largely empty handed. To date the services negotiations, a key area for the services-dependent economies of the Caribbean, remain deadlocked. No decision was made at Nairobi on the G-90 proposals on special and differential treatment.

    Fisheries Subsidies and IUU: Disappointingly, no agreement was reached on the pressing issue of fisheries subsidies which have led to over-fishing, or on the issue of illegal, unreported and unregulated fishing (IUU). These practices, which serve to shrink already rapidly depleting fish stocks, pose serious threats to coastal states’ food security, employment, income generation and the stability of their rural communities. By extension, they will have consequences for SVEs achievement of the Sustainable Development Goals (SDGs) and their targets.

    SSM & Public Stockholding: Even where decisions were taken, they remain subject to further negotiation. It was agreed that developing countries have the right to an SSM by which they will temporarily be able to increase tariffs in response to import surges. However, the actual details of this mechanism remain to be determined in subsequent negotiations. On the issue of public stockholding, WTO members are no closer to a permanent solution.

    SVEs have also expressed their disillusion with the lack of consideration given to many of their proposals, including the proposal for a development package for Nairobi which had been tabled by the ACP countries.

    Uncertain Future for Doha 

    Critically and most telling, WTO members have been unable to reach any consensus on the future of the Doha Round. This lack of agreement was unprecedentedly mentioned in the Nairobi Ministerial Declaration.

    After fourteen years of negotiations and limited progress to show outside of the Trade Facilitation Agreement concluded at Bali, developed countries have called for Doha to be euthanised.  In a letter penned in the Financial Times , the United States Trade Representative, Michael Froman, strongly stated that “Doha was designed in a different era, for a different era, and much has changed since’. He further asserted that “[f]reeing ourselves from the strictures of Doha would also allow us to explore emerging trade issues”.

    On the contrary, most developing countries, including Caribbean countries, have been vocal in their opposition to any attempt to jettison the Doha Round. Barbados’ representative, the Hon Senator Maxine McClean, in her statement on behalf of the ACP at the Opening Plenary summed up the importance of the Doha Round to Barbados as follows:

    “Barbados places great store in the Doha Development Agenda, as it recognises that need to narrow inequalities in the share of trade between developed countries and in particular the small and the vulnerable economies.”

    While WTO members have committed in the Nairobi Declaration to continuing negotiations on the remaining issues under the Doha Round, the future for the Doha mandate does not look bright, especially since the USTR has already pronounced the Round dead.

    The Question of Emerging Issues

    Another unresolved issue relates to expanding the sphere of negotiations to include emerging trade issues in light of the changing contours of global trade. There is some merit to this view put forward by developed countries. Trade disciplines which were negotiated twenty years ago cannot adequately regulate all of the newer complexities of twenty-first century global trade. Some of the new areas proposed include the long mooted “Singapore issues” of investment, competition policy and transparency in government procurement, as well as newer areas like e-commerce, global value chains, environment and labour.

    This suggestion has been forcefully resisted by developing countries which argue that their limited capacity to engage in negotiations on these new areas puts them at an inherent disadvantage, and instead favour the conclusion of the Doha Round before any new issues are added. Paragraph 34 of the Nairobi Declaration takes this disagreement into account by mandating that any agreement to launch negotiations on new issues must be agreed to by all.

    What next?

    As negotiators resume their work in Geneva on the remaining Doha issues, WTO members will have to decide on the future of the Doha Round. Progress will likely continue on the plurilateral agreements, such as the Environmental Goods Agreement and Trade in Services Agreement. In regards to the issue of regional trade agreements, WTO members have committed to making the provisional Transparency Mechanism a permanent one as was decided by the General Council in 2006. Progress on more contentious issues such as non-agricultural market access (NAMA), anti-dumping, domestic support measures and services will likely to be slower.

    Two points must be noted. Firstly, whether members decide to jettison the Doha Round or adopt a new mandate, the development element must be central to all negotiations. Secondly, the polarisation between developed countries and the majority of developing countries, coupled with the increased heterogeneity of the WTO’s membership, continue to be impediments to any substantive progress. The only way for the stalemate to be broken will be by serious compromise but without jeopardising the development prospects and interests of developing countries.

    Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

  • 2015 Year in Review for Caribbean Region: Triumph, Tragedy and Hope

    Alicia Nicholls

    2015 has been a year of both triumph and tragedy for the countries which make up the Caribbean region. This article reviews some of the major political, diplomatic and socio-economic challenges and gains experienced by the Region in 2015, many of which would have been covered on this blog throughout the year. It also speaks to the prospects for 2016.

    Political/Diplomatic issues

    General elections led to changes of government in St. Kitts & Nevis, Guyana and Trinidad & Tobago, while voters in the British Virgin Islands, Belize and St. Vincent and the Grenadines bestowed the incumbent governments with a fresh mandate.  In October Haiti held its first round of presidential elections, as well as local elections and the second round of legislative elections. The second round of presidential voting which was slated to occur on December 27, was postponed indefinitely in December.

    On the international stage, the election of Prime Minister Justin Trudeau in Canada was widely welcomed in the Caribbean Region as possibly heralding a new era in Caribbean-Canadian relations. However, the electoral defeat of President Nicolas Maduro’s United Socialist Party of Venezuela (PSUV) in the Venezuelan legislative elections in December has caused concern in the Caribbean about the future of Petrocaribe, a legacy of the late President Hugo Chavez under which Venezuela provides oil to participant Caribbean States on preferential terms.

    In international diplomacy, the Region had two major triumphs. The first was the historic election of Dominica-born Baroness Patricia Scotland as the first female Secretary-General of the Commonwealth of Nations.  The second was the conclusion by 196 parties of an international climate change agreement in Paris, which though not perfect, paid consideration to the interests and needs of small states.

    The catastrophic human and economic devastation inflicted by Tropical Storm Erika in Dominica in August and Hurricane Joaquin in the Bahamas in September-October, and the prolonged drought and water shortages being experienced across the Region are sharp reminders that climate change is an existential threat to the Region’s survival. Access to climate change finance will be critical in financing Caribbean countries’ mitigation and adaptation strategies. Despite the triumph of small states at Paris, this is only just the beginning and a major hurdle will be the ratification of the Agreement by all parties, critically the US.

    Caribbean low tax jurisdictions’ battle against the tax haven smear made by metropolitan countries continued in 2015 after several Caribbean countries were included in blacklists by the European Union and the District of Columbia. At the 8th meeting of the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes held in Barbados in October, there was acknowledgement made that the Global Forum was the “key global body competent to assess jurisdictions as regards their cooperation on matters of transparency and exchange of information for tax purposes”. However, the fight is not over.

    On the international front, the border disputes between Guyana and Venezuela and Belize and Guatemala remain unresolved.  The Guyana-Venezuela dispute came to a boiling point after the announcement that Exxon Mobil Corp had discovered large oil and gas deposits in waters of the disputed region pursuant to a contract made with the Government of Guyana. While CARICOM countries have pledged their support of Guyana’s sovereignty, Venezuela’s more aggressive diplomatic engagement of the region in recent months has raised questions about where CARICOM states’ loyalties will truly reside; with a fellow CARICOM state or with a major financier. To further complicate matters, Suriname, a fellow CARICOM State, has restated its claim to a portion of Guyana’s territory. Indeed, the expeditious and peaceful settlement of both disputes will be important for the economic future of Guyana.

    While the US embargo of Cuba remains despite an overwhelming United Nations vote (191 to 2) yet again in favour of ending it, the United States and Cuba made significant advancements in 2015 in the quest towards “normalization” of relations. These included the easing of several travel and trade restrictions, the mutual re-opening of embassies in August and the announcement in December of an agreement to resume commercial flights between Cuba and US for the first time in more than half a century. The future resumption of air links between Cuba and the US is a welcomed development and instead of simply fearing the impact this will have on their US arrivals, Caribbean States should see this as an impetus to increase their marketing efforts in the US market and to improve the competitiveness of their tourism product.

    Socio-economic issues

    Lower oil and commodities prices have had a mixed impact on the region. They have been a blessing for services-based, import-dependent Caribbean countries struggling to overcome the lingering effects of the global economic crisis on their economies by slightly reducing their import bills and narrowing their current account deficits somewhat. For commodities exporting Caribbean states, however, the impact has been negative. Low oil prices have had a deleterious impact on the Trinidad & Tobago economy which is dependent on the export of oil and petrochemicals and was recently confirmed to be in recession after four consecutive quarters of negative growth.

    The tourism industry, the lead economic driver for most Caribbean countries, saw a strong rebound in 2015 with several Caribbean countries, including Barbados, registering record long-stay and cruise ship arrivals, buoyed by increased airlift and cruise callings and stronger demand from major source markets and lower fuel prices.

    However, the Caribbean continues to confront an uncertain global trade and economic climate. As recently as December, Managing Director of the International Monetary Fund (IMF), Christine Lagarde, was quoted as stating that global growth for 2016 will be “disappointing” and “uneven”. Another arena Caribbean countries must watch is the troubled Canadian economy and the depreciation of the Canadian dollar as Canada is one of the major tourism source markets for Caribbean countries and an important market for Caribbean exports.

    According to an Inter-American Development Bank (IDB) report released in December, Caribbean exports are estimated to decline 23% in 2015, with Trinidad & Tobago accounting for the bulk of the decline. A bright spark is that St. Lucia, Grenada and Guyana signed on to the World Trade Organisation (WTO)’s Trade Facilitation Agreement, joining Trinidad & Tobago and Belize. The on-going reforms being made by these countries pursuant to the Trade Facilitation Agreement should help facilitate and increase the flow of trade in these countries. Barbados, Guyana and Haiti underwent their WTO trade policy reviews in 2015.

    The Caribbean region continues to be one of the most indebted regions in the world. Aside from high debt to GDP ratios, several Caribbean countries continue to face high fiscal deficits, wide current account deficits and sluggish GDP growth. Regional governments will have to continue measures to lower their debt, broaden their exports and lower their import bills.

    In September, the world agreed to the 2030 agenda for sustainable development in the form of the 17 ambitious sustainable development goals and their 169 targets. A critical factor for achieving these goals will be access to financing for development. Caribbean countries already face several challenges in accessing development finance owing to declining inflows of official development assistance, unpredictable foreign direct investment inflows and limited access to concessionary loans due to their high GDI per capita. Caribbean States should continue to vocalize their objection to the use of GNI/GDP per capita as the sole criterion for determining a country’s eligibility for concessionary loans.

    The alarming rise in crime across the Region remains an issue which Caribbean countries must tackle with alacrity not just for the safety of their nationals but for the preservation of the Region’s reputation as a safe haven in a world increasingly overshadowed by terrorist threats. 2015 was a year marked by an escalation in terrorism, with deadly attacks in Egypt, Kenya, Paris and Beirut capturing international headlines. Moreover, the news of recruitment of some Caribbean nationals by ISIL (Daesh as ISIL calls itself in Arabic) is an issue which Caribbean States must confront.

    The growing threat of terrorism has caused some concern about the security and robustness of the Economic Citizenship Programmes offered by some Caribbean countries. St. Kitts & Nevis revamped its programme and in light of the Paris attacks, the Kittitian Government announced in December that Syrian nationals will be immediately suspended from its programme. However, the fact that St. Lucia has forged ahead with the establishment of its own programme, accepting applications from January 1st 2016, shows that some regional governments strongly believe the gains outweigh any potential risks.

    High unemployment and youth unemployment rates continue to be major social issues threatening the sustainability of the Region, with consequential implications for crime and poverty reduction and political engagement.

    Prospects for 2016

    Without doubt there are several issues and challenges which confronted the Region in 2015 and will continue to do so in 2016. Moreover, since the “pause” taken years ago, CARICOM continues to face the threat of regional stagnation and fragmentation. While Dominica must be applauded for signing on the appellate jurisdiction of the Caribbean Court of Justice, it is only the fourth out of fifteen  CARICOM States to have done so nearly fifteen years after the Court’s establishment.

    However, in spite of these challenges the Caribbean Region has several factors still going in its favour, including high levels of human development, well-educated populations, political stability and a large diaspora. These are factors which it should continue to leverage but should not take for granted. No doubt a critical success factor will be the ability of regional governments, individually and together, to formulate effective and innovative solutions to the challenges faced, working towards the achievement of the SDGs, and their ability to mobilize domestic and international resources to finance these solutions. Let us also hope that 2016 will be the year where there will be a greater emphasis on increasing the pace of implementation of the Community Strategic Plan 2015-2019. The unity displayed by CARICOM during the Paris negotiations should be a reminder that the Caribbean is at its strongest when united.

    Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. Please note that the views expressed in this article are solely hers. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

  • A sustainable future for SIDS necessitates an ambitious outcome at COP21

    Alicia Nicholls

    Over the next two weeks (November 30 to December 11), leaders and delegates from over 190 countries are gathered in Paris, France for the 21st Conference of the Parties (COP21) of the United Nations Framework Convention on Climate Change (UNFCCC), with the aim of achieving a legally binding multilateral agreement on climate change.

    For small island developing states (SIDS), which are already suffering the adverse effects of climate change, the stakes are particularly high. The importance of climate change to the post 2015 development agenda has been reflected by its inclusion as Goal 13 of the Sustainable Development Goals. Failure to act on climate change has implications not just for the economies, societies and survival of SIDS, but will undermine their achievement of many of the sustainable development goals, including poverty reduction.

    Vulnerabilities

    SIDS are not the only countries affected by climate change. However, while combined their contribution to global greenhouse gas (GHG) emissions is minuscule, they are among the most vulnerable to the adverse manifestations of climate change. The geographical vulnerabilities of small states, such as their geographic location, small land masses, concentration of human settlements and major infrastructure along coastal and low-lying areas and dependence on limited industries, enhance their vulnerabilities to rising sea levels, ocean acidification, coral bleaching, more frequent and destructive weather events and changing precipitation patterns.

    Several SIDS, including those of the Caribbean Community (CARICOM), are already experiencing beach erosion, more devastating hurricanes, flooding and longer droughts. The situation is even direr in lowlying islands and atolls in the Pacific like Kiribati which face displacement of coastal communities because of rising sea levels.

    Sustainable Development Goals and Climate Change

    Addressing climate change has been made part of the post-2015 development agenda. SDG 13 mandates states to take urgent action to combat climate change and its impacts. The targets under goal 13 include strengthening resilience and adaptative capacity to climate-related hazards and natural disasters, integrating climate change measures in policy frameworks, improving education and awareness, promoting mechanisms for raising capacity for effective climate change planning in LDCs and SIDS and implementing developed countries’ commitment of mobilizing jointly $100 billion annually by 2020 to address the needs of developing countries.

    Climate change poses not only an existential threat to SIDS but also to their ability to meet sustainable development goals. Longer droughts as a result of changing precipitation patterns diminish crop yields and hurt livestock which in turn diminish the livelihoods of farmers and the families which depend on small plots of land for income and food. Low agricultural yields means reduced food production which has an impact on nutrition and food security, with implications for the achievement of SDG 2 – zero hunger. For subsistence farmers, income from surplus yields is used to finance household expenses and education of children. Loss of homes and livelihood from cyclones, droughts and floods has an impact on the eradication of poverty (SDG 1 – no poverty). In many poorer countries, women make up the majority of small farmers and are the ones required to fetch water for their families, highlighting the gendered impact of climate change which affects the achievement of SDG 5 – gender equality.

    The oceans are the lifeblood of SIDS, whether through fisheries or as part of their tourism product. Ocean acidification due to oceanic uptake of CO2, warming seas and coral bleaching cause fish to migrate to more favourable waters resulting in lower fish yields and loss of aquatic biodiversity (SDG 14 – life below water). This in turn leads to loss of income for fishermen, glass bottom boat operators and entire coastal communities which depend on marine biodiversity and fish catches for food and income, again with implications for poverty reduction (SDG 1). Another alarming aspect of climate change is saltwater intrusion into freshwater aquifers which limits the availability of fresh water for human consumption, farming and other economic activities and will undermine the achievement of SDG6 – clean water and sanitation.

    Speaking of the achievement of SDG9 – industry, innovation and infrastructure, the major economic drivers in SIDS tend to be tourism, agriculture, fisheries, which are climate sensitive industries. In Grenada an entire nutmeg harvest was devastated by Hurricane Ivan in 2005. Major infrastructure in many islands, such as hotels, road networks, electrical power plants and such, are concentrated along coastal areas which can become inundated by rising sea levels and destroyed by hurricanes.  Destruction or damage of these ports of entry impact on their ability to receive tourists, which is crippling for economies dependent on tourism.

    Aside from these impacts on economic growth and sustainability, infrastructure and livelihood, the loss of human life is one of the greatest threats. One only needs to consider the devastation by Tropical Storm Erika in Dominica and the loss of life to see that the impact is indeed real. According to the Rapid Damage and Impact Assessment, the damage and loss has been estimated at US $483 million which is equivalent to 90 percent of Dominica’s GDP.

    The scale of the problem

    Climate change has been one foreign policy area on which CARICOM countries have been steadfastly united. They have participated keenly in climate change negotiations and have submitted their intended nationally determined contributions (INDCs) setting out their post-2020 country commitments. A taskforce on climate change was also established.

    Previous attempts by the global community to achieve an internationally accepted binding agreement for the reduction of GHG emissions have left a lot to be desired. The Kyoto Protocol, adopted in Kyoto, Japan in 1997 and entered in force in 2005, is the first multilateral treaty requiring countries to cut their GHG emissions. However, the US, currently the second largest  emiter, never ratified the Agreement and China  (currently the largest emiter) and India, were exempted from the emission cuts because they were not major emiters during the period of industrialisation. Moreover, the emission cut targets of 5.2% under Kyoto are not enough.

    The inertia of the world’s major emiters on substantially cutting emissions and on achieving an ambitious binding agreement so far on climate change has had devastating consequences. The World Meteorological Organisation reported that concentrations of carbon dioxide increased at their fastest rate for 30 years in 2013. Moreover, a World Bank scientific report published in 2012 found that the world is heading towards a temperature increase of 4 degrees celsius by the turn of the century if current emission levels remain. A recent report by the IPCC further reiterated this. Such an increase would be catastrophic for SIDS.

    The current global position for emissions reduction is for limiting temperature increase to no more than 2 degrees above pre-industrial levels. However, any long term temperature increase by 1.5 degrees Celsius over pre-industrial levels will have a devastating impact on SIDS. As such, countries of the Alliance of Small Island States (AOSIS), including CARICOM, have been pushing the “1.5 to Stay Alive” campaign to raise awareness and support for cuts which will limit the increase to no more than 1.5 degrees.

    Moreover, the current level of actual financing provided by developed nations to meet the adaptation needs of small states has been woefully inadequate.

    CARICOM negotiating position

    The Rt. Hon Dr. Kenny Anthony, Prime Minister of St. Lucia, has lead responsibility for climate change for CARICOM.

    In a press conference given by Dr. Anthony, CARICOM’s negotiating position was articulated. It re-emphasises the position taken in the Community’s  Declaration for Climate Action issued pursuant to regular meeting of CARICOM Heads of Government in Barbados in July of this year. As stated by Dr. Anthony, CARICOM is advocating for:

    the retention of the principal of special circumstances and unique vulnerability of SIDS;

    five-year review cycles of green house gas emission reduction targets with the first review to take place prior to 2020, to allow for the adjustments necessary to achieve the goal of 1.5 degrees;

    recognition of loss and damage (the irreversible, slow onset impacts of climate change to which it is not possible to adapt, example sea-level rise and ocean acidification) as a critical issue for SIDS and the development of a mechanism to address this element, treated separately from adaptation;

    support for REDD+ (efforts to reduce emissions from deforestation and forest degradation and the sustainable management of forests);

    adequate provisions for adaptation to help Caribbean countries reduce their vulnerability to effects of climate change and develop great climate resilience where possible; and

    commitment by developed countries to take the lead in scaling up the provision of adequate, predictable and new sources of financing for mitigation, adaptation, loss and damage, and for technology support.

    The threat of climate change to the livelihoods, economies and very existence of SIDS cannot be understated. World leaders in their various statementsleading up to the conference have all recognised that COP 21 represents a critical development juncture where adaptative and corrective action can still be taken towards charting a new course towards a climate friendly sustainable future. However the window of opportunity for avoiding an environmentally catastrophic global temperature increase of 4 degrees Celsius is closing.

    A comprehensive, legally binding agreement with ambitious and substantive commitments on emissions reductions to reduce the global temperature increase to no more than 1.5 degrees over pre-industrial levels, which provides binding commitments for technology transfer, capacity building and adequate financial support for adaptation of SIDS and other vulnerable countries and communities to climate change and which recognises the vulnerability and differentiated responsibility of small states and LDCs will help reverse this. The hope of SIDS for a sustainable future depends on what action or inaction world leaders take over the next few days.

    Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. Please note that the views expressed in this article are solely hers. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

  • Intra-Commonwealth trade projected to increase to $1 trillion by 2020

    This week the Commonwealth of Nations released its Commonwealth Trade Review 2015 entitled “The Commonwealth in the Unfolding Global Trade Landscape: Prospects Priorities Perspectives”. The report which was released ahead of the Commonwealth Heads of Government meeting in Malta this week details the trade performance and trends in the 53-state voluntary grouping and discusses prospects for future intra-Commonwealth trade. The Commonwealth comprises a diverse set of countries, most of which are former British colonies. It includes developing and developed countries, as well as small states and land locked states.

    Though not a trading bloc, trade amongst Commonwealth states is already substantial and growing. Intra-Commonwealth trade has grown almost 10% annually since 1995 and was estimated at $592 billion in 2013. It is projected to reach over 1 trillion in 2020.The report emphasises that there is scope for more intra- Commonwealth trade due to the historical ties, shared values, long established trade, familiar administrative and legal systems, use of the English language mostly and strong diasporic communities.

    Commonwealth Trade

    Some key points from the report:

    • Total combined Commonwealth exports of goods and services were $3.41 trillion in 2013 and accounted for 14.6% of global exports in that year.
    • Developing Commonwealth states increased their share of Commonwealth exports from 36% in 2000 to over 50% in 2013. This expanded share was attributed mainly to Asian countries which comprise 4/5 of total Commonwealth developing country exports in 2013.
    • Merchandise exports comprised 76% of all Commonwealth exports while the remaining 24% is services exports

    Commonwealth Caribbean Trade

    Caribbean states, along with Pacific states, comprise the majority of small states in the Commonwealth. The report reveals that:

    • Total Commonwealth Caribbean exports in 2013 comprised only 1.14% of total Commonwealth exports of goods and services and 2.25% of total Commonwealth developing country exports of goods and services.
    • Commonwealth Caribbean exports have grown from 14 billion in 2000 to 39.1 billion in 2013 and are forecasted to reach 41.2 billion in 2015.
    • Trinidad & Tobago accounted for 60% of all Commonwealth Caribbean goods and services exports in 2013, with its total exports of goods and services reaching 24.7 billion in 2013. The other top Commonwealth Caribbean exporters were Jamaica, the Bahamas and Barbados.
    • Intra-Caribbean exports account for 55 per cent of Caribbean members’ intra-Commonwealth exports, while developed countries accounted for 40% and developing countries was 25% in 2013.
    • Services accounted for 60% of Commonwealth Caribbean countries’ exports in 2013 and were dominated mainly travel trade, followed by transport and other business services.

    Other major points made in the report:

    • Commonwealth small states’ share in world trade has declined from over 0.7% in 1980 to just 0.46% in 2011, with loss of preferences being a major factor. Small states are also faced with declining export orientation of their economies; export GDP ratio of small states has fallen while it has risen globally. This is compounded by the numerous competitiveness challenges small states face, including their small domestic markets, unfavourable geographical location.
    • China has grown as a major trading partner in the Commonwealth, with Commonwealth States exports to China increasing from 19 billion in 2000 to 268 trillion in 2013, while Commonwealth states’ imports from China have grown from $16 billion in 2000 to $359 in 2013.
    • The report also mentions the many opportunities which exist within the Commonwealth for enhancing trade and suggests ways in which developing countries can improve their trade performance. These include through the use of trade preferences, aid for trade, addressing the implementation gap, promoting the role of private sector and the global trade support architecture.

    The full report is available on the official website of the Commonwealth here.