June 2019

Baroness Scotland, Secretary-General of the Commonwealth, explains how trade support is helping to bring truly inclusive and sustainable development to poorer Commonwealth countries

The Commonwealth is a diverse family of nations, including five G20 members and some of the world’s smallest and poorest countries. Fourteen of our members belong to the category of Least Developed Countries (LDCs). Today, these countries face a set of unparalleled global challenges with the potential to seriously undermine their development aspirations.

The rules-based global trading system, which has helped lift millions of people out of poverty, is at risk from rising protectionism and unilateralism. The recent widespread flooding in Malawi and Mozambique is a stark reminder that LDCs are extremely vulnerable to climate change, yet have the least adaptive capacity. And, as the world moves towards greater digitisation and a data-driven Fourth Industrial Revolution, it is imperative to close the global digital divide.

LDC export goals

The 47 LDCs are home to 12% of the world’s population, yet they account for less than 2% of world GDP and about 1% of global trade in goods. This presents a challenge to the global community with regard to the attainment of the United Nations Sustainable Development Goals (SDGs). As it has been for decades, the Commonwealth Secretariat continues to be at the forefront of advocacy on behalf of our least developed member countries for more inclusive and responsive international support measures, especially on trade.

The 2030 Agenda for Sustainable Development and the Istanbul Programme of Action for LDCs share the target of doubling the LDCs’ share of global trade by 2020. We are way off course to reach this target – it requires LDCs’ exports to increase by nearly 20% from current levels.

The structural transformation of LDC economies is a key challenge. Their exports tend to be concentrated in a narrow range of products; for some, minerals and commodities, for others, consumer goods. Poor economic infrastructure raises transport and logistics costs, which further impairs productive and trade capacities and competitiveness. The private sector is often underdeveloped and, where exporting does become feasible, smaller firms often lack access to vital trade financing facilities.

Supporting SDG achievement

If the LDCs are to achieve the SDGs, they need a global trading environment that supports and enhances their participation in world trade. A range of international support measures exist. For example, LDCs benefit from the non-reciprocal trade preference schemes of Canada, the EU (Everything but Arms status), Japan and the US, while China and India also offer duty-free treatment for a range of products. However, many LDCs struggle to take advantage of these opportunities because of the stringent standards (especially covering food safety and animal and plant health) and other regulations required to access these markets. While the World Trade Organization (WTO) has agreed to provide preferential treatment to LDC services and suppliers, this is not yet being effectively implemented.

The Commonwealth is supporting our LDC member countries in several ways:

  1. We are helping them expand and diversify their trade. In 2018, our Heads of Government adopted the Commonwealth Connectivity Agenda for Trade and Investment. They set the goal of expanding investment and boosting intra-Commonwealth trade to US$2trn by 2030.
  2. The Commonwealth Secretariat and the WTO Enhanced Integrated Framework (EIF) are working together to deliver more effective and targeted Aid for Trade to build LDCs’ productive and trading capacity, with priority given to women’s economic empowerment.
  3. The Commonwealth has called for rules-based global trade to be strengthened and protectionism to be resisted. According to one estimate, the loss of exports LDCs incurred as a result of protectionist measures between 2009 and 2013 was US$264bn. Removing remaining trade restrictions against LDCs would greatly improve their economic prospects.
  4. Sixteen LDCs are expected to graduate out of this category by 2024, including our members Bangladesh, Solomon Islands and Vanuatu. When LDCs graduate, they lose access to many support measures. The Commonwealth Secretariat, in collaboration with the WTO, EIF and the UN Conference on Trade and Development, is working to ensure that the transition process is smooth and does not exacerbate economic vulnerabilities.

To achieve the SDGs, innovative development approaches are needed that deliver peace, prosperity and sustainability. As home to a third of the world’s population, with many of the fastest-growing economies and half of the top 20 emerging cities globally, Commonwealth connection provides a blueprint for cooperation and pioneering action linking nations in every continent to tackle 21st-century challenges. From climate change and smart cities to harnessing the blue, green and digital economies, we offer both templates and practical experience for charting new pathways towards truly inclusive and sustainable development.

The Rt Hon Patricia Scotland QC is Secretary-General of the Commonwealth

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