Investment in infrastructure

Improving trade infrastructure – particularly roads, railways and port facilities – will help lower trading costs and boost trade within the Commonwealth, a new report says.

The report, ‘Trading on Commonwealth ties’, was launched on the eve of the 2007 Commonwealth Heads of Government Meeting held between 23-25 November in Kampala, Uganda. It says that investment in infrastructure will lead to growth of exports both within and outside the Commonwealth and also help Commonwealth countries to develop competitive manufacturing industries.

“If you look at the roads and rail networks in many African countries, for instance, you can see where the real barriers to trade lie. Our economic model shows that in a country like the host nation Uganda, a 10 per cent improvement in trade-related infrastructure would raise the volume of exports to other Commonwealth countries by about 62 per cent,” the report states.

The report, commissioned by the Commonwealth Secretariat’s Economic Affairs Division, was prepared by Professor Chris Milner, a Research Fellow at the Globalisation and Economic Policy Centre at the University of Nottingham, UK. It identifies a number of opportunities for stimulating trade within the Commonwealth, but warns against setting up a Free Trade Agreement across the member states.

Professor Milner says that while the idea of trying to build a Free Trade Agreement that covers the Commonwealth may hold enormous appeal, it is fraught with legal, administrative and political difficulties.

He notes that Commonwealth countries can still improve intra-trade between individual and regional groupings by negotiating fairer tariff deals to increase exports.

Intra-Commonwealth trade currently generates about US$225 billion a year in export trade for member countries, which is equivalent to about 16 per cent of Commonwealth countries’ total exports. This is a substantial volume of trading activity, but overall the bulk of Commonwealth countries’ trade is with countries outside of the Commonwealth. The report notes that for some countries, like Botswana, Namibia, Papua New Guinea and Samoa, intra-Commonwealth trade remains significant as it represents in excess of 70 per cent of their international trade.

Commonwealth Deputy Secretary-General Ransford Smith described the research as “a timely and significant study that examines trade within the Commonwealth, and provides possible directions for the future.”

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• Economics and Trade