Commonwealth members enjoy up to 50 per cent trade advantage

A Commonwealth country’s trade with another member is likely to be a third to a half more than with a non-member, even after taking into account other possible contributory factors such as proximity, level of development and language, according to new research published today by the Royal Commonwealth Society (RCS).

The research also reveals that, over the last two decades, the importance of Commonwealth members to each other as sources of imports and destinations for exports has grown by around a quarter and third respectively.

“The Commonwealth may be best known for its Games, but it seems to be delivering some serious Gains on the trade front,” said Dr Danny Sriskandarajah, Director of the RCS. “Though founded on shared political bonds, the Commonwealth’s future may lie in promoting economic ties.”

These findings were announced by Dr Sriskandarajah at a seminar taking place at the Commonwealth Secretariat’s headquarters in London on 30 September. This event was organised by The Worshipful Company of World Traders and the Institute of Directors City of London Branch.

Speaking at the opening of this event, Commonwealth Secretary-General Kamalesh Sharma said: “It is perhaps in the field of trade that our country-to-country links can most obviously be manifested and where we – as a community – can be more dynamic. Our newest member, Rwanda, said as much: it was its eye on new trade opportunities which is a key reason why it sought Commonwealth membership.”

Also speaking at the event was Lord Howell of Guildford, Minister of State at the UK’s Foreign and Commonwealth Office. Lord Howell said: “In a changed international landscape the Commonwealth can be the face of the future and a platform for the 21st century."

“It is easier to invent, mobilise capital and build trade opportunities within the Commonwealth because of the many shared advantages. Studies have also shown there is a Commonwealth premium when member nations trade with one another. The Commonwealth network is a wonderful template for doing business.”

Other key findings in the RCS report, ‘Trading Place – The Commonwealth Effect revisited’, include:

- Between them, Commonwealth countries traded around US$4 trillion worth of goods in 2008.

- Intra-Commonwealth trade accounts for about one-sixth of total Commonwealth members’ trade, with an average for each member of around one-third.

- The share of intra-Commonwealth trade has grown steadily from around 12 per cent in 1990 to around 16 per cent in 2008.

- The Commonwealth dominates trade in some countries; for example more than four-fifths of Botswana’s and Namibia’s imports come from other Commonwealth countries; and more than 90 per cent of the exports from St Vincent and the Grenadines and Samoa go to other Commonwealth countries.

- The value of trade between pairs of Commonwealth member states is between 38 and 50 per cent higher than between pairs of countries where one or both are not Commonwealth members, controlling for other factors.

In addition to this new research, those attending the seminar also heard a proposal for establishing a Commonwealth Development Bank.

“The initial concept of the Bank is to provide something that is uniquely Commonwealth, and which will be worthy of meaningful support from throughout the Commonwealth, with the well established countries working with the developing countries in productive partnerships to encourage development and economic activity,” Subbir Sikder, founder of The London Bank, said. The London Bank will specialise in infrastructure finance and micro-banking when it begins operations in 2011. 

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Notes to Editors

'Trading places: the 'Commonwealth effect' revisited', published by the Royal Commonwealth Society (RCS), updates research first carried out in 1997 which showed a significant ‘Commonwealth Effect’ on trade and investment. The paper was presented at the 'Commonwealth Trade – Time for action!' seminar, held on 30 September 2010 at Marlborough House, London. The research has been carried out by a team from the Royal Commonwealth Society, Landman Economics and the University of York, with financial support from the Worshipful Company of World Traders.

RCS report – media enquiries

For all media enquiries, contact Joanna Bennett: joanna.bennett@thercs.org / 020 7766 9230 / 07816 221 568 or Danny Sriskandarajah: director@thercs.org / 020 7766 9211.

Summary of Commonwealth Trade Seminar

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