Partnerships: Commonwealth, Europe and the Mediterranean Countries.
Date: 22 Nov 2005
Speaker: The Hon. Dr Michael Frendo, Minister of Foreign Affairs of Malta
Location: Plenary Session: Building Global Partnerships: Commonwealth, Europe and Mediterranean Countries, at the Commonwealth Business Forum 2005
Partnerships must be one of the ways that will help us face the challenges of globalization. The key features of globalization have been rapid technological advances coupled with trade and financial liberalisation. The world has become one large trading system with a number of countries across the globe interlinked by means of this phenomenon.
The creation of partnerships between the Commonwealth, Europe and the Mediterranean , involve forming linkages between a huge diversity of social systems and business cultures that stretch over half the countries of the world.
Let us first look at the Commonwealth countries.
Australia , Canada and New Zealand have a comparative advantage in the production and export of agricultural and other raw materials. Pakistan , Bangladesh and others have abundant and consequent low-cost supply of labour, which gives them an advantage in the production of labour-intensive goods such as textiles and clothing. India , the Commonwealth country with the largest population also has an advantage in the production and export of labour-intensive products. This same country, in these last years has also specialised in information and communication technology, and established significant corporations in fields as diverse as pharmaceutics and electrical engineering.
Many countries of the Caribbean and the Mediterranean like Cyprus and Malta , in the Mediterranean have put their climatic, scenic and cultural assets to good use and built a vibrant tourism industry. Then there are all the other remaining countries that export raw materials they produce, whether tea, coffee, cocoa or diamonds.. They have a clear advantage in concentrating on processing these materials to increase the value of their exports generated in their own country.
Several African countries posses an abundance of mineral wealth, excellent climatic and topographical conditions for agricultural production, and a stunning diversity of wildlife and flora which can be (and often are) the basis for a prosperous tourism industry. Certainly we can say that, for the most part, problems that exist in Africa cannot necessarily be ascribed to the intrinsic lack of some comparative advantages.
If we focus on Europe , one significant statistic that immediately commands our attention is that this continent produces about one-fourth of total world production of goods and services. Goods cover the whole range from textiles to medical instruments, nuclear power plants, aircrafts and capital goods. The services also vary in their value added, from labour intensive travel and tourism to more sophisticated financial, legal and engineering services.
If we look at the Mediterranean where the Northern shores belong to Europe while the Southern shore is African and Middle East, both share broadly similar climates and have specialised in what is known as 'Mediterranean' agricultural products. Some countries of the Southern shore are also blessed with much sought after mineral products that yield excellent profits - in particular oil and natural gas. Others have an advantage in the abundant supply of labour.
So the question arises: What sort of global partnerships can one build with all these countries? In my view the best partnership must be based on a multilateral approach to economic development.
The General Agreement on Tariffs and Trade, generally referred to as GATT, enshrined the principle of non discrimination. GATT admitted the possibility or rather the desirability of preferences within the context of a customs union or a free-trade area. However, it must be said that neither the British Empire nor the Commonwealth which followed it, were ever intended to achieve that goal.
Many Commonwealth countries have therefore entered into such regional agreements. Canada has joined the North American Free Trade Association (NAFTA) with the United States and Mexico . Several African and Asian countries have concluded regional arrangements with their neighbours. The United Kingdom , Cyprus and Malta are part of the European Union.
The EU is perhaps the most successful and deepest regional arrangement in today's world, to the extent that it has become the centre of a complex web of other regional arrangements. Amongst these one must mention the Cotonou Agreement between African, Caribbean and Pacific states, which covers a majority of Commonwealth states. There is also the Euro-Mediterranean Partnership known as the Barcelona Process, which this week is ten years old and covers all countries of the European Union and most of the countries bordering on the Mediterranean Sea .
This makes the EU one of the most important hubs and major trading partner for both Commonwealth and Mediterranean countries, it is also the main source of their FDI, the host of one of the major currencies, and - in my view a prime example of how one can improve good governance.
One role that the three countries that belong to both the EU and Commonwealth (UK, Cyprus and Malta) can assume is to increase the mutual awareness of each other's possibilities, opportunities, socio-economic needs and, it must be said, limitations. Cyprus and Malta , which form part also of the Mediterranean region have a function to retain in the forefront Mediterranean issues. But this does not mean that issues that affect Commonwealth countries (especially small island states), should not also be raised in Brussels by these two 'special' EU Members.
The Euro-Mediterranean Partnership has made some progress, especially in strengthening the trading links between the EU and individual Mediterranean countries through the free trade provisions and the new Association Agreements. But regional trade arrangements between the non-European partners still need to be developed more.
We have therefore not advanced far enough towards the Euro-Mediterranean Free Trade Ares which would include the EU with its 25 countries and the Mediterranean countries which are not EU members. I hope that the new impetus that should be given to the Barcelona Process later on this week, will lead to further progress in the next years.
The European Union has also reached out to many countries in the Commonwealth. Relations between India and the EU, for example, are largely conditioned by the very extensive EU-India Action Plan. There are several sectoral agreements between the EU and Australia and New Zealand . Pakistan has also signed a wide-ranging Cooperation agreement with the Union , and if we turn our attention to the ACP countries, we see that the EU is the largest trading partner for virtually all of these States. Nor has North America been ignored as evidenced by the Partnership Agenda adopted by Canada and the EU, an Agenda that identifies ways of working together to move forward on issues of mutual interest, especially where joint action can achieve more than both sides acting alone.
Of course the most immediate and urgent challenge of multilateralism is the successful conclusion of the Doha 'development round' of trade negotiations. The Secretary General made ample reference to the challenges of this Conference and what we can contribute to that meeting.
The second, longer term challenge is to prime the world and regional development banks to focus more narrowly, but deeply, on the countries that on their own may not be attractive to private capital. There is no lack of capital in the world at large. There are many developing countries which can finance their own development, whether the oil-exporting countries or the new and hugely successful exporters of manufactured goods. On the other hand, other developing countries need the intervention of international development institutions and the support of Commonwealth and Mediterranean countries.
Europe can provide its technological know-how and its capital. Above all, it can provide its markets and the input of its private entrepreneurs with their hands-on knowledge and experience of production, financing and marketing. These three regions - the Commonwealth, Europe and the Mediterranean - are teeming with business opportunities. It is up to us to take them and make them successfully.
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Partnerships: Commonwealth, Europe and the Mediterranean Countries.
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