BUSINESS COMMENTARY

Sands of time: The Commonwealth in Focus

Monday,  December 12, 2005

This article is part of the “Sands of Time” series written by members of the faculty at the University College Cayman Islands. 

The Commonwealth Conference was declared open by the Queen Elizabeth II, in Malta on the 25th of November, 2005. Information technology, trade reform, and human rights were the main topics on the agenda.

The Commonwealth is comprised of 53 member states that are the former colonial territories of Great Britain – not including Zimbabwe. The grouping has a combine population of 1.8 billion people - 30% of the world total.

The member states are very diverse in size, population, and economic development. India has a population of over one billion people but is geographically smaller than the two largest countries in the Commonwealth - Canada and Australia. At the other end of the scale there is Nauru - a small Pacific island; once the richest country in the world - with a surface area of only 8.2 square miles and a population of 13,000. Many of the Commonwealth countries are at very different stages of economic development.

The most highly developed - Britain, Canada, Australia and New Zealand - are members of the Organization for Economic Cooperation and Development (OECD), which includes the world’s 30 leading industrialized nations.

India today has one of the fastest growing economies in the world and along with China acts as an engine of growth for the global economy.

Nigeria, Africa’s most populous country and the leading oil producing country in the Commonwealth, is showing promise under the guidance of President Obasanjo.

Obviously, such a long standing and once powerful group could play a role in the world’s economic and political affairs. But, even though these nations and leaders had gathered together, many critics have argued that the meetings of Commonwealth nations are nothing more than a ‘talk shop.’ They really have little influence over the issues of the day, and do little to promote mutual growth.

The question is whether the Commonwealth has any relevance in today’s rapidly changing world, or whether it can be adapted to become more relevant organization and be of benefit to member states.

It is my view that the Commonwealth should be much more than a formal gathering of nations. It could transform itself into a large, powerful and successful free trade area.

Such a free trade area could act as a stimulus for trade for many developing countries in Africa, the Caribbean, and the Pacific. Such a free trade arrangement would allow these economies to compete within a fairly large trading block that would enable them to sharpen their competitiveness before they set out on the global stage.

The Commonwealth free trade area could act as conduit for the free flow of capital from the rich developed countries to the developing countries that are starved of international capital and foreign direct investment.

In return for access to the financial capital of the rich nations in the Commonwealth, the developing nations would provide many multinationals in the developed countries access to the large, their emerging markets. Having access to the emerging markets could be very lucrative for multinational business. For instance the large and growing Indian economy currently denies access to Western retail chains. This may change under a Commonwealth free trade area.

A Commonwealth free trade area would also provide many small states preferential access to the developed countries’ markets for their agricultural produce and manufactured products. This may be a method by which to circumvent many World Trade Organization (WTO) stipulations on agricultural products such as sugar and bananas. This could only benefit poor agriculturally-based countries.

Other spill-over benefits include the transfer of technology from developed countries. A Commonwealth trading arrangement, in essence, can help to bridge the technological divide between developed and developing nations.

The Cayman Islands, being a colony of Britain, will stand to gain from such a trading arrangement. By virtue of Cayman being the fifth largest financial centre in the world, it could facilitate the flows of goods, services and technologies between the countries of the Commonwealth. The Commonwealth, with some innovative thinking, can become much more than just a ‘talk shop.’ It could regain some of its past success by becoming a very large, international trade organization that provides mutually advantageous economic opportunities for its member states. 

The author welcomes comments and may be reached at ngumbs@ucci.edu.ky.

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