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Advancing Our Shared Prosperity

Advancing Our Shared Prosperity

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Advancing Our Shared Prosperity – this was the title of the communique issued at the end of the Commonwealth Trade Ministers Meeting which took place in London on October 10, 2019. Among the issues discussed by ministers were support for the multilateral trading system, deepening Commonwealth trade and investment, digital transformation, creating an enabling environment for the private sector, and trade and climate change. Indeed, each of these areas represents issues that the international community is presently struggling to come to terms with. However, on this occasion, I will focus on the multilateral trading system.

The multilateral trading system, as embodied by the World Trade Organization (WTO), is a rules-based system which plays an important role in governing the trade relations between and amongst 164 countries and customs territories. These rules enhance the chances of predictability, transparency and openness with respect to how countries execute their external trade policies and domestic measures affecting the ability of foreign individuals and entities to operate in their markets.

Without legally binding multilateral trade rules, chaos would ensue as each nation would be left on its own to make its own rules. In such a scenario, the smallest and weakest countries would be worse off, because the biggest and most powerful would likely fashion the rules in their favour with little concern for how they impact on the most vulnerable.

Given the importance of the multilateral trading system, it is no surprise that Commonwealth Trade Ministers issued a statement expressing concerns about “the risks of protectionism and unilateralism to the global economy”. They also underlined “the importance of resisting all forms of protectionism including the proliferation of WTO inconsistent measures that threaten the rules-based trading system”. Of course, the statement by Commonwealth Trade Ministers comes against the background of trade wars between some of the world’s major economies, as well as a seemingly growing tendency on the part of some big and powerful countries to impose unilateral trade restrictions, sometimes in apparent breach of multilateral trade rules.

According to the World Bank, trade appears to have been an important contributor to reducing extreme poverty from 33.5 percent of the global population in 1993 to 10 percent in 2015. Notwithstanding the fact that the global population increased by more than 2 billion people between 1990 and 2015, the number of people living in extreme poverty fell by more than 1.1 billion to roughly 736 million people. The World Bank also suggests that trade was a vital contributor to this development. In essence, trade helps to reduce poverty because it creates jobs, it provides revenue for government coffers from trade taxes and it also creates pathways for inward investment and innovation which are important to the overall health of any economy.

Notwithstanding the benefits of trade, there is also recognition that the benefits are uneven. There are cases of farmers losing their livelihood, factory workers losing their jobs and economies coming under considerable strain as a result of market opening. However, I am convinced that in absolute terms, the world is a better place today because of a rules-based multilateral trading system.

Fundamentally, a well-functioning multilateral trading system is critical to advancing the shared prosperity of the global community and threats to this system are also threats to our shared prosperity. In light of this, Commonwealth Trade Ministers are rightly concerned about the threats to this system on account of rising protectionism and unilateralism. In essence, what we need is a stronger system and any attempts to derail or weaken the system should be frowned upon. In particular, we need a stronger system that creates more meaningful development outcomes for Small Island Developing States (SIDS) and one which restores confidence in the system at a time when questions are being asked about its relevance and its ability to constrain the non-compliant behaviour of some countries.

Progress on these fronts will redound to the benefit of global prosperity.

Joel K Richards is a Vincentian national living and working in Europe in the field of international trade and development.

Email: [email protected]

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