© Vlododymyr Krasyuk / Shutterstock.com
Commonwealth member countries share similar legal systems and could offer potential new markets to each other in the same way that the EU does for its members
With the 2015 general election in the United Kingdom now over and the possibility of one of the world’s largest global trading players leaving the European Union (EU) trading bloc, there is arguably no better time for the legislature to give consideration to formulating a trading regime with the members of the Commonwealth.
Commonwealth nations share much more than just a head of state (bar the few that have become republics). With historical links in law, values and sport (cricket, rugby and football), as well as the high premium placed on democracy, the Commonwealth presents an opportunity for Britain’s businesses to explore new markets for goods and services, with the creation of a Commonwealth Free Trade Area (CFTA).
While pursuing a new trading regime with the 53-member organisation ought not to be necessarily seen as a replacement for membership of the EU, creating a new trading regime with the former could lead to a myriad of economic benefits to the UK. It must be noted that my take on the proposed Commonwealth project would be for the purpose of a single market for the trade in goods and services only, and not that of labour mobility between its members.
Sceptics may be tempted to argue that the UK has little in common with most other member states due to its relatively competitive advantage in technology, legal systems and economic infrastructure, making it challenging to present such a bloc as viable. However, closer inspection would reveal that within the Commonwealth exist a vast number of trading nations with significant capacities to trade with Britain.
For example, two BRICS nations, namely India and South Africa, are members of the Commonwealth. The economic giants of Australia, New Zealand and Singapore, as well as oil-rich Nigeria, and Trinidad and Tobago; alongside the off-shore financial centres of Barbados, The Bahamas and Malta, plus the many mineral-rich African Commonwealth nations, provide for a solid platform for both economic growth and development.
One of the distinct advantages of entering into a new trading arrangement with the Commonwealth for Britain and its business sector is the certainty that common-law jurisdictions based on English law principles bring. Compared with the EU, whose member countries mainly have legal systems based on civil law (versus common law), parties trading in the Commonwealth are guaranteed a level of similar jurisprudence when it comes to key English law concepts. In the inevitable event of day-to-day contractual, and other, business disputes that come before the courts, parties may be more at ease in ensuring their interests are served in a structure that involves similar legal systems.
In the ever-growing field of dispute resolution – which serves as an alternative to the highly contentious litigation process – many emerging and developed economies are contracting parties to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (The New York Convention).
This convention serves as a mechanism to ensure that awards in foreign arbitration are enforced, so that parties are compelled to honour the decision of the arbitration process. Due consideration may need to be given to a model of governance for the enforcement of the provisions of the trading bloc in a centralised location. This body should draw on the skills and expertise of a wide cross section, harnessing the best in both legal and economic minds that exist in the Commonwealth.
It has been widely accepted that greater access to cheaper goods and services not only leans towards competition, and ultimately benefits the domestic consumers of such goods, but also allows for otherwise weak economies to use new modes of technologies to build their economic capacity. Young entrepreneurs across the UK may find great value in tapping into markets in the Caribbean and Africa with rich potential, for example. A Commonwealth trading arrangement would make for cross-border transactions, benefiting both the UK and the host markets that traders are based in. Local communities could enjoy the benefit of receiving new efficiencies associated with high-end goods at a cheaper rate, while the producers of these goods yield greater profits.
Outside of the hard numbers of profit, which trade ultimately is governed by, such an agreement should thus be underscored by the Commonwealth’s ideals, which address the issues of economic inequality and the promotion of institutional co-operation, among other things.
This discussion is perhaps quite timely, as the biennial Commonwealth Heads of Government Meeting (CHOGM) will be taking place as this magazine is published. This will be preceded by one of four key parallel events, namely the Commonwealth Business Forum (CBF), which invariably feeds into the heads of governments’ deliberations.
It must be noted that the UK already has a number of bilateral trade and double taxation agreements in place with individual Commonwealth nations. However, creating a trade bloc within the 53-member grouping would allow for a route for British goods and services to gain access to the wider world, without the restrictions that have hitherto existed.
The Commonwealth therefore presents an opportunity for the UK to strengthen its position as a major global trading nation, by guaranteeing that the long-envied and much revered British global competitiveness it now enjoys remains, in both the medium and long terms.
