UK–Commonwealth Trading Relationship

Lord Purvis of Tweed Excerpts

Thursday 8th July 2021 Lords Chamber

[Lord Purvis of Tweed (LD)]

My Lords, it is a pleasure to follow the noble Lord and to commend his work and that of the council. As he rightly said, the strength of the Commonwealth offering is one which, if we see the current trajectory both continue and accelerate, will be to the United Kingdom’s trading and international benefit. I also commend the noble Lord, Lord Howell, for bringing this debate to us; it is a very timely debate. He speaks with great wisdom on this issue, as has been recognised across all Benches, and his wisdom is based on experience, but it is relentlessly forward-looking and challenging. That has set the framework for this debate, which other noble Lords have followed.

The noble Lord, Lord Hannan, I think, wanted to write some of my speech for me. I do not know, but I might be disappointing him by saying that I agree with him entirely about not being nostalgic for something that we left last year or something that some noble Lords have said we turned our back on 50 years ago. International trade does not like nostalgia anyway because—as he said, and I agree, and as the noble Lord, Lord Howell, indicated—trade today in the 21st century is markedly different and, indeed, more complex. It touches on much wider areas, including standards, supply chains, human development and other areas. Of course, with e-commerce we are trading in manners and ways that our predecessors in trade would never have imagined possible. The Commonwealth is a network that is forward-looking.

Some have described the Commonwealth as a hub-and-spoke model, but in many respects it is a blockchain; it is a model of networks. When I co-chaired, with the Nigerian Trade Minister, an inquiry for the All-Party Group on Trade out of Poverty, one of our witnesses said something that has really stuck with me since then. She said that there were two major benefits to the Commonwealth: one was that America was not a member and the second was that neither was China. A network of commonality and consensus, which has values at its heart—even though we recognise that sometimes these have been challenging and challenged—nevertheless provides a very good basis for growth.

One of the reasons why we should not be nostalgic is that the trading world that the UK operated in before we joined the European Union was already changing. As the noble Lord, Lord Lansley, indicated in respect of our free trade agreements, it is, perhaps, an odd quirk, but probably deliberate, that we are now a party to more free trade agreements with wider and deeper benefits with more Commonwealth countries because we were a member of the European Union, which had entered into agreements with those countries. Now we are seeing the successor of them, and our challenge is how to develop and grow them—but not necessarily simply to view the world within a simple tariff-preference scheme that existed within the Commonwealth Preference Area.

It is perhaps little recognised or remembered that the Commonwealth Preference Area was not necessarily reciprocal. For example, the Commonwealth Preference Area for Ghana and Kenya was unilateral for the United Kingdom, but not reciprocal for them. For the first time, therefore, we entered into free trade agreements with Ghana and Kenya through the European Union and now we have the continuity. Our debates will be on how we can develop that further. As noble Lords have indicated, with Australia and Canada now being negotiated, how can we look at our future trade agreements post European Union with our Commonwealth partners to take advantage of the Commonwealth advantage? The Commonwealth advantage includes the direct inflows of investment as well as goods and services.

It is interesting to me to note that the Commonwealth represents 14% of global GDP but 28% of global FDI flows. Most of that grew rapidly through London and our being part of the single market, and one of the challenges that we will be entering into now is what our trading partners in the Commonwealth will see as the UK’s position through the City of London and how the FDI flows will continue to develop.

As has been indicated in the debate, intra-Commonwealth trade has doubled in little over five years. Growth potential post pandemic is even higher, as we have now surpassed more than $1 trillion and have an ambition to meet $2 trillion. The group that I had the pleasure of co-chairing had started to look systematically at what the barriers were that could potentially mean that that growth would not happen. We also argued for a step change in activity, and I will touch on some of the key areas.

We also wanted to link in human development. It is a reality with the global goals—and all of the Commonwealth countries signed up to the global goals—that we share an ambition, especially in goals 4 and 8, to seek poverty eradication in human development. It is a fact that, within the Commonwealth, 440 million women, men and children live below the poverty line of $1.90 a day. If you are born in the Commonwealth, you are twice as likely to live a life of extreme poverty as if you were not born in the Commonwealth. Trade and development are therefore critical. As the noble Baroness, Lady Chapman, highlighted—and I too welcome her to her position—the disparity in vaccine availability is an illustrator of this, and I agree with her. Uganda paid three times as much for AstraZeneca vaccines as the United Kingdom. Both are supposedly at cost, but the reality is that for many countries the costs are significantly higher. Two-thirds of the world’s small states, with populations of less than 1.5 million, are members of the Commonwealth, with very limited capacity to see trade facilitation and expansion. Therefore, the larger and more developed Commonwealth countries also have a responsibility for very close partnership working.

The first area that we considered to overcome was reducing costs and risks in trade and investment. E-commerce, for example, is one of the key areas where there is opportunity, and I agree with the noble Lord, Lord Sarfraz, who outlined—so I do not need to—the disparity in connectivity within the Commonwealth. This also links, as he mentioned, with the youth profile. Of the 2.4 billion people in the Commonwealth, 1 billion are under 25 and 60% are under 30. This presents huge challenges but also a massive opportunity, because 44% of the world’s entrepreneurs are aged between 18 and 35. Many non-tariff barriers exist for them, such as limited access to finance and capital assets, limited business networks, limited market information, and limited trade support.

When we develop that, and look at young women, we know that in Kenya, for example, 24% of SMEs are owned by women, and in Rwanda it is 26%. Most Commonwealth countries still have legislative and structural barriers to women entering the economic marketplace—on public procurement, on legal reform, on supply chain assets and access to finance. The Commonwealth Parliamentary Association and others, as the noble Baroness, Lady Hooper, indicated, have provided model laws on e-commerce and reforms. These are all positive and we should be doing our own work to support those, SheTrades initiatives and others, so we can make sure that the majority of the population —that is, women—are economically active.

The other areas focused on strengthening partnerships —building them through the diaspora, in particular—and the absolute benefit we have with commonality in our legal frameworks, our regulatory frameworks and, broadly, our standards. Yes, there are differences which we will need to resolve, but all have a degree of commonality that provides an excellent platform.

Where could we go forward? As the noble Lord, Lord Marland, indicated, the UK has a real opportunity now with the extended chair in office. The group I co-chaired called for a new Commonwealth trade and investment mandate, and for the UK to bring its convening power to the Commonwealth convening power, so that it can set an agenda at the WTO and other rule-making bodies, which the Commonwealth is not and should not necessarily be. Nevertheless, a new mandate with co-ordinated and strategic Trade Ministers looking systematically at intra-Commonwealth trade barriers will be a benefit to the United Kingdom. Leading up to the next CHOGM, I hope the UK will seize this opportunity and play a significant role in allowing intra-Commonwealth trade to develop. This will benefit the UK and set us on a trajectory so that, at the end of the decade, we will have $2 trillion and the UK can look forward and absolutely not be nostalgic.