Today is Commonwealth Day, when over 56 member countries of the international association celebrate their connections. But what does the Commonwealth mean for trade and what are the relationships like between member nations?
The history
The Commonwealth is largely formed of countries that were once part of the British Empire. In 1926, an Imperial Conference drawing together leaders from across the empire stopped short of abolishing it, but took the first steps towards replacing it with the Commonwealth, which remains headed by the British monarch, currently Charles III.
Formal establishment came with the London Conference of 1949. It was decided at that conference that even countries that were republics – that did not recognise a monarch – could be part of the association.
The structure
In its structure, the Commonwealth is led formally by the British monarch but sees most decisions taken by the heads of government from each of its member countries at the Commonwealth Heads of Government Meeting (CHOGM).
Other meetings take place as part of the association’s programme, including the Commonwealth Business Forum, Women’s Forum and People’s Forum. The meetings work towards the aims set out in the 1971 Singapore Declaration, including “to achieve the freest possible flow of international trade”.
The stats
The UK exports throughout the Commonwealth, where 2.5 billion people live – 1.4 billion of them in India. In terms of individual member nations, India is unsurprisingly the largest of the UK export markets within the Commonwealth, accounting for almost a quarter (23%) of UK exports to Commonwealth countries and 17% of its Commonwealth exports in services.
The association is not a trade bloc, and even some of its largest members do comparatively little trade with one other. India, for example, didn’t export any services to one of the association’s wealthiest countries, Australia, in stats for 2022 published by the Observatory of Economic Complexity.
There are many much smaller countries within the group; a House of Commons report on trade within the Commonwealth published in November last year notes that Tuvalu and Nauru both have populations of around 10,000.
That report also outlines the UK’s volume of trade with Commonwealth nations, which in total amounted to £83bn of goods and services, or 10% of the country’s exports, in 2022. That rises to 12% for services alone. Some £74bn (9%) of UK imports also came from the association.
The UK has a trade deficit of £7bn in goods with the Commonwealth, but a £16bn surplus in services meant an overall trade surplus in 2022.
The projects
The Commonwealth Secretariat carry out projects to foster economic development across the group. In Nigeria, for instance, a Secretariat-developed piece of software named Commonwealth Meridian is being used to reform how the country manages its debts.
The software offers a specific, engineered solution to a set of specific problems. Dr Ruth Kattumuri, who directs the Commonwealth Secretariat’s Economic, Youth and Sustainable Development Directorate, said the project will help the nation to be at the heart of the continent’s “growth and sustainable development”.
Other recent projects include the development of a Commonwealth Climate Finance Access Hub, which provides experts to countries looking to develop their green infrastructure and industries via a ‘hub and spoke’ network, with a hub based in Mauritius. As of July of last year, the system has provided over US$310m for 77 projects across the association.