Ronald Duncan, Chairman and CIO
Prior to founding cloudBuy 1999 (then @UK), Ronald was a downhill ski champion who competed internationally for ten years, including at two Olympics. 

Development through free trade has a major role to play in reducing the causes of economic migration

Jul 05, 2016

Uncontrolled migration was a major factor in the UK’s decision to leave the EU. Time has yet to tell whether the negotiations the UK has with the EU will limit the free movement of workers once Brexit has been achieved. However, it’s true to say that a major factor in the scale of the migration into the UK over the last few years has been the relative strength of its economy in comparison to those of many EU states.

Taking a more global perspective, armed conflicts and economic imbalances between nations are the two major factors driving the mass movement of people between countries and continents.

Economic migration is defined as the act of moving between countries to improve an individual’s standard of living by gaining a better paid job in the destination country. It follows that improving economic development across the globe, increasing trade between nations and removing barriers to the free flow of goods and services, can make a direct impact on reducing economic migration. It may even make a contribution to reduce conflicts by binding nations more closely together into mutually beneficial economic relationships.

The EU, which began as the European Economic Community in 1958, was succeeding in its goals of achieving peace and prosperity throughout Europe until the shocks of the financial crisis created issues difficult to address. During its lifetime the EU has made an effort to address the wealth imbalances within the community. However, EU tariff barriers are bad for other regions of the world, not only reducing the options for trade, but also for economic development.

For example, in 2014 Africa generated nearly $2.4 billion from its coffee crop. Compare this to Germany which processes raw coffee into ‘added value’ products. It earned $3.8 billion from coffee re-exports in the same period. Non-decaffeinated, un-roasted green coffee is exempt from the EU tariffs, but a 7.5% charge is levied on roasted coffee imported into the EU from Africa. This not only reduces trade but consigns African nations to be mere raw material providers, making it harder for them to develop their economies by adding value.

The Commonwealth by contrast, has always had aspirations to be a free trade zone and as its 53 member nations span Africa, Asia, the Americas, Europe and the Pacific, the effect of creating a Commonwealth Free Trade Zone (CFTZ) will bring benefits to a much wider range of economies than is possible for the EU. Indeed, 31 of the Commonwealth’s members are classified as small states and the organisation’s Charter commits it to helping them develop. Increasing trade between members will support these development ambitions.

The UK’s support for a CFTZ has been hamstrung by its membership of the EU for the last 40+ years. This has meant that the Commonwealth has focused on good governance and human rights without the economic clout which the EU wields. The positive result is that the Commonwealth gained 2 new members that had no historic links with the UK, but had a desire to show that they support human rights and the rule of law. This ethical focus now provides sound foundations for developing greater trade volumes.

The UK has an impressive track record of generous international development funding which has been maintained through the economic downturn. Whilst donation is good, the greatest legacy UK leaders could leave is to deliver tariff-free trade for the Commonwealth and especially its members that have developing economies. This would be a much better spur to economic growth and ultimately act on the pressures for economic migration across the world.