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The Rt. Hon. Patricia HewittFree Trade For a Fair, Prosperous World |
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CHECK AGAINST DELIVERY I'm delighted to be here today. I'd like to thank the European Institute for arranging this event. You play a central role encouraging transatlantic dialogue on a range of crucial issues and I am delighted to be able to contribute. I would also like to thank our two sponsors. Rolls Royce I am, of course, familiar with in the UK. But they are also a key part of the US industrial landscape, employing 8,500 people across North America. Riggs Bank I was less familiar with. But I understand that they are the British Embassy's bankers here in Washington. Indeed, they are one of the oldest banks in the Washington area and enjoy extremely close links with the European business community. They are part of the glue that holds the transatlantic relationship together. That relationship is as important as ever. The United States and the United Kingdom share a common belief in the benefits of an open, democratic society and open, dynamic markets. I am here in Washington to demonstrate that we can work together to advance those principles, to boost free trade and economic growth through a new World Trade Round. But the backdrop for our discussion today is Genoa, and the appalling violence that marked the G8 summit last weekend. The Plan for Africa lost in media coverage of the protests. A beautiful city devastated. Hundreds of police officers and protesters injured [around 500 people injured, more than 70 police]. And a young man dead. Many of those protesters came from the United Kingdom. A few from the United States. If you read the eye-witness accounts of the journalists who travelled with them to Genoa, I think you will be struck by two things. First, that many of the protesters - although a minority - had no interest whatsoever in peaceful protest. They wanted violence - and they got it. As Tony Blair said last weekend, protesters have learned that if they make their point peacefully, the media aren't interested. Trash a city, and you are seen on every TV in the world. But you would have to be struck, too, by how varied the protesters were. The middle-aged priest. The elderly woman. The retired sub- postmaster. The retired vicar and his daughter. A software engineer from IBM. The middle-aged community nurse. I see similar groups in my own Parliamentary constituency - church-goers, active supporters of development charities, who truly believe that world trade is a disaster for the world's poor. They may disapprove of the violent methods of the anarchists and the extremists - but they are united in their hatred of globalisation. This is the challenge to all of us. We must make the case for globalisation. We must show that free and fair trade is the only answer. And we must create the institutions that will make globalisation work for the poor as well as the rich. The question is not whether we should be for or against globalisation, but - in the words of Kofi Annan - "how to ensure that globalisation becomes a positive force for all the world's people, instead of leaving billions of them behind in squalor." The arguments for globalisation are, in essence, quite simple. On the one hand, the threat of protectionism. On the other, the hope of prosperity. The threat of protectionism When the economic cycle turns down, when people are losing jobs, it is the easiest time to argue against global trade. But history shows that protectionism always and everywhere damages the interests of working people. That was the painful lesson of the 1930s, when raising tariffs to their highest level in US history simply intensified the Depression, compounding the misery for businesses and working people. My father grew up in Australia in the great depression. He never forgot it - and as a young public servant with the Australian government after the war, he helped write GATT, the General Agreement on Tariffs and Trade - the great contribution of his generation to promoting prosperity. NAFTA and the last World Trade Round, the Uruguay Round, built on GATT and - over the last ten years - contributed to the longest period of economic growth in US history. As we now experience a slowdown we must not repeat the mistakes of the past. Those who stand in the way of world trade make the threat of a global recession more real. If we in the West retreat to protectionism now, it will be damaging for us...but disastrous for the poor. The hope of prosperity That is, if you like, the negative argument for world trade. But look too at its flip side: the hope of prosperity. Look at South Korea. In 1970, their economy was hidden behind protectionist walls. They were poorer than Nigeria. Today, South Korea is six times richer than Nigeria - and the opening up of the country to world trade is one of the reasons why. Developing countries - like Bangladesh, China, India, Ghana, Nepal, Uganda and Vietnam - that became much more open to trade in the 1980s and 90s, have experienced growth rates above, in some cases well above, the global average. As George Bush said in his address to the Organisation of American States here in Washington in April: "Open trade fuels the engines of economic growth that creates new jobs and new income. It applies the power of markets to the needs of the poor. It spurs the process of economic and legal reform' [and] reinforces the habits of liberty that sustain democracy over the long term." We cannot stand by when 1.2 billion people - a fifth of the world's population - are living on less than $1 a day. The answer is not a global minimum wage. The answer is capacity building - to help them build their economies, build their societies, so that they can earn a living. As the old development movement proverb puts it: "Give a man a fish, and he'll eat for a day. Teach him how to fish and he'll eat forever". The 49 least developed countries account for nearly 11% of the world's population, but only 0.4% of the world's exports - and that small percentage has been falling. They have suffered from the 30% fall in world commodity prices over the last 20 years. But that is not the sole reason for their marginalisation in the world trading system. These countries - that most need trade to raise them out of poverty - face significant trade barriers. Barriers we must remove. We're starting to make progress. In the European Union, with the Everything But Arms agreement, we are giving the Least Developed Countries duty and quota free access for all products except arms. And last year the United States increased duty free access for countries in sub-Saharan Africa. In the first three months of this year these countries increased their exports to the United States by 24% compared to the same period in 2000. Nor has that hurt American industries - as some opponents claimed it would. In the same period, US exports of products such as machinery, automobiles and wheat to sub-Saharan Africa were up 23%. So we need to build on these initiatives. Fair rules for world trade We must deliver an international, rules-based framework for fair trade which provides poor countries with a pathway out of poverty. We know the poorest countries haven't always benefited from the trading system. It is essential they do so this time. One of the lessons we learnt in Seattle, when we failed to launch a new round, was that a new world trade round will only happen if it benefits the developing countries. That in turn benefits the West too. We want to open up protected markets in developing countries. Over the next twenty years India and China will emerge as amongst the biggest economies in the world - we must be in there. And we must be in the next generation of growing economies. We cannot predict which countries or regions of the world economy will grow fastest over the coming decades. A WTO Round, involving more than 140 member nations, is the best way of ensuring that our businesses can benefit from - and contribute to - future economic growth anywhere in the world. It is estimated that a comprehensive new world trade round could boost the world economy by more than $400 billion annually, and US prosperity by around $45 billion a year. So the successful launch of a new WTO round is perhaps the single biggest thing we can do to boost confidence in the world economy. Transcontinental trade We also need to work together to extend trade between Europe and America. In the United Kingdom, our businesses and consumers are benefiting from the single European market. Here you are seeing the same benefits from NAFTA. We now need to think transcontinentally as well as continentally. This week, in New York, Gordon Brown will be making new proposals for extending trans-Atlantic trade. In the 1980s, at the start of the move towards creating a single European market, we commissioned a serious economic study - the Cecchini report - to quantify the economic gains which it could bring. The figures were so impressive that they convinced European leaders to move forward quickly and enabled them to explain to the people of Europe what this would mean in terms of jobs and prosperity. We now need to consider a similar report that looks at the potential benefits for businesses and our people on both sides of the Atlantic if we remove the remaining barriers to a fully open trading and commercial relationship between Europe and America. This would be a useful complement to add to the main trade policy task of bold liberalisation in a multilateral trade round. I believe the benefits could be significant. Take one example. In the European Union businesses benefit from mutual recognition of standards - a product which is approved for sale in one country can be put on the market across the European Union without further testing or approval. This saves businesses time and money. Imagine the benefits if we extended this between Europe and America. Once a company got approval for its home market it could then sell straight into the combined EU and American markets. Increasing trade, cutting costs for business, reducing prices for consumers. The same case can be made for mutual recognition of professional qualifications. E-commerce is already enabling even the smallest businesses to reach customers around the world; removing non-tariff barriers to trade would provide a further boost. The challenge to business Making globalisation work for all our people is a challenge to governments. But there is also a big challenge to business. Global businesses have to help win the arguments for globalisation. But winning the argument will take deeds as well as words. It is not acceptable for a company to make highly priced clothes for highly paid consumers in the developed world, by ruining the health of women and children in the sweatshops of the developing world. It is not acceptable for a company to make beautiful furniture for the homes of rich families in the west, but leave a devastated forest landscape in Brazil. Sooner or later, companies like that will be found out. Their customers will walk away. They will lose their moral licence to operate. And they will lose the argument for globalisation - not only for themselves, but for everyone else as well. We need global companies that don't just talk the talk, but walk the walk as well. The companies that do so are seeing the benefits. The other week I went to an awards ceremony in London for businesses who take their social responsibility seriously. I presented one award - to a bank [the Co-operative bank] which estimate that over 15% of their profits come from the fact that they operate a comprehensive ethical policy, using their investment to support human rights and encourage fair trade for developing countries. And we need more companies like the leading home improvement store in Britain (B&Q) which takes seriously its responsibility to reduce the environmental impact of its business on global trading partners. Its environmental strategy includes a strict purchasing policy only to use properly managed timber sources. And some businesses have found from experience the cost of getting a bad reputation for their activities in developing countries. Nike and GAP have learnt from this experience and now both companies sponsor an independent NGO, the Global Workers Alliance, to review their operations. Shell encountered enormous public concern over its activities in Nigeria, regarding the Ogoni people, and the death of Ken Sarawiwa. Shell too has made huge efforts to learn from the experience. It has put in place a real campaign to change company culture right from the top. So the businesses that will help to win the argument for globalisation are those that understand that corporate social and environmental responsibility isn't just a nice-to-have. In the global economy, it is a must-have. Responsible corporate behaviour wins employee loyalty and consumer trust - at a time when more and more citizens are questioning the whole moral basis of the global economy. Responsible corporate behaviour wins support in the developing world - at a time when many developing countries are reluctant to engage in world trade talks. Conclusion Responsible corporate behaviour offers an opportunity to improve everyone's quality of life - in developing and developed countries alike. Opening up markets creates new opportunities for prosperity for people and businesses across the world. We need a new Trade Round which will benefit our businesses and citizens here, in Europe and in the developing world. Failure risks depriving the slowing global economy of the stimulus it needs and which previous rounds have provided. It risks depriving the world's poorer countries of the opportunities they need to lift themselves out of poverty. To achieve a new Round we need to work together, to provide leadership and build consensus. The prize is great. We should not let it slip from our grasp. |
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Other speeches by The Rt. Hon. Patricia Hewitt
(the following are available from the archive) |
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