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The Rt. Hon. Patricia Hewitt"Building a Stronger World Community Through Trade" |
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It's an honour to be speaking here at the Royal Institute of International Affairs. Chatham House has played a crucial role in stimulating debate on key issues in international affairs for over eighty years. Just a look at your autumn programme demonstrates this - topics include international terrorism, liberalising trade in services, the European single currency, the Middle East and many other issues. Between the end of the cold war and the explosion of the internet we have seen the growth of a new global economy. Recent months - economic downturn and the atrocities of 11 September - underline the depth of our global interdependence. A new world trade Round was important before 11 September. It offers the best pathway out of poverty for the least developed countries. It is estimated that if tariffs were cut by half in both developed and developing countries, developing countries would gain by $150bn a year - greater than the combined gains to the EU and the US and three times what they receive each year in development aid. A new trade Round is doubly important since 11 September. Doubly important both economically and politically. There is a real danger - in the face of economic difficulties - that countries retreat into protectionism and isolation. That would be a disaster. Instead our response to the downturn internationally must be to inject new confidence through a new WTO Round. Just as our response in Europe to the downturn must be not to retreat but to drive forward the Lisbon agenda of economic reform. Over fifty years ago, after the second world war, the nations of Europe created the European Community to ensure peace and stability through trade and economic ties. Internationally, nations came together to create a new world institution - GATT, the General Agreement on Tariffs and Trade, a precursor of the WTO. Today we face a new threat - international terrorism. In the last five weeks an extraordinary international consensus has been built against terrorism. But that consensus must be reinforced through trade. It is quite clear - there is no excuse or justification for terrorism. But those fanatics who demonise the United States find easy recruiting grounds in communities left behind in poverty. Where people feel powerless against the forces of change in the world, it is easy to turn against globalisation. As Tony Blair has said: "If globalisation works only for the benefit of the few, then it will fail and will deserve to fail." In the words of Kofi Annan, our aim must be "to ensure that globalisation becomes a positive force for all the worlds people, instead of leaving billions of them behind in squalor." Just as peace and prosperity went hand in hand in Europe after the war, so today secutiry and prosperity must go hand in hand through world trade. Trade:a force for progress The reason that trade creates peace is that it is far more than simply a flow of money or products. It is also a flow of ideas, of knowledge and of people. It is a force for social, scientific and democratic progress as well as industrial innovation and wealth creation. Five hundred years ago China was the most technologically advanced nation in the world. Long before the West, China invented paper, printing, blast furnaces for smelting iron, and a water driven machine for spinning hemp. Yet by the eighteenth century, many of these inventions had fallen into disuse - whilst Britain was leading the industrial revolution on the foundation of similar technology. Why did China not realise its potential? One of the reasons was the absence of a free market and a distaste for trade. During this period the Ming dynasty actually attempted to prohibit trade overseas. In contrast Europeans were exploring and trading across the globe. Europe was open to new products and new ideas. China retreated into isolation. The UK:global trading in a multicultural economy One of the factors in Britain's leadership in the industrial revolution was our openness to new ideas - many of which came from settlers from Germany, France and Holland. We are all familiar with the fact that in the global economy our most important asset is our people. But here in the UK we have just begun to realise that one of our most important assets in this global economy is the diversity of our people. We all know that we live in a global economy but we should recognise - and celebrate - that we have the globe here, in the UK economy. The very diversity of our own country brings with it competitive advantage. Cosmopolitan cities, where almost every language has a home, a multitude of ideas and beliefs are tolerated...helps to make a dynamic, creative culture. This in turn creates a spirit of entrepreneurship and attracts new investment and new businesses. People of all nations of the world not only build their home in Britain - they build their business. And these businesses provide us with our strongest trading bridges. Because they bring an understanding of the culture and aspirations of different countries and they have the language to build first class trading relationships. Our British Asian community gives us direct ties of family and culture to the Indian sub-continent and other parts of the Pacific Rim and East Africa. This new generation of British Indians are at home in the global economy. Their ties with India are already the basis for the rapid growth we're seeing in trade between our two countries. Over £4 billion a year, and rising fast. So many Indian companies are choosing to expand into the UK, the natural home for them as they seek to expand into Europe. And so many UK companies are expanding into India. In Leicester, where my constituency is, a knitwear company called Jackmasters has recently established a joint venture in Sri Lanka - with support from its local Business Link and drawing on contacts established by one of the partners who is from Sri Lanka. The company is now manufacturing in Sri Lanka, whilst designing and finishing takes place in Leicester. So the venture is supporting jobs both here and in Sri Lanka. Or take the Caribbean. Total two way trade between the Caribbean and the UK last year was around £1.8 billion. And on top of that there are major investments in the Caribbean by British companies as well as a growing number of Caribbean investments here in the UK. On a recent trade mission to the Caribbean, over half of the British business participants were Afro-Caribbean and other ethnic minorities. There are countless other examples, covering all four corners of the world, all five continents. Our economy benefits significantly from its multicultural and diverse nature. But we can do more to expand these trading links and create new opportunities for people in Britain and overseas. The benefits this can bring depend on an open trading system with clear rules. We need a multilateral trading system for our multi-cultural economy. The World Trade Organisation already provides global rules that order and stabilise trade between nations. But significant constraints, both formal barriers like tariffs and quotas, and informal ones - lack of transparency in investment or competition rules - still dog international trade. We can not make the most of these trading links unless we remove barriers to trade in both directions between the UK and countries like India and the Caribbean islands. And we can extend these further if we bring more countries into the WTO framework. That's why it is so important that China - the second largest economy and the eighth largest trader in the world - is now entering the world economy through the WTO. Once and for all ending the isolation I described earlier. Britain's role The multicultural nature of the British society means that we are almost uniquely placed to drive forward negotiations towards this new round. Add to that - our special relationship with the US, - our position as one of the largest economies in Europe, - and our Commonwealth ties,and it is not hard to see that the United Kingdom has a huge potential to influence the direction of these negotiations. An agenda for change At Doha, the UK - with our EU partners - will press for a broad agenda - to extend the benefits of free trade to new sectors and to maximise the potential gains from the Round for all trading partners. And I am optimistic that the Round we are pressing for is within our grasp - but there are hard issues we will have to tackle in the end game. On environment, there is a lot of confusion about the EU's aims. The reality is simple - we want to clarify what existing WTO rules are in this area - not agree new ones. Greater clarity will benefit developed and developing countries, business and consumers alike. They will also reassure our public that globalisation need not be at the price of environmental devastation. Foreign direct investment is an area of enormous importance to many countries. We want to see rules that will give business the stable and predictable climate it needs to flourish and help countries, especially in the developing world that do not currently attract much foreign direct investment. And that's why we are also seeking clarity on the legal and regulatory areas of competition policy, which are an important complement to facilitate inward investment. As we expand world trade we must also promote higher labour standards around the world. The International Labour Organisation (ILO) is the place to set labour standards. But I believe there should be closer co-operation and a broader dialogue between the ILO and other international organisations including the WTO. We have an ambitious agenda. And so we should. But we are not trying to complicate negotiations. What we are looking for is a short, crisp, successful round. A round that delivers for developing countries. A Development Round We know the poorest countries have often not benefited from the trading system. It is essential they do so this time. If this is truly to be a Development Round, the EU, US and other developed countries will need to reflect on their priorities. The EU is prepared to look again at implementation of agreements which are causing developing countries problems. Where we can agree solutions immediately we will do so. If necessary we stand ready to renegotiate aspects of agreements that we signed off under the Uruguay Round. And we must - as a priority - address the issue of developing country access to medicines. At the moment, 14 million people in the developing world die every year from treatable diseases, including HIV/AIDS, malaria, and tuberculosis - that's 37,000 people a day on average. A death toll which could be significantly reduced - if only developing countries had access to affordable medicines. This requires improvements to healthcare systems and funding for the poorest countries. And a solution which continues to give our pharmaceutical companies the incentives to develop new cures and treatments - but ensures that those who most need in the developing world can access them at an affordable price. We in the UK are already donating $200 million to the Global Health Fund to help tackle this. I do not believe WTO patent rules - which include built-in flexibilities - are the cause of this problem. There are other solutions, including opening up parallel imports. Nevertheless we are monitoring the use of the rules and at Doha I will be seeking a declaration to provide further clarity - to reassure those who read the rules differently. We also need to look forward to developing country interests in negotiations themselves. We should also follow up the EU's 'everything but arms initiative' and lower the remaining barriers to developing country exports - particularly agriculture. Frankly, if we in the European Union are to prove that we are serious about development, we must open up our agricultural markets and substantially cut the subsidies. It is in our own interests to use the opportunity the Round presents for real liberalisation. To reform the EU's Common Agricultural Policy (CAP) which currently costs European taxpayers 40 billion euros and European consumers a further 48 billion euros. The launch of a new round in Doha - when combined with the imperative for change that will come from EU enlargement - will give a real boost to agricultural reform. This is a chance for major change: phasing out price support and putting European farming on a truly sustainable footing. But this is not just an EU issue. The average tariff protection on agriculture around the world is as much as nine times higher than that on manufacturing. Agricultural protectionism in all OECD countries - including countries of the Cairns Group who lead the cry against European subsidies - is estimated to cost developing countries US$20 billion a year. A new Round will simply not be credible if it does not tackle this problem. And the Round must benefit all developing countries - the smaller ones not just the larger countries. We must agree rules which genuinely reflect their different levels of development. The UK is playing a leading role in ensuring that developing countries can participate in the WTO as equal members. Clare Short has doubled the budget we have invested in capacity building from £15m to £30m over the next 3 years. Whether this money is spent on ensuring free or low cost legal support for developing countries pursuing cases in the WTO's Dispute Mechanism or holding workshops on competition policy and law in Cape Town for African members, our aim is to help the developing countries to help themselves. Conclustion We need a new Trade Round which opens new opportunities for prosperity for people and businesses across the world. Which also underpins the search for global security which is so urgent today. 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 develop understanding. The UK is in a unique position to contribute. As a strong ally of the United States. As a constructive member of the European Union. And a sister of the other Commonwealth countries. In Doha in two weeks time, Liz Symons and I will use that position to help build a stronger world community through trade. There is an enormous prize to be won. 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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