The Fabians have always been at the forefront of intellectual debate on
trade. And in your first quarter of a century the Young Fabians have
been at the forefront of intellectual debate in the Fabian Society.
Last year, when I launched the new Fabian workstream on
globalisation, I talked about the challenge for progressive politicians
of tackling poverty and inequality across the world as well as at home.
Today I want to talk about how we make globalisation work for
everyone - in the developed and developing world, and how we make sure
that Britain is able to meet the challenges of a more open economy.
For the protestors at international summits, globalisation is the
root of much evil - a conspiracy of multi-national business bringing in
their wake poverty, inequality, environmental disaster and cultural
destruction.
For its champions, globalisation is an inexorable force of
technologically-driven change, demanding obeisance from governments of
developed and developing countries alike.
Neither extreme is accurate or helpful. We use 'globalisation' to
refer instead to the process of growing inter-dependence between the
economies and businesses of different countries, as production and
consumption become increasingly internationalised.
This process is incomplete, unplanned and uneven, but it is real and
gathering pace.
Undoubtedly, globalisation disrupts old ways of doing things, settled
jobs and communities. But I firmly believe globalisation can be a force
for good, raising standards of living at home and abroad and, crucially,
enabling hundreds of millions of people in the developing world to
escape from poverty - Kofi Annan's 'globalisation with a human face'.
But globalisation will only be a force for good if we make it so.
So it is our first responsibility, as progressive politicians, to
make sure that globalisation works for the many and not the few.
This means cutting down barriers to trade - opening our markets and
removing trade distorting subsidies which prevent poorer countries
trading their goods. The potential benefits are huge. If we could cut by
half the barriers against trade, we could raise the income of developing
countries by $150 billion a year - three times what they currently
receive in aid payments. By 2015, we could lift over 300 million people
out of poverty - a huge step towards achieving the Millennium
Development Goals.
But when even developed countries in the West balk at trade
liberalisation, it is not surprising that developing countries fear the
consequences for their own, far poorer producers.
Indeed, developed countries rightly stand accused of hypocrisy:
preaching free trade to the rest of the world, imposing trade
liberalisation upon developing countries through the policies of the
World Bank and the IMF, but keeping up our own trade barriers to protect
our own agriculture and other special interests.
If we are serious about the benefits offered by international trade
and investment, then we must start by dismantling our own trade
barriers.
In the current negotiations on the Doha Development Round, that means
an end to rich country agricultural export subsidies, cuts in
trade-distorting domestic support and significant opening up of our
markets. It also means dealing with tariff escalation - the hike in
import tariffs on processed goods that stop developing countries from
turning cheap coffee and cocoa beans, for instance, into valuable
consumer products.
Protectionism damages taxpayers and consumers alike. The Common
Agricultural Policy - which does untold damage to farmers in the poorest
countries of the world - also costs EU taxpayers some €50 billion a
year, plus another €50 billion in extra consumer costs through higher
food prices. Its goal - the protection of rural communities and Europe's
countryside - could be achieved more cheaply and without damage to the
developing world by supporting farmers directly to manage the
environment and to diversify.
Last years US tariffs on steel imports (eventually lifted after the
WTO ruled in favour of the European Union) not only damaged British
steel companies and workers, but also the US automobile industry that
had to pay higher prices for raw materials.
Protectionist fears generally rest upon the belief that international
trade and investment are a zero-sum game, that one more job in India
must mean one less job in Britain. But more growth in China does not
mean less growth in Britain. Just as the UK benefited from economic
growth in Spain, Greece, Portugal and Ireland - all far poorer countries
than us when they joined the European Union - so too we will benefit as
developing countries grow.
Above all, it is morally right that developing countries should be
able to lift their people out of poverty. But their growth is in our
interest too: as people in the developing world become richer, they will
buy more from us.
But if not protectionism, what should our approach to the threat of
trade-induced job losses in the developed world? The answer, of course,
is to maintain sound economic policies, ensuring that new jobs and
businesses are created faster than others are lost, accelerating
European economic reform, building strong regional economies and helping
people whose jobs are made redundant to get new skills and employment as
fast as possible.
The job losses in textiles - and other traditional industrial sectors
- have been extremely painful for the individuals involved, and for
their families and communities.
Equally, there is enormous anxiety about job losses in the new
service sectors - like call centres - that offered a lifeline to
communities devastated by the loss of industrial jobs and that now seem
to be threatened by 'offshoring'. But for the last seven years, every
job loss has been matched, and more, by a job gain: in every nation and
region of the UK, unemployment is down and employment up, by an
astonishing 1.9 million jobs across our country as a whole.
3 million less people work in manufacturing, but we have
· twice as many people now working in high value financial services
· more people than ever in work,
· more women than ever in work,
And, yes, we might not have the big visible icons of yesteryear, but
we are making products the world wants to buy. We are exporting
· £86 billion worth of services ever year;
· more business services than cars and consumer goods exports put
together;
· more than £5 billion of management consultancy and computer
services.
As well as exporting huge amounts, Britain is also
· the biggest recipient of inward investment into Europe; and
· has the biggest financial services sector in the world.
Our economy has never been bigger - worth over one trillion pounds in
2003; and goods have never been cheaper.
As technology and trade grow even faster, the challenge to us, and to
governments in other developed countries, is to step up the active
support we offer to people to continue updating their skills, and to
business to continue improving their competitiveness, so that we can go
on raising living standards for all our people.
I want to end by talking about our approach to trade in the EU -
particularly in light of the European Elections earlier this month.
As fifty years of the European Union have amply demonstrated,
countries that trade together, grow together. Together we are stronger
than we are on our own. And it is this strength that enables us to meet
the challenges of the changing world economy.
EU membership brings huge benefits to Britain. In return for the
contribution the UK makes, Britain benefits from access to a single
market of 450 million people, trade of £110bn, and significant foreign
investment from firms that locate in the UK in order to serve the whole
EU market. As a result, some 3.5 million jobs are in some way reliant on
the EU. British citizens also benefit from cheaper holiday flights and
free health cover while abroad.
Yet despite these benefits, the wider Eurosceptic movement is
gathering pace and large parts of the British press continue their
relentless campaign against Europe.
The challenge facing Britain is to decide whether to be a
wholehearted member of the European Union - or to sit on the sidelines.
Eurosceptics still argue that the UK's relationship with the EU
should consist of nothing more than a free-trade area.
The truth is if the UK wants a relationship with its European
partners limited to free trade, it will have to settle for some form of
free-trade agreement with the EU as a whole, along the lines of what
Norway and Switzerland now have.
Such an approach would be disastrous. In order to obtain access to
the EU market, both Norway has to agree to be bound by all the EU's
single-market rules, and Switzerland has to negotiate several different
bilateral agreements.
Both also pay hefty contributions to the EU: Norway is committed to
payments of 1.1bn euros over 5 years or 220m euros a year; Switzerland
agreed in May to payments of 1bn Swiss francs over 5 years, which works
out at 130m euros a year. But neither has any say whatsoever on how the
money is spent or on the rules that the EU adopts. In Norway, the result
has been called 'fax democracy' - because Norwegians get their new laws,
by fax, from Brussels.
Just at the time when Britain is winning the argument for economic
reform in Europe, when Europe is expanding and we in Britain are
benefiting from the boost to trade that this brings, it would be immense
folly for the UK to opt out.
So our response to UKIP - and to the Conservatives, whose policies
follow closely behind - must be to make the case for Europe. We cannot
afford to give up the fight for the hearts and minds of the British
people. We have to get this message out and we have to expose the cost
of withdrawal - to British trade and to British jobs.
I started by saying that left alone, globalisation is an unplanned
and uneven process that has huge consequences for every economy in the
world.
In Britain, we have every reason to feel comfortable with this
changing world. With our history of change, our global reach, our
scientific genius and our economic and political stability.
But we must not be complacent. There are huge challenges ahead. We
need to be equipped to meet them.
We must turn them into opportunities for everyone around the world to
enjoy the opportunity to share in rising prosperity. We must make
globalisation a truly progressive force for good in the world.
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