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German/British Chamber of Commerce Annual Dinner

The Rt. Hon. Alistair Darling MP,  Former Secretary of State for Trade and Industry
London,  04 July 2006

It is a pleasure to be here this evening to celebrate the UK’s business partnership with Germany.

The German-British Chamber of Commerce has been promoting trade and investment for over 30 years. You have played a key role in strengthening relations between our two countries. And it is a relationship underlined by Trade between our two countries.

And all over the world we can see tremendous opportunities to expand trade. So it is essential that both our countries play their part in the rapid global economic expansion we see today. And we must embrace globalisation as an opportunity, and not treat it as a threat.

 Because to respond to this huge change by running away from it – because that is what protectionism is - will inevitably lead to less trade and investment, lower growth, and fewer jobs. 

For more than 450 million people living in the European Union we need more trade not less. Because if we respond positively, our economies will expand  providing jobs for our people and opportunities for businesses.

Especially, at this time as the WTO talks reach a critical point, politicians and business leaders across the world have an opportunity to lead and shape events. We have the opportunity to show how economic expansion can bring new jobs and increasing opportunities and prosperity for all our people. I want to say more about that shortly.

Investment

Now Germany is important to us. It is one of the most active foreign investors in the UK.

For example, there are substantial investments in UK utilities by E.ON and RWE.  We believe in an open liberalised energy market. And we want to see the same approach in every EU state.

The German economy increasingly depends on high technology to compete in the globalising economy. So do we.

It is well-matched to many UK strengths - Life Sciences and Performance Engineering are good examples.

According to the Bundesbank statistics the UK was the favoured destination worldwide for German investors after the US.

Trade

And Germany continues to be one of the most important trading partners for the UK.

The UK exported over £21billion worth of goods last year to Germany. Second only to our exports to the US.

In fact, we exported more goods to the German State of North Rhine-Westphalia in 2005 than we did to the whole of China, India and Russia combined.

UK Economy

Now our aim is to ensure that the UK is, quite simply, one of the best places in which to do business.

In a recent United Nations survey, we were placed joint 7th - joint with Germany! – as the best place to do business. 

A growing economy is a good place in which to do business – it offers scope for new businesses to set up.

Indeed, we have had the longest period of sustained economic growth combined with low inflation in our history. That is something we  remain committed to. We will do nothing to put it at risk.

Over the same period, the number of jobs in the UK has grown by 10% - a record high showing how in a modern economy we can maintain our commitment to full employment.

Our aim is to raise the competitiveness of the UK economy and move individual businesses up the value chain. Today, one in four British jobs is linked to business overseas. Which is why trade is so important.

Europe and World Trade Issues

In the next few months the current WTO talks will reach a critical phase which could shape world trade and therefore development and growth for the next few decades.

Here in Europe the future prosperity of over 450 million people living in the European Union depends on our ability to trade.

The rapid expansion of economies across the world is a huge opportunity for us in the European Union.

There is a big prize for a successful completion of the trade round and a huge price to pay for the failure.

Goods, services, investment and people have been crossing national boundaries for centuries.

But it is the PACE of change today that is unprecedented. And this does put pressure on our economies and communities and it has brought huge structural change to our economies. All the more reason to redouble our efforts to make it easier to trade with each other.

In 1980 less than a tenth of manufacturing exports came from the developing world. Today it is almost 30%.

Today China alone is producing 70% of the world’s photocopiers, 50% of cameras, 40% of microwaves – and at wages that are a fraction of our own.

With India and China growing at 8 per cent and 10 per cent, we are seeing an historic shift of economic power to Asia.

Between them, India and China are producing over five million graduates a year. Increasingly, they are competing for the worldwide markets in services too.

And rising demand due to worldwide industrial and economic restructuring has fuelled oil price rises. Meanwhile, rising consumption poses environmental challenges on an unprecedented scale, which affect all of us.

But alongside these challenges, globalisation brings real opportunities too.

Increased trade create jobs and therefore growing prosperity.

And for consumers, globalisation can mean access to cheaper goods.

Now globalisation need not be a zero-sum game. It does not mean that one country’s benefits must come at the expense of the other.

As developing countries grow wealthier, they will become new markets into which we can sell our products and trade a wider range of goods.

But in the UK, in Europe and in the US and elsewhere, we have already seen a reaction – a backlash – against globalisation.

In some cases it is Governments themselves who are giving in to the temptations – and pressures – to respond to globalisation in ways that simply won’t work. By erecting barriers, they send out the wrong message that globalisation is a threat to run away from, not an opportunity to pursue.

The irony is that the more the world economy is integrated, the greater the pressure for a retreat behind the supposed security of national boundaries.

Today, we are seeing waves of economic nationalism – protectionism, by another name.

In Europe this has manifested itself in a number of ways:

Attempts by some states in Europe to make cross-border takeovers in some sectors more difficult, if not impossible.

Vocal opposition to a number of takeovers of different European companies in sectors such as steel, energy, banking and even yoghurt, in order to protect so-called “national champions”.

Yes, there will be change. There always has been. But new jobs come from increased trade and greater movement of good and services. Lower prices for goods in our shops, lower interest rates, higher economic growth, higher employment.

In short, if we make the right choices globalisation can benefit everyone.

We have an opportunity to lead and to shape events. We have the opportunity to show how globalisation can bring new jobs and increasing prosperity for our people provided we make the right choices.

That’s why the WTO talks need to succeed. There’s too much at stake. If they fail, how can we expect the developing economies to join in multilateral developments. How can we stop the protectionism we already see in the US and here in Europe, for example.

This is an opportunity we cannot afford to miss. We will do all we can to achieve a deal that delivers for the world’s poorest as well as the global economy. It’s too easy to talk of what countries may lose. We’ve got to focus on what can be won – on the tremendous gain for all our people and for countries across the world.

Conclusion

Our two countries, our businesses, our people,  are becoming ever closer. Building security, prosperity and opportunity in a changing and uncertain world.

It is essential that we work together now and in the future.