Main Menu
- Other links
- Sections
- About
This snapshot taken on 26/07/2008, shows web content selected for preservation by The National Archives. External links, forms and search boxes may not work in archived websites.
The Rt. Hon. John Hutton MP, Secretary of State for Business, Enterprise & Regulatory Reform
The Centre, Brussels, 15 November 2007
Good afternoon. Thank you for this opportunity to speak on what I believe will come to be seen as one of the key decisions now facing the EU.
It is important because the decisions we make here will help define the extent to which we truly commit to being part of the new open, global economy, or whether we try to hold on to the old order of protected markets, subsidies and barriers to international trade.
This issue has provoked fierce debate before, during and since the Commission’s consultative Green Paper.
I can think of no better place to discuss this issue than here at The Centre.
Change has joined death and taxes as one of the very few certainties in life. And as countries and individuals – we have a choice.
We can either embrace change – developing the attitude and capabilities we need not just to survive, but also to thrive. Or we can retreat within our own border or homes and try to ignore it.
But in an increasingly interdependent world, there are very few places left for anyone to hide.
Technology continues to tear down barriers to the movement of people, money, goods and services around the world. Emerging economic titans such as China and India continue to grow at an astonishing rate and the global economic world to expand.
Encompassing billions more workers ambitious and eager to take advantage of the opportunities offered by the global labour market. And billions more consumers keen to benefit from the increased choice and quality improved access to goods and services from across the world delivers.
This is a world where the food we eat, the clothes we wear and the gadgets we use are just as well - if not better - travelled than we are.
It is a world where the biggest problems we face – climate change, security and poverty – demand greater innovation and stronger collaboration on an international scale.
The latest generation of European leaders must equip our people and our economies to succeed in this new reality.
Effective trade defence measures ensure the EU is able to act against unfair trade - where exporters injure EU producers by pricing below their own market to gain competitive advantage or because they are unfairly subsidised.
But the line between genuinely unfair trade and healthy competition is narrow. First and foremost, we must not allow trade defence to become an excuse for protectionism.
In the longer term free trade and competition makes us stronger, not weaker.
It is more likely to bring jobs and growth than protectionism and subsidies. And we are more likely to meet our other developmental objectives through free trade than any other approach.
The term trade defence probably doesn’t mean much to the average European citizen. But we should be in no doubt that if present or future generations of European businesses miss out on new markets, if our people miss out on better jobs and consumers on higher quality goods at lower prices – they will judge us harshly. Rightly so.
After the Second World War, the European Communities helped rebuild the war-shattered economies and societies of its members. When the Berlin Wall came down, it enlarged to help reunite Europe and give greater economic and social opportunities to its citizens.
Now it has the chance to deliver a strategy that will empower people even further.
The Commission will soon debate the response to the EU Trade Defence Green Paper. This follows the largest public consultation ever organised on this subject. It has generated wide-spread debate and hundreds of responses.
In the UK, we fundamentally believe the Commission must commit to modernising the trade defence regime to meet current and future needs.
We made this clear in our response to the 32 questions posed in the Paper. And we continue to do so in our contacts with the Commission, member states, businesses and other interests.
As the President of the European Commission, Jose Manuel Barroso has said: “…global Europe must be an open Europe. It must be an outward-looking Europe...It can and must resist those whose response to globalisation is to retreat behind protectionist barricades.”
We agree. Gordon Brown’s vision for a global Europe argues that the EU’s approach to the challenges of globalisation should be guided by 3 principles:
Open economies boost competitiveness and productivity. They help improve living standards, drive innovation, sustain economic growth and keep prices low.
The global economy is a reality we cannot deny.
Since 1990, there has been a six-fold increase in the global stock of foreign direct investment – reaching over $10.5 trillion in 2005. This is in comparison to only a doubling in world GDP over the same period.
By 2020, the Asian economies’ share of world GDP, which was just 18.5% in 1950, is expected to rise to 30%. China will be the 2nd and India the 6th largest economies in the world.
An explosion in the workforce engaged in the global labour market and the rapid advancement of technology has changed the business landscape forever.
I understand that the impacts of such global changes generate fear and uncertainty for many people. But in an increasingly interdependent world, the lessons of history tell us protectionism is not the answer.
We might defend some jobs for a short time this way, but only at the expense of many more in the long term.
Between the wars, countries chose to retreat behind higher tariff barriers. The result was that all countries suffered through the decline in global trade and investment and falls in employment that followed.
Since the Second World War, the average industrial tariffs of developed countries has fallen from nearly 40% to less than 5% through eight rounds of multilateral trade liberalisation. This liberalisation has contributed to a twenty seven fold rise in world exports and an eight fold rise in world income.
The best - perhaps only - way to survive and prosper is to adapt not retreat – supporting EU citizens by empowering them through better life chances, skills and jobs.
We have never sought to limit the ambitions or aspirations of our own people. And through processes such as the Doha Development Agenda we’ve urged others to embrace the benefits of globalisation and to resist a retreat into protectionism. This isn’t the time for us in Europe to change.
We must recognise that for every challenge globalisation brings, there are countless other opportunities it creates. New markets, jobs and partners that no business can afford to turn their back on.
Like you, we hear much about what a revision package might contain. But like you, we have to see what is finally put on the table.
There are three areas in particular where the UK believes our EU trade defence regime should be modernised and improved for business and citizens.
First, the EU regime must operate in a way that takes account of the commercial realities modern businesses face. For example, multinational competitors operating through direct overseas investment, global production and sourcing chains - to legitimately benefit from the comparative advantages of different regions.
Second, it must actively identify and assess the interests of all relevant economic EU players. Not just the interests of EU-located producers, important though they are. But also the interests of EU companies that produce globally for industry and other consumers, and of retailers, employees and consumers.
All these players contribute to the EU economy and have valid interests that must be recognised.
We must also hear the legitimate views of third country exporters and Government in this process.
Third it must be built on transparent procedures and equal access to information.
I want to make clear that the UK recognises anti-dumping and other trade defence instruments as legitimate trade policy tools. We fully accept that they can be a justified response to unfair trade that breaches WTO rules.
Rules are rules. When they are broken, there must be consequences for the wrong-doer.
In the long-term, an open economy delivers economic and social benefit. In the short-term, unfair trade imposes unjustifiable costs against the overall interests of the EU. It undermines the principles of free and fair markets.
And this is reflected in our votes in the anti-dumping committee where – while we may abstain rather than actively support some cases – we have actually voted against only half of the cases brought forward since 2000.
We believe it’s important that each proposal be judged on its individual merits and decisions be based on thorough economic analysis.
As commercial pressures intensify, the most competitive, internationally focused companies are finding efficiencies and advantage through supply chains that cover continents, and other foreign direct investment.
As a result, more EU businesses are operating from bases in other countries. Millions of EU citizens are employed by foreign-owned businesses. And the sales of these businesses have risen by over 400% since 1990.
This is the business environment in which all EU companies must work. It’s the reality and future we ask our students and workers to train and develop for.
And it brings huge benefits to the EU economy. With high-value employment and massive increases in the earnings from the overseas operations and investments of EU parent companies.
It makes no sense therefore to penalise the EU-owned companies that have taken legitimate and positive steps to operate and grow effectively within the global economy.
I believe that necessary measures to boost competitiveness – including the objectives of the Lisbon Agenda - must be considered in the Commission’s trade defence deliberations.
All relevant EU economic interests from member states must also be taken into account. This demands more active engagement with producers, traders, trade unions, retailers and consumers - whether they’re buying materials for manufacture or shoes from the high-street.
Consumers are an important element of this equation. Taking account of their interests will help make sure that open markets and globalisation are seen as beneficial to the individual - with greater choice and lower prices. This lies at the heart of the Citizens’ Agenda.
There must be no repeat of the ‘bra wars’ in future years. European citizens rightly want the opportunity to buy the best value goods possible, and developing countries rightly demand that we honour trade deals we do with them.
If our citizens and other nations are to maintain faith in the EU in the future, it is vital we do not keep out goods simply because they have been made more cheaply somewhere else.
We must protect against unfair advantage. But the ability to produce goods cheaply is not in itself an unfair advantage. In the past in Europe, we have sometimes acted as though we believe it is.
A full account of all interests calls for a rigorous analysis of business and consumer needs, backed by strong economic assessments. This is the best way to ensure a Community Interest test that’s fair, balanced and objective.
Businesses need a measure of predictability to make the most competitive decisions they can. Improved transparency and increased access to information would help foster, as far as possible, more certain business conditions.
Through:
we can help deliver a truly equitable and forward looking process.
Europe has the people, potential and power to be a leading global player - but only through an open economy approach. There is no protection in turning away from the world.
We must engage and ensure the economic conditions for all EU businesses to prosper globally. We must focus not on building barriers, but on dismantling them. We must not turn back to protectionism and closed borders, but look outward.
This is the best way to empower and enable all EU citizens to reap the brilliant opportunities that now lie within and beyond Europe’s borders. Thank you.
[CHECK AGAINST DELIVERY]