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Free trade must go hand in hand with raising social, health and environmental standards, says Prime Minister (13/9/2000)

The Prime Minister today welcomed a Performance and Innovation Unit (PIU) report that shows it is possible to balance an open system of free trade with raising labour and animal welfare standards and protecting human health and the environment. The UK Government has been leading the way in taking a strategic look at these issues and hopes that the analysis will be useful for trade negotiators, interest groups, businesses and consumers alike.

The report, 'Rights of Exchange: Social, Health, Environmental and Trade Objectives on the Global Stage', highlights growing public concerns about how and where products are made and the extent to which the trading system can accommodate labour standards, animal welfare, human health and environmental objectives. While consumers want more and clearer information about where and how products are made, there is a real danger that these issues will be used as a cloak for protectionism with negative impacts for everyone, but especially for poorer countries.

The report's main conclusions are that:

• opening international markets can be expected to benefit social, health and environmental objectives over time by raising standards of living;
• but open markets will only deliver these benefits if supported by the right policies - for example, measures to address increased pollution or to improve health care systems;
• developed countries and international institutions need to do more to help poorer countries gain market access for their products and to implement supportive social, health and environmental policies;
• unilateral trade restrictions by rich countries to force poorer ones to adopt higher standards will almost always be counter-productive;
• world trade rounds are not suitable as the main forum for negotiating non-trade issues;
• the role of the World Trade Organisation (WTO) is poorly understood, but it provides an effective framework for trade;
  the trade rules need more clarity and transparency in several areas including production processes, product labelling and the precautionary principle; improvements are also needed to the dispute settlement processes;
• more multilateral agreements are needed to address social, health and environmental issues, with these agreements and trade rules mutually supporting each other; and
• there is much that business and consumers can do to influence standards and government can play an enabling role in encouraging:
  • voluntary initiatives by business and best practice in corporate social responsibility
  • better product labelling which can significantly improve consumer choice and social, health and environmental outcomes.

Welcoming the report, the Prime Minister said:

'An open and rules-based trading system brings great opportunities and benefits. As consumers, we now enjoy greater choice and competitive prices; as businesses, we profit from greater access to markets; and as citizens, we benefit from improvements to living standards at home and abroad.

'However, trade liberalisation also presents new challenges on the environment, conditions at work, human health and animal welfare. But there is much that all of us can do - as government, businesses and individual consumers - to help raise standards around the world.

'I welcome the PIU's report. The Government's future policy-making will be guided by the principles it sets out. We intend to use the report's conclusions as the framework for our long-term agenda. I also hope that its analysis will create a more informed and open debate on the issues.'

Brian Wilson, Minister of State at the Scotland Office, and sponsor Minister for the PIU report, said:

'This report shows that in general a liberal trading environment brings economic benefits and social advances. It also identifies areas where additional efforts are needed to help ensure that trade liberalisation makes the maximum contribution to sustainable development and poverty elimination.

'Trade cannot and should not be used indiscriminately as a big stick with which to force change in developing countries. This approach is usually seen by them as just another form of protectionism imposed by rich countries. However there is a need to make further progress through co-operation and support.'

Richard Caborn, Minister of State at the Department of Trade and Industry, said:

'The PIU have provided a convincing and coherent intellectual framework for addressing these complex issues. I welcome the report's conclusions setting out the limits to the sensible use of trade measures to pursue social, health and environmental objectives. In addition, I strongly support the emphasis placed on the need for a more coherent approach towards social, health, environmental and trade objectives at the multilateral level and the important role of business and consumers in bringing about change.'

Notes for editors

Media copies of the report, 'Rights of Exchange: Social, Health, Environmental and Trade Objectives on the Global Stage', can be obtained from the Cabinet Office Press Office on 020 7270 0432. Non media copies can be obtained from the PIU on 020 7276 1452.

Further information about the PIU, including copies of all their published reports can be viewed on their website at www.cabinet-office.gov.uk/innovation

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