Speech by Minster of State Gareth Thomas at Wilton Park on 5 October 2009
05 October 2009
Let me start by giving some context to this discussion.
While many countries are starting to see signs of recovery from the economic crisis, world trade is still likely to shrink by 10-15% this year.
Globally Foreign Direct Investment inflows are forecast to be down 30% on 2008 levels.
Millions of people in developing countries are now just starting to feel the full effects of the crisis.
The UN estimates that the financial crisis has already pushed some 100 million people into poverty, with more than 60 million becoming unemployed over the last two years.
To help protect people around the world from the worst impacts of the economic crisis, we need to continue championing more and fairer trade - as the driver of economic growth and a lifeline out of poverty for developing countries.
There are five key areas we need to focus on:
Firstly, we need to deliver on the commitments we have made through the G20 in London and Pittsburgh. We have already made significant progress.
On taking global action against protectionism:-World Trade Week in June highlighted the importance of global trade and launched the Global Trade Alert to monitor protectionism. Recent reports by the World Trade Organisation and the Global Trade Alert suggest that although there has been some minor slippage, political commitments to avoid protectionism are having a positive effect. But we must continue to be vigilant.
On delivering an additional $50 billion to safeguard development in the poorest countries:-The UK has led the way. Countries such as Tanzania, Kenya and Mozambique are already benefiting from the increased finance available.
On protecting the most vulnerable from the impact of the economic crisis:-Last week the UN launched its Global Impact and Vulnerability Alert System, and the UK has committed £200 million through the World Bank to provide social protection for the most vulnerable.
On agreeing a multilateral trade deal:-At Pittsburgh leaders committed to work towards conclusion of the Doha Development Agenda in 2010. We now need to build on the political progress there has been with action that will deliver real progress next year. The G20 also agreed to a Ministerial stock take by early next year - to hold countries to account on the progress they have made.
Secondly, we need to do more to ensure that developing countries can access trade finance.
The World Bank's International Finance Committee (IFC) launched its Global Trade Liquidity Programme (GTLP) in July, targeted specifically at developing countries.
The G20 has contributed some $2.5 billion and total commitments stand at $4 billion.
The GTLP has the potential to provide up to $50 billion of trade finance over 3 years with around $12 billion for Low Income Countries. So we need to continue working with other donors and the IFC to ensure that the GTLP is fully funded, and to monitor its impact on the poorest countries.
Thirdly, we need to make further progress in reforming our international financial institutions and giving greater voice to developing countries. We have agreed an accelerated timetable for World Bank voice and representation reforms, to be completed by spring 2010 - a year ahead of schedule. At Pittsburgh the G20 agreed to shift voting power by at least 3 percentage points in favour of developing countries - in addition to the 1.5% agreed last October.[Douglas Alexander is discussing next steps with his fellow World Bank Governors today in Istanbul].
It is crucial that we maintain momentum.
To avoid a one-size-fits-all approach, both the IMF and World Bank are reducing their conditionality. The average number of conditions in a Bank loan fell from 32 in 1999 to 9 in 2008, and the UK is pressing for further progress. We also agreed in London and restated in Pittsburgh that appointments to International Financial Institutions should be open, transparent and merit-based. This must be demonstrated with the next high-level appointments in 2012.
Fourthly, we need a united message on trade and climate change ahead of the Copenhagen meeting in December. As we approach Copenhagen, we need to keep pushing for an agreement that global emissions should peak and start to decline before 2020, and that they should be cut by at least 50% below 1990 levels by 2050.
Trade policy can play a role in meeting this target. The global market for low carbon and environmental goods and services was worth some £3 trillion in 2007, and is forecast to grow by 45% by 2015. An Indian company called Suzlon is now the fifth largest wind-turbine manufacturer in the world, and covers 8% of the global wind market.
We need to liberalise trade in green goods and services, and support a 21st century green revolution. We need to see the major world economies committing to voluntary reductions in tariff barriers as a signal that we are serious about sharing low-carbon technologies more easily.
At Pittsburgh global leaders committed to implement domestic policies that will stimulate investment in clean energy, and to provide financial and technical support for clean energy projects in developing countries.
We now need to build on this momentum.
And fifthly, we need a comprehensive approach that helps developing countries improve their capacity to trade, and puts poverty reduction at the heart of our trade policy.
We need to continue championing free and fair trade as the best way to reduce poverty.
In our recent White Paper, DFID committed to spending at least £1 billion a year on support to growth and trade in developing countries.
We also need more global funding for Aid for Trade. In particular we need to support Southern and Eastern Africa to deliver on the promises made at the North South Corridor conference in April 2009. Over $1.2 billion of funds were committed to upgrade transport networks from the Copperbelt of DRC and Zambia to the ports in South Africa and Tanzania. Going forward, we want to expand the programme to cover other transport corridors in Eastern and Southern Africa.
Conclusion
In short, Ladies and Gentlemen, we need to continue to demonstrate the vital importance of trade for jobs, growth and development, and we need to ensure that both developed and developing countries alike can share in the benefits that global trade delivers.
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