Speech
30 October 2008
The DDA trade landscape
Speech by DFID Minister Gareth Thomas to the Confederation of British Industry (CBI) / Warwick Commission , the Methven Room, Centre Point, 103 New Oxford Street, London, 30 October 2008
Thank
you Richard (Lambert).
It has become a truism in recent weeks that, with the global economy reeling
from a credit shock and an economic downturn, we are facing uncertain times
- the full impact of which may take some months and possibly some years to work
through.
While we wait to see the longer term consequences of the financial turbulence, I
think have to decide how we will react as an international community in the face
of calls for greater protectionism and higher barriers to trade.
I believe that the most important thing we can do to deliver prosperity for
developed and developing countries alike is to ensure that the global market is
fair, open and sustainable, so that everyone – especially the world’s poor – can
unlock the benefits that all of us in this room recognise increased global trade
can deliver.
Despite the current economic turbulence, the world economy will double in size
over the next 25 years, creating a billion new jobs. But if current trends are
maintained, that economic growth and the wealth it creates will by-pass the
people who need it most.
The challenge of making sure that all countries – the UK certainly, but also the
poorest – can play a proper role in globalisation, and receive a proper share of
its rewards, is one, I would argue ,of the greatest challenges of our time.
We need to be clear ourselves here in the UK - and clear with our international
partners - that trade continues to be fundamental to meeting that challenge,
with all the many consequences that brings.
There are, I believe, five key elements to ensuring our international trade
system is equipped for the next ten years.
- Firstly, a successful Doha deal
- Secondly, stronger institutions
- Thirdly, more support for business
- Fourthly, investment in low carbon growth
- Fifthly, improved infrastructure in Africa and other developing countries
A multilateral trade deal
It is perhaps obvious, but we still need a Doha deal. Despite the setback this
summer, a Doha deal is still our top priority. Securing a deal would provide a
vital shot in the arm for the global economy – and a lifeline out of poverty for
developing nations.
The lack of agreement at the WTO Ministerial in July was of course
disappointing. But we should recognise that significant progress was made.
The package on the table would have secured substantial cuts to US and EU
tariffs and subsidies on agriculture; it would have delivered greater market
access for EU firms to countries like Brazil and Argentina, in key sectors like
cars and the wider automotive sector; and it included strong signals on possible
services liberalisation for example in asset management and insurance markets in
India, China, and Brazil.
The value of an overall deal has been estimated at £100 billion each and every
year, with the benefit to Europe alone worth potentially some £25 billion per
year.
There is a lot at stake.
Although we cannot now conclude the Doha Round this year, there remains a window
of opportunity following the US elections for securing agreement on agriculture
and industrial goods, which could then pave the way for completing a deal next
year.
We see the forthcoming international Group of 20 leaders’ meeting in Washington
on 15 November as a milestone for making political progress.
At that meeting we will urge countries to show their commitment to an open
global economy, and – as part of that – to a multilateral trade deal.
If we don’t succeed in securing agreement this year, we will miss an important
opportunity. The new US administration will need time to settle in and trade is
unlikely to be their first priority - although the confidence injection a Doha
deal would deliver for the global economy may be a powerful attraction to a new
president. Indian elections and changes to the European Commission next year
will also reduce their ability to engage.
If we don’t succeed this year, the danger is that we may have to wait until 2010
before we have another chance. So it is urgent we act now.
Stronger institutions
As well as staying firmly committed to Doha, we need to ensure that our
international institutions are fit for the 21st Century.
Alongside reforms of the IMF and the World Bank which have been well discussed
in the media recently, there will inevitably be a discussion about how to make
sure the World Trade Organisation is properly equipped for the challenges ahead.
I believe that discussion needs to address:
- The scope of the WTO on climate change, and how it relates to the UNFCCC and other international institutions;
- The WTO’s role in policing Free Trade Agreements – both those upcoming and recently signed;
- How to ensure developing countries are better able to engage in trade negotiations;
- And whether we should consider alternative decision making processes – such as plurilateral agreements – in the future, after the Doha Round.
Support for business
We also need to continue to help UK businesses gain access to new and emerging
markets – enabling them to achieve faster growth, and to generate wealth for the
countries we’re in. You will be familiar with the work of UKTI, which is helping
UK businesses overcome barriers to trade, and generating around £3 billion a
year in benefits for its trade customers.
It has already helped nearly 20,000 companies to exploit opportunities in
overseas markets. We want that to grow.
In recent years we have sort to concentrate the work of UKTI on high growth
markets such as India, China, other Asian countries, the Gulf, and other
emerging economies will continue to be our priority. But I’d be interested in
views on whether or not small and medium sized enterprises will want further
help to access more familiar markets such as the EU and US, where language, rule
of law, and governance issues are less significant.
We are also working to conclude Investment Promotion and Protection Agreements (IPPAs)
with priority countries identified by business. Successful agreements will set
higher standards of investor protection – enforceable through international law,
with independent settlement of disputes as a key part of those agreements – and
encourage new investment in the UK and partner countries.
We also see bilateral trade agreements as a key part of improving trading
opportunities and opening up new markets for investment, alongside Doha.
But it is essential that we ensure Free Trade Agreements genuinely address the
barriers facing UK businesses. We need to agree FTAs which go “deep” enough to
cover issues such as intellectual property rights and competition, and don’t
distract from the importance of Doha.
Our short term priorities are the Free Trade Agreements with the Republics of
Korea and India - two key trading partners of the future - and we hope to see
the conclusion of at least one of these agreements next year.
Climate Change
If developing countries are to achieve sustained economic growth, they will need
to adopt new climate resilient technologies. To help them, the World Bank’s
Clean Technology Fund – with UK backing - will support programmes which
demonstrate low carbon development technologies in action.
We are also looking at dynamic new proposals for Europe to work with the Chinese
government on Low Carbon Development Zones in China. These Zones, like special
economic zones, could provide a far-reaching opportunity for us to try out a new
range of trade, investment and development policies which would put China and
the EU on a faster track to an energy-secure, low carbon economy.
UK and EU business has a real stake here. The EU would benefit as a net exporter
of environmental goods. And the UK would capitalise on our strength in
environmental technologies, and our expertise in the fields of clean coal and
carbon capture and storage.
The challenge is now to make Low Carbon Zones a reality at the EU-China summit
on 1 December.
Aid for Trade
Finally, developing countries also need to build up their infrastructure and
improve their capacity to trade. In the Central African Republic moving a
container from a factory in Bangui, the capital, to the nearest port and getting
through customs takes 116 days. In Denmark it takes five.
As I’m sure you’d agree, delays like that make doing business nearly impossible.
These are the kind of issues that governments can do something about.
As a donor government, we will shortly be launching a strategy setting out how
the UK will support vital infrastructure programmes to improve roads, ports and
telecommunications – things which developing countries desperately need if they
are to participate in the global market – the so called Aid for Trade agenda.
We will increase our Aid for Trade to over £400 million a year by 2010 – a 50%
increase compared to 2004. For example, we are providing nearly £5 million to
remove bottlenecks and reduce transport costs in Africa’s North-South Trading
Corridor.
And next year I will be championing an Infrastructure in Africa conference
hosted by the southern and east African regions to demonstrate how this
initiative can improve trading opportunities from the copper-belt of northern
Zambia to the ports of South Africa.
Conclusion
As we respond to the financial crisis and the economic downturn, our ability to
maintain open, sustainable economies, build stronger trading partnerships, and
stand firm against those who would prefer to erect walls and barriers around us
will define how quickly we emerge from economic difficulties.
Open markets will continue to be fundamental to our ability to prosper – and for
developing countries in particular to see the benefits of globalisation.
Links
- UK launches Aid for Trade Strategy - 4 December 2008
- Millennium Development Goal 7: Protecting the environment
