Thank you for inviting me to join this Forum today.
As a former Opposition spokesman on the City I am aware of IFSL's role in the promotion the UK financial services; and your contribution to the Liberalisation of Trade through the LOTIS Committee. The Government values your advice on WTO matters, such as the recent submission to the House of Lords inquiry on the role of the EU post-Cancun. Your contribution to the debate on the future of the Doha Round is important. We must get negotiations back on track.
A successful WTO Round could increase global incomes by nearly $400 billion (or 1.4% of GDP) each year. The potential gains are even greater for the developing world. Further trade liberalisation could increase the income of the developing world by $150 billion, three times the value of aid budgets. The number of people living in poverty could be reduced by over 300 million by 2015 – a major contribution to the Millennium Development Goal to halve poverty.
FREE AND FAIR TRADE
Creating free and fair trade rules can begin to tackle the misery of poverty and its potentially devastating consequences. Trade liberalisation and economic reform have real effects: Life expectancy in India has doubled over the past 30 years. In China 150 million people have been lifted out of poverty in a decade.
Despite the disappointing progress in Cancun last year 2004 offers fresh hope. All WTO members have signalled their willingness to come back to the negotiating table with greater flexibility than in the past. I have told fellow EU ministers and the European Commission that the EU must be positive and flexible. The US Trade Representative says that the US is ready to resume negotiations despite the difficulty of tough decisions on trade in an election year.
The EU is determined to work closely with the developing countries – from both the G20 and G90 group of smaller, least developed countries and those from ACP countries. Recent discussions between the European Trade Commissioner and G20 representatives have been encouraging. China and India say they are willing to negotiate and move the process forward.
WORLD ECONOMIC FORUM
At the World Economic Forum in Davos the UN Secretary General, Kofi Annan, said that the most important area to progress was agriculture. The IFSL report to the House of Lords highlighted that developing countries are unlikely to move on services without concessions on agriculture. We must continue to explain the long-term impact of CAP reform on the developing world and guide European agriculture to a more sustainable footing.
But it is vital that tariff barriers are not simply replaced by non-tariff barriers. As Europe must reduce trade distorting tariffs and subsidies, others must tackle their own protectionism. Developing countries have much to exploit here. The World Bank estimates that 70 percent of the burden on exports from the developing world results from trade barriers imposed by other developing countries. Removing such barriers could generate four times the benefit achievable from developed country liberalisation alone. I therefore welcome the emerging consensus – supported by many developing countries – to give priority to cross border trade facilitation and transparency in government procurement.
IFSL's interests lie in progress on liberalisation of trade in services. The service sector is vital to the UK economy accounting for two thirds of GDP and around 25% of British exports. The financial services sector employs over a million people with exports approaching £18 billion in 2002. There are many barriers to remove. We must increase the number of offers to lift restrictions submitted by WTO members.
'MODE 4' ISSUE
For these negotiations to progress the developed world needs to be more flexible over the temporary movement of people – the 'Mode 4' issue. Our ultimate goal is the elimination of all industrial tariffs. In the meantime we will work towards a substantial reduction to improve access to all markets for all WTO members.
But without constructive engagement by all parties – the EU, the US, G20 and G90 – we will not make progress. The prospects for a successful conclusion to the mid-February General Council look good – providing a clear roadmap for progress during 2004. We must seize this opportunity.
Patricia Hewitt has announced a Government White Paper to be published in 2004, outlining our vision of a global trading system that is fair as well as free. We will continue to look closely at the balance between competition and regulation in the financial services sector. Strong competition encourages industry to improve productivity in the global market place. The consumer benefits from wider choice and better products or services at competitive prices.
Regulation must not stifle innovation, but facilitate investment and international competitiveness. The regulatory framework established by FSMA has been a resounding success – as shown by countries such as Germany, Ireland and South Korea seeking to follow our example. My colleague, Lord Falconer, has announced a major review of the regulations covering the provision of legal services.
FINANCIAL SERVICES ACTION PLAN
In the EU we are nearing the end of the Financial Services Action Plan legislative process – with 36 out of the 42 measures complete. The creation of a single, integrated market is within sight. We need to build on the collaboration between Government and the financial services industry to tackle outstanding issues, such as the Investment Services Directive and the EU Directive on Services in the Internal Market.
My Ministerial responsibility includes the work of UK Trade & Investment - formerly Trade Partners UK. UK Trade & Investment works to develop trade development strategies and priorities with the key players, often SMEs, in industry sectors. In financial and legal services UK Trade & Investment works with IFSL, the Corporation of London, Mansion House, the Law Society, Bar Council and Government departments including the Department for Constitutional Affairs and Treasury. That means business driven priorities for overseas events, inward visits by key decision makers, and outward mission programmes including support to the Lord Mayor.
The worldwide interest in Public Private Partnerships presents major opportunities for UK financial and legal expertise. UK Trade & Investment can draw upon commercial teams in over 200 Embassies and Consulates throughout the world to promote the UK's financial, legal and PPP expertise and lobby overseas decision makers on liberalisation issues. I am grateful to the Corporation of London, the Law Society, the Bar Council and DCA for the training provided to overseas staff, helping them understand your needs and to raise the City's profile across the globe.
As UK Trade Minister I am keen to promote the financial and legal service sectors when I travel overseas, either on my own or with the support of a business delegation. This worked well in China when I led the business delegation accompanying the Prime Minister last July. In India I stressed the benefits of the liberalisation, building on the visit by President of the Law Society in December. There was positive feedback from Minister of Commerce, Law and Justice, Arun Jaitley.
Clearly the door is now ajar. India is beginning to listen to our message on liberalisation of legal services, but more work is needed. In short the Government will continue to work with you to add value to your efforts.