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Thank you for that introduction, Paul. I’m
delighted to be here.
The International Chamber of Commerce stretches
across 130 countries and includes key emerging economies such as Brazil,
China, South Africa and India.
As well as your important role in reflecting
national thinking, you give us a valuable insight into global thinking
which is particularly important in the run up to Hong Kong, where 149
Trade Ministers will gather just three weeks from now.
Your theme for tonight is “the difference a
successful Hong Kong can make”. This is an appropriate theme - because the
enormous benefits of success are sometimes forgotten.
The last trade round added $500 billion to world
GDP.
This round could also boost world output by
hundreds of billions of dollars.
Strengthening global security, increasing global
prosperity.
Creating a system of trade that is fair as well as
free has the potential to lift millions out of poverty.
It will bring benefits for our economy – in the
form of reduced inefficiency and greater productivity; for our consumers –
lower prices and higher quality; and for our businesses – by providing
more export opportunities in a liberal trading environment.
It will develop the role of business - in the
business of development.
Equally startling is the cost of failure.
No-one stands to lose more from preserving the
status quo than developing countries.
Today I want to talk about the kind of deal I
would like to see achieved at Hong Kong – one that unlocks the development
potential of this round, and thus builds a more competitive economy in
Europe.
But first, I’d like to step back in time. Over the
summer, I read two biographies by politicians about politicians – who says
we’re self-obsessed? – William Hague’s biography of Pitt the Younger, and
Roy Jenkins’s biography of Churchill.
First, to 1785. Hague tells how Pitt tried to
reform the pernicious protectionist regime Britain had put in place
against Ireland. We had banned Irish ships; forbidden Irish imports; and
levied duties on Irish wool.
In a speech to the Commons, Pitt described
Ireland’s treatment as “cruel and abominable.”
He called for a “system of equality and fairness”
creating a “community of benefits” and not a “community of burdens”. He
described a system of trade with Ireland that would not “aggrandize the
one or depress the other”.
Pitt lost the vote. Ireland sank further into
abject poverty and the rest, as they say, is history.
Then fast forward to 1904. Jenkins’ biography of
Churchill tells of his struggle against protectionism in Balfour’s
Conservative Party.
Churchill wrote:
“Our planet is not a very big one… I see no …
reason why we should endeavour to make inside our planet a smaller planet
called the British Empire, cut off by impassable space from everything
else.”
Churchill warned that unless Balfour changed his
mind, Churchill would “consider his position” - that most famous of
political codes.
Balfour was unmoved - and Churchill crossed the
floor of the House to join the Liberal Party the following year.
The debate between the protectionists and the free
traders has always been fierce.
As an island trading nation, we know the power of
trade as a force for good.
We are still one of the most open trading nations
in the world.
It’s no co-incidence that Europe grew as we
removed our barriers to trade. And as our prosperity grew, and our
interests became more intertwined, so our security grew.
In 1950, East Asia was poorer than Latin America.
But whilst East Asia looked outwards and put trade and exports first,
Latin America turned inwards and became protectionist. Latin America
stagnated - East Asia surged ahead.
It’s astonishing to think that Japan was described
as a “developing country” just forty years ago. And impossible to conceive
of a situation in which we could find ourselves at war with them again.
Free trade is good. But it’s not always been easy
to convince people of this.
After the war, we had GATT - which became known as
the “general agreement to talk and talk”.
Then the WTO and the Uruguay Round – the “Long and
Winding Round”.
The basic problem in trade talks has been that too
many rich countries have used their wealth and power to demand concessions
from others, whilst conceding nothing themselves.
In the years after the Uruguay Round, sub Saharan
Africa actually became poorer than it had been when the round started.
The Doha Round was deliberately designed to
redress this balance – to devise a trade system that was not only free,
but fair.
That’s why it’s called the Doha Development Round.
It was launched in the aftermath of 11 September –
when world leaders agreed that increased security depended on enhanced
access to rising prosperity.
Since then, that spirit of harmony has become more discordant.
Cancun ended in failure.
It’s too early to say whether Hong Kong will fail or succeed.
But I will say, from my numerous phone calls and meetings with my
counterparts, that no-one wants Hong Kong to fail.
Yet the prospect of failure is very real.
This requires all of us to make a monumental effort to get the process
back on track.
We need more talk about what can make a deal, and less about what would
break it.
More time thinking about what we should offer, and less about what we
should protect.
We need more pragmatism and less posturing.
We can’t let Hong Kong collapse. It’s too important to the process, if the
Round is to conclude successfully next year – and failure in the round
could sound the death knell for the whole concept of multilateralism.
Global change is taking place too swiftly for us
to squander this chance.
Economic change – with India and China producing
more engineers, computer scientists and university graduates than Europe
and America combined.
Technological change – with products appearing and
disappearing in the click of a mouse.
And demographic change – with Europe’s falling
birth rate and ageing population, and the rising population in the
developing world. In India, 60% of the population is under 30.
Protectionism will not protect our citizens from
global change. Adapting to this change and nurturing sustainable growth in
developing countries provides the only solution.
Too many countries are getting left behind. 1.2 billion people live on
less than a dollar a day; there are millions with AIDS; hundreds of
thousands of mothers dying in pregnancy and childbirth every year.
Africa is, of course, in desperate need of help. But we must not forget
the plight of Asia – still home to the vast majority of the world’s
poorest people.
Many of you already operate in these countries – providing the goods and
services that are such a vital component of development.
We can now communicate, travel and trade across the world almost
immediately.
We all share a stake in each other’s prosperity, and each other’s
problems.
One country’s famine is another country’s migration problem. One country’s
pollution is another country’s flood.
Mulitlateralism is more essential in today’s world than at any time in our
history.
Finding consensus between 149 countries is never
going to be easy. These are complex negotiations and it is hard to
properly reflect those complexities in a speech.
But some things are as clear as crystal.
The focus has rightly been on the EU and the US to
offer reforms on agriculture. We must reduce our trade distorting
subsidies and establish a credible end date for export subsidies. We must
put an ambitious limit on the number of sensitive products that can be
afforded extra protection.
Reforms like these offer huge opportunities for
developing countries whilst also making our economies more efficient.
The UK Government has rejected once and for all
the mercantilist approach to trade negotiations which treats any opening
of Western agricultural and other markets as a “concession” for which
developing countries must pay a price.
But we need a balanced round.
We should aim for progress on non-agricultural
dossiers as well. We want to see a more liberal trading environment in
both industrial goods and services. But one which gives developing
countries the flexibility that they need to sequence their commitments in
line with their development needs.
A successful conclusion on NAMA could increase
global incomes by over $50 billion a year within a decade.
Providing big opportunities in overseas markets
for British business. And huge opportunities for developing countries in
our markets, and each others – South/South trade barriers are a major
problem amongst developing countries.
Services also offer opportunities on both sides.
They make up 70% of world output but only 20% of
world trade. The gains from services liberalisation could double the gains
from liberalisation of trade in goods.
America still has restrictions on the sale of
insurance; and Japan on the provision of legal services.
Our banking sector plays a key role in providing
the capital needed for growth. Our insurance companies allow businesses to
take on risk and expand more quickly. And our high quality, professional
services – legal accounting, auditing – provide invaluable support to new
and established businesses, whatever their size.
It’s not a one-way street.
Developing countries also have huge potential to
expand into our markets. Particularly in areas like office services.
Brazil, India, China and South Africa all have a stake in ensuring new
opportunities for their service suppliers in overseas markets.
I know the ICC is concerned by the slow progress
of the services negotiations. So are we.
We are keen to explore options to make progress in
these negotiations. I fully support efforts to re-intensify the bilateral
request – offer process.
However, the UK preference is for a settlement
that avoids mandatory requirements on developing countries to liberalise
services. Not least because unwanted distractions at this late stage could
jeopardise the round as a whole.
It remains vital that all developing countries
retain the right to decide if, when and how to open their service markets
to foreign competition in a progressive and sequenced way.
The UK has taken a lead in setting the trade
agenda.
It was our Trade and Development White Paper in
July 2004 that raised the hypocrisy of developed countries lecturing poor
countries about opening their markets whilst protecting their own. And it
is tackling this hypocrisy, above all, which holds the key to success at
Hong Kong.
We must work together in the next few weeks. You’re all global businesses
who can apply pressure to other Governments, just as we are doing. We must
work together in these final weeks.
As I have said, I don’t know whether Hong Kong will succeed or fail. What
I do know is, if it does succeed:
We will lift millions of the world’s poorest out of poverty for good.
We could entrench prosperity and security across
the world.
We will show that when we said this was a
development round, we meant it was a development round.
I can’t pledge success. But I can promise that if we do fail, it will not
be for any intransigence, grandstanding or lack of will on our part.
As the Prime Minister said in his Guildhall speech on Monday, failure in
Hong Kong will only come after the most monumental effort to get these
talks back on track.
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