Constructive Dialogue on Globalisation Issues
8 July 2002: Butchers' Hall, London
Presentation to conference
Rt Hon Baroness Symons, Minister for International trade
I am delighted to have the opportunity to speak once again to the Worldaware conference.
I think Worldaware does valuable work in spreading understanding about global issues. Andrew Fraser has already spoken to you about what globalisation is. What I want to discuss here is the role of trade and investment - subjects for which I am responsible - in globalisation.
In this country we have one of the most open economies in the world. We are the fifth largest trading nation and second largest global investor. Trade represents more than half of GDP in the UK. Our living standards depend on our openness to trade and investment.
We take for granted that goods and services should be able to circulate freely for our benefit.
We see globalisation in finance, in communication, in technology, in culture and in recreation. How many of us here for example have not used a mobile phone, not surfed the internet, listened to CDs featuring artists from all over the world, or watched the World Cup on TV?
That shows the everyday impact of globalisation on our lives. Worldaware's excellent publication Global Eye has defined globalisation in terms of people becoming more interconnected and interdependent. But it has also underlined the fact that there are many people in the world who are cut off from these developments and are being left behind.
Trade is cited by some critics as a part of the problem. But the problem with globalised trade is not that there is too much of it. On the contrary there is too little. The evidence shows that countries which have liberalised trade and sought to integrate their economies have tended to grow more quickly than those which have pursued more restrictive policies. And economic growth is essential for countries tackling the problems of poverty and social exclusion.
At the World Trade Organisation Conference in Doha last November, all members of the WTO agreed to a new round of trade negotiations with a strong focus on trade liberalisation and development. The 'Doha Development Agenda' aims to draw developing country WTO members into the mainstream of what we are trying to do in the WTO.
IMF and World Bank studies have shown that a 50% reduction in protectionist measures could boost developing economy incomes by around $150 billion a year, equivalent to three times all current aid flows, and lift 320 million out of poverty by 2015. Immensely important goals which the WTO negotiations have to address.
Let's be clear: some people may argue that the WTO is not the unacceptable face of global capitalism. It is a rules-based body which promotes fair, transparent and predictable trading conditions. Without it there would be a free-for-all in which the strongest would win out. Most of the WTO members are developing countries, including some of the poorest, who recognise that membership gives them a voice in the trade system. If the WTO did not exist those countries would be in real difficulties compared to the developed rich countries.
Tariffs are a peculiarly potent barrier to trade and to lifting the poor out of misery.
What we have to do is make this trade round work. This makes it imperative that WTO members deliver on the promises made at Doha and demonstrate a real commitment to opening markets. And that includes agriculture. We have a great deal to put right in our own backyard. Reform of the Common Agricultural Policy in the EU is essential to the success of the Round, and must be a major target.
The EU is taking a strong lead in improving access to developed country agricultural markets. For example the Everything But Arms initiative provides duty- and quota-free access to the EU for all farm products from the Least Developed Countries. And we will push for the EU to be as generous as possible in the trade negotiations starting in September with the African, Caribbean and Pacific countries.
But developing countries need to act too. They need to improve market access between themselves. Tariffs on trade between developing countries are currently far higher than those in developed countries. And trade between developing countries is a fast-growing part of their total trade - 40% of developing country manufactured exports are to other developing countries. I am glad that African countries have committed themselves to reduce trade barriers within Africa in the New Partnership for Economic Development (NePAD).
All of this applies to services too, a growing part of the world economy. The WTO negotiations on services, known as the GATS, enable countries to set forth their priorities for liberalisation. They do not, as they are sometimes misrepresented, force any WTO member to liberalise any particular service sector if it does not wish to do so.
Something I often hear from my opposite numbers in developing countries is their desperate need for inward investment. I can't think of a time when I have met developing country representatives when they didn't raise this concern.
Agreeing a framework for investment in the WTO would help to increase investment flows by providing greater predictability and certainty for investors. This is not simply in the interest of a few giant multinational corporations, as is sometimes claimed. Companies of all sizes take part in international investment.
The benefits of foreign direct investment into developing countries are that it can help those countries to integrate more deeply into the global economy, acquire new technology and skills, and lift employment standards. NGOs in this country are of course right to scrutinise the conduct of UK companies in the developing world to ensure that the benefits of investment are being shared. They will find many companies who are willing to maintain a dialogue with them on this.
It is worth pointing out here too that the Government has committed £23 million to support the work of the International Labour Organisation in helping developing counties to implement core labour standards.
Effective intellectual property protection - patents, copyright, trade marks - is a key factor in encouraging investment into research and development of new products.
International patent rules, including the WTO TRIPs agreement, do not enable global companies to patent the biological resources and traditional knowledge of the developing world. The UK plays a constructive part in the international discussions on the protection of such resources.
We also recognise the gravity of public health problems afflicting many developing countries, especially diseases such as HIV/AIDS, tuberculosis, and malaria. AIDS in particular is having a devastating human and economic effect on the poorest continent, Africa.
More than 90% of what the World Health Organisation terms essential drugs are out of patent and therefore not affected by the TRIPs agreement. But access to medicines remains a very difficult problem for many poor countries. We are helping alleviate this through the UK's aid programme and our contribution to international funds. And I should like to underline our support for the declaration that the rules of the TRIPs Agreement do not and should not prevent members from taking measures to protect public health.
The Doha Agenda includes the first ever negotiations within the WTO on the linkages between trade and the environment - an objective the UK and EU have been pursuing since 1994.
The reason this has been so difficult is the need to balance concerns about the impact of trade on the environment with fears that such concerns could be used to block imports from developing countries. I assure you that the UK and the EU's agenda is not "eco-protectionist".
We have also been a major contributor to the Global Environment Facility which helps developing countries to meet the additional costs of objectives on environmental protection. These issues play into the World Summit on Sustainable Development in Johannesburg this August.
The World Summit for Sustainable Development, or WSSD as it has become known, provides the opportunity to focus efforts on delivering the sustainable development necessary to achieve the Millennium Development Goals and other international targets.
Poverty eradication through sustainable development will be a top priority for the Summit. The UK will be seeking to promote a greater understanding of the links between poverty reduction and environmental issues such as:
- The management of environmental resources.
- Promoting sustainable livelihoods to help meet the target of halving the proportion of people living in extreme poverty by 2015.
- Ensuring that environmental issues feature in countries' poverty reduction strategies.
- And working to improve health. The World Bank estimates that 20% of disease in the developing world is due to environmental causes such as unsafe water and air pollution.
Today 1 billion people in the world lack drinking water and 2.4 billion people lack sanitation. In the real world away from international fora, conferences and negotiations, people die for want of clean water. We are committed to halving the proportion of people without access to appropriate sanitation by 2015.
In all of these initiatives, there is an underlying issue: the capacity of developing countries to argue their case - to take part in negotiations and implement agreements.
The Government has doubled support for capacity building related to trade - from £15m to £30m over the three-year period from 2001. This will help many of the smaller and poorer countries to use the voice they have in the WTO more effectively.
I said earlier that there are far too many people in the world who are cut off, disconnected, from the benefits of globalisation. To quote again from Global Eye, these are the people known in Latin America as the 'unplugged ones'. I have tried to show how this Government is working to enable more people to be 'plugged in'. As the Prime Minister has said, if globalisation works only for the benefit of the few, then it will fail and will deserve to fail. Our challenge is to make it work for the benefit of the many so that it becomes a force for good.
Answers to questions by minister included a clarification of the balance of rules concerning exports and imports, the link between UN development targets and the arms trade, and the impact on worldwide economies of the attacks in the USA on 11 September 2001.