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Free Trade and Foreign Policy
3.31 pm
The Secretary of State for Foreign and Commonwealth Affairs (Mr. Malcolm Rifkind): With permission, Madam Speaker, I should like to make a statement on the publication of a White Paper entitled "Free Trade and Foreign Policy: A Global Vision", which my right hon. Friend the President of the Board of Trade and I are presenting to Parliament jointly today. Copies of the White Paper, together with a summary, have been placed in the Library.
The Government have a vision of global free trade by the year 2020. Both in the European Union and more widely, we will champion the cause of free trade and open markets. An immediate objective will be to persuade the European Union to commit itself to seeking global free trade by 2020.
The first ministerial conference of the World Trade Organisation will take place one month from now in Singapore. My right hon. Friend will represent the United Kingdom. The Government's objectives are wide ranging. They include free trade in services as well as in goods. They extend also to free and open markets for investment and capital flows--issues of particular interest to my right hon. and learned Friend the Chancellor of the Exchequer and requiring the involvement of a variety of international organisations.
That commitment to global free trade by 2020 should be realised in three stages: first, pressure at Singapore next month for progress in implementing existing commitments, completing continuing negotiations and initiating a further substantial liberalising work programme; secondly, a new round of multilateral trade negotiations to be launched before the end of the century so as to produce results by 2010; and then a final push forward to achieve the target of global free trade by 2020.
The Government are clear that free market policies are best. They produce the greatest economic benefits and, applied internationally, foreign policy benefits as well. The degree of interaction between trade policy and foreign policy is increasing.
Political developments over the last decade have created major new opportunities. The collapse of communism and of state socialism has removed the major ideological obstacle to global extension of the free market. The liberal, democratic, capitalist model is offering new hope to countries that were previously subject to authoritarian state control, not just in central and eastern Europe, but in the developing world. It is important that this new hope placed in the market economy and the democratic system is not disappointed.
Throughout the world, security and stability are an essential precondition for markets to function smoothly. Britain is making a significant contribution to efforts to uphold international peace and security, reflecting our global spread of interests. At the same time, the Government are convinced that free and open markets are themselves a force for peace. Closer trade and economic ties between countries create a community of interest, and the prosperity that they bring provides a powerful incentive to maintain stability and order in international relations.
Britain is better placed than any other nation to champion free trade and open markets on a global scale. We are a merchant nation, and we are active in a wide
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In pursuing our aim of world security and prosperity, we benefit particularly from our position in the Security Council and in key international economic institutions. Our contribution to their work is an effective means of promoting British interests.
By working together on trade issues, the European Union carries greater weight than any member state could hope to do acting individually in difficult negotiations with the United States, Japan and other countries. The EU made a constructive and, in some respects, decisive contribution to the Uruguay round of multilateral trade negotiations, concluded in 1994--for which the Commission team, led by Sir Leon Brittan, deserves much credit. The British Government were consistent then in their support for trade liberalisation and, by working through the EU, we were able to achieve our objectives. We are determined to use our influence in the Union to secure further progress towards global free trade.
Within the European Union, the single market programme already provides for the elimination of all barriers to trade, in both goods and services, and for the elimination of all barriers to investment. It establishes rules and provides for their enforcement. A system of global free trade would have to be broadly similar in nature.
The single market demonstrates what can be achieved on a regional basis. Around the world, countries are entering into regional trading arrangements. Those arrangements hold promise, and it is important that the promise is fulfilled--not only in boosting economic activity within the region concerned, but in contributing to multilateral liberalisation, as the EU has done. Like the EU, many regional arrangements extend in scope beyond trade to other spheres of economic and political co-operation. By fostering dialogue and understanding between neighbouring countries, they help promote stability as well as prosperity.
Britain is an Atlantic as well as a European nation. Success in maintaining security, as well as in building prosperity, over the past 50 years has been rooted in transatlantic co-operation. The joint EU-US action plan, agreed last December, renewed the commitment of both sides to work together for a more stable and prosperous world. It also set out the practical steps needed for development of the transatlantic marketplace. The volume of two-way trade and investment is already massive, with scope to multiply further. The Government are committed to pursuing transatlantic free trade in the context of world trade liberalisation.
The Government believe that by setting the firm target of global free trade by 2020--to be reached in well-defined stages--and by pursuing other liberalising policies, the nations of the world will establish the most favourable environment for progress. Our development assistance programme has an important part to play in creating the conditions necessary for profitable trade and sustained long-term investment. We recognise that poorer countries may need help with adjustment. Over time, however, all stand to gain from being able to trade their way to prosperity.
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Economic development is also the way in which to deal with other issues of international concern, including environmental and labour standards. The director general of the World Trade Organisation has proposed that the least developed countries should be given a guarantee of tariff-free access for their products, which would bring practical benefits to many of the world's poorest countries. Britain is urging the EU and others to support that initiative.
Open markets provide an important competitive spur, but it is important that all undertakings given to open up market access are honoured in practice. Two Government initiatives--action single market and the trade barriers initiative--aim to secure the elimination of those barriers to trade which obstruct British business in Europe and outside.
We are determined to help British firms to secure the benefits of free and open markets. Supporting business is the largest single activity of our diplomatic posts abroad, accounting for 35 per cent. of our front-line diplomats. The Foreign and Commonwealth Office and the Department of Trade and Industry work together, through the joint export promotion directorate, to promote exports, which are at an all-time high--twice the level that they were in 1979. Inward investment is also running at record levels--Britain receives one third of all inward investment in the EU.
My right hon. Friend the President of the Board of Trade and I have agreed that, to enhance our inward investment effort further, the Invest in Britain Bureau should operate in a similar way to, and alongside, the joint export promotion directorate. That will strengthen the IBB's role, enabling us in particular to promote international trade and investment at home and overseas in a way that develops a common strategic approach to those issues in different countries and regions.
We are determined to open up new opportunities. Britain is well placed to make the most of them. Our economy is thriving--tax rates are low; social costs are lower than in other comparable countries; labour relations have been transformed; and the social chapter opt-out is necessary to ensure that labour market rigidities are not reintroduced. We are committed to policies to improve competitiveness. The Government are making Britain the enterprise centre of Europe.
Free market policies are the basis for our success. Global free trade represents their extension to the world. We are proposing a plan of action for the next quarter-century.
In parallel, we will work in the Organisation for Economic Co-operation and Development, the International Monetary Fund and elsewhere for free flows of investment, and to create the right environment for economic growth.
Global free trade by 2020 would bring enormous benefits--political as well as economic. The Government have the vision to set that bold policy objective. It is achievable in the time scale. It is our 2020 vision for the world.
Mr. Robin Cook (Livingston):
It is a measure of the bland content of the White Paper that there is much in it
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The key question is: how can the Foreign Secretary justify the cost of printing this compilation of platitudes as a Government White Paper? What reply did the Foreign Secretary give to the letter from Downing street which noted that the Prime Minister could not identify anything new in the White Paper and did not believe that it would be convincing as an action plan? Will the Foreign Secretary accept that those of us who have read the White Paper agree that, for once, the Prime Minister got it right?
Will the Foreign Secretary confirm that the White Paper does not propose a single new post in the commercial sections of our embassies, does not release a penny of new investment in our trade missions and does not come up with a single fresh initiative for supporting British exporters?
The Foreign Secretary claimed that economic development was the way to address concerns on international labour standards. Is he aware that the Government's opposition to a social clause in the general agreement on tariffs and trade puts them to the right not just of most of Europe, but of the Republican majority in Congress? How dare Ministers claim, as the President of the Board of Trade did this morning, that a clause stopping trade in the products of child labour or convict forced labour is somehow protectionism.
Does the Foreign Secretary also recognise that there will be widespread disappointment that the White Paper equivocates over the environment clause in the general agreement on tariffs and trade and that his statement appeared to reject it? Does he agree that it would be intolerable if the rules of the World Trade Organisation were to prevent individual nations from refusing to import products that broke environmental treaties? Does he also recognise that free trade must be balanced by fair trade? Is he aware that the countries of sub-Saharan Africa will lose 3 per cent. of gross domestic product from the latest GATT round? If so, why are the Government cutting overseas aid when it is needed most?
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