We did it before, we’ll do it again: my call to the champions of world trade

By Gordon Brown, the Chancellor of Exchequer of the United Kingdom (THE TIMES, 06/11/06):

THREE MONTHS HAVE elapsed since the world trade talks stalled, and the time has come for bold and concerted action to restart the drive for an ambitious trade deal.

Today I am urging progressive global business leaders and government to join forces with governments in a new push for a breakthrough.

Globalisation desperately needs champions, statesmen and business leaders speaking together, to challenge the current descent into protectionism. And a new world trade deal is the most visible signal we can send that anti-globalisation forces of protectionism can and will be routed.

For generations, trade liberalisation has required bold steps to break down barriers and force the pace of change. In the 19th century Britain led the world in equating free trade with liberty only when business and politicians came together for that shared purpose.In this new century the same kind of joint effort is required from government and business before the last window closes to restart the talks.

Although time is short, I believe that together we can make progress. Europe should now go considerably beyond its initial offer of a 39 per cent cut in agricultural tariffs. It even could go beyond the 51 per cent currently mooted. Similarly, America could and should go beyond a 53 per cent cut in trade-distorting domestic support for its farmers. Brazil could and should go beyond its pledge to reduce tariffs on industrial goods, with India responding on services, and all of us contributing to an aid for trade.

And I believe that with support from the business as well as the political community, Pascal Lamy, Peter Mandelson and Susan Schwab and other negotiators have the will, commitment and energy to finalise a deal.

The push for trade needs more than new negotiating mandates today. It needs new mechanisms for today and beyond to break the dangerous global log jam that is obstructing trade reform, and allowing anti-globalisation and protectionist forces to gain support.

A new exchange of political and business interests should expose not only the dangers of rolling backwards into unilateralism and bilateralism, which would undermine the spirit of the Doha development round, but how much more the world can gain, and especially the poorest, by a globalisation that we push forward together.

A “trade exchange”, reflecting the converged interests of business and government — could bring together major financial institutions, global corporations and leading public figures from rich and poor countries, and urge vital reforms, not least curbing agricultural protectionism.

In my view we should stake the future of our government on getting globalisation right.

And as politicians in the richest countries, our contribution should be a promise at all times to defend and support open markets, free trade and flexibility. We will do that best by showing that globalisation works best when it combines investment in education in the world’s richest nations and in development in the poorest.

Government and business need to understand the full costs of agricultural protectionism — and the dangers to all of us of doing to too little.

We also need to understand what the 400 per cent increase in unskilled workers from Asia into the industrial economies means for advanced industrial economies. And we need to debate together the reforms needed in national economies and the changes required in our international institutions. This initiative could lead to a statement about the future — a charter for a better globalisation — that would challenge the reactionary protectionist forces that have stalled recent liberalisation.

I believe we can build a new sense of international purpose behind this venture. But the resolution we show will also have to counter a growing sense, even among the beneficiaries of globalisation, that they are its victims — consumers in advanced industrial economies who see the loss of manufactured jobs offshored to Asia but do not link to free trade and globalisation the benefits of lower consumer prices, rising living standards, and lower inflation and lower interest rates.

We have to counter the re-emergence of national champions in Europe, prompted by country after country threatening to undermine both the spirit and the letter of the single market by blocking mergers takeovers and cross-border flows — and in America also protectionist sentiment and in Latin America protectionism masquerading as the populist defence of the poor.

Yet even against these challenges and threats I am optimistic that a pro-globalisation movement can make progress.

My optimism stems from the fact — already common ground in mainstream business and government circles — that the ideologies that support protectionism offer no positive or credible alternative of how all the world can prosper and are little more than the modern equivalent of Luddism, a negative backward looking movement resisting necessary change.

My optimism reflects macroeconomic changes over the past 30 years, signalling a shift from the old ideological war between free markets and planned economies. Instead, a new, potentially liberating consensus is emerging that the best way to drive globalisation is to install an engine powered by free trade, open markets, flexibility and investment that equips people to cope with the insecurities of change and fosters a better and fair deal between rich and poor countries.

But in this global era we need more than the right policies. We need the global political will to build new arrangements for our time — and the same determination that postwar leaders demonstrated in theirs in building the IMF, World Bank and the new international economic order after 1945.

Back then there was the recognition we need again today: that prosperity was indivisible, that prosperity to be sustained had to be shared, and that the interests of all were advanced when we advanced in co-operation together.

But new times demands new ways of delivering these objectives. A global conversation and exchange of ideas would, I believe, drive pressure for reform of international institutions — and a new attention to environmental care, better global relationships between rich and poor and the primacy of investment in people primarily through education. And it would prove that public and private sector co-operation — too often ignored in the international arena since 1945 — is one of the essential components of a truly global new deal.