Gauging international attitudes towards rules-based systems of economic governanceedit
Hugo Swire, Minister of State, Foreign and Commonwealth Office, addressed an international audience of private sector and governmental representatives at our conference concerning the impact of trading rules on global prosperity.
Monday 5 – Tuesday 6 November (WP1200)
Gauging international attitudes towards rules-based systems of economic governance
After welcoming remarks by Richard Burge, Chief Executive and Kathryn Hingston, Programme Director for Global Prosperity at Wilton Park, the Rt Hon Hugo Swire MP started the discussion by acknowledging the importance of free trade in overcoming the global economic crisis and addressing poverty. Trade rules create a level playing field and are critical to encouraging business confidence.
A number of factors frustrate effective economic governance. The Minister spoke about the corrosive impact of corruption in undermining rules and distorting markets. He also recognised that the process for developing and negotiating the standards must be open and transparent. All countries must have a fair chance to influence change as this lends credibility to the rules and encourages compliance.
After the Minister’s speech the conference participants discussed some of the issues he had raised in greater depth including which rules need fixing most urgently, and how to secure universal acceptance of existing or new rules.
Participants were eager to discuss the current institutional architecture – whether it should be radically changed or whether it can be improved. The World Trade Organisation (WTO) should play a complementary role in relation to regional trade agreements. The WTO should also be more sympathetic to emerging and re -emerging countries to ensure that they can comply with the rules and fully enjoy the benefits of a rules based system.
It is particularly important that trade is linked with climate change. This link should be made at the WTO but the WTO’s mandate would have to be extended to this arena.
The Chief Corporate Officer of Balfour Beatty talked about the issues his company considers when it makes operational decisions about which countries offer positive and ethical trading environments. These range from taxes, intellectual property and health and safety, to the overall strength of countries’ legal systems. Intellectual property rights are particularly important to sectors involved in innovation through research and development such as the pharmaceutical sector.
The discussion picked up on a number of wider current issues on the international agenda which could all directly or indirectly influence the effectiveness of trade rules. These included the OECD’s promotion of improved corporate governance, potential changes to membership of the UN’s Security Council, problems within the EU, and the proposed Trans-Pacific Strategic Economic Partnership. Despite these challenges there was a consensus that the focus must remain how countries can work together rather than why countries should work together.
Trade sits in a wider context of democracy and rule of law. The ability or inability of countries to effectively trade with each other reflects this broader background. Although at times of domestic strain protectionism can be mistaken for patriotism but this must be avoided.