Year 13 - Bridging The Development Gap

Let me tell you why. It’s the oldest observation of the modern age that we are all interconnected. Communication is faster than ever, finance is more mobile than ever and yet the paradox of this open world is that in many ways it’s still so closed and so secretive. It’s a world where trade is still choked off by barriers and bureaucracy. It’s a world where some companies navigate their way around legitimate tax systems and even low tax rates with an army of clever accountants. It’s a world where, regrettably, corrupt government officials in some countries and some corporations run rings around the letter and the spirit of the law to rip off hard working people and to plunder their natural resources. There is a long and tragic history of some African countries being stripped of their minerals behind a veil of secrecy. We can see the results: the government cronies get rich, some beyond their wildest dreams of avarice, while the people in those countries stay poor. So it is clear how devastating this can be for some developing countries. But frankly all this matters, and should matter, to developed countries too. When trade isn’t free, we all suffer. When some businesses aren’t seen to pay their taxes, that is corrosive to the public trust. When shadowy companies don’t play by the rules, that drives more box ticking, more regulation, more interference and that makes life harder for other businesses to turn a profit. That is why I want this year’s G8 to bring a new focus on these issues: trade, tax, transparency. Those are the issues we are going to be driving for this year.

So first we’re going to push for more openness on trade. In late 2008 we saw the steepest fall in global trade ever and the deepest since the Great Depression, and more than four years on trade has still not fully recovered. Now this should be at the forefront of the mind of every leader, every diplomat during those long negotiations on trade; and there’s an enormous amount on the table today. You’ve got the US leading efforts on the Trans Pacific Partnership. In the European Union we’re about to embark on our biggest-ever programme of free trade agreement negotiations. We’ve got parameters for a deal with Singapore, negotiations with Canada nearly complete, and we’re about to launch negotiations with Japan, and of course there’s the beginning of negotiations on an EU-US trade deal. Now the EU and the US together, we actually make up about a third of all global trade. A deal between us could add over fifty billion pounds to the EU economy alone. Agreeing all the EU deals on the table could increase our GDP by two per cent and create over two million jobs across the European Union. Trade between developing countries and within Africa is growing and we should work to encourage that further - and we must also continue to support the multilateral system. This means working through the WTO to agree a deal to sweep away trade bureaucracy at the ministerial conference in Bali this December. That alone could be worth around seventy billion dollars to the global economy and help trade to flow freely across the world. It is ambitious, but we must seize these opportunities to give a massive boost to free trade across the world.