Lord Price speech at the Australian-British Chamber of Commerce
Speech delivered by Lord Price CVO, Minister of State for Trade Policy, at the Australian-British Chamber of Commerce in Sydney on 1 December 2016.
Thank you. I’m delighted to be here.
I would like to thank the Australian-British Chamber for inviting me to speak. This Chamber was founded in 1910 – the very year Australia sent its first High Commissioner to the UK.
For over 100 years the Chamber has been promoting the interests of businesses both here and in the UK; I hope you continue to work with the Department for International Trade to ensure this collaboration continues.
Today I want to make three points. I want to talk briefly about the strength of UK-Australian relations - across history, culture and trade. Secondly, I want to update you on the steps the UK government is taking post the EU referendum. And finally, I want to talk about Britain’s future place in the world.
Australia and the UK’s relationship needs little introduction.
It’s hard to find two countries so intertwined across so many areas. We are part of the Commonwealth, we share a Head of State, and crucially we both understand that a strong society is one which is democratic, based on the rule of law and which creates the conditions for business to flourish.
Our history is your history.
We both celebrated the 800th anniversary of the Magna Carta last year – the foundations for both UK and Australian common law systems.
This year marks the 100th anniversary of the battle of the Somme, where Australian soldiers fought alongside the British. And in theatres and schools from Melbourne to Manchester we both will be commemorating 400 years since Shakespeare’s death.
And let us not forget our sporting rivalry which while at times fierce, has always been grounded with a huge amount of mutual respect.
Though I must say, we have particularly enjoyed our recent success against Australia on the cricket and rugby pitches.
Our inherent trust and familiarity underpins our fantastic trading relations.
Australia is the UK’s 14th biggest export market (ahead of India, Russia and Canada) with £8.3 billion of goods and services sold in 2015.
The UK is the second largest investor in Australia with over £220 billion of investment, and the UK is Australia’s second biggest FDI investment destination.
Business is flourishing.
UK based Laing O’Rourke is delivering the early works package for Sydney Light Rail and was recently awarded the lead contractor role in the £2.1 billion Pacific Highway upgrade.
In the UK we are very familiar with Westfield shopping centres, which are an Australian import, and Wolf Minerals have opened the first mine in the UK for 40 years. Both are amongst the 1500 Australian businesses that can call the UK home.
In light of the events of the past few months, it is vital that our trading relationship is strengthened. This brings me onto my second point.
Some will say that the decision of the British people to leave the European Union was a sign of the UK closing the door on the world.
This couldn’t be further from the truth.
It was a decision to take back control of our economic destiny and place the UK at the heart of an increasingly interconnected world.
To those in this room who are concerned by the level of change afoot, let me be clear that while we remain a member of the EU there will be no change to the terms on which we trade.
And we will continue to champion an EU liberal trade agenda, such as the EU-Australia Free Trade Agreement.
However, we are now able to reset and revive our relationships with the EU and the rest of the world – enhancing our ties east and west to become a super connected trading hub.
We want the EU to succeed. It is the destination for 44% of our exports. We want to give British companies the maximum freedom to trade with and operate in the European Market – and we want to let European businesses do the same in the UK.
So when we leave, we will do so in a way that causes minimum disruption for our European neighbours with whom we will maintain strong economic, security and diplomatic links.
Department for International Trade
I am delighted that after many years, trade is back at the heart of government.
The Department for International Trade will develop, coordinate and deliver new trade and investment policy for the UK, including negotiating new trading arrangements with non-EU countries.
Let me be clear, government is not planning to design our trading future in isolation.
I want this to be a collaborative effort with businesses, academics and trade experts from all around the world so we listen to and understand all the nuances of what will be a challenging and complex endeavour.
My role will be to ensure that businesses in the UK and their trading partners overseas don’t face a cliff edge caused by a gap in their trading relationship.
This is something that our Prime Minister has been absolutely clear on as well.
Understandably, businesses want as much continuity and certainty as possible and in my conversations with European counterparts, I have asked that we work pragmatically towards a new order.
This is not about replicating an existing EU trade model – be it Canadian, Norwegian or Turkish. We will seek a unique British model: that protects and promotes trade between British business and our overseas trading partners.
That is why, since the referendum, I have met with over 250 business leaders and spoken to around 1,500 – in the UK and overseas - to get an industry view on what a good deal looks like for Britain.
I have travelled to 19 countries – as well as the UK devolved administrations in Scotland, Wales and Northern Ireland – and met with over 25 trade ministers, 9 of whom are in the EU. And I have plenty more such meetings to come.
All of those I have spoken to have been committed to ensuring a smooth transition for the UK when we leave the EU.
It is clearly in the interests of European businesses and consumers that we reach a mutually beneficial agreement. We have traded with the rest of Europe since Neolithic times and today, the EU trades a £60 billion surplus with the UK.
Our supply chains are increasingly intertwined.
Take Airbus: with wings built in the UK, tailfins in Spain, final assembly in France, and paint and interior work taking place in Germany.
Or in automotive, where parts have criss-crossed the channel for decades.
But a smooth transition out of the EU is also a priority for our non-EU partners. I just mentioned Europe’s interlinked automotive industry; Australia buys nearly £800 million worth of British made cars.
The EU is also Australia’s biggest two-way trading partner in services, with the UK accounting for 40% of these flows.
That is why I am delighted that Australia was the first market since the referendum with which the UK has established a bilateral trade working group.
And the first meeting of that group was in Canberra yesterday, where we met Minister Ciobo for a very constructive conversation.
These initial discussions will help lay the groundwork for Australia and the UK to build a vibrant trading future.
Business is a force for good
Let me explain why this future is so important.
I honestly believe that the success of business and society is inextricably linked.
I saw first-hand, when I was head of the supermarket Waitrose for 9 years, the transformative impact business can have on the livelihoods of both the people they employ and those they serve.
In the UK, business collects the majority of taxes for the government that is then re-invested back into society – into our schools, hospitals and national defence.
If government can get the conditions right, creating a competitive open economy with a strong rule of law, then business can continue to be a force for good.
And we are creating the conditions, but not without some resistance.
Which brings me onto my final point about Britain’s position in the world.
As protectionist sentiment continues to spread around the world, I want the UK to be the most fervent champion of global free trade.
In fact, I see it as a growing part of my role to make the case for free trade in a way that resonates with counterparts and the general public.
Everyone here knows the benefits of free trade. A competitive market place provides consumers with cheaper and more innovative goods…
…businesses benefit from a larger customer base and the spread of ideas and technology across borders…
…and finally hundreds of millions of people, particularly in developing economies, have been lifted out of poverty through trade.
However, it shouldn’t be solely up to governments to fight the battle for free trade.
I want the UK to be at the forefront of a global movement that encompasses governments and businesses to ensure we better communicate the benefits of a free and fair trading system.
To do this we must move our thinking and concerns on from tariff barriers – which are gradually being eliminated by trade deals.
We must instead renew our focus on non-tariff barriers which are in many cases now the most significant impediment to international trade.
Whilst UK exporters are currently valiantly working around them, there is a job for government and industry to work together to reduce regulatory barriers to trade and to make the case for global standards loud and clear.
There are already good examples of this. The recently agreed EU-Canada agreement minimises duplicate inspections of pharmaceutical manufacturing.
And there are already international rules on automotive construction standards that enable UK car manufacturers to sell their vehicles in many other parts of the world.
This shows that the possibility of a more open and harmonious trading system can be achieved.
Examples however, remain of those who prefer to pull up the drawbridge.
Several weeks ago, I visited South Korea and it remains a fine example of an open economy in action. Its neighbour to the North however, is a fine example of what a closed economy can achieve.
Having started from a similar base in 1946, they are poles apart today. Seoul is a thriving democracy with high standards of living for all its citizens.
Whereas Pyongyang is now one of the world’s most restrictive and impoverished societies.
GDP in South Korea is $1,622 billion compared to $40 billion in North Korea; 81.5% of South Koreans have access to the internet – compared to less than 0.1% of North Koreans; and there is a 10 year life expectancy gap in favour of South Koreans.
It goes to show that open economies and personal freedom often go hand in hand.
The UK is in a perfect position to lead this debate.
We remain a fantastic place with which to trade with and do business.
Our economic fundamentals have ensured that even post referendum, we will be the fastest growing G7 economy this year including having record numbers in employment.
This is in addition to our unique attributes such as having a highly skilled, English speaking workforce fed by the best universities in the world; and our low tax low regulation economy which makes us the highest ranked major economy with which to do business according to the World Bank.
This is why investment has continued to pour in since the referendum. Japanese technology firm Softbank acquired UK-based ARM holdings for £24 billion and just a few weeks ago, Nissan confirmed it would extend production at its plant in the North East of England.
The world understands that Britain is well and truly open for business.
I would like to finish by reiterating that throughout history, the UK and Australia’s relationship has remained strong.
After all, the fact that the English Rugby team has remained unbeaten with an Australian coach at the helm, shows just what can be achieved when our two countries work together.
We are both instinctively free traders and our future success will be determined by how much we work together to champion this natural instinct.
If we can do that, then we will be able to enjoy the trust, then peace, then prosperity, that a more open world will bring.