G8 Summit

Lord Howell of Guildford Excerpts

Thursday 13th June 2013 Lords Chamber

[Lord Howell of Guildford]

My Lords, we should all be grateful to my noble friend Lord Trimble for initiating this debate and for his excellent opening speech. I also welcome siting this G8 conference in Fermanagh, which is one of the most beautiful areas of our United Kingdom. I got to know it well during my privileged time as a Minister in Northern Ireland for two and a half years. As my noble friend Lady Falkner has reminded us, the Prime Minister’s priorities for this G8 are the three Ts—trade, tax compliance and transparency. All are excellent issues which we should pursue with vigour.

I shall concentrate mainly on trade, although on the tax compliance issue I merely observe that obviously the efforts are completely commendable. However, in dealing with the hyper-connected world of unbelievable complexity in which we now live, it is difficult to see how Governments will ever catch up completely on a multinational scale with all the devices for avoiding and minimising tax liabilities. I leave your Lordships with this thought: we should be a little uneasy about the idea that the answer is more and more power to the tax-gathering authorities, on almost Bourbon levels. It will not solve the problems, which are undoubtedly there. The complexity is very great.

This leads to my main point which I want to share with your Lordships. In this transformed world, the character of trade has changed almost beyond recognition. Modern trade now follows a totally different path from anything that the world has ever seen. In today’s heavily interconnected world, it is no longer a question of products manufactured in one country being sold to another. The advent of the modern supply chain means that most manufacturers use components from a variety of different parts of the network and from different countries.

In these novel conditions, markets are simply no longer definable in terms of tariffs, quotas and other protections. On Europe, for instance, we hear the current mantra that the single market must be preserved, but the nature and meaning of the phrase “single market” has been completely transformed. The common trading platform of the world wide web is building up a new kind of supranational single market which is highly competitive and very transparent; it is criss-crossed by intricate supply chains and knows no regional boundaries whatever. The often asserted “fact” that the European Union is the world’s largest single market is in fact no longer correct. Cybermarkets on the world wide web are much larger. Pacific rim markets, including the vast market of China’s new middle class, are just as large, with the growing consumer markets of India, Brazil, Mexico, Turkey, Thailand, Vietnam, east and west Africa and a score of other places all coming on extremely fast behind.

Not only have old classifications such as “manufactured goods” ceased to have any statistical meaning but the trade in services—which 30 years ago was hardly worth mentioning—has taken centre stage with its knowledge-intensive products. The driving forces of international business have shifted into a world which is only dimly understood even now. It certainly was not at all understood all those years ago. In particular, the old idea that the path to free trade lay through negotiating down various tariffs and quotas has lost much of its meaning. It is the non-tariff barriers which are woven into countless procedures, customs and attitudes that now stand in the way. Their existence and persistence depends not on tariffs but on deep cultural factors and processes. The assault on them has to begin not with numbers or even with detailed negotiating facts but with the deployment of soft power in all possible forms.

That all, in turn, depends on the power to communicate and persuade and to open up our economies—for which, incidentally, the modern Commonwealth network, with its common working language, its vast and intimate professional links and its dazzling cross-cultural cross-pollination, is of course ideal. When listening to the Canadian Prime Minister just a short while ago I was a little sorry that, in an otherwise splendid speech, he did not mention that aspect. However, I agree totally with my noble friend Lady Falkner in her remarks that the Commonwealth, as a network, ought to be an ideal vehicle for the kind of proposals that she put forward on improving transparency and tax compliance.

We have to recognise, in the background to all the changes I am describing, that we are dealing with a world which is totally transformed, with 2.5 billion people on the internet at all times. Mr Eric Schmidt of Google estimates that there are now more mobile telephone subscribers on this planet than there are human beings. Every morning, 300 million Chinese go shopping online. We are doubling the data we draw out of the system for trade and other activities every nine months. I will share one further blinding statistic with your Lordships. Under the present system we generate in two days more data than were generated between the dawn of civilisation and 2003. We are, in short, in a completely transformed atmosphere in which trade is operating in totally different ways. That is one point that I hope will be understood by the G8 dignitaries when they gather at Enniskillen and in Fermanagh.

My second point is that there has been a lot of talk about the G8 being the top table, but it is not. There are many top tables today. The rioters last Sunday in the City of London were completely deluded when they talked about this being the power centre—the centre of wealth and riches and so on. Not even the G20 is the top table today. There is a new alphabet soup of organisations, alliances and networks springing up all over the planet, and they are beginning to exert as much power and influence as the old G8 and the other institutions of the 20th century, such as NATO, the UN, the IMF and the European Union, all of which are struggling to adjust. New sets of initials are swirling round in this alphabet soup which we have to adjust to: OIC, SCO, AU, GCC, AL, UNASUR, SAARC, ANMC, PIF and Caricom. I will not take time to spell out what all those stand for. I can see the noble Lord, Lord Triesman, shaking his head. Those are just a few. At the end of the list I put the largest and densest network of all, the Commonwealth network, which unites 2.25 billion people in a common system, as I have already described.

Procedures, attitudes, organisations and institutions have only dimly begun to reflect what is happening, and most of the media, with some brilliant and insightful exceptions, have hardly done so at all. A network world—for that is what it has really become—operates quite differently from one of hierarchies and blocs. Relationships emerge of a quite different quality; priorities are reshuffled; new elements, previously ignored, come to signify. Suddenly, in a digitalised network system, everyone has to be kept in the loop, small nations and large. More than that, the networks become part of the legitimising process. Agreement for international action at the United Nations has to be supported by agreement across the networks. All have to be consulted, won over and brought along, because all are now instantly, and in most cases continuously, connected.

I will end by saying that I hope that at Fermanagh our colleagues and leaders engage with these new issues, because they are entirely new, and do so with a suitable degree of humility, fully realising that in today’s world they are not the top table; they are only players in a far larger and newer scheme of things. They are not the bosses; they are the partners. They have to grasp the opportunity to understand that status, otherwise they could well find that they are not players at all but merely spectators.