Britain's commercial relationship with the United States
Foreign Secretary William Hague gave a speech to the British American Business International Advisory Board at the New York Stock Exchange.
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Ladies and Gentlemen it is a great pleasure to be here and to have the opportunity to speak to you about the new British Government’s ambitions for our economy and for our trade relations with the United States. I am very grateful to Duncan Niederauer and to the New York Stock Exchange for hosting us, and for treating us to a display of the warm and effortless hospitality for which America is so rightly famous.
I am here in New York to attend my first annual UN General Assembly as Foreign Secretary. I will have five days of intensive meetings with Foreign Ministers from around the globe and discussions on a wide range of issues including Yemen, Somalia, Darfur, Pakistan, the Middle East Peace and Iran’s nuclear programme, all of which pose challenges that Britain and America are facing up to together.
It is easy to forget, given such pressing world affairs and the rapid pace of politics, that we are still engaged in something very new in Britain. The first coalition government in over fifty years of our history is still only in its fourth month in office. Yet despite this relative newness we have made early and determined strides to grip our nation’s finances, inject energy into our foreign policy and reinvigorate the promotion of UK commercial interests overseas.
All of this is testament to how well the coalition is working. We inherited a unique set of national circumstances: the worst fiscal position a British government has ever been faced with outside conditions of war, the largest budget deficit in the G20, no reserve currency, a state that was borrowing one pound for every four it spent and a European soveriegn debt crisis on our doorstep. We still face a series of momentous decisions about government spending and the UK’s public finances. But none of this has dimmed our confidence or our sense of optimism and purpose.
We understand that the British economy of the future must be one that is built on investment, saving and exports, and are utterly determined to use our tough plans for fiscal consolidation as a springboard for growth and recovery through the private sector.
In our first hundred days in office we delivered a Budget which proved to the world that Britain now has the will, determination and the resolve to live within her means; we undertook to eliminate the current structural deficit by 2015; and we set out an ambitious plan to create a business environment that is one of the most competitive anywhere in the world.
From 2011 we will gradually reduce corporation tax to 24 per cent, giving Britain the lowest rate in the G7 and one of the lowest in the G20. We will reduce the small profits rate of corporation tax to 20 per cent, instead of the increase to 22 per cent planned by the previous government. We will lower capital gains tax for entrepreneurs. And we will cut National Insurance contributions for employers, extend help to small businesses needing access to credit, and invest in our skills base and critical infrastructure including superfast broadband. All of this should be good news for companies in this room and has indeed been received as such by the markets. These are the right steps for Britain, given our unique national circumstances.
It is part of the core purpose of the Foreign and Commonwealth Office I lead to support this economic agenda and to make a leading contribution to securing Britain’s prosperity. We are doing this not only because when the British economy is strong our foreign policy is strong, but because that foreign policy must make a tangible difference to the lives of Britons who are seeking secure jobs and postive prospects for the years ahead.
So we have injected a new commerical focus in Britain’s foreign policy. We want to focus to a greater extent on using our diplomacy to open up pathways into new markets and to unlock barriers to investment - using the expertise and connections that our diplomats excell in. We aim to build a network of strengthened bilateral relationships for Britain over the next five years, that can act as veins and arteries along which trade can flow in both directions and benefit our diplomacy more widely.
We have begun a new programme to elevate Britain’s links with key powers and emerging economies in Asia, Latin America, the Gulf and North Africa. By 2050 emerging economies will be up to 50% larger than those of the current G7, but at the moment we export more as a country to Ireland than we do to India, China and Russia put together. When we took over as a government we were astonished to find that there was no effective cross-government strategy for building political and economic relations with up to 30 of the emerging economies, something we are already putting right.
We have also achieved something of a tectonic shift in mindset of the whole cabinet, agreeing that the promotion of the British economy overseas is something for the whole government, not just a handful of Ministers. So we really mean business when it comes to securing the prosperity of the UK and will be “messianic”, to use the Prime Minister’s vivid term, when it comes to advocating free trade and open markets and to championing the British economy as a home for trade and investment.
But while it is right that we look for new opportunties around the world, there is no commercial relationship that is more important to Britain than that with the US.
With no other country are our economic links so broad and deep and so integral to the workings of our economy and to our identity as a trading nation.
A million people on each side of the Atlantic go to work each day for British companies in the US, or for American companies in the UK.
American investment into the UK is seven times larger than its investment into China, and it is around a thousand times larger than the scale of Chinese investment in Britain.
In 2005 the UK earned £50 billion from its investments in the US, fifty times what we earned from our Chinese investment activity.
We are each other’s single largest foreign investors, biggest partners in trade in services, and most important partners in science and innovation.
I would also add that our investment in each other’s economies is underpinned by a sense of solidarity and affinity that the statistics, as impressive as they are, simply cannot do justice to.
Every single state in America has workers in jobs that are created and sustained by British companies. And scores of American firms are household names in Britain not only because their products are in virtually every home but because they employ a million of our people.
Our commercial relationship supports jobs, helps create growth and adds value to both our economies - as well as helping the global economy battle its way out of recession.
In my mind it is this extraordinary level of personal connection that makes the relationship between our two countries irreplaceable - quite apart from our like-mindedness in international affairs, our shared our military sacrifices and our essential defence and intelligence cooperation.We are part of each other’s success. We have immense reserves of goodwill towards each other and a unique sense of shared interests, values and compatability.
I feel this at a personal level as someone who is Atlanticist to the core. I have family here in the United States, I have travelled to 34 states of the Union, and the only landscape in the world which comes close to being as dear to me as that of my native North Yorkshire are the mountains of Montana, where my wife Ffion and I holiday on a regular basis.
Similar sentiments are shared by countless politicians past and present from all parties in Britain and by business leaders and Britons and Americans from all walks of life. This accounts for so much of the resilience of our relationship and its ability to produce tangible benefits for all sides.
So the application of the new spirit of commercialism in UK foreign policy starts right here in the United States. We want to build on our extraordinary success story. I am very pleased, for example, that British Airways has just re-launched its ‘face-to-face’ programme, which is an innovative idea entirely suited to a networked world where making new and imaginative connections is often the key to unlocking new opportunities.
Our Embassy in Washington and Consulates across the United States are working with politicians, officials, businesses and business groups to support economic activity and prevent new trade barriers being erected. In Boston our Consul General worked with our Ambassador and others to successfully prevent Massachusetts introducing a tax change that would have cost British and other international businesses millions of dollars. We will be activist as a Government about such issues, just as we have been outspoken about the need for ratification of the UK US Defense Trade Treaty. So I am delighted that the Senate Foreign relations Committee yesterday voted unanimously to send the Treaty to the Senate floor. I look forward to its early ratification by the full Senate. As President Obama has said, it will bring benefits to workers and soldiers in both our countries.
We will speak out against protectionism and barriers to trade, in our own European backyard as well as more widely, including here in the United States. It is no secret that we have been concerned about the sentiment and Congressional action that has led to calls for ‘Buy America’. Trade and investment-limiting measures can set us along a dangerous downward spiral and we must be robust, together, in resisting this.
Trade is not a zero sum game. The growth in exports from one nation does not mean a diminishment in ours. Or to quote a much earlier piece of wisdom from an 18th century academic, “there can be no such thing as a Nation flourishing alone in commerce; she can only participate.” Protectionism gives short term help that ends up making everyone poorer. We believe that successful economies promote what they are good at - they do not try to protect themselves against what others can do more efficiently.
This is an argument we make ceaselessly in the European Union. We pushed very hard - and, I am glad to say, successfully - at the last European Council for the EU to agree trade measures to help Pakistan in the wake of the disastrous floods and an EU-South Korea Free Trade Agreement. Within the European Union we are staunch advocates of the widening of the Single Market, as movement in favour of more open trade is vital to our future and Britain and other European countries face profound challenges to our ability to maintain the levels of economic growth our societies expect.
So to conclude, as a new British Government we are determined to do all we can to help trade thrive between Britain and America, and to do so from the highest levels of Government, from our Prime Minister down, using reinvigorated diplomacy and a new National Security Council which is already making an important contribution in this area.
And while none of us should be starry-eyed about the scale of the economic challenges we face, about the grit and perseverance that will be needed before we leave behind the full effect of the global economic crisis, or indeed about the foreign policy challenges the US and Britain are confronting side by side in Afghanistan and elsewhere, we should be optimistic about the future. The businesses represented in this room give ample grounds for both Britain and America to be confident of shared success in the years ahead, and you will have the support of our Government in London and all our staff here in the US in those efforts.