Syed Kamall MEP argues that globalisation and
free trade are not only the key to enriching this
planet; they may also prove to be the key to saving it.
As Conservative Spokesman on Trade in the European Parliament I spend much of my time debating with people who think globalisation is bad and that free trade damages poorer countries. If you are simply using governments to redistribute wealth from rich to poor or vice-versa, of course there are always going to be winners and losers. But what they misunderstand is that when it comes to exchanging goods and services for money in a free market, it is not a question of winners and losers. Every time a trade takes place the buyer gets the good or service he wants and the seller gets the money in return at a voluntarily agreed price. This produces a win-win situation for buyer and seller.
Trade liberalisation – the process of removal of government and monopoly controls to enable trade to become easier between buyers and sellers – will enable us to generate more wealth in the future. But its detractors claim that some of the companies which emerge under a liberalised regime damages our lives in other ways, such as harming the environment.
Take, for example, the argument of some that liberalisation of aviation – the move that gave rise to the ‘no frills’ airlines – has caused environmental damage. But are they right that ‘no frills’ airlines are the great environmental ogres they are made out to be? The hard evidence says that carriers like EasyJet use less carbon per passenger, because they fill almost every seat whereas half empty planes operated by the flag carriers are often less efficient. On the assumption that scientists are right that CO2 emissions contribute to man-made global warming, then aviation is inherently damaging to the environment, but to claim that cheap flights are to blame is disingenuous.
It is all too easy to single out a candidate for punitive taxation on the basis of misleading environmental claims. The aviation industry actually only contributes 2% globally to carbon emissions – a tiny proportion compared to power generation and the impact of cars. Only by examining real evidence can we see that calls for higher taxation often have precious little to do with real environmental factors but a lot to do with environmental posturing or the need to raise new revenue.
Recently there has been much talk in the European Union about stopping us from shipping ‘waste’ overseas rather than dealing with it at home. We are told that it is wrong to turn the developing world into our landfill site, and on the face of it, this sounds hard to dispute. After all who would feel comfortable with the idea of shifting our pollution to a poorer area? But, once again, when you examine the real effects of exporting waste overseas you see a different picture to the one you imagine from the political left’s rhetoric.
Much of the ‘waste’ that we export is actually recyclable and is used by developing countries as the raw material for their manufacturing. It is normally delivered on ships that were already dropping off goods in the UK, and have to return home anyway, so they might as well return with recycled or recyclable materials on board. Banning this practice could undermine developing economies without any real payback for the environment.
We are also told that allowing major companies to relocate in the developing world is damaging for the environment, and that they only go there to avoid tough environmental rules in the west: but do they? While it may be true that environmental rules are more lax in some developing countries, many major companies in fact locate to developing countries because of better tax regimes and cheaper labour – not to avoid environmental regulation.
Modern production techniques in developing countries are far less polluting than those that were in use in Britain’s industrial revolution. The industries that these countries specialise in are also cleaner industries. Produce like clothes, computers and coffee cause very little pollution. The economist Tim Harford argues that some of the big polluting industries of the West like chemical production cannot be moved overseas because they rely on a highly skilled workforce. So, in many respects, the West is hiving off its clean industries, whilst holding onto its big polluters. The idea that the great Victorian smogs of London are being transferred by Western businesses to Bombay is simply wrong.
In fact, it is where the West attempts to protect its domestic markets from competition that many environmental dangers lie. By subsidising our farmers to grow surplus quantities of food, regardless of quality, sometimes in heated and lit greenhouses, heavy in pesticides and far too intensive to be sustainable, we damage the environment. Removing these tariffs and subsidies would probably lead to lower pesticide use, and would certainly allow farmers in the developing world to sell us their produce (much of it organic) and earn a living from free trade.
People in poorer countries have a right to create wealth through hard work, in the same way we did in the last two centuries. Obviously, industrialisation will throw up challenges, but that does not mean that people should be denied the right to trade and to earn. Sometimes in these debates it feels like we are telling the developing world to stay poor in order to protect the environment. That is an unacceptable and untenable position.
Only through economic progress were we able to clean up much of the industrial filth that lay strewn across urban Britain in the latter half of the twentieth century. First we achieved the great economic leaps forward from new industries and inventions, and then we refined the processes to ensure a limited effect on the environment. Would we have been right to stop innovating in 1850 to stop further pollution from coal? So why should we tell others they must stop growing their economies, especially when companies in emerging economies have the potential to leapfrog to modern cleaner production techniques?
The world is changing at an astonishing rate and we should be the vanguard of that change. Instead of using phoney environmental claims to stifle opportunity, we should give people the chance to trade their way to greater prosperity. Britain is unlikely to be the ‘workshop of the world’ again, but we need to be able to trade with developing countries, both to buy the goods that they can manufacture cheaper than us and so that we can prosper from our expertise in other industries like financial services – were we now excel.
We need a liberalised trading environment if growing economies are going to be pressurised into accepting higher environmental standards. Without free trade, green consumers have no leverage on producers. Globalisation and free trade are not only the key to enriching this planet; they may also prove to be the key to saving it.
Syed Kamall MEP is a Member of the European
Parliament representing London.