Below is the text of the speech made by Hugo Swire, the Minister of State at the Foreign & Commonwealth Office, at Asia House in London on 8 March 2016.
Thank you Michael for that kind introduction. I am delighted to be here at the launch of Asia 2025. The list of contributors to this excellent book – and the distinguished guest list this evening – reads like a Who’s Who of all things Asia, and is a credit to the respect which Asia House commands, both in this country and in the region.
You’ll forgive me that I have not read the whole book, but I have seen some extracts of the expert opinions it contains. I know many of the authors are with us tonight so I won’t pick any out for fear of favouritism, but I will say that I am sure it makes for fascinating reading.
Many spoke of risks, challenges and uncertainties, yet all relished the possibilities, potential, and opportunities they presented. Whether we’re in politics, diplomacy or business, we all know that risk and opportunity are two sides of the same coin.
Some commentators are sounding the alarm about the Chinese economic slowdown, and the impact this might have on other economies in the region and further afield. This does not change the fundamental fact that Asia is now – and will remain – a major engine for global growth, and one with which we must continue to engage.
How Asia is changing
You only have to look at how Asia is changing, and the astonishing pace of that change. China’s Pearl River Delta now encompasses 42 million people – that’s more than the 20 biggest European cities put together. It’s the largest urban area on the planet. There are 160 cities of over 1 million people in China alone. And despite hundreds of millions of people moving into cities in the last decade, Asia’s urbanisation surge is only just beginning. This urbanisation is directly linked to income growth and consumer spending. The purchasing power of Asia’s growing middle classes is going up faster than the sky scrapers they are moving into.
This huge movement of people is not restricted to Asia. They are travelling overseas in ever greater numbers. India overtook China recently to become the fastest growing outbound travel market – predicted to more than triple to 50 million between now and 2020.
Two of the world’s top three economies are now Asian; a third of global trade and GDP is represented by Asia. Some predict that by 2025 as many as two thirds of the world’s population will be Asian. Both the G7 and G20 will be hosted in the region this year – clear testament to its growing significance.
Why this matters to the UK
There is no doubt that these seismic economic shifts are being felt right across the world, and the UK is feeling them too. Some contributors in the book you are launching today argued persuasively that the Asian economic centre of gravity was shifting westwards. Others argued just as forcefully that it was the centre of gravity of western economies that was heading east.
Of course both are right. People in Europe are looking east as never before, but Asians are also increasingly looking west – as students, investors and tourists. Some estimates suggest that Chinese tourists spend as much as £8,000 during a visit to the UK. (Informal sources suggest much of this is spent in Bicester village.) This increasing integration is having a huge impact on the UK. Cheaper Asian imports – from T-shirts to televisions – have given British people today a standard of living their grandparents could only dream of. But at the same time these products threaten the livelihoods of lower skilled British workers. So economics spills over into politics, with protests about globalisation – not least against free trade agreements such as the Transatlantic Trade and Investment Partnership (TTIP), which is already the subject of urban myths.
But we all have to accept that this increasing global inter-connectivity is here to stay and embrace it. Asia is embracing e-commerce. Ten years ago only 2% of Indonesia’s population used the internet. This year a third are expected to: that means 100 million Indonesians connected globally, with huge implications for economic growth and social change. Chinese consumers spent a record £10 billion online in just one day last year.
At an individual level, it means that a teenager on a laptop in Hanoi can do business with a company in Huddersfield. At a country level, it has meant a recognition of growing economic inter-dependence and the need to join forces with others.
Like our work with the Republic of Korea – building a new fleet of ships for the Royal Navy, which has led us to work together to promote the project to third countries. Or our plans to bring Typhoon fighter jets to Japan later this year, for the first non-US military exercise Japan has ever hosted.
Cooperation like this not only breaks down barriers between countries inside the grouping or partnership, it also magnifies their individual power and influence outside it.
In the trading context, you can see the proof of this in the EU – which I’ll come to in a moment. You can see it in the Commonwealth, where we are expecting to see the value of intra-Commonwealth trade reach $1 trillion by 2020. And you can see it in ASEAN’s economic success, and the launch of the ASEAN Economic Community (AEC). Almost two thirds of ASEAN’s growth in the last quarter century has come from productivity gains. Today ASEAN is the fourth largest exporting region in the world, accounting for 7% of global exports.
We support ASEAN’s Vision 2025, with its plan to tackle non-tariff barriers, harmonise the regulatory environment and liberalise services. These changes will be crucial for boosting growth in South East Asia and strengthening integration with the rest of the world economy. We also support the Free Trade Agreements that the EU is pursuing with countries in the region – we see these as laying the foundations for an EU-ASEAN FTA.
The UK, the EU and other like-minded economies are gradually building a global free trade network – through the Trans-Pacific Partnership (TPP), the Transatlantic Trade and Investment Partnership (TTIP) and various EU Free Trade Agreements, with the Republic of Korea, Vietnam and Singapore. (Only yesterday I was able to reaffirm our commitment to the EU-Vietnam FTA during our third Annual UK-Vietnam Strategic Dialogue here in London.) An agreement with Japan is in the pipeline; I very much hope to see soon a resumption of negotiations on the EU-Thailand FTA; and the UK is advocating a feasibility study on an EU-China FTA.
Interconnectivity – security
The benefits of international cooperation are not just seen in trade. It is a simple truth that in an inter-connected world, problems and threats in the form of Daesh-inspired terrorism, instability in the South China Sea or the North Korean menace require a unified response. Large multilateral organisations like the EU or NATO, ASEAN or the UN are listened to in a way that no individual country is. That is plain fact.
I am pleased that United Nations Security Council Resolution 2270 passed unanimously this week, delivering a strong response from the international community to North Korea’s nuclear test and satellite launch using ballistic missile technology. We must stand united against acts that so flagrantly disregard international agreements and responsibilities.
And it makes sense that these groupings come together for discussions. ASEM is a good example – giving the UK and its European and Asian partners a forum to discuss issues of mutual interest and further consolidate their influence.
EU – good or bad?
Change, and increasing global connectivity, are as relevant to us here in Europe as they are for people in Asia.
Like Asia, the European Union has changed a great deal over the last half century. From its roots as a means to prevent further conflict between France and Germany the EU has grown into something different. Whilst with a whole range of new members this is inevitable, it does mean that reform is now clearly needed if the EU is to respond to the changed demands of the 21st Century.
But that aside, it is clear that the Union has brought peace and stability to its member states and to much of the European continent. It has introduced democracy, the rule of law and market economics to the former communist countries of Central and Eastern Europe. And it acts as a champion for those values globally.
EU – good for Britain
A lot of this is down to the multiplying effect of EU cooperation. Its members have achieved more together than they could have achieved alone. The United Kingdom’s membership of the EU, like our membership of NATO, the Commonwealth and the UN, amplifies our power and influence on the world stage.
In Asia, it gives us greater leverage in the negotiations on free trade agreements and on the comprehensive investment agreement with China. These are tough negotiations, and our negotiating power to secure market opening in important sectors is much greater from within the EU than outside it.
At a time of increasing economic uncertainty and rising security threats, cooperation at an international level is more important than ever. The EU has powerful tools at its disposal, be they security, diplomatic, economic or humanitarian. They allow us to project our influence further than it would otherwise reach. Of course NATO remains the cornerstone of UK defence – we will never give control over such decisions to the EU. But the EU complements NATO’s military activities with its important longer-term stabilisation and development arms.
Of course the benefits also go the other way. The UK gives EU foreign policy greater credibility thanks to our global perspective. We are after all one of the EU’s two serious military powers. We are the only major nation to have kept our promise to spend 2% of our national output on defence and 0.7% of our national income on international development. We take the lead on cutting red tape, negotiating FTAs and extending the single market. So our membership of the EU benefits both the UK and the EU.
For all these reasons, I believe that the United Kingdom will be stronger, safer and better off in a reformed EU. Looking at the issue from an Asia perspective, it makes no sense at all for us to withdraw from the European Single Market just at the moment when Asia is creating one of its own.
Some say the whole renegotiation and referendum exercise is an unnecessary gamble. If we were convinced of the case for staying in, why take the risk of Brexit by putting it to a referendum? I have two simple answers to these questions.
First, like many, I am aware that the EU has its shortcomings. But I believe that the deal which the Prime Minister successfully negotiated is a landmark agreement which delivers tangible benefits for the UK in the four key areas of concern: economic governance, competitiveness, sovereignty and welfare/migration. The deal gives the UK special status within the EU that no arrangement outside the EU could match. It is a good deal for Britain – as the Prime Minister has said, it is a deal that gives us “the best of both worlds”.
The deal he secured on competitiveness is of particular relevance to you here this evening. It is a tacit recognition by the EU of the need to reform in order to respond to the economic challenge Asia represents. The rise of Asia underlines the case for the UK to stay in the EU and to influence reform from within.
Secondly, this referendum is about democracy. More than a generation of new voters have joined the British electorate since our accession in 1973. I am one of them. In last year’s election, this Government was given a clear mandate to renegotiate the terms of our EU membership and to let the electorate – not the politicians – decide whether to stay in or to leave. In setting a date for the referendum on 23 June we are honouring our electoral commitment.
So in conclusion, while challenges and uncertainties remain, the opportunities that Asia offers the UK and the West are undeniable, and now is the time to seize them. The best way to do that is in cooperation with others. So I for one intend to continue promoting international cooperation, working with my Ministerial colleagues to reform the EU from within, and keeping the EU firmly focused on the opportunities in the world beyond, above all in Asia. Thank you.