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1994 - Mr Major’s Speech to the British/American Chamber of Commerce

Below is the text of Mr Major’s speech, made to the British/American Chamber of Commerce in New York on Tuesday 1st March 1994.


PRIME MINISTER:

Mr Chairman, thank you very much for that very warm welcome. It is a pleasure to be here in New York and to be your guest today and to see such a magnificent turn-out at this luncheon. I am very tentative about looking at the size of the turn-out, I recall the advice that Churchill once had for a speaker who was over-impressed by the size of the audience: "Always remember", said Churchill, "that if you were about to be hanged the audience would be at least twice as large". As a politician I am not sure whether it would be the same audience but I am sure it would be twice as large.

You mentioned a moment ago, Mr Chairman, C-SPAN and Prime Minister's Questions. It occurs to me this is a Tuesday afternoon and so far as I can judge I have an audience in front of me that is unlikely to shout and answer back too much - we shall see when we come to questions.

I went yesterday to Pennsylvania with President Clinton. We went there, amongst other things, to see how the state was changing, how Pittsburgh, once one of the heartlands of the steel industry, has taken on an entirely new life in recent years. That cannot have been a pain-free transition for Pittsburgh, it must have taken a remarkable effort to make the changes that have been brought about in recent years. And I say that with a certain degree of confidence because my country has been changing as well. And it is very easy to forget from this distance of 3,000 miles how partial a view we may have of one another, even though we believe we know one another extremely well, a view so frequently provided principally by the distorting lens of news priorities and soap operas.

I wonder how many people in Britain think that all American life offers is either the glamour of Dallas or the mean streets of the cop movies that they see so frequently on television. And in precisely the same way I wonder how many people in America get a view of modern Britain either from downbeat films of inner city life or recreations of a bygone age, a world of Miss Marple or Middlemarch, a hidebound unchanging class ridden society.

It is a view I think reinforced, reinforced by the story first told by the scientist, Arthur C Clarke. During the last century the Chief Engineer of the British Post Office was called to testify before a Parliamentary Commission on whether an American invention deserved any notice at all, and the particular American invention was a telephone. And when asked whether Alexander Bell's invention would be "of any use in Great Britain?", he replied! "No, Sir, the Americans have need of a telephone but we do not, we have plenty of messenger boys."

My more cynical advisers say to me; why not leave the image like that, let our American friends see us as still living in the Remains of the Day while we get on with running Brooks Brothers, Burger King or BP, making your shirts, grilling your burgers, pumping your gas, all by British companies.

But I do not wish to do that because I wish the image of my country to match up with the reality of the changes in my country and Britain has changed out of all recognition in the past 15 years and it is changing again, and again at speed in the 1990s. So let me just try in the next few minutes to change a few perceptions and perhaps remove a few misconceptions, because the companies from over there are doing rather well over here.

American figures show that British companies invested over 7 billion dollars in American business last year. We have 100 billion dollars worth of investments here in the United States and their exporters sell America 60 million dollars worth of goods each and every day of the year.

Like you, we in Britain have come through a recession, but we have come out stronger than we were before. In manufacturing our productivity rose over 5.5 percent last year, our labour costs actually fell. Unemployment too has been falling, much earlier in the economic cycle than after the recession in the early 1980s.

And this past year Britain's economy has been growing twice as fast as forecast. And in the coming year, in the coming year we are again expecting the fastest growth rate among the main European countries.

But what we are looking for is not just a fast growth rate for one year or two years, what I am seeking is sustained growth, not a single year of success, and that is what our policies are set to achieve in the 1990s. And in the quest for that sustained growth with low inflation we start now from very solid foundations. We have low inflation, we have a sound financial framework, an enterprise culture, a flexible labour market and above all an open economy, open to trade and open to competition.

And let me expand on those virtues for just a moment. Last year our headline inflation rate dropped below 2 percent, our underlying rate is lower than we have seen for a generation. The inflation psychology, so damaging for so long to British interests, is at last in retreat and I intend to keep it that way.

British industry has certainly got that message, there has been a crucial change in the workplace, Even in the 1980s wages continued to grow too fast, earnings never rose by less than 7.5 percent a year, even in years of no growth and recession. Today that has changed, today the figure is down to 3 percent, the lowest figure for a quarter of a century,

And low inflation is important for many reasons, it has its own virtues and one of them I believe is that low inflation creates its own dynamic for investment and for growth, and because we have got inflation down and because the markets now know that it will stay low we have been able to cut interest rates from 15 percent to 5.25 percent in the last 4 years.

In our recession borrowing by the government rose, with recovery it is beginning to come down again and we took some tough decisions in our budget to ensure that it will. But we have still managed to keep our direct tax rates low, they have helped over recent years to make Britain a magnet for enterprise and for investment, Our business taxes are the lowest in Europe, our labour reforms are the most far reaching in Europe. I wonder how many of you remember half-time Britain, how many of you remember strikes as the bane of our economy, But these days you do not see that problem, these days they have faded into history, today we have less industrial strikes than at any time this century.

These are welcome changes but they are a platform upon which to build, they are not the be all and end all of what we are seeking. Because we still need more change, more change to sharpen our competitive edge, and that is why we are embarked on a fundamental review of all the factors affecting our ability to succeed in the global market place. Competitiveness is the key challenge for the 1990s and it is a challenge that the British welcome.

Long-term competitiveness depends, above all, on the quality, the ability and the skills of the workforce, and for that reason education is at the top of our domestic agenda. When we are told, for example, and this is a statistic I do not like, when we are told that the average child in Singapore or Japan is 2 years ahead of their British or their American counterpart alarm bells should ring on both sides of the Atlantic, we have heard them in Britain loud and clear.

So in Britain we are seeking to raise standards in our schools by developing a national curriculum and testing pupils' attainment. Over the past decade we have doubled the number of young people going on to university. And over the three years immediately ahead of us, over those three years, we will treble the number of young people skilled as technicians, craftsmen and supervisors.

These are continuing changes, let me tell you what they are aimed to produce. What we are working for is nothing less than the re-skilling of Britain for the 21st century, and when I set it out in that fashion l hope you can begin to see what I mean about the pace of change in the United Kingdom.

We have taken exactly the same radical approach to science, to engineering and to technology. We are putting more into science and we are working to get more out of the science that now takes place and we are putting much more into supporting and assisting our export effort. Right here, for example, our "North America Now" campaign is an example of our new approach. We do not take our traditional markets for granted, we recognise that they have to be worked for and they have to be won, year after year after year after year in a world that is increasingly competitive.

If we are to be competitive, increasingly competitive, as a nation, it is not just industry that must innovate, of course industry must innovate but on their own that is not sufficient, government must do so as well and that is why I have launched a 10 year programme of reform. In every service funded by the taxpayer we are publishing standards and league tables of performance, devolving decisions and bringing in competition. We are now opening up capital projects to private sector investment and expertise, not just tiny projects but great communications projects like the Channel Tunnel rail link or new motorways.

There are huge opportunities here for national and for international investors in Britain in the years ahead. I believe that the days of monolithic government are over. The governments that will help their countries to be competitive will do less but they will do it better. All our government departments have been told to roll back the burden of regulation on business, if there is one British product I want to see less of it is our historical famous red tape, the sooner that can go the better it will be for all concerned.

We look around and see remarkable changes in the world, not just in my country but elsewhere. Power and economics have become much more diffuse, more complex, more multinational. Trade, finance and technology have made national boundaries economically less absolute. Even if we wish to, and personally I do not, we cannot insulate old industries and old habits from global competition, we have to be as lean as the leanest, to work as hard as the hardest, to be at the cutting edge of learning and advance technology.

It was put best I think by Professor Michael Porter of Harvard, let me quote to you for a moment what he said: "Innovation and up-grading result not from a comfortable home environment in which risks have been minimised but from pressure and challenge, from demanding home customers, from capable home-based suppliers, and most of all from local rivalry. The lesson to be learned is that competition works." I am utterly sure that that is right.

Britain and America share that commitment to open markets. It is never easy to do that in the face of political pressures and that is why we applauded so much the conclusion of the North American Free Trade Agreement, it did give America a moral leadership at a crucial time which enabled Mickey Kantor to build on the work that Carla Hills had done and to work with Leon Brittan together to drive through the most far reaching world trade deal in history.

But that is I think a beginning, but not the end. Those tariff cuts need to be implemented and they need to be implemented fast. I agreed with President Clinton about that in our discussions in the last two days. And we agreed we should set an early target - 1 January 1995 - for bringing the GATT settlement into effect. There is much unfinished business, particularly on services, much still to be done to remove trade tensions.

We understand and we share America's impatience to see a freer flow of imports into Japan, we want to work for this within the GATT framework in which all countries take part. We must find a way of working together to open Japanese markets. Britain and American business, we can encourage the Japanese business community to support the forces of change in that country.

We in Britain have long been the spearhead of a new European relationship with Japan, we have been open to Japanese investment and that investment has triggered a revolution in technology, management, skills and industrial relations in the United Kingdom. And what America for a long time, and Japan more recently, have both realised is that Britain is the ideal base for operations in Europe. It is no accident that nearly 40 percent of all United States investment in Europe comes to Britain and we intend to keep it that way.

So that fight for competitiveness shapes our approach to Europe. There are still some, I fear too many, too many in Europe who wish to see it remain a narrow club, one which turns its back on the competitive challenge. I have said frankly to my European partners, and I repeat it here today, much of Europe is over-regulated, that costs jobs, there are people unemployed in Europe who would not be unemployed but for the burden of regulation in Europe over the last decade.

And how could it be otherwise when businessmen calculate that social costs represent nearly 50 percent of the average wage bill in say Germany or France. That is twice the burden carried by employers here in the United States or in Japan. In Britain we have kept much closer to your levels and while in continental Europe the dole queues grow longer, our unemployment has been falling.

We have said "No" firmly and finally to yet more social regulation and we will go on saying "No". And it is not just an economic point, I think it goes beyond that. I believe it is morally wrong to give more support to people in work when doing so gives people out of work even less chance of getting a job in the future. The need for flexibility is a message I believe that Britain and the United States can jointly bring to the G7 job summit next month.

In Europe I believe that our arguments are gaining ground. We will remain in Europe at the centre of the debate, working for a new Europe that is open, wider, prosperous and peaceful. I believe that opening our doors to new members is essential to those aims. The progress of European Union membership underpinned democracy in Spain and Portugal in the 1970s, it is now the best hope of future peace and prosperity in central and Eastern Europe.

Mr Chairman, ancient hostilities still lie close beneath the surface of the new Europe. In the former Yugoslavia, as we see daily, they have broken through into tragedy. Every day on our television screens we see their effects in Bosnia. For the past 18 months or so, 2,500 of our troops have served bravely in the most difficult and the most dangerous part of Bosnia, thousands of people are alive today who would otherwise have died from hunger and privation because of their efforts.

I have agreed this morning with President Clinton that Britain and the United States will take joint action to build on the Sarajevo ceasefire, we have agreed to send a joint British/American planning mission to see how we can help restore public utilities there, we are both encouraging the United Nations to take action on Tuzla and Srebrenica and to develop plans for the other besieged towns; we both believe in the firm action taken just the other day to enforce the No Fly Zone and to protect United States forces; and Britain is supporting the American-led diplomatic initiative to seek agreement between Bosnia's Croats and Muslims. Strong, coordinated international action has brought a small glimmer of hope in Sarajevo. To develop a wider peace will be enormously difficult but if our two countries with other international partners can strengthen the hand of the United Nations we may yet turn the corner in Bosnia and that must be the aim for us all.

Mr. Chairman, even in the United Kingdom we are not free from ancient enmities. I know that very many Americans care passionately about Northern Ireland; so, let me tell you, do I.

I want to see peace in Northern Ireland, not just a ceasefire, not just a temporary peace but a permanent, long-term peace that can give the people of Northern Ireland the opportunity to plan for the long-term future without the disruption and mayhem that they have had to suffer so consistently in the last quarter of a century.

I believe we took a large step forward in December when the Irish Prime Minister, Albert Reynolds, and I signed our Joint Declaration. Our initiative calls for a permanent end to violence and offers Sinn Fein, the IRA’s political wing, an open highway to democratic life. It is there for them to take. The British and Irish governments, whose positions used to be so far apart, have united behind a common set of principles.

Our Declaration has received overwhelming support. Last weekend, a poll of opinion indicated that over 90% of the people throughout the whole of the island of Ireland want Sinn Fein to seize the opportunity and renounce violence and yet they still continue to hold back from the peace process and perpetuate violence. There have been 17 attacks on the security forces since the Declaration.

Lest anyone present should be unfamiliar with the realities of terrorism in Northern Ireland, let me give you just two statistics: the number of people killed in Northern Ireland last year by terrorists - 84; the number of people killed by the security forces - none. I hope that Sinn Fein can yet be persuaded to end violence and I believe that the strong support for peace coming from America can play an important part in this but in the meantime the British and the Irish governments will continue to work with the constitutional parties for a lasting political settlement and those constitutional parties represent 90% of the people of Northern Ireland.

I know that across America there are many people - businessmen, churchmen - who would like to help in the cause of peace. You can help. The business community in particular can help by investing in Northern Ireland and providing new jobs. As I have seen for myself on many occasions in factory visits in Northern Ireland, investors in Northern Ireland have chalked up a string of successes and just before I left the United Kingdom for this visit the leaders of the four main churches in Ireland called to see me in Downing Street. They wanted my support for their call for fair employment and investment in Northern Ireland and they got it wholly and unequivocally. I warmly endorse that appeal and I know that it is supported by the church leaders here in the United States as well. That investment will play its part in providing jobs across different religious instincts in Northern Ireland and will play an important part in promoting peace.

Mr. Chairman, change - difficult, demanding change - that has been the theme of everything I have had to say to you in the last few minutes. Technology has shrunk the world and calls for it to move and change at an ever faster pace. It has created a global financial market that never sleeps; it has made it feasible to design products in one corner of the world, manufacture them in another, assemble them in a third and sell them in a fourth; it has placed a higher premium than ever before on competitiveness. I won't waste your time with cosy reminders of old friendships between our nations. Those friendships are part of our history and I believe part of our future as well but you who work at the sharp edge of our trading relationship know the realities of the market place: we work together when it is to our mutual advantage, we compete when it is not but we share an agenda for open markets, a healthy respect for successful competitors, an appetite for change. Mr. Chairman, in my belief those are the true guarantees of closeness and mutual esteem in the challenging years ahead. I have no doubt of our business and trading relationship; it is good and it will get better because of our shared interests, our shared instincts and our shared beliefs. [Applause].


QUESTIONS AND ANSWERS

QUESTION:

Mr. Prime Minister, exactly how strong do you expect the British economic recovery to be in 1994 and 1995? Specifically, Sir, can you tell us how much do you expect the GDP to grow and how much do you expect unemployment to decline?

PRIME MINISTER:

Let me take those two points absolutely directly:

In the current year, we think GDP growth will be around 2.5%. That is a Treasury forecast, we see no reason to believe it will be less, certainly we would expect to reach 2.5%. It will be a little higher, we believe, the year after.

The recovery is steady and spreading. It is not sensational but it looks secure and steady and it looks as though it is going to grow. Over the past year, we have had unemployment falls in ten out of the last twelve months, rather earlier as I said a moment ago in the economic cycle than on previous occasions. We tend not to forecast the future of unemployment. I can only say that it does look as though the trend is downwards, how sharply I think it is difficult, to be frank, to make an honest judgement about but I think we will see a continuing decline in unemployment throughout this year and I believe throughout next as well.

QUESTION:

When, Mr. Prime Minister, do you anticipate that there will be true peace in Northern Ireland and what specific steps can the US Government take to contribute to bringing about that peace?

PRIME MINISTER:

The sooner the better, frankly. After 300 years it is a long time for people to realise that they can't all sit in entrenched positions. There is a great will for peace in Northern Ireland, that is what has changed in the last few years. That will is manifestly there and those who dissent from that are being forced to the edges of debate on either side. How soon the peace will come, I would be very unwise to forecast. I believe there is every chance that it will come. The prospects for that are better I believe that we have seen for very many years. There will be setbacks. Nobody should imagine that it is going to roll gently ahead to a solution. Of course there will be setbacks, it is that sort of patchwork in Northern Ireland but I believe we are in a better position to try and secure it than we have had before though I would be very unwise to put a time frame on it.

As to what can be done from here, I believe the repeated and unequivocal support for the Joint Declaration that we have had from the United States Administration is immensely helpful. I believe allied to that the point I made a few moments ago about investment in Northern Ireland is immensely helpful. That isn't just a plea for investment for the sake of jobs; it is because it genuinely does make a contribution in bringing the community together. Increasingly, the fresh investment and the fresh employers are bringing the community together by employing both Protestants and Catholics. It has a much wider impact than many people externally may imagine and it is very warmly welcomed not just by the churches but by every part of opinion in the Province.

QUESTION:

What were the significant trade and economic issues that you raised in your talks with President Clinton and what was his response?

PRIME MINISTER:

There were two really. The first was to look at the GATT deal. The GATT deal is a very remarkable deal. I think it is often not appreciated what a tremendous breakthrough it has been. It is infinitely the biggest and widest trade deal that the world has ever seen. It has brought whole sectors like agriculture into the GATT framework where previously they were outside. It is a remarkable innovation that GATT deal and it will become increasingly apparent I believe as year succeeds year that that is the case.

We discussed bringing forward the implementation of GATT if it can be done. It is not of course at the gift of the United States or the United Kingdom governments but we will lobby and encourage others to bring the implementation date for GATT forward to 1 January 1995. That is the first of the issues we discussed.

We discussed a range of issues to do with open markets and in particular the problems with Japan that I mentioned a moment ago. I won't reiterate the points I made in my speech except to say that there is a wish I think across the industrialised West to see Japan accelerate the opening of her markets. There has been some movement and everyone is pleased about that but there is a very long way to go and we took the opportunity of discussing how we might assist in the opening of those markets.

QUESTION:

Mr. Prime Minister, what is your appraisal as to how well or poorly progress toward a true Common Market is going now? Do you have any plans for re-entering the European Monetary System and what are the prospects for European Monetary Union by, say, the year 2000 and carrying on from that, referring to your remarks in the speech, in terms of opening the doors of the European Union to new members, which new members?

PRIME MINISTER:

Let me take the last point first. We are in the last stages of negotiation with the EFTAN states Austria, Norway, Finland and Sweden and our expectation is, providing those negotiations are satisfactorily concluded, that they will enter the European Union within the next eighteen months or so - they will be very welcome.

At the moment, the Community is a fragment of Europe, it is not truly a European Community. Beyond that and on a longer time-scale, we wish to see the Visegrad countries enter; they won't do so until they are economically ready. That is clearly some years ahead. In the meantime, we will try and negotiate trade and cooperation agreements with them and seek to progressively open our markets to their exports but to bring them into the Community too soon would neither help the Community nor help those particular states for they would not be economically ready for the competition within the Community.

As to how true a Common Market it is, truer today than it has been in the past. The Single Market has made a big difference. I wouldn't pretend that it is perfect. There is just occasionally room for doubt as to how clearly all the regulations of the Community are enforced in some member countries. I put the point delicately here, I put it less delicately elsewhere so to that extent it isn't a true Common Market and there is certainly more to be done.

We have no immediate plans to return to the Exchange Rate Mechanism. The likelihood of us returning in this Parliament think is minimal. I don't believe that will happen.

As far as Economic Union is concerned, by which I take it you mean moving beyond the Exchange Rate Mechanism to a single currency right the way across the European Community, there are very sharply differing views in the Community about the desirability of that and how speedily it can be brought about so the views I express you must accept as my views and that there would be widely differing views from other quarters.

I don't believe we will move to Monetary Union speedily and I don't believe so because I don't believe that the economic conditions right the way across the European Union will be appropriate for us to do so. If we were to attempt a single currency without a proper coordination of economies, I think we would give rise to very substantial structural unemployment in the southern states of Europe and as a result of that a political imperative for massive resource transfers from the north of Europe to the south. That would be politically impossible for the northern states, German, France and Britain, to persuade their electors to make so I believe on economic grounds that European Monetary Union ought to be treated very carefully and I do not myself believe that the economic circumstances to bring it about are likely to be there in the next few years. Others disagree but quite apart from the political and other arguments, economically early Monetary Union seems to me to be a folly we should avoid. [Applause].

QUESTION:

Mr. Prime Minister, finally, can you give us your views please on the prospects for peace in the former Yugoslavia and as a corollary to that what do you see as the future role of NATO and the specific British and specific US involvement in NATO? Do you think that NATO should take a more activist, armed role in policing the trouble spots of Europe or of the rest of the world?

Do you see the entry of NATO forces into the Bosnian War as a precursor to a more activist NATO policy or is this just an isolated, perhaps one-time case?

PRIME MINISTER:

NATO is changing at the moment. The nature of the Alliance is changing. I think it was set out perhaps most vividly in the Partnership for Peace agreements that were reached at the recent NATO summit and the plans for combined joint task forces that are now being examined and implemented at the present time.

I think that does imply that NATO will become progressively more activist. Whether it will become dramatically more activist in the short-term I think is open to doubt but where there is a need for some intervention in a trouble spot around the world, frankly I see no other body other than NATO that would be remotely competent to undertake that role so although it has particular problems for the main contributors to NATO, I do believe over time it will increasingly become more activist.

One sees this to a point of course in Yugoslavia with the decision being taken to enforce a no-fly zone, a Security Council Resolution passed very nearly a year ago that it was necessary to implement just a day or so ago and of course there are a substantial number of troops from NATO nations on the ground in Bosnia at the present stage.

I wish I could tell you what the answer is to your first question about peace in Bosnia. I fear I can't. What it does seem to me is that the present position is this:

There are two strands towards bringing this frightful conflict to a conclusion. The first is the political process and the advances made over the last 48 hours in Washington with the negotiations with the Muslims and the Croats certainly are very welcome. I think that offers a glimmer of hope and I hope we can build on it and persuade the Serbs also to make political advances.

The second element is what is physically happening on the ground. What happened in Sarajevo was a very remarkable exercise. The commander on the ground, General Rose, negotiated a ceasefire and agreed that the heavy weapons in the area would be corralled and effectively policed by United Nations troops. That, with the impact of the ultimatum and also I think the impact of the Russian involvement, meant that that was a very successful enterprise indeed.

There are differing views about whether Russia should be involved and to what extent. I take the view very strongly that Russia does need to be involved and that we wish Russia to use her influence on the Serbs just as we wish the United States and the European Union to use their influence upon other combatants. That, I believe, is the way that we will move more speedily towards a settlement.

There is a glimmer of hope now. We have seen it before and it has slipped and faded away. Agreements that were made have often been dishonoured almost before the ink is dry on the agreement so no-one can be certain that we are on a pathway to peace. I do believe the prospects are better now than they have been because of the success of Sarajevo and because of the success of the talks in Washington over the last few days.