Good afternoon, everyone.
Thank you for coming. As you
may have heard, there is a Green Room -- actually it's not called a "Green Room"
these days, is it? There is a
conversation going on that Ambassador Portman and Secretary Johanns are
attending. They are talking about
cotton and duty-free, quota-free, and we understand that the conversation on
cotton ended a little while ago, and they are now just starting duty-free,
Obviously, if the group breaks up and they come in here, we
will welcome them and we will step aside.
But in the interim, we are here primarily to answer your questions.
The United States continues to stress that unless and until
we see progress in agriculture, it's very hard to imagine us being able to make
the kind of progress across the board in services, in NAMA, and in other areas
that will be necessary for a truly robust and comprehensive multilateral trade
The Doha Development Agenda is critical for developing
countries, but also critical for developed countries. So we all have a lot at stake here. The World Bank has noted that over 90%
of the gains from reductions in trade barriers around the world would occur in
agriculture from the expanded market access with a decline in barriers in
The United States and the G20 have been calling on the
European Union to move on market access in agriculture, but we also share the
interest that the European Union has expressed in a more ambitious outcome in
services and in non-agricultural manufactured goods. And I think I will stop there. There is a lot going on, and I suspect
you are in a better position to ask those questions that articulate your
Melbourne Age, Australia: In
terms of agricultural market access, the focus, I gather, has been largely on
sensitive products and firstly, how many of them are to be and, secondly, what
disciplines should be applied to them.
If we could get an agreement on that coming out of this meeting, would
you regard that as meeting the criteria you've put that we need to get a deal on
agriculture to make this meeting a success?
SENIOR U.S. OFFICIAL:
Thanks, great question because this is one of our priorities -- to move
on the issue of sensitive products in agriculture. You will recall that we've got an
agreement to use a tiered formula with substantial tariff cuts. For some products, the cuts are not
going to be as deep. These
sensitive products will have to provide access through expanding tariff-rate
The negotiations in Geneva over the past couple of months
have been held up exactly on that issue.
How can we ensure real, meaningful improvements in access for these
sensitive products by having sizeable quotas established? We don't have agreement on that
yet. There has been some informal
work in the past couple of days on this topic. In fact, even this morning, there was a
group of experts meeting to try and come up with a solution to this.
We have seen a little bit of marginal progress on it,
particularly on the question of the treatment of these products: how you would expand the quota, whether
you do it on a consumption basis or some other basis. And we are seeing more and more
countries starting to converge around the concept of the size of the quota
should be based on the size of your market and consumption is a good indicator
for that. Unfortunately there is
one important player who has not yet agreed to use this basis, and so we will
keep working with them.
To answer your question, if we were able to get progress on
this question of sensitive products -- how many products, how you would expand
the quotas -- that would be a real meaningful move forward in these
negotiations. Not the same as if we
had established full modalities in agriculture, not the same as if we had agreed
on how deep the cuts are to be, not the same as if we had made some of the other
formula decisions -- but it would sure be a big help. And so here, that is exactly what we are
trying to do, find ways we can move forward even when in some areas we are
blocked. So we have three days left
and we will see what we can do.
QUESTION (in French):
I have two questions on market access and on delocalization of textiles
in the U.S. The French translation
is not working, either? So today we
have two problems, for English and French (laughter).
heard lots of people talk about market access, and I don't believe that African
cotton goes to the United States because what we see there is that factories are
moving out of there. So market
access isn't going to have any effect on what we are discussing here since
factories are moving out of the United States. The WTO question is, "What is the United
SENIOR U.S. OFFICIAL:
Okay, thanks. I think I got
the gist of it. Thanks for your
help. There are two elements to the
question: what is the market access
for cotton and how does that relate to the United States. The second was what is the United States
doing to comply with the WTO ruling in the Brazil cotton case.
On the first one, on market access, there are several layers
to this. The West African countries
have put forward a comprehensive proposal to deal with cotton in the
negotiations. One of those elements
is market access, where they have proposed the global elimination of tariffs on
cotton. What Ambassador Portman
said yesterday is that the United States is prepared to support that
initiative. Now remember, we also
support global tariff elimination.
That's the U.S. proposal.
What we said yesterday is that we're prepared to do that also with
respect to cotton in the context of the discussions that are underway on
improving access for least-developed countries.
So the United States, which has a 21% out of quota duty on
cotton, is prepared to eliminate that duty when the round is implemented. We would call on all other countries as
well to eliminate their duties on cotton.
These duties can be quite substantial, 40% [shout from audience]. Let me finish my answer here. There are other countries who have
barriers to cotton trade. These in
fact, as the speaker suggested, is where the growing markets are. The countries where textiles are
produced, where cotton is demanded, is where the increased market access is
going to be of most interest. We
import some African cotton, removing these barriers will help facilitate more
imports in the U.S. But certainly
the Chinese market, India, other countries, is where the most gains are to be
had here. That's one element of the
Another element has to do with export subsidies, elimination
of export subsidies. The United
States has an export subsidy program, the Step 2 program. It was implicated in
the cotton finding, and we are moving, even now, with our Congress, to try and
eliminate this program -- a $300, $400 million a year program that, if we can
work our way through the political process at home, will be off the books, even
this year. So we are certainly
trying to move in that area as well.
Finally, as you know, there's a domestic support element to
the West African's proposal. We
have a proposal on the table broadly in agriculture to substantially reduce
trade-distorting domestic support and ultimately phase it out. That certainly would have the same end
point as these countries. We are in
discussions with them now about how we can address some of their concerns in the
context of our interests also in moving the round forward. We do think we are engaged with these
countries. We have made moves, even
yesterday, to try and address specific elements of their proposal and we will
continue to work with them.
Reuters: I just wondered if
there were any new ideas that the U.S. had in terms of food aid in order to help
get to this goal of setting a deadline to eliminate export subsidies. Have you made any proposals in regards
to getting rid of the trade-distorting effects of food aid? Secondly, service industries are
concerned about a proposal being put forward by the G90 countries, which they
say would weaken the mandate for the services negotiations. I just wondered what comments you would
have on that?
AMBASSADOR SCHWAB: Doug, let me respond first to your
question on services. There is, starting ten minutes ago, what is called an
open-ended discussion on services at a technical level to discuss what proposals
may or may not be out there. There
are some proposals circulating informally, as distinct from formally. That
situation should clarify somewhat later on this afternoon.
We understand that there are a number of countries that have
an interest in changing some "shalls" to "shoulds," and that kind of thing to
perhaps water down some of the language that was here when we arrived. There are also a number of countries
that feel that the current text and annex are insufficient and should be
strengthened. It will be
interesting to see during this open-ended dialogue what the outcome is about the
Ambassador Portman has noted that the United States would
like to see the services text topped off, meaning strengthened, but we will see
how the progress works. The EU has
a stronger position related to perhaps some numerical targets. At this technical
meeting this afternoon, we'll have a better sense of which countries are where
in the equation.
SENIOR U.S. OFFICIAL:
On the food aid side, in early October, I think October 5th, the United
States made a specific proposal to our trading partners on food aid disciplines
we recognize as part of the framework.
We're willing to work here. We have a framework that would deal with
emergencies very carefully, deal with the chronic food deficit countries very
carefully, and impose more rigorous disciplines on all other types of food
It's a framework that we've been talking with other members
on. We're prepared to negotiate from it, take others' ideas and see what sort of
appropriate disciplines can be imposed that do treat very cautiously an issue of
life or death.
One of the big obstacles in making progress on food aid is
that one of our main interlocutors has stuck to a very hard line position – that
food aid should be provided only through cash. It's a position that is not
broadly supported in the WTO among food aid experts or food aid deliverers. So we're running to the ground on food
aid because of this intransigence.
We certainly are prepared and eager to intensify this
discussion if it helps unblock the discussions on export competition. That's
what was the focus of WTO meetings last night. We were prepared to engage and
negotiate from our proposal, and deal with all reasonable positions, as long as
we safeguard the needs of the poorest here.
AMBASSADOR SCHWAB: Let me suggest, for those of you who were
here yesterday when Ambassador Portman was speaking, he noted the fundamental
importance of U.S. food aid for feeding starving people, and he also noted our
commitment to address the trade-distorting effects of food aid.
Let me step back a minute, though, and note that given the
potential for development gains for the developing world, from a robust and
comprehensive multilateral Doha Development round, this is something of a
distraction. It's unfortunate that
all of the potential gains – the question earlier that was raised about market
access for cotton. If there were
tariff eliminations by developed and major developing countries alike in cotton,
the potential gains for cotton producers, West African cotton producers, could
be substantially greater than the conversation going on – the narrower, more
narrowly-focused conversation going on on cotton.
So quite honestly, the best kind of development agenda – the
most robust, the most successful, the most sustainable development agenda we
could and should be talking about -- has to do with market access, not some
narrowly drawn definition of food aid.
National Journalist Congress Daily:
Today, the National Cotton Council in Memphis put out a news release
opposing the offer to eliminate cotton tariffs. They say that it would be a unilateral
action for which the United States would not get anything in return. What is your reaction to the U.S.
industry opposing this? And also,
what would be the process for the entire duty-free, quota-free proposal going in
SENIOR U.S. OFFICIAL:
Let me let my colleague handle that one.
Why don't I address the cotton issue. First of all, I haven't seen the press
release coming out, but let me just step back on cotton for a second. We have been engaged in some pretty
intensive discussions with the C4 countries this week. You know, people use the phrase "good
and constructive discussions."
These really have been good and constructive discussions.
We started out this week, I think, positions substantially
far apart and without really a common understanding, notwithstanding the fact
that there has been a lot of discussion.
I think we've moved a long way this week. I think – you know, I'd be so bold as to
say I'm cautiously optimistic that we will find a common way forward with the C4
countries because I think we share a common interest in seeing a successful Doha
round. I think you see the C4
countries realize that the gains that they stand to realize from both market
access liberalization as well as from the elimination of trade-distorting
subsidies – and that would be gain from the U.S. proposal – are substantial, and
that they should not be lost.
The source of the frustration there that they have and that
we have is that things have not gone fast enough. And they have not gone fast enough. They haven't gone fast enough because we
have been awaiting agreement on overall agricultural modalities, which is what
was agreed to in the July framework and which is the only way it makes sense to
handle this issue. You cannot allow
these negotiations to break down into sector-specific negotiations. You've got to reach overall ag
modalities and then start dealing with specific sectors. And I think there is
increasingly a common appreciation that we're going to need to move forward with
these negotiations after Hong Kong.
So I'm very, very pleased with how our discussions have gone.
There has been a flurry in the media that, frankly, has been
stirred up by folks who would rather distract attention from what is the
principle impediment to moving the Doha round forward, and that is the inability
to reach agreement on agricultural market access at large. But I can tell you, that is not
affecting the nature of the conversations that we are having with the C4. Those are good, constructive
conversations. And to those who
suggest that we are holding hostage cotton to everything else, I would first of
all suggest that in fact what is happening is the entire round is being held
hostage to a failure for our developed country partners to come forward with
ambitious offers in agricultural market access, which is what we need to close
Now, with respect to the Cotton Council position, we have
stated all along that our agricultural market access proposal is a very bold
proposal. We're getting criticism
from our agricultural interests.
We've been getting it for a long time. But to bring this round to a successful
conclusion, there is going to have to be some political courage here. We've taken that, we've demonstrated
that, and frankly we're leaning forward again in the area of cotton.
Now there's a balance to be struck here, and at a certain
point in time, to be able to get this entire package through, we're going to
have to see greater agricultural market access. That's where the substantial gains stand
to be realized for the developing world as well.
So I just want to be very clear. This is shaped by conversations that
we're having, on-going, but those who would portray this as being a blow-up I
think are not in the discussions, they are not being part of those conversations
which have been good, cordial and constructive. Thank you.
I'm sorry, you had another question there.
QUESTION: Yes, I
asked what will be the process for actually achieving this duty-free, quota-free
program? Can you do it in the
Administration or do you have to send this through Congress?
SENIOR U.S. OFFICIAL:
Yes, the answer is that our tariffs in the United States are set through
Congressional action. So any change
in tariffs is going to have to require Congressional action and change of laws.
Our expectation is that when we send up a Doha agreement across all of the areas
to implement the final package, it would include whatever commitments we've made
on tariffs, which would include for least-developed countries. And so this would be part of the
implementing commitments that we undertake then.
QUESTION (in French):
I hope the translation problem has been resolved? I will try to explain with my bad
English as translation is difficult for me. I am Ibrahim Maloum, President of the
African Cotton Association. [Various remarks summarized:] African cotton-producing countries have
nothing except cotton to export in the world market. Since we introduced the
cotton initiative, world cotton prices have been dropping annually, mainly due
to U.S. and EU subsidies. We are
really waiting for subsidies to be cut, or we will be out of the world market
and take ourselves out of the WTO.
The U.S. and EU must propose and find a reasonable and concrete position
to fulfill the Doha round.
I know Mr Malloum well.
We've had the chance to meet on many occasions, and he's a very very
articulate spokesman for the West African cotton producers. Someone in an earlier question
referenced our Cotton Council and the pressures that they put on the U.S.
government. I can tell you Mr
Malloum is equally effective in putting similar pressure on the C4 countries,
and again he's a very very eloquent spokesman.
I would just simply say, Mr Malloum, I agree with you. We want to eliminate subsidies. We do. That's been the nature of our proposal
put forward. We would like to
eliminate them across the board. We
are doing everything we can to liberalize agricultural trade. The plan all
along, going back to the July 2004 declaration, was that we would reach broader
ag modalities on how to liberalize -- not just for cotton.
And I acknowledge that the cotton trade needs to be
reformed. But the cotton trade,
even in Africa, even in sub-Saharan Africa, you're talking about fewer than 7%
of Africa's farmers in sub-Saharan Africa are engaged in the cultivation of
cotton. 93% are going to be waiting
for liberalization of other commodities, of cocoa, of coffee, of tea. We can't allow this round to degenerate
into just a number of sector-specific negotiations.
In terms of having an agreement on cotton, we are all for
moving forward, and we're all for achieving an ambitious outcome. We need overall ag modalities to allow
us to get there. But in the
interim, we have been working, as you know, assiduously with the C4 countries to
try and figure out what can be done to address both the development side and --
you put forward some numbers there that I've heard references to this $450
million number. I literally have
never seen that study. We have seen
eleven studies here, FAO studies, studies by the IMF as well. In terms of assessing the impact of U.S.
cotton programs on worldwide price, they range from a low of 2% to a high of
12.6%. The principle cause of the
differential is what the assessment is in terms of the demand elasticity. We believe that the lower studies are
probably more accurate.
Even if you just take the median number, just the middle
number, seeing as they've all got different perspectives, you're looking at
4%. That's roughly a $40 million
impact on the four C4 countries, which is not to suggest that we support
subsidies. We don't. We want to eliminate them. But it does suggest that this is a
broader problem. It's got to be
addressed not just by looking at subsidies, but also by expanding market access
to allow West African cotton growers, as well as coffee and cocoa and everybody
else, to expand their access to global markets to allow for real development
Bloomberg News: We've heard
this morning from different industry groups that not only are the NAMA talks and
the service talks stalled out as they're waiting for agriculture, but actually
the positions are hardening on all different sides. In fact, we see this next text on
services. Is it your understanding
or your feeling that talks are moving backwards on NAMA and services, or are
they just not going anywhere?
AMBASSADOR SCHWAB: I think at this stage of the talks, it's
too early to know. We are in Day 4,
Day 5. A lot of senior officials
have had a little bit of sleep, and there are some folks getting grumpy along
the way. Right now, I think you're
seeing more posturing than you're seeing substance, and it really is too early
to tell. We are still optimistic that the outcome of this week can be a movement
forward to a successful Doha round, and that includes on NAMA and on
The deterioration that you're describing has not -- it's too
early to know whether deterioration has in fact occurred, and it is much too
early to know what the outcome will be by the end of the week. We are still cautiously optimistic that
this stage of this round can have a successful outcome where we move the ball
message we seemed to be getting is that progress on big issues seems to be
stalled and that small issues seemed to be raised such as, for example, cotton
or food aid. If I could come back
to food aid, because if that is the case, progress on the small issues perhaps
is taking place in negotiation.
On food aid, we were told this morning by the World Food
Program that in principal they would prefer cash, but the problem is that there
isn't enough cash being put forward.
And that secondly, they themselves, on the commercial displacement issue,
have guidelines to deal with commercial displacement. Now my question is, is the U.S. willing
to move forward on food aid, first by relaxing its apparent insistence on broad
exemptions for emergencies and net food importing countries; and secondly by
using the World Food Program guidelines, which I understand are accepted by all
UN nations, as a basis for WTO disciplines on commercial displacement?
Let me suggest that what is holding up the talks is not the small
issues. What is holding up the
talks is the big issue, and the big issue is market access and agriculture. If my colleagues would like to answer on
the food aid.
Just briefly, the World Food Program, in fact, has recently done very
interesting studies. You all should
look into them because I think they, in many ways, buttress a number of our
concerns about the need to protect food aid. But commercial displacement is a real
trade issue. We're prepared to
negotiate it here because we don't want the distraction to stop progress on big
issues. So we're completely
prepared to negotiate on a reasonable basis. The problem is we haven't found our
negotiating partner prepared to do that with us.
Century Business Herald: Just have
to follow-up on Annex C. Just seems
to be there are four or five alternative proposals here now. One of the G90 meeting suggests that
this should be the second round of a revised offer and they have a very big
difference between the
plural-lateral suggestion posed by EU, and the EU wants to introduce another
alternative. Seems to be the
difference between (inaudible) Annex C is very great. Are you suggesting that you should put
the whole Annex C aside and let the meeting go ahead, or let it break down?
The question relates to the services sector negotiations and the status
of Annex C. There are technical
level conversations going on right now as we speak. There are differences about the text and
Annex C, but those differences appear to be both from countries that would like
to see them watered down and from countries that would like to see them
strengthened. I don't think anyone
has talked about setting aside Annex C.
We'll see more developments in the services area going forward.
QUESTION (follow on):
Is it the fact of just like two years before the Cancun meeting that
African country just walked out and put down the talks.
I have not -- my understanding is in the case of the services discussions
that countries are engaging in a very constructive dialogue. I am told that there are two texts that
are being floated informally, not formally, but that there are other potential
amendments that are also being considered.
Some would weaken, some would strengthen. Thank you.
QUESTION (started in French): From the Ivorian Commission: What I want to say is that when the C4
countries put down their proposal to eliminate all subsidies and domestic
support on cotton, they were told that this will not solve their problem and
that they will better work on the development aspect of the problem, which means
that they should work on promoting the transformation of the cotton. But do you think honestly that it is
wise to make these suggestions to them when you know that most of the American
manufacturers which was transforming cotton have been let down? And that most of the American production
of cotton is exported abroad. Do
you think that it's wise to propose to African countries to work on the
transformation of the cotton since they will not be efficient in this
transformation. That is my
Again, I would just reiterate what we have said before, which is that we
do not challenge at all the legitimacy of the point of view that has been put
forward by the C4. Indeed, we have
been spending a good chunk of this week speaking with the C4 countries about the
issues of subsidies, and we look forward to continuing to do so.
Moreover, as we have said, our proposal is the most
forward-leaning proposal in favor of illuminating trade distorting subsidies, as
well as reducing tariffs. The only
point that we have made is that the cotton market internationally appears to be
a highly competitive market. And
the elimination of subsidies may not be – trade distorting subsidies -- may not
be the only element that is needed to fulfill the development goals of the C4
To that end, we have been working -- the United States and
others -- have been working very hard this week to put forward ideas for
development for aid for trade, for other things to help ensure that the goals of
the Doha round are achieved. We
have also been working to try and eliminate tariffs, in cotton and in other
So if the answer is whether there is any suggestion of
whether it is wise or unwise, I simply want to point out that there is no
question about the legitimacy of the cause. We agree with you that the
trade-distorting subsidies should be eliminated. We would hope to get there. And for that we need, frankly, your
support and the support of the other countries here in moving us towards an
agricultural package, a negotiations package, something that we had hoped would
be agreed here this week. The
original concept was that was what we were going to do this week. And so we need you assistance, we need
QUESTION: We are
hearing a lot of concern from delegates about how the blame-game has already
begun and shifting blame onto different countries in the event of collapse here
in Hong Kong. And I am
wondering -- we already see, you
know, beyond just the expected blaming of the French farmers, given the fact
that in the U.S. right now, the reduction of tariffs for the aid package will
have to get through Congress that wants to cut revenues -- wants to cut our
budget, not to cut tariffs -- given the fact that we have gotten a letter form
senators that are in no mood to deliver on Mode 4 in services, given the fact
that Congressman Thomas chairs the Committee on Ways and Means, oversees trade,
and comes from a district with the largest cotton subsidies, how do you really
see that this is going to move? And
really the question is, how much responsibility is the U.S. willing to assume in
the event of failure here in Hong Kong?
Let me suggest that evidence of the U.S. willingness to lean forward and
be forthcoming rests in our October 10 agriculture proposal, and you articulated
the political circumstances that we are addressing back home in the United
States. Every country that comes to
this kind of a trade negotiation is dealing with pressures from import-sensitive
sectors: industry, agriculture, services.
We are all dealing with that.
And the question is one of leadership and one of being forthcoming and
being ambitious and taking a chance and doing what is right.
And I think it's been very, very clear in terms of the U.S.
approach in agriculture, clearly our commitment in NAMA and services, trade
facilitation -- all of those areas where these conversations are going on, we're
here and we're ready to negotiate and we are prepared to come up with an answer
that is good for developing countries.
This is the Doha Development Agenda. But also, we know that by helping
developing countries, developed countries and the global trading system, the
global economy will be helped.
We have the trade promotions authority – it used to be called
fast-track legislation -- available to the United States through the middle of
2007. That would require the round
being wrapped up, pretty much, by the end of 2006 for us to be able to enact
legislation. It would be
impossible, or virtually impossible, for the United States to implement an
agreement coming out of this round of negotiations absent trade promotion
authority. So that is a very, very
real, drop-dead deadline for us.
But in the meantime, we're here, ready, willing and able to
lean forward and to negotiate and to exhibit the leadership to do so.
QUESTION (follow on):
Does that mean that the U.S. would also accept some responsibility that
maybe our "leaning forward" is too far ahead of where a lot of Americans are,
seeing the sagging support for the trade agenda in the U.S.?
AMBASSADOR SCHWAB: Americans have been willing to accept
trade-liberalizing agreements since 1934.
If you look at the history of U.S. trade policy and trade negotiations
after the Smoot-Hawley Bill was enacted in 1930 and we raised our tariffs and
other countries raised theirs and the world drifted into a depression -- a
lesson was learned and that lesson has stuck. The United States and the American
people have been consistently willing to accept trade-liberalizing
I don't see that changing. It gets tougher. I think we all
hear more from our import-sensitive sectors than we hear from our
export-ambitious sectors. But the
Congress has provided trade promotion authority to the United States Government
for the purpose of implementing a successful round. We hope to see a successful round and
look forward to implementing such a round or moving such a round through
QUESTION (in French):
Since the beginning of the conference, it seems to be a question on
statistics. Statistics depend on
the database and sources. If we
don't have the same database and we don't have the same figures, we certainly
won't have the same conclusion. We
have a statistic of the International Cotton Advisory Committee. This figure shows that the elimination
of U.S. subsidies could maybe improve the world price of cotton around
29.7%. The Brazilian statistic
which was based on the dispute settlement body between Brazil and the U.S. shows
that the improvement in world price on cotton could be 12.6%. If we are discussing nowadays subsidies,
it's certainly because everybody has agreed nowadays subsidies is a big problem
for international trade. We do not agree when Americans use statistics that say
cotton producers only receive 15% of the international prices given for the
cotton producer price (inaudible) in Africa.
just wants to show that the figures which have been used by the U.S. are not
good figures and that the remuneration of the African cotton producer is
certainly [inaudible] that was shown by the figure used in the U.S.
I thank the gentleman for his comments. Again, I think we share a common
objective at the end of the day, which is to promote the development of cotton
in the framework of a broad trade-liberalizing agreement, and to see the end of
trade-distorting domestic subsidies. We want the same end.