USTR - Briefing by Senior U.S. Government Officials, World Trade Ministerial, Hong Kong Convention and Exhibition Center
                 
The Office of the United States Trade Representative

Briefing by Senior U.S. Government Officials, World Trade Ministerial, Hong Kong Convention and Exhibition Center
12/15/2005

FIRST SENIOR U.S. TRADE OFFICIAL: Thank you very much. Thanks for joining us. Sorry that we were a little bit late.

Just to give you a little bit of a quick overview of what people have been doing on the U.S. delegation. Of course, you know the Chairman's Consultative Group is active, was active last night, was active into the early hours of this morning. Of course, both Ambassador Portman and Secretary Johanns participated in that and will continue to do so.

Also, we have been continuing to meet with other delegations and to reach out. For example, both Ambassador Portman and Secretary Johanns met at noontime -- or a little bit after noon, I should say -- with the least-developed countries, and that was a very useful meeting. Obviously, a range of issues came up there. There was additional discussion of cotton. There was discussion of the duty-free/quota-free and also a discussion about food aid.

As you know, those countries, many of them are extremely concerned that food aid -- it's very important for them that food aid be available in emergencies. And of course some of them have long-term food needs. So that was an important discussion, since food aid is part of the export competition pillar in agriculture. There we and these countries agree that there should not be commercial displacement. But there's a great anxiety on the part of these countries that radical changes in the food aid program for emergency relief -- which last year, as Secretary Johanns pointed out, was over 50% of the food aid that the United States provided last year was in emergency crisis situations. And of course, we continue to provide substantial food aid for the situation in Sudan. So that was an important part of the discussion.

There was also a discussion of the accession process. I think as you know, there are eight least-developed countries that are in the process of acceding to the WTO. It is not an easy process, and so we work closely with them to support them in their efforts to join this organization.

So as you can see, it was a very wide-ranging discussion, a very useful one, from a number of fronts: the agricultural negotiations, the development negotiations, we didn't really get into NAMA very much. As you know, we're not -- and neither are other developed countries -- requesting that the least-developed countries make cuts in tariffs either in the agriculture or the manufacturing negotiations.

Our deputies have been out meeting with various trading partners as well. Karan Bhatia continues to work closely with the Cotton 5 and indeed with other countries of Africa who have cotton interests, maybe not as intensively as the five countries, but certainly we work with them as well; and with a variety of bilaterals with various Latin countries and other African countries.

So we've been very active, and I know that many of you were present with Ambassador Portman at an earlier press activity. I believe that at that point he clarified for you really a gross misstatement in a news article today suggesting that we don't accept textiles and apparel from least-developed countries, whereas we take more than half of the textiles and apparel that they sell to the world. We take more textiles and apparel from the least-developed countries than the rest of the world combined. That works out to -- let's see, I think it's $4.8 billion that we took in last year.

So we wanted to clarify that. Just to give you a little more context for our trade with the least-developed countries, they are eligible for duty-free access on 83% of the products in the U.S. tariff schedule. And obviously once we figure out how the commitment will be on duty-free/quota-free that would increase from that 83% very substantially.

And it varies from country to country. In the African least-developed countries, there are 34 least-developed countries from Africa, and approximately 95% of our imports from them come in duty-free.

I think I would leave it at that in terms of -- our total imports, just so you have the whole picture: our total imports from the least-developed countries last year were $12.4 billion. So there you have a bit of the context of that.

Why don't I stop there and see if -- well, I know you have questions. I guess we have a mike that someone can carry around.

QUESTION: Financial Times: Could I ask you to clarify a few points about the U.S. position? First of all, in your view, would the proposed development package only come into effect if there were an overall agreement on all the other issues under discussion? Secondly, would the aid for trade fund, money that you announced, be part of the development package or would it be a stand-alone thing on its own?

FIRST SENIOR U.S. TRADE OFFICIAL: From our perspective, for example the announcement that Ambassador Portman made yesterday or the day before about aid for trade, that is an ongoing policy of the United States which exists in the midst of a variety of trade negotiations. I mean, it's not meant just for WTO negotiations, but it has an impact on countries with whom we're negotiating other free trade agreements or even countries with whom we're not negotiating free trade agreements.

The basic idea is that we have an enduring commitment to help the developing countries -- it's not just the least-developed countries -- help the developing countries take advantage of the power of trade. The power of trade is enhanced, obviously, if we're opening new markets for them. But that money is going to be provided whether or not there is a successful outcome of the WTO negotiations. Now we're confident that there will be, and that this money will be used effectively to help countries take advantage of these openings. But that's an enduring part of our relationship to the developing countries. Now, whether it gets somehow packaged in tandem with the negotiations here is another matter. So that's first on that.

In terms of the -- when you say whether the development package would be part of the overall agreement, I guess it depends on what parts of the development package you're talking about. Part of the development package we think is the agreement that we reached last week in Geneva on TRIPS and medicine. Well, that's on a separate track because that is an amendment of the WTO, and that will go forward, also, independently of the negotiations.

If you're talking about different aspects of the five least-developed country proposals, certainly we see the duty-free/quota-free as going forward as part of the overall package of the Doha round. I think I explained yesterday that in our legislative system, we would have to get Congressional approval for doing this because we're changing tariffs, and Congress is the one who has the right to change the tariffs. Our view is that the best way to do that is in an overall implementing legislation for the round. Frankly, we think that makes the most sense.

QUESTION: Bloomberg: On the textile and the least-developed countries, Ambassador Portman today mentioned Bangladesh and one other country that you were considering, some kind of special treatment for. Is that Cambodia? Secondly, on the rules of origin part of the textile part, are you foreseeing that the rules of origin would be the same as they would be for any other product? Or would this have some kind of special rules of origin involved?

FIRST SENIOR U.S. TRADE OFFICIAL: First of all, when he talks about special treatment, if you were to look at the trade statistics -- particularly the imports of textiles and apparel from least-developed countries into the United States -- you would notice that Cambodia is the second largest supplier after Bangladesh. So does that answer your question? Those are the two big competitive suppliers.

I'm trying to remember the numbers, it seems to me that Bangladesh is on the order of, I want to say, $2.5 billion in textiles. I think that Ambassador Portman gave you that number today. There was a number, and I forget what he said. I think when we looked at Cambodia, Cambodia was something like $1.5 billion. No, those are their total imports, I'm sorry.

Those are the two largest suppliers. They're both very competitive in a broad range of lines. So that, obviously, we're going to have to balance domestic sensitivity with their aspirations and find what is the right balance, so that they present a bit of a challenge.

On rules of origin, we'd have to look and see what appropriate rules of origin -- you know, we have various rules of origin within our different preference programs and that is something we're going to have to sort out. The one thing I will say is ,though, that we would maintain the kind of stance that we have on rules of origin elsewhere, which is that they are able to be used effectively by countries that are providing products on the one hand -- and our trade figures with the least-developed show that -- and on the other hand, though, they are designed to prevent circumvention by countries that are not eligible for the protection. I think we've found a pretty good balance here. If you look at AGOA, the rules of origin seem to work reasonably well for both sides.

QUESTION: Wall Street Journal: Can you outline sort of how the proposal to provide duty-free/tariff-free just for the Cotton 4 would work and how that fits into the other discussions? I mean, does that mean, for instance, if you can't work out arrangements on Bangladesh and their larger issue surrounding that, that the U.S. is willing to just do this issue now. And if that's the case, it sure raises the question in my mind about whether you're going to move forward on that. Can you move forward on that legislatively on the Hill as well?

FIRST SENIOR US TRADE OFFICIAL: Basically the context for this is, of course, the detailed dialogue we've have been having with the cotton countries and going through very systematically the elements that they're concerned about and that we're trying to be responsive on and so one part of that is the agricultural negotiations.

And so in talking to them, obviously we'd talked about the export competition. And there, of course, we've talked about the Step 2 program that's being eliminated and the other steps that we've already taken. And then in market access for them, they are looking at -- they see, of course, that our proposal is out there in market access, our global proposal on agriculture. They're very supportive of it because it is very bold, but obviously, it would take a while to implement because normally you implement tariff reductions over a period of many years. And so we were discussing, "Well, are there mechanisms by which we could move more quickly?"

Obviously, one mechanism by which we could move more quickly than the overall implementation schedule of tariff reductions would be to cover cotton in a duty-free/quota-free program. And so, Ambassador Portman did indicate to them that we saw that as a way to provide faster market access. And so that's basically the extent to which that discussion went.

Now obviously, we're going to have figure out the details of that. If the round were not to conclude as quickly as we'd hoped, then we'd have to look at that situation. But generally, it basically was a commitment to them that we could use that mechanism as a way to get the market access benefits more quickly than the normal scheduling of reductions in tariff.

QUESTION: The cotton duty-free/quota-free, does that mean that that is part of the package of (inaudible)? When would this be phased in? Would this be phased in by 2010 with the rest of the agricultural items?

FIRST SENIOR US TRADE OFFICIAL: We will have to look at the details of that, but our expectation is that there will be a commitment by the United States on duty-free/quota-free treatment for products from least-developed countries. Obviously, all of these countries that we are talking about are least-developed countries, and so cotton would be covered in that. And so it would go into effect when that new program went into effect.

We would expect that that program would go into effect all at one time, basically. In other words, it wouldn't like your normal tariff reductions that are stepped down over five or 10 years.

QUESTION: South China Morning Post: I want to ask you on the textile issue. When you're talking about -- I know this isn't set down yet --but when you're looking at Bangladesh and Cambodia, what percent of existing tariff lines are you looking at applying a tariff to? And would that tariff represent a significant reduction over present tariffs?

FIRST SENIOR US TRADE OFFICIAL: Number one, if we're doing something under duty-free/quota-free, whether it's textiles or whatever, since the title is duty-free, we would provide duty-free treatment, i.e. a zero tariff. So whatever products are included from whichever countries that will be a zero tariff program.

What we do in these programs -- and we're required to this by statute and administrative requirements -- is we will have to allow for public comments. We will make a proposal and say, "We propose to provide coverage in the following products under duty-free/quota-free," and we would put out a public comment. And that public comment allows not just domestic interests to comment, but it allows the countries of potential beneficiaries to comment.

So, the least-developed countries would comment on particular areas that they're interested in. They will look and they'll say, "Gee, we want to expand here," and so forth. And obviously Bangladesh and Cambodia, on the textile and apparel side, would come in with their advice.

So we then have to distill all that advice we get from the private sector in the United States, some of whom will be importers and apparel retailers. And so they are going to say, "Well, this should all be duty free." And then some will be producers who are competing and they will say, "No, let this line in." And then we'll have the countries who will say, "You should let this line in." So we'll have to take all that and from that determine the precise product coverage that we will provide.

So it makes it -- I mean, at this stage, I can't say to you where we would end up other than to say that our aim is to provide as much support for these least-developed countries as possible across the board in production -- you know, across the product spectrum.

QUESTION: The Standard: Two questions to clarify on the status quo. You mentioned now there's $4 billion in imports from the LDCs. About how much of that is duty-free? You mentioned 83% of product line, but not in terms of the money.

The second part: You target 83% are duty-free. Are quotas (inaudible)?

FIRST SENIOR U.S. TRADE OFFICIAL: Okay, first of all, with respect to current trade, it's approximately 64% of the goods coming into the U.S. from least-developed countries are duty-free, a combination of MFN-free, our GSP program -- which has enhanced benefits for LDCs -- and AGOA. But it works out to be about 64%.

Now that varies from country to country. There are a number of African countries, for example, that have basically 100% duty-free. Rwanda, Zambia for example, those are two. And as I said, for African least-developed [countries], about 95% of total imports from those countries come in duty-free. So there's quite a variation among them.

Now in terms of quotas and the degree to which quotas apply, since those are on the ag side, I would ask [second senior US trade official] to comment.

SECOND SENIOR U.S. TRADE OFFICIAL: In the U.S., we have a number of import-sensitive products where tariff-rate quotas apply, so there's a low in-quota duty and a substantial out-of-quota duty. Under most of our preference programs, the in-quota duty is waived for these countries, but they are still subject to the high out-of-quota duty.

So most of the trade that we do in fact with them comes in duty-free, but there is a restriction based on these high out-of-quota duties. Sorry, I don't have the figures in front of me, but that's the basic scheme.

FIRST SENIOR U.S. TRADE OFFICIAL: We can do two more questions.

QUESTION: Are there any bilaterals going on with the Europeans or conversations with the Europeans? Is there any points in which you coincide, or are you talking past each other? You've talked about your favorite points, they've talked about their favorite points. Have you discussed the same points?

FIRST SENIOR U.S. TRADE OFFICIAL: We don't talk past anybody. We talk with people.

Well, I'm not sure how formal you mean by "bilaterals." Are we sitting down with the European Union to craft a bilateral mega-agricultural solution? No. Do we sit down bilaterally with the European Union and talk in detail about agricultural matters and the elements within the agricultural negotiations here? Sure. We do that with the European Union. We do that with Brazil. We do that with India. We do it with just about every country.

That's a general response. Jason obviously has something more to say on that.

SECOND SENIOR U.S. TRADE OFFICIAL: One of our objectives this week was to come and see where we could make progress on agriculture. Big differences on a number of areas, could we highlight some specific areas where we could bring countries together. There's been a number of fora here this week and we've been trying to explore that.

We've done it bilaterally with some of the key players. We've met with key country groups. We've also met in some small plural-lateral sessions, where we will bring in European Union, G20 members, LDCs, U.S. -- a smaller group of countries to explore things like how do we deal with the treatment of sensitive products? How do we define emergency food aid circumstances? Can we set an end-date for export subsidies? Some of the bottleneck issues here that could help break the negotiations.

So we've been doing that informally with the Europeans and others. There's also a formal process here, where the facilitator, Minister Kituyi -- and then in the Green Room -- where some of these topics come up.

So we've been working this hard. We have been trying to find ways where we can make real, tangible progress here. The Europeans have been involved. We've invited them. They've even hosted some of these meetings. So this is the way we try and do business.

The disappointing part has been the substantial engagement. That we've seen quite entrenched positions, lack of flexibility, and no real progress yet. But it's only Thursday, so….

FIRST SENIOR U.S. TRADE OFFICIAL: Okay.

QUESTION: Reuters: I just wanted to ask one really quick question. Do you expect that there will be significant increases -- well, significant volumes of West African cotton exported to the United States under the duty-free/quota-free system, once it's been approved? I mean, the United States is a very big producer, a very efficient producer of cheap cotton. What kind of leather and cotton imports are there at the moment in the United States?

FIRST SENIOR U.S. TRADE OFFICIAL: (To colleague) Take this one.

SECOND SENIOR U.S. TRADE OFFICIAL: All right, thanks. You are right. The United States is a great producer of cotton. We export about half the cotton we produce right now, partly because many textiles production has moved overseas, so there is less demand for cotton in the U.S., and partly because we are very competitive producers.

And so there traditionally has not been much in the way of cotton imports in the U.S. in recent years. In the past, we have an import-sensitive, politically important group, so there have been high tariffs and quotas set.

The West Africans can compete in some areas of cotton. The staple length of the cotton they produce is distinct from most other countries. The quality can be high, if they iron out some of their marketing and distribution channels. It is hand-picked cotton. It doesn't run through a machine. This is something that producers value.

So it is a good product, one that they sell overseas. But the truth of the matter is that the real markets for cotton are in the textile-producing countries. China, the biggest importer of cotton, India, Pakistan. These are also the countries that have some of the highest barriers to cotton trade. China's out-of-quota duty is 40%. India's tariff binding is at 100%. Pakistan the same. And so the West Africans in their proposal have said let's get rid of these tariff barriers. We are all for it. We think that this process here, where we provide duty-free/quota-free access to these countries is a real -- could be a real boon to them. We'll open ours; other countries should do the same.

QUESTION: I have this question of duty-free/tariff-free. Earlier, Mr. Portman said that the standard that would be used on which products might be excluded from coverage is global competitiveness. And obviously, we have talked about textiles, and I guess sugar is the other product that might be excluded. Are there other products that the U.S. is sensitive to about excluding from that tariff-free/duty-free? Which products would those be?

And if you have a standard that says global competitiveness excludes the product from the deal, are you basically saying that if an LDC is really competitive in the world, we don't want their imports? This is only open to people who can't produce and can't sell the goods anyway?

FIRST SENIOR U.S. TRADE OFFICIAL: No. If you are globally competitive, you are selling a hell of a lot to us. And I mean that would be our indicator. And the whole point is --(journalist off-mike). Pardon me?

QUESTION: That's not globally competitiveness. It's U.S. competitiveness.

FIRST SENIOR U.S. TRADE OFFICIAL: Well, alright, I mean don't take the word too precisely. By globally competitive, what we mean is that they are competitive in the global market. They can compete with anybody. That's what we mean, okay? And so if a country has reached that with a particular product -- the whole point of these preference programs is to give people a temporary, albeit very long, period of support so that they can get to the point where they are competitive in a wider variety of products than they have been. And that then they, presumably, move from a system or status of preferential treatment and can stand on their own two feet in the export world. That's what we are aiming at. That's what they want, and we think that's what is fair.

But I don't think that you would see a decline in U.S. imports from these products. So it is not a gimmick, a Catch-22 to prevent anybody from selling to us. It's once people have shown that they can sell to us in great volume, that then we say, "Well, I guess the time is that you don't need to have theses preferences anymore."

You see that in our GSP program, where we have a competitive need limit. And if you provide imports above a certain dollar amount, or a certain share -- I think it's more than half of our imports in a product -- you don't get the GSP benefit anymore. And we have not been seeing, you know, sudden declines then in imports of those products when they are graduated from GSP. So, that's the principle of solid economic theory. It is sound public policy, and it is equitable.

QUESTION: Can you give us some examples of products that might be in that category?

FIRST SENIOR U.S. TRADE OFFICIAL: Well, I mean, it will come out this process that I mentioned. I think those are the two that are the most obvious. And I don't expect there to be a lot of products that would fall into that category. And our aim is to provide as much benefit as possible, so we are not going to be, you know, just without any kind of real rigorous review adding products to any kind of exclusion list.

Thank you very much.

# # #