USTR - Remarks by Deputy U.S. Trade Representative Susan Schwab and Deputy U.S. Trade Representative Karan Bhatia
The Office of the United States Trade Representative

Remarks by Deputy U.S. Trade Representative Susan Schwab and Deputy U.S. Trade Representative Karan Bhatia

MODERATOR: Thank you for your patience. Sorry we're a bit late. I'm Christin Baker with the United States United Trade Representative. I have our two Deputy USTRs, Ambassador Susan Schwab and Ambassador Karan Bhatia. They can give you our reaction here to the initial text, and they'll be providing remarks and will take your questions. Thank you.

These folks are on the record.

AMBASSADOR SCHWAB: Good evening, everyone. The HOD is just beginning - I have been doing this too long -- the heads of delegation meeting is just beginning or will be beginning momentarily, and Ambassador Portman is there, prepared to give his statement.

When we arrived in Hong Kong a week ago, we weren't quite sure what to expect. We hope that we will be leaving with a solid platform for a major multilateral trade negotiation going forward. Obviously, unless and until the final text, the Final Ministerial Declaration, is finalized and approved by the ministers, we don't know exactly what the outcome of this week will be. But we are cautiously optimistic that within the next several hours, we will have that very important platform for a Doha Development Agenda and a major round that will be negotiated in the coming year. There was a dramatic intensification of effort this week. That's evident from the document that is being considered by the heads of delegation. Real progress was made, and this ministerial was obviously a prerequisite for moving forward with a robust multilateral trade agreement.

But we've got a lot of work ahead of us. We have a great deal of work ahead of us. The down and dirty of the negotiations starts. We've got requests and offers -- bilateral, plural-lateral, multilateral negotiations. And above all, we need to focus on the all-important market access aspects of the negotiation. We're lowering trade barriers globally to the products and services of developing and developed countries alike. This is really what a development agenda is all about.

Market access is the critical ingredient, will be the critical component going forward to make this round a success. There are a number of elements where we've already made a down payment on the development agenda, and my colleague, Ambassador Bhatia, will be speaking to that part of the document.

AMBASSADOR BHATIA: Thank you. Coming into Hong Kong, it was acknowledged that the focus of a lot of attention this week was going to be on the development aspects of the round. There's been a lot of hard work put in on those issues this week. And I think we are pleased by where things seem to be coming out.

I'll highlight two points for you, particularly. First is in the area of aid for trade. We've seen a lot of, I think, significant commitments made this week and the week before in the area of aid for trade, which is building the capacity for lesser developed countries to meaningfully participate in the global trading system - doing everything from helping them build more effective customs systems to helping them build roads to get goods to market.

So I think in the aid for trade area, there has been some good progress this week. The United States has taken a strong interest and a leadership role in this area, both by working and reforming institutions, through which aid for trade is delivered, but also by delivering with its dollars, frankly. And there was an announcement earlier this week that the U.S. would double the amount of aid for trade money that it is going to be allocating up to an estimate of $2.7 billion by 2010.

The other area that I'd like to point to is cotton. There has been a lot of attention on the issue of cotton trade this week. We knew it was going to be a major focus coming in. We had been engaged with our West and Central African cotton-producing partners for several weeks leading up to this Ministerial. And I am very pleased to announce that we have just concluded our cotton negotiations with the C4 -- cotton four -- countries and Senegal. Those are again Burkina Faso, Benin, Mali, Chad - the cotton four -- and Senegal. I think you will see shortly at the heads of delegation meeting a joint sponsorship of a few changes to the declaration and with it agreement on a platform for moving forward.

This I think is a notable success for the Hong Kong Ministerial. We will eliminate all forms of export subsidies by developed economies in 2006 with respect to cotton. Again with respect to cotton, the package will provide for market access on a duty-free, quota-free basis for cotton exports from least-developed countries starting at the commencement of the implementation period for the round. We agree on an objective for negotiations that trade-distorting domestic supports for cotton production be reduced more ambitiously than under the formulas that will be genuinely agreed for agriculture, and that they will be implemented over a shorter period.

Now, what does all this mean? It means that we, the United States and our African partners, are working closely together to expand trade and economic opportunities for Africa. We are pursuing a common vision of generating economic growth by opening markets around the world. It's an important statement that you're going to see made today and again, this has been done in tremendous partnership, working closely and collaboratively and I will say, frankly, intensively. This has taken up the bulk of my week over the course of the last seven days.

With that let me stop, I'm happy to answer any other questions that you have as well.

QUESTION: RTHK: On the cotton issue, from what you read out about the agreement you've reached with the four West African countries, it seems to me similar to the bracket paragraph in the latest version of the declaration. Do I understand you correctly so later on we'll see this bracket removed or there will be some change of wordings? Thanks.

AMBASSADOR BHATIA: Yes, if I understand the question, it was, are we, does the final version, will the final version of the text reflect the draft version of the declaration that appeared yesterday. Excuse me, the draft -- I'm sorry, losing track of time -- the draft version that appeared today.

Yes. The short answer to that is there will be a few slight wording changes, but by and large, yes, it will be similar to the version. Let's put it this way. The version that we and the C4 countries have just agreed to will be very similar to the version that was circulated earlier today.

QUESTION: PBS: Can you speak for a moment about the issue of NAMA? Did you achieve the targets that you had coming into this from the G20? And also, how do you expect this to affect the American industrial sector? The AFL-CIO said they haven't seen any benefit from the first round, and they don't expect anything from this. Speak to that issue for me, please.

AMBASSADOR SCHWAB: As I said at the outset, the progress made today really lays the groundwork for a major negotiation going forward. This was a necessary prerequisite to get to that point, and now we're talking specifically -- we will begin talking specifics in the request/offer process in the application of the formulas. And the key for the United States, for the developing countries involved, is market access, and that is in agriculture, that is in services, and that is also as it relates to manufactured goods, as you said.

The coefficients still have to be discussed. Those are - there is in essence a place-holder here. So we've got some more dialogue that we'll be going through in terms of the formula. But it was important to reach this agreement so that we're in a position to get into those details.

QUESTION: Washington Trade Daily: Two simple questions. Firstly, on the answer that you gave on NAMA. Now, do we understand that the U.S. has not been able to get the dual coefficient that Ambassador Portman suggested in the Green Room? Because it says "coefficients," and that is what the ABI proposal is largely based on.

Second, on agricultural market access. Do we understand that you have actually now weakened the language on the (inaudible) products in terms of coverage?

AMBASSADOR SCHWAB: On the NAMA negotiations, let me begin by reiterating the first point, which is that this document is not final until the heads of delegation finalize it. So that is worth remembering as we are sitting here having this conversation. The heads of delegation are reviewing, commenting on and -- we anticipate -- approving, but they may also be amending this document. So putting this into perspective, when this document refers to coefficients, plural -- that means more than one co-efficient -- let's just say that the basis has -- we are comfortable that we have a basis for a negotiation based on the Swiss formula with coefficients, details to be determined.

SENIOR U.S. TRADE OFFICIAL: We didn't go backwards in agriculture this week. In fact, we went forward. As no doubt you've heard, we've made some progress on a couple of high profile issues. Export subsidies, for example -- got a good clear date, there, for the elimination of export subsidies that we've been going after here for 20-odd years. So that was good.

Other parts of the text are less dramatic, but what we did achieve this week were a number of useful productive conversations with the key countries involved about how we moved forward on the issues that are a bottleneck in the negotiations. So I think we're pleased that we had this opportunity. Glad we're able to lock some stuff in and then glad we've forced the ministers and other senior officials to deal with the issues.

On the question about the TRQ expansion: First, there's nothing in this document being adopted today that is going to undermine the framework. That's stated clearly right up at the front. So even if others may try and spin it the other way, you point them right there to the first page of the document.

Second, it was true that there was an effort to try and further amplify this provision on TRQ expansion. Ultimately, some members were uncomfortable with it, and so the language in there just notes that it's a complex issue. But we still have the core issue in the framework that says that the deviations will determine the size of the quota.

[Question off mike]

SENIOR U.S. TRADE OFFICIAL: Yeah, but it's still in our framework, and we had a lot of really good conversation among the key players about how to implement it. So I feel alright about it.

AMBASSADOR SCHWAB: Let me just point out, you know, paragraph 24 in this draft document where it is very clear that what we're talking about is a comparably high level of ambition in market access for NAMA and agriculture. So this has been, as you know, a position where linkage and parallel movement has been discussed a great deal this week, and that is reflected in this document.

QUESTION: 21st Century Business Herald: It just seems that a great progress has been made on the issue of cotton. But the question is that if you didn't agree on other areas of talks, would you still eliminate the subsidies on textiles by the end of 2006? Thank you.

AMBASSADOR BHATIA: I'm sorry, could you just repeat the middle of your question? I missed a part of it, one more time?

QUESTION: Yes. My question is that, if other issues weren't agreed by all the parties - would you still eliminate all the export subsidies on textiles by the end of 2006?

AMBASSADOR BHATIA: No, the agreement pertains to cotton, to the product of cotton. The U.S. has advanced more broadly proposals in the agricultural sector that would eliminate export subsidies by 2010. But the agreement that has been agreed today between us and the West African, Central African countries pertains to the exports of cotton itself.

AMBASSADOR SCHWAB: And I think you may be confusing the duty-free, quota-free proposal on cotton relative to --

AMBASSADOR BHATIA: I'm sorry, maybe I didn't understand the question. If the question is with respect to duty-free, quota-free treatment. Sorry, okay, I got you.

Duty-free, quota-free treatment. The market access commitment that is contained in the paragraphs in the draft declaration -- and again, I reiterate what Ambassador Schwab said, this all does await broader agreement by the heads of delegation -- but the provisions that you will see in the text provide, in the area of market access, that developed countries are going to give duty-free, quota-free access for cotton exports for less-developed countries beginning at the commencement of the implementation period. That is a commitment that is independent of the commitments that may pertain to duty-free, quota-free treatment for other products including textiles, which was what was referenced. Thanks.

QUESTION: Ambassador Portman talked about the possible need for another conference to keep the momentum of Doha round going. Based on what came out today, based on the agreements you have reached so far, do you think it is still necessary to have such a conference, and if yes, when and where?

AMBASSADOR SCHWAB: I think it is very clear that given the ambition to move this forward, there will be a lot more conferences. Whether we're talking about a major ministerial conference, I think, is something entirely different.

There will be meetings scheduled, probably in Geneva or other locations in the next several months going forward of some of the key players to make sure that some of the details are worked out and also to advance the ball. I don't believe we are talking about an announcement of a major ministerial meeting.

But there are going to be, obviously, meetings going forward, just as there were meetings leading up to this ministerial-ministerial level meetings with a variety of players from developed and developing countries.

AMBASSADOR BHATIA: And with respect to your question, is there the need for this? I mean, I think the short answer is that, assuming this declaration comes together, as currently it looks like it hopefully will, there have been a number of concrete successes here. I mentioned a couple before, but there are plenty of others here as well. The trade facilitation area, for instance, which is an often overlooked area, but one that is of fundamental importance to small- and medium sized businesses around the world. It's helping improve the rules, the ways that packages clear customs, for instance. I mean, it has a real practical impact. So anyway, there are a variety of successes that are contained in this. TRIPS and public health was an issue that got resolved just before the ministerial started.

The bottom line is they've established a foundation here with some building blocks, especially in the area of development. They're good successes. There are still substantial tasks that await us. There is no question about that. Market access is going to be the driving force that helps people achieve the benefits from a trade-liberalizing round. And those are issues that we have not yet resolved, obviously, especially in the important agricultural area.

So, to respond to your question, absolutely there is going to be the need for a lot of further ministerial and senior-level government involvement. President Bush, I can tell you, is vigorously committed to the Doha Round Agenda. The Bush Administration is as well. And we're going to intend to continue to work very hard to pursue it.

AMBASSADOR SCHWAB: Let me add something here. Another element that is reflected in the dialogue that's taken place in the course of this week. We've come a long way since Cancun. For those of you who've covered Cancun, we've come a very, very long way since Cancun. This week reflected unprecedented cooperation between developed and developing countries - among developing countries, among developed and developing countries. We're not talking about major blocs looking to divide. We saw a lot of blocs coming together and working together across lines.

And I think you would be hard pressed to identify a trade negotiation that has been launched with this kind of cooperation between developed and developing countries.

QUESTION: Ambassador Schwab, Bloomberg News: I just wondered, already we've heard from the textile folks and the cotton producers in the U.S. that they're unhappy with what you've agreed to here. We're probably going to hear from the sugar guys, and I would bet the food aid people, that they're unhappy. Are you worried that you have created a kind of political dartboard that's going to get a lot of whacks from Congress and derail Doha before the benefits can kick in for the U.S. producers?

AMBASSADOR SCHWAB: This is a negotiation that is not over. And that was the point that I made in my opening remarks. We have laid the platform for what could be, what we hope will be, what we anticipate will be a highly successful negotiation with successes in, among other areas, market access, in agriculture, in services, in manufactured goods.

It is now incumbent upon us as negotiators to sit down with the processes that will be put into place once this document is adopted and turn that into real gains for, in our case, American producers, so that those contributions, those concessions that we make are offset by benefits. And we know that the United States consumers and producers alike will benefit from greater economic growth in the developing world.

We also know that the economic pie - you know, more robust international trade, greater international trade - will bring benefits that we will be able to point to when we take an agreement to Congress.

SENIOR U.S. TRADE OFFICIAL: Just quickly, on food aid, I think we had a pretty good week on food aid. We had this real good public dialogue, a little messy at times, where we had a chance to really thrash out some the positions on food aid: cash only versus disciplines on commercial displacement, but provisions for emergency and chronically food-deficient regions. It's good to have that in the fight, because we had to, we really did have to move the Europeans off their position.

The text, I think, does us well. It certainly carves out the need to protect emergencies. We've always agreed that we want to prevent commercial displacement in other circumstances. The text certainly goes in those directions. So I don't want people to get the wrong impression about this. Food aid is not something you make a concession on. Food aid is something where we are improving the trade rules; at the same time protecting some of the most vulnerable. And I think we did make some good progress both in the general understanding, as well as how we move forward on this text.

QUESTION: Kiplinger Washington editors: There were a number of concerns expressed earlier in the week by the folks in the service industry about pressure to weaken the existing protections, or the existing market access for services. Bearing in mind, as you said, that this is not a finished negotiation, are we any closer to not having to worry as much about moving backwards and whether there is a possibility of actually increasing market access in different areas of services?

AMBASSADOR SCHWAB: I will tell you, when we left Ambassador Portman to come here, one of the unanswered questions was whether there was going to be a challenge or amendments to the services text, during the heads of delegation meeting. We hope not. And we hope there won't be additional changes because we're very comfortable with the text that is currently expected to come out of this meeting.

Services is a new area in many ways for negotiations, and the United States has great ambitions to achieve market access gains in services. And similarly, a lot of developing countries realize that more open trade in services may be the real key for them in economic development. And so, I think we're pleased with this document as it's currently written. It is very, very similar to what was brought in from Geneva and has not been watered down.

QUESTION: Reuters: You hear the United States and the EU make the argument a lot that market access is good for development; that these countries, by opening their markets to manufactured goods and to services will actually boost their income. But sort of the impression you gain after being here all week is that developing countries don't really buy that argument. I mean, they want to opt out of the services negotiations. They want to maintain high tariffs on their manufactured goods. Can you point to anything in the text that indicates that developing countries are really buying into this argument and are going to be willing to make the sort of concessions that you're asking of them?

AMBASSADOR SCHWAB: I think the first point to make is that developing countries aren't a monolith. This is not a homogeneous perspective. Different countries have different approaches to trade. I can tell you, without any hesitation whatsoever, that there are major developing countries that have been involved in these negotiations this week that clearly have great ambitions when it comes to trade and market access. Brazil being a very obvious example. India being a very obvious example. Mexico, some others that have really put down a stake and said, "This is in our interest. We want these to move forward." In the services negotiations Singapore, Hong Kong.

AMBASSADOR BHATIA: And I'd just add, the least-developed countries as well. Some of the -- frankly, the arguments that you're seeing here relate to their desire for greater access to the developed country markets. It's not that they don't believe that the way towards development isn't through greater trade. They do. They very much believe that. There are obviously issues about how do you devise special and differential treatment that's appropriate and so forth.

And again, maybe it's just because I've been living the cotton thing for the last week and a half, I can tell you - and I've been sitting across from the C4 countries for a substantial period of time - they want to grow through trade. Indeed, they want to grow by expanding their production base, moving into other industries as well. There is a philosophical commitment that I see from a lot of these countries to grow through trade. That's very heartening.

And it is heartening because it does suggest to me that we may be ultimately on the right path. Yes, you have arguments. I mean, that's the nature of trade negotiations. But at the end of the day, I think there is a common vision here. So I have been heartened by that.

AMBASSADOR SCHWAB: I think - and in addition, while you do see -- there's a lot of language in here on special and differential treatment, concerns about least-developed countries, the potentials for opt-outs, and I think that's one of the areas that you're looking at.

I am very confident, based on conversations we've had with a variety of developing countries, that they are interested in market access negotiations and recognize that really to make gains, you also have to make concessions. They are fully prepared to come to the table and negotiate.

QUESTION: My question is about agriculture. Just wondered if there is any plan to remove the food aid and also the export credits in the future. If there is, when? Thank you.

SENIOR U.S. TRADE OFFICIAL: Okay, thanks. I think the question was, is there a plan to remove food aid and export credits? The answer is no. What we've agreed to do is to eliminate direct export subsidies and impose disciplines on other measures that can have export promotion effects -- export state trading, export credits and food aid. So they certainly will be permitted to have food aid and export credits and some forms of state trading. They'll just have to operate under some disciplines to guard against things like commercial displacement or to squeeze out subsidies or to end privileges like monopolies. It's not nearly as drastic as that. There will be reform, there will be reduction in distortions, but we'll be able to continue to use food aid.

QUESTION: [inaudible] ....I have a question about (inaudible) products of agriculture negotiation. The former revision of the draft said that the greater the deviation from the tariff reduction formula, the greater the increase in tariff quotas. It implies some flexibility, which seem to be reflected in the G10's new proposal. But the final draft just said, "We recognize the need to agree on the treatment of sensitive products, taking into account all the elements involved." I'd like to know what this difference means, and if the United States is not comfortable with the former language in the last draft?

SENIOR U.S. TRADE OFFICIAL: Thanks for the question. The area of sensitive products is a very complex one. These are the ones -- the products in agriculture -- that can't take the full tariff cut, and instead of providing access solely through the tariff cut, access will also be provided by expanding tariff-free quotas. How you calibrate the tariff cut and the size of the quota is an area of ongoing discussion. We've made some progress this week talking about a consumption basis for that quota. Got some more countries on board with that. But ultimately there wasn't enough progress to identify one area of the many elements in isolation. So the members decided just to note that further progress is needed here.

From the U.S. perspective, we definitely support the idea that the larger the deviation from the tariff formula cut, the bigger your quota should be. The smaller your tariff cut, the bigger the quota is a good compromise. It's a good way to ensure access.

QUESTION: The Standard: I'll bring you back to services again. My understanding is that services negotiations are taking place on two fronts, on market access and rule making. What progress, if any, have you made on rule making? If so, can you provide some examples?

AMBASSADOR SCHWAB: If you look at the services language in the Ministerial Declaration, you will see that this really lays out the - sets the groundwork, lays the foundation, whatever - I am mixing metaphors. Well, I know I'm not allowed to say [inaudible].

One learns in this business that there are certain words that over the years have become taboo in trade lingo that mean lots of things to lots of people beyond what we learned in school. In the case of services, that's clearly an element.

This really lays the groundwork for the negotiations, so you don't have those specifics. Really, what you're talking about here is a framework whereby there will be bilateral request/offer procedures. There will be so-called plural-lateral conversations -- conversations, negotiations involving groups of countries. These can be both on rules and on sectors, for example.

The services negotiations are very, very interesting and very complex in that it's a matrix. They're done in something of a matrix. You're not going to see the specifics in this document. All this document lays out is that basis for going forward and having the conversations about rules, about sectors, about methodologies.

QUESTION (follow up): One of the reports that was given out by the Ministerial on 22 November beforehand said one of the focuses of the trade negotiations was to assist LDCs to participate more effectively in international trade. Is that going to continue to be a focus to assist them? Because I've been talking to people from the outside, the protesters, who have been very concerned about displaced workers in the LDCs.

AMBASSADOR SCHWAB: We've talked about trade capacity building. You want to...?

AMBASSADOR KARAN BHATIA: The round as a whole is a development round. That means you're developing through a number of different means. One is through enhancing the access of the least-developed countries and of their citizens to global markets, allowing them to better their lives by being able to sell their products and services globally. That's a vitally important element. We've made some progress in that area, but there's a lot more progress to be made.

The second is the area of taking countries with infrastructure systems and other necessary elements to participate effectively in the global economy and seeing what we can do to help ensure that they can effectively participate. The round this week, the discussions this week, have focused on those elements, and I think we have made progress. I talked about the trade capacity building efforts that any have put forward. There have also been discussions of institutional reforms, for instance using the integrated framework, a multi-agency consortium that addresses those needs. I think there has been good progress in that area. It's another vital part of making sure that the least-developed do get to become more effectively integrated into the global economy.

QUESTION: Brazilian daily: In Cancun, as you remember well, there was an alliance - close alliance - between the U.S. and the EU, which resulted in a joint document which in its turn was resented by Brazil and other countries, which led to the creation of the G20. Here in Hong Kong, to the contrary, there is a kind of informal alliance between the U.S. and Brazil, which is publicly resented by the EU.

What has changed since Cancun? The U.S.? Brazil? The EU? Or all of them?

SENIOR U.S. TRADE OFFICIAL: You know, I think from our perspective, we've been very consistent. We can't speak for changes in others. But just to recap here: prior to Cancun, the WTO membership was stuck on agriculture. And at a meeting in Montreal, Canada, they turned to the U.S. and the EU and said, "You are the two big players. Can you come together on a plan to move forward the negotiations?"

We made an effort, made some compromises, brought it to the membership, but it wasn't broadly accepted. And in fact, the G20 members in particular decided that they wanted to come up with their own alternative. And we weren't able to reconcile before Cancun.

But each of us were negotiating in our own interests. And in some cases they converge. For example, the G20 and U.S. have very close interests in reforming developed-country agriculture. The U.S. and the EU have close interests in terms of services and NAMA. So we work with all of these folks.

This week, we met with the G20, we met with the EU, but we also met with the Africa group. And so we're going to continue to find folks where we have common ground but also work, you know, where we have differences to negotiate with different countries.

I think it's a healthy development that countries are expressing their interests, they are negotiating, they are being asked to do things and making requests. As long as they can deliver, as long as folks can actually at the end of the day open their markets, then we'll have a - I think it will be a real good development for the system.

AMBASSADOR SCHWAB: If I could just add to that. The point I was making earlier about how different this negotiation has been in terms of developing countries versus developed countries, where we've had conflict and compromise between and among developing countries, conflict and compromise - a lot of cooperation - between developed and developing countries, depending on the issues. What you see is evidence of mutual respect, leadership exhibited - Minister (of Foreign Affairs Celso) Amorim, for example, from Brazil has been a clear leader in the developments leading up to this ministerial and during this ministerial. And I think that's what you're seeing. And I think it goes to the point about each country coming to this table looking to their self-interest, but realizing that mutual self-interest brings the most gains.

QUESTION: Seattle Times: I wonder if you could just clarify for me on this April 30 date that has appeared here in this draft text. Do you actually envision within the agriculture talks setting an agreement on levels of cuts for domestic support and tariffs by that date? And if so, then could you comment on well on what you envision by that date for NAMA and services?

SENIOR U.S. TRADE OFFICIAL: Briefly on agriculture, yes, that's exactly what we need to do. And a deadline will help us force those decisions. You'll notice in one of the attachments to the declaration that was prepared earlier in the week is a report from the chairman on the committee on agriculture. And he lays out all the areas where we've made progress and where further progress needs to go.

On the tariff cuts and the subsidy cuts, we've got a framework, we've got a structure. We just have to start filling in those numbers. And so we need an action-forcing event, we need some political leadership, we need to see some key members step up to the plate here and live up to their obligations to substantially open their markets, and then we can do it.

And so that's going to be our challenge. Won't be easy, but that's the next step.

AMBASSADOR SCHWAB: In NAMA, there are a lot of details still to be resolved. We talked about the formula, the nature of the formula, the coefficients themselves. And NAMA -- the non-agricultural market-access negotiations - and agricultural negotiations are moving in parallel.

In the cases of services, as you will see from the text, there is a different set of deadlines involving plural-lateral requests due in February, revised offers due in July - the second round of offers - and then final draft schedules due at the end of October. So each one, each component here will be subject to its own deadlines for details.

QUESTION: Bombay, India: I seek a clarification about point 6 in the declaration about export subsidies. The sentence reads, "The date about for the elimination of all forms of export subsidies will be confirmed only upon the completion of the modalities." What is that?

SENIOR U.S. TRADE OFFICIAL: Yeah, that looks like a negotiated sentence, doesn't it? You know, the difficulty here, particularly for the European Union, was to make the step here and finally commit to eliminate these export subsides. The start of the Uruguay round was driven, back in 1986, in part by the desire to get rid of export subsidies. And here, for the first time, we can see the light at the end of the tunnel.

Long-standing EU policy, very difficult for them to give it up, and their point was, "We don't want to be committed to this end date until we are convinced that we have reforms in state-trading enterprises, export credits, and these disciplines on food aid. So this is to provide them comfort that they won't be alone when we eliminate export subsidies, that other members will make their reforms as well.

QUESTION: I thought that was already in an earlier text? But there's something - parallel and all these words would indicate that, parallelism. But this is something, you know, which goes ahead. Will it give some scope for the EU to back up? That's the concern.

SENIOR U.S. TRADE OFFICIAL: No, I don't think so. I think this is a big step for them to take, and so the membership wants to help ease the way for them. And this sentence is meant to help.

QUESTION: Neil Gough from the South China Morning Post: I had a question about the LDC package, the deal for the 50 poorest countries. I think I heard at some point this week a statistic that 83% of LDC imports currently go to the U.S. duty-free. This new package calls for - well, I understand that they were offered 95% duty-free access and that they ended up getting 97% duty-free access, which says something both about the charitable spirit of developed countries and the negotiating abilities of LDCs, not to - a little bit of surprise.

But my point is, to turn that around, that's 3% exemptions for you, as the destination nation. Is that 3%, can you clarify if that's 3% of tariff lines or 3% of the value of the imports? And can you also clarify or explain if that 3% is a big enough window to get in textiles, specifically from Bangladesh and Cambodia, which I understand there is sensitivity towards. Thank you.

SENIOR U.S. TRADE OFFICIAL: Just briefly, that number does relate to the number of tariff lines, not a trade-weighted number. And secondly, we haven't identified the specific products or how we would implement this yet. It won't even come into force until the round itself comes into an agreement and we implement that legislation. So, at that time, we will be able to do some assessment and some consultations, have a transparent process at home to identify where there is an interest both in opening our market -- because there will be a lot of people who want to expand markets -- but also areas where some additional protection might be needed. So we will sort that out. And I think we are pretty comfortable with the number of lines, that this really does identify, the areas where competitive, least-developed countries could have a real threat to some of our sectors. So I think this is a good number for us.

AMBASSADOR SCHWAB: But if you were asking the question, "Will there be textile and apparel products subject to duty-free, quota-free?" the answer is yes, absolutely. And if you are asking the question, "Will Bangladesh and Cambodia, for example, benefit from duty-free access in some of these lines?" the answer is yes. I mean, that sounds to me like the question that you are asking.


AMBASSADOR SCHWAB: My colleague alluded to this. If you look the way most countries read it -- but if you certainly look at the way the United States runs, for example our Generalized System of Preferences, our preference programs, we have a very transparent, open process for making that determination, You start with the Federal Register Notice, you have public hearings, we go to the International Trade Commission to ask where sensitivities are, and anyone who is interested -- and that includes foreign trading partners and U.S. industry -- who want to comment about lines that they think should be subject to this, or shouldn't be subject to this, can have input. And then there is an inter-agency process where all of these are weighed and ultimately that will be the basis on which a determination will be made.

So we can't tell you right now what will be subject to it, except that we're talking about the vast majority of tariff lines affecting the trade of the least-developed countries.

QUESTION: UPI: Two questions. First, I was wondering, we haven't really talked-or we haven't heard your impression or opinion rather -- on the 2013 end date for the elimination of export subsidies. I am wondering, is the U.S. satisfied or feels comfortable with that? We know you position has been 2010. And if it's likely that the end date may be revised?

My second question is, can we expect more revisions, or how significant changes will be made in the final text this evening/this morning?

SENIOR U.S. TRADE OFFICIAL: Yes, on the question on export subsidies: Yes, we had come out strong on this thing, saying 2010. You remember several months ago, President Bush, Prime Minister Blair, had put that out there as an objective. Well, what we heard back from our trading-our negotiating partners in the European Union, was that's- we were supposed to implement this thing in 2008. So that would give us three years to wipe out all these export subsidies. That's really fast.

And so we had a negotiation, and the date that we have got now is going to be a reasonable amount of time to get rid of these programs and get us down to zero, which is the big objective. So, you know it was give and take. Many Europeans certainly wanted as much time as they could get, so we moved them some and we backed off and got a good compromise.

AMBASSADOR SCHWAB: The key is to have a date. The critical element was leaving here with a certain date by which time the phase-out will have been complete. And that is a major accomplishment.

QUESTION: On dates, in the services annex, what's new in there that is going to create the so-called critical mass of substantive offers in the key sectors prioritized by the U.S.? I mean, aren't some of the most important countries that the U.S. wants to open service industries in just going to ignore the deadlines like they have in the past?

AMBASSADOR SCHWAB: I would say that we do not believe so, and they do not believe so. There has been a lot of give and take and a lot of argument about this text. There were developing countries very much in favor of watering down this text. There were developing countries feeling equally strongly about maintaining this text, or even strengthening it. And I think that all agree this is going to be a major subject for negotiation. And we are optimistic that developed and developing countries, alike, will be coming to the table for these negotiations. We have no reason to believe that countries will not show up for these negotiations.

QUESTION: But they haven't for the past few years. I mean the lack of will to make substantive offers in services -- it's really been a delay in the negotiations. What is new now that is going to change that?

AMBASSADOR SCHWAB: This is a ministerial declaration that we hope will be adopted by consensus among 150 countries. That is a fairly strong basis for going forward.

MODERATOR: Thank you all.