Agriculture Secretary Mike Johanns And US Trade Representative Rob Portman Hold
Press Availability On Trade
AMBASSADOR PORTMAN: My voice is a little scratchy today but I
don't think we need four bottles of water up here.
SEC. JOHANNS: Maybe they were anticipating really tough
AMB. PORTMAN: Yes. So we may need all four by the end of
Thank you all very much for coming on a holiday Friday here
locally, and I imagine I'll get to see some of you all over the next 10 days in
Mike Johanns, Secretary of Agriculture, and I are leaving
tomorrow morning along with the U.S. delegation made up of several agencies.
We'll be flying directly from Washington to Hong Kong. We'll then be spending
about 10 days in Hong Kong working through these WTO issues hoping that we can
make progress toward a successful completion of the Doha Development Agenda by
the end of 2006.
I am hopeful that in Hong Kong we can make incremental
progress in a number of areas. One would certainly be a package for being sure
that the least developed countries are assured that in this round they will
receive very specific benefits to help them integrate fully into the global
trading system and to be able to take advantage of the market opening
opportunities that will arise from a successful Doha Round.
We've got a lot of work to do. Hong Kong will not be a time
for us to make some major breakthroughs that the United States had hoped for,
but we do hope that we can make incremental progress and establish building
blocks that would go toward even more progress early in the new year.
In Hong Kong we will be stressing that improving market
access is again the key to achieving the goals of the Doha round. We've said
this many times, but it bears repeating-- the best way to promote development,
expand economic opportunities and alleviate poverty in all countries is through
expanded trade. And the only way to expand trade is for countries to open their
markets in meaningful ways.
This is particularly true in agriculture, which from the
start has been at the core of the Doha Round. It's a tough issue. It's always a
tough political issue back home. It's one reason that agriculture has not been
part of previous rounds with the exception of the Uruguay Round. The previous
seven didn't include agriculture. But it's in agriculture where you find the
highest tariffs and you find the highest trade-distorting subsidies.
It's also an area where many developing countries see that
they have a comparative advantage. They have the ability to sell their products
overseas and they're looking for a more level playing field.
That's why it I support Doha. The broad development goals of
the Doha Round depend on progress in agriculture, and increasing market access
in agriculture will benefit farmers everywhere. The World Bank has studied this
and indicated that 93 percent of the gain in agriculture will come from gains in
This is particularly true though among farmers in the
developing world who confront an average world tariff of 62 percent in
We must also reduce trade-distorting domestic supports. And
the United States has taken the lead in putting a proposal on the table. It
reduces trade-distorting supports here, in Europe, in Japan, and other countries
that provide support -- and eventually under the U.S. proposal, eliminating
Progress in agriculture will then allow us to make parallel
progress in other areas including reducing tariffs on manufactured products and
opening up access to service providers. I say parallel because it's very
important that we move together on all these fronts. Agriculture is at the core,
and I don't think we can make progress on these other two central areas of the
Doha Development Agenda without making progress on agriculture, but I understand
that as the European Union has said repeatedly that we need to be sure that
there is progress on all fronts. And therefore the progress needs to be
These other areas are extremely important in terms of market
access. After all trade in manufactured products makes up two-thirds of global
trade. And recall once again developing countries have the most to gain here
because 70 percent of the tariffs that they pay are to other developing
countries. So here reducing the barriers in south-to-south trade will be
extremely important for development.
The United States has put forward bold proposals to open
markets and end trade-distorting supports in agriculture, reduce industrial
tariffs, and knock down barriers to services because we believe the Doha Round
is a once-in-a-generation opportunity for us to enhance trade and therefore
deliver the benefits of trade to people everywhere.
More and more I find the consensus among decision-makers
including trade ministers, the consensus among economists, the consensus among
people who may not be economists but who follow the trade area is that we must
keep moving forward, as the WTO has done over the past five decades, in knocking
down barriers to trade so that we can indeed achieve these benefits.
We've made some success along these lines just over the last
week or so here in Washington. Our negotiators worked through the night and
concluded a free trade agreement with Peru on Wednesday. This as you know is
part of an overall effort to expand trade but specifically in the Andean
countries, and we hope to have similar success with Columbia and Ecuador soon,
and so further efforts to promote economic relations and political stability in
our own region.
Also on Wednesday the House of Representatives approved a
free trade agreement with Bahrain. The vote in the House of Representatives was
the largest vote for a trade agreement since we passed trade promotion
authority. This was a terrific step forward not only in advancing our deep
commitment to the economic and political future of the Middle East by once again
engaging with a country in the Middle East to expand trade as we have done with
Jordan, Morocco and Israel, but it was also frankly very important in forging a
stronger bipartisan pro-trade consensus in the U.S. Congress.
In addition, this week we reached an agreement in the WTO on
drug patents, which will allow the export of lifesaving drugs to developing
countries that face public health crises but cannot produce drugs for
themselves. As many of you know, this was a landmark accomplishment, something
that had been worked on for over two years. It ensures that drugs will get to
areas ravaged by HIV-AIDS and other serious health problems and epidemics. And
it shows that by working together we can reach common ground on tough issues
involved with international trade.
Now finally I want to mention that today I received a very
hopeful letter from the heads of 11 major environmental organizations strongly
supporting the U.S. efforts to reform rules on fish subsidies in the WTO. Our
efforts on this very important matter should help stem the over-fishing that has
put at risk 75 percent of the world's fish stocks. This could be a very
important accomplishment of a successful Doha Round.
So it's been a good week in advancing trade liberalization,
and we continue to work hard with our trade partners, consulting closely with
members of Congress to ensure that as we go into Hong Kong we can continue to
Over the past week I've had the opportunity to speak with the
chairs and the ranking members of the Agriculture Committees, Ways and Means
Committees, Finance Committees, and a number of other members of Congress
interested in trade. I've been able to give them an update on where we are with
regards to Hong Kong and our talks.
Unfortunately many of them are not going to be able to come
to Hong Kong since the House and Senate will both be in session next week. And
I'm sorry about that because it would have been a good opportunity for them to
come and see firsthand the challenges we face and the opportunities that we face
in the Doha Development Agenda.
But we are consulting very closely with Congress and will
continue to do so as we move forward so that at the end of the day when as all
of us hope we can come together with an agreement it's one that the U.S.
Congress can support.
The United States will continue to play a leading role in
Hong Kong in promoting an ambitious and comprehensive agreement, one year from
now so that the Doha Development Round can be worthy of its name. President Bush
has shown great vision and political courage in pushing for broad reductions in
tariffs, cuts in trade-distorting subsidies in agriculture, and assistance to
countries to help them integrate into the global trading system.
We have a chance here to lift tens or even hundreds of
millions of people out of poverty.
We have a chance here to truly give the global economy a shot
in the arm that it needs.
So we have to push hard for success next week in Hong Kong
leading up to what should be a successful completion of the Doha Round by the
end of 2006.
Thank you. And now Secretary Johanns would like to say a few
SEC. JOHANNS: Well, thank you Mr. Ambassador, and let me also
offer my words of welcome. If I might just start out on a personal comment and
thank the ambassador for all of his good work on this Doha Round-- he's done an
excellent job. And I've had the opportunity to sit with him through hours and
hours of negotiations. He represents our country well. I'm pleased to be a part
of this team.
The road to Hong Kong has had many, many months behind it.
It's covered a lot of miles in terms of travel. And while we hope our European
friends and colleagues join us in consolidating the progress that we have made
thus far by taking advantage of an opportunity to narrow our remaining
differences, we also know that Hong Kong is a stop on the journey, but that the
journey will continue.
Just eight weeks ago the United States put forward a very
bold and a very generous proposal that actually cut -- and I would remind
everyone will eventually eliminate -- trade-distorting farm subsidies in
exchange for reciprocal cuts in protection by other nations.
It was met with universal approval around the world, and it
brought this Doha Round back to life. And I would also add that the approval
Doha's unique potential to generate economic growth and
significantly help the poorest countries is a very real goal of what we are
doing. And 70 percent of duties paid by developing countries are paid to other
developing countries, largely a function of very high tariff rates. Reform will
lead to more trade between developed and between developing countries.
The EU provides more than double the trade-distorting
domestic support to its farmers than does the United States and has the ability
to even go beyond that. We have asked for the support of our nation's ag
industry and of Congress to help move the international trade agenda forward.
And so far their support has been good.
And you can understand why if you think about it; 27 percent
of U.S. farm receipts are from trade and agricultural exports, and we're
expected to reach a record in 2006 yet again. We need to level the global
playing field for American agricultural products by opening up the markets.
But we want to be clear, our proposals of course are part of
an overall package. We do not cut our support 60 percent as proposed unless
there are cuts that match our ambition, our bold ambition.
Now some might ask, why should the EU accept our proposal?
It's not complicated. It's not a complicated proposal at all. Market access
really does equal development. Many countries share our view that the EU falls
short in offering greater access to protected farm markets. EU tariffs are very
high, and tariff preferences favor our competitors. The EU still maintains it
needs to designate, in addition to all of that, 8 percent of total tariff lines
as sensitive products. So many countries that have analyzed the proposal as we
have after the analysis look at it and say, well where is the market access?
The EU is the world's largest agricultural importer and
exporter with imports increasing 43 percent from 2000 to 2004 while U.S. exports
to the EU are basically stagnant.
I believe very strongly that most of the 148 WTO
member-countries view Hong Kong as we do, as an opportunity to make tough
decisions on the framework and for discussion to go forward. The U.S. is very,
very committed to this Round and pushing very hard for a successful meeting.
We're going to do everything we can to build consensus at the ministerial and
move the negotiations forward.
Hong Kong, I would emphasize again as I have done in the past
weeks, is part of a work in progress; it was never intended to be the end of the
process. To achieve the tariff and subsidy free world envisioned by our
President, we propose a practical two-stage reform initially by making deep cuts
and then over time eliminating all trade-distorting subsidies.
It is our hope that we will have a successful meeting in Hong
Kong, and we intend to do everything we can to accomplish just that. And then it
is our hope that we can use that momentum to reach successful agreement in
Thank you very much.
AMB. PORTMAN: Questions? Start in the front here.
QUESTION: Jim Berger, Washington Trade Daily. Do you expect
(off-mike) cotton initiative (unclear)?
AMB. PORTMAN: A cotton initiative package? First of all,
we've had a great dialog with the C-4 cotton countries. In fact Karan Bhatia, my
deputy, who's supposed to be with us right now is speaking with one of the trade
ministers, Mr. Mi, I think from Mali, as we talk. So he couldn't be here. But
we're in very close touch with them. As you know Secretary Johanns and I each
went together to Burkina Faso to meet with the C-4 countries a month or so ago,
and we think we have a good package that we've put together really over the last
year or so since July 2004 when the framework was put together. And we continue
to talk about that package. I think in Hong Kong we'll make some further
progress in that regard.
With regard to cotton, just to put it in some perspective
here for those of you who don't follow it as closely-- in July 2004 when the
framework agreement was put together, we agreed to address cotton as part of the
overall agriculture negotiations, not to separate it out but to deal with cotton
expeditiously, ambitiously and specifically. And there's perhaps some deliberate
ambiguity there with some of that WTO language, but the reality is the United
States takes that very seriously. And we are addressing cotton very seriously
and very specifically.
We also realize that it has to go along with the rest of the
agriculture negotiation in order for it to be successful both in terms of
marrying with the subsidy cuts that we hope will come out of the Doha process
and the tariff reductions, but also frankly within our political system. It
needs to be part of the overall package.
So that's what we're working toward. We're very proud of what
we've done since July 2004. When you think about it there's been a lot of
progress. I will start if I could just with the Step 2 Program, which is the
major cotton export subsidy program, which Secretary Johanns sent to the Hill at
the behest of the President with a recommendation for repeal. The House and
Senate have now each passed repeal of the Step 2 program, and we hope that
within the next couple weeks in Congress that the Step 2 program will be
This is a major step forward since July 2004.
Administratively the Secretary can speak to this, but he has also done all he
can with regard to export credits in cotton. So this is something the Secretary
has been very bold with.
In terms of the overall picture on trade-distorting support,
our proposal is the most aggressive proposal on the table. It deals directly
with the Marketing Loan Program, the countercyclical program, the very programs
that our cotton farmers use here and that would cause trade distortion in global
I will also say that the total amount of cotton produced by
the C-4 countries is relatively small now compared to the overall trade in
cotton. Percentage is what, about two percent of overall trade. We think this is
a problem that we can focus on in a very specific way.
We also think the amount of distortion caused by our
trade-distorting support is relatively small compared to the price of cotton.
The IMF said it's, I think, 2.8 percent. The highest figure I've seen is about
10 percent. Some of the NGOs might say 10 or 12 percent, but let's say that the
studies are between that range. We think this is an issue that can be dealt with
very specifically; therefore, since 2004 we've stepped up our aid to these
countries directly to affect the production and the marketing of cotton.
And when we were in Africa as you know we announced some
additional funds for the Cotton Improvement Program. That's why I asked if you
were talking about the Cotton Improvement Program, Jim, or the broader one.
Another $5 million to add $7 million. This is directly to affect the efficiency
of the production and marketing of cotton.
Why is that important? U.S. cotton farmers, as an example,
are twice as productive as African cotton farmers. The per-acre yield is twice
what it is in Africa. Again, if the distortion is between 2.8 and 12 percent, if
it's 2 percent of the world's cotton, think what you could do by just increasing
the efficiency. That's why we've directed a lot of funding, not just to Cotton
Improvement Initiative but several other programs, that we can detail for you
that Secretary Johanns, USAID, US Ag have done.
So we've really focused on this issue.
Then finally I just want to mention that the Millennium
Challenge Corporation is directly focused on cotton. This is where we funnel
most of our foreign aid now, as you know, through the Millennium Challenge
account. And four of the five countries that are involved directly in this issue
being Mali, Burkina Faso, Benin, Senegal -- not Chad. Just those four are
eligible for MCC funding now. And in the next couple of years should the
compacts move ahead as expected -- and as you know a number of these compacts
have already moved almost to the closure stage -- there would be roughly $1
billion of U.S. taxpayer commitments to these countries, perhaps more, based on
the compact numbers that we've seen.
About 74 percent of our compact has gone toward trade
capacity-building, specifically in Benin it's for ports to be able to more
efficiently export cotton. Burkina Faso has now put together the first part of
its application. We're told that it focuses on cotton.
So when you look at the budgets of these countries for
agriculture budget and so on, the hundreds of millions of dollars per country
and the $1 billion dollars or more overall is a significant and very targeted
and very specific way to address this problem.
So I just want to put that in some perspective for those of
you who follow this issue. I know it's become kind of a cause celeb, in Hong
Kong among some quarters. Don't think the United States isn't focused on it; we
are. We think it's a problem. We want to address it, and we're doing so very
AMB. PORTMAN: Too specific for you probably. I'm sorry.
Russia probably doesn't care about that cotton program.
QUESTION: On, no, we do.
AMB. PORTMAN: Can I mention one more thing on cotton, since
you want to get more specific? Market access. One thing the C-4 countries have
been focused on is not just reducing the supports so that the price of cotton is
higher, but also they want to be sure there's more market access for their
cotton. And here the United States will be making some additional initiatives in
terms of market access.
We believe there ought to be more market access, as our
proposal on the table indicates, but specifically on cotton we are willing to do
what we can to ensure that there is access in the key cotton markets around the
world. And this is something I think you'll see more of next week in Hong Kong.
So market access is also part of it.
Back to Russia. Sorry.
QUESTION: You mentioned (unclear) breakthrough. What about
bilateral (unclear) with Russia? What would it take, what are the chances for
it? And while we are at it, (unclear) Ukraine?
AMB. PORTMAN: The question is about Russia and the succession
agreement to the WTO and specifically on our bilateral agreement with Russia.
Recall you've got to go through the bilateral agreements with WTO members and
then the multilateral agreement. We're still working with Russia on both of
those agreements. We're hopeful that by the end of the year we can make
substantial enough progress to be able to move ahead on the bilateral front, but
we're not there yet. We still have four or five outstanding issues.
You don't want specifics necessarily, or do you?
QUESTION: I do.
AMB. PORTMAN: I'm not sure anybody else does.
QUESTION: Do you expect them (unclear) in your meeting with
AMB. PORTMAN: I don't know. Honestly we still have a number
of outstanding issues, and some of them are fairly serious issues in the sense
that they require the Russian government to take additional steps. One I will
just mention which is something of great interest in the United States and
particularly on Capitol Hill, and that's intellectual property protection.
Intellectual property rights in Russia has become an increasing problem. My
former colleagues on Capitol Hill are very well aware of this. The Russian
Multilateral Agreement and its subsection to the WTO has to go through our
Congress much like China's did because of Jackson-Vannick, and they need to be
rewarded by our Congress with a PNTR, Permanent Normal Trade Relation status,
they don't have now.
So we need to be very sensitive to the kind of bilateral and
multilateral agreements Russia is willing to make in order to be sure that it
can go through our political system. And we are not there yet, but we're hopeful
that a lot of movement can be made even in the next several weeks.
QUESTION: If you have to bet, Russia or Ukraine?
AMB. PORTMAN: I'm not a betting man. I learned long ago I
always lose those. They're both moving well in the sense of we hope that by the
changes we've seen in the Ukraine -- legislators. You know they have made some
changes in their intellectual property and other areas like agriculture that
Ukraine can also come along. I would hope this would be done roughly in the same
SEC. JOHANNS: Let me if I might address the question of
subsidies in cotton. Your question is an excellent one and it could be posed to
any wealthy country in today's world in agricultural trade. When it comes to
subsidies, actually we don't set the standard. The high subsidies are paid by
the European Union, Japan is next, and United States is actually third.
You could identify a number of products not just cotton where
very easily the claim could be made that the trade distortion caused by very
high tariffs keeping people out and very high subsidies rich countries
subsidizing agriculture is leading to terrific distortion.
And that is the claim that is made over and over again.
We look at this WTO issue from a world standpoint. We want to
do everything we can to help these five countries, and we have an excellent
working relationship. We think for example through the Millennium Challenge that
these countries will qualify; four out of the five at least are well on the way
to qualifying. And that will be $1 billion dollars worth of real assistance to
But if you're really going to make a difference in terms of
least developed countries, which as we all acknowledge is really the poorest of
the poor, it is the U.S. proposal that will do that. It's the proposal that
basically says, let's make dramatic cuts in subsidies now. Let's make our
markets open. Let's cut tariffs. And let's work toward a day where we will
eliminate trade-distorting subsidies in their entirety.
And believe me, when you do that every developing country,
every least-developing country in the world will see the immediate benefits.
Just in summary, that's why all of the studies that have
looked at the Doha Round say that 90-some percent of the benefit is going to
come from market access, opening up markets.
That's why it is so important that the EU match our proposal.
We can work on these individual issues and we will. We want to.
In terms of beef, the answer to your question on Kobe beef is
that we are ready. We have been through our rulemaking process, so we are ready
to flip the switch and bring Kobe beef into our marketplace. And that can happen
really any day. We are that far along in the process.
So I can tell you that it's not like we're out there trying
to figure out how this happened simultaneously, but I can assure those in Japan
that we anticipated that that issue would arise. We've gone through our
rulemaking, our risk analysis, our scientific approach, and we're ready to bring
Kobe beef in.
We are very, very encouraged by what's happening in Japan.
I've said for some time now that we really are at the end stage of the process.
But what's encouraging to me is that at every step in the process a step in the
right direction toward allowing exports of U.S. beef into the Japanese market,
the decision was made to allow that to occur at every single step in the
So we're now really down to a yes or no decision. We're
hoping that that will happen within days, not weeks. I said that yesterday. We
are very, very encouraged. And we will be ready to comply with regulations and
rules that we have worked through with Japan on this issue.
And we have many in the United States that will be ready to
do that. So I have a smile on my face, and it relates to Japan and the good work
that's happened over there.
AMB. PORTMAN: I'll have a good week, but I forgot to mention
we'll see you Monday.
QUESTION: I'm curious about the flexibility you do have on
this proposal to (unclear) countries as (unclear) initiative that being
discussed. Also, (unclear) WTO ministerial staff. I know you're leaving
AMB. PORTMAN: I'll probably end up meeting with most of our
friends. We do get there on Sunday evening, and we have meetings all day Monday
and Tuesday up until the plenary session, which I believe begins on Tuesday
afternoon. This will include meetings with the so-called G-4, which is India,
Brazil, the EU, and the United States. But also meeting with the G20 countries,
developing countries, G90 developing countries, and an opportunity to reach out
and meet with our free trade partners around the world.
We have a very busy agenda, very busy schedule, and one of
the great things about this meeting for Secretary Johanns and myself is that
we'll have the opportunity to compare notes and build on our economic relations
with 148 other countries and entities--the EU of course representing 25 of
those. And that's going to be a very positive aspect of the meeting for us.
With regard to the Hill, as you have seen from the reaction
from Capitol Hill there is a general support for the direction that we've taken,
but contingent upon having the package come together. And specifically with
regard to agriculture subsidies some of the agriculture community and some who
are representatives in Congress or Senators who represent agriculture interests
are on the committees have particularly expressed that concern that there is no
way that we can see unilaterally disarming unless we see market openings, the
elimination of export subsidies and the other elements of our package.
And this makes sense. As Secretary Johanns said, the European
Union as an example has the ability under the WTO to use four and a half times
more domestic support, trade-distorting domestic support than the United States.
They do use about three times more for the same production. As a percentage of
their production Japan uses about three times more than the United States. Other
countries do as well like Switzerland, Norway or Iceland.
So the United States is not, as Secretary Johanns said, at
the top of that list. And yet we are the ones who are being most aggressive in
saying, it's time to begin in the United States to reduce these trade-distorting
supports in exchange for getting rid of the export subsidies and getting real
I think with that combination we have a good deal of support
going into Hong Kong from our congressional leadership in the key committees and
in both houses of Congress.
QUESTION: What about quota-free duty free?
AMB. PORTMAN: I'm sorry. Quota free duty free. Well, as you
recall back in 2001 WTO members as part of Doha agreed to make progress toward
duty free/quota free. I hope that in Hong Kong we'll be able to take the next
step in that, and that is as part of the least-developed country package of
development. And recall this is the 49 countries who are truly the poorest
countries of the poor as defined by the IFI, by the World Bank and others, that
they will be able to get additional access to not just developed country markets
like the United States but also some of the emerging developing country
And as you know, the United States already has a number of
preference programs in place-- most prominent would be our GSP program, General
Systems and Preferences, and the AGOA Program for Africa, but also our CBI
program and others.
So we already are relatively open to least developed
programs. The IMF and World Bank does a study every year called the Global
Monitoring Report. They analyze all of us in terms of our openness to developing
countries. A lower number is better. The United States is at sixth. Canada is at
seven; the EU's at 15.
And this is an indication that the United States is today the
most open market to developing countries in terms of products across the board.
This relates to tariffs, also relates to rules of origin, also relates to SPS
treatment, sanitary and phytosanitary treatment, and so on. So the United States
has been a leader in this, and we intend to continue to be a leader.
As to specifically how duty free/quota free will be
implemented, in the United States it will be implemented through our existing
programs. In other words, we will be doing this autonomously, as will other
countries I believe. That means doing it through AGOA, through our GSP program
and through our other preference programs. And where programs are not part of a
preference program now they will be brought into that.
But this is the way that we are going to implement it through
our legislative process. It's how we would have to do it under our laws. And the
question is, whether it will be with regard to every product or whether there
will be some flexibility in terms of products and some flexibility over time.
These are issues that still need to be worked out and will be addressed
specifically in Hong Kong.
QUESTION: (unclear, off-mike)
AMB. PORTMAN: I didn't know we had logic in school.
QUESTION: If agriculture is to be (unclear portion,
AMB. PORTMAN: I want to hear the Secretary's answer. I think
your logic is impeccable. I really do. I mean I think we're at the point where
some have said the mandate that's existing from the member states of the
commission has been reached. Others have said there's some room left. Others
have said until recently it was exceeded. I understand today there was an
announcement by the French government that in fact it has not been exceeded. So
that has changed.
It's hard for me to speak to the mandate, but from the
analysis that we've done it appears as though it's rather ambiguous. And so our
response is, you know we'd hope that the EU would meet its responsibilities. And
if that requires stretching the existing mandate, that's fine. If it requires a
new mandate, that's fine. But the point is, they need to step up, and they need
to do what's required in order for the Doha Round to be successful.
And I think your logic is inescapable, which is that
agriculture is the key to unlock progress in other parts of the round and to
bring the round together. And agriculture, of the three pillars, export
competition, domestic support and market access, two are fairly well fleshed out
and ready for negotiation. The third is not.
And whether it's a new proposal, frankly I don't think a new
offer is what's necessary -- or whether it's simply working with other countries
to reach a consensus on the appropriate proposal, we need to move forward. And
this has been the consistent U.S. position ever since October 10 when we put our
proposal on the table. We did so because we were told by others that in order to
move forward on market access they needed to see more movement by the United
States on domestic support given our 2002 Farm Bill, given the situation we were
in. We did our part. And now we continue to urge others to do theirs.
I will say that I think the European Union has a good point
in terms of their commercial interests and in terms of the political realities
that I also face here, which is that the largest part of trade is not in
agriculture. I think agriculture is 6.2 percent of our exports now. It's in
manufactured products, it's in services. And here there is also a commitment
under Doha to provide substantial new market access. And that's why I said
earlier, in parallel we need to see movement in those areas as well by all of us
including the advanced, developing countries.
And I think that is ultimately where the agreement is to be
found is to have all of us come to the table and be willing in parallel to put
forward our own offers and proposals on the broad range from services and
manufactured products to agriculture, across the broad range to provide real
That will do more for development than all of the checks that
our governments can write, for trade capacity-building or for the enhanced
integrated free market, or even for aid through an entity like the FCC. If we
can come up with a way to truly expand trade, to enhance trade between these
countries, the United States, least developed countries, between developing
countries, that will make the most difference in terms of global economic growth
So that's the U.S. position. I don't think it's particularly
complicated. Not everybody agrees with us; I understand that. But I think that's
the way to go beyond Hong Kong toward a successful conclusion of the Round.
In Hong Kong though I think we need to make progress to get
there in two fronts. One is, again to give the least developed countries more
assurance as to what they will get from the round, and that is basically the
trade capacity help to be able to take advantage of the trade openings.
And second, we need to make incremental progress in all three
of these areas: agriculture, manufacturing and services.
SEC. JOHANNS: U.S. inspection programs are really beyond a
doubt safe. And I'll offer a couple thoughts on that. The analysis or report you
referenced there, if you'd asked me a question where you said, Mike, your
inspectors found zero problems, I'd say, wait a minute, that sounds rather
remarkable; I wonder what's going on out there.
But the report actually indicates they're doing their job.
They're identifying the issues that we need to deal with and then demanding that
those issues be fixed.
The other thing I would tell you about Japan, and this is
really unique to Japan -- as you know we've agreed in this first phase with
Japan to start at meat from animals 20 months and under. And you're just not
going to find BSE there. It's just not there. So from a number of standpoints, I
can safely assure the Japanese consumer that beef is safe.
But probably the best assurance I can give them is as you
know the Japanese process over the last two years has been enormously
meticulously carried out, painstakingly so. At times we couldn't even detect
progress. I mean that's how thorough and comprehensive this process was. And at
every stage of the process the conclusion was reached that U.S. beef is safe as
Then you do a comparison of the countries. We have a herd
size of about 90 million. We process about 30 million animals a year,
thereabouts, probably a little bit more than that. We've been able to identify
since the enhanced surveillance started one case that was actually so difficult
to find we had to test and test and test to find it even.
Japan is familiar with BSE. They've now identified their 20th
case of BSE. So in working with the Japanese government and with food safety
people it was not like we were working with people who had never had any
exposure to BSE issues. So when you factor it all in, all the things we've done,
I can assure the Japanese consumer beyond a shadow of a doubt that beef is safe.
And we're very anxious to return it to their marketplace.
And we'll work with the consumers. We know that it's been a
very long process and we have work to do with the consumers. We're going to do
everything we can to accomplish confidence in U.S. beef. And I'm very, very
confident that we will achieve that.
AMB. PORTMAN: All the way in the back corner?
AMB. PORTMAN: You're trying to make news here, aren't you?
The GSP program as you know has to be reauthorized soon. I think our idea was to
reauthorize it next year and we'll be looking at all these issues, countries,
when they'd graduate from GSP, and products.
We do not intend to do that this weekend in Hong Kong or
necessarily even in the WTO process because our GSP program is something which
we take on on a unilateral basis to provide a preference program, and we can
certainly exceed the duty free/quota free WTO program, which would be just for
least-developed countries and would not include, you're right, countries like
So I don't expect changes this weekend; nor do I necessarily
expect changes in our GSP program to come out of the WTO process.
But we are looking at it. We're looking at the whole broad
In terms of textiles, we have not made a decision at this
point. I indicated earlier that I believe there will need to be some flexibility
with regard to all the commitments on duty free/quota free, not just from the
United States but also from the European Union, Japan and others. But I do
believe that we can expand our existing access.
And as I said earlier, based on the analysis, the U.S.
provides the most access at this point. The fact that the United States has
relatively low tariffs, 12 percent on agricultural products versus 62 percent
world average, 30 percent in the EU; industrial tariffs we're at 3 percent
versus the 30 percent international global average. We're relatively open.
And with regard to least developed countries, we're
relatively open, the most open of the developed countries.
So we have a lot to be proud of. We also have a trade deficit
as you know, which is historic. And one reason we have such a large trade
deficit is we are relatively open. You look at our trade deficit, and you
determine which of our imports are from developed and developing countries, more
than half of our trade deficit this year will probably be as a result of
products from developing countries. That trade deficit, as you know, is likely
to be significantly more than the $670 billion trade deficit last year.
So the United States is relatively open already. We are
willing to do more. And we are willing to do so in the context of the Doha
I'll take a couple more. One more in the back and then we'll
go up here to this gentleman.
AMB. PORTMAN: Well, I spoke to Senator Grassley recently.
First of all, I really appreciate his support. He's been a terrific ally of our
bold agricultural proposal despite the fact that he's someone who is a leader on
the Ag Committee and the Finance Committee, and has probably heard from some
members of the ag community who are skeptical and concerned. He has stuck with
it because he truly believes in the promise of market access for agriculture and
for development and for economic growth. So I appreciate his support.
He did not tell me what apparently he told you about the
breakthrough. I agree with him, it gets more difficult to conclude at the end of
2006 without a breakthrough. But my sense is, that if the Hong Kong meeting can
educate those countries that have not been as engaged in this process to date,
and if we can make as I said progress on the least developed country assurance,
the Round will help them to be able to engage in trade, and if we can make some
of that incremental progress then I think over the next few months it will
become fairly obvious what we have to do. I think the pressure will mount. And I
think with more information and more education it's more likely we can see that
breakthrough coming after the first of the year.
If that happens, then I think we still have time. It won't be
easy, but if you look at the history of the Uruguay Round a year or let's say
nine months assuming it takes us awhile for that breakthrough would be adequate
time for us to put together the tariff schedules and make the progress we need
to make to have something finished by the end of 2006.
That's important as you know because in Congress Trade
Promotion Authority may expire in 2007. The administration would hope for
renewal, but last time it took nine years to renew TPA. So I think it's a risk
for us not to complete in 2006 to be able to send something to the Congress in
Do you want to add to that?
SEC. JOHANNS: You know what I'd relate back to is that some
weeks ago stories were written that the ag talks were absolutely stalled, there
was a standoff. And then we put our proposal forward, and all of a sudden it was
seen as a breakthrough really around the world. And we covered a lot of ground
in that short period of time.
My belief is that when the EU steps up, there isn't any doubt
it about that we can get an agreement done in 2006. A lot of work to be done
even after the general framework is put together, but it is still very
AMB. PORTMAN: It's a good question. I don't necessarily share
your pessimism about 2006 because as I said earlier I do believe that the
building blocks are there to have an agreement come together early in 2006 and
to be able to avoid the breakdown that you suggest.
I also don't agree with you on Cancun. I think the dynamics
are very different. Were you at Cancun?
AMB. PORTMAN: Well, you recall there you had the split
between the developed countries and the developing countries. Here you have a
very different sort of dynamic. And what we've talked about mostly today is how
developed countries need to do more.
I'm not suggesting Hong Kong will be a successful meeting in
terms of breaking the deadlock and coming up with the solution to be able to
move Doha forward. I am suggesting it can be a constructive meeting where we
make incremental progress on the building blocks including agriculture, and then
progress on least developed countries and a package where they can feel more
comfortable about their ability to integrate into the global trading system and
take advantage of what the ultimate result in Doha should be.
But I think the dynamics are very different this time
AMB. PORTMAN: With regard to your litigation question,
litigation has already commenced. We have already faced a case with regard to
cotton. We may find ourselves facing other cases. The better solution is for us
to deal with the subsidies head on.
As you know, WTO litigation, as important as it is, is far
from perfect for both sides. The United States has won a number of WTO cases
including as an example our beef hormone case with Europe. And yet we still have
no access to the European market for our beef because you win a case and
retaliation is set. And it's retaliation in terms of trade, which is an awfully
inefficient way to retaliate because it ends up hurting both of you I think, and
it doesn't necessarily result in progress.
I could name a number of other examples, some who perhaps
might turn to us would talk about the Byrd amendment where we have retaliation
currently in place, and yet we still have the Byrd amendment in place. So it's
an imperfect system. A much better one would be for us to deal with the
subsidies. And that's what we're advocating.
SEC. JOHANNS: Yes. What I would suggest here too is that
there is a very fundamental difference. And here is the difference. The proposal
that was put out by the United States about eight weeks ago has really caught
the imagination of the world. It really has.
Now some, our friends from Brazil for example, when they talk
about the proposal they say this is a really good proposal, we'd like to see if
you could do more. But it really has caught the imagination of the world.
A minister from New Zealand described it as "very heady
stuff." I really believe that the countries associated with the WTO look at that
proposal which is on the table waiting for a response from the European Union to
match its ambition, and those countries say, we can't afford to walk away from
this, because if we do it's a once-in-a-generation opportunity that may be
And the discussions we've had -- in fact in a recent meeting
in Africa a minister said, "The U.S. proposal is the best proposal."
Now again, there is constant discussion about, what about
this approach and that approach? And we've always said, Look, we're going to
stay at the table and negotiate an agreement.
But I think the dynamic is so much different now because
countries do not want to walk away from this very ambitious, bold proposal to
open markets and bring down and eliminate trade-distorting subsidies. It really
truly is a once-in-a-generation opportunity.
Walk away and it's lost.
AMB. PORTMAN: That was so well-said I think we should end the
press conference there. But I see one more question. He's very patient. And
Doug. And then we'll break up.
AMB. PORTMAN: I'll answer the second part of your question
first. We saw some very hopeful signs last week, came out of the G7 Finance
Ministers Meeting. Some of you followed that, where India and Brazil, China and
others made statements that were consistent with progress in this notion of
parallel progress on services and so-called NAVA (sp), which is the industrial
tariff on the one hand and agriculture on the other hand.
So I am more hopefully frankly after the last week and after
the G7 Finance Ministers Meeting. During that meeting, Secretary Johanns and I
were in other meetings with trade ministers -- in Geneva, including Japan, the
EU, Brazil, India, Australia. And there we also got some indications, more
privately, that there is an understanding of the need for movement across the
So I am a little more hopeful actually in that regard. And I
think going into Hong Kong we have some momentum there that I think people
realize as I said earlier this is where the agreement is to be found.
What was the first part of your question? Aid for Trade? I
haven't seen the report yet from Japan. I was assured by my colleagues from
Japan that they would be coming out with a development package, which would
include trade capacity building and other kinds of development aid. And I
welcome that, I applaud them.
The United States, as you know, is leading the world with
regard to trade capacity building, which is the kind of aid that we focus on in
the WTO. Our number in 2005 is roughly $1.3 billion. That again puts the United
States at the number one country in the world in terms of providing this kind of
aid, even including all the EU countries. We're still number one. That's a 45
percent increase, you should know, from 2004-- which indicates, particularly in
a tight budget year, the priority with which the United States attaches this Aid
for Trade and trade capacity building.
In Hong Kong we plan to make additional comments regarding
this matter because we think this is so important. We think the United States
needs to continue to take a leadership role in helping countries be able to
engage in the kinds of market openings we're advocating. So we'll continue to
prioritize Aid for Trade, also called trade capacity building.
One thing I have found over the last week as I have worked
with my own team and others in the administration on this development issue and
funding, you can come up with all kinds of different pledges and different
programs. I'd just encourage you to look below the surface at our proposal and
others with regard to development funding.
What I'm talking about is funding that actually goes to
capacity building to enable countries to engage in trade, not that anything's
wrong with aid in general but I think you need to distinguish between the two.
Frankly I haven't seen the Japanese package to know how they break that out. But
I would say with regard to all these proposals they might want to look at that
issue of aid in general versus aid that really affects a country's ability to
engage in trade and therefore to take advantage of what the Doha Round has to
Thank you all very much. Have a great holiday.