Doha, but unfortunately I cannot.
Instead I can tell you that we are here to say that we are concerned. We are concerned because we are not seeing the progress that we had hoped for this week. I do believe that the promise of Doha hangs in the balance. I believe the time is too short for us to have wasted weeks, and I believe that unless we see progress soon, it will be very difficult to envision a successful Hong Kong meeting and a successful completion of the round at the end of 2006.
Recall these negotiations have been ongoing for four years now. We have, I’m told, 54 days until Hong Kong. And frankly, in order to complete negotiations by the end of 2006, we have to unlock these discussions on agriculture. This is what Director General Pascal Lamy has reported, because it reflects the view of the membership. And there the responsibility at this point rests squarely with the European Union and their ability to come forward with a proposal that is meaningful and credible on market access.
Recall there were three pillars in agriculture. One is export competition, which has been fleshed out to the point of establishing that we will eliminate export subsidies, domestic support. With our proposal last Monday in Zurich, about ten or eleven days ago, we fleshed out a proposal on domestic support that is real, meaningful, credible. It does provide for real cuts in our programs. The Secretary will talk about that in more detail. We are certainly hearing that from our farm community. We are hearing that because we are making a serious commitment here. The third pillar has always been market access. This is where we have not seen the progress.
I will say that there was a positive development last night in our FIPS meetings, and that is that the G20 came out with the second part of their market access proposal. It was then followed by a proposal by the Australians, another member of the FIPS group in addition to Brazil and India representing the G20. And each had to do with how you treat products outside of the tariff formula, what products you would exclude from the tariff formula and how you would treat them. The so called sensitive products. And I think both proposals were very constructive. The G20 proposal provided for a 1 percent exclusion for developed countries and a 1.5 percent for developing countries. I welcome those contributions.
But again, my colleagues in the EU -- and I do consider them colleagues and friends -- they have nothing to offer. And, again, what is more disconcerting to us, probably was the lack of a concern about the time crunch that we face. There was not only a lack of proposal but a seeming lack of urgency despite the fact that we are facing this deadline in Hong Kong.
Last night I think we agreed, as a group of Ministers, that the EU would present a proposal next week. You should speak to Pascal Lamy directly, but I think that was the consensus of the group last night, and that that would happen within a week from yesterday. I hope it is not just any proposal. I hope it is a proposal that again reflects the high level of ambition in the other two pillars of agriculture and thus permits us to bring agriculture together and then to move forward on other issues.
I will say here that I do not disagree with Peter Mandeson’s letter last night. Some of you heard about that letter. I think the Financial Times got a copy of it because I read about it in the Financial Times this morning, so now I can talk about it. But in essence he said now we also need to work on services and NAMA, that those are important commercial concerns to the European Union. Of course. I couldn’t agree more. And last night chairing the meeting I gave Commissioner Mandelson every opportunity to talk about that and we did talk about those issues. From a U.S. perspective, I’ll be frank with you, those issues are also very important, as are the other issues, trade facilitation, rules, development. We need to get on to all those issues. But as I said at the outset, this is not something that the EU or the US can dictate. This is something that the membership of the WTO will decide in terms of sequencing, and we need to see progress on agriculture in order, in my view, to see the kind of substantial progress we also need in terms of industrial tariffs, services and other issues.
I know the EU has been through a series of internal conversations with their member states. I’m sure those pressures are very real that they face. I will tell you, every WTO member faces pressures. Certainly we do, and we have and you can look at some of your own reporting on agriculture in the US to understand better what some of the concerns are that have been expressed by some of our commodity groups and by some of our legislators who represent agricultural districts or states. So while I do empathize with their situation, I must say that we all face domestic pressure, all of us. And we have to stand up to it. And there is just too much at stake not to.
In addition, there is a lot to gain from Doha for the EU and for the world. I mentioned services and NAMA, there is also a lot to gain in terms of development and global economic growth. In terms of market access I said the proposal would need to be credible and would need to provide substantial improvement in market access which is what the framework calls for. Currently tariff levels are very high in agriculture, 62 percent on average, with many tariffs over 100 percent. And therefore we need a robust tariff reduction formula that significantly reduces tariffs bringing them down to low levels in developed countries, like the United States and the EU, but at least below applied levels in developing countries as well. In other words there needs to be new real market access, real trade flows. Without that we are not keeping with the Doha mandate or the framework agreement in 2004. Certainly I would say that any proposal from the EU must be in the zone between where the United States is, joined by a lot of other countries with our proposal, such as Canada, New Zealand, Australia and others, and where the G20 is in terms of market access in developed countries. If it is not within that zone, then it cannot be viewed as a credible proposal. Again, forgetting what the U.S. might think, it will not provide real market access. It will not provide for the improved market access that is required under the framework agreement, substantial improvement in market access, nor will it provide meaningful trade flows.
Countries have a burden to persuade WTO membership that a product deserves deviation from whatever formula cap we end up. And that is why the sensitive product area is so important. There again, I think we need to have as few deviations as possible in line with the US proposal, but also the G20 proposal, also the Australian proposal made last night. Again this sensitive product area designed for extremely delicate products where exposure to zero duty imports needs to be limited to a specified quota, a TRQ quantity. And broad use of that category would mean that trade flows would be defined by quotas, rather than by relative prices. This would not provide for real market access.
As the World Bank analysis shows us, even a few products escaping meaningful market access means that you lose so many benefits of the DDA. And I think that is laid out in this fact sheet here that you have. And I encourage you to take a look at some of the economic analysis that has been done.
I would just end by saying that we need to remind ourselves what this is all about. Doha is an opportunity that comes around once in a generation to make a substantial difference in the economic well-being of our countries, of our world and of individual citizens, particularly in the poorest countries. No other form of development, in my view, whether it is direct assistance, whether it is debt relief, whether it is charity donations, can come close to holding that same potential that trade holds for the developing world. So we cannot allow this once in a generation opportunity to pass. And our offer on agriculture reflects our commitment to Doha. We believe Doha is so important that it is worth taking risks. And yet the U.S. cannot, and will not, act alone. Other members of the WTO join the United States in awaiting an ambitious market access proposal in agriculture to unlock the potential of Doha. Thank you, and, Secretary Johanns.
SECRETARY JOHANNS: The Ambassador’s comments were very thorough so I will just offer a couple of thoughts. I do appreciate what he said at the start of his comments, that we really are at a crossroads in our discussions here. And the situation is, I would go so far as to say, very grave, in terms of we are down to the last week or so for this to fall together by the time Hong Kong arrives. We are in a situation where it looms out there, not very far any more. And so if this doesn’t come together here very quickly, we just simply run out of time.
Now the good news is, on the agricultural piece of this, of the three pillars, two are in fairly good shape. We have made a significant amount of progress on export competition and domestic support. Yet, we are still at an impasse when it comes to market access, which is not only critical to the United States, but it is really critical to the world community.
A few weeks ago the world looked to us to make a significant proposal on domestic supports to energize the discussions. And we did so. We made a substantial, bold proposal. In fact, some of the commentary has been along the lines that it was bolder than what was anticipated. President Bush led the way. The U. S. will reduce and eliminate all trade distorting measures, but the rest of the world must do the same.
Last week we offered in Zurich a bold proposal that brought fundamental reform to our domestic supports. That is about as direct as I can be on this. This really changes how we do business. That substantial move by the U.S. was very well received by our negotiating partners. They saw it as the U.S. again taking global leadership in these discussions.
Well we returned to Geneva this week expecting the EU to be equally forthcoming with an ambitious proposal on market access so we could head toward Hong Kong prepared to achieve the vision of global development – which is really what this round is about.
Here’s a very important point. Every other part of the world has illustrated their willingness to be aggressive. And probably, most importantly at this stage in the discussions, put their cards on the table. Many nations, not just the United States, have taken the initiative and been very, very forthcoming with very specific proposals. We have proposals from the G-20, the G-10 and the G-33 in addition to the proposal made by our country.
But we really have nothing at this point from the European Union. They have been very timid and that is concerning to all of us. Again for a lot of reasons, but the greatest concern at the moment is we are just simply running out of time. The days are very numbered and limited.
The Ambassador’s comment, and I really do believe he is right, in saying the point of discussion really is between the G20 and the U.S. proposal. And yet the European Union really has not put any cards on the table. They really have not identified an approach that gets us to Hong Kong.
I will say what I said from the very beginning of my tenure as Secretary of Agriculture. We want this round to be successful. Our President has made a very, very bold commitment in terms of trade-distorting subsidies. We have found a pathway because of his leadership to a result that would be positive for the entire world. So we are going to do everything we can to hang in there and have a successful Doha round. Thank you.