Amb. Portman: I apologize, we’ve been telecom challenged this morning in a severe way. I’ve been trying to join you all on this line for awhile, but I’ve been told that there were no free lines. It must be a slow news day. I do thank you very much for your patience.
As you know we have just returned from a busy week in Zurich and Geneva. There now appears to be more forward movement in the Doha negotiations than we have seen in months, and I’m encouraged by that. On Monday in Zurich, as many of you know, I hosted an informal gathering of 21 ministers representing 17 countries from around the world. We also included in the meeting WTO Director General Pascal Lamy and the General Council Chair Amina Mohamed.
We chose that moment to unveil a bold new U.S. proposal designed to unlock the deadlock in agriculture. As part of the first stage in that, we offered real cuts in trade-distorting domestic support. We did so in exchange for substantial improvements in market access and deeper cuts in trade-distorting support for those countries like Japan and the countries in the EU who have larger subsidies than we do. We also called for the elimination of export subsidies. All of this, of course, is consistent with the July 2004 framework that the countries of the WTO – all 148 – have already signed up to. In fact, it talks about substantial improvement in market access.
As a part of a second stage in our proposal, we seek to implement the President’s even more bold vision of total elimination of all trade-distorting measures and tariffs in agriculture over time. Under that plan, we would do that by 2023.
So, this was meant to be a proposal to get movement in Doha. It was also specifically specifically meant to help break the deadlock in agriculture. And it has generated a lot of momentum throughout this week. Our sense is that the negotiations have a new energy that was lacking before this new U.S. offer was introduced.
I just got off the phone with Geneva and that sense was certainly communicated at the Trade Negotiating Committee Meeting yesterday and again today in Geneva. There is a much higher level now of engagement with Ministers and we’re talking about details and specific numbers. So, this is an encouraging sign.
The focus has now shifted to market access and agriculture. In particular what the European Union is willing to offer to reduce tariffs in their heavily protected market. On Tuesday in Geneva, the European Union did present two or three changes to their existing proposal on market access. These were minor adjustments. I do welcome the give and take from our trading partners and in particular the EU, but I continue to be very disappointed that the EU did not reciprocate with a similar level of ambition on market access as we offered on domestic support. In fact, its proposal was only marginally better, not just on the ideas they had already presented, and in many respects it is not as ambitions even as the G-10 proposal in agriculture. G-10 representing countries such as Switzerland, Japan, and Korea, and others that have heavily-protected markets. It’s also a lower level of ambition than the Uruguay Round result in agriculture, which, as many of you know, was believed to be totally unsatisfactory on agriculture and that’s the reason that agriculture was deemed to be a focus of the Doha Round. There, as you may recall, was a 20 percent reduction in the most trade-distorting agriculture subsidies called AMS, in exchange for a 20 percent reduction, there was a 36 percent average tariff cut for all countries under the Uruguay Round. This time offering a 60 percent reduction in AMS, which, if you were to make it equivalent to Uruguay, would mean a 108 percent tariff cut. We’re not asking for that much. But we are asking for substantial reductions of course that must go beyond the Uruguay Round.
And again, the EU proposal does not even go to the level of the Uruguay Round. For the EU, for instance, it would be a 24 and a half percent (garbled, noise on line). For the U.S., frankly, it’s a lot less than that.
Later on Wednesday, yesterday, or day before yesterday I guess now, the G-20 also unveiled a proposal – a G-20 developing countries – on agriculture. Again, I appreciate the fact that our trading partners are making these proposals and we’re making progress. But again, this, too, fell short of expectations that people had in the level of ambition that’s been set by our proposal. On market access, the G-20 proposal expects too little from the developed countries like the United States and the EU, and very little from developing countries. Frankly, it lets developing countries that are emerging economies off the hook. You recall that the least-developed countries will be asked to do nothing in regard to reducing their tariffs. But those countries that are emerging markets, such as the countries involved with the G-20 must also be asked to open their markets to be consistent with the Doha Round. The analysis that we have of this G-20 proposal indicates that the market access proposal would cut largely into bound tariff rates. In other words there would be no difference in terms of market access because the applied rates, the actual rates, are lower than the bound rates. So applied rates wouldn’t be affected in many cases at all. I mean there’d be no change in market access. No new trade flows. Let alone a substantial improvement in market access. But again, it’s already been agreed to in the July 2004 framework. So frankly it’s unbalanced in terms of commitments; it doesn’t deliver on the promise of Doha.
I went to Zurich on Monday with the hope to break this deadlock in agriculture. Recall that during the past few months, my fellow Ministers have been tough on the U.S. They’ve been asking the United States to present a detailed proposal on trade-distorting agriculture subsidies in exchange for more market access. I listened and we responded in good faith on Monday. In fact, we did more than what was asked of us. Now, of course, we need to see the real market access that was promised to go along with that.
Let’s keep in focus the fact we are only nine weeks or less now, less than nine week from Hong Kong. And, this is, as you know, meant to be a very important milestone in the Doha negotiations. This is the Ministerial meeting where we were supposed to come up with the framework to go forward to be able to have a successful completion of the Doha round by the end of 2006. And the United States continues to be very supportive of the Doha round. We believe that no other initiative has more potential to generate economic growth and to significantly help the poorest countries and their citizens. In fact, the elimination of global trade barriers, as you know, has been analyzed by the World Bank and others to have the potential of lifting hundreds of millions of people out of poverty around the world.
We agree that development is at the heart of the Doha round and that is precisely why we are fighting to ensure that the round has significant market access, not only in agriculture, but also reduction of tariffs in non-agricultural areas, like industrial tariffs, also reduction of barriers and services, steps that will increase trade in both developed and developing countries and be good for the global economy, and again, good for the developing countries.
The benefits for developing countries are substantial. Analysis indicates that nearly two-thirds of the gain in global annual income from the world-wide elimination of barriers to goods, trade would go to middle- and low-income countries. The World Bank, as you know, had calculated that 93 percent of the benefit to developing countries from rich countries’ trade liberalization will be due to market access, to the reduction of tariffs. So the vast majority of the benefit to the developing world will come from this market access that the United States now needs to go to balance our proposal on domestic support.
There’s a lot at stake. And, the clock is ticking. Again, we’ve made some progress this week. The United States has made a strong offer. We await a meaningful response.
And I await your questions on this or other topics. Again, thanks for your patience. I’m sorry that you had to hold for so long before we were able to get a line in.