USTR - Transcript of Opening Statement and Q and A by US Trade Representative Rob Portman
                 
The Office of the United States Trade Representative

Transcript of Opening Statement and Q and A by US Trade Representative Rob Portman
U.S. Mission, Geneva, Switzerland 10/12/2005

 

PORTMAN: Let me just make a very brief statement and then go to your questions.

I am disappointed because we haven’t seen more progress on market access. The United States was asked to come up with a real cut in domestic support in order to breathe new life into the Doha round. We did as we were asked, and we did more.

The expectation as you know was that there would be a 50 percent cut in AMS. They challenged us to make a 55 percent cut last week, and the week before. We made a 60 percent cut. I talked to you yesterday about water and all I can tell you is the numbers are public, they are out there, we have reported that we spent $14 billion in the amber. The truth is that we have spent up to $17 billion in the amber. We can only spend $19.1, that is what we are allowed. A 60 percent reduction even from 17 means it goes down to $7.6 billion. That is a 46 percent cut in muscle and bone. There is no water there. Unlike on the tariff side where we are cutting from bound rates, I am telling you we are cutting from applied rates here, we are cutting into our programs. The Secretary of Agriculture said yesterday that he cannot operate the programs at that amount. Why? Because the marketing loan program which is the great bulk of that as you know, does not fit within the $7.6 billion left over in amber, so it forces us to reform our farm programs.

The other issue I was told about was we need to have a reduction in blue box, and the framework agreement in July 2004 established a 5 percent of production cap in the blue box. Right now there is no cap in the blue box. So to be more aggressive there, we said we’ll do five percent, plus we’ll do 50 percent more, we’ll do 2.5 percent in blue. Again, the program that we would consider blue box program, which would be our countercyclical program, can not fit within that number, although current spending is about $5 billion, and the blue box number is about $5 billion, the countercyclical program is authorized at $7.6 billion. And years when prices are low, there is more spent there. And in years when prices are high, there is less spent there, because it is based on prices. But the truth is, these are real cuts.

On de minimis, I was told the expectation is to come in around 50 percent. We don’t use the de minimis very much, as you know. After you move countercyclicals out, we use it very little. We have no sleight of hand, we have no reasons to want to shift things into that area. Besides, a 50 percent cut means you can’t shift it there anyway because there is not enough there. So this is a real cut. It is exactly what I was asked to do and more. And I was told that when I did that, then the market access proposals would be equally ambitious and they would allow us to break this deadlock in agriculture and thus get on to rules, and services, and NAMA and trade facilitation and development.

Admittedly it has only been three days, so I can’t be too impatient. But given the short time frame between now and Hong Kong, it is absolutely critical that we see market access proposals surface that equal the ambition that we have laid out on domestic support. If that does not happen, I fear that not only will the Hong Kong meeting be a disappointment, but the Doha round will be a disappointment and we will have missed the best opportunity I can think of to increase economic growth and to encourage development in those countries around the world that are struggling where trade offers hope.

So that’s where we are. We will go to your questions. The important thing is that I am not giving up. We need to continue to fight for a successful Doha round because it is so important. It is important to the citizens of the United States because we live within the global economy. But frankly it is most critical to global economic growth. We only have this opportunity once in a generation. And some of you may have covered the Uruguay Round. I don’t know if any of you are senior enough to have done that. This is your opportunity. This is your round, this is my round, this is our opportunity to make a big difference. So it is worth the fight. We will continue the fight. I will return to Geneva next week. I am canceling my schedule right and left because this is so important. And the United States will continue to push hard for a successful Doha round.

Final thing I want to say. The second stage of our proposal as you know is not just the reduction of domestic support, but the elimination of trade-distorting domestic support. The second stage is also the elimination of tariffs. President Bush has been very clear on this. And he believes that a world free of constraints to trade is a world where you have the opportunity to increase economic development dramatically. And that continues to be the U.S. position. That is why made this dramatic step forward in the domestic support area, that is why we are promoting Doha, because it is the next natural step toward the vision that the United States has of a world where you don’t have trade distortions either on the domestic support side or on the tariffs side. This round was meant to be a development round and it was also meant to be a market access round. The World Bank study I referred to yesterday indicates that 92 percent of the benefit to the developing world from what we do, what the rich countries do, will come from market access in agriculture. In the three pillars of agriculture -- export competition, market access and domestic support -- 92 percent of the benefit will come from market access. And that is what we are waiting to hear. It is worth waiting because it is so important. On the other hand, we have so little time. Time is running out. So we await a proposal that can be supported by the EU and others that by objective standards provides, as the framework agreement said, substantial improvement in market access in all products. That is what we agreed to do, that is what we are still waiting for.

QUESTION: Even that there is so little time, do you think that next week’s meeting is now effectively the deadline to the E.U. to come out with some proposal on market access which you could really negotiate on?

PORTMAN: Let me respond by saying I would hope we could have it even sooner than that. You know, this has been out here now for three days, member states are well informed. Our proposal has been analyzed every way possible. It’s not that complicated frankly. I’ve just outlined it for you, so next week will be a critical opportunity for I don’t know how many trade ministers are able to come back. But I would hope even this week we could see – today is Wednesday, isn’t it? If it’s Wednesday, we must be in Geneva! I would hope even this week we could see a response from the E.U. I don’t see why we can’t. This is not something new. We’ve been talking about this for a long time. Again, when I was asked over the past couple of months, to come up with a domestic support proposal in order to break free the market access proposal, it was my understanding that the market access proposal would be ambitious and that it could be delivered. So I would hope we wouldn’t even wait till next week. The G20 is also working on a proposal. The G20 proposal, I hope, on market access will also be an ambitious one.

QUESTION: Ambassador Portman, clearly from your comments I assume you found the E.U. proposal last night insufficient. I just wondered if you could tell me what the problems are with that proposal? Secondly, there seems to be a perception, particularly amongst the G20 about the domestic support proposal, that the U.S. would have an opportunity to vastly increase its spending under the de minimis and there seems to be a suspicion that despite the offer that you would have this great opportunity to perhaps shift programs into the de minimis and avoid any real effective cuts, what assurances have you given them that this will not happen?

PORTMAN: Let me answer both your questions. First, I don’t think it’s fair to say it’s a G20 perception, because I’ve talked to plenty of G20 members including some who have been in all the meetings, who don’t hold that view. I would tell you in the FIPS-plus meeting today it was summarized by those who were present including WTO officials that the proposal is real and that the proposal has real cuts. Some of our fiercest critics on domestic support acknowledged as much, including the Canadians, who have been very tough on us, as you know, including the Australians. I would refer you to Celso Amorim if you are going to talk about G20 members, and see what he says about it. But I told you earlier, we were told that the expectation was a 50% in de minimus. You know the U.S. doesn’t use de minimus particularly, we use it some because of the countercyclical programs being there, although it’s not reported as such, but that’s where we would consider them. But in moving them under the blue box and then having to reduce it, the countercyclical program would have to be reformed. That’s the hard fact, that’s why I’m getting so much heat from back home. And there is no intention from our part to shift, nor could we because some of these programs, as you know, namely the two programs that are of most concern, marketing loan, and countercyclical are far in excess of either de minimis. So it was never our intention and I don’t think that serious people believe that. I think some people have said that because they don’t want to deal with the market access issue. There’s some in the developing world who are concerned about the market access issue. I would tell them that LDCs, least developed countries, who are left out all together, they are asked to do nothing, nothing on tariff reduction. Others would have under the framework, special and differential treatment for their products, in addition to what the developed countries might have under sensitive products.

So I would again, just make the point there’s so much to gain here with the Doha agreement and we are at risk of missing this opportunity unless we get serious on market access. That’s where we are now. By any objective standard the E.U. proposal you asked me about doesn’t come close to meeting the expectations that all of us have on market access. An example would be on the Uruguay round, which was considered pathetic in terms of its agricultural market access, by the way, it’s one reason we have this round, its because people thought the Uruguay round didn’t go far enough. In the Uruguay round there was an average tariff cut of 36 percent. All of us had to do 36 percent. The AMS cut there was 20%. Now I’m proposing an AMS cut of 60 percent, that’s three times as high. That means the tariff average ought to be 108 percent if it’s to be compared to the Uruguay round which not considered ambitious on market access. I’m not asking for that. The United States is not asking for that. So we are already dialing down our expectations from the Uruguay round, so that’s a comparison apples to apples comparison you can make. Where is the E.U. proposal? I wouldn’t say it was a new proposal last night. I’d say they made two changes in their proposal last night. One was with regard to something internal, flexibility and the other one was regard to sensitive products, which went from 10 percent to maybe 2 percent less, so 8 percent. So what did the E.U. proposal mean -- 24.5 percent cut in tariffs in the E.U. Guess what? A lot less than for the United States. That’s not adequate, that doesn’t even come close to the Uruguay round cut of 36 percent.

QUESTION: Just that figure 24.5 percent based, that would be an average?

PORTMAN: That would be what the E.U. would be required to do. Every country would be required to do something different because under the E.U. proposal it wouldn’t be an average every country would be asked to do, but would depend on your tariff level, and the E.U. again, would be asked to do 24.5 percent. I don’t think anybody considers that adequate. That’s the average across all their tariffs, all their tariffs for ours it would be less than that, I don’t know what our number is. We have 12% average tariffs now, they have, what about, what’s their average?

AMBASSADOR ALLGEIER: Theirs is 30 something

PORTMAN: 32 percent maybe. So if ours is 12, ours would be roughly a third of that. That’s all we’d be asked to do under the E.U. proposal. That’s not enough to ask us to do.

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