Senior US Trade Official: Thanks, Marci, and hello to you all. Thanks for joining. We just thought it would be useful to set up a call just to give you all an update and answer any questions that you have.
We’ve been over here this week focusing on the WTO agriculture negotiations and of course we had planned this trip a while back as the 30 April deadline was looming. We’ve still got a week to go. But I’m sure you’re picking up there is not a whole lot of optimism that we will establish the modalities as had been envisioned in Hong Kong. So we are here doing that.
The work here is focused on a couple of things. We have in the agriculture negotiations, the chairman of the agriculture group, Crawford Falconer, has put out a few what he calls reference papers, which try to define the issues in several areas: state trading, food aid, export competition, green box, blue box, those come to mind.
He’s been having meetings with the WTO members to see how they’re reacting to his papers and to hear how members want to start to specify more specific rules that would come out of this. So that’s what he’s been doing.
In addition to large meetings where these issues are covered, he’s also hosting a couple of smaller, more selective meetings on some of the other topics, things like how are we going to deal with the commitment to liberalize tropical product trade. What are we going to do about tariff preferences or tariff escalation and so on.
He’s plowing through all the issues, recognizing they have all got to be done. If the will is there, he’s prepared to guide us in the modalities over the next week or so.
The problem, of course, is that the will hasn’t been evidenced. To our frustration, we haven’t seen countries coming forward with the types of proposals that we think are needed to achieve our mandate of having substantial reform in the negotiations.
So despite the lack of political movement on some of the headline numbers of tariff cuts, subsidy cuts, he is still trying to guide the process along over this next couple of weeks and presumably the weeks after that, so that the negotiations will be in a position to conclude if we do find that the countries are ready to come up and step forward with the right kind of proposals.
So that’s been most of the work. Of course, on the side of these meetings that he’s held, there has been a bunch of smaller group meetings, informal meetings, bilateral meetings, where countries have had a chance to focus in on some of the stickier issues. Talking about some of these basic questions of how deep are the tariff cuts going to be? What are we going to do about sensitive products, and so forth? So that has also been going on.
It’s in these more intimate discussions that sometimes you’re able to start conversations that might lead to the drafting of an agreement and start agreeing on the formulas. But again, we don’t see that here yet. But we’re certainly trying to push this as hard as we can to make progress where we can.
The US submitted a proposal this week on export credits where we had some specific textual proposals on what rules should be governing export credit programs. We earlier submitted proposals on food aid and on the green box. We’ve been engaged in the other discussions, putting forward ideas, trying to find the common ground, and really trying to get good agreement where we can. Of course, we’re also working with folks on the issues of the cuts and the level of ambition, encouraging folks to step up to the plate here. So we’ll keep doing that through the rest of this week.
The rest of the process becomes a little less clear. There is a meeting on Friday here in what the green room, where Pascal Lamie will call in the ambassadors from a number of countries and get their guidance on what needs to happen in this process. So Friday night we’ll have a little better sense of that. But I think we can expect on the ag side to have a continuous process of work here, of meeting continuing for the next several weeks, where the chairman is trying to drive towards a consensus, trying to find the compromise and starting to draft text probably at some point that would show where he sees agreement developing or putting some brackets in to put pressure on people to make up their minds on some key issues.
I think that will keep going. But we are trying to cram all this work into a shortening period of time, because as you all know, we have TPA for only so long. So we’ve got to get this thing done.
So that’s the quick report. Why don’t I just stop there? I’m happy to field any questions that you all have.
Question: This is Sally Schuff with Feedstuffs. It seems to be a foregone conclusion that the April 30th deadline is going to come and go without an agreement on any substantive issues. What would be the likely next agreement? Would it be before the August break? When would be the next practical possibility that there’d be something?
Senior US Trade Official: It’s a good question. I don’t think anyone has a straight answer to it. I think the one firm deadline we have is the end of the year, when we’ve got to get something done so we can package it up to send it up to Congress for the TPA deadlines.
So then the question is, well how do you squeeze in what needs to be done in the remaining time? So you can’t wait until December 1st, because we’ve got to agree on the formulas and then we’ve got to put together the schedules and then we’ve got to negotiate the specifics.
So it certainly means that we’ve got to have some really serious progress in the next couple months and that we’ve got to have some basic agreement by the summer. I don’t think there is any specific date that you can set; say it’s got to happen by then. But certainly, we need to make real progress in the next couple of months and really start converting agreements on formulas into schedules by the summer.
Question: This is Gary Yerkey of BNA. There is a report today that the US had tabled a proposal on sensitive products. You didn’t mention that in the list you gave us. Is that report accurate, and if so, what can you tell us about it?
Senior US Trade Official: It’s not accurate. We did have some meetings though, with some small groups of countries and in those conversations one of the big topics was sensitive products. How do you deal with these tariffs that are not going to get the full cut, but instead are going to have some sort of quota access as the main vehicle for new access.
We did float some ideas there about how you would ensure that there would be a decent size quota and that there would be a decent premium for the countries who are declining to cut their tariffs, that they’re making sure that they are providing access to a quota. But it wasn’t a formal proposal. It wasn’t anything that we’re sharing with the WTO writ large. We’re just sharing some of our ideas about how we might find some common ground on that.
Question: Ian Swanson from Inside US Trade. What is the possibility of ministers getting together in the near future to try to move things forward? Would the US support the possibility of ministers meeting at the end of April or early May to try to give this a boost or does the US think that wouldn’t be a good idea at this point?
Senior US Trade Official: This is sort of the inside process question of the moment here in Geneva. There’ll be a meeting tomorrow night where this will all probably come to a head. This is this Green Room Meeting that the Director General will host. One of the questions will be, as he had been preparing to have ministers come if there had been prospects for a big break-through. So he was saying, well, do we need the ministers to come in now anyway?
I’ll give you my view, because we’re still working it out before we head into this meeting tomorrow, but we certainly are willing to do whatever is going to be constructive for this process.
We are over here in force this week. We are engaged in the negotiations. Ambassador Crowder has come over, our chief ag negotiator, for example. If we thought that it would be useful to have trade ministers come over here, I think we’d find Ambassador Portman would be ready to do what it takes.
But it’s not at all clear that that’s going to be the most useful thing right now. There are a lot of details that have to be worked out and it is always useful to get guidance from the highest level, but to organize one of those meetings, it can be complex. I think we’ll have to see what the prospects are and what the options are.
Question: Ian - I’m sorry, did I interrupt?
Senior US Trade Official: You’ve got the floor.
Question: Okay, good. I’m getting the feeling that – Ian Elliott, [inaudible]. I’m getting the feeling that the agriculture negotiations are basically, how do I say, that format is basically over with. Now it goes to the TNC. Is that fair?
Senior US Trade Official: I don’t think so. I think what’s happening now is that we have a bunch of simultaneous conversations going on. We’re meeting in small, informal groups to really focus in on some of the difficult issues, like that sensitive products question that came up.
We’re meeting under the direction of our chair in larger groups where people are putting formal proposals down in textual form and he’s trying to figure out how he can start drafting the actual text of an agreement. Then we have our ministers engaged, talking amongst themselves in meetings or on the phone.
So I think all of that has to happen at the member-driven level, where we’re talking and negotiating amongst ourselves and so that we can put together some basics of an agreement that can then be put forward to the broader membership in something like that TNC, and then you can really fight out some of the big issues that all of the members need to weigh in on.
I think we’re still working on that, that there are still broad enough differences that we, the members, have to find ways to start finding the common ground.
Question: Can you hear me?
Senior US Trade Official: Yes, I can. Is that Jerry?
Question: Yeah, it’s Jerry. You know, for maybe a couple of years, people have said that in the end there may be a Plan B. In other words, the elaborate agreement that we’re talking about is not going to work out, but that people will not want the round to end in failure. Do you have any sense at this point that anybody has another plan, a simpler, lesser goal?
I might also mention that Congressman Moran and Congresswoman Emerson told us this morning in another call that they do not believe that Pascal Lamy will be making a proposal to try to force an agreement as some people have suggested.
Senior US Trade Official: On the second part first, I think that’s right. As I mentioned earlier, we, the WTO members need to work amongst ourselves and try and find our common ground before we, and I don’t think we’re in a position where someone can just come in and decide these things for us. So I think the Congressman and Congresswoman are right.
In terms of a Plan B, I haven’t heard much talk of that here. Most people are still trying to find a way to achieve their objectives, be it subsidy cuts, be it opening markets, be it finding ways to meet the objective of a substantial reform package here. I don’t see a move towards that.
There is from time to time, consideration of a small deal. But again, our strong preference is to do something here that is quite substantial. We see all the upside of expanding trade. So I don’t think there is much focus on that right now.
Question: If I could ask a follow-up? When you’re having these conversations, since it seems like everybody is blocked, the Europeans are blocked on agriculture, and the developing countries don’t want to give on these industrial tariffs and some of the services issues.
Do the negotiators from different countries express to each other frustration that they have only limited political direction from their countries? How is all of this expressed when you’re dealing with each other, as far as how far people can go and can’t go?
Senior US Trade Official: I think a common complaint of other countries would be that they’re at their limit in terms of what is sellable at home. For our part, we’d say when another country would ask us for a deeper cut in trade distorting support, we’d say, are you kidding? We’ve put a great offer down here, a very strong offer on the table, and we don’t see enough coming back to justify a deeper offer.
So there is just not a political viability for that and moreover we don’t think it’s fair, so we can’t sign off on something like that.
Similarly, if we were asking the Europeans to cut their tariffs deeper, what they will cite is the protectionist sentiment in the member states, and that they couldn’t carry a deal at home that calls for more market opening.
So our job is to try and figure out when they’re bluffing and when they’re serious. I think one of the things that we’ll see here is, as the deadlines really start to crank down, if we do a good job of keeping the pressure on and framing the issues, and showing that we’re not the problem here, that we’re flexible, we can negotiate, then hopefully that will help drive people to their bottom lines and we’ll see if the deal winds up and makes sense or not.
Question: It’s Ian again from Inside US Trade. I just want to go back to what you said about sensitive products. You mentioned the ideas the US floated were about ensuring a decent quota and a decent premium. I’m just not sure that I understand what a decent premium means in that context.
Senior US Trade Official: That’s a good question. I’m sorry; I was probably speaking in shorthand.
We put out a proposal a month or two ago that had this basic idea. We said look, if a country wants to declare a product as sensitive, that is they want to maintain a high tariff, they’ve got to do two things here.
One, they’ve got to provide a decent core size to that quota. They need to compensate everyone for the fact that they are not going along with the general idea of lowering tariffs.
Second, they need to provide some compensation that is calibrated to the deviation from the tariff that they would have cut.
So it’s that second part, this deviation part, I’ll call it a premium, is to say that if you have a really high tariff or if your tariff would have been required to take a deep cut under our tariff formula, well then you have to provide more quota access. There is a relationship here, to keep high tariffs, to keep tariffs that are avoiding big cuts. The bigger that deviation, then the larger your quota needs to be.
That’s at the core of our idea. What we were discussing with some members today were just some ways to adjust that to deal with some of their ideas, some of their suggestions about how to really come up with a more workable formula.
Question: Can you say those discussions were primarily with developed or developing countries?
Senior US Trade Official: It was with a mix, I guess. They were private conversations, Ian.
Question: Can’t blame a guy for asking.
Senior US Trade Official: No, it’s fine.
Question: This is Gary Yerkey of BNA again. Could you give us your general sense of where you think progress was made this week, a few areas where we could say, okay these guys have been there for a week and here is some headway that they’ve made? Is it so technical that you can’t really?
Senior US Trade Official: That’s the challenge. I think progress, you could see it in a couple of ways. One was, in the process here that our Chairman put out a raft of papers here that included some basic core concepts in written form. So you can see him starting to move closer to the outlines of what would be a negotiated text. Those went forward. None of them were accepted completely. We had issues with some of his characterizations. But I think generally people bought into both his process and his basic structure and conclusions.
We have really now a vehicle to try and build up a text and we have a process to do that. It’s on some important issues. He’s got food aid in there. He’s got state trading in there, things that are really going to matter. He hasn’t solved all the issues. But those things are in place and starting to be built. So that’s one thing.
The second thing is that we are seeing some more serious exchange with some of the key players on some key issues, things like the sensitive products, things like a special safeguard mechanism. We’re far from reaching an agreement on that, because it really gets to the size of market access.
We’ve seen folks go from saying they’re not going to do anything to starting to at least engage in some of these discussions. It’s useful. I don’t want to make it sound like we’ve made great progress, because we haven’t. It’s all been really incremental.
I hope what we see here are people getting serious as they recognize time is really slipping away and that this is an opportunity that could be slipping away.
Question: This is Jerry again. What about food aid? As I’m sure you’re aware, the US humanitarian groups are quite concerned about some of the things that have been proposed. How do you see this? How much agreement has been reached on this emergency safe box? And also what about this issue of who is going to be able to declare an emergency and make an appeal?
Senior US Trade Official: This is a big topic here, one we’ve been working on. We’ve got some folks from AID and USDA here helping us out on that. In fact, we even have some private sector folks here making the rounds.
I think if we step back, we have been making progress on food aid at Hong Kong and since Hong Kong. We are talking now about a safe box, which would be basically food aid that is allowed without restrictions. If you do it this way, then you go ahead and do it. So it’s talking about the contours of what would qualify for that. Other food aid would also be allowed, but it would be subject to some restrictions.
There are a couple of key questions though there in terms of this emergency food aid that would particularly be unrestricted. It gets to this question of who identifies an emergency and who has the authority to trigger this emergency. So there are differences of views on that.
We’re worried that it becomes too narrow a group of authorized people, that it has to be just a UN consolidated appeal, for example, that may not be quick enough in certain circumstances.
We’re also worried about some ideas that others have of trying to somehow channel all this food aid through the UN. We see a big role for the private voluntary organizations. We’ve been pushing back hard on that.
I think we’re making some progress in terms of sensitizing people to the rules of these PDOs, that they should be allowed to be engaged in this, that we can have an agreement where they’re cut out of providing food aid. That would just be in our view unacceptable.
We’re having a good conversation about what exactly should be the safe box activities of these organizations, where in emergencies, or is it going to be hands off, no real restrictions on what they do? Then, as we go forward we’ll have further discussions about well, they can be involved in other food aid too. Don’t forget that. But if they do those other activities, well then what should the appropriate disciplines be?
I think it’s generally going pretty well. We’ve had an African paper that has really helped turn the tide. The Chairman has done a decent job, not perfect, in terms of characterizing the issues. We really have the Europeans on a back foot here in terms of their obsession with trying to convert food into cash.
We’re not there by any means, but I think things are certainly trending in our direction.
Question: This is Jerry again. If nobody else is going to speak up, I’ll have to ask, what about anything on state trading enterprises? And has the scandal surrounding the Australian Wheat Board affected the negotiations at all?
I’ll just tell you, the Canadian Ag Minister told me this morning that the Canadians still say that anything dealing with the Canadian Wheat Board should be resolved in Canada, not at the WTO. So apparently the new government is going to continue to defend it.
Senior US Trade Official: We’re hearing the same thing here. Canada, Australia, as well as some other countries, even some developing countries that have state trading organizations are pushing back on this monopoly elimination proposal that we’ve got out there.
A number of them were distressed that the Chairman in his paper really put the issue quite starkly, saying there is a question of some who want to eliminate these and there are some who don’t and we’ve got to decide this. We agree. It should be a clear cut question.
We’ve got a number of supporters, the European Union included. We think it’s only right. Now, the Canadians and Australians are trying to say that since no one has ever identified a subsidy through these organizations, just because of the structure they have, that they’ve already met their obligations.
They’re definitely digging in here, but we’re not giving up on them. The Australian Wheat Board scandal hasn’t been specifically cited here because it really wasn’t a government action that was at play there. They were spending the farmer’s money.
But it is certainly helping us in terms of putting a lot of doubts on the credibility of these organizations in a more informal way. But the illegal activities really haven’t risen to a WTO issue.
Marci Hilt: This will be the final question.
Question: If I could follow up on some of these questions about food aid and STEs, is it your opinion that there can be final agreements on these issues even before you reach agreements on sensitive products and the real core issues on agriculture? Or in the end is a final deal on food aid going to have to wait for market access in agriculture?
Senior US Trade Official: I think in the end, they’re all going to have to happen real close together. It doesn’t mean in the interim we can’t do two things. One is frame issue so it’s easier to make the decisions and then how you frame it, of course is critical. That becomes the direction you head.
Also, we are going to have to clear away some of the detail so you can sort of clear the brush away, so you can really see the tree you’re going after. So we are going to have to make some moves around the core issues.
But ultimately it is going to come together. It’s going to be this basic question of the United States has proposed big reforms. We have proposed substantial reductions in trade distorting support, substantial market opening, and who is going to stand up and really step up to the plate here and offer to make reforms as well and join into what we think is required to have a more market oriented agricultural system.
That, I think, is going to have to happen all real close together, because everyone is going to have to see the balance together and see that they are making their move when everyone else is and that people need to feel that they’re moving at the last second when they’ve held out to the end.
Marci Hilt: Is there anything else you’d like to say in closing?
Senior US Trade Official: No, that’s it. I think we’re just plugging away here and I hope that was helpful.
If there is anything that you all have, feel free to get it to me through Marci.
Question: Thanks a lot.