Minister Cuttaree:  Ambassador Zoellick, members of the press.  Thank you for being with us this afternoon. I’m not going to speak a lot, because my main purpose is for the U.S.T.R. Zoellick, how he perceives the work done here, and how does he perceive the process up to the end of July proceeding.  So, first of all, let me thank him for coming all the way from, he’s traveled half the world, for to come here for one day, and that’s very kind of him, and it also shows the interest that he has in the work we’re trying to do at the level of the G-90, and how at the same time that he sees us as an important partner in order getting the talks moving at the level of the WTO.  So thank you very much, Ambassador Zoellick.

USTR Zoellick:Mauritius and Prime Minister Berenger and Mr. Cuttaree for organizing this meeting which comes at a very important time.  As I mentioned yesterday to the Minister and all our colleagues, I remember being in Mauritius in January of 2003 for the AGOA Forum which Mauritius did a wonderful job of hosting.  And at that time, one of the issues we talked about was the importance of not only extending AGOA but some of its particular provisions and so I was delighted to report to my colleagues today that those provisions had been amended, AGOA has been extended and that President Bush was at least scheduled to sign it into law today but with the time difference, should be in couple of hours.

This meeting is an excellent complement to the session that I had in Paris with my Brazilian, European, Indian and Australian colleagues because the G-90 represents a very important group of diverse countries from a variety of regions of the world.

The topics that we were able to discuss were agriculture.  We spent a lot of time on agriculture, on cotton, spent a good amount of time on cotton, but also discussed goods, some of the services issues, trade facilitation and its relation to the other Singapore issues and then the overall development agenda including some of the specific, special and differential treatment points.  I had an opportunity to meet with the ACP countries yesterday and then today I had a brief session with the SACU countries, the countries of the Southern Africa Customs Union, and I just finished a session with the four West African ambassadors and that have focused on cotton, along with representatives of the African Union.  Their ministers, unfortunately, were not able to attend but I am encouraged to know that they will be visiting the United States soon on a trip that has been organized by the U.S. Department of Agriculture – my colleague Secretary of Agriculture Veneman, but also importantly with our private sector, with the National Cotton Council to try to see how we can work together.

I appreciate the efforts of Minister Cuttaree, I think, first among them for the efforts to try to work toward the common goals. As I said recently, I think when we back away from all the specific issues, there is a truly historic opportunity to reform the world’s agricultural trade, to eliminate export subsides in agriculture, to have very deep cuts in trade distorting domestic support but also to open markets for agriculture as well as the other items, goods and services.  We had been exploring elements of flexibility, which is important.  Each of our countries has positions and we have to try to see how we can work together.  I thought the tone of sessions I attended there was a good tone and a constructive tone. People were focused on their priorities but also recognizing we all need to work together. A number of the questions we received from some of the G-90 members related to the discussions that we had in Paris.  They wanted to have a sense of the tradeoffs among other countries which I think is a good recognition that this is something that has to come together from all parties.  I have a sense that certainly the vast majority of countries, perhaps all, feel that the meeting in Cancun was a missed opportunity and now people are trying to see if we can, how to seize an opportunity.  So as I mentioned in Paris, I see points of convergence but I also see many items we still have to work through.  This will be a challenging task. We will next look to the Chairman of the General Council, Ambassador Oshima of Japan, to produce a draft declaration which I think he is scheduled to do - is this, what day is this?  Friday, July 16 – you see, I’ve been traveling so much I know where I am, but I don’t know the day - and that will include the text that Chairman Groser is developing in the agriculture area as well.  And then this will give an opportunity based on meetings like this one for ministers to review that text prior to the meeting of the General Council in Geneva which begins the 27^th of July, if I recall correctly.

I just want again to thank my good friend Mr. Jayen for his leadership as always in this process, whether it was AGOA, or the DOHA agenda.  He certainly played an exceptional role and I am always torn because Mauritius is such a pretty country to visit but it does take me a long time to get here.  So anyway, happy to take your questions.

Reporter: AFP,  Mr. Lamy made a proposal about the round free, for free for LDCs.  Do you support that proposal?

USTR Zoellick:  What I told the group is that I think the core idea of that proposal which is that the least developed countries, and many of the poorer countries, should not be asked to take on additional obligations, is a good idea because it reassures the least developed countries and the poorest that they will not be overburdened. At the same time, I have suggested that we need to be sure that we don’t create second-class citizens in the WTO.  And what I mean by that is I believe there are important opportunities for a number of those countries to gain from trade liberalization.  For example, I mentioned yesterday in the area of services, over half the developing world’s economy are service industries. And it’s very important to be able to stay competitive to look for opportunities to liberalize services.  And indeed, these are elements that are the key infrastructure of development.  Those of you in the newspaper business know you need to have a good telecommunication system to be able to operate.  You need to have a good financial services system, energy costs being down, through competition. We talked about trade facilitation, that is as I mentioned to Minister Cuttaree and his colleagues, one of the big issues that we will face is the end of the textile quotas at the end of 2004.  Well a number of African countries can probably compete on a cost basis with China and India but some of the costs of bringing the goods in and out make them less competitive so these are areas in which more efficient customs systems are important.

So my point is that and this is what I said to my colleagues is on the basic issue of trying to reassure the least developed and the poorest countries that they will not be subject to additional burdens.  I think that is a good idea. 

But I also want to adjust it with encouragement to find ways in which these countries can integrate more deeply in the global trade system and not be separate from them.

As you know, the Commissioner’s proposal raised some concerns among other mid-level developing countries and as I said many times over the past two days, with three weeks to go, we need to stress how we find our points of commonality, not the points of difference.  We have had many months of differences.  We need to find the points of commonality.

But I think it was a well-intentioned proposal and that’s why I tried to support the primary message without necessarily taking every detail.    Let me give you one other example.  The group of countries that Minister Cuttaree has invited include the African Union, the ACP and the LDCs.  Well, some of those countries, depending on which you include, South Africa or Egypt are really at a little bit higher stages of development and there are other countries that aren’t here like Honduras and Nicaragua that are actually poorer and another question is to whom it will apply.  My point of the least developed and poorer countries, island states that are subject to vagaries.  Those are the ones that have to pay special attention and not putting an extra burden.

Reporter:  Nita with Reuters. I have two questions.  The first one is that the G-90 Ministers have been saying to me that, yes it’s been very positive, it’s been very constructive, but they’re concerned that nothing is there in black and white, that nothing is really there, that the political commitment isn’t really there, that it’s been just pretty words.  Why have you not really come with any kind of written proposal to them?  I know that’s not the issue at this stage, but they’re saying that they would have preferred, for example the West African cotton producers have been saying that they’re willing to put cotton into the overall agriculture package but they need a political commitment from you.

USTR Zoellick: Let’s come back to cotton.  Because I think if you talk to most of the ministers you will recognize that over the course of the past 2 ½ -3 years, there have been many papers and proposals being talked about what we were willing to do, eliminate export subsidies, cut other subsidies, we at one point proposed the removal of all tariffs on goods.  We have also adjusted because some countries like Mauritius have also said that while they are willing to open markets, we have to ease the adjustment because some of have been dependent on preferences.  This is the  same issue with textiles and apparel with end of the quotas, this is one reason why the extension of AGOA was important.  So at least I didn’t encounter the request for more specificity, because we are really at point now where this will not be solved by country-by-country proposals.  It will be solved by countries coming together. And we reported on the meeting we had in Paris where we had some convergences and some differences. And we discussed, in talking to small groups the convergences, differences here.  So I think the next paper will not be long awaited.  It’s the one Chairman Oshima comes out with and then we will have to work off that document.

Now in the case of cotton, I think from having just met with Ambassadors, their closing point was the one that I think and hope was most important.  And the Ambassador from Benin said they want to find a solution.  And we would like to find a solution as well.  Now, what I’ve explained is that we understand the critical importance of this not only for those countries but other countries.  And indeed, the poignancy of it for many of the poorer developing countries that are cotton producers.  What we have also explained, is how at least I believe we have the best opportunity to make progress.  Let me just give you one that people haven’t talked about much.

I think the United States and these other cotton producers can join hands on trying to cut cotton tariffs, particularly with the end of textile quotas.  You are going to see a smaller number of countries become major producers of cotton textiles.  So some of those countries have very high tariffs on cotton.  And those tariffs impede the U.S. as well as West African, and Pakistani as well as other cottons.  So that’s a point of commonality.  But what I’ve also explained and also think is that that the best way that I can try to help the West African countries on the trade side is through an overall agricultural package because the way that trade negotiations work is that for those who are going to have to make sacrifices, they get benefits elsewhere.  So if U.S. farmers can see the European Union and Japan making major cuts in subsidies, then I can get major cuts in subsidies.  We can see elimination of export subsidies, that can help me cut subsides, including for cotton.  It will also help if I can get open markets because U.S. tariffs in agriculture are relatively low compared to others in the world.  So for me to cut subsidies, I need to get other markets open.

Now there’s also the development side and we talked about the follow-up from the meeting that was held in Cotonou on this in March.  I talked in the larger audience, with the innovation of the Millennium Challenge Account which offers some tremendous opportunities for countries that had good governance practices, sound economic practices, invest in human capital.  And two of the four countries, Benin and Mali, are among the 15 candidates for that.  But we also have other programs as does the World Bank and others to help on the development side. So I think we need to try to get the trade and development sides working together and, at least, the reason I had an additional meeting with the Ambassadors even though the ministers were not able to come, was to try to explain straightforwardly where I thought I could help and where we can help.  I’m in the business of trying to find practical solutions and I would like to try to do that in this area as well as in others but it won’t just be a question of wishes or hopes.  As important as those might be, we have to try to come up with practical solutions.

Reporter: And are they willing to put in the overall package?

USTR Zoellick: I’ve learned in this business to speak for myself, I can’t speak for others.

Reporter: You said that from what you have heard here was the tone was correct, so do you expect this will be sufficient for the talks at the end of July?

USTR Zoellick:  I really don’t know.  I remain cautious because there are many issues, many countries.  We saw how the process could break down in Cancun but I have seen people trying to come together.  I have seen a number of countries in the G-90, where of course you are dealing with a large number.  I’ve seen some leaders like Minister Cuttaree trying to play a leadership role, to advance the interests of the group as well as his own country while trying to pay attention to the needs of others.  So that I hope will bear fruit. We don’t have much time left.  We have many issues to work through and when Minister Oshima comes out with his text, we are going to need a spirit of how we try to solve problems, not how we try to emphasize divergences.  That was I think the sad point of Cancun was that I came to Cancun having just resolved the problem about access to medicines in August which was so important for many African countries and unfortunately, too many countries came to Cancun I think trying to state positions boldly, as opposed to find solutions practically and we will just have to see how that works in July.

Reporter:  You also said that at the end of July, if nothing happens, the [unintelligible]?

USTR Zoellick:  I don’t know, seems pretty clear to me.  I think it would be very, it would be -  two setbacks for the DOHA agenda would mean that the challenge of having 147 economies come together has proven to be beyond our capability.  I frankly.  Well let me go back a step.  The reason that I wrote the letter I did the very first week of January was I felt this was important to try to not have 2004 be a lost year.  And it was my sense talking to friends like Jayen and others that within a few months after Cancun, a number of other countries shared that view but they weren’t sure how to get back to the table.  And that’s where the United States, as the largest economy in the world, can play a leadership role.  But we can’t do it alone and so that’s one reason I traveled in February around the world to try to consult, with Jayen in a meeting we had in Mombasa, that was hosted by Minister Kituyi, and one of the ideas that came out of that meeting was that Africa could at most accept trade facilitation on the Singapore issues so I talked with my colleague, Commissioner Lamy, I talked to the Japanese, I talked to the Koreans.  And we are able to get that done. Now there are still issues about how we move forward on trade facilitation but at least that is a good accomplishment for these countries.  Commissioner Lamy has committed to eliminate export subsidies.  Now he’s getting some challenges from some of is member states which are trying to work on those issues but he’s trying.

And so there’s a role the major economies can play in helping to prod and push the process, helping to listen and try to solve problems but as we saw in Cancun, we are one.  And in this WTO system which moves through unanimity.  We can’t do it by ourselves.  That’s why I am making every effort but I am also being honest with people.  There’s no rabbit that gets pulled out of the hat - we either do this together or we fail together.

Reporter: [unintelligible]…U.S. on textiles?

USTR Zoellick: Well, I’m not sure which aspect, but if you’re talking about the textile quotas?  Quotas.  We committed in the Uruguay Round to end all the quotas by the end of this year and we keep our commitments.  As I mentioned to some of the countries here, I was always surprised in past years where India wanted to move up the end of quotas and a number of developing countries cheered them on.  This was part of the so-called implementation agenda and I used to ask them “well why do you want to move this up?  It’s going to be harder on you.”  Well now a number of countries agree with me.  So we will keep our commitments.  It’s fair for India and China and other competitive countries to have the benefits of what they negotiated.  But I also said it’s very important to try to help other countries with the adjustment process and that’s one reason why I spent a lot of effort trying to pass the AGOA amendments the President will sign because that will to give Sub-Saharan Africa an edge because they will have zero tariffs where the other countries will still face tariffs.  That’s one reason I negotiated a free trade agreement with Central America to help those countries have an edge. I think it should be an ongoing topic of discussion of how we work together and I hope that China, India and the other countries that will be very competitive will also recognize that and take that into account in their own behavior.  But that of course is a question for them.

Reporter:  [unintelligible] (Ravi Kanh)…you said Members should avoid further divisions, are you now saying…[unintelligible].  The second question…[unintelligible]…West African…[unintelligible]…did you get an assurance that…[unintelligible]…drop off this issue as a stand alone…[unintelligible]?

USTR Zoellick: Two I think is enough, don’t you.  Two’s enough.  You’re a good negotiator, but…[laughter].   On the second one, as I answered this woman’s question, I think those countries should state their own positions, it’s not the role for me to state their positions.

On the first question, I have been in a lot of meetings with Commissioner Lamy.  I don’t recall what you talked about in terms of political declarations.

[Crosstalk]

Well he can raise it with me if he wants.  What I said was this.  I believe that the thrust of his push, which is to reassure most of these countries – you see, the question is some have even debated which countries are included.  Is South Africa part of it? Is Egypt a part of it? You know, remember, the ACP is a special preference program done by Europe, for former European colonies.  There are poor countries in Latin America that were never European colonies but are deserved.  One has to be a little careful here because you are talking about real economies and they need to know whether they are in or out.  What I have said is for, certainly the LDCs, nobody is asking any additional reduction commitments, and frankly, I would be willing to expand that for many poorer countries that don’t quite meet the LDC level, but for some of the bigger mid-level developing countries, as I mentioned, we expect to have them contribute and I think most of them expect to contribute and again, as for a political message, my political message is this:  For the countries of the G-90, we want to ease the burden of trade liberalization on your economies and therefore in this round, for the LDCs and the poorer island states, we will not be seeking reduction commitments in goods and in tariffs, and in agriculture.  But at the same time, we want to be fully engaged with you because we don’t want to leave you behind and there may be areas for example in sectoral negotiations and goods where some countries may want to have a cutting of tariffs and they may want to be part of the sectoral or in services or obviously in trade facilitation.  So my message is as I tried to recall saying last night is that we need to strike a balance.  We want to ease any burdens but we also want to try to help these countries be integrated in the economy and we do not want to repeat one of the failures of history which is to leave countries of Africa, island states, poor countries in Asia behind the system. That would be in my view a mistake.

Can we take one more?  If there is one more?  No. No this woman is next in line, you had one.  Anybody else who didn’t have one?  Ok, you get the last one.

Reporter: Just on the issue of export subsidies.  In talking to the G-90 delegates, you know, they’ve been saying a lot about the U.S. and the EU seem to be playing this game of hide and seek.  You know, one is saying they are committed to reducing export subsidies, providing the other one does the same.  Who’s going to make this first move, and are you really playing hide and seek?

USTR Zoellick:  Well, these are serious issues for countries and they are not easy to undertake.  We and almost every other country that I know around the world has felt that the elimination of export subsidies in agriculture has been a major goal countries have been trying to achieve for decades because countries and economists agree that these are the most trade distorting interventions in agriculture trade.  And so we made a move early on by saying we wanted to eliminate them.  The European Union has made incremental moves in terms of moving toward that elimination.  Commissioner Lamy said in his letter that they would agree to eliminate them based on conditions.  We affirmed that we would agree to eliminate any subsidy element of credits or food aid and we wanted to eliminate monopolies of state trading enterprises, and to deal with differential export taxes, which is another issue.  So now we are trying to figure out how to make that parallelism work and we have had discussions about ways in which we could try to further discipline export credits to be certain that they would only reflect market credits.

But let me give you a little further explanation of why this is important.  When I discussed this with a number of G-90 countries today, I saw heads nodding in agreement.    For many of the poor countries in Africa, they do not have established banking and financial systems.  So they may need credit to be able to buy the goods, for some period of time, the agricultural goods, and then after they sell the goods they will be able to pay back the credit.  For some countries, their financial markets haven’t considered them to be big enough to get good credit risk assessments.  They don’t have banking systems that will evaluate the risk in return.  And so for those countries, there may be a need for government credits but we agree they should not be subsidies in those so there are ways the WTO and the OECD have discussed how to make sure the market rate is not trade distorting.  And I drew one other comparison.  The European Union is focused very much now on export credits in agriculture.  The European Union is not hesitating to use all sorts of government credits and loans in industrial goods, so you know, there are many issues in which the U.S. complains about European loans and credits to businesses.  Well, for years, there have been disciplines on that but it’s interesting, they only start with credits of two years and longer. Now there are reasons for this.  Industrial goods have longer lives than agriculture goods.  So, but I think, I hope that the European member states that are guiding this will also recognize that if they push very hard to put strong disciplines on export credits that will give us a wonderful opportunity to come back and say well let’s put very strong limitations on your industrial credits too.

[reads note from Min. Cuttaree] Oh.  This shows excellent group leadership, but also individual leadership.

One of the changes that was in the AGOA legislations was a critical part was the extension of the third party fabric to allow African countries to extend below certain income levels to use fabric from outside of Africa. Now this was extended for 3 years but the reason that it hasn’t been extended permanently is to help the African countries compete, they will, with China, India and others, they will actually need to further develop their fabric industry as well as their apparel industry.  And this is starting to happen in places like Lesotho and Kenya and others.  Well, Mauritius has an interest in being part of the third party fabric and I’ve talked with the Minister, and I’ve talked to our Congress about trying to include them, about trying to include them and this is one of those sensitive issues that is caught up in the idea that Mauritius has a reasonable point about wanting to make sure that the advantages of preferences are phased out carefully but at the same time, we need to phase them out.  So this is an issue that I talked to Minister Cuttaree about trying to work with our Congress over time and I’ve talked to members of Congress about as well.  And so we hope to continue to do that.

But I think the good news is that since Mauritius is integrated with much of the rest of Africa that the broader extension I hope will send good news for investors who come to Mauritius as well and I remembered actually that was one of the issues that we dealt with in the business forum that we had when Mauritius hosted that as well.

Thank you.