Ambassador Portman: Thank you all for
coming. As you know, yesterday the
U.S. presented a proposal on domestic support
and tariff reductions. I want to
report that that proposal generated a lot of good, and I think very
constructive, discussion at our meetings in Zurich.
My view as you know is that we have not made adequate progress in Doha
Round discussions over the past several months, so I was very pleased yesterday
to see new energy in the talks, a new optimism about reaching our goals in Hong
Kong, so that we could have a successful Doha Round completion in 2006. I was very pleased with the response
from my colleagues, including Director General Pascal Lamy. This has been very helpful in amplifying
the need for additional movement, not just in agricultural but in the area of
services, development, rules, NAMA, trade facilitation, so I think you will find
from talking to my colleagues that yesterday’s meetings were constructive,
specific in terms of the issues and it’s the first time, certainly in my four
and a half months on this job I saw real movement toward having a successful
Hong
Kong meeting and a
successful round.
We have a very short period of time before
Hong
Kong -- about nine
weeks. I was reminded by one
of your stories this morning I read, that’s very little time, considering the
complexity of these issues and the need for us to put together the modalities or
the framework for Hong Kong.
That’s why I thought it was so important for the
United
States to make a bold proposal yesterday, and
again I believe it did generate a kind of momentum we were looking for. It was an effort to step forward and try
to break the deadlock in agriculture, because agriculture is so important to
unlocking the potential of Doha.
The feedback from the
United
States has been mixed. Mostly good, the business community is
very supportive of the Doha round going forward, and their response was
one of relief that this is an opportunity to break the deadlock and move the
talks forward. I do think it is now
easier for us to talk in more specific terms about services and non-agricultural
market access, rules, development, trade facilitation the other issues. We’ve also heard from our agriculture
community. There, there is general
support for additional market access, for elimination of export subsidies, for
harmonization of domestic support, and therefore there is a feeling among
American farmers and ranchers and their representatives, that so long as the
proposal we offered yesterday brings those other elements, particularly market
access, that they’re willing to give us a little leeway. Some comments you will see, maybe some
this morning that you have seen are not as positive because they’re worried –
they’re worried that by making cuts to farm programs we’re not going to get the
kind of market access from the Europeans and from other developed country
markets that we seek.
A key focus in our efforts all along has
been on development, and one reason that we are focused on market access is that
we have an interest as exporters in our agriculture products having a fair shake
in other markets, but also because we believe strongly that market access is the
core of Doha, and that market access is the key to having true development
benefits result from this round. The World Bank economists calculate that 92% of
the benefits to developing countries from rich countries trade liberalization
will be due to tariff reduction.
Furthermore, two thirds of the gains in
global income from the world-wide elimination of barriers to goods will come to
middle and low income countries.
These benefits are pretty powerful.
And they are benefits that can lead, as you know, to hundreds of millions
of the world’s poor being lifted out of poverty -- should there be an
elimination of those barriers. This
is why I believe yesterday’s proposal was important, because it enabled us to
have an opportunity to see real market access.
We’ve also heard again from some lawmakers
in Congress, who have told us that their support of our proposal is conditioned
on reciprocity from our trading partners.
As I said earlier we have had a generally good response to our proposal,
both here and at home, but again without the market access being offered by
other countries being more specific, without other countries being more
forthcoming, it will be difficult to put the Doha compromise together that we
need to have a successful Hong Kong round.
So the pressure is on us, all of us. Later today, the Secretary of
Agriculture, Secretary Johanns was with me today and I will be meeting with some
of our colleagues in the FIPS group.
Tomorrow we have additional meetings with an expanded group of countries
beyond FIPS, focused on agriculture. I’m hopeful that what we began yesterday
with a new proposal and with new momentum will result in the next forty-eight
hours in additional and more specific offers on the market access side, so that
we have a hope of pulling together an agreement that we can take into the
Hong
Kong at the end of
the year. Again I appreciate your
being here this afternoon and I would now like Secretary Johanns to say a few
words and then we’ll open up to your questions.
SECRETARY JOHANNS: Let me also express my appreciation for
the opportunity to offer a few observations to you and then as the Ambassador
indicated we’d both be happy to take any questions that you have.
If I might just start up and offer a comment
about the U.S. proposal and how it has been received. As you know we concluded a meeting in
Zurich yesterday where we met with other
countries. We’ll continue that
today with the FIPS group and then tomorrow with additional countries. The bold, really substantial move made
by the United
States was well received by our negotiating
partners. I do believe that they
saw that as a step by the United
States to offer global leadership to move these
talks forward, and I believe it was seen as enabling the overall talks to make
progress. As each of you know, the
export competition pillar has been fairly well defined for sometime now. The
U.S. proposal now enables the domestic support
pillar to be developed very quickly, and it clearly defines that we’re seeking a
significant ambition here. The
U.S. proposal also does another thing: it
clearly shines the light under the remaining pillar, which is market access
where now work really needs to be concentrated. I believe very strongly that this can be
a successful round. I’ve always
believed that. But now we need to
have other countries show real leadership when it comes to market access. Director General Lamy noted that we need
to work very hard to negotiate this final piece, and we’re anxious to do
that. Time is short, you pointed
that out over and over in your articles, we recognize that.
Now if I might also address another piece of
this, and that’s the support for the proposal by the
U.S. agriculture community, and I see some of
you have new releases from folks who are not as enamored by the proposal that
was made, I see Kent Conrad’s statements there. This proposal was – we consulted
thoroughly with folks that were going to be impacted by this. We have received a supportive statement,
as you know, from a number of agriculture groups. American Farm Bureau has indicated
through a statement that they’re supportive, but I want to be very, very clear
that the proposal is a package and that support is conditional on it being
viewed that way. That is, our
agriculture groups will accept the reduced support that comes with this, but
there has to be real substantial tangible market-access in return. That’s the key issue here. We said all along that we were willing
to be bold and now that has been delivered with great specificity, but now we
have to hear what folks are willing to do on the market access, and we have to
see real results for this to be successful, so we’re anxious to continue to move
forward and we’re anxious to bring this round to a successful conclusion. Thank you.
QUESTION: Yesterday Mr. Mandelson said that he was
only prepared to cut domestic supports by 70 percent, whereas you asked for 80
percent. So I was wondering if you
were going to settle this business at 75 percent, or is it going to be more
complicated?
PORTMAN: You are a good negotiator. The question was on the domestic support
side, how far the EU was willing to go and whether there could be a compromise
on domestic support. Let me put it this in a little context if I can. The proposal that we have made on
domestic support is in excess of what the EU had asked for. You’re correct. The EU said the
U.S. needs to
cut the most trade-distorting support which is the AMS support, so called amber
box, by 55 percent. That was out
the last couple of weeks. We went
to 60 percent. And we did that
because, frankly, we wanted to be even more ambitious than was expected. Many people thought after the framework
agreement that the AMS cut would be about 50 percent. The EU said it needs to be more, 55, so
we said we will up the ante and take it to 60. This means real cuts for us by the way,
because in the amber box we have right now 19 billion dollars allowed, we use
about 14, so a sixty percent reduction takes us down to about 7.6 from 14 which
is about half, a little less than half.
These are real cuts, and I can tell you, having spoken to some farmers
this morning who are here in Geneva
representing the American Farm Bureau.
They know they are real cuts.
So that’s what we think is appropriate.
Then the question is, what
should the EU do in return? Well
there was always an agreement in the WTO that there be harmonization between the
major subsidizers, that’s us, the EU,
Japan. Right now the
United States
has support for its farmers that is at one level but the European support is a
lot higher. Under the WTO they are
allowed to have four and a half times more support than we are. Our farmers remind us of that
often. They [EU] actually use three
times more than we do. But the way
the WTO works, as you know, is you take it from the bound amount, the allowed
amount, so the question is how much should they take off from their bound
amount, four and a half times what we have? I’m a pretty straightforward
negotiator, I guess, maybe not very good at it in that regard. But my view is right now they have four
and a half times what we have, four and a half to one, they use three to one, in
order for me to sell the agreement back home, in order for it to be fair, in
order to meet the harmonization principle of the WTO, which was a commitment we
made again in the framework agreement that we would harmonize these levels of
support so they would be more even between the U.S., Japan and the EU. My thought is how about two to one? They’d still have twice the support that
we have.
But it’s closer to one to one, then
three to one, and that’s how we come up with the number of 83 percent. Now under their cap reforms they’ve
already begun, they can probably get pretty close to that without doing
anything. In order for us to get to
go to a sixty percent cut we have to do a lot, because you cannot continue the
farm programs we have in place under this amber box when you have almost a fifty
percent cut in real terms. I’m not talking about the bound rate. I’m talking
about in real terms. They may have a very minor cut in real terms, negligible,
maybe. I don’t know the exact numbers. We have
our own numbers we are working with.
They have different numbers.
So I just want to put that in
context. What we’re asking for from
the EU, on the domestic support side, is very small compared to what we’re
willing to do and still they’ll have twice the support we will. I think that’s fair. The other thing we’re asking for, which
we’re going to insist on, in order for us to sell this proposal back home, is
market access. By the way all of us
will have to live with these market access numbers, we’ll have to reduce our
tariffs also. We’ll have more
limits on our sensitive products also.
We have sensitive products.
You all know what they are, but it’d be sugar, dairy or peanuts or
cotton. We’re not immune from these
cuts ourselves. So this is what we
view as an absolutely realistic and fair proposal: one, domestic support, we are
going to do more than others, but others need to come along under the principle
of harmonization. And second, on tariff reductions, we need to see a much more
aggressive result on market access.
Again the World Bank economists will tell you, other economists will tell
you, the gains to the developing world and the development round will come
primarily from market access. Those
gains will dwarf anything we do in term of domestic support. There we’re talking about not ten of
billions, but hundred of billions of dollars, of potential benefit to the
developing world, should we open up the markets particularly in the developed
economies.
So, I don’t know what the final
number is but my strong view is that this proposal is a fair proposal, it is a
balanced proposal. It is not meant
to be, as I said yesterday, an opening gambit, and it is not meant to be a
negotiating position. It’s meant to
be what we think is a balanced approach, given the urgency of moving these
Doha talks forward. We really don’t have time to play
games. We have to get to the point
where we see a real specific proposal on subsidies and if people have questions
about that we’re happy to provide all the information, we’re doing that today in
a very concerted way. Other member
countries, not just the EU are asking this question, we’re providing them
data. It’s been a very helpful
exchange. On market access we need
to see the same thing now. We need
to see a specific proposal that has real cuts to provide tangible new access to
agricultural products.
QUESTION: Can you clarify to us how much in your
overall, because one of your data that you put, is that in the overall budget
cuts would be 53 percent. Out of
how much today and how much is it that you actually give? Finally, is this your final proposal
before Hong Kong or you’re still ready to make new
commitments in case the EU comes up with some real marker access cuts?
PORTMAN: I’d like Secretary of
Agriculture to address that first point.
But let me say it’s interesting, you said are we willing to make new
commitments and this first gentleman said the EU wants us to do less. So, I
mean, I don’t think we should do less.
I suppose you’re asking whether we should do more. The
United States
thinks this a very ambitious and bold proposal if others can’t come along then
the Doha Round is in danger. By the
same token, the United
States is willing to look at any proposal
consider any alternatives. We are
willing to be entirely open-minded to get the Doha Round moving. With regard to the 53 percent figure,
I’ve heard 54 percent too, again when you look at the agriculture spending that
would be considered to be trade distorting, it would be the most trade
distorting in the amber we talked about, the next would be in the blue, and
there are de minimis for products and general non-products specific. When you add all that up, including all
of the bound rates, not just what’s used but the actual ability to, the allowed
amount of support, I think the cut is more like 54 percent.
We don’t use all of that. For us really that number is not as
relevant as it would be on the 60 percent in AMS or the reduction in the blue
box. The blue box was, as you
recall, in the framework agreement agreed to be capped for the first time, and
the cap on the blue box was meant to be five percent of your production. We have looked at that and decided that
a bolder proposal would be to go even beyond the framework and say let’s go,
instead of five percent, half of that, down, let say two and a half percent of
your production. That does hurt us,
as you know, because we have a counter cyclical program that was written under
the framework agreement to be in the blue box, specifically in there, and it
says that, because that program is $7.6 billion authorized, we would have to
live with it at roughly four point eight billion. So, again out of five billion
that would be about a 34 percent reduction in that program alone. So, these are the kinds of real cuts
we’re talking about, not out of bound rates, not out of water, and again I would
challenge the other countries, either
Japan or the EU,
what is their actual real cut gong to be, because I would suggest that if it’s
going to be very minor from their bound rates. What we’re talking about them doing is
not going to be difficult for them as compared to us. And then you do this
overall which includes the de minimis and that’s where you get the 54
percent.
JOHANNS: Yes, that observation is
absolutely correct. If you just
look at the whole picture it’s 54 percent.
But if I might just walk through the specifics here in the, what we call
the amber box which is regarded as those programs that the WTO feels are most
distorting when it comes to trade.
The numbers we reported to the WTO show that we have 19.1 billion
there. The proposal made by the
United States
would reduce that to 7.6 billion, that’s 60 percent, and then “de minimis” is a
50 percent cut so that goes from 9.5 billion down to, as the Ambassador
indicated, just under 5 billion.
And then the blue box cut - we even there also went beyond and said 2.5
percent there. I think five percent
was what had been talked about. You
can see and this is a very important point, number one these are very real
cuts. These cuts have a real impact
on the dollars put into agriculture in the United
States through these programs. These really get to dollars and they
reduce those dollars by the amount of money involved. It is very real, that’s why the Ag
groups are saying, Mr. Portman and
Mr. Johanns, you better deliver a market access package that is very, very
ambitious for us to be supportive of what you’re doing here because this
definitely impacts.
And then the other point that I
wanted to make is that the level of ambition shown here by the proposal
indicates our desire to get a successful round. In our commitment to a successful round,
and again I emphasize this is a package, we stepped beyond what anyone would
have anticipated just a few days ago, to demonstrate our commitment and our
level of ambition to get a successful round. Now it is the responsibility of other
countries to deal with the market access issue.
QUESTION: The OECD has just come out with a
report in which it says that all but a very small number of developing
countries, mostly in Sub-Saharan Africa stand to gain more than lose from the
successful completion of the Doha round. I’d like to know if and how your
proposal will benefit the countries in Sub-Saharan Africa who always seem to
lose out.
PORTMAN: I’ve not seen that specific reference to
any countries that would not benefit from Doha.
My belief is that the world economy will benefit from
Doha as will the developing world in particular,
and I say that because as you know the least developed countries would not be
asked to make any contribution, either on the subsidy side or the tariff
reduction side, so they would gain from both. They would gain from the reduction of
subsidies in the developed world because they would then be more able to compete
with our agricultural producers, and second, they will gain from a reduction of
tariffs, which as I said earlier is where economists will tell you the primary
benefit will lie, as they will now have access to markets they do not have
access to now because they’re so many trade protections in place. Specifically in Sub-Saharan Africa, as
you know, the U.S. does have a very aggressive program there,
the AGOA program, which permits duty-free access, but that’s just the
United
States. This would enable them to have better
access to markets all around the world, including markets in developing
countries that are not LDC’s but are emerging economies in the developing
world. So it’s a win-win, I think
it’s clear to say the status quo is not acceptable. I think it is clear to say that it would
be a huge missed opportunity if we were not as WTO members able to pull together
and make some of these tough decisions to unlock the potential of this round,
which is to help all of these countries, including Sub-Saharan Africa. But I will now look at that OECD study
and be in a better position to answer your question more specifically, but I
don’t see how those countries will not also benefit. Mike?
JOHANNS: I would answer your question very
quickly, I was at the AGOA forum this year and had an opportunity to speak, but
also had an opportunity to conduct many, many bilateral meetings with my
colleagues and one minister came in and really brought summary to me in terms of
what they were seeking and he said: “We appreciate the aid that has been
provided by the world community, but I will tell you, Mr. Secretary, I’m not
here seeking more aid, I’m seeking the opportunity to trade,” and they feel
very, very strongly that given that opportunity, that there’s a future for their
people.
QUESTION: My question is your current assessment
on the ambition in Hong Kong.
Many people believe that Hong Kong really is the final chance for the
survival of the Doha round because it has to finish by the end of 2006 before
the fast track authority expires, so do you consider that the Doha round will
survive in Hong Kong and if there is a failure in Hong Kong, would you consider
it will send the Doha round into a coma at least way beyond 2007? Thanks.
PORTMAN: Well first of all,
all of us around this room are looking forward to going to Hong
Kong in December right?
So we have to make sure that happens, and we appreciate the hospitality
by the way, Hong Kong has been terrific, John Tsang who
is the trade minister sat next to me at lunch yesterday and we had the
opportunity to talk about the meeting and some of the preparations. He’s been by
the way very supportive of this proposal and very supportive obviously of being
sure the meeting itself is successful substantively.
I think our expectations for
Hong Kong need to be on track with our progress, and that
means we shouldn’t expect too much.
Until three days ago I would have said we shouldn’t expect much at
all. Now I would say there’s an
opportunity to unlock the agriculture deadlock and to make progress therefore on
all these other areas I talked about, including getting a formula on
non-agricultural market access, including some more progress on specifics on
development, including getting some sort of an agreement on services that would
include all countries making some progress and reducing barriers to services
including some progress on the rules, adding more disciplines including progress
on trade facilitation which has a tremendous opportunities for the developing
world. So I think now there’s an
opportunity, if we work very hard over the next several weeks and if we are
successful in getting this political decision made this week and next week on
agriculture. I say political
because at this point, you know, the U.S. has put out a very specific proposal
on domestic support, others have come back and said, you know, we’re not sure we
can do on market access and my response to them is, well, the Hong Kong success
lies in your hands, and it’s a political decision that they have to make, that
they have the will, the political will to be able to make tough decisions. I admit they’re tough, on all sides,
because of the long-term benefits of
Doha to the world economy. So I’m guardedly optimistic now that we
can pull this together for Hong Kong and have it be a
successful meeting.
QUESTION: Does something need to happen this week
to keep that optimism going. Are
you trying through these FIPS meetings and through the TNC on Thursday, to reach
some kind of concrete goal, some kind of concrete framework that would guide the
talks from now to Hong Kong, and if the best that comes out of this week is the
U.S. proposal and sort of the reactions to it, does there have to be a
reassessment of what Hong Kong can be?
PORTMAN: The answer is yes, you
know our ambition on the Doha round needs to be matched by our ambition over the
next two weeks, or the Doha ambition can’t be reached, that’s kind of tautology
I guess. We have to be ambitious to
be ambitious, and clearly, we think the FIPS meeting is timely. We think this is the time. Now is the time, now is the place. We cannot delay any longer, we need to
make the tough decisions or else we risk not having the opportunity to open
markets, grow the economy and help the developing world in this round. That’s
where we are. The FIPS meeting was previously scheduled so it’s not as if we
established the FIPS meeting because of the proposal yesterday, but of course
the U.S. was aware of that timing and we thought this was a good opportunity for
us to allow the twenty trade ministers and Ag ministers yesterday to hear the
proposal for the first time, to get their input, and now to work with the FIPS
group and the FIPS plus group, and work with a larger membership, provide more
information through the TNC on Thursday, so this is a critical week. I
understand that some countries need to analyze our proposal. We welcome
that. And we are providing again
information to anybody who asks for, and that’s a good sign, that people are
interested in the substance.
JOHANNS: I might just add something
to that. As the Ambassador
indicated, we are working to make sure we get the information to answer the
questions. But having said that, no one is going to leave here wondering where
the U.S. stands
on domestic support, not any longer.
We got a very specific concrete proposal that has a real impact in the
United States,
and you’re not going to have to speculate or write stories speculating about
what the U.S.
position is going to be on domestic support. That has been absolutely nailed down
with the proposal, and it is very bold and it is very ambitious, and it is very
real. The next story though, that
you’re writing is what is going to be the level of ambition relative to market
access? And you know what? That
question needs to be answered here very, very quickly. Very quickly, just simply because we’re
eight-nine weeks away from Hong Kong, and so we just ask
that the specificity and the ambition represented here is embodied in a very
specific proposal relative to market access that needs to happen.
QUESTION: Ambassador just two questions. First, do
you agree with what Pascal Lamy said yesterday in the meeting, that the E.U. has
to now come up with a market access proposal, given the level of ambition that
you showed? What exactly are you
expecting when Lamy said this? And second, in the green box that you want a
peace clause, this was something the European Union used to always ask for,
peace clause. Are you fearing likely disputes in the green box programs?
PORTMAN: To the first question, yes
I agree with what Pascal Lamy said.
I think he was correct. I
think he, more than anyone else understands all the moving pieces that are
necessary to come together. I think
he, as you just said, he understands that the ambition we’ve shown on domestic
support now needs to be matched by ambition on market access, and you know, I
think he has lot of credibility, having been the E.U. Ag Commissioner and now in
this position and seeing from a broader perspective what is possible and what is
not between now and Hong Kong. He was very pointed yesterday, I won’t talk about
his comments, because it was a confidential meeting, in any specificity. But
I’ll say he was very pointed to all of us, not just in a general way, but very
specific about what we need to do in each of these areas to have enough together
for Hong Kong – not that Hong Kong will not be the end of this. It doesn’t resolve the Doha round, but
we need to have enough in Hong Kong to provide, as I said earlier, the
modalities for the framework for us to then, into 2006, prepare the tariff
schedules, do all the hard work on services so that we can have a good
result. So he was very tough on us,
appropriately. And he put it very clearly in terms of the need now for a market
access proposal that is ambitious and specific. On peace clause, my view on
that, for what it is worth, you haven’t asked me my view specifically, but is
that in order for us to give some certainty to a Doha round result that a peace
clause make sense, the sense would be that if you agree on the subsidy side to
make real cuts in subsidies, if you agree that there should be a amber, blue and
a green box that those ought to be something that we can rely on, at least
during the time period of the round.
I’m a former litigator myself, I guess, a former lawyer at least, but I’m
a recovering lawyer. I don’t think
litigation is the way in which we ought to be establishing trade policy. I think we should try to come up with
clear rules on the international front, on all fronts by the way, not just on
subsidies and then make sure that our exporters and importers and know that they
can rely on those rules. To the
extent possible you want to have a rules-based system, that’s what the WTO is
all about. So I think a peace
clause makes a lot of sense, as long as it is within the rules that we agree
to.
Question: Mr. Ambassador, I was
wondering if you could shed some light on the U.S. priorities for NAMA, since
everything is interlinked in the poker game here, and if there are going to be
sensitive tariff lines in agriculture, some U.S. industries are asking for a
carve out, as you know, and textiles and clothing have got the backing of the
textile caucus in congress, so if you could elaborate the priorities on NAMA for
the U.S. Thank you.
PORTMAN: That’s a good
question. I’m delighted that you
are asking about some of the other areas, not that I don’t want to talk about
agriculture all the time. NAMA has again great opportunities for all of us, the
developed and the developing world.
In the developing world you have the opportunity in some instances to be
on the offense, be an exporter now of manufactured products, you need to look no
further than China for an example of that, but even some of the countries that
are not as industrialized, by opening up their markets more on the NAMA side
will be able to offer a lower-price products, higher quality products to their
citizens, and therefore raise the standard of living in those countries which is
part of the answer to the Sub-Saharan African question as well. More market
access is good, going both ways. So I think the NAMA discussion is one that we
have not had the opportunity to talk about as much as I would like, but yes, the
U.S. has a very strong and specific interest in being sure that there is a
reduction in non-agricultural market access. You asked whether the
U.S. has some
sensitivities. Yes we do, as
I said we did in agriculture.
However, you know the
U.S. is a
relatively open market right now, our average tariff is about 4 percent. I think our bound rate is a little bit
higher than that and our applied is a little bit less than that or vice-versa,
but it’s about 4%. So we’re
relatively open right now and so my argument certainly to Members of Congress
and to our industry is that they ought to be very supportive of the Doha round,
because it’s the right thing to do for the world economy, and because although
we do have some sensitive industries that are concerned about lowering some of
our own tariffs, that overall this will be beneficial to the U.S. economy, in
particular, and to the global economy in general.
QUESTION : Textile industries want
textiles to be treated separately in the NAMA negotiations, not to be part of
the formula, to be treated separately, could you elaborate what the position of
the administration is on that?
Thank you.
PORTMAN: You know, I don’t think they’re asking
for a carve-out as I understand it, I think what they’re asking for is special
treatment within whatever formula is devised under NAMA. You know more about it
than I do maybe. The formula, we
strongly support what’s called the Swiss formula, since we’re here in
Switzerland we
can give them the name. It’s a
simple formula, it just says if you have higher tariffs, those ought to be
reduced more. So as opposed to the Uruguay round approach it says, if you want
to get at the peak tariffs and the high tariffs you really need a more
aggressive approach to those higher tariffs. In the case of textiles, as you know, as
of the first of this year under the WTO agreement the quotas are no longer in
place and there is more pressure, on the U.S. we’ve had dramatic increases in
textiles but I just don’t know enough to answer your question about the carve
out, my understanding was what they had hoped for would be treated as a
sensitive product under a Swiss formula.
QUESTION: I wanted to follow up on Secretary
Johanns’ comments about the impact of these proposals on
U.S. farm
spending because there was a real concern expressed yesterday by your trading
partners that this proposal might lead to what they called “box shifting” and
that it wouldn’t actually lead to reductions in
U.S. farm
expenditures. I was wondering if
you could comment on that and if you have any estimate of how much in real
spending of the impact of this proposal would have. Also I wanted to get some brief comments
from you Ambassador Portman on the EU market access proposal which was outlined
in detail yesterday and what improvements they need to make on that?
JOHANNS: Well, to address your question, there
was this concern and we heard it.
Our trading partners expressed it to us, that not relative to this
proposal but in the weeks past, that what was going to happen is the United
States was going to take its counter cyclical program and just move it on over
to this new blue box and so there was discussion, again prior to this proposal,
about box shifting, and that concern, that idea that all we were going to do is
pick up this program and drop it in to a new box. That didn’t work here. This proposal has sized the program in
the amber and blue box in such way that that’s not possible. The current program just simply could
not be shifted over. In terms of
the numbers I gave you, those numbers are very, very real. That’s what we’re dealing with. We went beyond the ambition that was
anticipated. I think if you would
have gone to our trading partners a few weeks ago and say where would you think
they’ll end up, they probably would have suggested to you that it would be a
different number. I believe we
actually went beyond because, it demonstrates our level of ambition and our
commitment to getting a successful WTO Round. But again, what this means is this: this
means that the rest of the world has to step up in terms of market access, and
that’s the essence of what we are doing here. But in answering your question I can
answer it very directly. I know the
size of those programs and I know that current size of the counter cyclical
program just won’t shift over, it’s not going to fit. So that’s as straight forward that I can
be.
PORTMAN: You’ve probably gotten him to be to
straightforward! There may be some
farmers who are interested in those comments. Honestly, I just don’t get it that there
some people are out there saying Gee, they are disappointed that this didn’t go
further and at the same time there are some who are saying that we went too
far.
Not that you asked this question,
but I noticed this morning in the paper OXFAM saying that this would only affect 2
percent of our spending in agriculture.
We have contacted OXFAM to correct those figures which are clearly
inaccurate. I have got to tell you
I was surprised and disappointed with
their response. Perhaps
inadvertently they’re providing comfort, and they are frankly letting countries
off the hook, that protect their markets, because when we come forward with a
serious subsidy proposal that truly cuts into the meat, even into the bone, in
terms of our farm programs and the response from those who say that they are
trying to help the developing countries is, “that’s not real,” that takes the pressure off market
access and that’s what is happening.
Unless people get focused here on market access there is a real danger
that this round will not achieve its development goals.
So I would just say, if you are interested
in being sure the market in United States, Japan, Korea, and the developed world
and some of the developing countries, I would put Korea and Brazil and China and
other countries in that category, have market access improvements, now is the
time to focus on market access.
These are real cuts, as I said earlier if you look at the most trade
distorting, which is the AMS payments you’re talking about a reduction from a
bound rate of 19 by 60 percent, and that’s how the WTO works. You go from the
bound rate. What I’m telling you is this year we will spend about 14, maybe a
little more, maybe a little less.
About 14 billion, maybe a little more, ok, they are saying maybe a little
more. So, what does that mean for
that 14? It means you go down based on my back-of-the–envelope calculations
here, by about 46 percent. That’s a
real cut. I can’t say it any more
plainly.
I’ve gone through several weeks of very
intensive consultations with our farm community back home to get to this point
and Secretary Johanns has been very brave in his working with us on this. I’ve met with all the legislators. I’ve met with the key leadership of the
agriculture committees, who care about this, and the reason they’re giving a
qualified response is they understand that we are making this proposal only if
we can get real advances in market access, only if we can get the elimination of
export subsidies which was already agreed to by date certain now, and only if we
can get the harmonization and the subsidy levels, and in some security in terms
of exposure to litigation under the WTO.
The OXFAM numbers obviously include our food
stamps program which is our largest green box program, which is not an export
distortion program. It’s how we
help feed poor Americans, and it has nothing to do with trade. I think that’s
unfair. I think we need to focus on
what’s really happening here, which is the
U.S. is coming forward with a real proposal that
is tough. At the same time we’re
saying we need to see the same level of ambition on the market access side. To answer your question about the
Europeans you said that EU had a new market access proposal. I have not seen a new market proposal
from the EU. The G-10 did make a presentation yesterday on market access, it was
not the European Union but the G10.
We are looking at that proposal.
It is not as ambitious as we had hoped but I’m pleased they’ve come
forward with some more specific ideas on market access.
The Europeans have talked I think publicly,
I know privately they’ve talked to us about the idea of a pivot, and dealing
with sensitive products. The pivot,
as we understand it, would be having a range of tariffs supplied to different
bands. Are you aware of this? I don’t want to be speaking out of
school here. So that’s out
there. My concern in the pivot is
very simple it leads to a lot of ambiguity, uncertainty, and frankly some
complexity in terms of market access, and I think will not be helpful in terms
of getting us to a result. I mean
obviously this all this depends on real market access and if you’re telling
every country in the world, yes, you can have market access based on the
principle and the framework agreement which is that there would be different
bands depending on how high your tariffs are, and different percentage
reductions in each band, higher band, higher reductions, that’s the principle we
are working with here, but we are going to have a pivot within each band, where
we can go up or down ten percent, and the United States or Brazil, or any other
country, Australia, Canada, New Zealand, Kenya, doesn’t know what that product
is, which will be subject to the pivot and which won’t, that obviously leads to
more uncertainty. It’s more
difficult for us to say this is a real market access proposal.
So I kind of worry that we have a
lot of well meaning and very well informed trade officials who are trying to
figure out ways to make this more complicated than it needs to be. We need to see real cuts in market
access, across the board, for the United
States, for the European Union, for
everyone. Yes, it will be treatment
of sensitive products, we understand that, but we don’t want to have belts and
suspenders and maybe another layer of belts and suspenders too. We want to be sure that it’s clear and
consistent with the framework agreement, which as you know was agreed to in July
of 2004.
QUESTION:
Brazil
sort of said yesterday that the point hadn’t been reached yet in which one could
really start talking about NAMA because agriculture still hasn’t gotten far
enough. Do you think that’s a
reasonable view or are you pressing hard on NAMA, this week or are you prepared
to allow the talks still to focus on agriculture? And just a second very quick
one, are you having any bilaterals on other issues like the Japanese on beef and
airbus?
PORTMAN: The answer is yes,
yes. With regard to NAMA,
absolutely we need to make progress in all areas. I’ve made the comments yesterday I guess
I can say what I said in the meetings, which is we cannot slow down our progress
on services, on development, on rules, NAMA, trade facilitation – there is not
enough time. If anything, what
happened yesterday should have enabled us to accelerate the discussion on those
other issues. So, we are discussing
those other issues as you know, they are subject of negotiating committees and
each case and our view is that particularly after the progress we’ve made this
week on agriculture, that we should redouble our efforts in those other areas as
well. Having said that, we
acknowledge that agriculture is the key to unlocking not just the overall
potential of Doha but these other
areas. But I think we should not be
hesitant to engage in a more serious way on all these issues. I think we must if we want to get it
done.
What was your second question… oh,
bilaterals, Secretary Johanns can speak to this but we’ve had great meetings,
I’ve met with the Japanese once already and are meeting with them again later
today, Korea
just a moment ago,
Australia,
coming up now. So we’re taking
advantage of this as an opportunity to talk about other issues other than
Doha and particularly some of our
trade issues we have, but I will say my focus is
Doha. I am intense about this as you can
tell. It’s because I think
otherwise we’ll be in trouble if all of the trade ministers don’t intently focus
on Doha and making progress we will
not be able to make it across the finish line in a successful way. I don’t think there is any question
among the 15 countries represented yesterday that that’s true, and I encouraged
all those ministers to continue to play a very personal role, they need to be
personally involved, and political decisions need to be made.
JOHANNS : Well, ditto! Thank you all.
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