Selected Events in 2005
Press Briefing on Doha Development Agenda by Under Secretary of Agriculture for Farm and Foreign Agricultural Services J. B. Penn
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In Berlin, U.S. Agriculture Under Secretary J. B. Penn met with German government counterparts, parliamentarians, and business leaders to reiterate the U.S. administration's conviction that the U.S. and the EU must continue to pursue an ambitious outcome of the Doha Development Agenda round at the December 13-18 WTO Ministerial meeting in Hong Kong. Under Secretary Penn also met with journalists to outline the U.S. position, especially on the urgent need to agree on significant cuts in agricultural subsidies and tariffs so that all countries, but particularly the developing world, can enjoy the benefits of liberalization.
Transcript of press briefing by J. B. Penn, Under Secretary of Agriculture for Farm and Foreign Agricultural Services
Berlin, Germany
November 18, 2005
Press Attaché Robert Wood: Thank you for coming, we appreciate it. We have of course with us Under Secretary of Agriculture for Farm and Foreign Agricultural Services Dr. J. B. Penn. Under Secretary Penn is going to begin with a brief opening statement and then take your questions. If you could just identify yourselves and the news organizations you work for. Mr. Under Secretary.
Under Secretary Penn: Thank you Robert, and thank you for coming. I think as everybody knows we are a few days away from the very important Hong Kong ministerial. We have been pursuing these negotiations since 2001; we're at a very critical time. This is a very important round for the entire world; it's called a Development Round for good reason. This is a stimulus that the global economy needs: liberalized trade is especially beneficial for the developing countries. The World Bank has done various studies that show most of the benefits of liberalizing trade -- not only in agriculture but in all areas -- would be especially beneficial to the developing countries, so we attach great importance to trying to get a successful outcome in Hong Kong.
Now, we are at a critical point, as everybody says, and that's because we have made some great advances in all areas -- but especially in the agricultural area -- and we've still got a ways to go. As you know, there are three pillars in that negotiation -- export competition, market access, and domestic supports. And in two of those pillars, we are in relatively good shape. In export competition, we're ready for Hong Kong; we're ready to negotiate there. The main point of that pillar is the complete elimination of export subsidies, and what remains is to establish for their termination. The United States has proposed 2010 as a date for elimination of the subsidies. In the domestic supports pillar, we're also in relatively good shape. We think that that one is ready for negotiation at Hong Kong. It is in the area of market access that we need work -- immediate, urgent work -- before Hong Kong. Now these talks had sort of come to a halt before the beginning of October, and the world focused on the United States and said, you need to make some movement in terms of domestic support, and we advanced on October 10 in Zurich a very ambitious proposal, not just on domestic supports but across the board in all three pillars. And it had the intended effect -- it did stimulate the talks -- we started real negotiations after that. The G-33 advanced a proposal, the Australians advanced a proposal, and, most importantly, the G-20 advanced a proposal. So then, the world looked to the European Union and said, now it's your turn to make a move on market access; and on October 28, the EU came forth with a proposal which we found to be wanting -- tepid, disappointing, I think, is how it's been characterized, not only by us but by others.
We've said over and over that we must have a balanced package. We're prepared to make important moves in various areas, but in return for those moves we have to have market access. So that's sort of where we stand at the moment. We're days away from Hong Kong, and we're working cooperatively with everybody who's willing to work with us to see if we can break the impasse and get things organized so that we can have a successful result in Hong Kong. We can't have a failure there. The world simply can't afford a failure in Hong Kong, and we can't have a very weak result. We think we have to continue to pursue a very ambitious outcome from the Hong Kong talks. So with that, I'll stop and be happy to try to respond to questions.
Question: Louis Charbonneau from Reuters: There's a great deal of pessimism about this upcoming round. You seem optimistic on two fronts. Do you expect that the Europeans are going to move in a way that would enable there to be some kind of agreement on market access, and will you be talking with any of your German counterparts and other Europeans ahead of the meeting? What do you expect, what specifically would you like to see them do, for example?
Under Secretary Penn: Well, as I said in my opening remarks, we are still at the table, we are working very aggressively with other leaders in these negotiations to try to make progress before Hong Kong. The discussion will continue in Geneva next week, the meetings have been scheduled now, I understand, and so we are trying to get conditions in place to have a successful Hong Kong discussion. I have already today had some discussions with German officials. We are discussing the status of the negotiations and what needs to be done, and so we would like to move these talks forward and we'll work cooperatively with anyone that's willing to work with us.
Question: Sascha Meyer, German News Agency. Are you optimistic that the Hong Kong meeting will really bring a final agreement, or will this just bring some more steps forward that will have to be continued afterwards?
Under Secretary Penn: Well, it's always been thought that these negotiations would go through calendar year 2006, that they would conclude at the end of that point. Hong Kong has been scheduled for a long, long time. I mean, this is not a meeting that just suddenly appeared on the calendar, and so we've known for a long time that this is a really important benchmark meeting, and that we have to have substantial progress there if we're then to complete the detailed negotiations during 2006. The timing works well for the U.S. process; you know we have Trade Promotion Authority, it extends until July 2007; we have a Farm Bill that is expiring in 2007. It works well for our legislative calendar, but we must stay on schedule for all of this to work. So we're still hopeful that we can have an ambitious, successful outcome in Hong Kong and keep all of this on track.
Question: What about the concerns that have been expressed by developing countries, and to a certain extent there's been some kind of impasse between the Europeans and the Americans? Do you think that, if the Americans and Europeans can agree on something, will the developing countries also be on board? What kind of objections could they come up with?
Under Secretary Penn: Well, as I said earlier, the developing countries stand to benefit most from liberalized trade, especially liberalized trade in food and agricultural products, so the developing countries have a big, big stake in making sure that this round is successful. We do have an impasse now, and it is focused on market access, but there are lots of other areas where the negotiations still have to be completed. We're talking to the European Union about market access, but it's not just about market access for the European Union market. The kind of arrangement that is decided on market access - the kinds of formulas, the level of tariff cuts - that will apply to all of the markets, not just to the European Union market, so it's very important for the developing countries that this also be an ambitious conclusion for that particular pillar.
Question: If you fail to get a successful conclusion in Hong Kong, what kind of signal is sent to the world?
Under Secretary Penn: I think the world is looking for a successful meeting in Hong Kong. I think the global economy needs the stimulation of a successful outcome, I think it needs liberalized trade in food and agricultural products. We've invested a lot of time and energy in this, and there are a lot of expectations that have been developed. This round has been underway since late 2001, and there have been a lot of expectations created, and, as I've said before, the developing countries are the ones that especially need to see a sold result here. Study after study has shown that much of the benefits of liberalized trade will accrue to the developing countries, and it's not just North-South trade but South-South trade, as well. A big proportion of the total trade in the world today is between South-South countries. You know the number, 70 percent of all the tariffs paid by developing countries are paid to other developing countries, so they really have a lot to benefit from this round, and most of the benefits will result from tariff reductions, from market access, so it's not just the Americans who keep hammering on market access, but the World Bank numbers say that 92 percent of the benefits of liberalized trade come from expanded market access, reduced tariffs. So it's very critical I think that the world achieve a stimulus to the economy here.
Question: To follow up on that. To a certain extent, the developing countries, looking at the rich countries of the world bickering over certain issues while they're sort of standing back, and it's up to the rich countries to do that, so if you didn't reach an agreement, if success isn't guaranteed - there has to be a willingness to move, what would we be telling them?
Under Secretary Penn: Well, I don't accept your notion that the developing countries are standing back. This is the development round, the Doha Development Agenda, and the developing countries have played a very significant role thus far in these negotiations. I mean, we saw the emergence of the G-22 group of developing countries at Cancún; this group has been very ably led by Brazil along with India and Argentina and others. I think they've been very constructive in the discussions that have occurred since Cancún. So I don't think that the developing world is stepping back, I think that they are playing a very important leadership role in this particular round.
Question: I'd like to ask you for some concrete examples of where you expect the Europeans to make a move. Is it the main question, tariff reductions, for market access, for special goods, agricultural …?
Under Secretary Penn: Well, my focus is mostly on the food and agricultural area, but you're right to note that there are other areas that are involved in these negotiations - the industrial sector, services, intellectual property. There are many other areas but my focus has been on the food and agricultural area. I said earlier that the United States has to have a balanced package, a balanced conclusion, from these discussions that we take back to our Congress. We're quite prepared to make very significant cuts in our domestic supports, we're prepared to change our farm programs, but only if we achieve real, tangible market access. And, by that, we have to go beyond elaborate, mathematical formulas. We have to be able to show to our agricultural groups that here are specific markets, specific products and specific commodities where you're going to gain additional access, where you'll be able to sell additional products. Now we are focused on the European Union because they are a leader in these trade negotiations, but the model - whatever gets developed for the European Union - is going to apply to the other countries as well. So, yes, it is very significant reductions in tariffs that we are seeking. We have suggested in our proposal a structure by which that can be achieved. We've established four tiers, and we've said the highest tariffs should be cut the most. We've proposed reductions ranging from 55 percent cuts for the lowest tariffs up to 90 percent for the highest tariffs, so we think that there is a structure that has been suggested and we'd like to see the Europeans move much closer to what we have proposed. The G-20 developing countries have made a very important proposal, and it's in the negotiating range. We just think the European Union is not yet in the negotiating range on market access.
Question: You might want to mention the percentage of sensitive products?
Under Secretary Penn: Well, that's been one of the big concerns that we've had with the proposal that the European Union has presented. I said before it was tepid in that the size of the cuts it proposed didn't even reach proposed those by the G-20, but, addition to that, it defined a very large number; eight percent of all of the tariff lines could be designated as sensitive products, and that means that sensitive products would be subject to smaller reductions than would other products. Not only that, they've also proposed what is called a pivot, or flexibility, in the very first tier, and that's the tier in which we have the most interest, that's the tier in which most of the products that are commercially traded appear. So here we have not only a proposal that doesn't show much ambition, but it has diluted even what little ambition exists with the designation of a large number of sensitive products and inclusion of this pivot. Now the World Bank has done work that shows that, if you have more than two percent of the tariff lines designated as sensitive products, then you've basically eliminated any of the effects that you would get from reducing tariffs.
Fully informed you, huh? Very good. Thank you, gentleman, for taking the time to come over this morning. Appreciate it.
