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Statement by Ambassador Punke at the World Trade Organization Trade Negotiations Committee Meeting

May 31, 2011

Statement by Ambassador Punke
Deputy United States Trade Representative

 World Trade Organization Trade Negotiations Committee Meeting
Geneva, Switzerland
May 31, 2011

* As Delivered *

“Thank you, Director General, for your introduction of this very important discussion, and for your contributions to ministerial-level meetings over recent weeks.

“Discussions since Easter – in Montana, Paris, and here in Geneva – have brought us to a fork in the road for the Doha Round. Discussions among various configurations of ministers, senior officials, and permanent representatives have established a new and necessary realism and honesty about the difficulties facing our negotiation. And they have motivated us to begin a serious examination of practical, achievable steps that might lead us in a more hopeful direction.

“The United States, like others, does not welcome the circumstances that have brought us to this turning point, but we are deeply committed to a forthright and constructive engagement with all Members as we collectively decide how to maneuver this new juncture. We can have no illusions that navigating the road ahead will be easy, or that it will be accomplished as quickly as many of us would like. This work will be hard, and probably very messy. Each of us is going to have to commit to the fullest measure of good will, creativity, and openness if we are to succeed.

“There has been much focus recently on the question of what can be achieved in the remainder of this year, particularly in light of the scheduled 8th Ministerial Conference in December. In light of broad agreement that a full DDA outcome will not happen this year, the shift in attention to what might be achieved in 2011 has led to a particular focus on whether there is a package we can put together that both demonstrates the WTO’s ability to deliver on issues of systemic importance and fosters hope that we will be able to find solutions to the harder issues that have eluded us thus far.

“The United States is fully committed to this exploration of options, including, of course, issues of particular interest to LDCs. At the same time, a number of complicated questions present themselves as we move forward with this conversation:

“First, can we agree on what should be covered by such a package? I would note, in this regard, that we do not subscribe to the notion that there is yet any consensus on this question, including the issue of whether any particular issue is in or out for December.

“Second, if we can agree on the scope of a package, what is achievable, in both political and substantive terms, in a very short period of time? December is right around the corner.

“Third, and very significantly from our perspective – what about the rest? Can any ‘early harvest,’ no matter how well-motivated, be accomplished in a manner that will lead, soon, to solid market access and rules outcomes reflecting the world we live in? If a 2011 harvest is simply a means of indefinitely deferring the gains – including the developmental gains – of meaningful market access opening by all major players, we will be doing fundamental damage to the institution. We should not lose sight of why we have arrived at this uncomfortable juncture: this institution has not yet solved the puzzle of determining appropriate roles and responsibilities for all of its major players – including emerging economies.

“For the United States, a core principle of our work going forward is this: all major players must make a meaningful contribution to any package of deliverables for 2011. To be blunt, this will not work if Members treat this as an ‘everybody but us’ exercise. All major players must take steps that are politically difficult. And, on that score, we are frankly concerned that we are hearing more from some about what they cannot do rather than what they can do. That will not get us very far. This simply will not work if the expectation is that one, or even two, of the major players will make the difficult choices while other major players sit on the sideline. Flowery speeches about supporting LDCs and care for the WTO system mean very little if they are not backed up by a clearly-stated willingness to make politically-difficult choices.

“I think it’s important to offer a few thoughts today on some of the specific issues that are being discussed as candidates for a package for 2011. In this context, I frankly struggle to think of any result that touches more directly on people’s lives, especially among the world’s poor, than an ambitious outcome on fish subsidies. Given the reliance of hundreds of millions of people on fish as a critical source of food and livelihood, can’t we agree that getting a serious handle on overfishing is a fundamental element of what constitutes a credible package? For the United States, we are deeply interested in keeping fish subsidies as a critical part of our agenda for 2011. Make no mistake: if we miss this opportunity, this is an issue that has no obvious Plan B.

“We have heard much today about cotton. We have always been honest that a cotton outcome that is disconnected from a broad and significant set of outcomes in agriculture and other elements of the DDA would be hard for us – very hard. There is a context to this issue, a context ignored of late. The commitment at Hong Kong with respect to domestic support was that trade distorting domestic subsidies for cotton production would be reduced more ambitiously than under whatever general formula is agreed and that it would be implemented over a shorter period of time than generally applicable. We are now in a new context, with no generally agreed formula and no generally applicable period of time. Our discussion must recognize this new and starkly different context.

“I also hear frequent references to ‘the mandate.’ Let’s be clear on that point as well. The cotton mandate agreed in the framework agreement of 2004 states, and I quote: ‘Work shall encompass all trade-distorting policies affecting the sector in all three pillars of market access, domestic support and export competition…’ If we are going to have a discussion about cotton, it must be a comprehensive discussion about all forms of market distorting practices in all three pillars. We would need to discuss both direct subsidization and other practices such as import licenses, sliding tariff scales, and reserves management – that produce very substantial levels of effective support for domestic cotton producers.

“If people wish to discuss cotton, everyone’s cotton programs must be on the table. And this will require a degree of transparency that is sorely lacking. One member that is the world’s largest market for cotton has failed to meet its WTO obligation to notify agricultural subsidies it has provided since 2004. We, and others, have repeatedly raised this issue with this Member to no avail. Since that time, we understand that the Member in question has initiated or significantly expanded subsidies benefiting its cotton sector. Let me be clear, we will not negotiate in the dark.

“Regarding duty-free-quota-free, we recognize that this is a subject of considerable importance to many LDC members, though frankly, we hear very different viewpoints from different LDCs, with some expressing grave concern about preference erosion. Once again, we cannot divorce a critical issue like duty-free quota-free from its original context. The United States has always discussed this issue in the context of a broadly ambitious Doha outcome. The situation today is different. The United States is not pulling issues off the table, but neither can we ignore the dramatic shift in context. All of us are struggling to determine where new balance points lie.

“As is the case with many other Members, we have a significant concern that any consideration of early DDA deliverables must take into account the need for ambitious results in the Round’s market access elements. In this regard, we have noted with interest the suggestion of several Members to explore committing to a standstill on all applied tariffs, as a sort of ‘bridge’ to more meaningful market access outcomes. While a standstill would clearly represent a deeply disappointing interim outcome after a decade of negotiations, we are open to further exploration of the concept to the extent that it helps to illuminate a clearer path forward to real market-opening outcomes.

“Trade facilitation continues to represent a bright spot in our otherwise bleak landscape, and we consider it important that any potential shift in attention to 2011 deliverables do nothing to impede the good progress being made. The NGTF, where the development gains have been clear from the outset, continues to benefit from the broad interest and support that has made this progress possible, and that will be necessary going forward.

“Turning to another important area, the United States would hope to see a vigorous discussion of environmental goods and services as we move into our next steps. At the recent APEC meeting in Big Sky, twenty of twenty-one economies were prepared for a fulsome discussion of a significant, substantive commitment on environmental goods and services. Only one Member economy was opposed, maintaining that the environmental goods and services discussion should take place in the WTO. We are more than ready to have that fulsome discussion in the WTO, and believe that an outcome on environmental goods and services would contribute importantly to the credibility of the institution.

“I have briefly noted a number of specific issues in order to provide a sense of the U.S. perspective, and of U.S. interests in the context of a discussion about what we can achieve in 2011. I consider it important to return to a note of caution, however, before closing. For 10 years, we have been working hard to build a broad, comprehensive, balanced and ambitious outcome on the basis of the Doha mandate – as a single undertaking. While there is now much discussion about ‘phasing’ the single undertaking into an earlier and later set of deliverables, and while we are willing to engage constructively in that discussion, let us not fool ourselves. What we are talking about is a fundamental, radical shift in the way we think about this negotiation.

“We are all, understandably, feeling a good deal of urgency. But I appeal to my colleagues – that urgency must be matched with deep deliberation, given the significance of the shift in direction we are considering at this fork in the road. We have to be sure this will work. And as much as I would like to say that I’m currently sure – I am not. There is an old saying in carpentry that offers wise guidance to our situation today: ‘Measure twice and cut once.’ Let us all measure carefully in the weeks and months ahead. Thank you.”