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Remarks by Ambassador Michael Punke During Press Briefing

Official Transcript of Press Briefing by Ambassador Michael Punke
U.S. Permanent Representative to the World Trade Organization and Deputy U.S. Trade Representative

January 13, 2011
Geneva, Switzerland

Ambassador Punke: Thanks very much, and Happy New Year to everybody. I appreciate your taking the time to come in today. I see that we’ve laid out an especially lavish spread for all of you, so I hope you’ve taken full advantage. Apparently we have a new budgetary infusion that has allowed us to lay out small portions of cake in addition to orange juice so I hope you’ve taken advantage.

My approach in terms of offering some initial thoughts is pretty straightforward. I thought I’d talk briefly about the U.S. perspective on where we’ve been, where we [we are], and where we are going. I think it’s a particularly appropriate time to have that discussion because we [are] at an interesting and important juncture here as far as the Doha negotiations are concerned.

But to start off first by stepping back just a little bit about where we’ve been.

I think it is significant that in the past several months the U.S. and many others in Geneva have succeeded in what I think of as restarting the engines of the Doha negotiations. There have been several aspects of that. I think the small group process that we engaged in over the course of the fall was very significant in that it helped us collectively to make the segue from only talking about process to beginning to talk about substance. Part of that process of talking about substance was very helpful to me, and I think it was very helpful to many of my colleagues and counterparts in Geneva in getting a sense of how the various issues that are out there need to be crystallized. I think it was in some ways a very important way of specifically engaging all of the ambassadors in the negotiations.

One of the things that we heard over the course of the fall is that many people were looking for explicit political signals from the U.S. and from other leaders in the world. One of the things that we worked very hard to deliver was an explicit statement coming out of both APEC and the G20, focusing on the Doha negotiations. And I think I can say without fear of contradiction that there was no one at the G20 leaders meeting who was more detailed or more explicit in his comments on Doha than President Obama. He reiterated his commitment to the WTO and to Doha. He indicated his willingness to take a good agreement if it can be reached before the U.S. Congress. He was very clear in stating our ambitions for the round and what we are seeking, but he also indicated that he understands that negotiations by definition involve a process of give and take. He also very directly challenged the emerging economies — the India’s, China’s and Brazil’s — to step up to their responsibilities as major players in the global economy.

Having come back, all of us, from APEC and the G20, what we did in Geneva in the sort of dying days of December was to lay out a process and a structure for January to ensure that we could come back and have the potential to hit the ground running. We are in the midst already of what over the next three or four weeks will be meetings at every level — experts, ambassadors, senior officials, even a couple of opportunities at Davos and elsewhere for ministers to have direct exchanges on Doha.

So that’s a segue really, from my standpoint, into where we [are]. Where we [are] right now I think, to state it succinctly, is we are all out of process. There’s no process left to do and what that means is that the only thing that’s left is negotiating.

That said, it’s clear to me that the central question of the round, that the central question of whether or not we’ll succeed in Doha remains the question of whether the emerging economies are prepared to accept the responsibility that comes along with their position in the global economy. If they’re prepared to accept that responsibility, we’ll have a successful outcome. If they’re not prepared to accept that responsibility, we won’t.

For the part of the United States, let me say very clearly that we are ready, willing and able to negotiate anywhere, to negotiate any issue, to negotiate with anybody except ourselves. That last point is an important one. We need interlocutors across the table from us who are prepared to talk about the key substantive issues that we’ve all worked to identify over the past several months.

I think it’s very important to emphasize that the eyes of the world are on all of the major players in this round. I hear sometimes that people are looking to the United States and that’s appropriate, but the world has changed. It’s no longer the case that the U.S. or a couple of developed countries can dictate the agendas and outcomes of the WTO. We have a larger leadership table now and everybody knows that that includes the emerging economies. So the world is looking toward all of us to shoulder our appropriate share of the burden.

The last thing I’ll say before opening it for questions is that I firmly believe that we can have a successful outcome of the round this year “if”. The “if” comes back to the question of whether we start immediately negotiating, doing the work that has to be done.

With that, I’ll open it up for questions.

Media: We are now in I guess the first week of our intensified January process. Do you see any sign yet in these first few days that the real negotiations are starting?

Ambassador Punke: Not yet, no. And part of that is I think the nature of some of the topics that are being discussed this week which are important topics but perhaps not the most central issues. Not all of the ambassadors are back yet. I think by next week everyone will be back, and by next week we’ll also be talking about some of the central market access issues that are clearly keys to having a successful conclusion on the round.

I will say that we were somewhat disappointed with what we heard from China when we met with them in Washington in December. We had very much hoped, especially in the wake of the G20 discussion, that we would begin this process that I’m talking about of substantive negotiating. What we heard from China instead was frankly much more of what we’ve heard before. There was a bit of glimmer of hope at the very end when Minister Chin spoke to Ambassador Kirk about his willingness to look at sectorals which we consider as being a very important signal. But the end game is now, from our perspective. So it is critical that we begin to get into the meat of negotiating, to the real give and take of negotiating. It’s no longer going to be sufficient if we want to be successful in 2011, to simply come in and repeat past talking points.

Media: You mentioned the emerging countries. What do you exactly expect, for example, from the new government in Brazil? What signals have you received from them that their position would be changing from the last administration, which is basically almost the same? But how do you expect that to be changed? Ambassador Roberto Zavedo gave a speech a couple of weeks ago showing that Brazil was the country that contributed the most for the deficit of the U.S. to be reduced. So what else do you expect from Brazil in 2011?

Ambassador Punke: I think we expect that Brazil will embrace responsibilities that are commensurate with the degree that it’s been a beneficiary of participating in the global economy. I think nobody questions whether a significant part of the miracle of the Brazilian economy over the last decade can be attributed to its ability to export into open foreign markets. We don’t begrudge Brazil its success. I would say the exact same thing about China and India. The progress that they’ve made in addition to being a manifestation of a lot of hard work on the part of their citizens is also a manifestation of access to open markets.

What I would say specifically is that India, China and Brazil all have the benefit of most favored nation access to concessions that were made by the U.S. and other developed countries in the Uruguay Round 16 years ago. In many cases that has created opportunities for them to develop global class industries.

So what we expect from Brazil and from the other emerging economies is that in particular in those areas where they are global class exporters it is reasonable for us to ask of them that they exhibit a degree of market access that is similar to what developed countries have been offering them for the last 16 years. Let me give you a couple of specific examples.

Chemicals. China is the second largest chemical producer in the world. It’s the fifth largest chemical exporter in the world. One of the things that the U.S. is asking of China is that it provide the same access to the Chinese market for U.S. chemical exporters that we provide to China for Chinese chemical exporters. We think that’s a reasonable thing to ask after ten years of China’s benefiting from access to open global markets.

Let me give an example specific to Brazil. There are 73 countries in the world that are members of the ITA Agreement. Brazil is not one of them. It’s somewhat stunning to me that one of the world’s ten largest economies is not party to an agreement that includes participants like El Salvador and Egypt and Vietnam. It’s not reasonable for Brazil to expect access to international markets if it’s not able to participate in an agreement like the ITA which has literally dozens of developing country participants.

Media: Ambassador Punke, I wanted to follow up on your remarks regarding the December 13th meeting with your Chinese counterparts. You said you were disappointed. Could you elaborate a little bit? Was it that they didn’t want to engage at all in any substance, or that the engagement was not sufficient? And in regards to you said at the very end there was some indication they might be willing to accept sectoral negotiations, did they indicate which sectoral negotiations they might be willing to take part in? For example, chemicals.

Ambassador Punke: No, they did not indicate which specific sectorals they might be thinking about.

But here is the essence of my disappointment. We are at a juncture now, and prior to the meetings in Washington we had had at least three earlier rounds of discussions with China in which we were explicit to the eight digit HTS code level about the types of products where we are seeking additional market access from China. And what we had hoped would happen in December and what really must happen now if we are going to be successful in 2011, is we need to have a specific conversation on the basis of specific products. China did not come prepared to engage in that type of specific conversation.

Frustratingly, one of the issues that’s been part of the discussion about sectorals has been this proposal that the Japanese have put on the table for a product basket approach. What the product basket approach essentially is, is a framework for talking about sectorals that a group of countries have developed as a specific way of addressing specific concerns that we’ve heard from emerging economies about the difficulty that they have in engaging in sectoral discussions. We have not even heard yet from the emerging economies whether something like the product basket approach is even in the abstract, even in a hypothetical sense, a construct for having a discussion about sectorals. That’s enormously frustrating.

So we will be listening very carefully over the next couple of days and weeks as to whether or not we are all getting specific or not. Everybody knows what the issues are, and we have done as much as we conceivably can to listen to the sensitivities that we’ve heard expressed, to be creative in how we are thinking about issues and how we are structuring conversations. But we’ve done as much of that as we can now, and again, all that is left is negotiating. That’s what we’ll be waiting for.

Media: Just a quick follow-up, will you talk Doha during President Hu’s visit to Washington?

Ambassador Punke: That is a decision that will be made out of the White House. Obviously Doha is one of our top economic issues with the Chinese.

Media: Just kind of a general question, what’s the best that you think can come out of Davos?

Ambassador Punke: The best that can come out of Davos? Well, sort of going back to what I said earlier, I don’t expect that there will be a substantive breakthrough in Davos. If you’re familiar with the format of the Davos discussion, it is 20-some ministers around a table, each making one intervention. And so that’s not a format obviously that lends itself to a great deal of give and take or any give and take, which is not to say that it’s not significant because I think what can be signaled at Davos and what we’ll be listening for is that attitudinal shift that I mentioned before. And whether ministers are expressing a willingness to engage immediately on the substance of the negotiations.

If that’s the case, and of course we’ll be testing that very quickly if we hear that it is the case, if that’s the case then I think we can get a very meaningful signal out of Davos.

Media: You mentioned the China chemicals. Are there any other examples where you feel the emerging economies could demonstrate what you call their responsibility to show that they’re willing to negotiate?

And on Davos, if you don’t see this willingness and the process, there remains a discussion on process for the next few months, would the U.S. be willing to settle for some sort of Doha Light?

Ambassador Punke: No. We won’t settle for a Doha Light. And there’s no political support for a Doha Light in our country, and my strong sense from talking to my counterparts in Geneva is there’s not much interest in a Doha Light from anyone. In fact I haven’t heard that phrase for a long time, and I had hoped that it had fallen off into the wasteland. I don’t expect that’s a direction that –

Media: Doha Extra Light. [Laughter].

Ambassador Punke: There won’t be any interest in that either. So no. No interest in Doha Light.

I think what everyone has talked about for the last year in the abstract is that to have success in Doha we need to increase ambition. At least in the abstract I think that there is agreement on that.

Coming back to your other points about what happens if we don’t have that type of attitudinal breakthrough, I think the answer is that we run out of time. I think the logistics of the negotiation catch up with us in that there’s a lot of labor intensive work to be done even after we have that attitudinal breakthrough that we are going to really engage in negotiations. If we are serious about taking advantage of this 2011 window of opportunity, it means that we meet every day. And if we squander the next month, from my standpoint it probably makes it very difficult as a practical matter to conclude this year.

Media: More specifics for that, like chemicals?

Ambassador Punke: The specific areas where we have sought additional access are well known because they have been our specific focus going back to the beginning of the round, going back to the last administration. They include, and I won’t pretend to give a comprehensive list here, but they include not only areas like chemicals, but also sectors like industrial machinery, agricultural machinery, forest products.

On the services side we have addressed critical sectors to us including retailing, including express delivery, including computer services. And on agriculture, obviously the key outstanding issue remains our efforts to seek assurances that the flexibilities that have been created or are contemplated in the context of Doha don’t undermine the access, the new market access that we would otherwise achieve.

Media: I understand regional trade partnerships are being set up while Doha has been stalled. So can I have your prospect on if or how such as TPP will have the impact on Doha negotiations?

Ambassador Punke: I think there’s the potential for different types of trade arrangements to complement each other. We certainly believe that TPP is an extremely important effort. We think it has enormous potential for creating really significant trade liberalization in the Asia Pacific region. In that regard I would add that we were particularly gratified at the very forward leaning posture that Japan assumed at the APEC conference. I think we were very appreciative for the leadership that Japan demonstrated at APEC in talking about TPP.

I think the short answer is that the more narrow the participants in an agreement, the greater the potential is for depth of commitment. The larger the numbers that you have, obviously you have the potential for reaching a larger number of countries but maybe not in as much depth.

So the WTO gives us our best opportunity to address all WTO participants with as much liberalization as we can possibly achieve. What regional and bilateral agreements give us is the potential for greater depth than we might be able to achieve in a multilateral negotiation. So I think there’s a clear place for all types of liberalization, and in the best case scenario they complement each other.

Media: You spoke about [inaudible] China [inaudible]. Can you give an assessment of India? What kind of support structure [inaudible]?

Ambassador Punke: My personal assessment of India is that it’s sort of one step forward, one step back. The signals that we’ve received from India have been very mixed.

I traveled to India in August with my counterpart Ambassador Siddiqui. In New Delhi we felt like we had had extremely constructive discussions about Doha. We felt like we were on the cusp of entering into those specific types of discussions and negotiations that I talked about earlier as being critical for the juncture that we are at now. But then we came back from Delhi and those never materialized despite our efforts to engage.

We see conflicting signals from India, and certainly we are hopeful that in the weeks that we are about to enter into that we’ll see those signals again of a willingness to negotiate. Because clearly, India is one of the leaders that everyone is looking to play a central role in the negotiations.

Media: On December one representative of the U.S. administration told a journalist that the verdict on the second Khodorkhovsky case could make more difficult for Russian accession to the WTO. Do you see a relation between these two processes?

Ambassador Punke: I’m not familiar with those comments that you’re referring to, so I don’t have any comment on that.

Media: Ambassador, I’d like to hear your views on where the U.S. stands on the commitment made in Hong Kong on duty-free/quota-free to identify the list of products that has been asked for by Bangladesh and other developing countries, when that list would be put forward and circulated. And will the U.S. move on cotton or will it wait for the ag package first before you move on cotton?

Ambassador Punke: As far as where we stand on our Hong Kong commitment on duty-free/quota-free, the commitment stands. We’ve committed to 97 percent, and we stand by that. We will work in the weeks and months ahead, along with all of our counterparts, to develop the specifics of that list.

As far as cotton goes, we also stand by our commitment from Hong Kong which is to address cotton, but we have always said that we will address cotton in the broader context of other areas of agriculture being addressed across all three of the agricultural pillars. I would say on the issue specifically of cotton, that one of the frustrations we have about the cotton issue is that there tends to be a focus on the U.S. support program much more than there is focus on the significance of market access for cotton as an element of improving the situation for cotton producers.

China, for example maintains a 40 percent tariff on cotton. It will be important as we address the cotton issue to have a holistic approach and to focus not just on domestic support programs, but also to focus on barriers to cotton exports, including barriers that are maintained by developing countries.

Media: What about the list? Have you circulated any provisional list to some of your counterparts? Or it’s still dead in the water?

Ambassador Punke: Well it’s not dead in the water. I’m not familiar with anybody circulating lists at this point. As I said before, we will fulfill our commitment that we made in Hong Kong as part of the process of the work that lies before us in the weeks and months ahead.

Media: I would like to question about the rare earth program about China. As you know, China caused the volume of rare earth. How do you think about this problem? Will the U.S. government intend to use the DSP mechanism?

Ambassador Punke: We think the rare earth issue is a very important one, and what we have communicated to the Chinese very directly is that we expect them to live up to their WTO obligations including their WTO obligations with regard to export restraints.

Media: I’d like to ask a kind of general question. When would you expect this window of opportunity of 2011 to be real opportunity?

Ambassador Punke: When would we expect it to be real? Or when we hope that it becomes real?

Media: Whichever –

Ambassador Punke: Let me answer that in a slightly different way. For 2011 to be a window of opportunity, we have to all be negotiating effective immediately.

Media: Immediately?

Ambassador Punke: Immediately. That’s the logistical reality of the Doha negotiations. There’s an awful lot of work to be done and if we aren’t beginning to engage in that work immediately it will be very difficult to take advantage of 2011 as a window of opportunity.

Media: I heard those interpretations of Easter or summer or early spring.

Ambassador Punke: People have talked about different milestones or sign posts along the way. But frankly, I think those mile posts along the road are much less significant than what we are doing as we walk along the road.

If we are all of us engaged in negotiating effective immediately, then we have a much better chance of achieving our overall objective of taking advantage of 2011 as a window of opportunity.

From our perspective, the specific date that particular texts are tabled is less important than whether or not we are doing the work along the way. If we are doing the work along the way, those types of issues will take care of themselves.

Media: Ambassador Punke, you talked about the give and take from the negotiations. Would you please elaborate a little bit more on the give part that the United States is willing to do.

Ambassador Punke: Let me start off by saying that our fundamental belief about the current state of the round is that there is an imbalance in concessions that have been made. And it’s imbalanced against our favor. So one thing that we will not do is come into a negotiation and negotiate against ourselves. In other words, we will not come in to the negotiation and increase the imbalance as part of an effort to decrease the imbalance. That would not make sense.

That said, I have a great deal of respect for all of my counterparts and they’re all very good negotiators. I would be naïve if I didn’t think that as part of the process of negotiating that will take place in the weeks and months ahead that we will not be asked for more. We know we will be asked for more. And as we’ve said repeatedly, we acknowledge that negotiations involve a process of give and take, and I emphasize both parts of that.

So we are ready to negotiate but what we won’t do is negotiate against ourselves.

Media: In the agricultural areas I know it’s very difficult, but to other countries, is there anything new you think will be taking place this year in regards the agricultural area?

Ambassador Punke: In regards to the agricultural area? The most important thing that needs to take place in the ag negotiations is that we need clarity that the flexibilities that have been created in the existing structure don’t undermine the market access obligations that are also part of the existing structure.

Media: A couple of days ago the Financial Times had a cover page story with the Minister of Finance of Brazil talking about a currency war and how he was willing to bring this to the WTO, et cetera, et cetera.

Do you think bringing this subject up here in Geneva would disturb negotiation or the round, or would get the focus of these matters that you’re talking about a bit confused?

Ambassador Punke: My answer won’t surprise you.

Media: Or is it helpful? Is it part of the trade issue?

Ambassador Punke: I believe Secretary Geithner made a very lengthy speech yesterday on the issue of currency. I would just refer you to his remarks for the administration’s views on currency.

Media: — WTO.

Ambassador Punke: I will mention one aspect from Brazil that I think is important as we enter this juncture and as we are thinking about things that have the potential to be disruptive to the negotiations. Brazil has taken several steps over the past couple of weeks to raise tariffs. That to me is a sort of “stick in the eye” of Brazil’s trading partners and it creates a more difficult environment for our Doha negotiations which are obviously focused on the goal of reducing tariffs.

Media: You haven’t mentioned a word about the European Union. Do they still exist as a trading block? [Laughter]. What are your concerns about the Europeans on sectorals?

Ambassador Punke: The Europeans are an extremely important player in Doha as everyone acknowledges, and we are appreciative of a couple of the steps that the Europeans have taken over the last couple of weeks to help push the discussions along, including some of the work they’ve been contemplating for getting a couple of key ministers together.

Moderator: Thank you very much.