Remarks by Ambassador Michael Froman at APEC Opening Plenary Session
May 17, 2014
Thank you to our Chinese hosts and thanks, Director General Azevedo, for your assessment of where we stand. Our theme today is “how can APEC support the multilateral trading system.”
Our highest priority must be to finish what we started. APEC Ministers led the way in urging an ambitious WTO outcome on trade facilitation. Having now achieved a landmark agreement, implementation is a test of the credibility both of individual Members and of the WTO as an institution. It is inconceivable to imagine further progress on Doha if the Bali Agreements are not being implemented faithfully. Fortunately, there has been steady progress in Geneva, and the vast majority of WTO Members appear to take their Bali obligations seriously.
Not surprisingly, APEC Economies are taking the lead. Congratulations to those Economies that already have made helpful announcements about their Category A notifications. Collectively, our statement this weekend also needs to send a strong message. Consensus on that message appears to be close, including the concept that APEC developing economies will notify in Category A those practices that they have already implemented.
In our discussions of trade facilitation, many have emphasized the importance of assistance for developing countries. As part of US efforts in this regard, I had a chance to convene several donors during the recent IMF/World Bank meetings in Washington. Raj Shah, the head of USAID, cohosted this discussion of how best to coordinate assistance efforts. One point that I think is vital: Many developing countries are already working successfully to line up funding for Category C projects. Existing needs assessments make this work possible now. Early movers will gain the earliest benefits of implementation.
Let me turn briefly to the important topic of the Post-Bali Work Plan. Roberto urged us today to enter a new phase in our work. We should not delude ourselves about the difficult discussions that lie ahead. WTO Members have failed at this discussion before, and we will fail again if we simply repeat the stale old debate.
As I said recently in Paris, the United States can envisage a Doha outcome defined by a range of ambition levels. Regardless of the level of ambition, balance is key. Ambition must run parallel for agriculture, NAMA, and services.
Many have spoken about the centrality of agriculture. Among the agriculture issues, balance is again the key, with parallel attention to market access, domestic subsidies, and export competition, including the activities of state trading enterprises.
As for market access, many economists believe that tariff barriers represent the single area of greatest market distortion. In the development context, this is even more important given the increasing importance of South-South trade.
Certainly agricultural subsidies are another important topic. Unfortunately this is an area in which we’re not having a full, credible conversation. We cannot ignore the fact that the nature of who subsidizes has transformed dramatically in the 13 years since the Doha round was launched. A recent study by the Cairns Group found that the largest emerging economies now subsidize their farmers at levels as high or higher than the United States and Europe. Moreover, developed country subsidies have been decreasing, while emerging country subsidies have risen dramatically.
Nor is it an answer to say that a Member’s current subsidy levels are consistent with the rules as they existed in 2001. Of course -- everyone has an obligation to be in compliance with their existing WTO obligations. The question for WTO Members is whether we want to set new rules to discipline the subsidies that distort markets today -- in 2014.
Unfortunately, problem-solving in this area is made infinitely more complicated by the fact that key players are years behind in complying with their obligations to notify the Membership of their subsidy programs. This is unsustainable if we aim to have a serious discussion.
So let’s carry this discussion back to Geneva and be ready to engage. Not by repeating our five-year-old talking points. Not by referencing the landscape of decades past. But by identifying the problems that matter today, and exploring whether it is possible to build a consensus to solve them.
Let me take a brief opportunity to make a few comments about an issue that has a long history of APEC involvement – the ITA agreement.
Members here know well that, despite repeated calls from our Leaders for a swift conclusion to ITA negotiations, ITA has remained deadlocked. Global industry, led by the APEC Business Advisory Council, has called for APEC leadership during this meeting toward an ITA conclusion. And I quote from their report:
“ABAC is disappointed about the loss of momentum in completing the ITA negotiations. ABAC strongly urges APEC to demonstrate greater leadership in advocating for a commercially significant expansion of the ITA by the conclusion of the APEC Ministers Responsible for Trade (MRT) Meeting in May, in particular by limiting sensitivities and supporting the mutually balanced and ambitious liberalization goals set forth in the initial ITA expansion negotiations. Such an outcome will be a significant contribution by APEC to the WTO and the global economy.”
The United States came to China with new flexibility that we believe can break the deadlock this weekend, provided that others show equal flexibility. We are consulting, and we remain hopeful for a breakthrough here in Qingdao. Success is within our reach, and it would send a positive and powerful signal that the multilateral system can achieve results.
The United States looks forward to working with APEC Members, and indeed with all WTO Members, to build tangible success stories – today and in the year ahead.