The Office of the United States Trade Representative

Transcript of Press Briefing by USTR Rob Portman
Geneva, Switzerland 07/29/2005

AMBASSADOR PORTMAN: I’ll start by saying it’s great to be here in Switzerland. As a proud Swiss-American, I have been to Geneva few times but never as a U.S. Trade Representative. It’s my first time here in this capacity. The Portman family comes from a town near Solothurn call Herbertswil, and my great grandfather came over in the late 1800’s, and about three years ago I was able to go back to that little town with my son, another William Portman, also ten years old, the same age my great grandfather was when he came, and had the opportunity to see some of my long lost relatives. So Switzerland has a special place in my heart, and it’s good to be here. It’s also good to see some of you. Some of you, I think for the first time since Paris and the good news is we will not be talking about AVEs today, for those who had to go through that with me, a very technical discussion. But instead we’ll be talking about the Doha Round and the reason that I have come over here and the reason that I feel it is so important.

Early yesterday morning, as many of you know, the U.S. Congress passed the Central American Free Trade Agreement (CAFTA), and in fact, just hours ago the U.S. Senate followed suit. The Senate had to pass the law one more time. Two additional Senators voted for it this time through, one Republican, one Democrat, so I’m attributing that to the great momentum we got in the House by passing it with two votes. But honestly, this has been a very important week for U.S. trade policy. This Agreement was viewed as a very difficult one to pass as you know, and we overcame the odds to do so. It was expected that it would not pass, the forces against trade in the United States were aligned against this particular agreement. It became symbolic of much more of just a Central American free trade pact. It became really a question about other issues related to trade, our deficit in trade, China trade policy, anxieties over globalization, and frankly it became a very political vote. So, I think it is a very good news for America’s leadership in the world on trade that we’re able to win this vote this week and I come here to Geneva with a little more momentum on the American side to be able to knock down barriers to trade globally through the Doha Round.

We continue to believe very strongly that trade is so critical to economic growth and stability and I will give you a specific example of that this afternoon. Just hours ago, the U.S. Government released the data for the second quarter. Our growth was 3.4 percent, increased exports accounted for one third of the economic growth increase in the United States in the second quarter, a 12.6 percent increase in exports. Although our trade deficit is unacceptably high in my view, the fact is that trade is good for our economy. It’s good for the global economy. It’s particularly good for developing countries. That is where, frankly, the most potential resides. As you know the World Bank has a study saying that a successful Doha Round could lift three hundred million people out of poverty. Another study that I saw this week indicates that number could be as high as five hundred million people being lifted out of poverty in developing countries around the world. Why? Because by breaking-down barriers to trade, particularly in south-to-south trade, and in the developing world, developing countries pay 70 percent of the tariffs in other developing countries. That will increase incomes that will enable economic growth and that would help the developing world to be able to achieve the kind of prosperity that we all seek. So we continue to believe strongly in the potential of Doha. We continue to be very ambitious in what we'd like to see Doha achieve, particularly in market access, but in all the pillars.

The purpose of my coming here this week was to take stock of where we go from here. To see what progress we can make this week certainly, but also to see from trade Ministers, from Ambassadors, from WTO Officials firsthand what the obstacles are and what we can do to overcome them.

In the last few months, while I’ve been in this job as U.S. Trade Representative, the United States Congress has passed three important pieces of legislation. One I just talked about, the Central American Free Trade Agreement but the other two are also equally important to the Doha Round.

One is our continued membership in the World Trade Organization. That’s sometimes a controversial vote. That was passed recently in Congress.

Second was the extension of our Trade Promotion Authority for another two years so that we have the ability to take trade agreements to the Congress on a fast track basis, under Trade Promotion Authority.

Those are all three important again to our continuing to lead the effort on Doha, but of course it must be a collective endeavor. Success in this Round is important for all members of the WTO. It is an essential ingredient as I said in economic growth but achieving these new market openings for developing countries is particularly important.

I’ve had the chance to meet today with Ambassadors, with WTO Officials, with some of the trade Ministers who were here. I met with Kamal Nath from India, today, Minister John Tsang, from Hong Kong, Soichi Nakagawa from Japan. It was very helpful to hear first hand their assessments of the state of the negotiations. They were fairly measured in their assessment, even sober in their assessments, but they all three shared my determination to succeed.

I also had the opportunity to speak with Peter Mandelson this week by telephone. Our schedules didn’t mesh to be here in Geneva at the same time, but we stay in close touch and had a long conversation when I was in Washington earlier this week. I will have the opportunity to meet with incoming Director General Pascal Lamy tomorrow. I had the opportunity to see Doctor Supachai today and hope to meet with him later today. And of course I attended the General Council Meeting.

President Bush has set a bold vision for trade, and for the WTO negotiations. Some of you heard this coming out of the G8 summit in Gleneagles when he talked about not just reducing but eliminating all trade distorting subsidies in agriculture.

This is a challenge, and the United States is up to that challenge. We all understand that unlocking agriculture is going to be the key to moving forward in other areas of the negotiation, particularly in opening markets for manufactured goods under the NAMA pillar, but also with regard to services. The market access agenda of course is at the core of the DDA. And it is at the core of meeting our goals for Doha so it can truly be a development round.

You’ve covered the announcements and debates from this week. I didn’t come here with a magic fix, but I did come here with a lot of optimism. I remain optimistic because I see the will to succeed and I see progress, slow but sure, but progress.

The promise of Doha is too important. We must keep the momentum going to ensure we finish the negotiations by 2006 as we have all agreed.

Before I take your questions let me just finish by stating what is perhaps the obvious. The United States will continue to lead in the Doha Round. We took the lead in launching the Doha Round, we believe in it, we believe as prime advocates of reform across the board, that a successful Doha Round is extremely important not just for the United States but again to the global economy and particularly to the developing world.

With that I’ll be happy to take any questions you might have.

QUESTION: Alan Beattie of the Financial Times. Ambassador, as you know there has been some concern among other WTO members that CAFTA has distracted the U.S. from the WTO. How can you reassure them that you haven’t expended political capital on the Hill on CAFTA that might have been better spent on the Doha Round.

PORTMAN: Well, it’s a good question. I think just the opposite is true, primarily because we were successful in CAFTA. I’d be here, frankly, with a different message had we not been successful. That would have been tough. Although we didn’t pass CAFTA by a large margin, given the array of forces arranged against us with this particular vote and given the fact that it was a come from behind victory, I think it helps us. I think it helps us to gain momentum. We addressed the very toughest of issues. And again, they weren’t necessarily related to Central America. They were related to the impact of trade on jobs. They were related to our trade deficit. They were related to issues, as I said, such as our trade relationship with China. And we were able nonetheless to achieve a victory there. In terms of being distracted, I’ve been pretty active as you know on the Doha Agenda. On my first day in office I got on the plane and I went to Paris for a meeting where many of you were there, as I said earlier, where we had a nice success on a relatively technical issue, but with regard to AVEs coming up with a way to go from specific tariffs to ad valorum tariffs, coming up with a formula. The next visit that I took was also quite successful. And that was in Cheju (spelling) in Korea, where the APEC countries came together and supported a very ambitious formula with regard to non-agricultural market access, the so-called Swiss formula, appropriate that we are here, talking about that. That was a success, in the sense that it moved the process forward in terms of coming up with a more ambitious result in manufactured goods and other non-agricultural goods. And then in Dalian where I was a couple of weeks ago, we also had some success in terms of coming up with a better structure on all areas, but particularly agriculture. And the paper that was circulated by the G-20, I characterized as a constructive paper. I also said that I thought the Chairman’s work was very helpful. I met with Tim Grosser briefly today, incidentally, who is the chairman of the agricultural committee and we continue to work very closely with him on structure. So while the Central American Free Trade Agreement was important, and it was important that it pass, and while we had an uphill battle there, we have not been distracted in the sense that we have stayed very much on target with regard to Doha and we will continue to.

QUESTION: Esther Lam from the South China Morning Post. Ambassador, you mentioned repeatedly China’s trade policy, so I have a question on this subject. Your government announced new restrictions on Chinese textile exports last Friday, exactly one day after the reevaluation of the Reminbi. So the Chinese government is saying that your government acted in bad faith, because all the time the U.S. whether in Congress or lobbists, were linking the two issues, the Renminbi and the trade deficit. How do you respond to that? Thanks.

PORTMAN: Well, first I thought that the Renminbi announcement was a welcome announcement. Not everybody in the United States and around the world feels that way because they wish it had been even more progressive. But I think it was welcome and I have expressed that publicly. Second, the textiles decision you are talking about, was not a determination, and we carefully communicated that in advance to Chinese officials. It was simply a determination to look at other applications. It would have been a great surprise had we not accepted the ability to look at those applications. It does not mean that they will be determined one way or the other. It was not a decision that the Chinese government was surprised by, nor was it a determinative decision by the United States. Finally I will say that we are making some progress on our issues with China. We had a successful JCCT meeting two weeks ago in Beijing where we made measured progress in a number of areas, including intellectual property reform. But we still haven’t made the progress that we seek to make for the simple reason that the Chinese market is not open to U.S. products and U.S. services in the way that our market is open to Chinese products and services. And this has become a major problem in our trade relationship and created a huge imbalance in trade. Last year our trade deficit with China alone was 162 billion dollars, which of course is the largest trade deficit in the history of the world. This year it is expected to be well over $200 billion per year. So what we are seeking is balance through fairness. And that fairness would be market openings in China commensurate to the openings that the United States has provide to China and other countries, incidentally.

QUESTION: Jamil Chade, O Estado de Sao Paolo. Two questions. One on this political capital that you might have gained. Do you think that it will be easier to pass in Congress your proposals on the cotton reform that you are supposed to do, otherwise you are going to face retaliations by Brazil. And secondly, still in the hemisphere, if FTAA doesn’t go further, as you plan, are you ready to negotiate bilaterals, as you already did with CAFTA, but with other Andean countries, with Mercosour to try to get these markets somehow to open, or to get a deal with them although FTAA wouldn’t move forward?

PORTMAN: Good questions. I’ll take the second one first if it’s alright. The answer is yes. We are interested in expanding trade throughout the hemisphere and creating more regional integration and we would, as you know, have as a goal the FTAA—but in the meantime certainly very interested in bilateral and smaller regional agreements where we can knock down barriers to trade and create something more akin to a common market in goods and services. One example would be Panama, which is as you know very interested in having a free trade agreement with us. The Andean counties you mentioned we’ve been working on that for the last couple of of years. As you know, Celso Amorim and I speak regularly and certainly our relationship with Brazil is a very robust one. We have a strong economic relationship, an increasing trading relationship, and that’s a nice segway to your question about the cotton case. We have responded to the WTO decision in a way that I believe other countries in the world, including Brazil, are pleased. It’s not easy politically because we do have program in place with regard cotton that is very politically sensitive, but we took the necessary steps administratively, immediately. And with regard to the legislative steps, we are also promoting with Congress the legislative solution that is necessary to be in full compliance with that WTO decision.

QUESTION: Scott Miller of the Wall Street Journal. Yesterday, Dr. Supachai was talking a bit about the mechanics of negotiation and he said that the old-style brinksmanship doesn’t work anymore because things are too complicated and we might have to give up on linking issues. Mr. Mandelson mentioned something similar yesterday, a kind of vaguely defined notion of a new negotiating paradigm. Do you think that there’s something wrong with the way that negotiations are carried out and is there some way of conducting them more efficiently?

PORTMAN: I suppose it’s easier for me to say yes since we haven’t made the progress that I would have hoped in Doha in the last three months while I’ve been in this job. But, I’ll just be very frank with you, I have seen over the last three months consistent progress in the right direction. I’ve seen these decisions be made with the best interests of the countries involved in mind and these decisions are tough. They require each of us to make compromises from where we might want to be. It takes us out of our comfort zone, domestically, but I don’t think there’s any magic to one structure or another. I think it’s really pretty simple. We have to keep in mind the goal, as I said earlier, and the goal is the enormous benefits that each of our countries will achieve and importantly what the developing world will achieve by liberalizing trade. Doing so in a sensitive way that takes into account particularly the needs of the least developed countries, particularly taking into account the fact that we are on a tight timeframe and that brinkmanship is not necessarily the most effective way to solve complicated problems, you’re right.

On the other hand, we don’t have the time and the luxury of time to be able to sit back and continue to analyze. It’s time to move forward. Putting our cards on the table, understanding that there will be concessions that have to be made and understanding the difficulty of that. But again, keeping in mind the enormous potential that we can achieve if we get a successful Doha round. And that must be what drives this process. So, I don’t know if I’ve outlined a new paradigm, or just said that the simple truth is that these will be tough decisions, but they are so important given the overall goal that we have to make them.

QUESTION: Hedayat Abdel Nabi, Kuwait News Agency. Sir, could you give us your reflections about U.S. relations with the Arab world and the Gulf region and if you could tell me if the question of terrorism and trade is looming over your preoccupations now in the U.S. concerning the Arab region?

PORTMAN: That’s a good question. I see actually a lot of interest in the Congress and certainly in the administration in expanding our trade relationship in the Arab world. I think it comes in part from the increased interest with regard to Iraq and Afghanistan, but it’s larger than that. It’s a sense that in the Arab world there is a real opportunity to enhance our economic relationship, bilaterally, but also through trade liberalization to modernize economies and to improve the lives of people and improve their prospects. As you know, we have free trade agreement discussions going on, very actively, with the United Arab Emirates, with Bahrain, with a couple of other countries in the region, not quite as mature yet, and I’m very hopeful that in the next couple of years that we can have some major changes in terms of our economic relationship with particularly Arab countries in the Middle East through free trade agreements. As you know we have an interest among some in Congress in having a MEFTA, Middle Eastern Free Trade Agreement, that’s a larger regional agreement. And what we’re doing now with these individual countries is beginning to put the pieces into place so that that can be possible. So that certainly is an area of the world where I see a lot of potential.

QUESTION: The question of terrorism. You don’t have any preoccupation with it, especially after the Sharm el-Sheik bombings?

PORTMAN: Well I think to the degree there’s a link there, it’s what I said about giving people the prospects of economic prosperity, hope, opportunity. And that comes with more open trading, and it comes with free markets. It comes with the economic growth that has always accompanied effective trade liberalization and fair trade liberalization. So that would certainly be a consistent goal with the long-term goal to address terrorism by promoting economic and political freedom.

QUESTION: John Zaracostas of Fairchild Publication in New York and Lloyds List of London. Mr. Portman. Firstly, could you elaborate a bit—what’s the stumbling block to getting a deal with the Chinese on textiles and apparel? You were close in Beijing, but something happened, if you could elaborate on that. And will it be as ambitious as the China-E.U. deal—will you go beyond the 7.5% upper cap? And secondly, with reference to opening up markets and bringing down barriers, will there be a U.S. offer on maritime transport? You’re the only major player without an offer on the table at the moment.

PORTMAN: Let me start with your second question and tell you I don’t know with regard to maritime transport, but Ambassador Allgeier will answer that question in a moment, right?

AMBASSADOR ALLGEIER: Yes sir. (laughter)

PORTMAN: He can think about it in the meantime. With regard to textiles, there’s been some misunderstanding and I think perhaps it’s our fault that we haven’t communicated this clearly enough, but we’ve had consultations with the Chinese government from the start on textiles. We’ve had two meetings, in fact, one as you know was in Beijing just prior to the JCCT, the other was a teleconference that took place about two-and-a-half weeks, I think, previous to that. And we continue to discuss with the Chinese the issues that relate to each of the safeguards. Incidentally, all of the safeguards taken together and the potential safeguards amount to about 1.5% of our trade with China and only about 15% of our textile trade with China. And recall that in these areas, we’ve had increases of up to 1500%. I know the EU has also had large increases, and technically we would describe those as surges under our law. But our percentages have been even higher and it is a relatively small part of our trade with China—again a very healthy and robust trade relationship with a trade deficit approaching $200 billion a year. So, just to put that into some perspective we are continuing to talk. To your specific question on ‘what would that negotiation be like?’

QUESTION: Is it going to go beyond the safeguard?

PORTMAN: We’re still discussing that internally. One, whether we would enter into formal negotiations as the EU did to attempt to achieve that number, whatever that might be. The time period of course is another important variable, and we just haven’t made those decisions yet. Now Peter, would you like to answer the maritime question?

ALLGEIER: Pardon me? No, I was just drawing boats here on the napkin. Actually, I mean we do have certain maritime services in our services schedule. The principal thing that we do not have is the intra-costal maritime services and that of course is a very sensitive subject in the United States. So, if you look at our overall services offer and our overall services schedule I think you’ll find that it is one of the most open in the GATS and we continue to make improvements in it.

QUESTION: Richard Waddington of Reuters. You mentioned that the U.S. was going to show leadership and you also said that agriculture was the most important area of the thing. Are these two going to come together when you get back to work in September? Is the U.S. going to come up with some new ideas on how we can break this deadlock on agriculture? And a second question, just on Boeing. This afternoon you mentioned on your way into the WTO, I heard our TV recording, that you’d had conversations over the last week, I wonder if you could just elaborate on that. And just in a general question, you’ve been saying, both you and Mr. Mandelson, that you’re open to the talks on Boeing. I mean, how is this thing going to play out? When are you going to have some serious discussions?

PORTMAN: Let me start with Boeing, because I don’t recall having said that to that TV reporter. But it’s correct—so you must have seen that through my communication. I indicated that we were talking, but in fact we did talk this week about the issue with the EU. I did have conversations. So you’ve gotten me to say something I didn’t say previously because you figured I had had talks. And that’s how I would like to approach it, is to keep the channels open and to continue discussions. The U.S. position is really very simple and it is that so long as launch aid is on the table, we must move forward with litigation. The agreement we worked out back on January 11th was that launch aid would be off the table therefore we could talk. And when launch aid couldn’t be kept off the table, my hands were tied and we proceeded with a WTO case. That case is proceeding as your know, and while it proceeds we are certainly open to talking. I would prefer a negotiated settlement.

I think it’s in the best interests of the EU and the U.S. and I think that negotiated settlement should be an elimination of subsidies. Again, we have a relatively simple position. I think the subsidies should be defined by the WTO, so it’s not the U.S. definition. And I think if we got there, it would be helpful to the EU, to the U.S., but frankly to the world, because you’d have better competition, lower prices. And I think it’s consistent with what the WTO stands for. So, that would be my goal and it still is my hope that in these talks we can come up with a negotiated settlement. With regard to your first question, I do believe that agriculture, as Celso Amorim famously said, is the engine of Doha. Why? Because so many members of the WTO, particularly in the developing world, really see the agriculture market opening as their major opportunity and if they don’t see market access in agriculture, they’re wondering why the rest of the round is worth it to them. Now frankly, from a U.S. perspective, we believe market opening in general is important : services, NAMA, non-agricultural products, and agriculture. But I think if we don’t make progress on agriculture, it’s going to be difficult to get much enthusiasm from the 147 other members of the WTO for the comprehensive agenda that we’ve laid out. So what will we do you say, in September? We will come up with new ideas, we will try to be as creative as possible, we will try every angle we can, to be able to get to a consensus. We will work not just with the EU, but with other countries as well. I think it’s important that we broaden this as much as possible so that there can, in the end, be a buy-in by the largest number of countries possible so that we can get to a solution.

There are three pillars in the agriculture area as you know : one is market access, the other is domestic support, and the other is export competition. The structure is pretty well in place for the second two. In fact, for the third one, export competition, we’ve actually made significant progress and certainly last July we made a bold declaration with regard to export subsidies and export competition, that there would be elimination over time. So, we’ve made progress in the last three months, as I’ve said. I’ve seen considerable progress on the market access side some of it technical, like the AVE issue, some of it structural, like the Grosser paper and the G20 proposal and beginning to come together with something that can lead us to a solution, but we’re not there yet. I’m sorry we’re not, but we’re not where I would like to see us. But in September we will be rolling up our sleeves and getting to work with more ideas, more creativity, with the hopes of coming up with a solution.

QUESTION: Ravi Kanth, Washington Trade Daily. You met Minister Kamal Nath in the morning; I believe one of the issues was binding your current services commitments. Would you be prepared to do that at this juncture in order to give some comfort or assurance to the Indians that they can go ahead with their conditional revised offer?

PORTMAN: Go ahead with their?

QUESTION: (inaudible)

PORTMAN: Ravi, this morning was the first time I had actually had the opportunity to see the proposed summary of the Indian offer. I have not seen the offer yet, and I don’t know that our team has had the opportunity to see the offer in writing yet. So, I’m not sure what the outlines will be, much less the detail. So it’s probably pre-mature for me to answer that. But, we have put an offer on the table, our offer is public, people can see it. As you know, we’re relatively open in services in the United States already, the Uruguay round is part of the reason for that. So, it’s difficult for the U.S. to make much more movement on services, but we did make an offer and we did have a good discussion this morning with Prime [Trade] Minister Nath, on the offer, on all of the aspects of services, all of the modes. And I feel very confident that the Indians will continue to take a leadership role in this, because it’s in the interest of India and because India has shown leadership, particularly Kamal Nath personally has shown leadership in the area of services and he is a very thoughtful, senior WTO official who people look to. So, we’re delighted to be working with India on that. We also had a big victory this week we think working with India on some other issues.

QUESTION: Trade facilitation.

PORTMAN: Exactly. So we had a good discussion and we are interested in working with India on the services matter. We think India will continue to be a leader.

QUESTION: Warren Giles, Bloomberg News. Ambassador, this week we’ve seen another threat, or a threat of another dispute case against the U.S. at this time on rice subsidies. Are you concerned that the lack of progress on agriculture means that the U.S. is more vulnerable to these kind of disputes and how do you see that playing out with the frustration, as you say, that agriculture is the engine of the talks and there’s bound to be more frustration with the lack of progress?

PORTMAN: That’s a very interesting question. Who are you with?

REPORTER: Bloomberg

PORTMAN: I hadn’t really thought about it that way. You’re talking about the Uruguayan case on rice? Yeah, again, we believe that negotiation is better than litigation to achieve reform in the case of rice subsidies. And we haven’t seen anything official yet with regard to that case. We’ve seen the press reports that you’ve seen. I’m not sure what the impact will be. I think if you look at what could come out of the WTO process on market access and on subsides and on exports, it could be a very balanced and helpful result for a number of U.S. agricultural interests, including rice. We have a very productive and efficient rice production system in the United States and so there is an offensive interest as well as a defensive interest. And this case, and other cases like it might have an impact. I really haven’t thought through that.

QUESTION: As long as there’s no agreement the U.S. is more vulnerable to this kind of dispute.

PORTMAN: Probably, and it depends what the agreement is too. If you look at the situation around the world, you know the United States provides subsidies to our agricultural community. They are roughly one-third of the subsidies provided in the European Union for the same amount of production, roughly $200 billion in production. So I’m not sure who would be more vulnerable, even with regard to Japan. I had a great meeting with the Japanese trade minister today, not the agriculture minister, but the trade minister, and there we have less production but subsidies comparable or greater, so it’s not just the U.S.

QUESTION: Marlene Schnieper, Tages-Anzeiger, Zurich. You say you are firmly convinced to bring to success Doha. On the same hand, you are starting bilateral talks on free trade with Switzerland, can you tell me concretely for why it is interesting for you? Will Switzerland be a sort of test market for the EU?

PORTMAN: Well we haven’t begun free trade talks with Switzerland. We have had some great discussions with Switzerland in fact Minister Joseph Deiss, who is a friend of mine, was in Washington this week and we had some good discussions about the economic relationship which as you know is very strong. Switzerland today has considerable trade with the United States, our two-way trade in industrial goods is about $20 billion a year now, $16 billion in services. Switzerland has considerable foreign investment in the United States and vice-versa. I was informed that Swiss entities in the United States now employ 500,000 American citizens. So we have a very strong economic relationship and what we agreed to do was to meet this Fall to discuss that relationship and see what we should do going forward. I’m not sure a free trade agreement makes sense or not at this point. Nor, I think, are the Swiss officials sure. But we are going to take a look at it and we are going to analyze it given the fact we have such strong economic binds. This has nothing to do with my Swiss binds by the way. I can’t be a parochial about these things. But, our process is interesting. To enter into a free trade agreement we have to have considerable consultation with the U.S. Congress and with the stakeholders, with the private sector, before we can even begin discussions. So we have not gotten to that level yet. And I don’t think it’s at all inconsistent with Doha, by the way. I think it’s entirely consistent—there’d be hopefully similar undertakings and it would be complimentary, should we proceed.

QUESTION: (inaudible)

PORTMAN: Well, if it’s consistent with other FTAs it would go further. It would go further.

QUESTION: Hajime Osaki with Kyodo News. The outgoing agriculture chairman, Mr. Grosser, said yesterday in his report that he thought that a key to the agriculture market access is flexibility. May ask you to tell us, your view, how you are looking at this flexibility issue. Flexibility in the formula and the sensitive products and the tariff cappings. How are you going to respond to the G-10 demand that greater flexibility should be maintained? And my second question is related to paradigm change. Do you see that the era of the old quad is over and the era of new quad is emerging? Thank you.

PORTMAN: I think you need the old quad and the new quad. I mean, honestly. That’s one reason I met with Minister Nakagawa today. I think it’s very important that we be as inclusive as possible. With regard to your statement that the G-10 is looking for greater flexibility—I hope you don’t mean greater flexibility than the current Uruguay round commitments because the United State believes they aren’t adequate to open markets in the way that would, again, achieve the liberalization, particularly in the developing world, that would lead to better living standards and more prosperity. So, if it’s relative to where we are now, more flexibility, no. If it’s relative to a Swiss formula as applied to agriculture, which is what we would like to see despite the fact we have sensitive products as well, you probably need some flexibility in order to get agreement. But we are looking for the highest level of ambition possible. We honestly believe that with regard to market access it would be in the interest, again, not just of the United States but of the global economy if we could set in place for the next decade a new level of ambition that goes well beyond the Uruguay round. So, flexibility is a relative term I guess and sensitive products is something we will have to deal with. We acknowledge that, but I think we should shoot high and if we don’t, my fear is that that engine of Doha and what I view as therefore the engine of economic growth and job growth that can come from Doha will not meet its promise.

QUESTION: Gary Yerbey with BNA. I wonder if you could bring us up to speed on the state of play of the U.S. negotiations with Russia on Russia’s accession to the WTO? I understand there were talks here this week on that, where we are on that process and whether you still expect Russia to be a member by the end of the year, by Hong Kong.

PORTMAN: Assistant USTR Dorothy Dwoskin is smiling at me over here because she has been in the middle of the Russian accession talks over the last year or so. I met with Minister Gref as you probably know on this as well, I frankly have not gotten a read-out on the talks this week yet. I know we did have additional talks, but we are hoping by the end of the year to be able to have completed the accession discussions, but frankly there are still some issues and those issues include IPR, intellectual property reform. Also, some specific market access issues, some specific services issues still outstanding. So, we would very much like to see Russia in the WTO, we think it makes sense. The bilateral that is necessary prior to the accession, we hope to be able to complete by the end of this year. And we’re still pushing hard to make that happen. Dorothy, anything to add to that? Peter? We can follow up with you, Dorothy can provide you more details if you like.

MODERATOR: I think we’ll take one last question. Sir?

QUESTION: Patrick Beart of AFP. Yesterday Mr. Mandelson was rather critical of the United States for domestic support. He’s been saying the United States was always saying that they would reform their farm bill, but he thinks that nothing concrete is happening. So I was wondering, is there something that you could do early on to show that the process of reform is actually starting? Also, as you’ve been reminding that President Bush has called for the elimination of subsidies by 2010, I was wondering why the United States can’t start by eliminating its subsidies on cotton as a down payment to the Doha negotiations? Thank you.

PORTMAN: I didn’t hear Commissioner Mandelson’s comments, so I don’t want to comment on what he might have said or might not have said. But, just to make the point again, very clearly, that the United States is prepared to work on all three pillars, including domestic support, where we’ve made the most progress as you know, on structures on domestic support and export competition where we see very disappointing progresses on market access. There, the United States would like to follow a Swiss formula to be as aggressive as possible in knocking down barriers to agricultural trade. However, because the EU and others are very concerned about market access, we have agreed already, we have already made compromises from that. As I said earlier, I think the G20 proposal is a constructive proposal. It’s not what we would like to see, but we are willing to work within a framework that Tim Grosser has laid out and we encourage the G20 and others to offer those kinds of constructive proposals. So, on market access frankly we’re disappointed. We’re not getting what we think is necessary to have ambitious Doha results on agriculture. The notion that in order for us to see market access in the way, not we would like to see it but even the compromise, that we have to do more on domestic support when the EU has three times the domestic support we do for the same production and five times the allowed support under the WTO is a little difficult for me to sell back home.

What the President talked about of course I totally support is that we would all eliminate all of our domestic subsidies. But, to be frank with you, I think it’s time for all of us to show flexibility on all of the areas and where you have the highest tariffs you’re expected to reduce the most. Where you have the highest subsides, you’re expected to reduce the most. That’s how this round was meant to operate. That’s what the July framework set forth a year ago—the question is what kind of flexibilities do you have, how do you treat sensitive products, and so on. And again, the United States is willing to be flexible in the sense that we want to get to a result that truly helps move this round forward and we will continue to do that. The President’s budget this year, as an example, because you mention agricultural reform, very specifically takes on an element of our current agriculture subsidy system. Whether that gets through the Congress or not, I don’t know, but it’s been proposed. So the notion that we are not interested in reform, when you have our President saying that he would like to eliminate subsidies all together and he specifically has proposed reforms seems a little inconsistent.

So, we will continue in good faith to be at the table trying to get to a solution. We believe market access is the key to development; the World Bank has indicated that 93% of the gains to the developing world would come from market access. And again, that’s simply because tariffs are very high right now in some countries in the developing world and the developed world. And knocking down those barriers will have an enormous impact on people’s lives. And being able to improve the economic hope and prosperity that this round was supposed to be all about. So, we’re going to continue to push on market access on all fronts but also be willing to extend a hand and work in all the other areas.

QUESTION: Specifically on cotton—

PORTMAN: On cotton, I reacted earlier to the gentleman from Brazil who asked about the cotton case and we have made the administrative changes that we had to make. Rather than resisting the WTO decision we are complying with it. With regard to the legislative part of it, we are promoting legislation that would also meet and fully comply with the WTO case. And again, I think the reaction has been quite positive from African countries as well as from Brazil and we appreciate that reaction when we make a good faith effort to comply.

MODERATOR: Great. Thank you very much!