USTR - Transcript of Press Briefing by Agriculture Secretary Mike Johanns
The Office of the United States Trade Representative

Transcript of Press Briefing by Agriculture Secretary Mike Johanns
Geneva 06/30/2006

"Earlier this month the IMF Managing Director pointed out that, and I am quoting, "Increased trade bolstered by multilateral agreements has been the cornerstone of growth in the global economy for many years. The US ambition is both to sustain and to strengthen that linkage for all, especially developing countries."

"Market access contributes fundamentally to development and we all know that trade can be an enormously powerful tool to generate income gains that can dwarf, absolutely dwarf foreign assistance. The World Bank's conservative estimate of $142 billion income gain to developing countries from goods trade barrier elimination exceeds the $80 billion in G7 foreign economic assistance and the current proposal for $42 billion in debt relief.

"We've done good work in other areas, but the core contribution to development comes from global market opening. In other words, creating new trade flows. That will be the yardstick of our success in this Doha round.

"When we launched the Doha negotiations and in subsequent commitments, all of us agreed to "achieve substantial reductions to barriers in market access," and those are the exact words we used. We continue to believe that we can meet this agreed-upon objective, but it will take contributions from all members.

"Suggestions that we need to settle for something less than achieving substantial improvements in market access for the sake of having a deal at any cost is, in my judgment, a clear signal that the WTO is losing its way.

"Twenty years ago we launched the Uruguay round. Twenty years later, we are only now seeing the end of the implementation and its results. We need no further proof than that this current negotiation is a once in a generation opportunity. These rounds just do not come to us often.

"The United States is committed to real reform in agriculture. Let me make that point. We signed up to this at Doha and all of our efforts since then have been aimed at getting a major result in the three pillars of negotiations.

"Our President, President Bush has been clear about our commitment to reducing and eliminating trade restrictions and domestic support and creating new trade opportunities through enhanced access. We are looking for a pathway for reform in three areas: domestic support, export competition, and market access. There must be a balance of outcome among all three areas - something quite different from a balance of incremental adjustments to what is currently being talked about in some circles.

"Last October we took a big risk in the United States. We put a bit agriculture offer on the table expecting that it would be matched by similarly bold moves by others. Regrettably to date it has not.

"On domestic support, we have proposed real cuts in domestic support - in the Amber, in the Blue, and in the de minimus. These cuts will require real reform in our programs. Although we do not have as much to eliminate on the export competition side as some others, we nonetheless are on a path to eliminate these practices as part of the overall result.

"Our October proposal was not take it or leave it. We never said this was a final offer. But we did say it was conditional on others moving. We've consistently said that achieving a meaningful result consistent with the Doha mandate on agricultural market access would mean an outcome that allows for market access.

"Looking across the three pillars of agriculture, right now the situation relative to market access is at best very ambiguous. Unlike domestic support and export competition, one cannot tell what actual market access increases might result. Simply wringing the water out of tariffs and providing huge exceptions through the three S's - sensitive products, special products, and special safeguards - create uncertainty in what appears to be a huge and unacceptable imbalance between market access and the other two pillars.

"Consequently, now is the time for WTO members to return to the aspirations of the Doha declaration and the goals of the framework, to find ways to deliver substantial tariff cuts, real access for sensitive products, and calibrated disciplines on special products and special safeguard mechanisms. Anything less really short-changes the Doha development round.

"We remain committed to negotiating a big outcome in agriculture, very simply because it's the right thing to do. A successful conclusion of the Doha development agenda would yield substantial benefits for the global economy with complete barrier elimination estimated at the World Bank to lift many tens of millions of world citizens out of poverty.

"Thank you for the opportunity to say a few words. I'd be happy to take some questions.

Question: "Mr. Secretary, accepting your point that the US offer hasn't been met by commensurate responses from the other members, the US position seems to be at this point that you're willing to entertain the possibility of doing more on domestic support if there is a really bold move by the others in the areas that you care about.

Can you just explain, maybe just from a purely tactical standpoint, why the US can't at this stage make an even bolder offer in domestic support, since it's all contingent on what the others do anyway. Everything is a single undertaking, nothing is agreed until all is agreed. What is stopping the US from saying look, we'll do more on domestic support. Okay, we know we can do it. We're willing to move first, however we'll withdraw it if the others don't come forward. What's wrong with that from a tactical standpoint?"

Secretary Johanns: "The premise of your question really outlines exactly the answer. Other countries have not met the ambition of the October offer. When we tabled the October offer around the world, our colleagues in other countries described this as a groundbreaking offer, an opportunity to unlock the Doha round.

"We made it very very clear at the time that that strong ambition, that bold offer, was dependent upon a strong response in market access. That is the key.

"We have made no bones about it since then. We have talked over and over again about the importance of market access. Market access, we believe, is what really makes the difference in this round worldwide, and every study supports that. This isn't something we dreamed up. Every study you read will tell you that the real opportunities for the globe lie in improved market access.

"I will also tell you that we're very very committed to our notion of eliminating trade distorting domestic subsidies. Our President has said that on a couple of occasions. But it has to be tied and it has to be balanced with the other three pillars. That's the key issue.

"And your premise recognizes the answer to the question and that is that we haven't been matched. There hasn't been a match in terms of our ambition."

Question: "Secretary Johanns, you're on record as saying that you think the next US Farm Bill needs to be changed for a number of reasons. I think you've said the budget, and I know you've said because of the potential that current US farm programs could be hit by WTO challenges like the Brazil cotton case.

"If there is no WTO deal this year, what do you think the new Farm Bill will look like? Will you still push for significant reforms?"

Secretary Johanns: "I believe reform is appropriate. I don't say that again just because I came to the office and one day thought that up. We did Farm Bill forums all across the United States. I did 21 of them myself in 21 states. We did Farm Bill forums in 48 out of 50 states and we heard a lot from farmers about reform, about the needs that they have. Keep in mind that in the United States only about 40 percent of our farmers receive a subsidy. Sixty percent of our farmers do not receive a subsidy at all. Yet they raise issues about the need for investment and phytosanitary/sanitary practices, the need for investment in research, strong support for university systems out there and the need to invest in research, market promotion of their products in other parts of the world. So those farmers who are very legitimately at the table for the Farm Bill discussion are bringing these issues and saying we think it's important that you consider the important contribution we make to the world economy. I think that's a fair comment.

"We also, as you know, have been involved in a case before the WTO, the cotton case with Brazil. We aggressively defended that. We appealed it. We aggressively defended it on appeal, but in the end there was a finding against us. As I've said many times in the United States, we have to be mindful of that.

"We will write a Farm Bill in Congress. That's where a Farm Bill is always written. But as I have said, it must be predictable, it has to be equitable, it has to be beyond challenge.

"Currently a significant portion of our receipts come from trade, plus we believe in trade. In our ag sector, our imports are actually growing faster than our exports. But what that indicates to me is that other countries have found our market to be a very very friendly market, and that is not a bad thing. Raising income around the world can be a positive thing. So we pay attention to trade. It is an important piece of what we do."

Question: "Mr. Secretary, can you give us in a nutshell the priority areas where the United States would like to see commercially meaningful market access for US exporters around the globe, to take it away from all this technical talk here. Thank you."

Secretary Johanns: "Without getting down too deeply into the weeds you can almost in the ag sector look at the products that we raise in the United States. We have a very varied agriculture, but very definitely we raise a lot of grain products, a lot of beef products, a lot of pork products, poultry products. Again, I think if you just went across the breadth of American agriculture you begin to understand why trade is so important. Again, I don't think that's secret information. You can see what our agriculture is about.

"Any area where we have agriculture is an important priority for us, but overall the priority is that if we're really going to wrestle distortion out of trade, you have to get to the barriers. We have always said we will do our part on the domestic support side, but when you have very high tariffs it makes it impossible to sell products into that marketplace. It just literally does, because it operates as an extra tax. It's an opening gate fee, if you will, to even get into the marketplace. That has to come down for this round to be successful.

"Tariff reduction has to be real and meaningful, and the loopholes have to be dealt with. You can't agree to tariff reduction only to see everything slip out the back door because of loopholes.

Question: "Were you thrilled to hear Mr. Lamie on the first day, Wednesday I believe, mention this 20/20/20? Considering that US farm subsidies were under $20 billion last year such a proposal would allow the US to potentially increase its trade distorting farm subsidies. What was your reaction to that overture by the Director General?"

Secretary Johanns: "As you know, it was an overture made to the media. It was not an overture made in a negotiating session or a discussion session. I read it with interest, but that would be about the extent of my thoughts on it. I have not asked him to flesh that out or to specify what he had in mind specifically. Like I said I read it with interest, but that was about the extent."

Question: "You say that a condition for a deal is real and meaningful cuts in tariffs, but as I'm sure you're aware, the argument about the US subsidy offer is precisely whether it's real and meaningful, and people say that as it stands the US could still spend more than the $19 billion it's spending at the moment. So why don't you spell out exactly where the level's going to be? Why don't you set a ceiling of $15 or $16 or whatever it is so that people can see with absolute clarity that the US farm subsidies are going to fall?"

Secretary Johanns: "I'm going to have to get down into the weeds a little bit to answer your question, so please forgive me because it's going to take a little bit of explanation of the US farm program and how it operates.

"The majority of the subsidies that we would run through the US farm program, the 2002 Farm Bill as it's called, operate through the Amber Box. Our marketing loan program, for example, which is probably the longest standing program. In fact marketing loan program started literally with the advent of the Farm Bill, 70-75 years ago, whenever it was when it was first passed.

"If you look at the detail of our offer you begin to see the dramatic offer that has been made. We have proposed that in that Amber Box category that we are going to cut that by 60 percent.

"Now let me, if I might, add a little bit of history here. It's not ancient history, it's recent history. Late last summer, early fall, you had been writing stories about the impasse that existed, that the EU was saying we should do this and the US was saying they should do that. We thought long and hard about that and we thought long and hard about our commitment to the Doha round.

"As we went out and about our colleagues from around the world said you know, if you're going to do anything meaningful, you've got to cut the Amber Box by 55 percent. Believe me, that is a real cut. Fifty-five percent goes directly to the heart of our farm program.

"We debated it, we talked to folks on the Hill, we talked to folks in the White House, and our offer was 60 percent. We stepped up and we said in this category in this Amber Box category we would cut 60 percent.

"What does that mean in real dollars, because we should be dealing with numbers here. It means we would go from $19 billion to $7.6 billion. I can tell you that in 2005 we estimate that these programs will cost about $12.5. So even if you go beyond bound to what we are actually going to use, this is a real cut.

"Let me add one other piece of information to this. That's not a one-year phenomena. This is how our farm program operates. These programs have exceeded this cap in seven out of the last eight years.

Now how anybody could argue that that is not a meaningful reduction when literally we are saying that the very heart of the US farm program is directly impacted by the cut that we have put on the table, it is very very real. It is going to require the reform of the US farm program."

Question: [Inaudible]?

Secretary Johanns: "No, they're not accurate. In all due respect to them, they have their case to make. But they are ignoring the reality of the US farm program. They are ignoring the reality of the actual numbers. They are ignoring the reality of how our program allocates its funding and by and large it is through the Amber Box.

"So in all due respect to them, I know that they are trying to come up with a catchy sound byte, but the reality is this is fundamental change.

"I don't stand just on my conversation with you today. That's why this program, this proposal that we tabled last October, captured the attention of the world. People who took the time, and our trading partners who took the time to look through what we were doing and what was happening here said oh, my goodness, that is a real meaningful, significant reduction in the US farm program, and it is. Numbers just simply don't lie.

"So in all due respect to them, I understand their need to say something, but they're ignoring the reality of the numbers."

Question: "Mr. Secretary, given that it was apparent last night there wasn't a whole lot of progress in the G6 meeting and that the EU promise of substantial movement on market access apparently hasn't materialized in a concrete proposal, at what point do you decide that these negotiations this weekend are finished and you pack your bags and you go home?"

Secretary Johanns: "We don't."

Question: "Are you reaching that moment?"

Secretary Johanns: "We are absolutely committed to this process, and we remain optimistic that we can have a bold Doha development round.

"If I might just address that. The EU basically has somewhat restated the G20 proposal. That's really what has been happening. It's been a restatement of the G20 proposal. But having said that, and the reason why I say somewhat, is there are very large gaps in that restatement.

"For example, I don't know and you don't know, there is no way you can determine what market access means if you don't know what sensitive products mean. If you don't know what special products mean. If you don't deal with those categories of special products, sensitive products, special safeguards, you can't even express an opinion as to what market access is all about and those issues really were not addressed.

"The other thing that I would point out to you, and we've said this, we appreciate any contribution. I've always believed personally that if people are talking, that's a very positive sign. Our analysis of the G20 proposal literally from the time it was tabled was that on market access it will not result in much in terms of market access. Then if you look at developing countries, it even gets worse. Again, rather than drag through the weeds here, suffice it to say that on the market access side of things that proposal just really doesn't get us down the pathway. It's weak with developed countries, it's very weak with developing countries."

Question: "Mr. Secretary, yesterday the EU Trade Commissioner has also indicated to you that he could go up to 60 or 65 percent but he wanted you to tell him what would be the kind of real and effective cuts you will bring about in the subsidies. Can you indicate a figure if the EU goes up to 60 or 65 percent, what would the US do exactly?"

Secretary Johanns: "He doesn't need my defense, but in defense of Peter, I didn't see that he tabled a 60 or 65 percent - I don't want his member countries to swarm Geneva."

Question: "Accept Peter's proposal that he could go up to 50 percent-"

Secretary Johanns: "No. You're kind of taking us down a path that really did not exist.

"Again, I want to be very clear. I didn't walk out of there with, and I don't think any other Minister did, with the notion that all of a sudden the EU had moved to 60 or 65 percent. I think that would be very unfair for me to make that claim or even suggest that. That would be very unfair to Marion Fischer Boel or to Peter Mandelson. I'd even hate to go there.

"But let me just offer a thought. Whether it's G20, whether it's 60 percent, whether it's 65 percent, whatever the percent is, you have to tell me what you're going to do on some very very key areas. Will sensitive products be at one percent or will they be at ten percent? What about special safeguards? What will happen here in terms of the exceptions?

"That is precisely my point. It is one thing to restate a G20 proposal, for example, but if you don't have definition we really don't have a proposal that moves us down the road.

"At eight percent, for example, the EU proposal, eight percent sensitive lines, that would be 176 product lines that would be impacted. That is huge. That is very very dramatic. To this gentleman's question, what are you interested in gaining market access in, he could ask that question to every country here, and all of a sudden that could evaporate.

"So it is a discussion that really, number one it's not based on anything I believe he is doing or Marion Fischer Boel is doing, and I think I need to be fair to them in that regard. The other thing is, until you bring structure to what's going on here, restating a position or restating a previous proposal doesn't' ring closure to even what the offer is."

Question: "Mr. Secretary, Mr. Amorim yesterday in his press conference here said that if the subsidies are maintained by the US at a level of US dollars 20 billion, there would be no deal. What's your reaction to that?"

Secretary Johanns: "Our attitude is we are here to work, we are here to roll up our sleeves, we are here to be problem solders. We're going to do everything we can to do that.

"We have always said that if countries can match our ambition we can do some very very hard work together. That's what we want to do.

"My reaction is Ministers say things, and I just think drawing lines in the sand when we've really only had a few hours of discussion and negotiation, I just want to avoid that.

"We came here to work. We came here to do everything we could to contribute to a successful Doha round and that's what we're going to endeavor to do.

"With that, thank you everyone."