September 27, 2006: UNCTAD - Post-Doha Work Program

UNCTAD - Post-Doha Work Program

Remarks by
David Shark
U.S. Permanent Mission to the WTO

September 27, 2006

I. General Remarks

The United States welcomes this opportunity to participate in the debate on the important issues before this body today and we very much welcome Dr. Supachai and Director-General Lamy’s contributions at the outset of this discussion.

As we have already flagged in the opening session, we have some serious concerns with the Trade and Development report. Many of these concerns have already been articulated eloquently by Mr. Lamy as well as others.

As there will be an opportunity to discuss the report in detail tomorrow, I will not dwell on it today but rather focus on the discussion of how to put the Doha negotiations back on track.

II. Meeting the Promise of Doha

The United States shares the disappointment of Secretary Annan over the suspension of the Doha negotiations. The aim and the promise of Dohais to broaden and deepen the market-openingwork begun by the GATT over a half century ago to lay the basis for a broader and deeper global prosperity for the citizens of the world – with a particular emphasis on more active participation in a rules-based global trading system by the developing countries.

The United States remains strongly committed to working with other WTO Members to unblock the negotiations and take them to a balanced, comprehensive, and ambitious conclusion as evidenced by Ambassador Schwab's active engagement with her Ministerial colleagues during recent ASEAN, G-20 and Cairns group meetings. We are encouraged by the positive feedback we received from our partners during those meetings.
We seek an ambitious and balanced outcome across the board, including in NAMA and services. Agriculture remains the key to moving forward but while progress in this area is a necessary condition for success, it is not a sufficient condition for success. We need progress in all areas and we need to produce results that open meaningful new market access opportunities if we are to meet the goals we set for ourselves in Doha and fulfill its promise to promote global growth and national development.

It has been suggested that what stands in the way of progress is politics rather than economics. While I can’t speak for others, I can say that from the perspective of the United States, the issues are economic.

Of course, if you can’t get the economics right, the politics aren’t going to work either. But the solution to the current impasse lies in engagement aimed at achieving substantial, meaningful economic results that are of benefit to all and promote development.

Turning to agriculture, the United States has already put on the table proposals that would require fundamental changes to our subsidies programs by slashing amber box support, capping blue box supports at half the level that had been proposed and cutting in half the limits on de minimus supports.

We understand that Members are still seeking more and we’ve been clear all along that our offer was not a take it or leave it proposition.

But ambition on subsidies will not succeed if we are not also ambitious on market access – and not because of some vague notion of dollar-for-dollar matching.

Trade in agriculture is highly distorted and we each have different points of departure in addressing them. Some have high subsidies but low tariffs. Others have little or no subsidies, but very high tariffs. The European Community has both.

This reality is recognized in the DDA since it did not set out a hierarchy among the agriculture pillars. It calls for both substantial reductions in trade-distorting support and substantial improvements in market access. We must deliver on both.

Strong results on market access are critical to meeting the promise of Doha. Although the exact numerical results of various economic studies have varied, all the key studies have found that the vast majority of the gains from the DDA will come via improvements in agricultural market access.

Unfortunately, what we have seen on offer would not provide the meaningful new market access opportunities that are needed to meet this potential. Proposed cuts that would seem to be significant at first impression turn out not to necessarily open new opportunities. In the tariffication process undertaken as part of the Uruguay Round, in many cases quantitative restrictions were converted to tariffs that were much higher than would be needed to choke off any trade in these items. In addition, there are the phenomena of bound tariffs that are considerably higher than what is applied. And then there are the exceptions – what we sometimes call the Black Box.

Comparisons to the Uruguay Round are interesting and might be even more interesting if we could all agree on the math. It is clear, for instance that all the proposals on the table cut amber box supports by three times what was agreed in the last Round. The same cannot be said for market access, where some proposals barely improve on the Uruguay Round.

We are not looking for perfection – we are looking for meaningful results.

We also need to achieve substantial meaningful results on NAMA where the evidence also shows that those markets that open up are the ones that prosper. We believe firmly that ambitious contributions by both developed and developing Members, particularly those that most actively trade, are a critical part of a development Round. But the United States has also been one of the most active participants in finding creative solutions to the specific concerns identified by weaker and more vulnerable developing country Members, whether small and vulnerable economies, those facing concerns about preference erosion, and small recently acceded Members that cannot yet take advantage of the significant liberalization they have undertaken to access other developing and developed country markets. We have recognized from the outset the needs of the most vulnerable, but also that those benefiting the most from the system, whether the EC and Japan (or the U.S.) or Brazil, India, and China, must also contribute significantly, though not identically, to providing real market access gains, not just paper reductions.

Several UNCTAD expert meetings have also clearly demonstrated the critical role that liberalization in services, and particularly infrastructure services, such as financial services, distribution, energy, telecommunications, and logistics play on development strategies. The strongest multiplier effects are found in services on which businesses in manufacturing and agriculture rely, as well as for technologically rich services sectors that are transforming modern economies such as business and computer-related services. Services is growing faster in developing countries as a percentage of GDP than in developed and is now a major source of employment in many developing economies, accounting over 50 percent of the jobs in regions such as Latin America, the Caribbean, and Asia. Unfortunately, the trade and development report, we will address tomorrow, grossly understates that component of the trade agenda.

We continue to believe that the major gains to development that will come out of a successful DDA lie in opening markets. But, we also have recognized that many developing countries need help to take advantage of the benefits of the trading system. Our record in trade related technical assistance globally is second to none. We have made substantial contributions to trade-related technical assistance (TRTA) since the launch of the Doha Round as the largest single donor of TRTA. We have committed to doubling our assistance by 2010 through Aid for Trade, our particular strength is on the ground delivery of TRTA to the least developed through the IF and the important follow on supply side projects outlined by it and PRSPs. We will continue to make major contributions to TRTA through the significant contributions of the Millennium Challenge Account. In the last few weeks alone, we have signed a number of $400-$500 million contracts with LDCs under the Millennium Challenge Account process that will address in part and as set out by the recipient country's priorities, important supply side concerns.

So how do we put the negotiations back on track?

To start with, I think that Brazil set the right tone this morning in recognizing the key role that all the major players have to play but, more importantly in stating clearly the Brazil is prepared to make its contribution.

We too are prepared to contribute. Just last week in Cairns, Ambassador Schwab and Secretary Johanns affirmed that we are prepared to address concerns related to our domestic support proposal, but only when other key members make meaningful improvements in their Ag market access offers.

More generally, we need to avoid the trap of arguing over who goes first. The solutions we are seeking lie in substance, not process.

At this point we need quiet conversations, exploring options, considering what-ifs, exploring red lines.
We need to all work together to make sure we do not miss the historic opportunity which the Doha negotiations present.