U.S. STATEMENT AT UNCTAD’S 54TH TRADE AND DEVELOPMENT BOARD

Remarks Delivered by the Deputy U.S. Representative
David Shark, U.S. Permanent Mission to the WTO
October 8, 2007

Post-Doha Work Program

I. General Remarks on the Importance of Trade

· The United States welcomes this opportunity to participate in the debate on the important issues before this body today.

· We remain committed to achieving a successful outcome to the Doha Development Agenda -- one that creates new economic opportunities and catalyzes global economic growth, particularly in developing countries.

· Doha was launched in 2001 with the vision that we in the trade community could make a significant contribution to global economic growth and poverty reduction by negotiating an agreement that would spur new economic opportunities in the form of new trade flows.

· The United States remains committed to that vision and we are prepared to work with all of our partners – developed and developing – to achieve it.

· We are extraordinarily pleased to be working to advance the global trade agenda at a time when developing country trade is posting sustained, vigorous growth – nearly double the rate of growth of overall global trade.

- The WTO recently reported that global merchandise trade expanded by 8% in 2006. Notably, least-developed countries’ trade grew by about 30%.

- The WTO also reported that developing countries’ share of world merchandise exports reached 36% -- an all time high in the annals of the WTO.

· We welcome the steady accumulation of evidence showing greater overall economic integration by developing countries into the global trading system. The strength of the growth in trade among developing countries is equally welcome.

· The growth of the global economy stands as a testament to the tariff cutting work in the GATT begun over a half century ago, as well as to the adoption in more recent decades of more outward-looking policies by many countries.

· Yet, we recognize the paradox that, while the global economy has yielded unprecedented gains in standards of living throughout the world, it is also a source of anxiety for some. Many -- particularly in the developing world -- are not benefiting fully from the global economy.

· As a result of unprecedented gains in productivity in recent generations, millions of people today enjoy lives unrecognizable a century ago. But clearly, more must be done to broaden and deepen these benefits across the developing world.

· The WTO can play a vital role in these efforts. WTO rules give policy makers tools to turn back protectionist measures that hobble innovation, create disincentives to trade, keep costs high and limit access to goods and services, particularly for the poorest segments of society.

· Our efforts on Aid for Trade will also play a critical role. It is well established that economic growth is the main driver of poverty reduction – and trade, largely through its positive impact on competitiveness, can play an important role in promoting overall economic growth. Moreover, openness is progressive – benefits to the bottom income groups are proportionally greater than for the top income groups.

· For many years, U.S. development assistance programs have emphasized trade capacity building as a key element in economic growth strategies. So our strong commitment to the efforts to bring all stakeholders together in support for Aid for Trade should come as no surprise.

· As we see it, Aid for Trade is a long term project. Success will require sustained political commitment and will depend fundamentally on building “coherence” among all stakeholders – donors and recipients.

· We need to collectively challenge ourselves in the Aid for Trade effort, both donors and recipient countries, to do better. We have to find ways to ensure that the outcomes are better, at every level of spending.

· In the coming decade, the growth in the global economy will require all nations – active, emerging and prospective traders – to focus on policies that promote greater competitiveness in their economies.

· As the World Bank recently noted in its report on Aid for Trade: “In a world of global production chains, the additional costs of production resulting from high tariffs can be sufficient to render a country uncompetitive as a supplier.” And restrictions on services trade and other “behind the border” regulations seriously impede competitiveness as well.

· By keeping trade barriers high, we condemn our industries, farmers and service providers to backwardness, while preventing our populations from buying products that are cheaper, more varied and higher-quality.

· The Doha Round gives us a “once in a generation” opportunity to strengthen global economic growth and contribute to poverty reduction – we cannot afford anything less than success.

· No single country can make Doha a success, but it is possible for a handful of countries that are unwilling to make the necessary contributions to bring Doha to a halt.

· The United States understands that leadership in the Doha Round, or any previous round, means putting contributions on the table that will move the process forward -- and bring the Round closer towards a successful outcome.

II. Achieving a Successful Doha Outcome

· The Doha negotiations are at a critical juncture.

· In July, the Chairs of the negotiating groups on agriculture and non-agricultural market access (NAMA) tabled their best judgment on the outlines of a possible deal.

· Our gratitude goes out to the Chairs for their efforts to narrow differences among us. The ranges in the texts cut along the razor’s edge and push everyone well into their discomfort zones.

· As recognized by the APEC Leaders -- representing over 50% of global trade -- in September, these texts – and the ranges therein – are our best, and possibly our only, chance to take the negotiations forward in the coming months.

· The question now is how WTO Members will use the multilateral process -- to carry work forward on the basis of these texts into an agreement or to allow a deal to slip away.

· There is a sense of urgency, a sense that we must seize this opportunity to move the negotiations towards a successful outcome that creates new trade in agriculture, NAMA and services.

· That’s what will be best for the multilateral system, for global markets, and for development.

· The United States has clearly signaled our willingness to negotiate on the basis of the texts, and recently reaffirmed this willingness with regard to the agriculture text’s ranges for overall trade distorting support – provided others are willing to commit to negotiate on the basis of the current ranges and flexibilities in the Agriculture and NAMA texts.

· Consensus is possible, but only on the ranges and flexibilities in the texts that provide for a “real and substantial” market access outcome in agriculture and NAMA.

· In agriculture, the challenge is to find the right balance between tariff reduction formulas and flexibilities contained in the text that are intended to address individual countries’ sensitivities and concerns.

· One concern – shared by many exporting countries, developed and developing – is to ensure that the operation of these flexibilities do not disrupt existing trade opportunities and do not hinder the important goal of creating new market openings.

- For example, during the negotiations, groups of developing countries identified concerns about the possible impact of further liberalization on their farmers. The concept of Special Products emerged as a way to address the food security, livelihood security and rural development concerns of these countries.

- Negotiators have been working on a way to ensure appropriate indicators and treatment for Special Products that respects the rationale for this flexibility but at the same time complies with the Doha Mandate for substantial improvements in market access

- Likewise, the concept of a Special Safeguard Mechanism has also been agreed to help provide comfort to those developing countries concerned about the possible negative consequences of unforeseen impacts of further trade liberalization. All Members, however, agree that the operation of this measure should not be applied in a way that is disruptive to normal trade.

· In NAMA, the challenge is to build from the Chair’s draft text an agreement on NAMA modalities that will truly open markets and enable trade to grow worldwide. At the end of the day, it is the new tariff rates that our businesses will be paying that will determine whether we have a worthwhile outcome.

· This is simply a practical, commercial and political reality: we need a result that provides meaningful new market access for our workers and manufacturers. Without such a result, we would be kidding ourselves that we have concluded a pro-development Round – as manufacturing represents 75 percent of global merchandise trade.

· In a world of global production chains, importing and exporting are closely related, so reducing barriers to goods trade is critical. Further, research shows firms that engage in trade have higher productivity, larger size, and greater capital intensity, as well as pay higher wages and undertake more innovation.

· By way of example, there is a continuous stream of entry, exit, and resizing of firms in the ever-changing U.S. economy -- and the resulting amount of "churn" in the U.S. labor market is enormous. A recent study showed that the U.S. economy shed 15 million jobs per year over the past 10 years -- but these losses were more than offset by the creation of about 17 million jobs per year during the same period.

· Trade reforms must go hand in hand with appropriate economic policies that enable factor markets to function efficiently to ensure that jobs shed in one firm can be redeployed in others. This is the coherence we seek in Aid for Trade by tightening the connection between the trade and aid communities, between trade and finance ministers and between donors and recipients.

· In services, a robust outcome is essential in a final package. As one of the three core pillars of the market access negotiations, the services group must achieve significant progress in terms of closing the gap between current practice and trade commitments and in going beyond current practice to provide for new competitive opportunities, particularly in key infrastructure sectors like financial services and telecommunications where significant trade impediments remain.

· For all economies, the gains from more open services trade can be substantial. Services occupy an ever larger share of the overall economy, particularly in developing countries and levels of protection in services trade tend to higher than for other areas.

· Services such as telecommunications and distribution are essential for producing and delivering virtually all goods, so more open, more efficient, services markets can have a major impact on overall economic performance.

· The costs of services protection, in particular of infrastructure-related services, are spread across, and impose deadweight losses on, a wide array of downstream users – in manufacturing, agriculture and other services industries.

III. CLOSING

· We would like to thank the UNCTAD Secretariat for its annual note containing its views on recent developments and issues in the Doha Work Program. It’s our sense that this product would benefit from stronger analytical rigor in its policy prescriptions and greater attention to trading issues as they relate to the actual commercial needs.

· We have a shared responsibility to ensure we do not miss the historic opportunity which the Doha negotiations present. The United States will continue to provide leadership, but all must step up to take the negotiations on the texts forward to a successful outcome.

· Now is the time for all WTO Members to signal publicly their willingness to accept the market access ranges and flexibilities in the Ag and NAMA texts on the table in Geneva – or gamble being in the spotlight as the one putting the Round at risk.