Opening Statement
at Press Conference

by
Ambassador Allen Johnson
USTR Chief Agricultural Negotiator

July 29, 2002
World Trade Organization
Geneva, Switzerland

AMBASSADOR JOHNSON: First of all thanks to everyone for coming. I am beginning to believe there are only hot days in Geneva. June was pretty miserable as well actually. I appreciate your coming by. We've obviously had a lot happen in the last month. You might recall that here in Geneva, as we put forward our export competition proposal, I had mentioned in that time and the coming month we would be engaging in outlining proposals for comprehensive reforms of all three pillars, including market access, and domestic support. Today, I announced to the members at the agriculture negotiations that in fact we have done that, which some of you may have seen in the press last Thursday. Ambassador Zoellick in Washington and Secretary Veneman in Tokyo announced our proposal.

In addition in June I had many questions regarding Trade Promotion Authority, and I pointed out at that time that it had already passed the House and the Senate, and we had hoped that the conference would be concluded by the August recess, and hopefully I may be able to report that that assessment was also accurate. The House passed Trade Promotion Authority Conference Report on Saturday and the Senate will be in session for another week and hopefully they will be able to move quickly on it. Which is absolutely essential for pursuing our agenda.

The U.S. is moving forward in working to open and expand markets for U.S. agriculture and farmers around the world by creating opportunities in a growing and fair global market place. You might ask why now, and why our proposal. We had two successes in Doha. One was the objective that we outlined, first was a long term objective, and I quote: "to established a fair and market oriented trading system through a program of fundamental reform encompassing strengthened rules and specific commitments on support and protection in order to correct and prevent restrictions and distortions in the world agricultural markets."

Secondly, we also outlined specific objectives for this negotiation, which was comprehensive negotiations aimed at substantial improvements for market access, reductions of, with the view toward phasing out export subsidies, and substantial reductions in trade distorting domestic support.

The second major success was we decided that Uruguay which took eight years to conclude, that that time line was way too long. We said it is not good enough and that we want these negotiations done in three years. In agriculture we went even further. We said we want our modalities completed by March 31, 2003. We want our schedules by the 5th Ministerial and the whole negotiation concluded by January 1, 2005.

Recognizing that we had these two successes -- ambitious results with ambitious time lines -- in March 2002, the WTO negotiating group established a schedule to meet these two objectives and selected a Chairman to be sure it got done.

Our proposal, which we put forward last week, and we're putting forward as part of this negotiation that is continuing today, meets all the successes and moves the process forward. The proposal is comprehensive because none of the three pillars can stand alone. The proposal is ambitious because we must see leveling in all areas if we are to see progress in any area. And the U.S. is leading with its proposal because we must lead in pushing to meet the successes and the objectives that we outlined in Doha as we did in June 2000 during the built-in agenda negotiations, as we did in launching Doha, and as we did last month in our first part of this package on export competition.

Just as a reminder, the Uruguay Round captured for the first time, agriculture and global negotiations. In order to do that, a compromise was made to cap practices as they were, and then, there were some reductions. That was significant, but it left tremendous distortions and disparities and clearly that is unacceptable for the Doha Development Agenda.

In our proposal the concept is simple and direct. Two phases. One, level the playing field and simplify the rules to meet the ambitious results called for at Doha for these negotiations and to set us on the right path for the long term objective. And phase two, is to finish the job by moving to eventual elimination of all trade distorting practices by date certain. Clearly, that's in the long term objectives which is ultimately a fair and equitable solution of leveling the playing field and allowing agriculture to be a full participant in the prosperity of the global trading system.

In other words, let's eliminate export subsidies and level the playing field significantly by reducing market access and trade-distorting domestic support in phase one and then eliminate them in phase two.

Now, let me just go to the specifics that I know some of you will have questions about, so I'll just cut to the chase. Let me first review again what we said as part of phase one in our comprehensive proposal on export competition last month. And I should point out that our approach on this would remove around ten billion dollars of the most trade distorting practices in the world in five years. Our proposal is to eliminate export subsidies in five years, eliminate the monopoly control and special financing privileges of export STEs, eliminate trade distorting impacts of export taxes, strengthen the disciplines of all countries and all practices of export credit, credit guarantees loan and insurance. In food aid, we proposed expanding reporting requirement to increase transparency and strengthen market displacement analyses in the international organizations charged with reviewing food aid activity.

And now for what we discuss this week, the second part of this comprehensive proposal is obviously market access. Our proposal would reduce tariffs, both out of quota and tariff only using a Swiss formula approach which cuts the high tariffs more than the low tariffs with no tariffs being greater than 25%. I should point out, similar to what I just said in export competition, this would reduce the average global tariffs by almost 80%, from 62% to 15 %. We want to eliminate all in-quota tariffs, expand TRQ's by 20%, strengthen discipline on TRQ administration in order to encourage quota fill and greater transparency. Eliminate monopoly control of STE's to allow any interested party to import. Eliminate the special agricultural safeguard because we believe that it is out of date but we know that we want to engage on import relief mechanisms for seasonable and perishable commodities. We want to promote sectoral initiatives which I describe as being WTO plus. After we get the basic comprehensive agreement for certain sectors we want to move forward with zero for zero and other measures. We want to engage, and then finally, as I said earlier, agree on a certain date for the eventual elimination of all market access barriers.

Finally, under the third part of our comprehensive proposal, which will be discussed in September as part of the domestic support discussion, this proposal will eliminate 100 billion dollars of allowed trade distorting domestic support from the global trading system. We want to simplify the domestic support rules to two boxes. One is trade-distorting, one is non-trade distorting. That would end the blue box exemption, which is by definition trade distorting support. We would reduce the ceilings of allowed levels on trade distorting support to five percent of a country's total value of agricultural production. It is logical that the amount of support would have some relevance to the size of the agricultural economy. We want to maintain the rules on de minimis provisions for developing countries at ten percent and five percent for developed countries,. The proposal maintains the green box provision to encourage movement towards non-trade distorting practices. And again promote sectoral initiatives or WTO plus. Again agree to a date certain for the eventual elimination of trade distorting domestic support.

As I said earlier, this proposal would get the job done by addressing all these unfair trade practices in a comprehensive way. We are confident that the global agricultural community will benefit greatly from the environment created by this proposal. This negotiation is about new rules and new directions, and we encourage others to engage with creativity and ambitiously working at this reform. While the Uruguay Round was a good first step, that approach is not good enough for the second step we must take now, and bring us to where we need to go tomorrow. It's time to move forward with these proposals and create opportunities for our farmers and farmers around the world by growing the markets, lowering the trade barriers, and eliminating the distortions. So with that I'll leave it open to any questions you may have.

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