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OPENING STATEMENT Ambassador Linnet Deily January 14, 2003 Madame Chairperson, delegation members, I would like to express
my appreciation for this opportunity to represent the United States
of America in this, the seventh review of U.S. trade policy. I
would like to thank the Secretariat for its thorough, detailed
report on U.S. trade policies; and our Discussant, Ambassador
Chung, for his participation in this review. The United States
continues to believe the Trade Policy Review process plays a vital
role in increasing our trading partners* understanding of the
factors that shape both the development and the administration
of U.S. trade policy. I believe the open and transparent character
of the U.S. trade regime will be clearly shown in this review,
not the least through the valued participation of other delegations. This shared purpose * to strengthen the global economy and to lay the basis for broader prosperity through multilateral trade liberalization * remains at the center of U.S. trade policy, as it has been for over half of a century. Both our certainty regarding the future benefits, and our ability to lock arms with our WTO partners, have combined to give us the will needed to conclude successfully seven multilateral trade rounds thus far. I am confident our collective effort begun in Doha will also conclude successfully provided we remind ourselves that we are working towards a claim on the future and, as sometimes gets lost in the "payment & concession" mind-set of trade negotiators, that solidarity with our WTO partners can bolster our ability to open our own markets further than would be palatable otherwise. The United States is an extremely open and dynamic economy, reflecting a 70-year policy commitment to trade liberalization. Americans currently consume more than one and a half trillion dollars of goods and services from abroad. As stated in the Secretariat*s Trade Policy Review of the United States, "the United States remains the world*s largest single importer and a main engine of growth." Much of the dynamism of the U.S. economy, and its ability to absorb shocks, are attributable to this openness. Certainly, U.S. trade policy reflects some domestic sensitivities * and these can be clearly seen given the transparency of our trade regime * but the United States stands by the strength of our record on the openness of our markets. Since the global economic slowdown began in 2001, U.S. policies have supported global growth by maintaining its markets largely open and by undertaking strong fiscal action. The 70 papers and proposals submitted by the United States in support of the Doha Development Agenda since 2001 speak clearly of our continued leadership on ambitious multilateral trade liberalization. It is useful to recall a few of the original U.S. proposals in this Round. In July 2002, the U.S. agriculture proposal called for the eventual elimination of all export subsidies, all tariffs and all trade-distorting domestic support. In November 2002, the United States proposed a tariff-free world on all consumer and industrial goods by 2015. Both proposals reflect extensive consultations with both Congress and the private sector. These proposals called on all WTO Members to advance free trade and complete the tariff-cutting work that began more than 50 years ago with the creation of the General Agreement on Tariffs and Trade. These proposals reflect our belief that the market access negotiations in the DDA offer the greatest potential to create jobs, to advance economic reform and development, and to reduce poverty worldwide. The United States has entered the new year with a renewed energy and commitment to ensuring that 2004 is not a lost year, but rather a year that exceeds expectations and delivers for the Doha Development Agenda. U.S. trade policy seeks to support and advance the rule of law in international trade. Today, the recognition of the strong influence of the rule on law on economic growth and development is near universal. A strong global economy requires a strong multilateral rules-based system. It would surprise few that the United States is an active participant * the most active, in fact * in WTO dispute settlement proceedings. Much as we expect compliance in disputes where we prevail, we also accept the need to implement the recommendations and rulings of the DSB in those cases to which we are a party where U.S measures have been found inconsistent with our obligations. Where legislation has been required to implement these rulings, we have worked strenuously with Congress to secure the necessary legislation, and will continue to do so. Over the period of review, the United States has pursued actively numerous regional and bilateral initiatives to liberalize trade. We recently concluded bilateral agreements with Singapore and Chile, and a regional agreement with the Central American countries of Guatemala, Honduras, El Salvador and Nicaragua. Discussions to join CAFTA continue with Costa Rica, and are commencing this week with the Dominican Republic. We are also in the final stages of negotiations of bilateral agreements with Australia and Morocco. Each of these agreements is comprehensive and fully consistent with WTO rules in all areas. The United States believes these regional and bilateral agreements can act to accelerate and deepen multilateral liberalization; and greatly values the enhanced market access these provide all parties involved. The greatest changes over the period of review stemmed from the U.S. recognition that the safety and well-being of our citizens and our shores required heightened security measures. The need was unequivocal. All of us have been affected in some way by these measures * most visibly in airports and commercial shipping ports. The United States recognizes there may be some adjustment necessary to adapt to these changes. These measures have been put in place not only to enhance our security but to protect world trade. A shut down of global sea container traffic caused by a terrorist attack would be consequential to the economies of all trading nations. These measures reflect the U.S. twin goals of increasing security and facilitating legitimate trade. In developing measures such as the Container Security Initiative, the 24-Hour Rule and the Customs-Trade Partnership, the United States invited and took into account advice from stakeholders in the trade community, including WTO Members, to minimize disruptions and delays to lawful commerce. As we implement these measures, the United States will continue to welcome input from the trade community to assess whether they can be further improved over time.
In the period since the last review, the U.S. economy has experienced an economic recession, a modest rate of recovery and, most recently, a resurgence of strong growth. Budget policy action by the U.S. government aimed at restoring growth, combined with the automatic corrective mechanisms of a healthy market economy, appear to be paying off in supporting a more rapid recovery. Among the most positive features during this period of recession and recovery have been the continuation of a secular improvement in U.S. rates of productivity growth in both the goods and service sectors. As is well known, rising labor productivity is a central factor underlying improvements in the material standard of living. We believe the U.S. commitment to open markets and the fulfillment of our WTO obligations have contributed importantly to competition in the U.S. market, to the efficiency with which the United States employs resources and invests for the future and to strong U.S. productivity growth and increasing living standards. The United States, of course, has not been the only country experiencing an economic slow down, and now appears to be in the vanguard in restoring healthy rates of economic growth. Despite our recession and moderate recovery until recently, U.S. real imports have grown by nearly 5 percent since 2000. In contrast, U.S. real exports declined at a like rate over the period, in part, under the impact of slow growth in many of our export markets. With imports rising and exports falling, the United States continued to contribute net demand to the rest of the world through the external trade sector. However, as a result, the U.S. deficit in trade in goods and services also grew from 3.8 percent of GDP in 2000 to 4.5 percent in the first three quarters of 2003. In round numbers, that is a $115 billion increase in the annual deficit level to an annualized $495 billion so far this year. The period of review corresponds for the United States to a transition from the ending of one period of strong economic expansion through recession to the launching of another period of healthy growth. Going forward, success in the Doha negotiations and other efforts to open markets and expand trade can, we believe, clearly contribute to more broad-based growth throughout the world economy. The United States has worked actively to help restore growth at home and abroad through domestic fiscal and monetary policy and through its commitment to more open trade. Stronger economic growth outside as well as inside the United States is in the direct interest of our affected trade partners and would additionally contribute to an easing of U.S. and global trade and current account imbalances. Let me now turn to a more detailed summary of economic and related trade developments in the U.S. economy since 2000. Growth/Inflation: After strong growth in the late 1990s, the United States experienced a brief recession between March and November of 2001. According to recently revised data, the GDP growth rate fell to just 0.5 percent in 2001 and picked up to only 2.2 percent in 2002. The pace, however, has quickened. Third quarter GDP of this year was 3.6 percent higher than a year earlier and, relative to the preceding second quarter of 2003, achieved an annualized growth rate of 8.2 percent, the most rapid in the United States in twenty years. Inflation has remained subdued at 1.5 percent in 2002 and 1.7 percent in the first three quarters of 2003. Saving/Budget Deficits/Investment: Largely because of the impact of recession and slow initial recovery on federal and sub-federal government budget balances, U.S. savings declined from 18.4 percent of GDP in 2000 to 13.8 percent in the first three quarters of 2003. The federal budget balance itself has shifted from a surplus equal to 2.4 percent of GDP in 2000 to a deficit equal to 1.5 percent of GDP in 2002. In the third quarter of 2003, domestic investment, which fell during the recession, is back close to its real dollar value prior to the recession. The decline in gross saving and the small change in the level of domestic investment between the beginning and end of the period have resulted in a change in foreign investment in the United States from a net inflow of $396 billion in 2000 to an annualized rate of net inflow of $562 billion in the first three quarters of 2003. Productivity: Manufacturing continued the resurgence of its productivity growth begun in the late 1990s. Between the last quarter of 2000 and the third quarter of 2003, output per hour worked in U.S. manufacturing rose at a 4.7 percent annual rate. This compares to a rate of 3.0 percent between 1985 and 1997. More striking still has been the productivity resurgence in the overall business sector which, in the United States, is dominated by service jobs. Output per hour worked for overall employment likewise grew at an annual rate of 4.4 percent during the period of review, compared to a 1.6 percent growth rate in the reference period of 1985-1997. Not only has productivity growth been strong, but overall business employment productivity almost closed the large gap between it and productivity in the manufacturing sector during the period of review. Labor Markets: The recession and slow initial recovery, combined with strong productivity growth, took a toll on U.S. employment levels. Between December 2000 and July 2003, employment fell by 2.6 million to a level of 129.9 million. Employment recovery has so far been modest, with the addition of just over a quarter of a million jobs in the second half of 2003. The unemployment rate rose from 3.9 percent in December 2000, the low for the previous business expansion, to a peak of 6.3 percent in June 2003. The rate has subsequently fallen back to 5.7 percent in December of last year. The net loss of U.S. employment can be accounted for entirely by the loss of U.S. manufacturing jobs. In fact, since July 2000 when U.S. manufacturing output peaked, manufactured employment in the United States has fallen by 16 percent. Accounting for this concentration of job loss in the U.S. manufacturing sector were the sharper decline in manufactured production than overall U.S. production, the modest rate of recovery from recession until recently, and sustained strong productivity growth. Trade Openness: The United States continues to maintain an extremely open foreign trade regime. The simple average of U.S. MFN-bound tariffs is 3.6 percent. This average will fall further with the full phase-in of U.S. Uruguay Round tariff commitments. Our trade-weighted average applied tariff is 1.6 percent. In 2002, two-thirds of imports entered the United States free of duty. Of particular note, estimates for 2003 indicate it is the first year in which the value of U.S. goods imports from middle and low income countries, at $642 billion, exceed that from high income countries, at $624 billion. U.S. service markets are open to competition, and U.S. regulatory processes are transparent and accessible. Exports, Imports and Trade Balance: U.S. trade flows over the period under review have been restrained by the pattern of recession and recovery in the United States and weak economic conditions in a number of countries outside the United States. As noted earlier, U.S. real imports have increased and exports fallen since 2000 by 5 percent each. This lack of growth in U.S. trade is also reflected in the value of trade relative to the size of our economy: U.S. exports plus imports of goods and services fell from 26 percent of GDP in 2000 to 24 percent in 2002. Nevertheless, the United States * long the world*s largest trading nation * is expected to report $2.6 trillion in trade in 2003, with over $1.5 trillion in imports alone. As noted earlier, the U.S. trade deficit in trade in goods and services for 2003 currently annualizes to nearly $500 billion. That represents a increase of well over one-third since 2000. Conclusion: The strengthening and further opening of global markets through successful conclusion of the DDA negotiations and other trade liberalizing efforts should support economic recovery and the income-increasing expansion of world trade for low-, middle-, and high-income countries alike. We believe strengthened growth, not just in the United States, but more broadly among WTO members, should likewise contribute to the moderation of global trade imbalances. II. TRADE POLICY DEVELOPMENTS 1. Multilateral Initiatives Over the review period, the United States sustained a vision of ambitious multilateral trade liberalization and worked energetically in its pursuit. Bearing in mind its role in world trade, the United States worked to ensure there was a successful launch at Doha and the agenda was sufficiently broad to enable all participants to benefit. We believe the launch at Doha was a considerable achievement for the WTO. The magnitude and scope of the DDA give it the potential to transform world trade, and command our continued efforts to ensure its success. Reducing trade barriers is a powerful method of increasing opportunities to the world*s citizens to achieve prosperity * an especially compelling goal for the developing world. The United States believes strongly that 2004 should not be a lost year. U.S. Trade Representative Robert Zoellick recently conveyed to all WTO ministers some ideas to reinvigorate the Doha negotiations. He offered what he views as common sense ideas for narrowing differences and re-energizing the momentum in our dialogue. We look forward to others* ideas and assessments of how we can advance together, and view this exchange as an essential element in making 2004 a year of accomplishment. The United States believes that multilateral trade liberalization is a tool we must employ to help accelerate growth in the developing world. To leave it unused makes little sense. In this regard, funding for trade capacity building and trade-related technical assistance is an important element in enabling developing countries to wield this tool effectively. The United States has chosen to be a partner with developing countries in their efforts to liberalize trade. The United States is the single largest donor of trade-related technical assistance in the world, contributing $752 million in fiscal year 2003. The United States has contributed more than $3 million to the WTO for trade-related assistance since the launch of the DDA. U.S. bilateral programs providing trade-related assistance complement WTO efforts in many countries. In addition, the United States contributes to the Integrated Framework, which we view as an important effort by the donor community to rationalize and prioritize the special trade-related needs of the least developed countries. Finally, substantial funding for technical assistance is an integral part of programs like AGOA to better enable countries to capture market access opportunities. In fiscal year 2003, total U.S. funding for capacity building support in AGOA was nearly $69 million. 2. Regional and Bilateral Initiatives Over the review period, the United States actively pursued trade liberalization on a regional and bilateral basis. Three free trade agreements * Chile, Singapore and CAFTA * concluded successfully, and the United States announced its intent to negotiate eight more * the U.S. - Southern Africa Free Trade Agreement, as well as agreements with Australia, Morocco, Thailand, Panama, Colombia, Peru and Bahrain. Several of these negotiations are part of broader regional initiatives, such as the Enterprise for ASEAN initiative, the Middle East Free Trade Area, and the U.S. - Andean Free Trade Area. In the ongoing negotiations on the Free Trade Area of the Americas, Ministers of the 34 FTAA countries recently reaffirmed their commitment both to its comprehensive agenda and to its conclusion by January 2005. The United States looks to WTO rules as the foundation for negotiating these agreements and is committed to the comprehensive coverage of products upon entering negotiations on an agreement. U.S. FTA policy also emphasizes diversity in regional coverage, which yields a greater complementarity of trade patterns. We expect these agreements to also lock in broader reform agendas among the participants. In a recent study, the International Monetary Fund concluded that the combination of these characteristics in free trade agreements result in the greatest potential economic benefits. The United States continues to benefit from the operation of its existing agreements with Israel and Jordan, and the North American Free Trade Agreement. Under the world*s largest free trade agreement, NAFTA, three-way trade among the U.S., Canada and Mexico has reached $621 billion, more than double the pre-NAFTA level. Since its entry into force in 1994, the Parties have implemented four rounds of accelerated tariff reductions, have implemented side environmental and labor agreements, and have initiated the exploration of improvements, on such issues as harmonization of tariffs, rules of origin and investor-state arbitration. 3. Autonomous Initiatives to Foster Development Another aspect of U.S. trade policy is comprised of efforts to foster the further integration of developing countries and newly emerging economies into the multilateral trading system through enhanced market access opportunities. The United States provides duty-free access for most products from developing countries through several preferential trade programs. These programs are the Generalized System of Preferences (GSP), which includes enhanced benefits for the least developed countries, the African Growth and Opportunity Act (AGOA), the Caribbean Basin Trade Partnership Act and the Andean Trade Promotion and Drug Eradication Act. These programs offer important and effective access opportunities to the U.S. markets for a wide range of products. Over the period of review, market access under the regional programs was expanded further. These programs indicate the importance the United States attaches to helping these countries become full participants in the global trading system. 4. Trade Policies by Measure i. Security Initiatives During the review period, the United States created the Department of Homeland Security and reconfigured several federal agencies to respond to the need for heightened security. The United States also adopted significant changes in its import procedures to protect and facilitate trade. By using advance information, risk management and technology, and by partnering with other nations and with the private sector, the twin goals of security and trade facilitation do not have to be mutually exclusive. Since 9-11, we have developed ways to make our borders more secure that also ensure the efficient flow of legitimate trade and travel. The major measures adopted include the Container Security Initiative (CSI), the 24-hour rule and the Bioterrorism Act. All of these measures seek to increase systematically the level and quality of information available in order to better assess and isolate risk. Under CSI, the U.S. Customs and Border Protection has entered into bilateral partnerships with other governments to identify high-risk cargo containers and to pre-screen them before they are loaded on vessels destined for the United States. The 24-Hour Rule requires the electronic transmission of detailed manifest information 24-hours in advance of a container*s loading and is designed to work in conjunction with CSI. Finally, the Bioterrorism Act of 2002 (BTA) is designed to protect the United States against bio-terrorist threats to its food supply, including food from foreign sources, through both registration and prior notice requirements. ii. Steel Safeguards In June 2001, President Bush announced a strategy to respond to the challenges facing the U.S. steel industry. President Bush requested the U.S. International Trade Commission (ITC) to investigate injury to the U.S. industry and directed initiation of negotiations on two fronts, including negotiations on rules that will govern steel trade in the future. The comprehensive investigation by the ITC found that imports of certain steel products were a substantial cause of serious injury to domestic steel producers and in March 2002, President Bush imposed temporary safeguard measures. These steel safeguard measures were found inconsistent with WTO rules in November 2003. President Bush issued a proclamation terminating these measures in December. This proclamation stated that the U.S. steel industry wisely used the 21 months of breathing space the safeguards provided to consolidate and restructure. The industry made progress increasing productivity, lowering production costs, and making America more competitive. The President concluded the safeguard measures had achieved their purpose. An integral part of President's Bush*s 2001 steel initiative
strategy was to address the underlying, structural problems of
the global steel industry that have contributed to a decades-long,
cyclical proliferation of unfair trade competition and trade remedy
responses. In the last year, the United States has helped to spearhead
international efforts in the OECD to bring about market-driven
rationalization of the world's excess and inefficient steelmaking
capacity while also formulating better disciplines over practices
which can distort markets and artificially sustain such capacity.
In the intervening year, the nearly 40 participating governments
representing the world's major steel-producing countries have
made good progress in outlining an agreement and defining its
core elements. i. Farm Legislation The Farm Security and Rural Investment Act of 2002 lays out food assistance and nutrition, agriculture, resource conservation and rural development policies for the United States for the next six years. The 2002 farm legislation continues past programs to support agricultural prices and farm incomes, and is fully consistent with U.S. obligations under the Uruguay Round Agreement on Agriculture. Programs in this legislation are designed to meet policy goals in a targeted, transparent manner, thereby keeping trade distorting support to a minimum. Further, due to concern that the United States remain consistent with its international obligations, Congress included a "circuit breaker" in this legislation, which requires the Secretary of Agriculture to ensure that we do not exceed any WTO ceilings. While concern was expressed at the time the 2002 farm legislation was enacted that it constituted a significant increase in U.S. farm spending over the previous farm legislation, this was not actually the case when account is taken of annual supplemental spending for disaster and emergency assistance that had also been provided by Congress. Looking at actual spending, which is influenced both by the legislation and market conditions, trade distorting domestic subsidies are trending downward. Looking forward, the United States continues to focus on the bold vision for agricultural reform reflected in the proposals offered in July 2002 in the DDA. The United States is committed to negotiating on a multilateral basis a broad program of agricultural reform. The United States stands ready to substantially reduce tariffs, increase market access, eliminate export subsidies, and substantially reduce trade-distorting domestic support, provided our partners in the WTO are prepared to join us. These U.S. proposals were developed in close consultation with Congress, and enjoy broad Congressional support. ii. Textile Phase Out The United States has been faithfully implementing the phase out of textile quotas as provided for by the ATC. During the course of ATC implementation, U.S. imports of textiles and clothing have increased 122 percent. The United States is committed to the completion of the implementation of this agreement at the end of 2004. Although the domestic U.S. textile industry has been undergone a difficult period of adjustment, we expect a smooth transition when ATC textile restraints are removed. 6. Looking Forward Over the review period, the United States pursued trade and economic policies geared to strengthening the global economy and providing a firmer basis for prosperity. The United States views the rules-based multilateral system of the WTO as an essential feature of the global economy in the 21st century, and appreciates the hard-work and professionalism of the WTO staff. We are committed to the successful conclusion of the DDA, and are prepared to engage constructively and energetically with our WTO partners to move the negotiations forward. We believe the DDA offers a compelling vision of a world trading system that offers significantly greater opportunities for achieving prosperity for all WTO Members.
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