Statement by United States Ambassador Michael Punke
Geneva, September 29, 2010
Mr. Chairman, Ambassadors, and distinguished representatives,
It is with great pleasure that I introduce this, the tenth trade policy review of the United States. I am honored to see the large number of participants at today’s meeting and, in particular, to greet so many of my Geneva colleagues. Thank you for the time you are taking to participate in this important WTO process.
We especially appreciate the participation of Ambassador Hiswani Harun, whom we are honored to have as our discussant today.
We also want to acknowledge the Secretariat’s key contribution to our trade policy review and to express our appreciation for the team’s analytical efforts in preparing its Report. The Secretariat team once again asked us challenging questions and we thank them for their hard work in producing a comprehensive and informative report that provides a solid basis for this discussion. I would also like to take this opportunity to express the continuing expectation that the Secretariat, while putting Members through our paces for these TPRs, remains mindful of what we believe should be its role as objective observer and its duty to seek consistency across all of its Trade Policy Review Reports. I make this observation, Mr. Chairman, with a view to continuing to nurture the transparency and institutional integrity of the TPRM.
Because the United States continues to place a high value on the trade policy review process, my delegation has been working tirelessly to answer the multitude of questions – more than twelve hundred – that Members have put before us. For Members that gave us their questions two weeks ago, we have provided responses to all of your questions. We’ve also included responses for those Members who missed the two-week deadline by one or two days and where we were able to do so. We provided these responses to the Secretariat last night. We are continuing our hard work on all the remaining questions.
U.S. trade policy and the U.S. Government’s trade policy priorities are no secret to this body or to the world. The United States has been reporting U.S. trade policy priorities and activities to the American people for the past 55 years. Each year, in accordance with U.S. law, the President’s Trade Policy Agenda and the Annual Report of the President of the United States on the Trade Agreements Program are submitted to the Congress and made available to the public. The United States produces and publishes reports, studies, testimonies, decisions, and regulatory and legislative notices on an ongoing basis to inform our citizens – and any other interested party – about the issues and rules that inform decision-making in the trade arena. We are — by national practice and by law — a government founded on transparency, and we are becoming even more so. The Obama Administration is committed to greater transparency in trade policy and we are using 21st century technology to fulfill this commitment. This has improved the information available to the public about trade policy, while also inviting a broader range of stakeholder participation.
Since the last U.S. trade policy review, the world has faced the most severe recession in over half a century. Despite this downturn, the United States market remains open for business. The U.S. Government response to the recent crisis has been informed by a keen awareness of the mistakes of the 1930s, and a determination not to repeat them. We have maintained our firm commitment to international trade obligations and assiduously avoided trade restrictive reactions that, as we know from experience, would only have compounded the crisis. We recognize the constructive role the WTO has played in fostering a collective effort, across the membership, to avoid recourse to protectionism. The past two years have thus reinforced my country’s conviction that the WTO is critical to advancing U.S. interests in a strong, multilateral trading system, to restoring global economic and employment growth, and to expanding economic opportunity and the rule of law. More broadly, we have worked with other major economies through such groups as the G20 to stop the crisis as quickly as possible and to restart growth across the globe. We took actions – fiscal, monetary, and financial – aimed at preventing a slide into full-fledged depression. Such a slide would have been a disastrous occurrence for the world – and for world trade. In addition, we have taken a number of steps to attack the root causes of the crisis including a landmark financial regulation bill passed this summer.
In 2008, the WTO Secretariat concluded that reducing the U.S. current account deficit required expanding U.S. exports, “which would be facilitated by a more liberal trading system and stronger demand growth outside the United States.” We agreed with the Secretariat’s conclusion in 2008, and we agree with it today. President Obama’s National Export Initiative, with its objective of doubling U.S. exports in the next five years, is tangible evidence of my country’s conviction that trade – both imports and exports – continues to provide vital avenues for economic growth and recovery.
As of 2008, exports supported over 10 million jobs in the United States, including more than one in four in the manufacturing sector. Today, exports account for more than one in every 10 dollars of U.S. income. Imports from U.S. trade partners have also helped to expand our purchasing power, to widen choices for American consumers, and to provide valuable inputs into U.S. production. As we all understand, trade need not be a zero-sum game. If we all open our markets and play by the rules, trade gains to one country come, not at the expense of others, but in conjunction with the gains of others.
I will turn now to the U.S. trade policy environment and review the key themes.
Openness of the U.S. Market
The World Bank confirms that the United States is one of the most open economies in the world. IMF data also show that 76 countries have the United States as their first, second or third largest export market. For 67 of these countries, the United States ranked either first or second. According to the WTO, the current U.S. simple average tariff is 3.5 percent on a legally bound basis, and there is virtually no difference between the tariff rates we have bound at the WTO and the applied duties we charge at the border. When the Generalized System of Preference (GSP) program and other tariff preference programs are taken into account, the U.S. trade-weighted average tariff is under 1.4 percent on an applied basis. In 2009, 70 percent of all U.S. imports (including under preference programs) entered the United States duty free. U.S. services markets are open to foreign providers and U.S. regulatory processes are transparent and accessible to both domestic and international stakeholders.
Our commitment to open trade notwithstanding, U.S. and global trade contracted sharply beginning in mid-2008, with recovery beginning in the 3rd quarter of 2009. As a result of the extraordinary measures that were taken, nationally and internationally, to combat the downturn, U.S. real GDP rose 3.0 percent, on an annual basis, between the 2nd quarter of 2009 and the 2nd quarter of 2010. Personal consumption increased 1.7 percent, and non-residential fixed investment increased 5.3 percent (both on an annualized basis). U.S. exports of goods and services increased 14.1 percent between the 2nd quarter of 2009 and the 2nd quarter of 2010, while U.S. imports of goods and services rose 17.2 percent.
Sustainable economic growth implies a more balanced distribution of global demand than existed before the crisis. During the crisis, the U.S. current account deficit moved from 6 percent, as a share of GDP, to under 3 percent. Going forward, it is unlikely that the U.S. will resume its outsized share of world demand, which will require concomitant adjustment from the large current account surplus countries.
Support and Strengthen the Rules-Based Trading System
In a time of global economic challenge, the United States reaffirms its commitment to the rules-based trading system anchored in the WTO. And let there be no doubt – the United States continues to regard the Doha negotiations as a unique opportunity not only to solidify the foundations of our multilateral system, but to lay the basis for future prosperity around the world by expanding market access in a way that will benefit all countries – developed and developing alike. President Obama has emphasized that the United States is “working toward an ambitious and balanced Doha agreement –not any agreement, but an agreement that will open up markets and increase exports around the world.” He sent a clear signal at the Toronto G-20 that what is on the table is not enough and that emerging markets, in particular, bear a special responsibility to provide greater market access, not just for the United States, but also for the world’s poorest countries. The world has changed since 2001, and the market access on the table in each of the core negotiating areas of agriculture, industrial goods, and services, needs to reflect contributions from all key players that are commensurate with their position of leadership in the global economy. We stand ready to do our part.
Enforce U.S. Rights in the Rules-Based System
As we continue to commit ourselves to ambitious and balanced results in Doha, the enforcement of U.S. rights in the rules-based system is also a trade policy priority for the Obama Administration. The American people expect their government to uphold the terms of negotiated agreements and, in 2009, the Obama Administration responded to their call for more vigilant trade enforcement. Our efforts begin with frank negotiations and continue with additional tools where needed and appropriate. For instance, this year we introduced two separate reports that will help us to identify and to address technical barriers to trade and sanitary and phytosanitary barriers. As tariff barriers fall, nontariff barriers are becoming some of the most difficult challenges our exporters face.
We continue to place great value on the existence of this institution’s rules and procedures for dispute settlement. While we welcome rapid and pragmatic resolution of trade disputes on the basis of dialogue and negotiation, the United States has not hesitated to pursue legal remedies when necessary. The system is stronger and we are better trading partners as a result. In asserting our rights, and in taking care to abide by our own obligations, we believe that we help strengthen the WTO’s institutional credibility.
Bilateral and Regional Developments
The United States continues to hold firmly to the view that our commitment to the multilateral system is strongly complemented by the existence of sound, comprehensive bilateral and regional agreements. Our agreements include high standards and strive for ambitious and comprehensive outcomes. In conformity with our obligations, we faithfully notify our Free Trade Agreements to the WTO and welcome a full discussion of their provisions. Last year, we pledged to seek paths forward on approving and putting into effect three pending FTAs, and to build on important existing agreements to better achieve our goals of creating more jobs and higher growth.
I am pleased to report that we are making progress on these objectives. With respect to the United States-Korea FTA, President Obama announced in June that he was launching an initiative to resolve outstanding issues by the November G20 summit meeting in Seoul. He also indicated his intent – if the outstanding issues have been resolved – to submit the legislation approving and implementing the Agreement to Congress in the months following the summit. President Obama has also announced his commitment to move forward with the Colombia and Panama trade promotion agreements as soon as possible.
With regard to new initiatives, the United States has begun negotiations of a regional, Asia-Pacific trade agreement, known as the Trans-Pacific Partnership (TPP) Agreement, with Australia, Brunei, Chile, New Zealand, Peru, Singapore, and Vietnam. With this initial group of like-minded countries, the United States is negotiating a high-standard, 21st century regional agreement.
U.S. Initiatives to Foster Development
The developmental dimensions of trade continue to gain importance in the United States’ overall approach to trade policy. This Administration supports expanding trade opportunities to stimulate market-led growth in the poorer countries of the world and to lift their national income levels. Much can be done through the WTO. First and foremost we can do better in using the Doha negotiations to open those markets that present the greatest opportunities for new growth in the decades to come. The United States also stands by our Hong Kong commitment to provide duty-free and quota-free market access to least-developed countries as part of the implementation of a successful conclusion to the Doha Round. In July, US Trade Representative Ron Kirk announced that the United States will contribute $1.05 million to the WTO Global Trust Fund, building on previous such commitments. This is only one part of our much larger commitment to trade capacity building assistance, to which the United States has contributed $12 billion since 1999. In this connection, the United States will continue support for the Enhanced Integrated Framework through bilateral trade capacity building assistance and on-the-ground presence in LDCs. We will work with developing countries to help prioritize trade in their development plans, particularly in critical undertakings such as food security.
We also will champion the WTO’s important work on trade facilitation, which holds such promise for developing country members of this body. Simplifying and modernizing customs procedures enhances trading opportunities, improves the investment climate, and helps better integrate developing countries, particularly least developed countries, into global supply networks.
Integral to the U.S. goal of accelerating growth and economic reform in the developing world and most importantly in its poorest regions are the four U.S. preference programs – the Generalized System of Preferences (GSP), the African Growth and Opportunity Act (AGOA), the Caribbean Basin Initiative (CBI), and the Andean Trade Preference Act (ATPA). Through these programs, eligible products from 131 beneficiary developing countries enter the United States duty-free. We will continue to work with the Congress and other stakeholders to implement and improve these programs, and to better focus benefits on the poorest countries. We also will continue to provide trade-related technical assistance for these programs. In the world’s poorest countries, ranging from Haiti to Saharan Africa, we will continue to make special efforts to link trade and economic opportunity for countries that have been ravaged by disaster or violence.
In conclusion, the United States is proud to say that in 2010 we remain among the most open and transparent economies in the world, even in the face of challenges and economic stresses brought to bear by global financial turmoil. Through a very rough two years since our last review, we have remained committed to the rules-based trading system. We know without any doubt that the existence of this institution, its rules, and its collegial deliberations have helped us, and all Members, to weather the storm.
The knowledge of the good the WTO has accomplished in the recent past accounts in large measure for our determination to continue pushing for the best and most ambitious possible outcome in the Doha negotiation that has dominated the work of this institution for the past nine years. We know that we can achieve tremendous benefits, for all members, if we keep our focus on the fundamental truth of this organization – market access counts. Open markets promote growth, raise living standards, and help individuals at all levels in all societies to realize dreams for themselves and for their families.
If we lose sight of this truth, if we settle for less, if we fail to respond to our individual and collective responsibilities as members of this institution – we will do ourselves and future generations a significant disservice. By contrast, if we work together to arrive at a Doha outcome that reflects the global economy as it exists today, and as it will be over the next generation, we will have succeeded in achieving an enormous global benefit. The Doha negotiation is a once in a generation opportunity that we cannot afford to squander.
Mr. Chairman, Ambassadors, distinguished representatives, we understand that the United States plays an important leadership role in this organization. And with leadership comes responsibility – including to engage productively and honestly in the review that is taking place this week. We look forward to participating, to listening, and to learning from this exchange.