The Tenth TPR of the U.S. – Responding Statement by Ambassador Michael Punke

WTO-TPROctober 1, 2010

Mr. Chairman, Ambassador Harun, distinguished Members, I would like to start by expressing our appreciation for all the thought and effort that has gone into this review. The broad participation, as well as probing questions and thoughtful observations, demonstrate the importance that Members attach to the Trade Policy Review process and to the role of the United States in the multilateral trading system. We also were pleased to hear many Members emphasize the importance of bringing the Doha Round to a successful conclusion. We strongly share this view and I will return to this issue later in my statement.

We very much appreciate the recognition expressed for the openness of the U.S. trade and investment regime and for our commitment to maintaining this openness in the face of an unprecedented economic crisis. We also listened with satisfaction to the comments of our free trade agreement partners on how well these agreements have been functioning and would point out that these preferential partners are also strong advocates of multilateral liberalization. We also are gratified by the kind words offered by our African, Andean and Caribbean partners for our preference programs and we appreciate the support heard from beneficiaries of our contributions in Aid for Trade.

We have listened carefully and taken good notes on all the comments and questions that Members delivered on the first day of the review. You can rest assured that I and my colleagues will pass on what we have heard to those in Washington responsible for the issues that have been discussed.

Most, if not all, of the issues that were raised Wednesday are addressed in the questions and answers that were distributed on Wednesday. With that in mind, the rest of my statement will focus on a number of key points.

Economic and Institutional Environment

The United States remains committed to maintaining open markets and an open and welcoming environment for investment. In this connection, we would note that our response to the global economic crisis has been part of a joint effort, led by the G20. Together we have been working to stimulate demand and build confidence on the part of consumers, businesses, and investors.

Rebalancing our economy has been an important and ongoing part of this effort. The Obama Administration has enacted significant measures in four areas. The Administration is seeking to increase private personal saving, reduce the cost to the federal government of health care, reduce the federal fiscal deficit, and increase U.S. exports.

With respect to reducing the fiscal deficit, the U.S. Government will be taking many steps over the coming years. The President’s FY 2011 budget lays out a number of savings that are estimated to reduce the deficit to roughly 4 percent of GDP by 2014. Some of the improvement in the budget will come as a natural result of an improving economy which will both reduce automatic stabilizer spending and increase revenues. Savings will also result as temporary stimulus measures wind down. In addition, the President has called for a non-security discretionary spending freeze, for allowing some temporary tax cuts to expire, and for making sure that health care reform puts substantial downward pressure on health care costs and the deficit in the medium and long term. Furthermore, the President has established a bipartisan deficit commission to examine how to reduce the deficit further, with a goal of bringing the deficit under 3 percent of GDP and thus stabilizing the debt to GDP ratio over time.

We appreciate the recognition that has been expressed in this meeting for the steps that the Obama Administration has taken with respect to financial reform. The Dodd–Frank Wall Street Reform and Consumer Protection Act, which was signed into law by President Obama on July 21, 2010, establishes new authorities and supervisory direction with regard to the U.S. financial markets including: banking, securities, insurance, derivatives, executive compensation, consumer protection and corporate governance. The legislation is complex and requires approximately 250 rulemakings and 70 studies. Over the next 6 to 18 months, regulators will undertake an intense period of rulemaking. This process will include opportunity for public comment and all interested parties are invited to make submissions.

I would like to briefly comment on China’s criticism of U.S. Federal Reserve action, specifically with regard to U.S. macroeconomic policy and the dollar. With respect to our exchange rate, the United States pursues a policy in which the exchange value of the U.S. dollar is wholly determined by the market. The Federal Reserve’s monetary policy is both appropriate, and in line with its mandate. This is not the forum to discuss monetary policy, and I will not comment further on that of the Federal Reserve. Regarding U.S. fiscal policy, it has been appropriately focused on supporting economic growth in an unprecedented period and aimed at restoring the United States to healthy growth. The success of these actions is important not only to U.S. citizens but also to the health of the global economy as many of the members mentioned on Wednesday. Let me conclude discussion of this topic by noting that greater exchange rate flexibility in China would give China greater scope to determine its own monetary policy.

A number of Members have raised questions with respect to actions we have taken to address the economic crisis as they relate to the financial services and automotive sectors. In looking at these actions – and as acknowledged by many of the comments on Wednesday – it is important to consider the economic context in which they were taken and the likely consequences had we failed to act. There can be no doubt that the financial crisis would have been far worse and recovery much further off into the distance – and not just for us but for the global economy – had we failed to take these steps. In taking these steps profound adjustments were required on the part of the industries at issue. This involvement, other than the government’s role as regulator, is temporary and it is already phasing out as spelled out further in our answers to Members questions. Hence, while we listened with keen interest to China’s comments about the dangers of industrial policy, that is not what is at issue here.

With respect to the questions that have been raised concerning government procurement we would note two things. First, we have been very careful in working with Congress to ensure that such measures are consistent with our international obligations. Second, we would hope that this renewed interest in government procurement will be reflected in broader interest among Members in participation in the Agreement on Government Procurement.

A number of Members have asked questions or made comments on the National Export Initiative. We’ve responded in detail to those questions but I would like to emphasize that the NEI is an outward rather than inward looking policy and that there is full recognition of the importance of the import side of the equation. This recognition is reflected in the recent unilateral tariff suspensions that were enacted through the U.S. Manufacturing Enhancement Act of 2010. Some of Wednesday’s comments appeared to imply that export promotion is a sort of zero-sum game – if the United States does well, other Members may lose. We disagree with such an implication, and would assert that there is no inherent conflict in play, provided that we are all striving to keep our markets as open as possible, and looking for opportunities to continually increase that openness.

Turning to the DDA, we were very interested in the range of perspectives that we heard Wednesday and it will come as no surprise to anyone that we strongly agree with those who emphasized the need to ensure that the negotiations result in meaningful new opportunities for trade. Much has been made of the potential for the DDA to be a stimulus package that does not tax national treasuries. But this will only happen to the extent that we get beyond simply consolidating the status quo. We take to heart the calls of other Members for the United States to show leadership. The United States has and will continue to play this role. However, I think we all agree that this need for leadership extends to all key players and I suspect few are nostalgic for the days when one or two Members could lead alone. Today responsibility is shared. The DDA is a unique opportunity to make the WTO reflect the realities of the 21st century, ensuring access to the fastest growing parts of the global economy. We are clearly not there yet but the United States is fully and firmly committed to working with its negotiating partners to reach a successful conclusion.

A number of Members raised issues with respect to dispute settlement. We would note that the United States has come into compliance, fully and promptly, in the vast majority of its disputes. As for the remaining few instances where our efforts to do so have not yet been entirely successful, the United States has been working actively towards compliance in furtherance of the purpose of the dispute settlement system. The U.S. Administration will continue to work with the U.S. Congress and other interested parties to fully implement the recommendations and rulings of the Dispute Settlement Body in those disputes.

A number of Members have raised the zeroing disputes. I would note that our concerns about the Appellate Body’s findings are well known, so there is no need for me to address that issue today. We are keenly aware that the issue of our compliance in the various zeroing disputes has created a difficult dynamic in the WTO. I can assure you that the United States takes its WTO obligations very seriously, and we have stated publicly that we intend to comply with the WTO rulings in all of the zeroing disputes. We are very actively engaged in a serious effort with our domestic stakeholders and our Congress to find an acceptable solution.

Trade Policy by Measure and Sectoral Policies

Turning now to trade policy by measure and sector, a number of Members have raised issues regarding tariff peaks and our agricultural programs. We have addressed these issues in specific written responses. And obviously, the DDA provides the forum to address these issues. We continue to support an outcome that would reduce or eliminate tariff peaks and the continuing reform of agriculture, along with opening up services markets, as part of a balanced and ambitious Doha package.

A number of Members have expressed concern about the increase over the past few years in contingency measures, which we would note has not been limited to one or two Members but has been a general trend. It is well known that the incidence of petitions for trade remedies tracks economic cycles for reasons having nothing to do with protectionism but rather economics. Consistent with this pattern, petitions did increase as economies weakened but it is notable that notwithstanding the depth of this particular downturn, the level of increase has more or less tracked the trend line of previous downturns. We would also emphasize that care must be taken not to equate use of trade remedies with abuse.

Several Members have raised concerns regarding the proposed Foreign Manufacturers Legal Accountability Act. This legislation reflects a desire to ensure consumers in the United States can be confident that the products they buy are safe and that there are procedures available under U.S. law to address effectively any product liability issues they may engender. The United States believes these goals can be accomplished without imposing undue burdens on foreign manufacturers. I must note, of course, that this legislation has not been enacted by both chambers of the U.S. Congress. It has been useful for us to hear Members’ views on this issue, and we will take these back to our capital.

Several Members also raised questions or commented on customs measures related to border security, such as advance information requirements or 100% scanning. The United States is confident that we can develop and refine these measures in a manner that achieves our security objectives without impeding legitimate trade. We are committed to working with our domestic and foreign partners, and with trade and industry, to implement these measures in a logical and practical manner that minimizes trade disruptions and integrates smoothly into the global supply chain.

A number of Members raised the issue of regulatory approvals for SPS purposes. The development of scientific, risk-based measures to protect human, plant, and animal health are complex and frequently involve detailed technical analysis and cooperation with technical experts with our trading partners. As such, the time it takes to make a determination will vary depending on the facts of each case. The United States, however, remains committed to applying as effective and efficient a process as possible. For example, the U.S. Department of Agriculture’s Animal and Plant Health Inspection Service (APHIS) has modified its Quarantine 56 regulation to provide a more flexible approach to import approvals of certain fruits and vegetables from pest-free status in foreign areas. We continue to work with WTO Members to identify trade and technical needs, and to assist Members in understanding our processes – with the overriding goal of ensuring atransparent and rules-based trading system.

In closing, I would like to reiterate our appreciation for the time and effort that Members, the Chair, Ambassador Harun as Discussant, and the Secretariat have put into making this an interesting and productive review. Richard Eglin and his team have contributed to this exercise with the dedication and professionalism that we have all come to expect. Ambassador Harun provided insightful analysis and thought provoking questions which have contributed importantly to making this a useful and interesting exercise. I would also like to express thanks to the interpreters for their hard work. Last, but not least, I want to thank my team – those here at t he table today and also many behind the scenes on both sides of the Atlantic. They have worked many late nights and I’m gratefulfor their expertise, professionalism and dedication. On behalf of the United States and the U.S. team, we have appreciated this opportunity to discuss issues of importance to Members.

Thank you.