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Ambassador to the WTO speaks on U.S.-EU Partnership
March 22, 2012

Remarks by Michael Punke,
Deputy United States Trade Representative
At the U.S. Chamber of Commerce-Business Europe Joint Conference

Washington, DC
March 19, 2012

(As Prepared for Delivery)

“Many thanks to the Chamber and to BusinessEurope for the invitation today. This morning’s discussions have stimulated some terrific thinking about the question, ‘Where do we want to take the WTO?’ It’s been an enriching day, and I’m very glad to have been able to benefit from your views.

“It’s especially gratifying – and important – that this exploration of future directions for the multilateral trading system is a joint endeavor of American and European business organizations.

“It may be a bit of a cliché, and it’s a reality that may make some WTO members nervous, but the fact remains that solid partnership between the United States and the European Union is essential to finding viable paths forward for the WTO. This has always been the case, but it is particularly crucial in light of the acknowledgment by all WTO trade ministers last December that the Doha round is at an impasse. This is a strategic moment – we should be thinking together about strategy, and not just quibble with each other about tactics.

“While it is the firm view of the United States that the acknowledgment of Doha’s prospects was necessary and even overdue, and that it was the only way to begin to tackle more productive, trade liberalizing work in the WTO, we know that it also creates some anxieties and uncertainties about the future. The U.S. and the EU have a special, shared responsibility to address those anxieties intelligently, and to create a new sense of momentum in Geneva.

“U.S. and European commercial interests are in some cases very different; our political systems and impulses don’t always line up neatly when it comes to trade policy; and our emphasis on the WTO as a venue for seeking to resolve really tough bilateral trade disputes has at times colored our collaboration.

“But we simply can’t afford – either of us – to allow the development of an impression that we are pulling apart at the WTO. We have to stay focused on our shared commitment to the value of the institution, and to our responsibilities as two of its key leaders. Equally important, the U.S. and the EU need to reinforce each other in insisting that the WTO must remain true to its fundamental missions – liberalizing trade, serving as a bulwark against protectionist pressures, and generating enforceable rules that provide essential stability to the global trading system.

“Our partnership with the EU on WTO affairs is strong, but we can always do better. And it helps us immensely that organizations like the U.S. Chamber and BusinessEurope are pushing us constantly to find common cause.

“I should mention that the exploration currently underway in the U.S.-EU high level working group on jobs and growth is an excellent complement to what we are trying to rebuild multilaterally. This structured examination of ways that we can further deepen transatlantic economic integration is well underway, although there is obviously much more work to be done. But it’s clear that both we and the EU are approaching this exercise with an awareness that whatever we do bilaterally can and should reinforce and support the mission of trade liberalization at the multilateral level.

“Let me try to provide a perspective on some of the current focuses at the WTO.

“The enthusiasm within this group for the initiative we are exploring for an international services agreement is great to see – and a confirmation of the strong appetite among U.S. And European businesses to find practical, meaningful ways to advance the ball on trade liberalization.

“The discussions in Geneva on services over the course of recent weeks have been exciting. Frankly speaking, it’s been refreshing – and, sadly, a little novel – to engage with a group of members who actively want to pursue an honest-to-goodness trade-liberalizing initiative.

“There’s a lot of work to be done to scope out how an international services agreement will come together. But there are strong core ideas on the table, and a common recognition of the tremendous benefits that can be shared through expanding services market access and developing new, internationally agreed rules and standards. We need such work in order to deal with both new and longstanding issues, especially in key areas that fuel growth, such as information communications technology services and global supply chains.

“I should mention that this is an area where closer coordination between the U.S. and the EU is particularly urgent. While I can appreciate the impulse of some of my EU colleagues to encourage that a services agreement encompass the broadest possible circle of WTO members, the big emerging economies have made it abundantly clear that they are not ready to engage seriously in services liberalization. To say nothing can be done without them means that nothing can be done. The United States does not support that view. We cannot afford to see the recent Doha history repeat itself.

“We must and we will approach an international services agreement with a keen awareness that a plurilateral structure should be a stepping stone for advancing multilateral liberalization. This is possible; there are ways to do it. And we are ready to move now.

“It’s been no surprise to me that we’ve also heard a lot today about interest in expanding the information technology agreement. Here again, your identification of a product area ripe for additional liberalizing work is hugely welcome, and we’re taking it very seriously. Our team is working closely with like-minded ITA members to scope out the most viable approach to negotiations in this area – taking into account the need to expand product coverage, retain the commitment of existing ITA members, and expand the appeal of the agreement to WTO members who aren’t yet ITA participants.

“Here again, close collaboration between the U.S. and the EU is essential. We’re not quite yet on the same page, particularly with regard to the scope of an ITA expansion negotiation. From the U.S. perspective, what makes best sense is a negotiating scope that allows for rapid progress, tangible deliverables, and reinforcement of the ITA membership. While I can understand why my EU colleagues would like to use ITA expansion negotiations as a platform to pursue longstanding aspirations on non-tariff issues, the ITA is fundamentally a tariff agreement. Exceeding the current ITA mandate is unlikely to garner the necessary consensus to move an ITA expansion initiative forward.

“Let me also offer a brief perspective on the WTO’s negotiations on trade facilitation. Since the ministerial conference in December, we’ve been pleased to see a continuation of the workmanlike, bottom-up approach to this negotiation that has characterized it for some time. Our intention is to continue contributing to the negotiation in this same spirit.

“The economic gains from an eventual TF agreement for the U.S. economy are important, and merit our continued attention. Just as importantly, trade facilitation has huge potential to advance development, and it’s great to see that this is recognized among a broad range of developing country WTO members. There’s real promise here, and the ‘steady as she goes’ approach has the best potential to continue to build towards strong results.

“We’re pleased to see work advancing in services, information technology, and trade facilitation. But what about the rest of the WTO universe? I think there are important silver linings to be found in the frank and honest acknowledgment of Doha’s current impasse. One of those is that we have greater latitude to revitalize the day-to-day work of the WTO’s standing committees and working groups.

“The work of the committees in overseeing the various WTO agreements – on subsidies, IPR, TBT, agriculture, SPS, and others – has perhaps suffered from some neglect in recent years due to the overwhelming amount of time and resources devoted to the Doha round. But this is critical work, and we need to work to make sure the committees are meeting their full potential. These bodies can and should be incubators for good ideas, and fora for members to discuss issues they consider relevant to the world we live and trade in today.

“So we’ll be looking for ways to breathe new life into the WTO’s committees, and to do so in a manner that reflects topical and meaningful U.S. trade interests. We expect and hope other members will do the same, and we see signs that this is happening. Brazil, for example, has identified an issue that both it and we consider important – the relationship between exchange rates and trade – along with a WTO working group where a discussion of that subject can take place. That’s obviously a tricky area, surrounded by a lot of sensitivity for some members, but we welcome the initiative to foster this discussion within the WTO. The United States has been and will continue to be an active participant as this process unfolds.

“I should also note that the conclusion of a revised government procurement agreement presents important opportunities to explore valuable work in this economically significant area, notably through work on the accession of China and other WTO members.

“As we look to strengthen the WTO and set it on constructive new paths, the huge and complex intersection of trade and development will clearly continue to be critical – as indeed it must be.

“As Ambassador Kirk told his fellow ministers in December, for the United States, the starting point of any discussion of trade and development is to remind ourselves that ‘trade’ and ‘development’ are mutually reinforcing, and deeply complementary. Trade has lifted hundreds of millions of people out of poverty, expanded individual opportunity, and accelerated economic development across the planet.

“It has become ever more clear, however, that a ‘one-size-fits-all’ approach to trade and development does not accurately reflect the world we live in. Developing countries are not the same, and pretending that they are contributes to deadlock in our discussions and – as we’ve seen clearly – in our negotiations. Levels of responsibility and contributions have to reflect the world we live in. We need urgently to start an honest discussion about this difficult but vital reality.

“Just a couple of additional points before concluding.

“First, a word on Russia. Russia’s invitation to join the WTO in December is obviously a very big deal, and extremely important for the United States, Russia, and the entire WTO membership. We know that welcoming this large, important, and dynamic economy into the WTO will involve adjustments – for Russia, above all, but also for the rest of us. Clearly, though, having Russia participate in the same system of trade rules as most of the rest of the planet is going to be immensely beneficial.

“That’s why the President and Ambassador Kirk have stressed that we will work vigorously, and rapidly, with the congress to terminate application of Jackson-Vanik to Russia and enable extension of permanent normal trade relations. That effort is gaining steam, and I know that the U.S. businesses represented here today are actively engaged in this effort. A positive congressional vote on Jackson-Vanik for Russia is, above all, a matter of U.S. national economic interest, so that American businesses and workers can benefit fully from the strong WTO accession package negotiated laboriously over nearly two decades.

“Second, no discussion of current trade issues would be complete without mentioning China – another area where U.S. and EU interests and concerns very often converge. In the context of Doha, we worked together closely developing and advocating tougher subsidy rules, particularly regarding state-owned banks and state-owned industrial enterprises. While those efforts have not borne fruit to date, they did lay the foundation for future work. Currently, for example, the OECD is examining the issue of state-owned enterprises and ‘competitive neutrality’ while the United States is looking to advance new disciplines on state-owned enterprises in the context of the Trans-Pacific Partnership. More broadly, we must continue to monitor and take action to combat China’s trade-distorting industrial policies, whether that be with respect to China’s policy of indigenous innovation, or the plethora of five-year plans now being issued by China’s economic planners. And, of course, our efforts regarding China’s export restraints are well-known and have been quite successful thus far, which we hope and expect will continue into the future.

“Finally, and on a much broader note: the work that we’re doing at the WTO, and the specific initiatives I’ve touched on today, all ultimately come back to a core truth. The WTO, and the potential it holds for producing market-expanding trade liberalization, is fundamental to creating conditions for strong global growth and job creation. While the existence of a positive link between trade, growth, and jobs may be self-evident to many, we – policymakers as well as economic actors – need to do a better job of reinforcing this linkage in the way that we talk about trade.

“Put another way, trade liberalization is an essential complement to fiscal and monetary policies, as we seek to grow our way back to prosperity. Ambitious market opening – in manufacturing, agriculture, and services – is a critical piece of the multidimensional challenge of creating growth. And the multilateral trading system embodied in the WTO remains, far and away, the best and most important means of producing broad-based market opening that benefits economies, companies, and individuals around the globe.

“The U.S. commitment to the WTO is founded on six decades of labor by 12 Presidents, Republicans and Democrats. We look forward to our continued labor with all of you – our stakeholders and our allies – as we continue with this generation’s work to build a stable world, and jobs for our people.”