Statement by United States Ambassador Michael Punke
Deputy U.S. Trade Representative and U.S. Permanent Representative to the World Trade Organization
December 18, 2012
Mr. Chairman, Ambassadors, and distinguished representatives,
We take great pleasure in participating in the eleventh trade policy review of the United States. We are honored to see the large number of participants at today’s meeting and, in particular, to greet so many of my fellow ambassadors. Thank you for the time you are taking to participate in this important process.
We especially appreciate the participation of Michael Stone, Permanent Representative of Hong Kong, whom we are honored to have as our discussant today.
We also want to acknowledge the Secretariat’s team for their hard work in producing an informative report that provides a basis for today’s discussion.
The United States places a high value on the trade policy review process, which we believe today – more than ever – remains vitally important for promoting greater awareness and understanding of Members’ trade policies and practices. My delegation has worked diligently to answer the multitude of questions that Members submitted – over 1500, from 36 Members. We provided answers to all questions that were submitted two weeks prior to today’s meeting, as well as those within a few days after the deadline. We are working hard to respond to the additional questions received just last week, and we hope to have responses for Members as soon as possible.
A central pillar of U.S. trade policy is our enduring commitment to open markets and to the rules-based multilateral trading system embodied in the WTO. International trade and investment policies have long played a critical role in the U.S. economy. This is especially true now, as the United States and other Members seek to strengthen their economies and to address new challenges following the shocks of the global economic crisis.
Since the last U.S. Trade Policy Review in 2010, the United States has actively pursued a trade policy that supports jobs through trade expansion, enforcement of trade rules, and enhanced international trade relationships. An important aspect of these efforts is partnering with developing countries to fight poverty and to expand opportunities.
President Obama launched the National Export Initiative nearly three years ago to double U.S. exports within five years, reflecting the United States’ commitment to trade-driven economic and employment growth. Jobs supported by U.S. exports have increased by 1.2 million between 2009 and 2011. Central to our multifaceted approach to trade policy is the recognition that trade openness creates economic growth and supports additional jobs. As of 2011, U.S. goods and services exports supported 9.7 million jobs in the United States alone. And imports have helped to expand purchasing power, widen the choice for American consumers, and provide valuable inputs into U.S. production in global value chains. In structuring our trade policy for the future, the United States will continue to reinforce the positive link between trade, growth, and jobs.
Openness of the U.S. Market
The United States continues to expand access to its already open market. In 2011, 68 countries had the United States as their first, second, or third largest export market. The current U.S. simple average tariff is 3.5 percent on a bound basis under the WTO. When GSP and other tariff preferences are taken into account, the U.S. trade-weighted average tariff is 1.34 percent on an applied basis. In 2011, nearly 70 percent of all U.S. imports, including those under preference programs, entered the United States duty-free. U.S. service markets also remain open to foreign providers and U.S. regulatory processes are consistently transparent and accessible to the public.
The United States has remained focused on the role that international trade plays in economic recovery. As a result of the United States’ open markets, nominal U.S. imports of goods and services increased by 36 percent between 2009 and 2011, to $2.66 trillion. This is equal to $7.3 billion of imports of goods and services per day, or $5 million per minute. One clear indication of U.S. openness can be seen in the fact that we are the world’s largest single-country importer. Put another way, the GDPs of only 4 countries – China, Japan, Germany, and France – exceed the level of U.S. imports of goods and services. In 2011, the United States was the recipient of 17 percent of global goods and services exports, excluding U.S. exports and intra-EU exports.
The United States continues to be the world’s largest recipient of foreign direct investment (FDI). In 2011, the stock of FDI in the United States was $2.5 trillion. As evidenced from the continued high levels of inbound FDI, the United States maintains a very open investment climate and is committed to remaining an attractive destination for investment.
The United States in the Multilateral System
The United States is committed to preserving and enhancing the WTO’s role as the primary forum for liberalizing multilateral trade, developing and enforcing global trade rules, and serving as a bulwark against protectionism.
That said, the WTO is an institution at a crossroads, particularly its vital function as a forum for trade negotiations. At last year’s Ministerial Conference, we all acknowledged that the broad Doha Round is at an impasse. This year, our collective efforts to “turn the page” in the Doha negotiations have created important new opportunities. In our view, this process has provided a useful reminder of the important aspects of the institution that are not related to the Doha negotiations. It has also challenged us to learn from our collective mistakes in Doha and to craft more constructive and productive pathways forward on those aspects of the negotiations.
I have heard many contrasting assessments of our work since MC8. Frankly, we are excited by the new energy we have seen in Geneva this year. Technical negotiations on a multilateral trade facilitation agreement are advancing. We have been working hard to address development concerns and are exploring approaches that can advance parts of the agriculture agenda in a realistic way. Negotiations are effectively underway to expand the product coverage of the Information Technology Agreement, or ITA, and are picking up steam. The United States is one of twenty-one developed and developing Members who are moving forward with discussions of a possible international services agreement. Beyond all of this, Members continue quiet discussions on how to deal with the more intractable issues.
We are also proud to have joined others in completing the revised Government Procurement Agreement, one of the WTO’s existing plurilateral agreements. We continue to participate actively in negotiations to broaden its membership. As noted by the U.S. Trade Representative, Ambassador Ron Kirk, the revision to the GPA “demonstrated the ability of the WTO, through hard work, dedicated effort, and the spirit of collaboration and compromise, to reach agreements that strengthen and clarify international rules and expand the international trading system.”
The WTO demonstrates its value every day through the work of its standing committees and other bodies. This institutional structure is instrumental in promoting transparency of WTO Member trade policies as well as monitoring and resisting protectionist pressures during a challenging time for the global economy. The United States has attempted to reenergize the quotidian work of the WTO, from pushing for strong results in the Triennial Review in the TBT Committee, to raising concerns with new trade-restrictive measures in the Import Licensing Committee, Committee on Agriculture, and Council for Trade in Goods.
And now we are focused on how we can show the world that the WTO remains an institution that can deliver negotiated results as we prepare for the next Ministerial Conference in Bali, just one year away. As we noted at the TNC meeting two weeks ago, Bali is not a deadline, but it will be a milestone. The test will be deeds rather than words. The world will be watching to see if the WTO is an institution that can deliver.
Looking beyond Bali, the United States continues to believe in the importance of liberalization of agriculture, industrial and services trade—the unfinished business of Doha—along with an updating of the WTO rule book. However, as we have said before, this will not be accomplished through sugar-laden, but ultimately hollow professions of devotion to the DDA. The stalemate we face is based on fundamental issues involving the respective rights and responsibilities of Members – particularly emerging players. If we are to succeed we will need to face up collectively to those difficult issues.
Through our work in the WTO, we have also sought to resist protectionism. Protectionism inhibits growth, and as WTO Members, we must remain vigilant to the most fundamental principle of the WTO – promoting the continued openness of markets.
The United States is pleased, too, that in July of this year, we were able to support the adoption of a Decision to operationalize the 2002 Guidelines for LDC Accessions. Since the last U.S. TPR, we have collectively welcomed four new Members to the organization, two of which are LDCs. With these accessions, traders around the world are benefitting from increased market access commitments and lower tariffs in an even larger number of markets. These recently acceded countries will benefit from implementing the reforms they agreed to in their accession packages and reaping the economic growth that comes from increasing trade.
The United States was also pleased to be a part of the collective effort to conclude 18 years of accession negotiations with Russia, and welcomed the largest country outside the rules-based system, to become the 156th Member of the WTO. President Obama signed into law the amendment terminating the application of the Jackson-Vanik statute to Russia and Moldova, thereby authorizing the establishment of Permanent Normal Trade Relations to the goods of both countries. We look forward to applying the WTO Agreement to both Russia and Moldova.
Bilateral and Regional Developments
To complement our efforts within the multilateral system, the United States actively pursues regional and bilateral initiatives as part of our broader efforts to liberalize trade and investment, while remaining within the scope of WTO rules. The United States has created an extensive series of high-standard bilateral and regional trade agreements that seek to make a positive contribution to the dynamic and open global trading system.
Today, the United States is a party to FTAs that are in force with 20 countries. These FTAs build on the foundation of the WTO Agreements, and in many respects, include more comprehensive and stronger disciplines. Since our last review, market opening trade agreements with Korea, Colombia, and Panama have entered into force.
The United States has also continued work with its negotiating partners in the Trans Pacific Partnership (TPP) to craft a comprehensive, high-standard regional, Asia-Pacific trade agreement that addresses new and emerging trade issues and 21st century challenges. The United States and its TPP partners welcomed its newest negotiating partners, Canada and Mexico, during the 15th round of negotiations, which concluded just last week in Auckland, New Zealand.
Since our last TPR, the Administration also concluded its review of the U.S. model bilateral investment treaty, or BIT, the results of which will enable the United States to advance its ongoing BIT negotiations and to consider launching additional new negotiations on BITs.
The United States has also advanced several new regional initiatives. We launched the U.S.-EU High-Level Working Group on Jobs and Growth to identify new ways to strengthen our economic relationship with Europe. With our trading partners in the Middle East and Africa, we began building new bilateral and regional approaches to promoting economic growth through the removal of barriers to regional trade and investment. We have launched a new global initiative to find new and better ways to address the growing challenge to market access presented by localization barriers to trade. And we continue to work to address barriers to trade and investment through APEC. Such efforts should lead to increased job-supporting two-way trade for the United States and its trading partners and increased regional integration and stability.
Enforcement in the Rules-Based System
The enforcement of trade commitments affecting a broad spectrum of goods and services is a trade policy priority for our Administration. Because the global trading system only works when all partners play by the rules, the United States will continue to use dialogue when possible and WTO dispute settlement when necessary to insist that markets remain open consistent with WTO rules. The United States will continue vigilant trade enforcement efforts at the WTO—while also monitoring and enforcing commitments in our bilateral, plurilateral, and regional trade agreements—to maintain a level playing field and to uphold key commitments.
Trade and Development
Another key aspect of U.S. trade policy on which the Administration places special emphasis is our commitment to partner with developing countries to alleviate poverty and to expand economic opportunities. This Administration views trade as a critical component of an integrated approach to development policy. The United States welcomed the Ministers’ statement at MC8, which reaffirmed the positive link between trade and development, along with the importance of development as a core element of the WTO’s work.
We also welcome Members’ decision at MC8 to redouble our efforts to make progress in trade and development issues in the CTD in Special Session Negotiating Group. We hope that we continue to make progress in pursuing that objective through constructive engagement on these issues in 2013.
Integral to the U.S. goal to promote economic opportunities in developing countries are the U.S. preference programs, which are the Generalized System of Preferences, the African Growth and Opportunity Act, the Caribbean Basin Initiative, and the Andean Trade Preference Act. Through these programs, eligible products enter the United States duty-free from 135 beneficiary developing countries.
Recognizing that an open door to the U.S. market is of no use to trading partners without the capacity to walk through it, the United States has also committed substantial resources to trade capacity building, being one of the leading donors of Aid for Trade. This past September, the United States contributed $1 million for trade-related technical assistance to the WTO Global Trust Fund, and a further $150,000 to the WTO’s Trade Facilitation Needs Assessment Trust Fund. More recently, we’ve just contributed approximately $115,000 to the Standards and Trade Development Facility. And, at the recent meeting of the WTO Committee on Technical Barriers to Trade, we were pleased to announce USAID’s new Standards Alliance in Geneva. These specific examples are part of a much broader U.S. policy of financial support for trade capacity building. Overall U.S. support for trade capacity building (or “aid for trade”) since 2001, has now surpassed $13 billion.
The robust U.S. commitment to supporting developing countries’ efforts to harness the benefits of trade is evident in the expansive mechanisms employed by the United States to deliver trade-related assistance. The United States takes a whole-of-government approach to providing Aid for Trade. USAID, one of our principal providers of trade-related assistance, works closely with the Millennium Challenge Corporation, and other U.S. agencies to provide trade-related technical assistance. A large number of our developing and least-developed WTO partners have benefitted from these various assistance mechanisms, and we will continue to explore the potential for synergies between our assistance efforts and developing country Members’ trade-led development.
The United States continues to champion the important capacity-building work on trade facilitation, which stands to deliver considerable benefits to all WTO Members. The OECD finds that reducing global trade costs, one of the principal benefits of trade facilitation reforms, by 1 percent would increase world-wide income more than $40 billion, 65 percent of which would accrue to developing countries. The simplification and modernization of customs procedures enhances trading opportunities, reduces trade costs for small and medium sized enterprises, attracts investment, improves tariff collection, trade diversification, and overall economic growth, and helps better integrate developing countries, particularly LDCs, into global supply networks. To that end, the United States supports the on-going WTO trade facilitation negotiations, and U.S. trade-related assistance has supported trade facilitation reforms in many developing countries and LDCs. In addition to a recent contribution to the WTO to support updated needs assessments, the United States in November 2011 launched a new initiative, USAID’s Partnership for Trade Facilitation, a flexible funding facility dedicated specifically to WTO trade facilitation.
In closing, I would note that U.S. support for open markets and rules-based international trade has been a cornerstone of our broader foreign policy for more than six decades. We are dedicated to the WTO as the best hope for preserving the work we have all undertaken in the past – and for building on this work in the future. The WTO is the only forum for Members to adopt and to help ensure implementation of multilateral trade rules. It retains the potential for undertaking innovative initiatives and concluding new trade-opening agreements, and we look forward to a successful Ministerial Conference in Bali in this regard. We know that we can achieve tremendous benefits for all Members with a consistent commitment to strengthening this organization.
Mr. Chairman, Ambassadors, distinguished representatives; we understand and we believe in the importance of the work that we are all here to do. We are therefore committed to engaging productively and sincerely in this week’s review and beyond. We look forward to participating in this exchange and we thank you all again for your interest and attention.