U.S. Statement at the WTO Trade Policy Review of the United States: Day 2

Statement Delivered by Ambassador Michael Punke
U.S. Permanent Representative to the World Trade Organization.

Geneva,
18 December 2014

-As Delivered-

Madam Chair, Ambassador Adank, and fellow permanent representatives and delegates;

Thank you for joining us again today for the continuation of this 12th Trade Policy Review of the United States.  And many thanks to all of you for your very active participation during the first day of this review on Tuesday.

As mentioned in our opening statement on Tuesday, the United States regards this review as a valuable opportunity to listen to, and learn from, other Members, and to take on board various perspectives on our nation’s trade policies.  Our experience on Tuesday confirmed the usefulness of that process of listening.  We appreciate the observations offered by over 50 Members, and the mostly constructive spirit in which they were articulated.

As is the case with all Members experiencing this process, we of course fully expect criticism to be part of the picture of our TPR.  And while we are not always able to respond as immediately or as fully as some of our partners would like, and while sometimes we disagree strongly with certain assertions or premises, hearing from all of you makes a difference in the way we think about formulating our trade policies.  We are also appreciative for the acknowledgment from so many of the fact that the United States maintains one of the most open economies in the world.

We hope that the massive effort we devoted to responding in writing to your many written questions will prove useful.  This morning I’d like to respond briefly to a few of the more consistent themes we took on board on Tuesday.  What follows will not be a comprehensive response to every intervention or question, but I hope to provide some elaboration on our written responses to questions posed by Members.

Let me note at the outset how gratified the United States is that we heard such consistent acknowledgments and expressions of appreciation for the commitment of the U.S. to the WTO, and for our leadership within it.  This recognition means a great deal to Ambassador Froman and to all of us who work on trade policy within the WTO.

Of course, we work to advance constructive leadership in the WTO not because we seek praise – although that is certainly welcome – but because we recognize how deeply the success of our economy and of our broad trade policy mission is tied to the viability and health of the WTO and the multilateral trading system that it supports.  We are committed to partnering with all of you to keep this institution vibrant because, first and foremost, it is in our national self-interest to do so.

As a brief aside, we note that one Member seemed confused by use of the term “global trading system” rather than “multilateral trading system” in our government’s report.  We are not sure we really understand this concern, but let me provide a blanket reassurance – we do not see a meaningful distinction between “global” and “multilateral,” and that is probably why we hear these terms used interchangeably in this institution.)

Let me now turn briefly to a few themes raised on Tuesday.

Ambassador Adank’s presentation made considerable note of the 2014 Farm Bill as representing an important development during the period under review, and many Members understandably expressed an interest in this legislation and how it will be implemented.  The questions and observations generally acknowledged that the process of implementing the Farm Bill is still underway.  While there was some suggestion that the new policy has the potential to be trade distorting, we would note that nearly all potential payments under the 2014 Farm Bill are made on historical production, without reference to current production, thus removing the incentives that lead to surplus production.

Nevertheless, we understand fully that the U.S. Farm Bill represents an important “fact on the ground” in discussions on agriculture here at the WTO, and we are committed to keeping Members informed, through required notifications and through discussions in the relevant committees and negotiating groups, as the implementation process advances.  As to the bill’s relevance to ongoing negotiations on agriculture in the context of the DDA, of course it is just as relevant as the agricultural programs of any other Member.  It represents a current, important reality.  As such, it is one of many current, important realities that must be a part of any meaningful discussion of agriculture.  But we certainly do not view our Farm Bill as affecting our ability to engage towards finding results across the scope of the DDA that are appropriately balanced and trade-liberalizing.  The United States previously proposed further liberalization of our agricultural policies as part of a broader reform in the DDA.  If and when all key WTO Members are prepared to negotiate seriously about meaningful reforms, in particular market access opening that has proven so difficult, the United States will be prepared to do its part.

A number of Members raised concerns about increased usage of U.S. trade remedy procedures during the period under review.

We should all be concerned about injurious dumping and subsidization and the effects the increasing prevalence of these practices has on the trading system.  We would remind Members that investigating and remedying these trade-distorting practices is specifically provided for under WTO rules.  The practices of many major WTO players reflect a recognition of this fact.  Indeed, we note the increase in AD/CVD cases by many WTO Members, including, in some cases, the specific addition of attorneys to prosecute antidumping and countervailing duty cases.  Under U.S. law, antidumping and countervailing duty investigations are initiated in response to a petition filed by the domestic industry. The decision then to impose a measure is based on a factual determination of whether injurious dumping or countervailable subsidization exists.  These are not policy decisions on behalf of the U.S. government.  Rather, the determinations made are based on the gathered evidence, and in nearly half of the antidumping investigations initiated in 2013, the evidence resulted in a determination not to impose a measure either because of no dumping or no material injury.  It is also important to put the recent increases in context.  Antidumping initiations and imposition of measures by all WTO Members have seen a nearly one-third increase in 2013.  The United States is particularly alert to this increase as we are now the third most-named country in antidumping duty investigations, a status that has been obtained only during this most recent TPR period.

At the same time, imposition of global safeguard measures by WTO Members has increased significantly in recent years, while the United States has not imposed such a measure in more than a decade.  In sum, concern about what the overall trends tell us is warranted, but concerns that United States trade policy decisions are somehow at fault are not.

With regard to observations that sunset reviews of U.S. antidumping orders may often result in an extension of those orders, I would remind Members that, under U.S. law, these reviews are administrative processes that depend importantly on the participation of respondents.  We have observed numerous instances in which respondents in U.S. antidumping proceedings simply fail to participate in sunset reviews.  This naturally reduces prospects for the termination of orders.  Members may wish to look for ways to remind interested stakeholders of the importance of active participation in the review process.

A number of Members raised concerns regarding the existence of tariff peaks within the U.S. tariff schedule.  We take note of these concerns, but consider it important to clarify that the United States is hardly an outlier in maintaining higher tariffs on products that are sensitive.  In addition, the tariff profile of the United States compares extremely favorably in this regard to that of other large Members.  According to the WTO, 2.7 percent of the United States’ MFN tariff schedule at the 6-digit level is bound at duty rates above 15 percent, while 45.2 percent of U.S. 6-digit lines are bound at zero.  For purposes of comparison, the percentage of lines bound above 15 percent are 4.4 percent for the EU, 16.4 percent for China, and 71.5 percent for India.  For those same partners, the percentage of lines bound at zero are 28.9 percent for the EU, 6.6 percent for China, and 2.3 percent for India.

Permit me now to respond briefly to concerns raised in this review regarding U.S. compliance with proceedings under the WTO’s dispute settlement procedures.  A review of the record – that is, based on facts and not rhetoric — demonstrates that the United States has come into compliance, fully and promptly, in the vast majority of disputes in which the DSB has issued recommendations with respect to a U.S. measure.  As for the remaining few instances where U.S. efforts have not yet been successful, including some mentioned during the course of this review, we have been working actively towards resolving such matters.  For example, it is useful to recall that in recent months, the United States successfully resolved both the Upland Cotton and Clove Cigarette disputes.  And Members looking at the record objectively will recall that over 2012 and 2013, the United States resolved numerous disputes and proceedings involving the use of “zeroing” in certain antidumping duty comparison methodologies, despite the strong disagreement of the United States with appellate reports on that issue.  Therefore, the United States has a strong record of support for the WTO dispute settlement system, including through implementation actions and working with other Members to resolve disputes, and we will continue to demonstrate this commitment through our actions, despite any misguided and unsupported assertions to the contrary.

We took careful note of interventions and questions from a number of Members regarding the Buy America provisions under U.S. law.  For context, it is significant to note that hundreds of billions of dollars of U.S. government procurement contracts are open to foreign competition under the combination of our GPA and FTA commitments, and those opportunities were increased in 2011 as part of the WTO plurilateral work to expand the GPA agreement.  Like every other GPA Member, the United States excludes certain procurements from its covered commitments.  The United States is committed to ensuring its covered government procurement, at all levels of government, is conducted consistent with its obligations under the WTO Agreement on Government Procurement and relevant U.S. FTAs.  We will remain open to discussing specific procurement concerns with our GPA and other trading partners.

A few Members spoke about so-called “homecoming of manufacturing” or “insourcing” policies of the United States.  The United States considers it to be a normal practice for any country to promote a strong and attractive investment and innovation environment, based notably on strong rule of law, and founded on non-discriminatory policies that do not distort trade.  Certainly the United States intends to compete vigorously in the competitive global environment.  While it may be the case that developments in the U.S. energy market have increased the attractiveness of manufacturing investment in the United States, we do not see how this constitutes any sort of concern under the framework governing relations among WTO Members.

I would like to especially acknowledge the numerous statements of interest from developing country Members concerning the status of reauthorization of the U.S. GSP and AGOA programs.  As those Members will see reflected in our written answers, renewal of these programs constitutes an important priority for the United States Administration, and one on which we continue to work actively with the Congress.  These trade preferences continue to constitute a critical element of U.S. trade and development policies, and we will continue to update Members about progress in this area.

We also heard a great deal of understandable interest in the pursuit by the U.S. of large, complex free trade agreements in the context of the TPP, TTIP, and TiSA negotiations.  These initiatives are, it is true, very high priorities for the United States, representing as they do important commercial opportunities as well as the ability to explore with our partners ways in which we can adapt trade agreements usefully to the conditions prevailing in today’s trading world.  We must note, of course, that all major players within the WTO, both developed and developing, are actively pursuing bilateral and regional agreements of their own. The statements we heard from many Members on Tuesday reassure us that most WTO Members understand that the United States’ pursuit of these important initiatives in no way detracts from the attachment of the United States to the unique role of the WTO and the multilateral trading system in fostering stable trading relations on a global scale.  We remain committed, including through the relevant GATT and GATS provisions governing regional trade agreements, to conducting our bilateral, plurilateral and regional negotiations in a way that complements the value of the multilateral system.  Of course, the WTO is one of many for a for promoting international trade.  The best way to assure its vibrancy is for Members to make WTO negotiations constructive and relevant.  We have an opportunity to do just that in the coming year.

I have tried in this statement to touch on some of the themes that were most consistent in the written questions and verbal interventions made during this review.  I recognize that I have not been able to touch on the many dozens of issues raised by Members.  I’d like to reassure the Membership that the United States has taken careful note of every single question and issue raised during this TPR, including, to name just a few, implementation of the Food Safety Modernization Act, consideration of potential new rules relating to fish subsidies, and a range of issues related to the regulation of telecommunications, health, and other services sectors.

Several Members mentioned the DDA and the development of a post-Bali work program.  As we stated in the most recent meeting of the General Council, we look forward to engaging with other Members in coming months to draw some conclusions about the most sensible ways of moving forward with the DDA.  On Tuesday, we appreciated very much that a number of Members, in acknowledging U.S. leadership in this institution, made reference to the flexibility we have shown.  Clearly, flexibility on the part of all Members will be essential if we are to conclude the DDA successfully.  We are committed to being part of that give-and-take.

Finally, before closing, I want to mention briefly the exciting and historic announcement made yesterday by President Obama with regard to relations between the United States and Cuba.  I am sure that many Members will have questions about this decision.  The United States will look forward to working together to answer these questions in the months and weeks ahead.

Madam Chair, the United States approaches the end of this review with a certain measure of relief, which is a sentiment I’m sure all Members can appreciate.  The TPR is a rigorous, demanding, and at times maddening process.  It is an enormous amount of work for big and small Members alike.  It is also immeasurably worthwhile, and represents one of the most valuable innovations of this now-20-year-old World Trade Organization.

I’d like to close by extending the warm thanks of all of our team – including the hundreds of colleagues across the scope of our government in Washington – who participated in responding to your questions.  We deeply appreciate the serious engagement of all of you, and we are grateful for the role of the Secretariat, the Chair, and our excellent discussant in shepherding us through this process.

 

Thank you.

 

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