THE 13TH WTO TRADE POLICY REVIEW OF THE UNITED STATES OF AMERICA
Statement by Ambassador Michael Punke
Deputy U.S. Trade Representative and U.S. Permanent Representative to the WTO
December 19, 2016
Madam Chairperson, Ambassadors, and distinguished representatives,
We are pleased to participate once again in the 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 and permanent representatives. Thank you for the time you are taking to participate in this important process.
We especially appreciate the participation of Ambassador Daniel Blockert, Permanent Representative of Sweden, whom we are honored to have as our discussant.
We also want to acknowledge the Secretariat’s team for their work in producing an informative report that provides a basis for today’s discussion. Again this year, as in past reviews, our colleagues in Washington appreciated the chance to engage in a vigorous and productive discussion with the impressive professionals of the Secretariat’s TPR Division.
The United States places high value on the trade policy review process, which is vitally important for promoting greater awareness and understanding of Members’ trade policies and practices. It is for this reason that we actively engage in all Members’ trade policy reviews and that we work diligently to answer the ever increasing number of questions we receive every two years. We have set a new U.S. record of over 1600 questions with this review. We provided answers to all questions that were submitted two weeks prior to today’s meeting, as well as those submitted 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.
Our commitment to open markets and to the rules-based multilateral trading system embodied in the WTO remains a vital part of the United States’ trade and investment policy. Since World War II, twelve consecutive U.S. Presidents – six Democrats, six Republicans—have toiled to sustain and to build on this commitment. We are proud of the role we played in creating the rules-based trading system that has lifted hundreds of millions out of poverty. It remains firmly in our national interest to promote a rules-based system and to do our part to ensure that it meets its tremendous potential. The United States has matched its actions to its words, and our efforts before, during, and after the Nairobi Ministerial Conference have been very much guided by that spirit.
The Obama Administration’s trade agenda has focused on three strategic objectives: establishing and enforcing the rules of the road, strengthening U.S. partnerships with other countries, and spurring broad-based economic development. It is with this mindset that the United States has continued to pursue an active economic and trade agenda since the last U.S. Trade Policy Review in 2014.
Openness and Accountability
The United States is one of the most open economies in the world. We make no claim of perfection – no Member can – but, we are gratified that the impartial Secretariat report emphasizes that the United States is one of the world’s most open markets. In Geneva, the foundation of U.S. leadership is sometimes overlooked in the daily din of clashing talking points and speeches. We appreciate that this TPR process offers reminders of the openness of the U.S. economy, and of our commitment to working with other members of this institution to advance market opportunities in the interest of global economic growth.
The United States, as all of you know, works tirelessly to promote export opportunities for U.S. stakeholders. We make no apology for this. But we have matched our efforts to open markets abroad with a willingness to open our own market. We are the world’s largest single-country importer, importing goods and services that exceed the total size of the economies of all but four countries in the world. In 2015, the United States was the recipient of 19 percent of global goods and services exports, excluding U.S. exports and intra-EU exports, and 71 countries had the United States as their first, second, or third largest export partner.
The current U.S. simple average tariff is 3.5 percent on an applied basis under the WTO. When tariff preferences are taken into account, the U.S. trade-weighted average tariff is 1.5 percent on an applied basis. In 2015, 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, including to non-U.S. citizens. As these figures underscore, it is no exaggeration to say that the openness of the U.S. economy to goods and services is one of the most important sources of global economic stability.
In addition, the United States continues to be the world’s largest recipient of foreign direct investment (FDI), underscoring the Secretariat report’s statement that the U.S. investment regime is generally open and liberal. The stock of FDI in the United States in 2015 was $3.14 trillion, and the United States is committed to remaining an attractive destination for investment.
The United States in the Multilateral System
The essential backdrop for the openness of the United States to goods, services and investment from around the world is our long-standing commitment to the WTO as the developer and guardian of the rules that govern the global trading system. The United States works in this institution to promote enduring values that are important to us and that benefit the rest of the world. These include the rule of law, good governance, transparency, and predictability. There is nothing easy or transitory about these values. They require vigilance, and leadership.
Members of this institution rightly expect leadership from the United States. Many in this room today know that U.S. leadership can at times be disruptive and uncomfortable. Our brand of leadership has often focused especially on stating certain realities in blunt terms. This was undoubtedly the case in our recent efforts to encourage the membership to move beyond negotiating structures that had, in our view, long ceased any promise of success.
Likewise, we have confronted what we consider to be some distressing trends in the dispute settlement functions of the WTO through steps that have, we know, been upsetting to some. But our willingness to be very direct, and occasionally disruptive, in the exercise of leadership flows precisely from the fact that this multilateral system is so vitally important to us. Our directness, our straight-talk, is always motivated by a commitment to making things work better within this system.
For years, and well before MC10, the United States has believed that if we are serious about strengthening the multilateral trading system, we need to move beyond the traditional but empty invocations of the past and start thinking seriously about how to revitalize the WTO to make progress on the critical issues facing our people: economic growth and job creation, the protection of workers and the environment, the promotion of innovation, the advent of the digital economy, the importance of small and medium-sized enterprises, and the distortive effects of state-owned enterprises. We are gratified to be observing a broadening consensus that pragmatic multilateralism is needed, a multilateralism which recognizes that the world has changed dramatically in the past two decades, that some developing countries have become globally competitive emerging markets, leading economies, and that with an increasing role in the global economy comes increasing responsibilities.
Pragmatic multilateralism has already helped this institution begin to turn the corner. In Bali, pragmatic multilateralism allowed us to reach the first multilateral agreement in the history of the WTO – the Trade Facilitation Agreement, which we hope to see enter into force within weeks. In Nairobi, pragmatic multilateralism allowed us to reach agreement on the first new agricultural disciplines since 1994, on agricultural export subsidies, as well as agreement on a range of issues important to the least developed countries.
In last year’s expansion of the Information Technology Agreement, pragmatic multilateralism allowed interested Members to come together and eliminate tariffs on over $1 trillion of information and technology products and to provide that benefit on a multilateral basis. This agreement represented the first WTO tariff-cutting agreement in 17 years. Pragmatic multilateralism has brought WTO Members together to work on eliminating tariffs on a range of environmental goods, so that we might see the dispersion of these key technology to deal with a raft of environmental concerns as quickly and affordably as possible. And in September, more than a dozen WTO members gathered to address the subsidization of fishing, a key economic, development, and environmental issue.
Pragmatic multilateralism does not always make agreement easy or fast, but it does help make it achievable. While our work on the Environmental Goods Agreement recently encountered some disappointment, participating Members have made good progress, and we look forward to continuing our work. These negotiations will require leadership from all participants, above all the major players.
The United States’ vision of a pragmatic multilateralism acknowledges the reality that dozens of Members – including all of the major players in the WTO – have negotiated scores of bilateral and regional trade agreements over the last couple of decades. These agreements are not intended to replace or supplant the multilateral trading system, but to inform it and to spur it on to action. The best of these agreements set high standards, address groundbreaking issues and define new rules, and can help establish models for the multilateral process as it defines a future agenda. Plurilateral agreements have been part of the GATT and WTO landscape for decades, and in recent years have offered one of the most productive channels for those countries that are committed to creating new opportunities for their companies and workers.
Nairobi represented a critical turning point in the history of the WTO. It was a moment in which both multilateral and plurilateral agreements were reached. And it was also a moment in which it became clear, officially, for the first time, that there is no consensus to continue the Doha mandate. Stated more directly, the old Doha mandate no longer exists. Together we have begun a new chapter in the history of the multilateral trading system.
Of course, even beyond negotiations, 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. We are encouraged by the energy that we see exhibited in committees ranging from TRIMS to antidumping to technical barriers to import licensing. These and other committees are the lifeblood of the institution, and we will maintain a firm commitment to keeping them active and healthy. As we and other Members have stated recently, however, the continued viability of these structures depends extensively on a much more vigorous attention to transparency and notification requirements across the scope of the WTO agreements.
Bilateral and Regional Developments
The commitment of the United States to opening markets and supporting a rules based system is why we have, since our last review, continued a vigorous pursuit of bilateral and regional arrangements aimed at reinforcing and complementing the multilateral trading system.
During the period under review, the United States, along with 11 partners, concluded and signed the Trans-Pacific Partnership (TPP) Agreement. Through TPP, we have sought to craft a high-standard pathway to regional economic integration in the Asia-Pacific. In addition to ambitious market access commitments, the TPP includes high-standard trade rules covering both new and traditional trade issues. It includes strong and enforceable rules to protect workers and the environment. It addresses issues such as competition by state-owned enterprises, digital commerce, and regulatory coherence, providing guideposts for how these issues may be addressed in other trade fora. According to analysis supported by the Peterson Institute for International Economics, if TPP were implemented, global exports would increase (compared to the baseline) by US$ 1.1 trillion (2015 dollars) by 2030, and global real income would increase by US$ 492 billion.
Following the February 2016 signing of the Agreement, the 12 TPP Parties turned to their respective domestic approval processes, but the U.S. Congress has not yet taken up the TPP agreement. The Obama Administration had worked with our TPP partners to address issues raised by Congress, was prepared to submit the agreement this year, and is of course disappointed that Congress chose not to take up TPP this year. We know that this disappointment is shared by our TPP partners. Obviously future steps depend on decisions that will occur in the next Administration.
Also during the period under review, the United States and the European Union made considerable progress in negotiating a comprehensive trade and investment agreement, the Transatlantic Trade and Investment Partnership or T-TIP. A T-TIP agreement would strengthen our relationship with the EU, which already accounts for over $1 trillion in annual two-way trade, $4.6 trillion in investment, and more than 14 million jobs. We are aiming in T-TIP to reduce tariffs and non-tariff barriers, modernize trade rules, and bridge unnecessary divergences in our respective regulatory requirements, while maintaining the high standards of health, safety, and environmental protection that stakeholders have come to expect both in the United States and the EU.
In 15 rounds of T-TIP negotiations, the United States and the EU have made significant progress toward an agreement, particularly in the elimination of duties and in advancing a number of important regulatory issues. For example, while tariff negotiations are not complete, U.S. and EU negotiators already agreed for 97 percent of our trade to be duty-free. While differences remain in several key areas, our work has brought greater clarity to our differences and enabled both sides to explore potentially promising avenues for reconciling them. As political leaders in both the United States and the European Union consider next steps for the T-TIP process, we will look forward to keeping other WTO members informed.
In addition to engagement at the WTO and ongoing trade agreement negotiations, the United States continues to promote mutual accountability and shared ambition as we work with our partners around the world on a bilateral and regional basis, through a variety of trade and investment avenues. Throughout the review period, the U.S. continued to engage trading partners through free trade agreement political and technical committees and councils, and through TIFA Councils and other arrangements with non-FTA partner countries.
From a regional perspective, we continued to explore potential new steps to develop trade and investment ties with countries in the Middle East and North Africa, both bilaterally with the United States and among themselves. We continued to strengthen regional economic integration in the Asia-Pacific Economic Cooperation forum, and we look forward to working with Vietnam, the host country, and other APEC member economies to advance this objective by the APEC Leaders’ and Ministers Meeting in late 2017. We also continued efforts to expand trade and investment ties with the Association of Southeast Asian Nations (ASEAN), through our TIFA and the Expanded Economic Engagement (E3) Initiative, including through the conclusion of ASEAN-U.S. joint statements on investment, transparency, and good regulatory practice.
The United States has a long term commitment to Africa’s growth and prosperity. Since 2000, the African Growth and Opportunity Act (AGOA) has been the cornerstone of U.S.-African engagement on trade and investment. By providing duty-free entry into the United States for almost all products of beneficiary countries, AGOA has helped to expand and diversify two-way trade between the United States and sub-Saharan Africa, and it has helped to foster an improved business environment in many sub-Saharan African countries. Last year, the United States extended AGOA to 2025. The renewed AGOA promotes greater regional integration by expanding rules of origin and by encouraging beneficiary countries to develop AGOA utilization strategies. It also provides additional tools to support compliance with the AGOA eligibility criteria. In September 2016, President Obama hosted the second U.S.-Africa Business Forum, bringing together African Heads of State as well as African and American private sector CEOs, entrepreneurs, and other key stakeholders, to highlight the partnerships and innovations that have led to deeper business relations between the United States and Africa, and to discuss the potential for future collaboration.
Enforcement in the Rules-Based System
In the United States’ view, achievement of the greatest economic benefits offered by the global trading system requires that all trading partners abide by their commitments and play by agreed upon rules. In this regard, the United States has continued to place an unprecedented emphasis on enforcement of existing trade agreements. While the United States engages directly with our trading partners, WTO committees and other WTO bodies, to address concerns regarding protectionist measures when direct engagement is not successful, the United States has frequently turned to the WTO’s dispute settlement system for discussion and adjudication of disputes with trading partners.
It remains our firm view that the work of the WTO in the area of dispute settlement represents a remarkable achievement of the multilateral trading system, and one that has proven its benefits to both developed and developing country Members. However, over several years, the United States has raised with Members a number of concerns with the operation of the WTO dispute settlement system, and in particular with the adjudicative approach reflected in certain Appellate Body Reports. And to be clear, these concerns have arisen in disputes in which the United States was a party and in those in which it was not.
The Appellate Body plays an important role in the WTO dispute settlement system. And that makes the proper functioning of the Appellate Body critical for the proper functioning of the dispute settlement system. It is useful to recall that the role assigned by WTO Members in the DSU to the Appellate Body is a focused one. The job of the Appellate Body is to review a legal conclusion or interpretation in a panel report so that the recommendations of the DSB help Members to promptly resolve disputes under the covered agreements. And the DSU is clear – a panel or Appellate Body report cannot add to or diminish rights and obligations under the covered agreements. As a result, the job of the panel or Appellate Body is not to “create law” or devote time to, or opine on, topics that are not necessary to resolve the specific dispute.
The concerns raised by the United States should be of concern to all WTO Members. WTO adjudicators should be focused on addressing those issues necessary to resolve the dispute. WTO Members cannot have confidence in a system where WTO adjudicators overstep the boundaries agreed by WTO Members in the DSU and the WTO Agreement. And if Members do not have confidence that the WTO dispute settlement system will not add to or diminish their existing rights and obligations under agreements they have approved domestically, they will not have confidence that they can conclude new agreements and credibly say domestically what those new agreements mean. The dispute settlement system should reinforce the WTO and not undermine our efforts to advance our interests together through new agreements.
Trade and Development
Another central component of U.S. trade policy is our commitment to partner with developing countries to alleviate poverty and foster opportunities through expanded trade and stronger economic growth. Whether through preference programs or new initiatives to increase trade and trade capacity in developing countries, promoting economic development by creating trade opportunities for some of the world’s least-advantaged countries remains a priority for the United States. We believe that open trade is one of the strongest pro-development tools, and we remain committed to multilateral efforts to assist least developed countries (LDCs) to become better integrated into the global trading system.
The United States has also committed substantial resources to trade capacity building, and remains one of the leading donors to Aid for Trade programs. Overall U.S. support for trade capacity building since 2001 has now surpassed $17.6 billion. We are proud that many of the developing countries in this room today are beneficiaries of U.S. capacity-building assistance. This past September, the United States pledged an additional $600,000 for trade-related technical assistance to the WTO Global Trust Fund, to help WTO Members participate more fully in the WTO. The United States takes a whole-of-government approach in 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.
The United States is committed to entry into force of the Trade Facilitation Agreement. We are in close striking distance of this historic event, with only 7 more acceptances needed for entry into force. To help Members secure the anticipated widespread benefits of the TFA, the United States has created a new public-private partnership named the Global Alliance for Trade Facilitation (the “Alliance”). The Alliance is a new approach to implementation where government and donors work to leverage private sector expertise to create the bottom-up demand and support for trade facilitation reforms. Joining together to create the Alliance is the World Economic Forum, the International Chamber of Commerce, and the Center for International Private Enterprise together with the governments of Australia, Canada, Germany, the United Kingdom and the United States. It is envisioned that the Alliance will support efforts in 12 to 15 developing countries on an annual rolling basis. The four pilot Members to date have been Ghana, Kenya, Colombia, and Vietnam, and we look forward to continuing our work with additional Members.
Four years ago, the United States launched the “Standards Alliance,” a partnership between USAID and the American National Standards Institute (ANSI). The Standards Alliance provides resources and expertise to enable developing countries to effectively implement the WTO Technical Barriers to Trade Agreement, for example, with respect to use of international standards and notification of technical regulations to the WTO. During the period of review, the Standards Alliance completed over 35 TBT-related trainings, workshops, and delegation visits that included more than 1,500 participants from 65 countries. Standards Alliance countries exhibit a growing expertise on TBT matters, and they have increased their participation in WTO TBT Committee meetings since 2012.
The United States’ long-term commitment to Africa’s growth and prosperity includes several ongoing trade-related capacity building initiatives. The Obama Administration has expanded the Trade Africa initiative to encompass 10 countries, and it committed to provide technical support on trade matters to the Economic Community of West African States. The United States also has boosted trade capacity building through USAID’s Trade and Investment Hubs on the continent, which are expected to facilitate over $200 million in new investments and foster the creation of 37,000 jobs by 2020. Other initiatives include Power Africa, Feed the Future C-4 Cotton Partnership Program, and programs to tackle obstacles to private investment and economic growth, to reduce barriers to financing infrastructure, and to increase agricultural trade both regionally and with the United States.
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.
In closing, the United States is eager to continue to work closely with all of our WTO partners in a constructive manner that will help this institution move forward into a successful third decade. We are encouraged by the energy that we see within this institution, even if the precise paths towards our next Ministerial Conference, and the success that lie beyond it, have not yet been clearly defined. Our hope, and our determination, is for a WTO that is responsive to the real world in which we are all actively trading; for a WTO where each of us seeks opportunities to use trade as a part of a strategy for creating good jobs for our people; for a WTO that remains true to its core, trade-liberalizing mission; for a WTO that is a means of advancing the development aspirations of all Members; and for a WTO that works productively to resolve disagreements among Members.
Madam Chairperson, Ambassadors, distinguished representatives; the United States believes deeply in the importance of the work that we are all here to do. We approach this review as an opportunity to listen and to learn, and in doing so to strengthen U.S. leadership within this institution. We look forward to participating in this exchange and we thank you all again for your interest and attention.