U.S.Trade Representative Robert Zoellick

AUG. 1 — The U.S. Trade Representative Robert Zoellick indicated President Bush had risked his re-election bid by supportingtrade, especially the latest WTO agreement reached in Geneva which seeks to reduce Western countries’ farm subsidies and makes developed and developing country markets more accessible to goods from developing countries like India.

India was among the leaders in opposing U.S. and European farm subsidies and resisting further liberalization of developing country economies unless conditions were met. The large agricultural population in South Asia raised concerns that increasing imports into the region will increase unemployment and erode the productivity base, thereby increasing poverty.

Concerns of price instability, and the need for increased capacity for developing countries to negotiate on market access, tariff rate quotas, and creating a level playing field were India’s focus as a leader in the WTO.

“We have agreed to make historic reforms in global agriculture trade. We have laid out a course tomarkets for manufactured goods. We’ve agreed to intensify negotiations toservices markets, which now account for more than half of the economies of most countries, developed and developing. And we are launching negotiations on customs procedures that will cut red tape and reduce the cost of selling into some countries by as much as 15 percent,” said Zoellick.

“President Bush confounded conventional wisdom by empowering me and my administration colleagues to make trade success a priority, even in an election year, because he believesmarkets build stronger economies and help create jobs in the United States,” said Zoellick.

To a question from D. Ravi Kanth, a reporter with Washington Trade Daily, regarding U.S. concessions, Zoellick indicated they were not give-aways but rather a negotiation to reach the best middle ground.

D. Ravi Kanth: “... my question relates to the agriculture text, in which you have given in to Argentineans on export taxes, India on de minimus, China on developing country STEs and so many things you sort of did part with in last night’s Green Room meeting. What exactly did the U.S. get in this agriculture package? It is not very clear. And secondly, there is an assumption that this particular round is not so much about market access in agriculture, it is just about export competition. Because if you see the kind of conditionalities that are attached in market access, there is no real market penetration anybody can get into your market or you can get into the developing countries market. Is that correct?”

Zoellick: Uh, No. But now I’ll tell you why. First off, your first question was, what did we get out of it. Well, as I emphasized, the United States has been pushing for the elimination of export subsidies for a very long time.

I worked on the Uruguay Round and that was a big, big hope. And again, I complement our European colleagues for their work, but they are the only real big export subsidizer. They have the authority to do five or six billion. They do three or four billion dollars a year.

That really affects beef and dairy and sugar but it has effects on our vegetable trade which is important which gets no subsidies, has relatively low tariffs, so that is a big, big plus for us in the world. And that’s where when I referenced Commissioner Lamy’s political courage, that was not an easy one for him to take on...

The second point is in the area of domestic subsidies, the United States again, and I remember this from the Uruguay Round, has tried very hard to push the harmonizing principle, you know, in the amber box which are the most trade distorting, the European level varies with exchange rates about $80 billion. The United States is $19.1 billion. ....But the key point is we now have flatly accepted, better than in Cancun, the harmonizing language and principle now through a tiered formula that is a big plus for us at home... You also mentioned state trading enterprises. We like the language we worked out with China. But that is a good example of the problem solving, is that they described what they were trying to do and if you look closely at their language, we worked out something that is really not so much related to the export purposes as it is to some of their development needs.

Their concern is with hundreds of millions of peasants that they have some ability to use those mechanisms to prevent real problems in their rural areas. This is an issue we had to deal with with India as well. So you raised the example of de minimus. (de minimus is the level of agricultural support subsidies that can be given by a government to its farmers). It was a very important principle for us, that if we were going to be cutting de minimus, that others were at least in the negotiation. Now India has emphasized, it says — by the way the de minimus level is 10 percent, they only probably use about 1 percent — and they emphasize that theirs is for subsistence farmers. We are not worried about that, we are worried about some other developing countries that might have commercial programs. ....This was very important to Minister (Kamal) Nath so we tried to work it out, and if you look at the language, pretty tight language, has to be almost all in subsistence farming or resource poor farming. So that is a good example of you solve somebody’s problem and your maintain you focus on your core principles.”