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USTR says subsidy cuts must be accompanied by ''significant'' market access

WASHINGTON, DC – 08/24/06 – Despite recent setbacks in World Trade Organization (WTO) negotiations on the Doha Development Agenda, the US continues to pursue an agreement that will open markets significantly, cut domestic agricultural subsidies and substantially increase trade flows, according to US Trade Representative Susan Schwab.

The negotiations, also known as the Doha Round, were initiated at the WTO' s fourth ministerial conference in Doha, Qatar, in 2001 and has sought to liberalize trade and enhance market access for agricultural products, manufactured goods and services. 
The talks fell into stalemate early on, largely over agricultural trade disputes.

In a recent C-SPAN television interview, Schwab said that she is conducting an intensive round of bilateral talks with other trade ministers to determine if it is possible to find sufficient "convergence" on the key issues to restart more formal negotiations.

"We are trying everything humanely possible to see if an agreement is possible," she said.
Schwab spoke prior to a trip this week that is taking her to a meeting of economic ministers from the Association of Southeast Asian Nations (ASEAN) in Kuala Lumpur, Malaysia, and bilateral meetings with officials in Singapore and China.

The USTR characterized the major division in the trade talks as one between countries that want only a small or conservative agreement that would not increase overall trade flows significantly, and those – like the US – that believe only an ambitious market-opening agreement would benefit developing and developed countries alike.

The US was the only nation to bring more and different proposals to the most recent negotiations in Geneva, she pointed out.

During the last session of Doha Round negotiations, the US made clear it was ready to show more flexibility in cutting trade-distorting domestic support spending on its farmers even further than the 60% cuts it proposed in October 2005, but only if the European Union (EU) and rapidly expanding developing countries would open their markets further to agricultural imports.

"The United States has been clear and on the record that we are prepared to move on domestic subsidies if and only if there is significantly more market access on the table," Schwab said.

Schwab stressed that US agricultural tariffs currently average 12% - half of the 24% rate for the EU, and far below the 62% average tariff rate for the rest of the world.

The US is continuing active negotiations for bilateral free-trade agreements (FTAs) with a number of nations, even though the congressional trade-promotion authority – also known as "fast track" authority – is set to expire in July 2007, Schwab said.

She noted that the US currently has 15 free-trade agreements, plus two more – Colombia and Peru – that have been completed but not yet approved by the US Congress.
The US is also supporting Vietnam's accession to the WTO.

Negotiations on FTAs with Korea and Malaysia are under way, she said.  Schwab expressed optimism that, despite difficult issues ahead, the talks could be completed by the end of the year and submitted to Congress before the expiration of "fast track" authority.

"Trade with our FTA partners is so much stronger than our trade with the rest of the world that you really want to keep pushing ahead," she said.

Turning to the surging growth of the Cinese economy, Schwab said that the role of China in trade negotiations is “critical” for the entire world.

"China needs to be an active, engaged, and constructive partner in the Doha Round," she said, characterizing that US-China bilateral trade relationship as one of "good news and bad news." 

The bad news is that the US continues to run a large and unsustainable trade deficit with China, she said. The good news, however, is that US exports to China have been rising by 20% or more annually over the last four to five years.

The key question is whether China is providing a "level playing field" and meeting its WTO obligations, Schwab said. Recently, the US has raised the issue of tariffs on auto parts as well as long-standing concerns over intellectual property rights (IPR).

"Quite frankly, I'd rather not litigate in the World Trade Organization,'' Schwab said, adding, "I would rather have China fix the problem, whether it's a market access problem or a problem related to intellectual property."

The US is not yet satisfied with China's protection and enforcement of IPR, she said, but, “On the other hand, the growing importance of Chinese movies, music, and entrepreneurial activity means that the Chinese are slowly beginning to understand that it is in their best interest to do a better job of protection intellectual property."

Schwab cited China's recent decision to load software onto all new computers before they leave the factory as a major step in combating software piracy.

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