US Trade Representative Rob Portman & EU Trade Commissioner Peter Mandelson (Right)

Wednesday, September 14, 2005

Office of the US Trade Representative [USTR]
Washington, DC

PORTMAN: First I want to thank you all very much for your patience. We had a lot to talk about and I apologize that we held you up a little bit, but it’s a good sign, in terms of EU-US relations and in terms of the larger issue of Doha.

Commissioner Mandelson and I have just concluded very constructive meetings that took place not just this morning but also yesterday afternoon and evening. In fact yesterday we were joined by US Agriculture Secretary Mike Johanns and also the EU Agriculture Commissioner Marianne Fischer Boel. Because we were very interested in getting their input and being sure we could make progress on the agriculture issues. We have in our talks reviewed a number of bilateral issues between the EU and the US, but also the state of play in the Doha round of negotiations and we have discussed preparations of course for the Doha ministerial meeting coming up in Hong Kong at the end of the year.

Our talks are well timed, I think. Today in a speech before the United Nations General Assembly, President Bush talked about trade. He talked about it in the context of development. He broadened and reaffirmed his commitment to Doha and he also challenged other nations to do the same.

He presented a very ambitious agenda to eliminate trade barriers in the areas of agriculture, manufacturing and services, with a special emphasis on enhancing trade for developing countries and the world's poor.

I believe what we have been talking about in these meetings is entirely within the spirit of the President’s comments. And I believe that the comments that the President has made will help with regard to movement with Doha, as well. We certainly stand ready to work hard to achieve those ambitious undertakings that the President talked about, through consensus building among various WTO members.

Related to Doha, Commissioner Mandelson and I discussed the expectations for the Hong Kong meeting and the work that needed to be done over the next few months, which is substantial. This includes market access, it includes supports to three major areas – agriculture, services, and non-agricultural market access, as well as trade facilitation, development and other issues – all this is necessary to bring this Round to a successful conclusion by the end of 2006, which has been and continues to be our goal.

We agreed between ourselves to remain very personally involved in this. I know Commission Mandelson has been and will be, and I certainly have been and will be as well. We have set ourselves out a very ambitious agenda with meetings with other WTO Members, additional discussions between ourselves to be sure that we are indeed moving the talks forward and undertaking the responsibilities that we feel. We understand our responsibilities as two great trading partners and as important players in the global economy. But we also understand that other WTO Members need to be brought on board; that they too have a responsibility and must contribute to the process and that we need to seek their input as we move forward.

In agriculture, we confirmed that we’ll build on the July 2004 Framework Agreement, and noted the G20’s proposals on market access, which we believed provides a good starting point to develop an approach on market access. I think we made progress in that regard.

We had a frank and constructive exchange on how to build on that proposal to achieve real market access. We will now redouble our efforts to reach out to other countries, as I said. In fact, I am sending USTR agriculture negotiators to Geneva today to follow up on the discussions we’ve had over the last 18 hours.

As you know, market access is the area where there has been the least progress in establishing a framework in the agriculture talks. And I think we made some progress, again in establishing that framework, and that’s very important because this is where we see the most potential economic gains. In fact, the World Bank has studied this and indicated that 92% of the gains from the developing world in agriculture will come from enhanced market access.

We also had a detailed and very candid discussion on the other two pillars of agriculture reform – export subsidies and domestic support.

In terms of manufactured products and NAMA discussions, we discussed the need to create substantial new market openings, particularly in emerging markets, as an essential contribution to development.

I will work with other interested WTO Members to now refine the approaches to the tariff cutting formula that Commissioner Mandelson and I spoke about today, and also to further define sectoral initiatives.

In services, we also found common ground and discussed the critical contribution to development for new openings in service markets. We discussed moving forward on the Services Working Plan. Commissioner Mandelson had some excellent proposals in this regard. To be sure that we make substantial progress in services, as we hope to in manufactured products and agriculture. We are setting a high level of ambition in the services area as well. Again, noting that there are meaningful benefits here for developing countries, particularly the least developed.

In conclusion, I would just say we had a very frank and constructive discussion. It was very helpful to me. I think it was helpful to both of our teams to sit down and talk through these issues. And I think we made substantial progress in being sure that over the next three months we can maximize our efforts toward a successful meeting in Hong Kong.

We recognize our responsibility. These negotiations will require us all to do our part, but we also can’t do it alone.

We will continue our intensive consultations with our counterparts throughout the WTO. For both of us, I know, that continues this week and next and on to Hong Kong.

With that, Peter.

MANDELSON: Rob, thank you very much. Let me just make one or two comments as a post script to what Rob has said because I entirely endorse everything that he said. And let me also welcome the attention that President Bush has given to the Doha Round in his address to the United Nations General Assembly. I strongly endorse the spirit of his remarks and I think it’s important that somebody like the President should give this amount of attention to the Round in his remarks. I know that in their own contributions, José Manuel Barroso, the President of the European Commission, will be addressing the same issues and reflecting very much the same strength of commitment, as will the UK Presidency of the European Union in the person of the Prime Minister Tony Blair, whose personal commitment is, I think, unequalled.

I strongly believe, as I said in my remarks yesterday, that the European Union and the United States need to offer joint political leadership in the WTO and on this Doha Round. This collaboration is a necessary, albeit insufficient condition for final agreement at the conclusion of the Round. We have a crucial role. The success of the round is a trans-Atlantic responsibility. Europe might have the most open markets in the world to developing countries, but we have enduring barriers and policies that we still need to work to work on. And we need to do so in the context of these multilateral talks.

Those in the United States who believe that America needs allies for the great tasks it has to fulfill in the world should recognize that Doha is a key test of our renewed ability to work together for the world’s good. I don’t underestimate the constraints imposed by domestic politics on both sides of the Atlantic, but we do have a wide range of joint interests, the two of us, in this round. At the end of the day, we are two very large continental players with different, but similar economic structures and specializations. We should not be in the business, of course we shouldn’t be pre-cooking and trying to impose outcomes on the rest of the WTO membership. We wouldn’t attempt to do so, and if we did we would get nowhere.

But it is essential that we work to build common or coordinated policy platforms. If we cannot agree on basic approaches, the two of us, then there’s little or no hope of the WTO’s membership as a whole of reaching agreement and taking things forward. It’s as simple as that.

So then, for example, in addition to agriculture where we’re seeking substantial additional market access, the winding down of subsidies and policies operating without trade distorting effects, we also need to agree on the broad basis on which we seek a world-wide reduction in industrial tariffs.

We need to agree on the means by which we can inject new momentum into the negotiations in the vital area of services. And we need to identify the changes, the acceptable changes, that we can make to discipline the abuse of trade defense instruments and the tightening of other rules.

Now, in these and many other areas, I would say that Rob and I have had not only good discussions, but the best exchanges we’ve had since both of us came into our respective roles. The rest of the world is looking to us to break through the bottlenecks, the stalemates so that we can move in this Round as a whole from stand-off to trade-off so that we can get the deals that we need to put into place, without which we will not have a successful and ambitious outcome of the Doha Round.

REPORTER: What progress did you make on agricultural market access?

PORTMAN: Well, again that was more yesterday because that’s when our agricultural counterparts were with us, although we did discuss it again today as well. Secretary Johanns was here, as I said, Marianne Fischer Boels was also here, the Commissioner for Agriculture, and we had the opportunity really for the first time for the four of us to be together. This was significant in my view because it enabled me to hear directly from Commissioner Fischer Boel about the specific concerns and constraints in Europe on market access. At the same time, Peter was able to hear directly from Secretary Johanns about some of our concerns here on this side of the Atlantic with regard to agriculture.

On market access, to answer your question, I think we made progress in two regards. One, by focusing on a particular structure of how to achieve reductions in tariffs, and that’s the G20 proposal. It’s not perfect from our point of view, you should know. Nor is it from the EU point of view. But, it does provide a basis for discussion and this is the first time that we have had the opportunity together with our agriculture counterparts to go over in detail how we might be able to break through on market access, what we would require. We also established a timeframe for us to get further information on that and to come together again. So, I thought it was very helpful in terms of market access.

Second, you didn’t ask about it, but I’ll talk about it, is on the area of subsidies. First export subsidies, as you know, we’ve already agreed to have the elimination of export subsidies. We talked about the timing on that. That’s very important to us. And then with regard to domestic support and domestic subsidies, we had a very frank exchange on that was well. We were in a tough position here timing wise, and our farm bill doesn’t come up until after we hope the WTO is completed. This Doha Round is meant to be completed at the end of 2006. Our farm bill expires in 2007. But, per the President’s strong setting forth of a vision today at the UN and in the spirit of that, we are working very closely with the EU and other WTO trading partners to ensure that we make progress in all areas. And from our point of view, if we can see substantial progress on market access, where we have real concerns, particular with the EU but also with other countries that have relatively high tariffs or other barriers to our trade, if we can see that other countries that subsidize more than we do, including Japan and the EU with a relatively high levels subsidy compared to us, also makes progress, we are certainly willing to do our part. So, we had frank discussion about both those issues, not (inaudible). I’d like to hear Peter’s comments.

MANDELSON: I broadly endorse everything that Rob has said. I mean, I think Pascal Lamy, the new Director General of the WTO got it right in his public remarks yesterday. We need to move now swiftly to putting in place the parameters for change in subsidies and domestic support. And likewise, we need to do the same in respect to market access, which we need substantially to increase in line with the framework agreement put in place in Geneva last year. Now, that means that we both got a lot of homework to do. And I think that homework is being done. We are clearing a lot of ground in preparation for those parameters to emerge and frankly I’m encouraged by the work that’s going on. And I’m encouraged by the discussion that we’ve had. Not that there’s going to be as simple or straightforward in reaching an agreement in any of these matters in agriculture. They are complex. They are technically challenging. And to think that you can wave a magic wand and have all these changes just fall into place over night is of course ridiculous.

But, it’s very important that world leaders, heads of government, President Bush, European leaders maintain that pressure and maintain that level of ambition and stand over us with a whip to keep us working hard and going in the right direction. And that’s why I so strongly welcome President Bush’s remarks in New York this week, but those of other world leaders which will join in expressing exactly the same sentiments. We need that pressure. We need that whip to force people to find a common ground, reach the accommodation, and make the compromises, and show the courage that this involves if we are going to make the strides forward to implement that original Doha mandate to which we are working.

REPORTER: To follow up, (inaudible) timeframe (inaudible)…

PORTMAN: As I was saying that, I was thinking I thought you might in a follow-up and hoped you wouldn’t. We didn’t set out a specific day, but we did set out a very ambitious timeframe to get back together and to continue to working on this. As I said, we’re sending a team to Geneva today meeting with their EU counterparts and others. And we will continue to have meetings, not over the next months, but over the next days and weeks.

REPORTER: (inaudible) I was just wondering if you could lay out the process for us a little bit more. I mean there’s an effort for the US and the EU to come together on this, come together at least on agriculture, does this mean that there’s (inaudible) general membership. I mean is that the plan? To ensure (inaudible)…

MANDELSON: Well, I’ve lost count of the number to trade ministers in other countries who have been telling myself and Rob Portman, the EU and the US, to iron out their differences and break through the stalemate in all these areas. But equally, our reaching an understanding, difficult as that will be will not be the end of the story. We really are not in the business of creating tablets of stone and then passing them down to a grateful WTO membership. If those days ever existed, they’ve long since disappeared.

PORTMAN: Peter’s been at this a little longer than I have…

MANDELSON: Two months. Three months.

PORTMAN: But the memory of Cancun is still fresh for me. And part of the story there was, there was not the adequate outreach and the consultation with other WTO members. So I whole-heartily endorse what Peter had said. One, we need to work hard on our differences as two of the major economies in the world with some tough issues to resolve on agriculture. But second, we will not be coming up with an EU-US agreement that will then be hoisted upon the rest of the Membership. We are working hard with other countries. You mentioned a couple. There are other countries as well. Today, I will be meeting with the Minister of Trade from Kenya for instance. Later this week, I’ll be talking with other trade ministers from Asia. And I know Peter and I will have the opportunity to do a lot of consulting over the next, again, days and weeks. So this is not something where we can, as the EU and the US have unsuccessfully tried in the past, come up with an agreement for everyone. But, we do have substantial problems to work out between ourselves and we’re on a track to do that.

REPORTER: I’m wondering if you could discuss the bilateral part of the discussion for a moment. One of the outstanding issues is bananas. And I’m wondering if a statement you made earlier this week, how important is it to the United States that the EU move to a tariff-only system on January 1 and did you discuss this at this meeting?

PORTMAN: We did not discuss it at any length. I did have brief conversation with Peter regarding the banana issue. To be frank with you, I’m perhaps too close to this issue having followed very closely over the years. Being from Cincinnati, Ohio, where the headquarters are for one of the large, I guess the largest banana exporting company, so the US does have an interest in this. There are jobs connected to it, there’s investment connected to it. But, my concern is broader than that. It’s that the countries of Latin America, Central America and South America have a strong and, as I heard this week from the Panamanian Trade Minister, adamant position on this. And I worry about its impact on Doha, and I know Peter shares that. So we are trying to be constructive to work through this. We believe that the commitment that we receive from the EU, as part of a group, including the Latin American countries several years ago, can be and will be met. And we would encourage that that level be set to indicate the tariff level at a reasonable level. So I think it’s an important issue that goes beyond the US interests. I think it’s one where we all would like to see it resolved and keep it from being an issue that keeps us from making the progress we’d like to make on a multilateral context.

REPORTER: I’m wondering with all (inaudible) tariff-only that (inaudible). What sense are you (inaudible) to the tariff-only system. And my question is how important is that tariff-only system going to effect (inaudible) from the United States (inaudible).

PORTMAN: I think we want to work with the producers and with the EU on this. And not to spend too much time on bananas, unless we slip on a peel or something, but…

MANDELSON: I was wondering how you would work that in.

PORTMAN: Yes, I was trying. There is a WTO decision here. So I guess, it’s our view, and I think Peter would share this, it should be consistent with the WTO guidelines.

MODERATOR: One last question.

REPORTER: You mentioned that you made progress on market access. Have you agreed on how that G20 market access code should be changed to satisfy all partners?

MANDELSON: No, we are working on it. But, what we come up with has to remain on that middle ground. It has to remain faithful to the G20 framework and it must deliver substantial additional market access. On that I am clear. And we have further homework to do on that. We will do it. We will discuss it, not only with our US friends, but with others. But, there’s no retreating from the commitments we’ve made. We have to, all of us have to understand and accept that there’s no way back from the commitments we’ve made. They must be properly expressed in the detailed legalities, formula arrangements, whatever flexibilities they involve. We must stand by what we’ve said we will do.

MODERATOR: One more.

PORTMAN: Neena’s giving us one more question.

REPORTER: Commission, in the testimony…

MANDELSON: Where are you from?

REPORTER: Sorry, Jitendra Joshi, Agence France Press. Given the (inaudible) how can the EU (inaudible), how confident are you of selling whatever deal you get on (inaudible) to France, (inaudible)?

MANDELSON: Well, we have a mandate to use the reforms that have been agreed, that are underway, which we’re now consolidating. Which as we know, are not indefinitely the last word in reform, but for the time being are the reforms that we have in place. And to apply those, to use those, in order to implement fully the Doha mandate that we have been given. Now all the EU’s member states are signed up to those Doha objectives, to that mandate, and therefore they accept. But on the basis of the reforms that are underway, we will follow through and faithfully standby and implement the goals we originally signed onto. If that means taking to the farthest extremity, the envelope that I have been given by the reforms that have been agreed, then I will have no hesitation in going to that farthest extremity. But it will be on the basis of the reforms that are underway.

PORTMAN: Can I answer that question? Totally presumptuous of me, of course, to comment of European politics and…

MANDELSON: You can (inaudible) the 25 member states, I’ll be happy to do it…

(laughter)

PORTMAN: I’ll send you to Congress.

(laughter)

MANDELSON: No, thank you.

(laughter)

PORTMAN: Two thoughts. One is Commissioner Mandelson is an effective advocate of his point of view. And I’m sure the member states realize that. But these are, as I said earlier, constructive but also very candid discussions and we’re at the point now where we are understanding each other’s position much better because we are providing each other with very detailed explanations of the commercial impact of these decisions. And he does a good job at that.

The second is from a member-state point of view, and from a US point of view, we have to keep our eye on the ball. And our discussions today have focused not just on agriculture where we do have some differences, but where both of us are committed to market access and reducing trade distorting subsidies, but it’s also focused on the tremendous gains to the global economy, but also frankly to our economies of having more access for manufactured products, for services where we each have a comparative advantage and where we can provide real aid to developing countries lowering their cost, increasing people’s standard of living. And this is something that all parties need to keep focused on, including the member states and including Members of Congress and those in this country who are following this. If we get stuck on specific issues and can’t make progress and therefore the round goes down, we will have missed a tremendous opportunity to improve economic growth in our own countries, as well as alleviate global poverty.

This is one of those rare opportunities that doesn’t come around often where we have the chance to make a real difference in the lives of people in our countries, but also around the world and so we have to keep that in mind. There are going to be pluses and minuses in various areas, but at the end of the day, this is something, that if successful will have a net benefit to our countries and to the global economy.

MODERATOR: Great. Thank you very much.

**********************************************
Neena Moorjani
Press Secretary
Office of the United States Trade Representative
Executive Office of the President
Tel: 202-395-3230
Fax: 202-395-6121
www.ustr.gov