Live Video Press Conference

with

EU Trade Commissioner Peter Mandelson

Moderator: Anthony Gooch, Spokesman, The European Commission Delegation

December 8, 2005

Transcript by:
Federal News Service
Washington, DC

ANTHONY GOOCH: Good afternoon – or morning. Good afternoon to you.

COMMISSIONER PETER MANDELSON: Nice to see you, Anthony. How are you?

MR. GOOCH: Very well. Surviving. Yourself?

COMMISSIONER MANDELSON: More than surviving.

MR. GOOCH: Oh, that’s good. Well, thank you for making yourself available to us. I gather that you can hear us loud and clear from here. We have a pretty full house of journalists to hear you, and they’re expectant – hanging on your every word.

COMMISSIONER MANDELSON: I doubt that.

MR. GOOCH: What we’ll do is – it’s as if you were here so we’ll give you time to set up your stall and then we will open the floor to questions from journalists. We’ve asked them to remind you of their name and affiliation for those that you may not have met before. So whenever you’re ready, we’re ready for you.

COMMISSIONER MANDELSON: Right, well, Anthony, thank you very much and thank you, everyone, for coming together. I happily take your questions. I’ve got about, I don’t know, half an hour, 40 minutes or so, but let me, if I may, make some opening observations to you.

Let me make some opening observations.

I value our co-operation with the US, and my friendship with Rob Portman. He is showing leadership in this [WTO Doha] Round, which I readily acknowledge and express thanks for.

But it is an uphill struggle. Why is this so?

Because the Round has been reduced to a crude bargaining over market access – and not much else since we abandoned the wider Singapore issues at Cancun. And because too many of our negotiating partners want this bargaining to be about Agriculture only, or are resigned to this, or have little ambition to extend elsewhere – or are so defensive in Agriculture that all they really care about is protecting their interests in this single area.

Brazil, China, the US, India and the ACP [Africa-Caribbean-Pacific] countries all either fall into one of these categories or are in danger of doing so.

The fact that the WTO [World Trade Organization] has successfully reduced industrial protection already in the OECD [Organization for Economic Cooperation and Development] countries reinforces this agricultural direction.

And business on both sides of the Atlantic is not operating countervailing pressure – the Ag-only Round is becoming self-perpetuating or self-fulfilling or both.

Where emerging-economy countries such as Brazil or India do tentatively float tariff reduction in non-agriculture areas, their ideas relate to cuts in theoretical duties which have long since ceased to be applied in practice, so the new market access proffered is more often virtual than real.

This non-negotiation is not good for development, not good for Europe and not good for the US.

It is not leading to real new market opening or real new liberalisation of trade, although it offers a reasonable return to agriculture exporters, not so much in the US as in Brazil and Argentina and some Asian countries, where they tend to be more competitive.

Europe and America cannot settle for such a limited, low-ambition outcome. There is not enough new business opportunity in it for us. If we are going to give developing countries the boost their comparative advantages merit, our working people in our local neighbourhoods need to see compensating jobs being created in the knowledge economy work on which our future depends.

That’s why we have to press for – and settle for no less than – real new market access in industrial, manufactured goods where, in the quality, higher-value sectors, we have an advantage.

That’s why we must insist on liberalisation of service sectors in the emerging economies. Of course these countries should retain policy space of their own. But keeping the lid on services liberalisation is anti-development. Where else will developing countries get the transfer of know-how, technology, skills and management expertise from if they remain closed to foreign investment?

We should not let China off the hook. Yes, China’s recent WTO Commitments are much greater than other developing countries'. But then its market and export growth is much bigger than other developing countries'.

There are other areas of mutual interest for Europe and America including in world trade rules where the US is very resistant to change, fearing that its trade defences will be weakened. But this is a short-term view: as trade instruments are increasingly used as weapons against us, we need to tighten the disciplines on them.

We all have our domestic sensitivities and interests to stand up for. In Europe, agriculture is a sensitive area although not nearly as much as it was and where a small revolution is underway in the CAP [EU Common Agricultural Policy].

The US underestimates our Ag offer, either genuinely or for tactical negotiating reasons. Either way, Europe should not be misunderstood: we are reforming, we will continue doing so, we will bind this into the WTO and we will not, therefore, be able to turn back. In eliminating export subsidies, slashing trade-distorting farm support and lowering our farm tariffs to an unprecedented extent, we are offering an important deal that is reaching our limits and should not be denied to the US farming community and the Agriculture Department’s budget makers.

If this Round fails, our offer will not come again. But that’s not the main reason why we must ensure Doha doesn’t fail. A much-needed boost to the world economy is at stake. Opportunities for growth in developing countries would be lost. A chance to re-balance the world and to even out the benefits of globalisation would be foregone.

In other words, there is a lot at stake. And I hope the pre-occupations of the agriculture-only brigade will not stand in the way of the US and the EU working together to achieve what is in our grasp.

At every turning point in the development of the world trading system since 1947, the US has given the lead. Without this, we would not enjoy the benefits of free trade we have today. That’s why I believe the US must take the broader view and the longer term view at this juncture in the World Trade talks. I hope you see that reflected at Hong Kong next week and in the months that it will take us to reach a satisfactory – I hope satisfactory conclusion to these negotiations.

Thank you very much.

MR. GOOCH: Thank you.

Just as a reminder, please, your name and affiliation. We’ll start with Jim. Commissioner, try it from here. I think it should work.

Q: Jim Berger from Washington Trade Daily. Mr. Commissioner, I get from what you said that unless there is a dramatic turnaround in Hong Kong next week, that Brussels would rather either pull out of the talks or suggest starting over again in the future. Is that correct?

COMMISSIONER MANDELSON: I don’t think we can do either. We can’t do either. We don’t want to pull out of the talks, and certainly don’t intend to. We intend to see them through to the end in whatever form that takes. But secondly, if this round fails, I think the possibility of restarting a further trade round is way into the future – way, way into the future.

So that’s not an option, and that’s why we’ve got to use every muscle and sinew in our bodies to get the negotiations going properly on a proper platform. The problem is the negotiations are not actually happening. There are a lot of statements, there are a lot of postures, there’s a lot of tactical brinkmanship going on but no real negotiation, and the reason for that is there is not enough on the table to negotiate about. In a multilateral trade round you can’t simply negotiate about agriculture. This round will end in a grand bargain. If it’s going to be about market access – and I rather regret that, but if it is now going to be a grand bargain in market access, that grand bargain has to have more in it than agriculture alone. Otherwise there will be no grand bargain to be had because it won’t be possible to make the tradeoffs between different market access areas which are needed in order to arrive at the grand bargain that we want.

MR. MANDELSON: Well, come over here and ask your question directly. (Laughter.) Come to Brussels.

Q: I’ll try to gracefully intercede. Ian Swanson with Inside US Trade, Commissioner Mandelson. I have a question on agriculture. It seemed over the weekend in Geneva there was some progress in agriculture, and that you and a select group of other trade ministers were able to reach an agreement on concluding negotiations on export subsidies by March 1st. I am curious whether you see this agreement as including an end date on the use of all forms of export subsidies, and also whether, in your view, an end date is a specific day or more of a period such as a number of years after the negotiations are completed where our members could still use these forms of export support.

MR. MANDELSON: Well, we want to talk intensively in the first two months of 2006 to get a sort of parallel agreement right across this pillar relating to European subsidies, which we are committed to eliminating, and making the changes and reforms, the disciplining in export credits, STEs, food aid that we need to see. Now, we can only do this if we do it intensively, if we do it across the board and we arrive at the same sort of end point and the same end date, which I shall come back to in a moment, in each of these different parts of the export competition pillar.

So far we have yet to see any meaningful commitment from the US to discipline its use of food aid to offload domestic surpluses. Likewise, the US must accept real disciples on its export credit programs below 180 days. I also believe the US must carry out effective and real reforms of its trade-distorting subsidy program, in particular the so-called countercyclical payments. And the reason we need that – I mean, I’m straying off a bit in the last respect from the export competition pillar, but the reason why we need to see these changes in farm support in the US is because while European support payments continue on a downward trend, US payments continue to increase. We’re going to see highly trade-distorting counter-cyclical payments arising from $1.1 billion in 2004 to $4.2 billion this year. Marketing loans will rise from $3.8 billion to $6.2 billion, and emergency payments from $0.6 billion to $3.7 billion.

Now, the 2006 farm budget is set to be the biggest trade-distorting farm budget in US history. That’s why we’ve got to see real disciplining, real reforms, real cuts in this trade-distorting expenditure, both in the export competition pillar and in the domestic support pillar. That’s what we’ve got to concentrate on over the next two months. I believe there is a willingness to do so. We have to find ways of accommodating each other’s domestic political sensitivities, but frankly, whilst Europe starts from a higher base or a higher level of spending, at least our reforms are extensive and are underway. In the case of the United States, we’ve yet to see a single dime cut. Now, that’s what we want to see real commitments to. And in that context if there’s a result of those negotiations in the first two months of next year, it’s possible for us to, in the export competition pillar, reach a parallel conclusion right across that pillar. Part of that will be an end date for our export subsidies, a large portion of which can be front-loaded. Indeed, in the case of certain of our subsidies, we don’t have to wait for an end-date; we can start immediately the moment we start implementing the outcome of the Doha Round.

MR. GOOCH: Rebecca’s amnesia seems to have subsided so we’ll give her another chance.

Q: Sir, thank you so much for your patience.

MR. MANDELSON: That’s all right.

Q: If these reforms to the Common Agricultural Policy are underway, how is it that this agricultural offer from Europe is limited time only and we are unlikely to see it again? I'm trying to reconcile those two concepts. Can you help with that?

MR. MANDELSON: Because the reforms that relate to domestic support, not tariff reductions or export subsidies, those have been introduced during the trade talks.

Q: Thank you.

MR. GOOCH: Mark.

Q: Commissioner, Mark Drajem from Bloomberg News. The US has said that it is willing to negotiate off of its agriculture offer, and Brazil and India have both indicated a willingness to propose cuts in their industrial tariffs. If these movements come from your trading partners, is there any room on the European side to move further on agriculture market access?

MR. MANDELSON: But we and the United States are the only ones who have made any proper offers. We’ve done so in agriculture. I mean, we’ve also done so in services and NAMA [Non-Agricultural Market Access]. What I’m arguing to you today is that we’ve got to persist with that, not throw in the towel, not lower our ambition – work together in order to get a proper horizontal negotiation across all these market access areas if we’re going to get the business opportunities and job boosts that we want for working people in the States and in Europe to go alongside the very real gains and benefits that a successful round will offer to developing countries.

Now, what we haven’t seen are proper offers on services – in the negotiations on services or on non-agricultural market access from Brazil or India. What did you think the offer from Brazil is on industrial goods or from India? Did I miss it?

(Laughter.)

MR. GOOCH: Doug.

Q: Hi.

MR. MANDELSON: Hello?

Q: Hi.

MR. MANDELSON: I thought you were going to bring me good news for a moment.

(Laughter.)

Q: Doug Palmer with Reuters News Service. Sort of on the same subject, President Lula has been very vocal lately in calling for a leaders summit to get the WTO negotiations forward, saying that – I guess that negotiators aren’t able to do it themselves and so leaders have to exert – show the leadership to get the talks going along. I mean, do you think that that would be a good idea to have a leaders summit, or do you think that Brazil has some sort of alternative motive in suggesting such a thing?

MR. MANDELSON: I couldn’t possibly speculate on that last observation. (Laughter.) No, look, if a leaders meetings – heads-of-government meeting would make a breakthrough possible and would break down the deadlocks in these talks, I of course would welcome that. It would necessarily have to consist more than the posturing we saw at the G7 finance ministers last weekend in London. (Chuckles.) I mean, it would have to be a serious exchange where genuine political will was demonstrated by heads of government to see an ambitious outcome of this round. If that was on offer, I wouldn’t turn it down. Not that I’m a head of government and therefore wouldn’t be invited, but I’d be happy to see it go ahead if I thought it was going to make a useful contribution and serve a useful purpose.

MR. GOOCH: Bruce.

Q: Bruce Stokes, the National Journal. Mr. Commissioner, when next year do you think that the negotiating partners would need to consider extending the round – I mean, at what date, if there’s not been sufficient progress, does that then become an issue you have to discuss? And while everyone is worried about the US’s ability to extend Fast Track under those circumstances, do you face any internal problems with extending the round? Putting aside the Fast Track issue, which is a US – it’s everybody’s problem but it’s a US responsibility – would you face any of your own internal problems of extending the round?

MR. MANDELSON: No legal or political problem in extending the round – possibly a neurological one. (Laughter.) I mean, I think that people’s patient might grow thin. But that doesn’t just go for Europe; it goes for everyone.

Bruce, you know, frankly, if we don’t make a breakthrough in 2006, I think it’s going to be difficult to sustain this round. It’s on too narrow a base; it’s on too thin a layer of soil. And I know that trade rounds have experienced similar or worse difficulties in the past. I know there have been much more exciting breakdowns than even those we’ve seen in this round. But frankly, I do think that people’s patience is wearing thin. I think there is just not the same commitment to or belief in a multilateral trade negotiation, given all the bilateral and regional activity that is going on, to sustain this round indefinitely.

MR. GOOCH: Gary?

Q: Mr. Commissioner – Gary Yerkey with BNA – one of your predecessors yesterday offered you some advice. I don’t know if you read the Financial Times or not –

MR. MANDELSON: Who was that? Oh, Leon – Leon.

Q: Leon Brittan [former European Commission Vice President].

MR. MANDELSON: Leon Brittan.

Q: Yeah. I’m wondering if you could give us your thoughts on the advice that he did give you. One was obviously to stay cool – (laughter) – but he did suggest that Europe eventually move on agriculture a little further than it has.

MR. MANDELSON: (Chuckles.) I must say, I think that’s a wonderfully selective reading of Leon’s article. (Laughter.) I congratulate you. Well done. I think that what Leon Brittan was saying – and I must say it seems like an eternity ago when I read his article yesterday, but what I think Leon was saying is don’t, under any circumstances, contemplate renewing or improving your agricultural offer until you’ve seen an awful lot of movement elsewhere in these negotiations. I think he’s got it about right.

MR. GOOCH: Jerry.

Q: Jerry Hagstrom from the National Journal’s Congress Daily. I’m wondering what your views are on why it has been so hard to get the offers that you want on services or NAMA from India or Brazil or the other developing countries. Here I would say there are kind of two theories about it. One is that this round is more difficult because of a lot of the easier things were done in previous rounds, and the second one is that maybe it was a mistake to call it a development round because developing countries have gotten the idea that they don’t have to make offers, that all the concessions should come from the developed countries.

MR. MANDELSON: Well, I think you make a reasonable point. I think it’s an interesting hypothesis. Look, I think I made it clear in my opening remarks that while this round has development values at its heart, and it has development objectives in its mandate which I fully subscribe to, we have to understand that overwhelmingly the development gains from this round will come from market opening, from increased market access, not only in agriculture but in industrial goods and services as well.

The World Bank has indicated from its own studies that only about half the gains from this round could come from agriculture, and even then, whilst those gains will be enjoyed in agriculture from some developing countries – that would be Brazil, Argentina, Thailand and one or two others – the bulk of the gains in agriculture will go to the developed world – not the developing countries. The bulk of the gains will go to the developed agricultural economies.

Now, for both those reasons, it’s important to place greater stress on non-agricultural market access and services because the World Bank is right, in my view, that at least half the gains will come in those areas, but importantly for developing countries – you know, remember the bulk of their trade – two-thirds, three-quarters of their trade is in industrial goods, not agriculture. Obviously overwhelmingly the number of people living in developing countries are employed in agriculture, but that’s not where the bulk of their trade is. The bulk of tariffs payments paid are in industrial goods to other developing countries. The bulk of the obstacles to free trade are between developing countries in industrial goods, not agriculture.

So we’re not doing developing countries any service by going along with this idea that development equals agriculture and that if only we get liberalization in agriculture, that equals trade justice. I’m afraid that equation doesn’t work except for a handful of relatively better off developing countries. That’s why the negotiation mix and the policy mix in this round has got to change.

And I’ll make another point as well. For these negotiations to work, everyone has got to feel that they are a positive-sum game, not a zero-sum game. If people in the States and people in Europe get the idea that all they’re doing is contributing, paying in; the concessions they’re making amount to a zero-sum game for them, I don’t think you’ll sustain much political support and backing for this round – certainly not for as long as we need and on the scale that we need to sell it domestically.

Now, most of our negotiating partners – Brazil, India, other members of the G20 countries – they realize this. That’s why recently we’ve had statements from the Pakistan trade minister calling on negotiators to move on from agriculture and broaden the negotiation. The Indonesian trade minister was in my office the other day saying the same to me. The Malaysian trade minister said, if it’s stuck on agriculture, fine; let’s move on to other areas where there are real benefits and opportunities and come back to agriculture at the end. I agree with those developing country trade ministers. They’re talking sense, both from their own point of view and the point of view of the global economy, and I hope others are hearing their voices.

MR. GOOCH: All right, can we ask you for your patience for one more question?

MR. MANDELSON: What time is it? Okay, five more minutes.

MR. GOOCH: Five more minutes, great.

MR. MANDELSON: If that’s okay with you.

Q: I’m Sam Gilston with Washington Tariff & Trade Letter. I wonder if I could shift the focus a little more closely. What do you expect to actually happen next week in Hong Kong? Will the ministers merely sort of endorse the reports from the chairmen that have come in and perhaps try to set some dates for deadlines in 2006, or will there be some real negotiation, particularly on some of the questions that Mr. Lamy [former EU Trade Commissioner, now WTO Director-General] has raised that will try to put some real focus on the negotiations going forward?

MR. MANDELSON: I hope we can take some steps – I hope we can add some building blocks to improve and strengthen the draft ministerial text at the moment. If it were possible to break some deadlocks on some of the structural negotiations – not the levels of ambition and numbers but in structures in the market access areas – I’d like to see that. I’d like us to set some hard deadlines as well for the negotiations in 2006. But also, crucially, and in my view indispensably, we need to agree on a top-up development package to benefit the least-developed countries.

Why is this important? Because as they see all this high-level negotiation going on about agriculture, which in their view will overwhelmingly benefit competitive agricultural producers and exporters, not them, they ask themselves, what’s in it for us? You know, they’re in danger of having their confidence in this round collapse. We’re in danger of seeing the poorer, more needy developing countries walk away from the negotiating table because they see that lavish demands for tariff cuts in agriculture is fine for the better-off agricultural producers, but no good for them because they of course depend on tariff preferences, and as tariffs are cut, they see their preferences erode.

So that’s their very real fear, that if this sort of agricultural sort of tariff-cutting engine keeps hurtling down the track, you know, they’re the ones who are going to be squashed, and their agricultural trade will be wiped out as their preferential access to markets, for example in Europe, is wiped out. Now, that is a very real danger. That’s why we shouldn’t stop liberalizing our efforts to liberalize trade and agriculture and we shouldn’t put away from making sensible, balanced tariff-cutting proposals in agriculture, but we’ve got to balance that with measures that are going to compensate needy countries for their preference erosion. We’ve got to find measure that increase market access opportunities for them, the less competitive.

That means, in my view, all the OECD countries – and here the US and Japan has a key role to join with Europe, that’s already made this commitment, to giving full tariff and quota free access to their markets for products from the least-developed countries. I want to see extensions in the waiver concerning the intellectual property agreement in the WTO. I want to see a substantial package of special and differential treatment measures for developing countries. I want to see a substantial new aid for trade package, one that will not just help in capacity building and trade facilitation, but also help LDCs build up their ability to meet the sanitary and phytosanitary standards that we operate in the United States and in Europe.

Now, all these measures, in my view, are absolutely vital if we’re going to keep the more needy developing countries from walking away from these negotiations. So there is more that we can achieve in Hong Kong. There are important milestones to achieve and benefits to get under our belt, but that’s not all. I hope also, as I’ve said, we can build some – put some building blocks in place in the market access areas for the round as a whole, and also set some important deadlines for 2006.

MR. GOOCH: Well, on that happy note, Commissioner, thank you very much for taking the time. If for nothing else, for the sake of your neurological well being, we hope that the Hong Kong meeting goes as well as it can.

MR. MANDELSON: Thank you. I’ll keep taking the tablets.

(Laughter.)

MR. GOOCH: Bye-bye.

(END)