Transcript of Remarks by U.S. Secretary of Agriculture Mike Johanns U.S. Agricultural Trade Coalition Conference WTO Ministerial, Hong Kong
December 15, 2005
Thank you very much for that introduction, Audrae, that was a great introduction.
I am going to offer some prepared thoughts and then will be happy to take your questions. I would say to our friends in the media, Ed, I think we are going to offer an opportunity afterwards to ask questions, so if I could have questions here from the coalition members.
Well, thanks and good morning, it is a pleasure to be here. My thanks also to the members of the Agricultural Trade Coalition for inviting me. All of you know the importance of an ambitious outcome for agriculture in the Doha negotiations. I would like to thank you for your loyalty to the agricultural industry. An industry that I do feel very passionate about, and for your strong support for international trade initiatives.
The negotiations surrounding the trade liberalization process have certainly experienced their ups and downs, you've read all about it. But we are determined to stay on track and urge others to follow the ambitious offer that was tabled by the U.S. recently. Your steadfast support has been a critical morale builder since the Doha Round was launched in 2001. Your enthusiasm and hard work have helped us to stay the course through the passage of important trade legislation, also, such as Trade Promotion Authority, CAFTA, and other bilateral trade agreements. If I had no other message today but to say thank you, that would be sufficient.
Just this week, we achieved the reopening of the Japanese market to U.S. beef. I've been smiling all week about that. This has been among my top priorities since I was confirmed as Secretary in January and I just want to thank you again for your support in this area.
To our friends in Japan, we applaud Japan's acceptance of a science-based system for trade in beef and will continue to work with them to fully implement the internationally recognized OIE standards. I believe Japanese consumers will quickly return to our high quality U.S. beef when given that opportunity and that choice. I will also share with you that this has moved along very, very nicely and beef is literally within days, if not as we speak, ready to be shipped to Japan.
We are not going to relent in our efforts to open other markets for our beef. We still have some markets that are closed. Now really is the time for South Korea, Taiwan, Hong Kong, Singapore, China and others to follow the Japanese example and resume normal trading relationships. Let me assure you that I have seized the opportunity while here to press for trade resumption during meetings with ministers from other countries.
But our broader focus this week is on the tremendous opportunity before us to make a real difference in terms of trade in developing countries. Agriculture is the major focus of the WTO negotiations, and you know what?
That's rightfully so. Without fundamental reform in agriculture, this Round will not live up to its name: the Doha Development Round. The Round really is our best opportunity to provide member nations a future. A future of economic growth. Significant agricultural trade reform will boost economic prosperity. Much of this would result from greater access to global markets.
A key issue of concern this week is delivering on the promise for developing countries to share in the prosperity that comes from trade. Two months ago, we presented a bold and ambitious agriculture proposal to increase market access, reduce trade-distorting domestic support, and eliminate export subsidies.
If the European Union had responded positively to our proposal eight weeks ago, I don't think there is any doubt, we would be further along. The EU has not done that to date.
To some, this lack of progress may be discouraging, but we can't let up on our ambition. Several recent highly credible studies have indicated just what the stakes are. Economic opportunity and political freedom are keys to eliminating destabilizing effects of poverty and desperation. That's why agricultural reform and improved market access are such fundamental parts of this round. There are so many studies in this area. The World Bank has calculated that 63 percent of the gains from full trade liberalization would come from agriculture. That's a remarkable statistic. Equally significant though, when we focus on the agricultural gains, 93 percent would result from improved market access. You can see why market access is so important to the world.
Under Doha, every nation stands to gain, but the developing world stands to gain the most. Indeed, World Bank studies have made it clear that opening trade flows can give tens or even hundreds of millions of people an escape from poverty. This was one of the key motivations in launching the Doha Development Round and is one of the central points of discussion here this week. When we reached consensus in July 2004 on the Framework, a commitment was made to provide duty-free and quota-free market access for products originating from least-developed countries.
The United States is prepared to engage in this discussion, we already have. I believe that's significant because the United States, ladies and gentleman, is the most open market in the world. It just flat is. Let me offer some comparisons, if I might. The Global Monitoring Report ranks nations on their openness. A low score is good score here. The United States rated a five, while our friends in the EU were graded at 13 and Japan at 21.
Sixty-five percent of our imports of all products from developing countries today enter the United States duty-free. And, I'd note, about 61 percent of our 800 million dollar trade deficit is with developing countries. And yet, we are at the table. In the past weeks in our talks among the G-6 countries, we've explored what might be achieved in Hong Kong.
We believe we could build on existing programs. The Africa Growth and Opportunity Act would be one example. And we envision these as opportunities to build trade. We'd also need to come up with criteria to address those developing counties that already are competitive in the global marketplace for certain products, but essentially all products would be covered. I expect more discussion on this topic over the days ahead. And let me emphasize again, we are engaged.
As important as trade is, the United States recognizes that trade capacity building and assistance is also enormously important to development. It is a lot easier to engage in trade and reap its benefits when you have a reliable telecommunications system, when your roads are passable, your ports move cargo efficiently and safely, and when your legal and financial institutions are sound.
The United States, my friends, takes a back seat to no one. Takes a back seat to no one when it comes to trade-related assistance. We provided $1.34 billion in Aid for Trade grants this year, up 46 percent from last year. Our spending on trade-related assistance has more than doubled in the last five years. And yesterday, we said that we wanted to do more. Yesterday, Ambassador Portman announced in his opening speech to the WTO Ministerial that we plan to double again our contributions to Aid for Trade to $2.7 billion by 2010.
Through our partnership with developing countries, especially the least developed, we share the goal of reducing poverty and increasing their capacity to trade. A part of our strategy must encompass the trade capacity building that strengthens governmental institutions and policies. Trade capacity building is a tool for opening markets, and it is also in the interests of developing and developed countries.
Let me mention one other topic of much discussion here this week and that is cotton and the interests of the West African countries, or other African countries. Many of you recall the attention given to this in Cancun. Some claim that our cotton program depresses the prices received by growers in these countries and there have been calls for compensation funds and an early harvest and reform in this area of cotton.
First, it's important to point out that recognized institutions, such as the Food and Agriculture Organization (FAO) and the International Monetary Fund, have studies showing that the price suppression resulting from subsidies and tariffs is really small.
The FAO estimated that if global tariffs and subsidies were eliminated, world cotton prices would rise by about 3 percent. Of this, at most, two percent would be attributed to eliminating- eliminating the U.S. cotton program. And that fails to consider other factors, very important factor at play. For example, these countries have yields about half of the world average and about a third of U.S. cotton yields. Beyond these production issues, and they are complex, competitive buyers are non-existent and marketing reform needs to occur. So, it isn't hard to see that there are many challenges that must be overcome to address world cotton prices. Challenges of far greater consequence than U.S. programs.
With that said, for some years our cotton program has been the focus of critics' attention. The 2004 Framework calls on members to address cotton on two tracks, trade and development. That the trade track means cotton will be addressed as part of the agriculture negotiations and there it says, specifically, ambitiously and expeditiously. On the development track, we have actively engaged these countries and committed substantial resources, as you know. I especially want to commend our cotton industry. They've stepped up to this. They have demonstrated their effort in this engagement. Together we have visited these nations and assessed what could be done to improve their situation.
We have brought agriculture and trade ministers to the United States to learn more about the American cotton industry and how our technology can be applied to their countries to improve the productivity and marketability of cotton. Our private sector has made an immensely important contribution to this process by launching a thorough evaluation of West African cotton productivity, ginning technology and marketing techniques.
About a month ago, Ambassador Portman and I went to Burkina Faso where we launched a West Africa Cotton Improvement Program. This program will strengthen Western African private sector organizations, link United States and West African agricultural research, reduce soil erosion, establish a ginning school, and improve the quality of cotton through better technology.
But fundamentally what will best meet the needs of the West African countries, in the end, is an ambitious outcome in these agricultural negotiations, such as what we proposed in October. I believe that we all recognize this and I have to tell you that the world has applauded our proposal. We have proposed to end all export subsidies and implement new disciplines on export credit programs.
We have proposed to substantially reduce and then eliminate tariffs, and we have proposed substantial reductions in trade-distorting domestic support.
We intend to keep doing our share in promoting a level playing field for all WTO members, and we will continue to engage our trading partners. But I will give you an honest assessment. I am concerned about time. We are still waiting for the EU to match our ambition. We need to move forward together. That's what negotiations are about. It is my hope that at the end of this process we will have achieved an agreement that will fulfill the noble promise of this round.
I want to wrap-up my comments where I began today to say thank you, to you and your organizations for standing with us since we began these talks. We have asked you in the United States to do some hard things and you have stepped up with us to support that. Your advice and counsel have been enormously helpful to us.
When we wrap up this week's Ministerial, I am confident that we can set a course for success in 2006 in the Doha Round. See, I feel really strongly that the world has no other real alternative. So much depends upon the success of this round.