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U.S. Takes Market Openings to Cancun Ministerial


U.S. Takes Proposals for Bold Market Openings to Cancun Ministerial

Satellite video conference between Washington and New Delhi Sept 2

A senior U.S. trade official says the stakes are high at the Cancun ministerial for the World Trade Organization (WTO) and the global economy.

In a satellite video conference between U.S. officials in Washington and Indian journalists in New Delhi September 2, Assistant U.S. Trade Representative Dorothy Dwoskin said the United States has proposed bold market openings in all market areas for the Cancun ministerial meeting September 10-14.

The United States does not intend to settle for the "lowest common denominator" but will try to advance the global trade agenda established at the Doha 2001 meeting of the WTO, Dwoskin said.

"[O]ne of the issues that we're going to have to tackle at Cancun is how we can arrive at frameworks, particularly for agriculture and nonagricultural market access in a way that advances the Doha agenda and ensures that we continue to have a single trading system and not two sets of rules, one for the North, and one for the South. We don't really think that a North-South split for these negotiations is really appropriate," Dwoskin said.

Principal Deputy Assistant Secretary of State for Economic and Business Affairs Shaun Donnelly said that the Cancun meeting marks the midway point for achieving the goals of the Doha agenda, and all issues will not be resolved at Cancun.

Dwoskin said going into the Cancun ministerial, the United States is delighted at the recent agreement on TRIPS (Trade-Related Aspects of Intellectual Property rights) and access to medicine for developing countries. She praised India for playing a constructive role in forging a compromise on an issue that is of great importance especially to countries in sub-Saharan Africa.

Donnelly said the United States and India have many similarities, such as large diversified economies, and a common interest in working together at the WTO.

Following is a transcript of the satellite video conference:

(begin transcript)

U.S. DEPARTMENT OF STATE
DIGITAL VIDEO CONFERENCE: THE WORLD TRADE ORGANIZATION CANCUN MINISTERIAL
September 2, 2003

MODERATOR:
David Kennedy, Press Officer, U.S. Embassy

PANELISTS:
Shaun Donnelly, Principal Deputy Assistant Secretary of State for Economic and Business Affairs
Dorothy Dwoskin, Assistant U.S. Trade Representative

CORRESPONDENTS:
Navika Kumar, Indian Express
Vivian Fernandes, CNBC India

MR. DONNELLY: -- issues, and we'll be going to go through them with Under Secretary Alan Larson, who is our most senior economic official in the Foreign Ministry.

But as in India, trade policy isn't led by the Foreign Ministry. It's led by the Commerce Ministry. In our case, that's the U.S. Trade Representative's Office.

And I've got with me today Assistant U.S. Trade Representative Dorothy Dwoskin. She's in charge of all the multilateral trade affairs, the WTO. Any time you see pictures of Doha or you will see pictures of Cancun, and there's Ambassador Bob Zoellick, it will be Dorothy who will be at his side. She's really our leading expert on all things related in the WTO. She was in Geneva the last couple of weeks through the preparatory process.

And I thought maybe, especially since we've lost a little bit of time, the best way would just be if Dorothy would say a few basic comments about how we're approaching Cancun and the process, and then we could get right into questions.

So thanks for your patience, and Dorothy, you're on.

MS. DWOSKIN: Well, thank you very much. I apologize for the delay this morning. I can negotiate trade agreements, but I seem to have a little more difficulty negotiating transportation agreements in the city of Washington.

I very much appreciate people organizing this session. We think that this discussion falls at an opportune time as the Administration begins its final push for preparations for Cancun. We think the stakes are pretty high both for the WTO and the global economy.

And our message for Cancun has been and will be the same message that we have taken all the way through the Doha negotiations, and that is to strive for a very high level of ambition.

As you know, we've put proposals on the table for bold market openings in all areas of market access. The message that we hope to take to Cancun is that we need to keep the level of ambition high.

In terms of our partners, the EU has been perhaps less so ambitious in agriculture but very high on ag and services -- excuse me, nonagricultural market access and services. We've been pretty consistent across the board.

Brazil has been an advocate for great ambition in agriculture but not elsewhere. In India, I'm sad to say that we don't see a lot of ambition in most areas, but maybe perhaps in services.

We do think that with ambition, we have to bring a note of practicality and pragmatism, and that means looking at flexibility for adjustment, but not really settling for the lowest common denominator. And I think that that's one of the issues that we're going to have to tackle at Cancun is how we can arrive at frameworks, particularly for agriculture and nonagricultural market access in a way that advances the Doha agenda and ensures that we continue to have a single trading system and not two sets of rules, one for the North, and one for the South. We don't really think that a North-South split for these negotiations is really appropriate.

The agenda is pretty broad. We've worked pretty hard to restore momentum. Ambassador Zoellick, starting in the spring, worked pretty hard to try and identify the key themes and issues in nonagricultural market access.

In agriculture, I think we were delayed somewhat, because we were all waiting to see how the European Union was going to translate its (inaudible) agricultural policy into its negotiating positions for the WTO.

At the end of July, trade ministers meeting informally in Montreal asked the United States and the EU to get together to try and bridge some of the differences in agriculture so as to advance the work amongst the larger WTO membership.

We managed to put together a framework, not to decide all of the issues, but at least to try and get everybody in the same ball park, as we say in the United States, to try and make sure that we could see a way forward to bridge some of our differences that would be helpful to the process.

Now what we have on the table going into Cancun is a document prepared by the chairman of the General Council, Carlos Perez de Castillo. It's a document that he doesn't like very much. I don't think anybody likes it very much, but I think he basically said that this was the best approximation of where he thought consensus could be reached. I think there's enough in it to make everybody unhappy, so it's probably a good working basis to move the process forward.

Our team for Cancun will be led by Ambassador Zoellick. We're very lucky, in addition to having Under Secretary Larson on our team, Under Secretary Aldonis from the Commerce Department will be joining us, as will Assistant Secretary Quarles from the Treasury Department, and a whole host of other executive branch representatives.

We also will have a fairly large contingent from the private sector and from the Congress. The chairs of the House and Senate committees that are committees of jurisdiction, the Senate Finance Committee and the Ways and Means Committee, will be joining us, as will the chair of the Agriculture Committee.

So I think we're almost over about 70 in terms of congressional representatives and staff. So that should be an indication that this is a pretty significant event for the United States.

We obviously are delighted that going into Cancun, we have behind us now the whole question of TRIPS (trade-related aspects of intellectual property rights) and access to medicine. India played a very helpful and constructive role in helping others to forge a compromise to move forward, and we think it was a good opportunity to set the stage for Cancun. And we are delighted that that is one less issue that's on the table, and it's clearly been a very important issue of concern to our trading partners, particularly in SubSaharan Africa.

And with that, I think I will stop. And thanks very much for having us.

MR. KENNEDY: All right. Thank you. Briefly, I'll just -- you know our correspondents here, Mr. Vivian Fernandes from CNBC in India, and Ms. Navika Kumar from the Indian Express. I'm David Kennedy, the press officer for the U.S. Embassy.

I'll pass it over to Mr. Fernandes to start off the discussion.

MR. FERNANDES: Hi. My first question is to Ms. Dwoskin. And I would like to ask you how realistic do you think it is to strive for as high level of ambition as you are putting, given the disagreement in Geneva on agriculture as well as on Singapore issues?

MS. DWOSKIN: Well, I think it's pretty realistic. I think that in agriculture there has been some important developments in terms of the European Union finally coming to the table, in terms of talking about decoupling support.

It's not all that we had hoped for, but be aware that what we're looking at is a framework that helps move the negotiations forward. We'll have to work through the numbers in Cancun and after Cancun.

With respect to the Singapore issues, and you probably know that the United States had a high level of ambition, particularly -- did we lose them?

MR. KENNEDY: No. We're here.

MS. DWOSKIN: Okay. High level of ambition, particularly in the areas of trade facilitation and then transparency and procurement, which we think are related very much to the nuts and bolts of the trading system and the work of the WTO.

On competition and investment, the other two Singapore issues, I think, we recognize that there are a lot of concerns. We share a number of the concerns that parties have. And what we're looking for, as we said in the General Council, is an agreement on modalities to begin negotiation that are the right kind of modalities that allow us to go forward.

We were looking, I would say, for both competition and investment as something fairly modest to begin with.

MR. DONNELLY: Could I just add one point, Dorothy? I think it is important to remember what we're trying to do in Cancun. This is basically the midpoint between the Doha launch of the agreement and the January 1st, 2005 target for completion. So I don't think people should set out that this is where everything is going to get resolved.

It's a very important meeting. We need to carry the ambition and the momentum. But this different from Seattle or Doha, and it is not set up to be the conclusion where the final compromises are going to be struck on all the difficult issues.

It's one of the reasons I think it would be particularly unfortunate to abandon a high ambition of really trade liberalizing when we're only halfway through the process.

MR. FERNANDES: But it just seems, for example, that in the case of agriculture, the (inaudible) between the United States and the European Union is high on intention, but there is very little on the ground in terms of subsidies. In fact, there's a statement released by a U.S. (inaudible) ministry, that the (inaudible) ministry on agriculture is not really converting.

MS. DWOSKIN: Well, let's look at the framework text that the chairman has put in his paper. It's not a take-it-or-leave-it paper. It was really intended to determine the basis for further negotiation. And indeed, it stimulated a contribution by a group of 20 developing countries, including India, using the same kind of framework to move the process forward.

We think that it gives an opportunity to continue to reduce the disparities in trade distorting domestic support. You do have the opportunity to create greater harmonization, and you do, as far as we're concerned, have every opportunity to achieve an elimination of export subsidies in this round.

So I understand Minister Jaitley's concerns. On the other hand, I think we have an opportunity to get the frame right so that then we can come back with numbers which actually allow for a high degree of reduction of domestic support.

Now, in order to achieve that, you have to pay attention to the other pillars in the negotiation. I mentioned export subsidy. And in export subsidies, the framework talks about not only the elimination, the eventual elimination of export subsidies, but elimination of export subsidies on products of greatest interest to developing countries.

The third pillar on market access is very, very, very important. And there, you know, we were stuck. You had the debate before the end of July on those who wanted to have a negotiation on market access based on what was done in Uruguay round, and those who really chose a more ambitious framework and what the U.S.-EU paper tried to do was to blend those two approaches in market access.

We certainly have a lot of work to do in that area, and I know it's an area of concern to developing countries. And there are other mechanisms in the draft framework text that will help to deal with that. It's a question that we'll have to work with.

But it's not a question I think of the U.S. and the EU imposing something on other trading partners. It's a work in progress, and we look forward to working with India to refine the framework so that it's acceptable to everyone.

MS. KUMAR: My question, again, on agriculture, which is an overriding concern in India, the level of subsidies in Indian agriculture are less than five percent, but the level of subsidies that we talk about, the EU and U.S. are way beyond 25, 30 percent.

And that's the area of concern that the Indian policymakers have, because we have a larger population which depends on agriculture, and we have very (inaudible).

How do these farmers or producers really compete in a market which is completely in favor of the developed world? So what would be the solutions to these kind of issues that have to be (inaudible) if we are to go forward?

MR. FERNANDES: I think I am next. It's not just India. It's about 19 other countries that account for 55 percent of the world farming community. There are a lot of apprehension, and one never knows when will these subsidies be reduced, that the rich countries are giving to the extent of about $300 billion a year.

MS. DWOSKIN: Well, I can tell you that in terms of agriculture, the United States has been very aggressive about moving forward in terms of reform.

You have a situation where the domestic support levels are quite high in the European Union and less so in the United States. I think at this point they're about on a ratio of 3 to 1.

Now a lot of the changes that have come about as a result of the common agricultural policy reform should help us in moving down the domestic support. The framework text, as you may recall, also ensures that those who are the biggest subsidizers reduce the most.

Now in order to deal with the concerns all farmers around the world, in addition to dealing with the domestic support side, you have to deal with export subsidies. I think I've mentioned that already.

I think we feel pretty good about moving ahead on that pillar, although it's still going to be a struggle in terms of convincing our partners in Europe about export subsidies.

The other element is, though, with respect to market access. And I shouldn't want to convey an impression or confirm an impression that perhaps our Indian colleagues have that the only markets for Indian agricultural exports are in the developed country markets.

If you look at the opportunities for growth in exports, you have to look worldwide. And what we're hoping we can do is move on all three pillars, including dealing with the market access issues in terms of market opening. That leaves the concern that Minister Jaitley has raised on a number of occasions about his 650 million subsistence farmers.

The framework text does deal with a number of those kinds of concerns in terms of safeguards for farmers. There are provisions for a special safeguard mechanism and other mechanisms to deal with market access.

We think that the best approach is a framework that integrates the developing countries into the process rather than creating a two-tier system, and that's really what the debate in Cancun is going to be about. Shaun, I don't know if --

MR. DONNELLY: No, no. I think that's right, Dorothy.

MR. KENNEDY: Do you have another follow-up?

MS. KUMAR: Again, back to agriculture, you did (inaudible) that India hasn't been very ambitious as far as negotiations at the WTO are concerned, but played only a (inaudible) role (inaudible). Can you just summarize for us what are the areas they really expect India to take a lead in solving certain blocked issues? Can you just summarize it for us?

MS. DWOSKIN: Well, I think for us, we expect India as an incredibly important trading partner to play a role across the board in the negotiations, not only in helping to find the right ground on agriculture, but in terms of nonagricultural market access.

We think that there are tremendous opportunities for the industrial side, for the exporting side, and we would hope that India would take a look there.

We know in services, for example, also, that India has an increasingly well developed services economy. My friend from the Indian mission in Geneva and I always talk about doing some joint proposals. I note that Bolly (phonetic) would rival Hollywood in terms of audio-visual.

So we think that there are some opportunities there. I think the United States and India actually can work together very, very well. I mean, we both I think have looked at the negotiations at their heart, the improvement of market access. And that's an area where we can work together.

I think we have some similarities in some of our concerns with some of the other areas, and I think we'd like to see if we couldn't find some common ground to help move the Singapore issues forward.

MR. DONNELLY: I think the point that Dorothy was trying to make was on the level of ambition. How bold in terms of opening markets have various countries been?

My sense is India has been very active and played a leadership role on almost all the issues across the board. That's natural. India is a major player, and this is a different -- this isn't the GATT. The WTO is different.

And all countries, certainly one so important as India, are going to be major players. And there have been some issues where the U.S. and India have been working together very closely.

There have been others where, frankly, hasn't -- it isn't that they haven't been participating actively and putting proposals forward. It is that they have been more on the side of trying to restrain, carve out, let's not go so fast, that kind of thing. The level of ambition, not the level of effort or the role that India has been playing.

I also think the point that Dorothy made about there are some real similarities and shared interest between the U.S. and India. I mean, we are both big, diversified economies. A lot of countries come into these WTO negotiations only caring about agriculture, only caring about light manufacture, only caring about services.

And a country that's as large and as diverse as India or the European Union or the U.S. has to have an agenda across all the issues. And I think that's one of the things we have in common. Intellectual property rights.

As Dorothy was saying, from my experience in South Asia, most of the piracy that goes on isn't on American films and music, it's on Indian films and music. I mean, that's an interest we should share in working together in the WTO.

There are going to be other issues where we won't come -- that come to the table immediately with the same priorities, but we should always be able to work together, and we should see those possibilities of compromises and tradeoffs, because we do have global agendas on all the sectors and all the issues we want to work together with India on.

MR. FERNANDES: Ms. Dwoskin mentioned that an unsolved conflict is inappropriate should be avoided. But there is an unsolved conflict at Geneva. At Cancun, can one expect a compromise between the EU-U.S. framework on agriculture, as well as the alternate plan that India and over 20 other countries have floated?

MS. DWOSKIN: Well, I'm sorry. I still disagree with you. I don't think that there is a North-South split anymore in the WTO. I think you have a lot of countries who are anxious to have agricultural reform, and I would include the United States in that group.

I would include the United States in that group of countries who want to make good on the commitment made at Doha to eliminate export subsidies. I would put the United States with the group of countries that wants to expand market access opportunities in agriculture.

I think what the chairman of the council did in submitting his framework in his paper was to take the framework idea, just conceptually the idea of a framework that was initially taken by the United States and then built on by our partners in the G-20. He didn't take all of the U.S.-EU paper, and he didn't take all of the Brazil-India paper either.

So the question is, is using the framework that he's put on the table, can ministers arrive at a framework to deal with the issues in the three pillars of domestic support, export subsidies and market access.

And I think India in some cases probably have interests that are similar to some developed countries. Sad to say, I think India in some ways would like to be more in (inaudible) in some respects with the European Union that's not really interested in opening its market.

On the other hand, I think Brazil is quite keen on having much more market access opportunities. So it's a little more complicated than saying that there's a North-South split.

Thank you.

MS. KUMAR: How much is the U.S. willing to accommodate India's goods and services?

MS. DWOSKIN: Well, in terms of services, it's an important area of negotiation for us. I think there are places where we need to work jointly together.

At Cancun, let's just be clear about what is supposed to happen at Cancun. There is hopefully going to be a revised push for negotiations in services for the tabling of additional offers and setting a schedule for further negotiations.

We are anxiously awaiting the submissions from the Indian side. The Indians have not yet tabled offers. We know that India has been working on something and we're looking forward to that.

We think that in terms of the individual negotiations, we have some distance to go. The negotiation is not supposed to be over until the end of 2004, so we can deal with the issues in our negotiation.

MR. FERNANDES: India is particularly concerned about more, too. That is the problem of (inaudible) and services. For example, (inaudible) creeping up in the United States. Is one going to see a backlash as more and more jobs are outsourced to India?

MS. DWOSKIN: Do you want to answer?

MR. DONNELLY: Well, I'll take a stab at it. I mean, one of the other things that India and the U.S. share, we were talking about some of them earlier, is we are both democracies. We're also federal and sub-federal systems.

And so there are some tendencies that you've noticed of -- I don't think anything has been enacted in any of the 50 U.S. states, but there have been some ideas introduced in a couple of state legislatures sort of like state assemblies I guess in the case of India. And we are following those things very closely.

But, you know, I don't think you should be surprised by that. I mean, in democracies when issues emerge and adjustment starts to happen, people, those that are affected express their opinions, and they can find political leaders that will espouse that. I think that happens in India. It certainly happens in every country that I've ever served at in an American embassy.

And that's what you're seeing here. People see this threat, if you will, of jobs moving from the United States to other countries. It's certainly not aimed at India. This is a phenomenon that is happening in general.

But I don't think people should overreact to every proposed piece of legislation that's introduced in every, you know, local or state or city assembly in the United States.

I mean, we are aware of it. We are in the process of consulting with the states involved in that. And we certainly are aware of our obligations that we have in the WTO and otherwise. But as democracies, we're going to see that. You may see farmers in the street in India expressing an opinion about something. We may see phone operators in the streets. That's not something that should be so surprising.

We have to pay attention to it. But we have to keep our eye focused on the objectives that each of us have individually and together.

MS. DWOSKIN: Just on that point, you probably may be aware that a number of other industries in the United States have raised concerns with that legislation. So there is a pretty good give and take and exchange on this. And this is an issue that Minister Jaitley and Ambassador Zoellick talked about when Minister Jaitley was in Washington in June.

Thank you.

MR. KENNEDY: I'm just going to answer a request. We have a number of other journalists in the room here. And I was going to -- there's a couple a couple that have been passed to me, and I'll put the two questions together on the Singapore issues:

How do you rate the chances of an explicit consensus at Cancun for negotiating a mandate on modalities of the Singapore issues?

And a related question to that is, is there an attempt to unbundle Singapore issues in the face of stiff opposition to investment and competition policy in developing countries like India and China?

MS. DWOSKIN: How do I rate it? I think it's going to be tough. And I think one of the reasons is that there still is a tendency to try and take all of these issues in a big bundle. And I think that whoever asked the question is very perceptive.

And one of the things that the United States has been trying to do, and I think with some success, is to unbundle the issues; to take each one of them on their merits. And we think that clearly the issues of investment and competition are much more difficult for developing countries. The discussion in Geneva clearly reflected that.

And it's important to note that the chairman really put out what he called extremes, particularly for investment and competition.

So I would say -- I would hope that we have a high probability of explicit consensus on modalities, but I think we'll probably have to take each one of these issues on their merits. And I think that's an area where very calm, logical focus at Cancun will be helpful.

Because India has articulated some of its concerns, and concerns that we'll move too quickly in some areas, and we need to work through those issues to find a way to make sure that we can move forward in the WTO with all members happy with the move to negotiation.

MS. KUMAR: But you do think that it is going to be part of the Cancun? Because India is not too keen that the Singapore issue be discussed for now.

MS. DWOSKIN: Well, certainly I can assure you that it's going to be part of the debate in Cancun. And I read some interesting articles in some of the Indian press over the weekend that perhaps there was less concern about trade facilitation and transparency and procurement than competition and investment.

So I'll set those two aside, and then I think we'll have to try and see what we can do on competition and investment.

If I could, just on competition, you know, one of the issues that we've tried to explore there is trying to at least continue to develop the culture of competition in the WTO and start with maybe a peer review process, something that is a little less than norm for WTO agreements, but at least to get the work started.

We think that that would be an appropriate way forward. It's not something that I know our friends in Europe are interested in particularly. But it is perhaps a way forward to begin the negotiations and the parameters of the peer review process.

MR. DONNELLY: David, could I just add on the trade facilitation, one of the things we've seen is when you talk with the American business community that's involved internationally, and particularly some of the smaller and medium-sized companies, and also with some of the foreign business groups that I've spoken to over the last year, this is one of the issues that they have fairly high on their agenda.

It's not a spectacular, intellectually stimulating debate perhaps, but it's those nuts and bolts customs procedures and so on that really have a direct impact on business and could be implemented relatively quickly and across the board to the benefit of all.

And I think that's really an example of one that I think shouldn't be held up while we try to find the perfect intellectual framework on competition and investment, which are very, very important but very challenging and very frankly divisive issues at this point.

MR. FERNANDES: One of the concerns expressed on the investment policy, on investment by the (inaudible) as well as the commerce ministry officials is that it's very open and that one doesn't know the scope of this agreement. So why don't they try to focus on what we want to talk about before we talk about those issues?

MS. DWOSKIN: Well, I think we don't have a lot of disagreement with you. What Ambassador Zellick has been trying to do, and other members of our cabinet, has been to say, if you're going to start talking about investment, let's look at it as a long-term proposition, and let's take kind of a building block approach, and let's make sure that we get the basis right.

It's almost like you're going to build a cake, layer by layer. You want to make sure that the first layers are sufficient for the rest of the agreement. So that obviously has raised a number of questions by a number of trading partners. We've been trying to work through the issues in terms of the definition of not having such a narrow definition that it doesn't support the agreement and to get some of the basics right.

We'll be looking at Cancun to see where we can be helpful to play hopefully a moderating role. We're not interested in an investment negotiation that's not based on the right kind of modality for negotiations. We have some of the same concerns that others have from our private sector.

MR. DONNELLY: And just one other point I would make on investment. I think the role of India is important, because India, again, being a large, diversified economy, India is both a recipient of foreign investment, but Indian firms are also major investors in many markets.

So you're not at the point of some of the very poorer African or Asian countries for whom investment is only a one-way flow. I think India and your firms should be able to see the issue across the board and some of the benefits that are out there from an appropriately structured and well-constructed process on investment.

MR. FERNANDES: I would also like your comments on the recently concluded pact on (inaudible) and public health and some of the nongovernmental organizations, OXFAM and (inaudible). They are saying that this whole business of notifying the (inaudible) council and the provisions for challenging (inaudible) would actually not help poor countries deal with public health emergencies in time.

And they were saying that the (inaudible) the World Health Organization was a simpler procedure.

MS. DWOSKIN: Well, all I can say is that, you know, OXFAN and the NGO groups all have their opportunity to comment. I think it was discussed at length with member governments. And I think that's a judgment that was made was that what we were looking at was really not all that onerous, and that the requirements could be met with little problem.

And don't forget, you know, a lot of what's in the (inaudible) public health requirements are sort of standard operating practice in the WTO. And obviously some of the NGO community may not be used to that. But notification and telling your partners what you're doing is standard practice.

Well, I think that the truth is that our partners were comfortable with the compromise and didn't see it as overly burdensome. And so I take my cue from our colleagues from Rwanda and Kenya and those who spoke in the (inaudible).

MS. KUMAR: Going back to the agricultural issue. You did talk about export subsidies and the U.S. agreement to move towards reducing them. There's also a fear that U.S. subsidies (inaudible) credit that the American farmers could probably get, and that kind of a possibility is really not available in a country like India.

How do you think these concerns are going to be (inaudible)?

MS. DWOSKIN: Well, I think if you look at the framework -- if you look at the framework and take the issue of export credit and export subsidies there's a certain parallelism that has been provided to deal with precisely that issue.

Now on export credit, I think the last studies from the OECD showed that the subsidy component of export credits is actually quite small, less than 4 percent. So we'll have to deal with that.

But that has been an issue that has been provided for in the framework agreement and will be addressed through the course of the negotiations.

MR. DONNELLY: And I'd just add there, I mean, there is this definition of measures that have the effect of subsidizing exports, we also have made the point that we think state trading enterprises and some of our other friends both in importing and exporting countries use are also on the agenda.

If we're going to have a broad definition of measures that are in effect subsidizing indirectly, we've taken the frankly difficult step of saying we're willing to talk about export credit, but then others have to step forward with those issues like state trading enterprises, which have also been difficult.

But it's an example of how we need a comprehensive approach to this issue.

MR. FERNANDES: (Inaudible) to what Navika said, (inaudible) was based on a position paper of the agriculture ministry. And (inaudible) said when the United States is talking about reducing subsidies, it's only talking about a color change, moving things from the amber box to the blue or the green boxes.

And according to this position paper, at the time of the (inaudible) negotiations, that the U.S. was subsidizing its agriculture by about $50 billion, of which $25 billion was amber box subsidies.

At the moment, the United States provides about $51 billion in subsidies. Only $7 billion are amber box. The rest are (inaudible). So are we talking about semantics here?

MS. DWOSKIN: Well, I think that our cap is about almost $20 billion in the amber box. I don't think we're talking about semantics. I think some serious questions have been raised about having to decouple the support from production, and the framework recognizes that.

So that there are real moves to change the kind of support and the kind of -- and moving towards less supporting. So that's not insignificant.

There's also in the framework a call for looking again at the green box. Those are the permitted subsidies. We certainly are not interested in a situation where, as you say, you change the color of the boxes. We think we've actually made some compromises just in putting the U.S. (inaudible) paper together to help put under control some of the spending.

And hopefully, as we built a framework that everybody can participate in, we'll tackle that issue. It's really important, though, I can't stress enough, that nobody should expect the United States to deal with only one pillar. We have to deal -- you want to have big cuts in domestic support, great. We're with you. You want to have elimination of export subsidies. But we need to have an ambitious outcome that everybody participates in with respect to market access.

That's the only way that's going to work.

MR. KENNEDY: There was one submitted question that you touched on briefly on what will the U.S. stand be on green box subsidies in Cancun. Can you address green box subsidies and the U.S. position on that?

MS. DWOSKIN: Well, what we've said is that we didn't have a long discussion in our bilateral discussions with the EU on green box. In our own framework, we said that that would have to be discussed.

Clearly, there is a big interest in setting more criteria for what's available under green box. As somebody who has done a number of negotiations for some of the accessions looking at green box, I personally would welcome having a little more criteria to explain exactly what fits under the green box.

But that's an issue for discussion. We certainly aren't talking about limiting the green box, but we are prepared to look at kind of additional criteria that one might apply.

MR. KENNEDY: Okay. I'm not sure my panelists -- I just wanted to ask you as sort of a point of order. I know we started a little bit late. I don't think we'll go the whole 60 minutes. I'm not sure what your timeframe is. Maybe there are a couple of more questions. I have a couple of submitted ones.

But just tell me -- a few more minutes on this agenda. Did you have something? I have a couple of here. Do you have something? Shifting gears a tiny bit, there is one submitted question: India is disappointed with the service offer from the U.S., as it does not have much on Mode 4. Do you have any comment on that, or is there any intention of the U.S. of changing that, of rectifying this position? This would be on Mode 4.

MS. DWOSKIN: Well, I mean, we are in a negotiation. I think that one of the problems that we have is that our commitment on Mode 4 are probably the best in terms of WTO partners.

We're obviously in a negotiation, and we're obviously awaiting the offers from the Indian side to continue our bilateral work. I certainly wouldn't speculate now about overall the improvement in the offers that we might make.

I think everybody recognizes that India is quite interested in Mode 4, and I think it's well known that a number of countries are interested in Mode 4 in all countries, and we'll be interested to see what India is going to do in terms of making its own offers with respect to opening its market to Mode 4.

Because it's a very sensitive issue for everyone. And I think if you talk to Indian negotiators, I think they acknowledge that, looking at it in terms of what kind offers India might make to open its market.

MR. DONNELLY: I think people know what Mode 4 is, but just to be clear, in the sense that it's a temporary movement of people to provide a service. And just to say, as Dorothy has on agriculture, talking about it's sometimes easier to go on the offensive and say we demand that everybody else open up their things. Of course, what we're doing is very difficult.

I mean, we've had some experience with the temporary entry or Mode 4 issues in our recent free trade area agreements with Singapore and Chile. And frankly, we've had some concerns expressed by the Congress here in the U.S. about this issue.

So this is one that is very important. It's very sensitive, and I think it has to be seen in the broad services context. You can't just separate out one part of services in a particular country like India which hasn't yet come forward with its offer.

But it's an issue that needs to be discussed more and worked on. And India has obviously positioned itself to be a major player on the issue. It will be more credible once its own offer is on the table and we can have a real give and take, not just a give on it.

MR. KENNEDY: Well, really, from our end, I think we're coming to the end. I know we're a bit over time of our original time, and we're approaching actually our panelists and others have deadlines to meet also, and you have a day ahead of you.

But anyway, we'd like to thank you very much for participating. It was a really good discussion. I think everybody here welcomed it. So thank you very much.

If there's any other final thoughts, we'd welcome them from here. But I just want to thank you from our side for taking the time out to do this, and it's very much appreciated.

MS. DWOSKIN: Well, personally, let me just apologize again for the transportation problem I had this morning and keeping everybody waiting.

We look forward to seeing you all in Cancun. I would just say in terms of press -- and, David, you probably have done a lot to help identify for our colleagues there what will be available in Cancun.

But we will have a big press contingent which Mel (phonetic), who is our press secretary at USTR, will be working with his colleagues from the other agencies. If you need something, the U.S. press folks on the ground are very anxious to try and see what they can do to facilitate you getting the right information from the United States as to the positions and development.

MR. DONNELLY: And I'd also just add my appreciation to everyone. It's really I think been an excellent discussion. Obviously, the Indian press corps is very well read and well informed on these issues and asked very good and pertinent questions, and I appreciate that.

Those of us who will be in Cancun look forward to continuing the dialogue with those of you and your colleagues in the Indian press corps who will be there. We recognize that India is really an important player in the WTO and on so many of these issues, we need to keep working at the official level, but also kind of more generally to explore what I think are a lot of shared interests.

And we need to get beyond the sort of stale North-South kind of rhetoric that may still be there. Because I think we can together really provide some impetus to the WTO and make the contribution to sort of improving the world trading environment and therefore the world economy.

So I think it's been a very good discussion. I appreciate your joining us today.

MR. KENNEDY: Okay. Well, thank you very much.

MR. DONNELLY: Thanks, David.

MR. KENNEDY: Bye-bye.

MR. DONNELLY: 'Bye.

(The conference was concluded.)


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