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U.S. Developing Countries Need to Negotiate

Developing Countries Need to Negotiate, U.S. Official Says

State Dept.'s Wayne says development depends heavily on trade

Developing countries need to approach World Trade Organization (WTO) negotiations ready to negotiate, says E. Anthony Wayne, assistant secretary of state.

"Helping developing countries to benefit from global trade integration simply cannot be a one-way street where developed countries make all the compromises and concessions," Wayne said.

He made the remarks to a Leadership Forum Dinner in Chicago September 15, one day after WTO negotiations among trade ministers in Cancun, Mexico, collapsed.

Wayne said this round of WTO negotiations, called the Doha Development Agenda, has become more complex than previous rounds with the addition of more participants, more issues and more transparency.

U.S. goals for the negotiations remain the same: opening markets in agriculture, industrial goods and services, he said.

"By achieving significant progress in these three crucial areas, we will help to integrate the developing countries more fully into the global economy," Wayne said.

But the United States will continue negotiating regional and bilateral free trade agreements, whatever happens in the WTO round, he said.

Following is the text of Wayne's remarks as prepared for delivery:

U.S. Trade Policy After Cancun
E. Anthony Wayne, Assistant Secretary for Economic and Business Affairs
Remarks to the Leadership Forum Dinner, Chicago Council on Foreign Relations
Chicago, Illinois
September 15, 2003

(As prepared for delivery)

Good evening. Before I launch into my remarks, I want to thank the Chicago Council on Foreign Relations for the opportunity to address such a distinguished gathering. It is truly an honor to be here with you tonight in the great city of Chicago. I also want to extend a special thanks to a former State Department colleague, Ambassador J.D Bindenagel, for including me in this evening's festivities.

I have been asked to share with you some thoughts on U.S. trade policy after Cancun. Given that the Ministerial ended only yesterday, I am going to limit myself to some brief remarks about what transpired in Cancun, and then describe our negotiation priorities in the Doha Round, which remain unchanged.

Results of Cancun

First of all, it is important to keep the Cancun Ministerial in the proper perspective. Cancun was a midpoint on the journey first charted at the Doha Ministerial in November 2001, when WTO [World Trade Organization] member states established goals for lowering barriers to global trade and development by 2005. Cancun was an opportunity to reassess our progress to date and to intensify our efforts to establish negotiating frameworks for attaining the Doha goals on time.

The U.S. arrived in Cancun ready to negotiate. Before we arrived, we solved the difficult issue of access to medicines under the intellectual property rules, which showed that, together, we can tackle some tough questions. Going into Cancun, the U.S. strategy on trade has sought to press ahead on global trade liberalization through the WTO. We hoped that others would share this objective.

It is far too early to make any categorical statements about the significance of Cancun. We are still in the process of analyzing what took place, taking stock of the negotiations, and reflecting on the path ahead. My initial reaction is that there are a couple of lessons that we can draw from the outcome at Cancun.

The first is that the negotiation environment is far more complex than in the past. There are more actors that have to be accommodated and more issues on the table. At this same stage in the Uruguay Round, the primary focus was on the status of discussions between U.S. and EU [European Union] trade ministers. In the Doha Round, developing countries are aggressively pushing issues of particular importance to them, most notably agricultural reform. As the scope of issues discussed at the WTO has broadened, other ministries, such as environment and finance, have also become important participants. Furthermore, the trade negotiation process has become more transparent and subject to intense scrutiny by NGOs [non-governmental organizations] and other parties.

The second lesson is that WTO members need to come to the table prepared to really negotiate. As Ambassador Zoellick [U.S. Trade Representative Robert Zoellick] has said, the WTO will only be successful if developed and developing countries both assert their individual interests and accept a sense of mutual responsibility. Helping developing countries to benefit from global trade integration simply cannot be a one-way street where developed countries make all the compromises and concessions. In order to enjoy a healthy trading system and a strong economy, developing countries must be willing and able to import as well as export. The simple fact of the matter is that vast benefits accrue to the countries that open their markets to trade and investment.

U.S. Priorities in the Doha Round

There are four principal elements of the Doha Development Agenda that will continue to shape the U.S. approach to multilateral trade negotiations:

-- First, development depends on global economic growth, and freer trade accelerates growth. Freer trade would enable developing countries to raise living standards, attract investments, manage debt service, and earn a place in global sourcing networks. Studies have repeatedly shown that developing countries whose economies are open to trade grow more rapidly than those countries with closed economies.

The opportunities for developing countries to benefit from expanded trade with the U.S. are immense. We are not only the developing world's largest supporter in terms of development assistance, food aid and humanitarian support, but excluding trade amongst developing countries themselves, the United States is their largest export market with the U.S. absorbing over $600 billion of their exports last year. That represents nearly a tenth of their total economic output. The United States has increased its openness to trade threefold over the past 30 years. Back in 1970, total trade -- exports plus imports -- represented only a tenth of our total economic activity; today trade is nearing a third. Our trade with developing countries also dwarfs their annual receipts of official development assistance coming from all the industrial world -- by a factor of ten. We are also the biggest investor in developing country economies, with some $22 billion in investment flows in 2001.

-- Second, the developing world wants and needs to sell its products to developed countries. Key developing countries, such as Brazil and India, view increased access to developed country markets, especially for agricultural goods, as a key element of the Doha Round.

-- Third, developing countries that lower their barriers to trade benefit both their own consumers and other developing countries. About 70 percent of the tariffs that developing country exporters pay are imposed by other developing countries. Roughly three-quarters of the trade gains for developing countries can only be achieved by cutting their own barriers. Increased openness will also attract additional investment and all the benefits that brings. Private investment into developing countries has averaged $115 billion per year over the last decade, and this number will only increase if developing countries can create climates hospitable to foreign investment.

-- Fourthly, the WTO must address the special problems of developing nations. Important constituencies such as subsistence farmers must be taken into account, and measures must be offered to assist with strengthening the rule of law and providing support for small business. WTO members and the IFIs [international financial institutions] have a vital role to play here.

Our aim in multilateral trade negotiations is straightforward -- the United States wants to open global markets across the board and to expand a virtuous circle of trade and economic growth for developing and developed economies alike.

In order to realize the Doha Development Agenda, the U.S. will continue to promote ambitious results in three core areas which drive the global economy: agriculture, manufactured goods, and services. By achieving significant progress in these three crucial areas, we will help to integrate the developing countries more fully into the global economy while at the same time setting the stage for further growth in the developed world.

The future of the world's developing countries is, of course, at the center of the Doha Development Agenda. The recently concluded agreement amongst WTO member countries allowing access to medicine to impoverished countries suffering from catastrophic health crises occasioned by HIV/AIDS, malaria, and tuberculosis demonstrates once again that the WTO system can bring results.

Bilateral and Regional Trade Agreements

As Ambassador Zoellick has said, the U.S. trade strategy includes advances on multiple fronts. The U.S. will continue to aggressively pursue bilateral and regional trade agreements with countries committed to opening markets and undertaking economic reform.

Last year President Bush secured Trade Promotion Authority (TPA) from the Congress. TPA will help us to open markets with FTAs [free trade agreements], to promote bilateral trade, and to resolve specific issues that impede trade.

So far we have put TPA to good use. Congress recently completed favorable action on our two new FTAs with Singapore and Chile. We are also in the midst of negotiations on FTAs with Morocco, Australia, five nations in Central America, five nations in southern Africa, and have announced plans to proceed with negotiations with Bahrain and the Dominican Republic.

An FTA with Bahrain will promote the President's initiative for a Middle East Free Trade Area that will advance economic reforms and openness in the Middle East and the Persian Gulf. A U.S.-Bahrain FTA will build on the FTAs that we already have with Israel and Jordan, as well as the FTA we are currently negotiating with Morocco.

According to a recent Cato Institute Paper by Dan Griswold, the markets opened through the recently completed Chile and Singapore FTAs, the ongoing Morocco, Central America (CAFTA), South African Customs Union (SACU), and Australia FTA negotiations, and the proposed Bahrain FTA negotiations, taken together as a group would constitute the 4th largest U.S. export market and the world's 9th largest economy in terms of purchasing power.

There is also ample scope for progress on the regional trade front. By working with organizations such as the Asia-Pacific Economic Cooperation forum (APEC) and others, we can make important advances in regional trade. Right here in the Americas, the United States is leading the effort to complete the Free Trade Area of the Americas (FTAA) on schedule, and is hosting the next FTAA Ministerial in Miami this November. Successful implementation of the FTAA would help ensure that the vast benefits of economic of growth and prosperity spread throughout the Americas and beyond.

I am going to end my formal remarks here. I'd be happy to entertain any questions or comments. Thank you. [End]

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