Speech Notes 25 May 2002

Jim Sutton Speech To Policy Roundtable Meeting Washington DC

Let me begin by thanking you for joining me here in Washington today for what I am sure will be an interesting discussion. I want to especially thank Bert Pena and Hogan and Hartson for hosting us.

I have been on the road now for nearly two weeks. Last week I attended the OECD Ministerial Council Meeting in Paris and since then I have been discussing trade policy issues in Geneva, London, Copenhagen and Brussels. In all of these places I have been discussing the same central issue: how can we get trade liberalisation moving, to achieve the economic growth and development that trade can deliver to all economies, rich and poor.

I want to begin close to home - just a few miles down the road in fact - with the question of Congress granting the President Trade Promotion Authority. The successful passage of TPA, to some people a domestic US political issue, is a key trade policy priority for New Zealand.

I do not buy the argument that the Administration does not need TPA to show trade leadership. It is crucial as a signal to the rest of the world, which is watching with close interest the progress of this legislation on Capitol Hill. I am delighted to see that the bill passed the Senate last night by a vote of 66 to 30. Attention now turns to the conference process, which I am hoping will relatively quickly produce a bill that can pass both House and Senate over the next few months.

While on the subject of the conference process, let me add my voice to that of Ambassador Zoellick and many in Congress when I say I hope that the final TPA bill expunges the language on trade remedies added by the Dayton/Craig amendment. To my mind such an amendment would run the risk of killing the entire WTO Doha process. I say that not because I necessarily expect that a Doha outcome will weaken US anti-dumping laws - indeed it may actually strengthen them. The problem is that many WTO members would see the policy promoted by Dayton/Craig as akin to the US unilaterally taking an issue off the Doha agenda.

TPA is central to Ambassador Zoellick's effectiveness as a trade negotiator. While I greatly respect the US Congress, as New Zealand's trade minister I do not want to negotiate individually with over 550 counterparts on trade deals with the US. Neither does anyone else. Having TPA will greatly strengthen the US hand at the negotiating table.

>From an outsiders perspective, it seems that TPA has been a long >time coming. The world has watched as the US has passed a new Farm Bill and invoked steel safeguards. In my opinion both the decision on steel and the new farm legislation are retrograde steps for the US and for trade liberalisation. They continue to cause shock-waves around the world. They are subjects of discussion in the meeting rooms and corridors of Europe where I have been in the past couple of weeks.

As bad as they are, however, there are many of us who do understand that sometimes you have to take a step backwards in order to then take two steps forwards. Gaining TPA is a tortuous and complex process even by the standards of my own experiences of coalition government! But if TPA is gained, and aggressively used by this Administration to initiate and complete new trade agreements, including the outcome of the Doha Round, then I believe people will be more willing to move forwards and not to continue to dwell on steel and the new farm legislation.

Once the President has Trade Promotion Authority, he has to use it.

New Zealand and the US share a view that getting a good outcome from the World Trade Organisation's Doha Development Agenda is the number one trade policy priority.

We set ourselves an ambitious timetable at Doha. I'm happy with that. For New Zealand the sooner we get some real momentum on trade liberalisation, especially in agriculture, the better. But it means we have to keep a close eye on the Geneva process from our capitals and find ways to jog it along.

What's happening now is a case in point. Geneva's still stuck in process mode. We have to get past this and on with the job of negotiations. The June/July round of meetings is important - we need to see real engagement at those. We're thinking through what could be brought to the table to encourage that. The role of the US, and in particular the level of US engagement in Geneva will be very important to making progress.

We face some very important deadlines over the next 15 months. They include the July and December deadlines in implementation, the March deadline for agriculture modalities, the time-frames for the services initial requests and offers, and whatever date we can eventually agree on for industrials. Agriculture offers must be tabled before Mexico. We will have to show substantive results at each stage if we are going to prepare the ground for a successful outcome at the 5th WTO Ministerial in Mexico.

What does this require us to do? We need to grab the initiative on developing country issues. This means getting early runs on the board on delivery of technical assistance and capacity building. It means delivering a substantive result on the Doha implementation issues. It means being prepared to at least foreshadow genuine ambition on market access.

It means getting to grips with subsidies - OECD members are more vulnerable to claims of hypocrisy and double standards on this issue than any other, and rightly so. The Farm Bill has been particularly unhelpful in that regard. It also means thinking through what is credible on special and differential treatment.

I think we can produce a credible package for developing countries without risking the creation of a two-tier WTO, or adding another set of countries resorting to trade-distorting measures on the grounds of "equity" with OECD members. If we can make real progress on these issues, we have a better prospect of getting negotiations underway on investment, competition and the other Singapore issues at Mexico. That's important, both for the issues and for a successful Mexico meeting.

New Zealand is concerned at the current delay in agreeing on a timetable for the negotiations. Given the ground that needs to be made up to bring the non-agricultural negotiations into sync with agriculture and services, it will be important that as little further time is lost as possible.

New Zealand has a strong record of cooperation with the United States in the field of trade. Our cooperation across the spectrum of WTO issues is second to none. Although very different in size we make a great team.

The US and NZ also continue to work together in APEC to realise our shared commitment to the 2010/2020 goals of free and open trade in the Asia Pacific region. I fly to Mexico on Monday morning to attend the APEC Trade Minister's Meeting. It is clear to me that having done much good work on trade liberalisation and facilitation in the past, APEC has lost momentum. In Mexico I will be working with Ambassador Zoellick, with the Mexican Chair and with other trade ministers to see what can be done to kick-start APEC and re-energise the process of moving towards the Bogor Goals. We will also be talking about how APEC can contribute to the new WTO Round - an area where APEC has been able to add significant value in the past.

The Administration has also indicated it wants to use Trade Promotion Authority to negotiate a range of bilateral trade agreements. I share the view of the President and Ambassador Zoellick that high-standards agreements can help set the benchmark and act as a catalyst for liberalisation more broadly, both regionally and in the WTO. New Zealand has been at the forefront of this approach.

As many of you know, with our largest economic partner, Australia, we have a CER (Closer Economic Relations) Agreement. We also have an agreement with Singapore and are in the process of negotiating one with Hong Kong. These are truly comprehensive agreements which cover all sectors. They stand as a competing model to those that the European Union continues to negotiate around the globe. These are the sort of agreements that when negotiators strike a politically difficult sector, usually agriculture, they simply leave it out of the deal. Unfortunately, we have seen an example of this in the Asia Pacific region recently with the Japan-Singapore agreement. It is in neither New Zealand's, nor the United States', interests to see these types of models dominate the theory and practice of trade policy in the future.

Both Australia and New Zealand are now looking to negotiate trade agreements with the United States. For both of us, the US is our second-largest economic partner. Comprehensive liberalised trade between the United States, Australia and New Zealand would set a powerful example and act as a catalyst for further ambitious liberalisation in both APEC and the WTO. To my mind we have an historic opportunity, through negotiation of such a trade agreement, to establish a model and a catalyst for liberalisation efforts in our region and multilaterally.

We strongly support Australia's bid for an agreement with the United States. But for New Zealand it is vital that we are associated with any preferential market opening between our two largest economic partners. Our assumption is that in contemplating trade links in our part of the world, neither the US Administration nor the Australian Government would seek to damage the New Zealand economy by excluding it from any negotiation. This is a point on which the President assured my Prime Minister when she visited in March of this year. For these reasons it is essential that negotiations be entered into with New Zealand at, or about the same time, as Australia and the United States engage.

Underlining this approach is the strong support we have for the US/NZ trade agreement in Congress, and from the US and NZ business communities. Furthering it is an important priority for my Government and is the key reason why I am in Washington today.

I would welcome your comments and look forward to a productive discussion.

ENDS

© Scoop Media