USTR's Punke delivers 'wake-up call' to WTO
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GENEVA, Switzerland, April 11, 2013 - U.S. Ambassador to the World Trade Organization (WTO) Michael Punke had strong words today for members of the Trade Negotiations Committee: “There is an urgent need for a serious course correction,” he said.
Punke's comments come just a day after a WTO report found world trade growth fell 3.2 percent in 2012 - from 5.2 percent in 2011 to 2.0 - and amidst news that once-promising trade negotiations stemming from the Doha round had failed to deliver.
Punke was especially despondent about current state of agriculture trade negotiations. The ambassador criticized the body's “retreat to a ‘small package'” that “deeply disappointed” the United States because of its failure to provide sufficient market access. He called current state of agriculture trade “dire.”
Punke said the current proposals represented “a step back” for global agriculture trade, and would create “a new loophole for potentially unlimited trade-distorting subsidies.”
“We must not sit idly by as the WTO's negotiating function hurtles towards irrelevance,” Punke concluded.
The full text of Amb. Punke's remarks is below:
"The purpose of this stock-taking exercise is straightforward: to sit together in one room and consider where we stand. It is important that we do this, because without a common understanding of our problems, we can't solve them. The date for the 9th Ministerial Meeting is far closer than it seems. And as many have said today, time is of the essence.
"And make no mistake; there is an urgent need for a serious course correction. The last Ministerial Conference in Geneva in December 2011 seemed to be a real turning point for the Membership of the WTO. All 153 Ministers at that time took the important step of acknowledging that Doha was at impasse, but also expressed a readiness to explore creative new approaches, including interim results in discrete areas where progress might be achieved, even against the broader backdrop of deadlock.
"Only three months ago, a diverse group of Ministers met at Davos and pointed us in a clear direction - a small package for Bali built around trade facilitation, an element on agriculture, and an element on development. There was genuine hope that intensive work could deliver such a result.
"Yet only three months later, the picture is grim. While it is not my intention to throw bricks, I will be frank in our substantive assessment of where various issues stand. That is the whole point of 'taking stock.'
"On trade facilitation, we have not seen the 'meeting of the minds' that we might have expected would emerge. This is not for lack of engagement. Indeed, for three months we've conducted scores of meetings in every imaginable geometry, including intensive involvement by experts, ambassadors, and recently with the assistance of respected 'friends of the chair.'
"Certainly there has been an increase in knowledge among participants, an increased understanding of the gaps. What has not occurred is a narrowing of the gaps. Most concerning for the process, we watched key players support converging positions one week, then step away from the same position the next - a waste of precious time that calls into question the utility of weeks worth of labor.
"Nor does there appear to be a meeting of the minds on fundamental concepts. Perhaps most significant, we don't even agree on the threshold issue of whether the trade facilitation agreement will be binding. This despite a ground-breaking proposal by the United States that would allow developing countries to self-determine individual implementation schedules according to their individual needs. This despite recent evidence from one LDC, which generously shared the details of its UNCTAD-provided needs assessment, that it might implement all of the obligations of a potential trade facilitation agreement in not more than four years, and at a modest cost of $15 million. This despite the world's multilateral, regional, and national development agencies proclaiming, repeatedly, their readiness to provide assistance.
"We all know that a trade facilitation agreement will benefit all countries - the evidence on time and cost savings is overwhelming. But these benefits will only accrue if Members are willing to finalize a strong agreement and then to implement it.
"The situation in our agriculture negotiations is even more dire.
"In this context, it is worth recalling the fundamental nature of the exercise in which we're engaged. Because we know that major issues are at impasse, we're aiming at a 'small package.' Small means not everything. Or even a small piece of everything.
The need for a retreat to a 'small package' was deeply disappointing to the United States, in part because the contemplated outcome does not address top U.S. priorities of market access for agriculture, manufactured goods, and services.
"Despite this disappointment, we have been willing to consider putting elements of agriculture in a preferential position - contemplating a near-term agriculture outcome even without corresponding outcomes in NAMA and services. But for an outcome to succeed, it must be modest. Without self-restraint by demandeurs, we will quickly find ourselves back in the familiar territory of competing demands degenerating into standoff and broader impasse.
"The G20 proposal last fall related to TRQ administration represents the type of initiative that is calibrated to our current context. We remain ready to address this proposal. While not perfect, its scope does not call into question fundamental balances in the agriculture sector, and it aims to promote trade. Nor is it technically difficult to negotiate.
"The G33 proposal on stockholding of food put forward by India is exactly the opposite. Many in Geneva have expressed concerns about this proposal from the beginning, while also expressing willingness to consider the proposal with an open mind. For four months the United States and others have engaged extensively to learn more, even in the face of incomplete information. But unfortunately these intensive discussions of the proposal have revealed more causes for concern, not fewer.
"Frankly, the very essence of this proposal is confusing and concerning. Since the beginning of the Doha Round, developing countries have made clear that they view disciplines for the reduction of trade-distorting agriculture subsidies as one of the fundamental goals of the Round.
"Instead of creating new disciplines to reduce agriculture subsidies, the G33 proposal represents a step back from existing Uruguay Round disciplines - creating a new loophole for potentially unlimited trade-distorting subsidies.
"This new loophole, moreover, will be available only to a few emerging economies with the cash to use it. Other developing countries will accrue no benefit - and in fact will pay for the consequences. First, in the immediate term, when the governments using the program buy up stocks, world prices will go up, making it harder for poorer countries to meet their food needs. Later comes the inevitable problem of miscalculation. Over the longer term, the lure of guaranteed prices that are set before the planting season will draw more acres into production. If recent history is repeated, more stocks will be created than anticipated, and the surplus then will be dumped onto international and domestic markets - competing with the products of countries which aren't subsidizing - and lowering prices that farmers around the world get for their commodities.
"These concerns are not based on abstract fears, but rather numerous recent examples. Just last month, New Delhi Economic Times reported that India was tendering an international wheat sale at a loss of over $300 million, after it miscalculated its stockpiles and found it necessary to dump surplus stocks on global markets. Another March article from Mayank Bhardwaj, Reuters' New Delhi correspondent, noted that the Indian government's broad effort to reduce stocks would “almost certainly drag down further global prices.”
"It is ironic that this proposal comes under a title of “food security.” Even if it did contribute to food security for the two or three countries that can afford the costs to support such a system -and this is debatable -- it will certainly create volatility and insecurity for the vast majority of others.
"We, like many others in this organization, find it unthinkable that one of our few agriculture deliverables at Bali would be a step backwards from existing disciplines and cause more harm to international trade and to those who most need its benefits. We cannot support such an outcome.
"Constructively, some members of the G33 recently have acknowledged the widespread concerns expressed with regard to their proposal and suggested a recalibrated proposal for Bali. We stand ready to consider a new and more realistic proposal.
"Beyond the existing proposals, we are concerned about rumors of yet more proposals on agriculture. We want to be very clear in this regard. The G20 proposal seems to represent a fairly unique example of an agriculture initiative that does not immediately call into question the broader balances within the agriculture pillar - or with other pillars. But we see no further prospect for cherry picking from the agriculture pillar. Any Member insisting on a partial result in one part of agriculture should be prepared to offer readiness for parallel cherry picking in the rest of the pillar, for example, in agriculture market access. Or beyond the agriculture pillar, for example in manufactured goods.
"Frankly, we are highly skeptical that potential proponents are ready for this type of discussion, and so the likely result, if we go down this path, will be continued impasse. Do we really want to watch this movie again?
"The United States has also been actively engaged in efforts to find development outcomes for Bali; though of course we believe that trade facilitation represents the most impactful development outcome. On the [Committee on Trade and Development -Special Session] issues, however, we've seen the same failure to find a meeting of the minds as in other areas.
"We have an opportunity with the Monitoring Mechanism to create a forum for addressing Member-identified Special and Differential Treatment issues, which we see as a useful tool. We want to see developing countries succeed in their goals to implement WTO commitments, as it is only through full implementation that developing countries reap the full benefits of the multilateral trading system. But some Members are instead seeking to establish a permanent mechanism to re-negotiate binding WTO rules, which is simply not acceptable in a rules-based system.
"Against this frustrating backdrop, how can we be anything but gravely concerned about the prospects for Bali? Some are eager to engage in a discussion of the 'post-Bali agenda.' But the post-Bali agenda can only be built on a foundation of a meaningful package of Bali deliverables.
"The time has come to speak bluntly. Remember, the Bali package is intended to be comprised of elements that are relatively easier to deliver. If Bali fails, it is hard to imagine how Doha can succeed. It defies logic to believe that, if we fail to deliver on the easier issues that the WTO is capable of delivering on the more difficult issues - issues at impasse now for more than a decade.
"Colleagues, it has been 12 years since the Doha round began. Aside from the important plurilaterals, the WTO has failed to deliver a negotiated, market-opening result in its almost two decades of existence.
"We agree with many who have said that the fate of Doha is inextricably linked to the fate of Bali. If Bali fails, the signal that we will send, in a world full of fruitful trade negotiations, is that the WTO is the one place where trade negotiations don't succeed. At the recent Geneva forum for Director General candidates, we found it interesting that all nine candidates made a similar point.
"For the United States, we are committed to every effort to avoid this outcome. We helped to build this institution as a cornerstone in the foundational architecture of the post World War II international system. Across six decades, 12 American presidents - six Republicans and six Democrats - have labored to sustain it.
"It is precisely because we value the WTO so much that the United States is insisting today: we must not sit idly by as the WTO's negotiating function hurtles towards irrelevance.
"The glint of hope today is that we still have time - though only just barely - to adjust our course. The institution we care about is in crisis, and we need to act accordingly. We have two tangible suggestions for making a change of course possible.
"First, we call for every delegation in this room today to engage in immediate, intensive consultations with its capital. The purpose of such consultations would be two-fold: to convey the seriousness of the situation in Geneva, and to explore each Member's readiness to contribute demonstrably to breaking the current deadlock.
"Second, we call for intensive contacts among Senior Officials and Ministers before the end of the month. The purpose of such contacts would be to report back from capitals, allowing further assessment of whether conditions have changed for moving negotiations forward.
"Work in Geneva can and must continue in the time between now and the end of April. In trade facilitation, for example, the new Friends of the Chair have the potential to provide a vital conduit between small configurations and the larger negotiating group. In agriculture, the Chair has set out an active schedule as has the Chair of the CTD Special Session. We have every process that should be necessary in Geneva for us to make progress.
"But every process is an empty vessel without substance from the capitals to fill it. Between now and the end of April, that is our collective task.
"There has been too much talk in Geneva about whether Doha is dead. The more relevant discussion should be: what are the tangible steps that each and every one of us is willing to take to save it?
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