Scene-Setter for the G-8 Summit in Genoa

  1:35 pm

MR. LARSON: Good afternoon. The president is very much looking forward to his trip to Europe for the G-7/G-8 summit. We spent some time with him this morning walking through some of the major issues, and I'm going to cover with you some of the major issues that we see.

We approach the G-8 summit wanting to advance a sense of partnership and responsibility in promoting development and alleviating poverty around the world. The president is going to underscore the importance of economic growth to a viable, durable policy for reducing poverty. He also is very strongly convinced of the importance of open markets and open political systems, democracy, to the achievement of those types of goals.

One of the big issues at this year's meeting is going to be trade. We're all working hard to secure the launch of a round of global trade negotiations this year. What's important, particularly for this meeting, is the very pivotal role that global trade liberalization can have in fostering developing and alleviating poverty around the world. Developing countries have much to gain from a new round of trade liberalization. It will foster growth. It will help improve their ability to trade and development.

When we think about a strategic approach to poverty alleviation, it's important as well to talk about the attack that needs to be made on infectious diseases like HIV/AIDS, tuberculosis and malaria. A couple of months ago, President Bush brought together at the White House the secretary general of the United Nations and President Obasanjo of Nigeria.

And at the time of their visit, he announced my government's support for a global fund to combat infectious diseases. He committed $200 million of new money from the United States to support that fund, and that's on top of the roughly $500 million that the United States already is spending internationally through the activities of our U.S. Agency for International Development and our Department of Health & Human Services.

Since the president's meeting here, the support for a global fund to combat infectious diseases has really moved forward. There was a very successful meeting of the U.N. General Assembly special session. And we're looking forward at the G-8 summit to a successful launch of this fund with contributions pledged by all of our partners.

Another important issue in the development agenda is education. Here at home, President Bush has given a lot of attention to education and stressed the importance of teacher training and issues like assessment and accountability, so you can see what works. We are going to be pushing those same sorts of themes in the meetings in Genoa, building on very important international work that's gone on the Dakar plan of action.

We think that it's important as well for us to focus the activities of the multilateral development bank on the sort of programs that really make a contribution to increasing productivity and expanding growth in developing countries. That's one reason why we support very strongly an emphasis on basic education as part of the strategies of these institutions.

The search for greater food security around the world is a very important issue. We're approaching a United Nations conference on food security, and we do so at a time when there is so very much that needs to be done. The United Nations has estimated that 800 million people in the world are malnourished today, that some 250 million of those are children, and many of those children suffer irreparable physical harm because of malnutrition.

We think we've got to do a better job in tackling this problem. In part that means a greater emphasis on the steps we can take together to increase agricultural productivity and to develop and extend new technologies, including biotechnology, to the search for greater food security. Last week the United Nations Development Program came forward with its annual human development report, which stressed very strongly that biotechnology has enormous potential for helping meet the food security needs of developing countries.

We think it's terribly important that all of us, and particularly the G-8 countries, work so that we can ensure that biotechnology achieves this potential, ensure that developing countries are able to share and expand the use of this technology and other such technologies to meet their food security needs. And we can do this through building of local capacity as well as many other steps.

There's an important set of issues that we are going to be addressing that touch on the environment. One of the issues that we want to draw attention to is the importance of negotiating international arrangements that will commit the export credit agencies of the G-7 countries, as well as a broader group of countries that are members of the OECD, to the high environmental guidelines that already have been adopted by the international community and they're used by the World Bank and other multilateral development banks.

Here in the United States, the U.S. Export-Import Bank has worked under these guidelines for a number of years. For the last two years, the G-7 countries have pledged that they would negotiate among themselves, and perhaps with a larger group of countries in the OECD, that same type of high standard. So far we haven't achieved that goal, and the United States believes it's very important for us to make a push and get these standards negotiated and put in place by the end of this year.

I think that covers the main points that I would like to highlight as part of our agenda. I just would sum up in saying that we have what we believe is a very forward-looking agenda that is focused on the problems that developing countries face, that offers a way to harness the power of the market through trade and investment, to address those developing challenges, but also will bring to the international debate sensible, targeted approaches for government action, dealing with such issues like health, education, the need to improve food security, as part of a strategic plan to help people develop their own potential and help reduce poverty around the world.

So thank you. I'd be happy to answer your questions.

MODERATOR: Any questions? Trevor, right on the other side of the pillar there.

Q (Off mike.)

MR. LARSON: We certainly will be pushing for a consensus that it's an urgent priority to launch this new round of WTO trade negotiations, that a new round of WTO trade negotiations would reinforce confidence in the world economy, that a new round of WTO negotiations would provide a very important avenue by which developing countries could improve their own prospects.

Studies have indicated that developing countries could gain a lot even by reducing the barriers between them, that there's a huge amount of economic benefit that could ensue from more trade among developing countries. Obviously there's also very important advantages to development that could be gathered by having more trade between developed and developing countries, and this is going to happen most assuredly through a round of negotiations where countries can come to the table and make offers, receive requests, and move forward together. So that's what we are looking for in these discussions.

MODERATOR: The gentleman here -- (inaudible).

Q I would like -- (name and affiliation inaudible) -- Sao Paolo, Brazil. I would like to understand why the economic crisis in Argentina and the risk of a crisis in -- all emerging markets are not a topic that is --

MR. LARSON: Let me interrupt you, because I think we may have confused you. I'm not saying it's not a topic. I'm just saying that in the United States, we typically have our Treasury Department talk about issues, the global economy and financial stabilization measures. And so all that we're saying -- we're not saying that these aren't important issues; we're not saying that the leaders won't talk about them. We're just saying that I'm not the person who should be briefing you on those subjects today.

MODERATOR: In the blue shirt in the back there.

Q I'm Justin Cole (sp) at AFX News. Do you think the G-8 will have a reaction to the accord that was signed over the weekend between Russia and China? And are you anticipating that the Russians will be seeking to advance their position on joining the WTO, WTO accession?

MR. LARSON: On the first question, I would rather doubt that that's a subject that is discussed much. On the question of Russia's WTO accession, we -- I had the chance to visit Russia very recently with colleagues from USTR, from Treasury and from the Department of Commerce. One of the messages that we gave is that the United States supports the accession of Russia to the WTO and we are prepared to work with the Russian government, at the pace that the Russian government chooses, to facilitate that.

The president will be -- President Bush will be having a bilateral meeting with President Putin, and I can easily imagine that this would be one of the subjects that would come up. We will have our Treasury secretary, Secretary O'Neill, and our Commerce secretary, Secretary Evans, traveling to Moscow at the end of the month, and that will be just one more opportunity for us to develop the bilateral economic agenda.

MODERATOR: Ben.

Q Thank you. Ben -- (inaudible). One of the major concerns for African countries in recent years has been the external debt situation, which is well over $350 billion. Is there any chance that this summit may address that?

MR. LARSON: Well, it certainly will address it. And I think there's a pretty good story here. Under the highly-indebted poor countries initiative, we now have 23 countries that have proceeded to their so-called completion point and are receiving debt forgiveness or the reduction of their external debts. The amount of debt forgiveness that has been pledged under that program is now over $50 billion. So I think there's a very strong record here.

At this stage, I think it's very important to implement the HIPC program, to continue implementing this program, and also to make sure that the benefits of debt reduction are used in the right way. There's been a lot of emphasis on the importance of taking the proceeds of debt forgiveness, the money that otherwise would have paid back foreign creditors, and use that on targeted programs to improve basic education and improve health in these highly-indebted countries. And, you know, I think there's a good beginning on that. It's going to be a long-term effort. And we are pledged to work with these countries in partnership to support that type of approach to debt reduction.

MODERATOR: The gentleman here.

Q My name is Nestor Riqueda (ph) from the Latin American edition of the Associated Press. It's a follow-up about the HIPC initiative. And as you know, there are some countries in the developing world that are creditors. It is the case of Costa Rica, for instance, that is a creditor of Nicaragua. And in his recent visit to Washington, President Rodriguez from Costa Rica was talking about his concern his country is going to write off more than $300 million in favor of Nicaragua. Is there any possibility that this issue could be raised in the agenda during the summit?

MR. LARSON: You mean specifically the idea of some developing countries writing off debt to the other developing countries?

Q Yes. (Off mike.)

MR. LARSON: Well, it perhaps was something that will come up. One thing I might have mentioned at the beginning but didn't is that before the summit formally opens, there will be an outreach meeting where the leaders of the G-8 will be meeting with leaders from a certain number of developing countries and the heads of international organizations, such as the secretary general of the United Nations, Kofi Annan. So there will be an opportunity for developing leaders themselves to bring up topics that they think are important to the goal of development and poverty alleviation. You know, this could easily be one of them.

I think, from the standpoint of the G-8 countries themselves, the focus is likely to be on the implementation of the initiative that they already have underway. In my own mind, you are emphasizing a different aspect of a question that I do think is very important, South-South cooperation. The aspect that I am particularly interested in is the potential for increased development arising from increasing South-South trade as trade barriers come down and there are more opportunities for countries to trade with their neighbors.

MODERATOR: (Off mike.)

Q My name is Paul -- (inaudible) -- TV in Qatar. My question is very similar to the gentleman that preceded me. I understand the president of Nigeria, the president of South Africa and Algeria are coming to the summit hoping to gain support for the African development initiative. I wonder if you could tell us if the American administration is favorable, supporting the initiative. They've already got the European Union's support on that.

MR. LARSON: We are very encouraged that there's been such a strong effort on the part of some important African leaders to develop an approach towards the advancement of their people that emphasizes principles like ownership of the development strategy, of responsibility on their part, of good governance. So there are many things in this report that we find very appealing.

It still, in my understanding, is a work in progress. There's some 77-page document that has come out of Lusaka. We are still in the middle of studying it. I suspect that the Europeans are also still studying aspects. I'm sure there will be elements in it that we won't be as supportive of. But I think our basic orientation will be to support the process that they have launched, to support the notion of local ownership, a development strategy of responsibility.

We might well suggest that, rather than trying to come forward with 80 pages of initiatives, that it might make sense to pick out one or two of those that are most crucial and try to make progress on that. But we're still studying it, but we're taking a very positive attitude towards the effort without necessarily endorsing every single proposal that's in this long document.

MODERATOR: The gentleman right here.

Q I'm Kyo Fuji (ph) from Nikkei Newspaper.

What is the prospect of the discussion on climate change? Do you see any new compromise between the U.S. and EU on this issue?

MR. LARSON: I -- I'm sure the issue will be discussed by the leaders, because they all agree that climate is a very important issue and that there is a need for international cooperation in addressing it. But I doubt that there will be sort of detailed discussions, because there will be ministers and senior officials from all of the governments who will be in Bonn meeting for that specific purpose. The so-called COP-6 (BIFS ?) will be underway in Bonn this week and will be continuing during and after the Genoa summit meeting. And so, in my own mind, that is really the locus for the conversations about how we can address the climate issue together. It doesn't mean that the leaders can't or won't talk about it, but it does mean that they have a lot of other things to talk about, including the issues that we've been talking about during this briefing.

MODERATOR: (Off mike.)

Q Stephan Marki (ph) from the Italian daily Il Tempo. Secretary, two questions, if I may. Do you think it's possible that in Genoa, the United States and the other G-8 countries will pledge for more money that they would commit over the next years to the international fund for fighting against AIDS and malaria and tuberculosis, as the United Nations deems that at least $10 billion every year are needed for that purpose?

Second question: Do you expect the G-8 countries in Genoa to pledge -- to promote the granting of fair trade conditions or trade preferences to the developing countries within the WTO, the forthcoming WTO negotiations? Thank you.

MR. LARSON: On the fund that will combat infectious diseases, I can only speak for our country, but our stance has been that we have pledged $200 million. We have continued to provide $500 billion through our bilateral activities. The president has said, in so many words, that we are prepared to do more if this fund works in the right way and if it's successful.

We have put a lot of stress on the importance for this to be a different type of international effort, that it should be accountable, that it should be driven by scientific and public health principles, that when we find programs and activities that work, we should scale them up and replicate them on a broad scale. When we monitor projects and find that they're not working in the right way, then we should shut them down quickly.

So our view is that if this is as successful as we think it must be and we expect it will be, then we are going to be prepared to continue to support it with additional funding in the future. I think that is the attitude of our partners. But I think, you know, they should, of course, speak for themselves.

On the issue of trade and trade preferences, I think that these preference programs for the least-developed countries are very important. Here in the United States, we have the Africa Growth & Opportunity Act, which is not yet one year old, and which is stimulating a big increase in our imports from a number of African countries. We also have a Caribbean Basin enhancement initiative, which is also a one-way preference program. We recognize that the European Union has done a very good program in its everything-but-arms program.

As important as these one-way preference programs are, though, they miss a lot. First of all, even though they are targeted on the poorest countries in the world, if you look at the poorest people in the world, you find that 80 percent of the poorest people in the world don't live in those countries. They live in lower/middle-income countries, countries like China and India or Brazil or Egypt.

And so we need to find an approach to trade that draws them in, too. And that's why I've stressed so hard the importance of a global round, because it's in a global round of reciprocal trade negotiations that we are going to have all of these countries coming to the table, and they will be able to make requests of barriers around the world that they think should come down. Other countries will be able to make requests of them.

It's not that these preference programs are unimportant. They are important. We're going to follow up on ours. We encourage Europe to follow up on theirs. But when you're talking about those preference programs, you're talking about roughly $30 billion of trade in the case of the United States; same in the case of the European Union. When you're talking about the total pool of imports from developing countries, in the case of the United States you're talking about $500 billion. In the case of Europe, you're talking about a roughly comparable number.

So what I want to do is make sure that we really address the barriers that will allow that $500 billion worth of trade to grow very quickly and not concentrate only on this much smaller amount of trade, as important as it is.

MODERATOR: Right here.

Q (Name and affiliation inaudible). In the last summit finance ministry meeting in (Rome?), some countries showed concern that prolonged slowdown of U.S. economy would be the biggest factor of the slowdown of the world economy. So in the upcoming summit, how will President Bush explain about the current situation and the prospect of U.S. economy, and what kind of role do you expect the other G-7 countries to sustain the world economy?

MR. LARSON: I think your question is getting perilously close to the sort of question I said I didn't want to get into. I'll make only a brief response.

We feel that we have taken some important steps to ensure that the United States has a strong and growing economy. There have been the steps taken by the Federal Reserve. The president's tax initiative is a step that we believe will strengthen our economy over both the short and the medium term. We also think that the basic resilience and the high productivity in the United States that has been stimulated by competition and by the introduction of information technology is something that is a durable phenomenon.

So I think that would be the general answer. But I want to underscore, I'm not here today to talk about the global economy or U.S. macroeconomic performance. And so, with your permission, I'd just leave it at that.

Q (Inaudible) -- missile defense. Is that something you can comment on? What do you think will -- how do you think it will be handled on the summit?

MODERATOR: (Off mike.)

Q I'm -- (inaudible) -- Swedish Broadcasting Corporation.

MR. LARSON: No, I don't -- I'm the one who's dealing with the economic-social-environmental issues, so I regret that I just don't think I can give you an answer that would be useful to you.

Well, look, it looks like we've -- oh, one more?

MODERATOR: The gentleman from -- (inaudible).

Q (Inaudible.) I'm not saying the AIDS issue is important, but concerning the current world situation, we have probably more urgent issues. But the focus of the summit is (otherwise ?) than, you know, but AIDS. So some people think that probably it's a kind of a preemptive meeting for the WTO, you know -- (inaudible) -- when the WTO or other negotiations or talks are held or other, some, you know, more urgent issues, demonstrations of forces against (the attendees ?) would be less. So do you think this is kind of -- (inaudible) -- for the focus set for the basic G-8 summit?

MR. LARSON: I'll have to say I see the issue completely differently than you do. If you have lived in Africa for five years, as I have, I don't think you can look at the AIDS issue as anything other than a global calamity on a scale that begins to approach the plagues of the 1400s. This is something that has set back the efforts of many countries an entire generation as they've approached their own development. It is devastating the ranks of the teaching profession in many countries. In many countries it's devastating the ranks of the military and the people who engage in peacekeeping operations.

So the one and only reason that the United States is interested in this issue, in making such a strong effort at this meeting to show leadership and working with partners, is that it is so urgent as a humanitarian disaster, as an economic disaster and as a disaster that runs the risk of destroying the prospects of a lot of these countries that we have to act, we have to act promptly, and we have to act in a cooperative fashion. And that's what we are attempting to do.

Now, I think you rightly pointed out that there are other urgent issues around the world, and I would agree with you that the issue of safe water is a very important issue. It's an issue that has been on the summit agenda from time to time, and it may well be an issue that we need to roll up our sleeves and begin to address again.

But I think that it's important to recognize this initiative on HIV/AIDS for what it is. It's a global calamity. It's an issue that my president decided early on in his tenure that he wanted to show some leadership on, and that's why he was the first leader to pledge significant amounts of new money to address the problem. It's why we think that the launching of this fund at Genoa is an extraordinarily important step. It is just a first step, but it's an important first step. And if it works in the way that we expect, then it could be the sort of international initiative that could help turn the tide.

MODERATOR: One more new questioner, if you don't mind taking it. This will be the last question.

Q Mr. Larson, my name is Yvonne Starazi (ph). I'm with the Financial Times Deutscheland. And I have a question regarding the WTO round. Everybody wants to have a new round, but there doesn't seem to be a lot of agreement on the agenda. In Gothenburg already, you know, we couldn't find areas of convergence. So I was wondering if you could update us. Has any progress been made on that?

MR. LARSON: I think there is progress being made. I know that the trade commissioner of the European Union, Pascal Lamy, is arriving in Washington in the next day or so for continuing talks with Ambassador Bob Zoellick, the U.S. trade negotiator. We are very committed to working with Europe and other developed-country trading partners, as well as the developing countries, to pull together this agenda.

At the end of the day, we need to have a balanced agenda that addresses everyone's core concerns. We have felt that there are some aspects of the European agenda that were frankly scaring off some of the developing countries. But our approach is not to say, "Oh, no, we can't talk about that, but we can talk about something else." Our approach is to try to sit down and have a more detailed conversation about what is possible.

And we're approaching this very much in the spirit of what is possible. Where can we, if we look at the interests and concerns of developing countries, of the major economies like Japan and the United States and Europe, where can we find a convergence around a trade agenda that's possible? That's what we want to do.

Thank you.

MODERATOR: Thank you, Undersecretary Larson. Thank you, ladies and gentlemen.

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