The World Trade Organization and the Future of the Developing World

  1:04 P.M. (EDT)

     MR. LARSON: Good afternoon. It is a pleasure to have a chance to talk to you about a subject that President Bush and the administration feel is of the utmost importance, and that is the challenge we have in front of us launching a new round of market- opening trade negotiation.

     It's very important, and I would say now more than ever, that the countries of the world not turn inward. Trade has been an engine of prosperity, growth, development for many, many countries in the world. Through this proposed new round of trade negotiation, it will be possible for that to be spread more broadly.

     We feel in the United States that this new round could be a round that will be of particular importance to developing countries. We think that there are opportunities to make further progress in breaking down barriers to trade in areas like agriculture, which are of great importance to many developing countries. We think there will be opportunities to increase opportunities for trade among the developing countries. This is an area that has actually slowed in recent decades and it's an area of great potential in the future.

     We have been working very hard in Geneva and bilaterally with developing countries to address the questions and concerns that some of them have. One of the areas that we have given great attention to is the area of trade capacity-building. We think developing countries are more confident now that there is going to be help available for them in addressing the obligations that they accept under trade rules and in assessing where their opportunities are to benefit from trade in a greater way and to a larger extent than some of them have been able to benefit in the past.

     We feel that the discussions last week in Geneva were quite productive. We're looking forward to a continuation of discussions at the mini-ministerial in Singapore. There will be much further discussion of these issues at the APEC ministerial and summit in Shanghai. And as I said, we're pulling together all of the resources at our disposal to help ensure that there will be a successful launch of the new round of WTO trade negotiations this year.

     I'll be happy to try to answer any questions you have.

     MODERATOR: We'll start up here in the front. Please wait for the microphone and give your name and news organization.

     Q This is Bermit Engisor (ph) with Turkey's NTV Television. My question will not be directly related to WTO, but I'd like to have your opinion about the following. Last week you met here with Turkey's economy minister, Dervis. And it's also a known fact that he has requested additional financial support by international financial organizations. Do you support that? Or do you have anything to say about Turkey's -- (inaudible) -- economic situation?

     MR. LARSON: Well, we have set this up as a briefing on the WTO and the launch of the new round, and I am going to keep it on that, even though there are many other interesting subjects to discuss. Let me leave it at this. We regard Turkey as an extraordinarily important friend and ally.

     I did have an extremely good and detailed meeting with the economic minister, Minister Dervis. He also met at length with Secretary O'Neill and the vice president of the United States, Vice President Cheney. So I think we have had a very good opportunity to get his assessment of how things stand in Turkey.

     But what is going on now, as I understand it, is that the government of Turkey is in discussions with the International Monetary Fund about what the shape of the next stage of their economic program should be. And we look forward to keep abreast of those discussions and we look forward to playing a very positive, constructive role.

     We think a lot of good has been accomplished in the Turkish reform program this year under the leadership of the government and of the minister. And our goal will be to make sure that that progress continues.

     MODERATOR: (Off mike.)

     Q My name is Jingshing Li (ph) from China Economic Daily. If I may, I would like to ask two questions. The first is, what kind of difficulties should be still overcome before the world has reached a point of successful launch of the new round? Could you name probably the remaining major difficulties? And secondly, what kind of linkage do you think APEC should have with WTO new round? What contributions do you expect APEC in Shanghai could make to the success of WTO round?

     MR. LARSON: The major task for the launch of the new round at this stage is to get agreement on the mandate. And it's important to understand that the mandate doesn't mean what the outcome will be. The mandate means what will be the subjects that are up for discussion. And there has been in circulation a text, the so-called . That is a working document, an effort to develop a consensus on what the mandate of these negotiations should be.

     There's a lot of work to be done on that yet, and there are many areas where countries haven't yet reached agreement. What is positive, I think, is that everyone is talking about working from the Harbinson text. And there is a document that is the basis of the efforts that all countries are making. And this is a marked improvement from the situation before the Seattle ministerial when there was this very, very large, unwieldy text with hundreds and hundreds of brackets that represented a great measure of disagreement about what the mandate should be.

     As for APEC, APEC is a grouping that, from its outset, has been devoted to open markets and using trade and economic cooperation as an engine of prosperity. APEC traditionally has taken a very, very positive stance on global trade liberalization. It typically, at its ministerial and at its summit or leaders' meeting, has issued very, very strong calls for moving ahead with global trade liberalization.

     I would hope that this would be the case again this year in Shanghai, that there could be a very, very strong message from the leaders of APEC that it is important that this round get launched and it's important that it get done this year and that the leaders of the APEC economies are going to do everything in their power to make sure that that happens. They're going to exercise the leadership together and they're going to take the decisions they need to take at home to make sure that this can be done.

     I mean, one thing about the launch of a negotiation, there has to be a little bit of understanding of the position of the other parties and you need to find that common ground; again, not the common ground that represents the end of the negotiation, but the common ground that represents the agreed starting place for the negotiation. And that's what I hope we can see coming out of Shanghai.

     MODERATOR: (Off mike.)

     Q My name is Egu Asari (ph), editor of AfricaNews -- (inaudible) -- .com. My question is, before one gets the chance to take a look at the Harbinson text, could you give us the gist of the main proposals in there, especially with reference to agriculture and agricultural products? And in this particular instance, with reference specifically to the African region, within the context that Africans are more and more moving towards an African union concept as it relates, say, comparable to the EU.

     MR. LARSON: Surely. The basic framework of this Harbinson text is to begin with some general propositions about the importance of trade that are more political than operational, but nevertheless are very important. And one of them is that it is fundamentally important to maintain and intensify this commitment to an open trading system and that this can be an enormously important tool for poverty alleviation. It is very strongly underscored in the text.

     Then what these texts tend to do is sort of set out specific areas that will need to be addressed in negotiation. How do you address the issue of trade in manufactured products? What should be the basic orientation of the negotiation there? What should be the orientation of the negotiations on services? What should be the orientation of negotiations with respect to electronic commerce? What orientation should there be towards a couple of new topics that other countries have suggested be on the agenda, investment and competition?

     And finally, though I'm not being exhaustive here, on the area of agriculture, you know, what should be the basic mandate there? Now, agriculture is one of the areas where the first draft of the Harbinson text was rather skeletal in nature because there have been enough disagreements about this that what it did, rather than give paragraphs and proposals, it sort of gave topics. And it talked, for example, about the issue of export subsidies, the issue of domestic support, the issue of market access and barriers to market access. And it listed a whole series of topics that would have to be discussed without fleshing it out.

     I think, based on the discussions that have taken place last week in Geneva, it should be possible to turn those elements into paragraphs and to give all of the participants in the process a chance to react and give their suggestions. So it is not -- just to clarify, it is not the sort of thing that would, at the end of the day, say we would expect to negotiate these specific agricultural products but not on others.

     I mean, I think the expectation is that when you deal with agriculture, everything is going to be on the table. And the question will be more what is the orientation that the negotiations should take with respect to various types of subsidies and various types of protection.

     MODERATOR: (Off mike.)

     Q Given the United States' position at the WTO, what is United States' view on the concerns raised by the African region with regards to subsidies, domestic subsidies in agriculture?

     MR. LARSON: Well, we think that African countries -- and I would say developing countries, broadly speaking -- have much to gain from liberalization and opening up of agricultural trade and from the phasing down, the reduction or even elimination of agricultural subsidies. Most African countries don't have sufficient revenue in the government coffers to be able to subsidize their own farmers, so this is a competition that doesn't put African countries or farmers on a very level playing field. It would be better to get rid of these types of subsidies.

     And we strongly support that for at least two reasons. One, we are also agricultural exporters and we think that, as a commercial matter, we will be better off in a world where agriculture is not subsidized and where in particular there are not agricultural export subsidies, which are extremely distorting of trade.

     But we also think, and we think this very sincerely, that subsidies to agriculture really are an impediment to development. In many countries, the bulk of the population lives in rural areas, and the way that -- if one is serious about reducing poverty, you have to be able to reduce rural poverty, and that means you have to find a way to increase income in rural areas. And I think part of the answer to that problem is through agricultural exports.

     So we have ambitious goals for agriculture. We understand that other countries, you know, have concerns about going too far. We recognize that in a negotiation you have to find some common ground. But in general, we're going to be very, very ambitious with respect to agriculture.

     MODERATOR: Over in the middle and then over to the side.

     Q (Inaudible) -- from France Press. Could you please give us a (handle ?) or at least a scenario? How do you envision a possible reduction of agricultural export subsidies, I mean, vis-a-vis the European Union?

     MR. LARSON: The scenario for the -- well, I think, first of all, just to repeat what we've been saying, at this stage we're not negotiating what the outcome of the new round will be. We're negotiating what the subject matter of the new round will be. And so I think that many countries would believe that the subject matter should include market access or the sort of issues that pertain to sale of products into the United States or into Europe or into Japan.

     Secondly, they should relate to the issue of the degree of domestic supports and subsidization. And thirdly, they should relate to the question of export subsidies. You know, what sort of disciplines will be in place when a country or a grouping says, "Well, we're going to sell our products outside, but because our prices are too high, we're going to subsidize those sales"?

     Those are topics that would have to be discussed and negotiated in the new round, along with other topics that might be raised in the area of agriculture. So that's all I think I can appropriately say at this stage, when we're talking about what should be on the table for negotiation. I don't know that it makes a lot of sense to discuss what should the end point be or how do you actually conduct a negotiation like that.

     Q Are you optimistic at all that there will be a reduction in export subsidies?

     MR. LARSON: Well, let me put it this way. Most economists would tell you that export subsidies are a particularly strange type of economic tool. They're something that is designed to make your products cheaper for foreigners to consume than they are for your own people. So normally economists think of export subsidies as being a rather strange instrument for governments to use.

     At the same time, they're very costly for finance ministries. And, you know, the question in this area, as in other areas, is, can you, by getting a framework of reciprocal and shared commitments, get to a situation where everyone is better off? And I think that's an issue that you can -- I mean, you can frame much of the debate about free trade in those terms.

     MODERATOR: Back to the side over here.

     Q Andrei Sitov from TASS from Russia; obviously a question on Russia. I would like to ask you for an update on the recent contact between the Russians and the American side on the issue of Russia's accession to the WTO, maybe the Geneva round, and then maybe even the visit from the Russian finance minister, Mr. Kudrin, a few days ago here.

     And I'm a little bit confused. The American officials have been saying that the level of requirements for Russia will be the same as for everybody else, and it's a technical issue. The Russians, on the other hand, and President Putin a few days ago suggested that there seem to be prior conditions that are over and above what everybody else was required to do.

     MR. LARSON: Let me answer your question in a broad context and then move into some of the specific things you talked about. If it weren't emphasized in that we are working with our colleagues in the Russian government to establish a very strong and broad-based economic relationship. I had the privilege of visiting Moscow between two of the recent meetings between President Putin and President Bush. I went there just before the meetings in Genoa.

     The reason I went was to lay out for Minister Kudrin and for others in the economic policy team some of our ideas about how we could work together, work together on WTO accession; we could work together on issues related to investment in Russia. We wanted to talk about ideas we had about giving particular attention to opportunities for growth in regions of Russia where there was a particularly strong interest on the part of local officials in attracting investment and being part of the global economy.

     And we wanted to talk as well about the ideas that we developed for a business dialogue. We're very gratified with the way those discussions have taken off. Secretary O'Neill and Secretary Evans have followed up and made their own trip, and there are lots of other activities in play. Ambassador Zoellick had an opportunity to go to Moscow to really follow up on the conversations he had had with Minister Graf on the margins of the OECD ministerial meeting.

     I'm not in a position to give you an inside account of the meetings that Ambassador Zoellick and Minister Graf had, because I wasn't on the trip and I haven't had a chance to get into it in great detail. What I do know is that we have taken the position that we want to be in a helpful posture. And by that, I mean that we have wanted to make sure that in areas where it would be helpful and we might be able to facilitate by making experts, not necessarily from the U.S. government but from outside the U.S. government, available to the Russian authorities, that we would be happy to try to do that.

     One of the things that I think sometimes is difficult for folks to understand about the WTO is that it is a rules-based organization. And part of the membership process is showing that you have the laws and regulations in place to fulfill the obligations of membership. I haven't seen the most recent comments to which you alluded, but I know that what we have striven to illustrate is that, yes, there are certain obligations, and the WTO membership as a whole decides when it feels that those obligations have been met. And that isn't going to change.

     But we do think that we can be helpful on addressing some of these technical issues, and we do think that it is extremely gratifying and very important that President Putin and his team have made WTO accession a high priority, because we think that it will be good to have Russia in the WTO as a country that is working under the rules, but also helping to shape the rules of the WTO.

     And we think that that's also something that reinforces the reform program in Russia, because we think that this whole concept of having the rule of law applied to the trading system works hand-in- glove with the broader reform efforts that the president and his economic team have been putting in place.

     Q If I might follow up just a second. In this new round, it's obvious now that -- a follow up. In this new round, it's obvious that Russia will not be a member of the WTO before the launch of the round. What role can Russia play in the round as an observer to make sure that its interests are taken into account by the participants?

     MR. LARSON: It can play a very active role. And we've actually had conversations with Russian authorities about that. And I think, based on my conversations with officials in the Russian government, they are very knowledgeable about what opportunities they'll have to have a voice and to help shape things. And I think they have thought through how these two things interact; that is, the process that they make towards membership in the WTO and also influencing the direction of the negotiations in the new round itself.

     MODERATOR: Time for just two or three more questions. In the back.

     Q Thank you. I'm Gary Yurkey (sp) with DNA. I have a two- part question. You talked about the mini-ministerial meeting in Singapore this weekend. Could you talk a little bit more about that and how it fits in with the WTO meeting? And I assume it's also meant as a run-up to the APEC meeting next week. And secondly, is there any -- given the events of September 11th, has there been any consideration given to possibly moving the venue of the Doha meeting or postponing it?

     MR. LARSON: On Singapore, I'll have to give you a relatively general answer, but I think it's the right general answer, and that is that it is very important, as you go into a major ministerial conference involving 180-some countries, to make sure that you have a consensus-building process leading up to that. And that is something that, for a variety of reasons, did not work well in the run-up to Seattle.

     This is a second mini-ministerial. The first was held in Mexico. It's an opportunity outside of the glare of television cameras for the ministers to look hard at the progress that's been achieved, certainly look at these Harbinson texts that we've talked about, identify what needs to be done in terms of narrowing any gaps between trading partners, and frankly, identifying any situations where an individual country's posture seems to be at variance with where the emerging common ground lies, and, you know, plot out a strategy for what will be a very determined effort over a matter of a few short weeks to resolve these outstanding issues.

     You know, you go into one of these ministerials and it may be inevitable and even desirable to have two or three issues that have to get decided at the ministerial. It's very hard if you go into a ministerial and you have 30 or 40 or 50 or 60 issues that need to be decided, because, you know, decision-making processes don't work very well when you're trying to coordinate views of 180 countries on such a large number of issues.

     So I see this as all part of a consensus-building process that will facilitate the job of Mike Moore, the director general of the WTO, to bring the world together on an agreed mandate.

     On the issue of the timing and venue of the meeting, I think that really is a Mike Moore issue and you ought to put it to him. Our view is this. We want to see a new round launched. We want to launch it this year. And, you know, when this meeting takes place and where it takes place, we're going to show up and we're going to be there. But the whole issue of those sort of details, you know, I'm not the person who is involved in that. I don't really have anything that is particularly relevant to say about it today.

     MODERATOR: We'll take this question here and then we'll conclude with the gentleman in the back.

     Q (Inaudible) -- Nikkei Newspaper, Japanese newspaper. I'd like to ask some questions about Japanese agriculture issues. I think you understand that Japanese government has been insisting that the Japanese agricultural market has many aspects in which they're talking about so-called food national-security issues, protecting -- (inaudible) -- issues and so on.

     And just a few days ago, it is reported by Japanese presses that the Japanese government proposed to consider so-called no-trade aspect of agricultural market. Do you think -- is it acceptable in talking about new round? And how do you evaluate the Japanese government's proposal?

     MR. LARSON: Again, the subject of this briefing is really the WTO round and its impact on developing countries. I'm going to answer your question from that vantage point. Clearly it is very important for developing countries to see greater opportunities for trade in agricultural products. And I think that it is very important for a new round, whose focus will have a big developmental dimension to it, to have agriculture and agricultural trade liberalization be an important aspect.

     I think -- I've thought a lot about food security issues myself, and I think that greater liberalization of agricultural trade will facilitate and strengthen food security around the world. There's an initiative right now in the APEC context called the APEC open food systems initiative. And its basic premise is that, you know, trade is a way of making sure that we use the scarce resources of the earth, scarce land resources and other resources, in the most efficient possible way to meet global needs.

     And I think if one looks at agriculture, a couple of things jump to the fore. One is that it is very important to increase the opportunity for developing countries to grow their agricultural sectors. Part of this is market access and liberalization of trade. Part of it is helping -- working with developing countries so that they can take advantage of new technological opportunities.

     We think, for example, that there's great potential for developing countries to use biotechnology and other innovative agricultural technologies as a way of increasing their own productivity and addressing their own food security needs. And we think this is an important part of the round.

     You know, I think that there are non-trade concerns about all aspects of economic life. There are non-trade concerns about manufacturing. There are non-trade concerns about services. What I think is important is that non-trade concerns not be used as a pretext to take measures that are discriminatory or protectionist or hold back poor countries, including developing countries, from taking advantage of their comparative advantage in the world.

     And so, you know, for us the bottom line is less the rhetoric than the reality. And the reality for me is, will there be increased opportunities for trade, including agricultural trade, to expand and grow in a climate where there are fewer barriers, fewer border measures and fewer subsidies and other distortions to trade? That's what we'll be after.

     Thank you very --

     MODERATOR: We'll take --

     MR. LARSON: We'll take one more? Okay.

     MODERATOR: Yeah, I promised to him, and that'll be the last one.

     MR. LARSON: That's fine.

     Q One last question. (Inaudible) -- Germany's business daily. As far as the foreign (safe?) corporations are concerned, there's on Monday a discussion in the Congress. So my question is, what do you expect will be the result of this discussion and what kind of solution do you see? And the second part of the question is, how far will this problem be part of the negotiations of the WTO round in Doha?

     MR. LARSON: I think there's a narrower and a larger context in which to answer this question. I think, at the most basic level, it's going to be very important for Europe and the United States to manage this particular trade dispute in a way that is not damaging to the international trading system.

     As you know, we have been concerned about the circumstances under which this case was launched, and we find ourselves in disagreement with the decisions that have been rendered by two different WTO panels. At the same time, we have great respect for the WTO and great respect for the rules-based system. And so the one thing you can be sure about is anything that we do with respect to this case will be grounded in our view that we all have an overriding interest in making sure that the WTO is strengthened, not weakened, and that we approach it in that way.

     We hope that and I actually anticipate that our friends in Europe will look at it in the same spirit. That doesn't answer your narrower question of what exactly is going to happen tomorrow. And on that, I am going to take a pass, because we've had a number of conversations about this within the administration.

     I think we have a pretty good meeting of the minds on some basic points. But this is both a trade matter and a tax matter, and I happen not to be the spokesman within the U.S. government for either trade or tax matters. And so I think I had better leave this one rest with the more general response I gave you.

     MODERATOR: Thank you very much.

END.

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