Ambassador Portman: Thank you all for coming.  As you know, yesterday the U.S. presented a proposal on domestic support and tariff reductions.  I want to report that that proposal generated a lot of good, and I think very constructive, discussion at our meetings in Zurich.  My view as you know is that we have not made adequate progress in Doha Round discussions over the past several months, so I was very pleased yesterday to see new energy in the talks, a new optimism about reaching our goals in Hong Kong, so that we could have a successful Doha Round completion in 2006.  I was very pleased with the response from my colleagues, including Director General Pascal Lamy.  This has been very helpful in amplifying the need for additional movement, not just in agricultural but in the area of services, development, rules, NAMA, trade facilitation, so I think you will find from talking to my colleagues that yesterday’s meetings were constructive, specific in terms of the issues and it’s the first time, certainly in my four and a half months on this job I saw real movement toward having a successful Hong Kong meeting and a successful round.

We have a very short period of time before Hong Kong -- about nine weeks.   I was reminded by one of your stories this morning I read, that’s very little time, considering the complexity of these issues and the need for us to put together the modalities or the framework for Hong Kong.  That’s why I thought it was so important for the United States to make a bold proposal yesterday, and again I believe it did generate a kind of momentum we were looking for.  It was an effort to step forward and try to break the deadlock in agriculture, because agriculture is so important to unlocking the potential of Doha.

The feedback from the United States has been mixed.  Mostly good, the business community is very supportive of the Doha round going forward, and their response was one of relief that this is an opportunity to break the deadlock and move the talks forward.  I do think it is now easier for us to talk in more specific terms about services and non-agricultural market access, rules, development, trade facilitation the other issues.  We’ve also heard from our agriculture community.  There, there is general support for additional market access, for elimination of export subsidies, for harmonization of domestic support, and therefore there is a feeling among American farmers and ranchers and their representatives, that so long as the proposal we offered yesterday brings those other elements, particularly market access, that they’re willing to give us a little leeway.  Some comments you will see, maybe some this morning that you have seen are not as positive because they’re worried – they’re worried that by making cuts to farm programs we’re not going to get the kind of market access from the Europeans and from other developed country markets that we seek.

A key focus in our efforts all along has been on development, and one reason that we are focused on market access is that we have an interest as exporters in our agriculture products having a fair shake in other markets, but also because we believe strongly that market access is the core of Doha, and that market access is the key to having true development benefits result from this round. The World Bank economists calculate that 92% of the benefits to developing countries from rich countries trade liberalization will be due to tariff reduction.

Furthermore, two thirds of the gains in global income from the world-wide elimination of barriers to goods will come to middle and low income countries.  These benefits are pretty powerful.  And they are benefits that can lead, as you know, to hundreds of millions of the world’s poor being lifted out of poverty -- should there be an elimination of those barriers.  This is why I believe yesterday’s proposal was important, because it enabled us to have an opportunity to see real market access. 

We’ve also heard again from some lawmakers in Congress, who have told us that their support of our proposal is conditioned on reciprocity from our trading partners.  As I said earlier we have had a generally good response to our proposal, both here and at home, but again without the market access being offered by other countries being more specific, without other countries being more forthcoming, it will be difficult to put the Doha compromise together that we need to have a successful Hong Kong round.  So the pressure is on us, all of us.  Later today, the Secretary of Agriculture, Secretary Johanns was with me today and I will be meeting with some of our colleagues in the FIPS group.  Tomorrow we have additional meetings with an expanded group of countries beyond FIPS, focused on agriculture. I’m hopeful that what we began yesterday with a new proposal and with new momentum will result in the next forty-eight hours in additional and more specific offers on the market access side, so that we have a hope of pulling together an agreement that we can take into the Hong Kong at the end of the year.  Again I appreciate your being here this afternoon and I would now like Secretary Johanns to say a few words and then we’ll open up to your questions.

SECRETARY JOHANNS:  Let me also express my appreciation for the opportunity to offer a few observations to you and then as the Ambassador indicated we’d both be happy to take any questions that you have. 

If I might just start up and offer a comment about the U.S. proposal and how it has been received.  As you know we concluded a meeting in Zurich yesterday where we met with other countries.  We’ll continue that today with the FIPS group and then tomorrow with additional countries.  The bold, really substantial move made by the United States was well received by our negotiating partners.  I do believe that they saw that as a step by the United States to offer global leadership to move these talks forward, and I believe it was seen as enabling the overall talks to make progress.  As each of you know, the export competition pillar has been fairly well defined for sometime now.  The U.S. proposal now enables the domestic support pillar to be developed very quickly, and it clearly defines that we’re seeking a significant ambition here.  The U.S. proposal also does another thing: it clearly shines the light under the remaining pillar, which is market access where now work really needs to be concentrated.  I believe very strongly that this can be a successful round.  I’ve always believed that.  But now we need to have other countries show real leadership when it comes to market access.  Director General Lamy noted that we need to work very hard to negotiate this final piece, and we’re anxious to do that.  Time is short, you pointed that out over and over in your articles, we recognize that.

Now if I might also address another piece of this, and that’s the support for the proposal by the U.S. agriculture community, and I see some of you have new releases from folks who are not as enamored by the proposal that was made, I see Kent Conrad’s statements there.  This proposal was – we consulted thoroughly with folks that were going to be impacted by this.  We have received a supportive statement, as you know, from a number of agriculture groups.  American Farm Bureau has indicated through a statement that they’re supportive, but I want to be very, very clear that the proposal is a package and that support is conditional on it being viewed that way.  That is, our agriculture groups will accept the reduced support that comes with this, but there has to be real substantial tangible market-access in return.  That’s the key issue here.  We said all along that we were willing to be bold and now that has been delivered with great specificity, but now we have to hear what folks are willing to do on the market access, and we have to see real results for this to be successful, so we’re anxious to continue to move forward and we’re anxious to bring this round to a successful conclusion.  Thank you.

QUESTION:  Yesterday Mr. Mandelson said that he was only prepared to cut domestic supports by 70 percent, whereas you asked for 80 percent.  So I was wondering if you were going to settle this business at 75 percent, or is it going to be more complicated?

PORTMAN:  You are a good negotiator.  The question was on the domestic support side, how far the EU was willing to go and whether there could be a compromise on domestic support. Let me put it this in a little context if I can.  The proposal that we have made on domestic support is in excess of what the EU had asked for.  You’re correct.  The EU said the U.S. needs to cut the most trade-distorting support which is the AMS support, so called amber box, by 55 percent.  That was out the last couple of weeks.  We went to 60 percent.  And we did that because, frankly, we wanted to be even more ambitious than was expected.  Many people thought after the framework agreement that the AMS cut would be about 50 percent.  The EU said it needs to be more, 55, so we said we will up the ante and take it to 60.  This means real cuts for us by the way, because in the amber box we have right now 19 billion dollars allowed, we use about 14, so a sixty percent reduction takes us down to about 7.6 from 14 which is about half, a little less than half.  These are real cuts, and I can tell you, having spoken to some farmers this morning who are here in Geneva representing the American Farm Bureau.  They know they are real cuts.  So that’s what we think is appropriate. 

Then the question is, what should the EU do in return?  Well there was always an agreement in the WTO that there be harmonization between the major subsidizers, that’s us, the EU, Japan.  Right now the United States has support for its farmers that is at one level but the European support is a lot higher.  Under the WTO they are allowed to have four and a half times more support than we are.  Our farmers remind us of that often.  They [EU] actually use three times more than we do.  But the way the WTO works, as you know, is you take it from the bound amount, the allowed amount, so the question is how much should they take off from their bound amount, four and a half times what we have? I’m a pretty straightforward negotiator, I guess, maybe not very good at it in that regard.  But my view is right now they have four and a half times what we have, four and a half to one, they use three to one, in order for me to sell the agreement back home, in order for it to be fair, in order to meet the harmonization principle of the WTO, which was a commitment we made again in the framework agreement that we would harmonize these levels of support so they would be more even between the U.S., Japan and the EU.  My thought is how about two to one?  They’d still have twice the support that we have. 

But it’s closer to one to one, then three to one, and that’s how we come up with the number of 83 percent.  Now under their cap reforms they’ve already begun, they can probably get pretty close to that without doing anything.  In order for us to get to go to a sixty percent cut we have to do a lot, because you cannot continue the farm programs we have in place under this amber box when you have almost a fifty percent cut in real terms. I’m not talking about the bound rate. I’m talking about in real terms. They may have a very minor cut in real terms, negligible, maybe.   I don’t know the exact numbers. We have our own numbers we are working with.  They have different numbers.

So I just want to put that in context.  What we’re asking for from the EU, on the domestic support side, is very small compared to what we’re willing to do and still they’ll have twice the support we will.  I think that’s fair.  The other thing we’re asking for, which we’re going to insist on, in order for us to sell this proposal back home, is market access.  By the way all of us will have to live with these market access numbers, we’ll have to reduce our tariffs also.  We’ll have more limits on our sensitive products also.  We have sensitive products.  You all know what they are, but it’d be sugar, dairy or peanuts or cotton.  We’re not immune from these cuts ourselves.  So this is what we view as an absolutely realistic and fair proposal: one, domestic support, we are going to do more than others, but others need to come along under the principle of harmonization. And second, on tariff reductions, we need to see a much more aggressive result on market access.  Again the World Bank economists will tell you, other economists will tell you, the gains to the developing world and the development round will come primarily from market access.  Those gains will dwarf anything we do in term of domestic support.  There we’re talking about not ten of billions, but hundred of billions of dollars, of potential benefit to the developing world, should we open up the markets particularly in the developed economies.

So, I don’t know what the final number is but my strong view is that this proposal is a fair proposal, it is a balanced proposal.  It is not meant to be, as I said yesterday, an opening gambit, and it is not meant to be a negotiating position.  It’s meant to be what we think is a balanced approach, given the urgency of moving these Doha talks forward.  We really don’t have time to play games.  We have to get to the point where we see a real specific proposal on subsidies and if people have questions about that we’re happy to provide all the information, we’re doing that today in a very concerted way.  Other member countries, not just the EU are asking this question, we’re providing them data.  It’s been a very helpful exchange.  On market access we need to see the same thing now.  We need to see a specific proposal that has real cuts to provide tangible new access to agricultural products.

QUESTION:  Can you clarify to us how much in your overall, because one of your data that you put, is that in the overall budget cuts would be 53 percent.  Out of how much today and how much is it that you actually give?  Finally, is this your final proposal before Hong Kong or you’re still ready to make new commitments in case the EU comes up with some real marker access cuts?

PORTMAN: I’d like Secretary of Agriculture to address that first point.  But let me say it’s interesting, you said are we willing to make new commitments and this first gentleman said the EU wants us to do less. So, I mean, I don’t think we should do less.  I suppose you’re asking whether we should do more.  The United States thinks this a very ambitious and bold proposal if others can’t come along then the Doha Round is in danger.  By the same token, the United States is willing to look at any proposal consider any alternatives.  We are willing to be entirely open-minded to get the Doha Round moving.  With regard to the 53 percent figure, I’ve heard 54 percent too, again when you look at the agriculture spending that would be considered to be trade distorting, it would be the most trade distorting in the amber we talked about, the next would be in the blue, and there are de minimis for products and general non-products specific.  When you add all that up, including all of the bound rates, not just what’s used but the actual ability to, the allowed amount of support, I think the cut is more like 54 percent.

We don’t use all of that.  For us really that number is not as relevant as it would be on the 60 percent in AMS or the reduction in the blue box.  The blue box was, as you recall, in the framework agreement agreed to be capped for the first time, and the cap on the blue box was meant to be five percent of your production.  We have looked at that and decided that a bolder proposal would be to go even beyond the framework and say let’s go, instead of five percent, half of that, down, let say two and a half percent of your production.  That does hurt us, as you know, because we have a counter cyclical program that was written under the framework agreement to be in the blue box, specifically in there, and it says that, because that program is $7.6 billion authorized, we would have to live with it at roughly four point eight billion. So, again out of five billion that would be about a 34 percent reduction in that program alone.  So, these are the kinds of real cuts we’re talking about, not out of bound rates, not out of water, and again I would challenge the other countries, either Japan or the EU, what is their actual real cut gong to be, because I would suggest that if it’s going to be very minor from their bound rates.  What we’re talking about them doing is not going to be difficult for them as compared to us. And then you do this overall which includes the de minimis and that’s where you get the 54 percent. 

JOHANNS: Yes, that observation is absolutely correct.  If you just look at the whole picture it’s 54 percent.  But if I might just walk through the specifics here in the, what we call the amber box which is regarded as those programs that the WTO feels are most distorting when it comes to trade.  The numbers we reported to the WTO show that we have 19.1 billion there.  The proposal made by the United States would reduce that to 7.6 billion, that’s 60 percent, and then “de minimis” is a 50 percent cut so that goes from 9.5 billion down to, as the Ambassador indicated, just under 5 billion.  And then the blue box cut - we even there also went beyond and said 2.5 percent there.  I think five percent was what had been talked about.  You can see and this is a very important point, number one these are very real cuts.  These cuts have a real impact on the dollars put into agriculture in the United States through these programs.  These really get to dollars and they reduce those dollars by the amount of money involved.  It is very real, that’s why the Ag groups  are saying, Mr. Portman and Mr. Johanns, you better deliver a market access package that is very, very ambitious for us to be supportive of what you’re doing here because this definitely impacts.

And then the other point that I wanted to make is that the level of ambition shown here by the proposal indicates our desire to get a successful round.  In our commitment to a successful round, and again I emphasize this is a package, we stepped beyond what anyone would have anticipated just a few days ago, to demonstrate our commitment and our level of ambition to get a successful round.  Now it is the responsibility of other countries to deal with the market access issue.

QUESTION: The OECD has just come out with a report in which it says that all but a very small number of developing countries, mostly in Sub-Saharan Africa stand to gain more than lose from the successful completion of the Doha round.  I’d like to know if and how your proposal will benefit the countries in Sub-Saharan Africa who always seem to lose out.

PORTMAN:  I’ve not seen that specific reference to any countries that would not benefit from Doha.  My belief is that the world economy will benefit from Doha as will the developing world in particular, and I say that because as you know the least developed countries would not be asked to make any contribution, either on the subsidy side or the tariff reduction side, so they would gain from both.  They would gain from the reduction of subsidies in the developed world because they would then be more able to compete with our agricultural producers, and second, they will gain from a reduction of tariffs, which as I said earlier is where economists will tell you the primary benefit will lie, as they will now have access to markets they do not have access to now because they’re so many trade protections in place.  Specifically in Sub-Saharan Africa, as you know, the U.S. does have a very aggressive program there, the AGOA program, which permits duty-free access, but that’s just the United States. This would enable them to have better access to markets all around the world, including markets in developing countries that are not LDC’s but are emerging economies in the developing world.  So it’s a win-win, I think it’s clear to say the status quo is not acceptable.  I think it is clear to say that it would be a huge missed opportunity if we were not as WTO members able to pull together and make some of these tough decisions to unlock the potential of this round, which is to help all of these countries, including Sub-Saharan Africa.  But I will now look at that OECD study and be in a better position to answer your question more specifically, but I don’t see how those countries will not also benefit. Mike?

JOHANNS:  I would answer your question very quickly, I was at the AGOA forum this year and had an opportunity to speak, but also had an opportunity to conduct many, many bilateral meetings with my colleagues and one minister came in and really brought summary to me in terms of what they were seeking and he said: “We appreciate the aid that has been provided by the world community, but I will tell you, Mr. Secretary, I’m not here seeking more aid, I’m seeking the opportunity to trade,” and they feel very, very strongly that given that opportunity, that there’s a future for their people.

QUESTION:  My question is your current assessment on the ambition in Hong Kong.  Many people believe that Hong Kong really is the final chance for the survival of the Doha round because it has to finish by the end of 2006 before the fast track authority expires, so do you consider that the Doha round will survive in Hong Kong and if there is a failure in Hong Kong, would you consider it will send the Doha round into a coma at least way beyond 2007?  Thanks.

PORTMAN: Well first of all, all of us around this room are looking forward to going to Hong Kong in December right?   So we have to make sure that happens, and we appreciate the hospitality by the way, Hong Kong has been terrific, John Tsang who is the trade minister sat next to me at lunch yesterday and we had the opportunity to talk about the meeting and some of the preparations. He’s been by the way very supportive of this proposal and very supportive obviously of being sure the meeting itself is successful substantively. 

I think our expectations for Hong Kong need to be on track with our progress, and that means we shouldn’t expect too much.  Until three days ago I would have said we shouldn’t expect much at all.  Now I would say there’s an opportunity to unlock the agriculture deadlock and to make progress therefore on all these other areas I talked about, including getting a formula on non-agricultural market access, including some more progress on specifics on development, including getting some sort of an agreement on services that would include all countries making some progress and reducing barriers to services including some progress on the rules, adding more disciplines including progress on trade facilitation which has a tremendous opportunities for the developing world.  So I think now there’s an opportunity, if we work very hard over the next several weeks and if we are successful in getting this political decision made this week and next week on agriculture.  I say political because at this point, you know, the U.S. has put out a very specific proposal on domestic support, others have come back and said, you know, we’re not sure we can do on market access and my response to them is, well, the Hong Kong success lies in your hands, and it’s a political decision that they have to make, that they have the will, the political will to be able to make tough decisions.  I admit they’re tough, on all sides, because of the long-term benefits of Doha to the world economy.  So I’m guardedly optimistic now that we can pull this together for Hong Kong and have it be a successful meeting.

QUESTION:  Does something need to happen this week to keep that optimism going.  Are you trying through these FIPS meetings and through the TNC on Thursday, to reach some kind of concrete goal, some kind of concrete framework that would guide the talks from now to Hong Kong, and if the best that comes out of this week is the U.S. proposal and sort of the reactions to it, does there have to be a reassessment of what Hong Kong can be?

PORTMAN: The answer is yes, you know our ambition on the Doha round needs to be matched by our ambition over the next two weeks, or the Doha ambition can’t be reached, that’s kind of tautology I guess.  We have to be ambitious to be ambitious, and clearly, we think the FIPS meeting is timely.  We think this is the time.  Now is the time, now is the place.  We cannot delay any longer, we need to make the tough decisions or else we risk not having the opportunity to open markets, grow the economy and help the developing world in this round. That’s where we are. The FIPS meeting was previously scheduled so it’s not as if we established the FIPS meeting because of the proposal yesterday, but of course the U.S. was aware of that timing and we thought this was a good opportunity for us to allow the twenty trade ministers and Ag ministers yesterday to hear the proposal for the first time, to get their input, and now to work with the FIPS group and the FIPS plus group, and work with a larger membership, provide more information through the TNC on Thursday, so this is a critical week. I understand that some countries need to analyze our proposal. We welcome that.  And we are providing again information to anybody who asks for, and that’s a good sign, that people are interested in the substance.

JOHANNS: I might just add something to that.  As the Ambassador indicated, we are working to make sure we get the information to answer the questions. But having said that, no one is going to leave here wondering where the U.S. stands on domestic support, not any longer.  We got a very specific concrete proposal that has a real impact in the United States, and you’re not going to have to speculate or write stories speculating about what the U.S. position is going to be on domestic support.  That has been absolutely nailed down with the proposal, and it is very bold and it is very ambitious, and it is very real.  The next story though, that you’re writing is what is going to be the level of ambition relative to market access?  And you know what? That question needs to be answered here very, very quickly.  Very quickly, just simply because we’re eight-nine weeks away from Hong Kong, and so we just ask that the specificity and the ambition represented here is embodied in a very specific proposal relative to market access that needs to happen.

QUESTION:  Ambassador just two questions. First, do you agree with what Pascal Lamy said yesterday in the meeting, that the E.U. has to now come up with a market access proposal, given the level of ambition that you showed?  What exactly are you expecting when Lamy said this? And second, in the green box that you want a peace clause, this was something the European Union used to always ask for, peace clause. Are you fearing likely disputes in the green box programs?

PORTMAN: To the first question, yes I agree with what Pascal Lamy said.  I think he was correct.  I think he, more than anyone else understands all the moving pieces that are necessary to come together.  I think he, as you just said, he understands that the ambition we’ve shown on domestic support now needs to be matched by ambition on market access, and you know, I think he has lot of credibility, having been the E.U. Ag Commissioner and now in this position and seeing from a broader perspective what is possible and what is not between now and Hong Kong. He was very pointed yesterday, I won’t talk about his comments, because it was a confidential meeting, in any specificity. But I’ll say he was very pointed to all of us, not just in a general way, but very specific about what we need to do in each of these areas to have enough together for Hong Kong – not that Hong Kong will not be the end of this.  It doesn’t resolve the Doha round, but we need to have enough in Hong Kong to provide, as I said earlier, the modalities for the framework for us to then, into 2006, prepare the tariff schedules, do all the hard work on services so that we can have a good result.  So he was very tough on us, appropriately. And he put it very clearly in terms of the need now for a market access proposal that is ambitious and specific. On peace clause, my view on that, for what it is worth, you haven’t asked me my view specifically, but is that in order for us to give some certainty to a Doha round result that a peace clause make sense, the sense would be that if you agree on the subsidy side to make real cuts in subsidies, if you agree that there should be a amber, blue and a green box that those ought to be something that we can rely on, at least during the time period of the round.  I’m a former litigator myself, I guess, a former lawyer at least, but I’m a recovering lawyer.  I don’t think litigation is the way in which we ought to be establishing trade policy.  I think we should try to come up with clear rules on the international front, on all fronts by the way, not just on subsidies and then make sure that our exporters and importers and know that they can rely on those rules.  To the extent possible you want to have a rules-based system, that’s what the WTO is all about.  So I think a peace clause makes a lot of sense, as long as it is within the rules that we agree to.

Question: Mr. Ambassador, I was wondering if you could shed some light on the U.S. priorities for NAMA, since everything is interlinked in the poker game here, and if there are going to be sensitive tariff lines in agriculture, some U.S. industries are asking for a carve out, as you know, and textiles and clothing have got the backing of the textile caucus in congress, so if you could elaborate the priorities on NAMA for the U.S. Thank you.

PORTMAN: That’s a good question.  I’m delighted that you are asking about some of the other areas, not that I don’t want to talk about agriculture all the time. NAMA has again great opportunities for all of us, the developed and the developing world.  In the developing world you have the opportunity in some instances to be on the offense, be an exporter now of manufactured products, you need to look no further than China for an example of that, but even some of the countries that are not as industrialized, by opening up their markets more on the NAMA side will be able to offer a lower-price products, higher quality products to their citizens, and therefore raise the standard of living in those countries which is part of the answer to the Sub-Saharan African question as well. More market access is good, going both ways. So I think the NAMA discussion is one that we have not had the opportunity to talk about as much as I would like, but yes, the U.S. has a very strong and specific interest in being sure that there is a reduction in non-agricultural market access.  You asked whether the U.S. has some sensitivities.   Yes we do, as I said we did in agriculture.  However, you know the U.S. is a relatively open market right now, our average tariff is about 4 percent.  I think our bound rate is a little bit higher than that and our applied is a little bit less than that or vice-versa, but it’s about 4%.  So we’re relatively open right now and so my argument certainly to Members of Congress and to our industry is that they ought to be very supportive of the Doha round, because it’s the right thing to do for the world economy, and because although we do have some sensitive industries that are concerned about lowering some of our own tariffs, that overall this will be beneficial to the U.S. economy, in particular, and to the global economy in general. 

QUESTION : Textile industries want textiles to be treated separately in the NAMA negotiations, not to be part of the formula, to be treated separately, could you elaborate what the position of the administration is on that?  Thank you.

PORTMAN:  You know, I don’t think they’re asking for a carve-out as I understand it, I think what they’re asking for is special treatment within whatever formula is devised under NAMA. You know more about it than I do maybe.  The formula, we strongly support what’s called the Swiss formula, since we’re here in Switzerland we can give them the name.  It’s a simple formula, it just says if you have higher tariffs, those ought to be reduced more. So as opposed to the Uruguay round approach it says, if you want to get at the peak tariffs and the high tariffs you really need a more aggressive approach to those higher tariffs.  In the case of textiles, as you know, as of the first of this year under the WTO agreement the quotas are no longer in place and there is more pressure, on the U.S. we’ve had dramatic increases in textiles but I just don’t know enough to answer your question about the carve out, my understanding was what they had hoped for would be treated as a sensitive product under a Swiss formula.

QUESTION:  I wanted to follow up on Secretary Johanns’ comments about the impact of these proposals on U.S. farm spending because there was a real concern expressed yesterday by your trading partners that this proposal might lead to what they called “box shifting” and that it wouldn’t actually lead to reductions in U.S. farm expenditures.  I was wondering if you could comment on that and if you have any estimate of how much in real spending of the impact of this proposal would have.  Also I wanted to get some brief comments from you Ambassador Portman on the EU market access proposal which was outlined in detail yesterday and what improvements they need to make on that?

JOHANNS:  Well, to address your question, there was this concern and we heard it.  Our trading partners expressed it to us, that not relative to this proposal but in the weeks past, that what was going to happen is the United States was going to take its counter cyclical program and just move it on over to this new blue box and so there was discussion, again prior to this proposal, about box shifting, and that concern, that idea that all we were going to do is pick up this program and drop it in to a new box.  That didn’t work here.  This proposal has sized the program in the amber and blue box in such way that that’s not possible.  The current program just simply could not be shifted over.  In terms of the numbers I gave you, those numbers are very, very real.  That’s what we’re dealing with.  We went beyond the ambition that was anticipated.  I think if you would have gone to our trading partners a few weeks ago and say where would you think they’ll end up, they probably would have suggested to you that it would be a different number.  I believe we actually went beyond because, it demonstrates our level of ambition and our commitment to getting a successful WTO Round.  But again, what this means is this: this means that the rest of the world has to step up in terms of market access, and that’s the essence of what we are doing here.  But in answering your question I can answer it very directly.  I know the size of those programs and I know that current size of the counter cyclical program just won’t shift over, it’s not going to fit.  So that’s as straight forward that I can be.

PORTMAN:  You’ve probably gotten him to be to straightforward!  There may be some farmers who are interested in those comments.  Honestly, I just don’t get it that there some people are out there saying Gee, they are disappointed that this didn’t go further and at the same time there are some who are saying that we went too far. 

Not that you asked this question, but I noticed this morning in the paper OXFAM  saying that this would only affect 2 percent of our spending in agriculture.  We have contacted OXFAM to correct those figures which are clearly inaccurate.  I have got to tell you I was surprised and disappointed with their response.  Perhaps inadvertently they’re providing comfort, and they are frankly letting countries off the hook, that protect their markets, because when we come forward with a serious subsidy proposal that truly cuts into the meat, even into the bone, in terms of our farm programs and the response from those who say that they are trying to help the developing countries is, “that’s not real,”  that takes the pressure off market access and that’s what is happening.  Unless people get focused here on market access there is a real danger that this round will not achieve its development goals. 

So I would just say, if you are interested in being sure the market in United States, Japan, Korea, and the developed world and some of the developing countries, I would put Korea and Brazil and China and other countries in that category, have market access improvements, now is the time to focus on market access.  These are real cuts, as I said earlier if you look at the most trade distorting, which is the AMS payments you’re talking about a reduction from a bound rate of 19 by 60 percent, and that’s how the WTO works. You go from the bound rate. What I’m telling you is this year we will spend about 14, maybe a little more, maybe a little less.  About 14 billion, maybe a little more, ok, they are saying maybe a little more.  So, what does that mean for that 14? It means you go down based on my back-of-the–envelope calculations here, by about 46 percent.  That’s a real cut.  I can’t say it any more plainly. 

I’ve gone through several weeks of very intensive consultations with our farm community back home to get to this point and Secretary Johanns has been very brave in his working with us on this.  I’ve met with all the legislators.  I’ve met with the key leadership of the agriculture committees, who care about this, and the reason they’re giving a qualified response is they understand that we are making this proposal only if we can get real advances in market access, only if we can get the elimination of export subsidies which was already agreed to by date certain now, and only if we can get the harmonization and the subsidy levels, and in some security in terms of exposure to litigation under the WTO. 

The OXFAM numbers obviously include our food stamps program which is our largest green box program, which is not an export distortion program.  It’s how we help feed poor Americans, and it has nothing to do with trade. I think that’s unfair.  I think we need to focus on what’s really happening here, which is the U.S. is coming forward with a real proposal that is tough.  At the same time we’re saying we need to see the same level of ambition on the market access side.  To answer your question about the Europeans you said that EU had a new market access proposal.  I have not seen a new market proposal from the EU. The G-10 did make a presentation yesterday on market access, it was not the European Union but the G10.  We are looking at that proposal.  It is not as ambitious as we had hoped but I’m pleased they’ve come forward with some more specific ideas on market access.

The Europeans have talked I think publicly, I know privately they’ve talked to us about the idea of a pivot, and dealing with sensitive products.  The pivot, as we understand it, would be having a range of tariffs supplied to different bands.  Are you aware of this?  I don’t want to be speaking out of school here.  So that’s out there.  My concern in the pivot is very simple it leads to a lot of ambiguity, uncertainty, and frankly some complexity in terms of market access, and I think will not be helpful in terms of getting us to a result.  I mean obviously this all this depends on real market access and if you’re telling every country in the world, yes, you can have market access based on the principle and the framework agreement which is that there would be different bands depending on how high your tariffs are, and different percentage reductions in each band, higher band, higher reductions, that’s the principle we are working with here, but we are going to have a pivot within each band, where we can go up or down ten percent, and the United States or Brazil, or any other country, Australia, Canada, New Zealand, Kenya, doesn’t know what that product is, which will be subject to the pivot and which won’t, that obviously leads to more uncertainty.  It’s more difficult for us to say this is a real market access proposal. 

So I kind of worry that we have a lot of well meaning and very well informed trade officials who are trying to figure out ways to make this more complicated than it needs to be.  We need to see real cuts in market access, across the board, for the United States, for the European Union, for everyone.  Yes, it will be treatment of sensitive products, we understand that, but we don’t want to have belts and suspenders and maybe another layer of belts and suspenders too.  We want to be sure that it’s clear and consistent with the framework agreement, which as you know was agreed to in July of 2004.

QUESTION:  Brazil sort of said yesterday that the point hadn’t been reached yet in which one could really start talking about NAMA because agriculture still hasn’t gotten far enough.  Do you think that’s a reasonable view or are you pressing hard on NAMA, this week or are you prepared to allow the talks still to focus on agriculture? And just a second very quick one, are you having any bilaterals on other issues like the Japanese on beef and airbus?

PORTMAN: The answer is yes, yes.  With regard to NAMA, absolutely we need to make progress in all areas.  I’ve made the comments yesterday I guess I can say what I said in the meetings, which is we cannot slow down our progress on services, on development, on rules, NAMA, trade facilitation – there is not enough time.  If anything, what happened yesterday should have enabled us to accelerate the discussion on those other issues.  So, we are discussing those other issues as you know, they are subject of negotiating committees and each case and our view is that particularly after the progress we’ve made this week on agriculture, that we should redouble our efforts in those other areas as well.  Having said that, we acknowledge that agriculture is the key to unlocking not just the overall potential of Doha but these other areas.  But I think we should not be hesitant to engage in a more serious way on all these issues.  I think we must if we want to get it done. 

What was your second question… oh, bilaterals, Secretary Johanns can speak to this but we’ve had great meetings, I’ve met with the Japanese once already and are meeting with them again later today, Korea just a moment ago, Australia, coming up now.  So we’re taking advantage of this as an opportunity to talk about other issues other than Doha and particularly some of our trade issues we have, but I will say my focus is Doha.  I am intense about this as you can tell.  It’s because I think otherwise we’ll be in trouble if all of the trade ministers don’t intently focus on Doha and making progress we will not be able to make it across the finish line in a successful way.  I don’t think there is any question among the 15 countries represented yesterday that that’s true, and I encouraged all those ministers to continue to play a very personal role, they need to be personally involved, and political decisions need to be made.

JOHANNS :  Well, ditto!  Thank you all.

###