TRANSCRIPT OF TELE-NEWS CONFERENCE WITH USTR AMBASSADOR JOE GLAUBER, CHIEF AGRICULTURAL NEGOTIATOR REGARDING NOTIFICATION OF DOMESTIC AGRICULTURAL SUPPORT PAYMENTS TO THE WORLD TRADE ORGANIZATION.- OCTOBER 4, 2007
REPORTER: Jim Stewart, KLFB Radio, Lubbock, Texas.
REPORTER: Tom Rider, WNEX Radio, Yankton, South Dakota.
REPORTER: Missy Ryan, Reuters.
REPORTER: Ronder Bernard, Pro Farmer and Farm Journal.
REPORTER: Becky Fatka -
REPORTER: Dan Morgan, Washington Post.
REPORTER: (in French)
REPORTER: Sam Quesdin, Washington Tariff and Trade Letter.
REPORTER: Gary DiGiseppi, Arkansas Radio Network.
REPORTER: Takuya Higuchi, Digit Press
REPORTER: (unclear)
REPORTER: Alan Bjerga, Bloomberg News
REPORTER: Ron Hayes, Oklahoma City.
REPORTER: Dan Rogers, World Radio Network, Nebraska.
REPORTER: This is Jim Winger from KFRM.
MODERATOR: Okay. It sounds like we have a full house. Again, my name is Gretchen Hamil, and I'm the deputy to USTR press office. We are going to go over a set of terms. You will be receiving a press release that will be embargoed until 10:30 a.m. Eastern Standard Time. Also there are (unclear) on this call will be also embargoed until 10:30 Eastern. And all remarks will be on the record. So I hope everyone, does everyone agree to that?
(CHORUS OF YES)
MODERATOR: I'm going to turn it over to Joe Glauber, the special envoy on agriculture to USTR. There you go, Joe.
MR. JOE GLAUBER: Thanks very much. As many of you know, the negotiations enter another phase, set of sessions here, over the next couple of weeks, and so we're back in Geneva.
MODERATOR: Please put your phones on mute. Some of the radio stations are recording this and I want to make sure the sound quality is okay.
MR. GLAUBER: The reason for the briefing however is that today we're submitting our domestic support notifications to the WTO for the years 2002 all the way through 2005. That's four years. As many of you know, we have an obligation under the WTO to notify our domestic support. It's an obligation we take seriously. This notification will contain information up through the 2005, 2006 marketing year. That will actually put us ahead of a number of WTO members insofar as notifications are concerned.
The notifications are quite detailed and provide extensive explanations of our programs. The process is, essentially we are transmitting them to the WTO today. They should be posted on the WTO website shortly. How soon depends, but this is at least our experience in the past they'd be up within a week or so. So you'll be able to get the details then.
I'd like to at least talk about the highlights and if I can just concentrate first on our so-called amber box outlays. These are the most trade-distorting support, the ones typically tied to production or price. Our results show for the following years that in 2002 our amber box reported (AMS) was $9.6 billion, for 2003 just under $7 billion, for 2004, $11.6 billion, and 2005, $12.9 billion.
I would note that in these four years that the domestic support level remained below our Uruguay Round commitment, that is the $19.1 billion ceiling.
It also means that the proposed cuts in trade-distorting support that we made in our October 2005 proposal, that is where we proposed to cut domestic support by 60 percent down to $7.6 billion, that I'd note that in seven of the past eight years our U.S. AMS levels would have exceeded those $7.6 billion cap. This is a point we've made in the past, but I think it's important now that the data are available to make the point again that we feel that the $7.6 billion cap by a reduction in support if one considers current (unclear) historical level for the past 8 years.
Let me turn briefly to green box port. For 2005 green box outlays were also given for the years '02 through '05. In 2002 green box outlays of $58.3 billion, for 2003 $64.1 billion, 2004 $67.4 billion, and 2005 $71.8 billion. You'll note that green box outlays have increased significantly. These reflect increases in domestic nutrition programs, primarily Food Stamps and the Child Nutrition Programs over that period. For example, Nutrition Program spending rose from $38 billion in 2002 to almost $51 billion in 2005.
One thing that has remained constant over that period is the decoupled income support which has roughly been around $5.2, $5.3 billion.
Lastly, let me address the issue of overall trade-distorting domestic support. As many of you know, this is not a measure that we currently report to the WTO. The whole concept of overall trade-distorting domestic support is tied to the Doha Round. It effectively represents the sum of your amber support plus your blue box support plus your diminimus support.
And even though we don't report it to the WTO, one can readily calculate it from the data that we provided here. For the OTDS levels for 2002 to 2005, we get for '02 $16.3 billion. For '03, $10.2 billion, '04 $18.1 billion, and '05 $18.9 billion.
I would just note that a point that I've made several times in Geneva when questioned about our OTDS levels is that in five of the past eight years our OTDS levels would have exceeded the upper range that is mentioned in the Faulkner text; that is the $16.4 billion. And that's one reason we believe that even the upper end of the range provides an effective cut in domestic support.
Let me just say that we've indicated our willingness in the past to work within the chairman's text. The ranges and the flexibilities in the text for both Ag and NAMA. I think that time is short. The feeling is that others need to come forward and make similar commitments.
Ambassador Schwab just recently, yesterday if I'm not mistaken, challenged the leaders of Brazil, South Africa and India to make similar commitments at their upcoming Trilateral in Pretoria on October 17. Without new trade flows we believe there's no new development, and without new development frankly it will not alleviate poverty. I think these are principal goals of the Doha Round, and we believe the singular best way to improve trade flows is through open markets.
Well, let me take questions at this point.
MODERATOR: Before we start taking questions, please put your phones on mute. When you're not asking a question, be respectful of others. When asking your question, if you'd state your name, who you are with and then your question.
REPORTER: Mr. Glauber, this is Bill Tomson with Dow Jones. Can you give us some examples of what the amber box payments are?
MR. GLAUBER: Good question, Bill. Amber box payments divide out into several different categories, but the primary categories are for price support commodities. And these are commodities whose prices are essentially supported by high tariffs. And for example our dairy and sugar programs are considered amber box policies. I don't want to get into all the minutiae in terms of other measures.
Another large component of our AMS in any given year is marketing loan gains and loan deficiency payments. That is, these are programs that are tied to actual production and the support is measured as the difference between (unclear) price, in this case the loan rate, and the world price or in the case of marketing loans the adjusted world price, or whatever.
Those I would say those are the two major components of our AMS, at least our product-specific AMS. On the non product-specific side, we have programs that are generic to a lot of different commodities, things like water subsidies, grazing fees. We also put in that category crop insurance outlays. We also put in that category our countercyclical payments.
MODERATOR: Okay, next question.
REPORTER: Minister Glauber, this is Jamie Strawberg from Inside U.S. Trade. Why are these figures on amber box and green box just being reported now, going all the way back to 2002? Is there a reason for the delay, and is this related to the Brazil and Canada challenge on subsidies?
MR. GLAUBER: Jamie, I think frankly I'm less interested in talking about why they weren't reported until now, but the fact is we are reporting them. We're bringing forward four years. I would have to say that as far as U.S. programs are concerned, we are fairly transparent. I think you can find almost any of these numbers up on our website. Certainly the arcana of classifying these payments, other things, yes, you'll see that in the actual notifications. But again, I think my particular focus on the fact is, we're bringing four years forward right now and again putting us I think ahead of a lot of other countries at this point.
REPORTER: Joe, this is Sally Schuff with Feedstuffs. Do you expect these numbers to strengthen or weaken your negotiating position as you go into the next couple of weeks?
MR. GLAUBER: I think it's neutral in one sense, Sally. This is more transparency than anything else. I mean again, I think we are, I've argued many people, long before these numbers come out that you could see estimates of our AMS largely from people who are able to go up on our websites and look at the data. But in one sense I do think they are important in the sense that I brought out earlier in my presentation. That is, that these proposed cuts that we've made, the proposals we've made in terms of cutting amber box support, a lot of people have said, well gee, the U.S. has done nothing, that this isn't really an effective cut. And I would point out that certainly looking historically over the last several years that these are very effective cuts. Again, even our most recent year if one's looking at an AMS number of some $12 or $13 billion, again that's a reduction of $7.6 billion, down to $7.6. Similarly, on the OTDS number, the fact that five of the last eight years, again we'd have been over, and in some of those years considerably over the upper end of the Crawford/Faulkner text.
REPORTER: This is Sam Goldstein from Washington Trade Letter. Do you have separate numbers on diminimus payments over those years and what was in those?
MR. GLAUBER: They are certainly in the notifications, and I don't have them right in front of me, but they are in the notifications. I can tell you, of course the diminimus, we often talk about diminimus like it's the separate box. Essentially what you're talking about is the non product-specific amber support. Again as I mentioned, what's essentially in the non-product-specific amber support is a handful of smaller programs like water subsidies and grazing fees. But also crop insurance subsidies are notified under the non-product-specific amber, and the countercyclical program. Again, under the DDA [Doha] proposed provisions on new blue box countercyclical payments we believe could be notified under the new blue box. Under the current Uruguay Round rules we notified them as non-product-specific amber.
REPORTER: Roger Bernard of Pro Farmer, Farm Journal. Just wanted to make sure here the current direct payments to producers, you have notified the WTO, fall into our green box payments. And how does that square with the panel in the Brazil Cotton Case which basically said those are a trade-distorting subsidy?
MR. GLAUBER: Thanks, Roger. It's a good question, inaccurate however. And let me explain why. First of all, yes we did report them as green. I think that's important point I want to make sure I made that one while I was talking about the green box payments, but I want everyone clear on that. We notified direct payments as green box. And our feeling is, is this is not at odds with the Cotton Decision at all. The Cotton Decision, the panel themselves did not rule on direct payments insofar as our AMS notifications are concerned. This was in a subsidy that did termination, and particularly under the so-called Peace Clause. Moreover, the Cotton Panel when looking at the trade-distorting aspects of direct payments concluded that they were not. That is, they concluded that they did not contribute to price suppression in world markets. And I think that's something that's often misunderstood because again when the panel was considering direct payments insofar as how they affect production and affect world prices they concluded, sided with the U.S. position on this, that they have no effect on production.
REPORTER: Well, what about their discussion relative to the limitation or the prevention of planting fruits and vegetables on program crop acres in exchange for receiving the direct payments?
MR. GLAUBER: Again what I'd point out, this was in a very specific aspect of the Peace Clause determination on those program payments. We feel that they are consistent with green box criteria.
MODERATOR: Next question.
REPORTER: This is Jerry Hagstrom from Congress Daily. Joe, two questions. Could you describe what types of things are in the diminimus, and secondly how are you responding to people who say that when you agreed to go along with the numbers in the Faulkner text, that essentially the United States was negotiating with itself. Have you gotten anything for agreeing to go along with the Faulkner text?
MR. GLAUBER: Thanks, Jerry. Good questions. In terms of the non-product-specific support, what happens with that is you total up all the non-product-specific supports. I mentioned the water subsidies, grazing fees, etcetera, etcetera. That's all totaled up, and then that's compared under the current Uruguay Round is compared to 5 percent of the total value of production of U.S. agriculture for that year. And if that level is less than 5 percent, it's considered diminimus. So I'm sorry when the previous question someone had asked what's in the diminimus, the non-product-specific outlays were considered diminimus in all four of these years because they were less than 5 percent of the value of production.
In terms of the second question, I feel that we've been consistent. We've said that with the publication of the Faulkner text that we pointed out that, yes, the Faulkner text presents a variety of ranges and on a variety of different topics on market access, on domestic support, and on both agriculture and non-agriculture market access. What we said is that we are comfortable working within these ranges, but we're also saying others too need to step up and make the same commitment, that this isn't a question of being comfortable on OTDS alone. We need a commitment for people to agree that they are willing to negotiate within these ranges.
That doesn't mean that we're willing to accept something at the bottom end of a range or anywhere within the range. What we've been saying all along is that where we end up on domestic support is in large part going to be determined on where we end up on market access. We know what the tariff formula will give us in terms of the strict tariff formula in the Faulkner text. It's actually fairly aggressive. What is unknown still remains unknown, is the provisions in the text that deal with some of the deviations from the tariff formula. And this is one thing that we believe needs to be fleshed out, both in the ag market access side but also in the non-ag-market access side. And we need to get detail on those provisions so that we can accurately evaluate the market access, because again our feeling is at the end of the day whatever is done on domestic support has to be commensurate with the gains we see in market access.
REPORTER: Just to follow up on that, since you haven't said that you've gotten anything in exchange for this statement, I trust that you have not gotten any concessions from anybody else yet?
MR. GLAUBER: Jerry, I don't think that's a reasonable assertion. I said I thought the Faulkner text in terms of the market access provisions are quite significant. Moreover, we do have 21-some-odd countries in APEC agreeing to work within this text. And again, agreeing to work within the ag portion of the text and the non-ag portion even though, recognizing that certain ends of those ranges cause heartburn for those countries as well. But the commitment is to negotiate within those ranges.
MODERATOR: Next question.
REPORTER: Patricia Mallou with the Saturday San Paulo. I would like to know what kind of action you expect from Brazil, and also you mentioned the lower bottom of the Faulkner proposal would be ambitious enough. That's not what Brazilian negotiators have been indicating. How do you respond to that?
MR. GLAUBER: Two things. One is that I don't know how Brazil will react. What I'd hope they do is react by committing to work within these ranges. We certainly are looking forward to that. But in terms of support, again look, every country has its own idea of where they would like to see others in terms of market access, domestic support, export competition, non-agricultural market access. This is a negotiation; we're going to end up at some place if we're going to get a successful agreement. All I'm saying is, wherever we end up for the U.S. to get a successful agreement we have to have market access.
MODERATOR: Next question.
REPORTER: Yes, this is Peter Shinn with Wade Agribusiness and Brownfield. Can you hear me? Joe, I was just wondering if you could give me a basic timeline for the direction of the talks from this point forward.
MR. GLAUBER: That's a great question. I wish there was a more clear-cut answer. We do know that back in July a text was put forward, a very incomplete text in many respects, but a text was put forward both in agriculture and in the non agricultural area. We came back at the first part of September and spent about three weeks trying to, having a very complete discussion of all the so-called three pillars in agriculture. That is, domestic support, export competition and market access.
What is expected to happen over the next few weeks is that the chair of the negotiating committee is hoping to flesh out many aspects of the agreement that were still sketchy in the July draft. For us that's critical, and not just for us. I would say for developing countries and developed countries the more clarity and more certainty needs to come forward on those aspects of the text, particularly on market access, particularly on developing market access.
I think we'll see that over the next few weeks. The thought is at that point there may be a revised text, but frankly the timeline on all of that I would anticipate something over the next few weeks as we're looking forward of getting more clarity in this text to a point where at least countries are able to evaluate that. But again, the important thing here is to have the sort of confidence from all countries in negotiating this and get forward and agree to negotiate within this text, the ranges and the flexibilities within this text.
MODERATOR: Next question.
REPORTER: Hi. This is Gary Yerkey with BNA. I got in very late on this call and I apologize. Maybe you've gone over this. Where I jumped in was the acceptance of negotiating within the ranges of the Faulkner. I thought I heard you say at some point you'd not accept anything at the bottom end of that range. I'm thinking obviously of OTDS. Does that mean you're not going as low as $13 billion?
MR. GLAUBER: What I said, let me just reiterate what I did say, and this is almost verbatim what I said in Geneva a couple weeks ago is that if you go through this text there are a lot of ranges, and there's ranges on domestic support, on market access, export competition, ranges in non-ag. Certain ends of these range put people way out of their comfort zone. There's no question about it. They put us out of our comfort zone in certain topics, others in other topics. What we're saying is that we're committed to working within this text and negotiate this text if there's - and we need that commitment from others as well.
My belief is at the end of the day if we're to get an agreement we'll fall somewhere within that text, but the trade-off are going to be part of the negotiations. And ultimately for us the goal that any trade-off in domestic support will have to reflect substantial and significant increases in market access.
MODERATOR: Okay, if there aren't anymore questions we will wrap it up there.
REPORTER: Could you just run through what your direct payments were for the period you're notifying?
MR. GLAUBER: Let me see if I've got them right in front of me. They are essentially - here they are. These direct payments are essentially for the four years in question; these are the payments that were authorized under the 2002 Farm Bill. For 2002 it's roughly $5.3 billion, 2003 $5.3, 2004 $ 5.3, 2005 $5.2. So roughly the same amount over those years. There's slight differences. If you know anything about farm programs, there are slight differences because some land comes out at CRP, there's a whole bunch of minutiae there. But essentially these reflect the direct payments that are made every year and again have been averaging about $5.2, $5.3.
REPORTER: And those were reported as green.
MR. GLAUBER: Yes.
MODERATOR: Okay. If you do not have the press release, please contact the USTR Office or the USDA Office. That concludes our teleconference call for today. Again, sorry for all the disruptions that you heard on the phone and thank you, bye bye.
