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Europaudvalget 2003-04
EUU Alm.del Bilag 424
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Medlemmerne af Folketingets Europaudvalg

og deres stedfortrædere

Bilag

Journalnummer

400.C.2-0

Kontor

EUK

14. januar 2004

Til underretning for Folketingets Europaudvalg vedlægges et brev fra USA’s

udenrigshandelsminister, USTR Robert Zoellick, til samtlige WTO-medlemmer.

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January 11, 2004

Dear Minister:

New Year’s greetings! I hope this letter finds you well.

I am writing to share with you some common sense reflections on where we stand on

the Doha Agenda and ideas on how we might advance it together. My thoughts are

not intended to launch breakthrough proposals. And I recognize that these views will

be affected by my own perspectives, but I hope they nevertheless will offer a sense of

how we might move ahead.

Over the past few months I have been discussing with many of you and the Director

General the outlook for the Doha negotiations. I read closely the exchanges of our

Ambassadors at the December 15 meeting of the General Council in Geneva, including

Chairman Perez del Castillo’s thoughtful and useful report.

Here is my frank assessment: there is a general interest in advancing the Doha

Development Agenda, and even a sense that our struggles at Cancun may have laid

some useful foundations. Yet there is uncertainty about how to reengage productively

so that we can make the necessary decisions.

I do not want 2004 to be a lost year for the WTO negotiations.

A Suggested Focus: The Market Access Agenda

At the most fundamental level, I think we are most likely to succeed if we focus our

work on the core market access topics: agriculture; goods; and services. These areas

offer the most significant gains both for the world economy and our individual

economies. Improved market access is particularly critical for meeting the needs of the

developing countries. These topics also involve enough diversity to permit economic

synergies and balanced results. Most of us are generally familiar with the issues --

although not yet the solutions!

In addressing these topics, we will of course need to incorporate special and differential

treatment, recognizing that developing countries face varying circumstances, additional

challenges from global competition, and particularly sensitive adjustment problems.

Agriculture: The Essential Topic and Catalyst

From the start of our preparations for Doha, it has been clear that an ambitious result

in agriculture is essential for this negotiation to proceed and succeed. The Uruguay

Round only began the process of disciplining and lowering barriers to trade in

agriculture. As our Doha mandate stressed, to foster development and growth in

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agriculture we need to address effectively the three interconnected topics: export the

competition; domestic support; and market access. As some colleagues will remind

rest of us, they also want to consider non-trade concerns, although others will rejoin

that by taking this into account, we should not further distort markets and create new

protectionist barriers.

Recognizing the critical role of agriculture in these negotiations, the United States

proposed sharp cuts in subsidies, tariffs, and other barriers. Later, the United States

tried to work with the European Commission to capitalize on changes in the EU

Common Agricultural Policy (CAP) to offer a framework for negotiating significant

openings for global agricultural trade. Some Members of the WTO found that

framework, including subsequent variations, to be insufficient or too uncertain; others

believed it demanded too much.

So here is where I think we stand.

I believe that we will not be able to solve the puzzle of the DDA unless we have an

agreement to eliminate export subsidies by a date certain. Export subsidies distort

trade more than any other measure. The final elimination of these subsidies would

underscore our common commitment, especially for developing economies. So we

need to set an end date. I prefer an early date, but recognize that may not be realistic

for some, given the sensitivity of the topic. I also am committed to eliminating the

subsidy component of export credit programs; we also need meaningful disciplines on

the special privileges of State Trading Enterprises. As a practical matter, to move the

negotiations forward, I believe we should seek an understanding that there will be

elimination of export subsidies by a date certain, with the exact date not set until there

is a better sense of the overall package, including non-agricultural components.

As for reductions in domestic support, I remain committed to an ambitious result,

which I believe can be achieved. As Chairman Perez del Castillo suggested, I urge that

we focus on the most trade-distorting support. The Uruguay Round established caps

on amber box support. We should now lower those caps substantially. For the United

States, the degree of ambition is linked to two essential elements: a significant

narrowing of the differential between those with higher caps (along with a currently

uncapped blue box), and a substantial increase in real market access opportunities both

in developed and major developing country markets. In addition to substantial cuts in

amber box support, we need disciplining caps on blue box support, where there are

none today.

Chairman Perez del Castillo suggested that the DDA also points to a second stage for

agricultural liberalization, which I would be pleased to support if it refers to all

distortions in agricultural trade. Indeed, the United States stands by its 2002 proposal

to set a goal of total elimination of trade-distorting subsidies and barriers to market

access.

In the area of agricultural market access, all of us have been struggling to find a

compromise between those that favor an ambitious (i.e., Swiss) formula for tariff cuts

and those that want to continue the modest Uruguay Round methodology. The

various frameworks produced in August and September of last year suggested

compromise amalgams. We should be open to all ideas on how to develop a blend that

applies fairly to all and provides meaningful market access commitments that provide

real export opportunities. These should be guided by three principles. One, we need

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substantial openings in markets of developed and developing countries, especially those

that are competitive in sectors of agriculture and with stronger economies. Two, if a

blended formula still permits extremely high tariffs, we need the principle of a cap on

high tariffs and significant growing access to create a basis for true access to markets

over time. Three, we need a common methodology, or else the DDA and even the

WTO will be driven by divergent disciplines that will undermine our ability to press

forward together, even if at different speeds. Of course, a common methodology can

incorporate different degrees of reduction of barriers and longer staging for developing

countries that need more time to adjust. As a practical matter, I believe our ability to

share a methodology depends on different treatment for a very limited number of

special products for certain developing countries that are concerned about harming

rural development and subsistence farmers.

Finally, although cotton is never specifically mentioned in the Doha mandate, I agree

with the Chair’s suggestion that we examine possibilities in this sector that are both

trade- and development-related. As we affirmed in Cancun, in the Doha negotiations it

is the objective of the United States to achieve substantial cuts in trade-distorting

domestic support for agricultural products, including cotton; the elimination of export

subsidies for cotton and all other agricultural products; and substantial improvements

in market access for cotton, cotton products, and other agricultural goods. This can be

combined with comprehensive economic reforms in individual countries and new

technologies to offer additional opportunities for developing economies.

The United States has also proposed sectoral negotiations in agriculture -- to build on

the general disciplines -- which developing countries may wish to consider pursuing for

other products of interest, including coverage of value-added processing.

Market Access for Manufactured Goods: Ambition and Flexibility

My assessment is that we will need to achieve a more concrete understanding in

agriculture before the negotiations on market access for manufactured goods can move

ahead. When they do, I think we will need to recognize that the current technical

debate over the complexities of the formula cut is obscuring a basic point: we need an

ambitious formula for cutting tariffs on manufactured goods that includes sufficient

flexibility so that the methodology will work for all.

If our discussions on agricultural market access succeed, we may wish to explore

whether the “blended” concept would work for industrial goods, too. For less

competitive developing economies, a blended methodology could give flexibility for

sensitive items while enabling the WTO to proceed with an ambitious formula that

significantly narrows the larger gaps in tariffs.

If we can move ahead on formula cuts, it is constructive that there already seems to be

broad agreement that non-tariff barriers also need to be tackled in the negotiations.

I believe sectoral negotiations remain integral to our results as well. As we have seen

with the Information Technology Agreement, an open sector with global competition

and sourcing can have dynamic growth effects for developed and developing

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economies in regions need to the world. Nevertheless, the dispute over “mandatory”

sectorals suggests we around find a balance between adequately sharing responsibilities

and providing appropriate flexibility for developing countries, especially the poorer and

less-developed. Perhaps we can reach a middle ground by defining an approach to

“critical mass” participation for sectorals.

The United States continues to favor the total elimination of tariffs for goods, if not as

we proposed, perhaps as a second-stage goal along with the second stage for

agriculture. I recognize others are cautious. But I urge you -- especially my colleagues

in developing economies -- to consider that the implementation of this agreement

could take us 15 to 20 years ahead, by which time your countries could benefit greatly

from locking in tariff-free trade in manufactured goods.

Services: Potentially Large Gains

We have not discussed the services sector much. Yet the services sector is increasingly

essential for development and growth in all our economies. The DDA will run

aground if we do not focus attention on this important market access component of

the negotiations, so that we can build on the current 40 offers. Perhaps we could press

for a near-term goal of meaningful offers from a majority of WTO Members.

To help achieve this goal, I suggest that various countries, the WTO staff, and the

development banks might help developing countries in two ways. First, some

countries need technical assistance to evaluate potential benefits, and to prepare offers

and requests. Second, we can identify sectors that seem especially fruitful for synergies

between developed and developing economies. Some services sectors provide critical

infrastructure for growth and development strategies, including the international

competitiveness of countries’ manufacturing and agricultural sectors.

Special and Differential Treatment

Our market access agenda will need to incorporate particular designs for special and

differential treatment. As we work through these challenges, we will need a reasoned

discussion about the level of participation of various countries given the wide

differences in current capacities to participate in the global economy. I recognize the

sensitivity of this topic. Yet as we design flexibilities for countries or even types of

countries or regions with special problems, we will be stymied if every provision

automatically applies to some 100 or more countries -- including some that are highly

competitive in a sector. Moreover, although our sensitive domestic constituencies

make it hard for us to recall, the economic gains from trade come from opening our

markets as well as exporting to others!

The “Singapore” Issues: Concentrate on the Most Useful and Least

Divisive

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A focus on the market access agenda raises the question of what to do with the

so-called “Singapore” issues.

From before Doha and through Cancun, a consensus on these issues has remained

elusive. A number of developing countries believe the Singapore topics strain their

ability to prepare and take part in the negotiations; others are anxious about where

rules in new areas might lead. At Cancun, in the face of this continued impasse, some

of the proponents of these topics graciously suggested they might be more flexible.

I suggest we might be able to progress by agreeing to negotiations on trade facilitation.

After all, this work would generally improve old customs rules that need updating. As

the 21 developing and developed economies of APEC have demonstrated, trade

facilitation measures are basically an extension of market access procedures that lower

transaction costs and increase timeliness of transit. These improvements will be

important for all economies in a world of global sourcing, especially for smaller

enterprises that all of us want to help launch in the sea of commerce. If we focus on

this topic, we might also be able to target technical assistance more effectively to help

developing countries improve their customs, ports and airports, information, and

clearance systems.

Some feel it may also be possible to reach a consensus supporting further work on

transparency in government procurement. Clear and transparent procedures -- which

still may incorporate local preferences -- help counter corruption, lower the costs of

government, and build trust in the rule of law. If others believe this transparency topic

merits ongoing engagement, we could explore possible subsequent steps: for example,

a negotiation for some or all Members, or simply encouraging more Members to join

the existing WTO Government Procurement Agreement.

For the topics of investment and competition, we could either drop them -- as I would

prefer, so as to concentrate our work -- or develop a plan of study.

How Might We Proceed?

I recognize that this letter covers only some of the topics we will need to address in a

successful DDA negotiation. For example, we are committed to addressing the

Dispute Settlement Understanding, trade rules, environmental topics, and the other

elements in the Doha mandate. I would of course be pleased to discuss other topics of

interest to you. My hope is that a focus on core work would enable us to determine a

way to move forward.

So how might we proceed?

First, we need an active Chair of the General Council to work with the Director

General to press discussions forward in Geneva. I understand there are traditions of

rotating the Chair between a developing and developed economy, with developed

slated next. I suggest, nevertheless, that given the importance of combining trade

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There are many skilled, experienced candidates -- for example, the WTO economy.

liberalization with development that we select a Chair from a developing Ambassadors

from Brazil, Chile, Pakistan, Singapore, and South Africa.

Second, we should urge the new Chair of the General Council to work with the

Director General and the Chairs of Negotiating Groups to build upon, not repeat, the

mid-December exchange. With our help, they can prod our teams in Geneva to focus

on solving -- not just discussing -- problems. We need to explore -- on- and off-line --

compromises that maintain ambition while securing necessary flexibility and a balanced

result for all. I would welcome your thoughts about whether the common sense

agenda I am outlining -- or some variation -- could help concentrate our energies.

Third, we need a stronger engagement by capitals, particularly at senior levels, to test

ideas and possible compromises. Indeed, this exploration for constructive

compromises may necessitate trying out ideas in capitals and in informal consultations.

If these negotiations and explorations of solutions are making progress and narrowing

differences, we can then look to the Chair of the General Council and the Director

General to advise whether Ministers need to meet, in some fashion, to address part or

all of the agenda.

To target productive results for 2004, I suggest we take an additional step. Since Hong

Kong has offered to host the next WTO Ministerial, I propose we agree now to meet

before the end of this year in Hong Kong. Let’s keep our focus during 2004. We

should try to agree on the frameworks for negotiations by mid-year. I understand

some of you believe we need to develop precise numbers -- or at least have a good

sense of them -- along with the frameworks. I suspect sequenced steps are likely to be

most successful, but am willing to work with other approaches if they can help reach

good results.

In closing, I want to let you know that I am seeking to explore every avenue to make

2004 not a lost year, but a year of accomplishment for the Doha Agenda and the

WTO. I have tried to outline ideas that I think might help us resolve critical issues, but

no doubt I have overlooked or misperceived particular interests. Therefore, I plan to

visit a number of capitals around the world early this year, as well as talk with others by

phone, to hear other ideas and assessments of how we can advance together. I have

already benefited from conversations with some of you late in 2003, but perhaps we

can refine our thinking together further so that the Doha Agenda regains momentum.

Thank you for your patience. I appreciate this is a long letter to impose upon you. Yet

I am doing so because the stakes are high for our citizens, our economies, and the

world trading system. So I wanted to be open with all of you on my perspective on

how to make 2004 a year that exceeds expectations and delivers for the Doha

Development Agenda.

With best wishes,

Robert B. Zoellick

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