A completed framework for a resumption of global trade talks could be achieved by July, says Robert Zoellick, U.S. Trade Representative (USTR).

Testifying April 28 before the House of Representatives' Agriculture Committee, Zoellick said the re-start of negotiations depends on continued progress on the issue of trade facilitation and on agreement of a draft document related to agricultural trade.

Zoellick said other issues that some developing countries had been holding as conditional for furthering trade talks -- the so-called "Singapore Issues" -- should not be used to continue to delay negotiations.

The focus of the negotiation framework should "solely" be trade facilitation, Zoellick said.

The other Singapore Issues relate to investment, competition and transparency in government procurement.

Progress on agriculture trade reform will require all members of the World Trade Organization (WTO) to agree to eliminate export subsidies, including export credits, end state-trading monopolies and "discipline food aid in a way that still permits countries to meet vital humanitarian needs," Zoellick said.

Zoellick said during visits to several countries earlier in 2004 he had emphasized the continued U.S. commitment to its 2002 proposal that all WTO members eliminate export farm subsidies by a certain date. The United States also proposes that all WTO members decrease and harmonize trade-distorting domestic supports and that both developed and developing countries increase market access for agricultural products.

Zoellick said these messages were recently reiterated by Chief U.S. Agricultural Negotiator Allen Johnson in discussions with 70 WTO members in Geneva. Those discussions were aimed at fostering a "more focused and cooperative environment" on the "core issues."

The current round of WTO negotiations, which began in 2001 in Doha, Qatar, stalled in September 2003.

On another topic, Zoellick said during questioning that the United States would challenge a ruling by the World Trade Organization (WTO) against U.S. cotton subsidies. A final ruling on a dispute over cotton subsidies brought by Brazil is expected to come in mid-June, Zoellick said.

Additionally, the United States is still considering whether to file in the World Trade Organization (WTO) another objection to new regulations in the European Union (EU) on the labeling of agriculture products derived from biotechnology, Zoellick said.

On the issue of counties' exclusive use of geographic locations for marketing agricultural products, Zoellick said the United States doesn't want such "geographic indicators" to "become a new device for protectionism."

Also testifying before the committee was Agriculture Secretary Ann Veneman.

The following is the text of Zoellick's prepared testimony:

As Prepared for Delivery
Statement of
Robert B. Zoellick

U.S. Trade Representative
before the Committee on Agriculture
of the United States House of Representatives
[Washington, D.C.]
April 28, 2004

Pressing Forward in the WTO

At key points, the United States has offered crucial leadership to launch, prod, advance, and reenergize the Doha Development Agenda, the global trade negotiations at the WTO. At the same time, we have emphasized that in a negotiation with 148 economies seeking consensus, others must also work constructively with us.

After the Doha launch, the United States proposed the global elimination of tariffs on consumer and industrial goods by 2015, substantial cuts in farm tariffs and trade-distorting subsidies, and broad opening of services markets. We are the only major country to put forward ambitious proposals in all three core areas. These proposals reflect extensive consultations with Congress and the private sector.

At the Cancun WTO meeting in September, however, some wanted to pocket our offers on agriculture, goods, and services without opening their own markets, a position we will not accept. Since Cancun, I believe many countries have concluded the breakdown was a missed opportunity that serves none of our interests. That recognition is a useful starting point for getting the negotiations on track.

Only a few weeks after Cancun, more than twenty diverse APEC [Asia-Pacific Economic Cooperation] economies -- encouraged by the United States and joined by some of our free trade partners -- called for a resumption of WTO negotiations, using the draft Cancun text as a point of departure. In December, the WTO General Council completed its work for the year with an important report by its Chairman on the key issues that need to be addressed if the Doha Development Agenda is to move forward.

By late December, we sensed many WTO members were interested in getting back to the table, probably working from the draft text developed at Cancun, but U.S. leadership was essential. So in January, I wrote a letter to all my WTO colleagues putting forward a number of "common sense" suggestions to move the Doha negotiations forward in 2004. I emphasized that the United States did not want 2004 to be a lost year. The letter suggested that progress this year will depend on the willingness of Members to focus on the core agenda of market access for
agriculture, manufactured goods, and services.

In agriculture, we believe that WTO Members need to agree to eliminate agricultural export subsidies by a date certain, substantially decrease and harmonize levels of trade-distorting domestic support, and seek a substantial increase in real market access opportunities both in developed and major developing economies. We emphasized that the United States continues to stand by its 2002 proposal.

Finally, we are asking that countries not permit the so-called "Singapore Issues" to be a distraction from our critical work on market access. We need to clear the decks. Based on extensive consultations in Africa and Asia, I believe we can move forward together on trade facilitation, which cuts needless delays and bureaucracy at borders and ports and is of vital importance to U.S. agriculture. I have urged my colleagues to drop the other topics.

The initial response to this initiative has been encouraging both from overseas and among domestic constituencies. To follow up the January letter, in February I traveled some 32,000 miles -- around and up and down the world -- to meet with representatives of over 40 countries to hear their ideas and encourage their commitment.

In March, USTR's Chief Agricultural Negotiator, Ambassador Allen Johnson, traveled to Geneva for discussions with more than 70 countries intended to move the Doha Round forward. While no specific major breakthroughs were achieved, Ambassador Johnson was able to foster a more focused and cooperative environment with key WTO members on the core issues.

As a result, I believe we are regaining some momentum, although the road ahead is marked by risks. Our ability to make notable progress by this summer depends principally, in my view, on two steps: one, reconciling the conundrum of the "Singapore Issues" by agreeing to focus solely on trade facilitation; and two, by concentrating on the draft agriculture text to see if we can agree on specific frameworks for reform. To secure movement on agriculture, all countries will need to agree to eliminate export subsidies, including the subsidy element of export credits, to end state trading enterprise monopolies, and discipline food aid in a way that still permits countries to meet vital humanitarian needs.

The framework will also need to show a strong basis for meaningful reductions in trade-distorting support and real improvement in market access. Such moves will create the opportunity to address our long-standing objectives of eliminating export subsidies, making substantial reductions in trade-distorting domestic support that results in greater harmonization, and gaining substantial new access to markets.

With this new momentum, and decisions by the European Union [EU], Japan, Canada Australia and key developing nations such as Brazil, China, India, and Korea to make strong new commitments to the WTO, a completed framework for progress is possible by July. Of course, methods for addressing unique agricultural sensitivities like those in the United States as well as the needs of hundreds of millions of subsistence farmers around the world must also be found as the process moves forward.

Pushing the WTO forward with Powerful Alternatives

The American agriculture community believes that the Doha Round of WTO negotiations should be the centerpiece of our agenda. They are right.

But the surest way to let Doha falter is by negotiating in a vacuum. By moving forward regionally and bilaterally, as well as globally through the WTO, we remind the world that the United States is committed to achieving trade liberalization. If some countries stand in the way of one opportunity, we will find another. Only steady trade-opening progress can infuse momentum into Doha.

Remember that in the WTO, it takes only one member to derail the process. We do not want to be held hostage to any one of 147 economies. Farmers and ranchers know this instinctively. No businessperson wants to be selling to only one buyer. If a potential buyer makes unreasonable demands, a farmer and rancher would move on to someone more willing to work together.

Equally important, our progress outside the WTO provides important opportunities for American agriculture. Since the Doha Round was launched, we have initiated or completed negotiation on FTAs [free trade agreements] representing the fifth largest market for U.S. agricultural exports.

Consider the Central American Free Trade Agreement [CAFTA] alone: Currently, 99 percent of food and agricultural products exported by CAFTA countries enter the U.S. duty-free -- without reciprocal access. Only after Congress approves the agreement and it is implemented will U.S. farmers and ranchers have a level playing field. A broad coalition of agricultural trade groups reports that CAFTA and the DR [Dominican Republic] will grow our exports of feed grains, wheat, soybeans, poultry, pork, cotton, beef, and dairy products, among others, with projected gains of almost $1 billion.

There are numerous specific benefits for U.S. farmers and ranchers in each of our most recent FTAs:

-- In CAFTA, more than half of current U.S. exports will become duty-free immediately, including high-quality beef, cotton, wheat, soybeans, key fruits and vegetables, processed food, and wine. Central America will also work to resolve sanitary and phytosanitary barriers [SPS] to agricultural trade.

-- In the Morocco FTA, our farmers and ranchers are gaining new tools to compete with Canada and the EU, among others. Our beef and poultry producers will get new access to a market that was formerly closed. Tariff rate quotas for durum and common wheat could lead to five-fold increases in U.S. exports over recent levels. Almond exports could double under a new TRQ [tariff rate quota]. Moroccan tariffs on sorghum, corn, soybeans, and corn and soybean products will be cut significantly or eliminated immediately. Morocco also will lift its duties immediately on cranberries, pistachios, pecans, whey products, processed poultry products, and pizza cheese. Tariffs on some other products will be phased out in five years, including on walnuts, grapes, pears, and cherries.

-- In our Australian FTA, every American agricultural export will receive immediate duty-free access and there are new mechanisms to smooth cooperation between U.S. and Australian officials on sanitary and phytosanitary barriers.

A static analysis only captures part of the benefit. Our trading partners' economies grow faster after they have joined an FTA with the U.S. That means more export opportunities across economic sectors as their incomes rise.

Even while negotiating these strong benefits for agriculture, we keep import sensitivities foremost in mind. In the Australia agreement, for example, some U.S. tariffs remain in place or are phased out over 18 years while safeguards remain in place for sensitive horticultural products and beef.

One-on-one negotiations also provide opportunities to implement innovative solutions to old trade problems or adopt unique new disciplines that can foster trade. For example, the Chile FTA recognizes U.S. beef grading and inspection, while language in the Australia and Morocco FTAs advances our goal of global export subsidy elimination and our goals on state trading enterprises at the WTO. The Australia FTA and CAFTA provided leverage to reform sanitary and phytosanitary barriers. Once good ideas are put into practice and their success can be observed from around the world, the best ideas can be exported to other FTAs and the WTO negotiations.

As we push the WTO forward regionally and bilaterally, we are targeting markets that offer the biggest opportunities to our agricultural exporters. We chose Thailand and Colombia to be among our newest negotiating partners knowing of their commercial significance to our agricultural producers.

We would like to pursue FTAs with the largest markets around the world, including the European Union and Japan among others. But right now, those countries are unwilling to move forward. As a result, we are pushing for the liberalization of their markets through the WTO. At the same time, as another facet of competitive liberalization, we hope our progress on other FTAs will encourage these important markets to reconsider their stance.

Advancing Negotiations in the Free Trade Area of the Americas [FTAA]

Since taking office, the Administration has been working to transform years of general talks about a Free Trade Area of the Americas (FTAA) into a real market-opening initiative, with a focus on first removing the barriers that most affect trade. When complete, the FTAA would be the largest free trade zone in the world, covering 800 million people with a combined GDP [gross domestic product] of over $13 trillion. It would expand U.S. access to markets where tariff barriers are high and non-tariff barriers are abundant. Since many of these countries already have enhanced access to the U.S. market through our preference programs, U.S. farmers stand to gain the most since the U.S. has few trade barriers left to remove.

As we proceed in the FTAA, we will continue to take into account not only the export opportunities this Agreement offers our farmers, but also the particular sensitivities they have to certain agricultural imports from our FTAA trading partners. We will also continue to insist that the WTO, and not the FTAA, is the place to negotiate on domestic supports, export credits and guarantees, and food aid.

Spanning the Globe With Bilateral Free Trade Agreements

In 2003, the United States signed free trade agreements with Chile and Singapore, and those agreements won strong bipartisan majorities in Congress. These comprehensive, state-of-the-art FTAs set modern rules for 21st Century commerce and broke new ground in areas such as intellectual property protection, transparency and anti-corruption measures, and enforcement of environmental and labor laws to help ensure a level playing field for American workers. They also built on the experience of prior free trade agreements and will serve as useful models to advance other U.S. bilateral free trade initiatives in 2004.

In Latin America, for example, the long-sought FTA with Chile took effect on the tenth anniversary of NAFTA, and only two weeks after the Administration concluded a U.S.-Central American Free Trade Agreement with El Salvador, Guatemala, Honduras, and Nicaragua. In January, we finalized CAFTA by resolving a few remaining issues with Costa Rica, and on February 20, the President notified Congress of his intent to enter into that agreement. Last month, we completed negotiations for the Dominican Republic to join CAFTA. The expanded agreement would create the second-largest U.S. agriculture export market in Latin America, behind only Mexico.

Just this week, the U.S. launched FTA negotiations with Panama. Later this spring the United States intends to launch similar negotiations with Colombia and possibly Peru and Ecuador, while continuing preparatory work with Bolivia. Added together, the United States is on track to gain the benefits of free trade with more than two-thirds of the Western Hemisphere (not counting the United States) through state-of-the-art, comprehensive sub-regional and bilateral FTAs.

In February, we concluded a landmark free trade agreement between the United States and Australia. All U.S. farm exports -- more than $400 million per year -- will go duty-free to Australia. At the same time we have been able to ensure that our import sensitive areas of agriculture such as beef, dairy, and sugar are treated carefully.

In Southeast Asia and the Middle East, the President has announced initiatives to offer countries a step-by-step pathway to deeper trade and economic relationships with the United States. The Enterprise for ASEAN [Association of Southeast Asian Nations] Initiative (EAI) and the blueprint for a Middle East Free Trade Area (MEFTA) both start by helping non-member countries to join the WTO, strengthening the global rules-based system. For some countries further along the path toward an open economy, the United States will negotiate Trade and Investment Framework Agreements (TIFAs) and Bilateral Investment Treaties (BITs). These customized arrangements can be employed to resolve trade and investment issues, to improve performance in areas such as intellectual property rights and customs enforcement, and to lay the groundwork for a possible FTA.

President Bush announced the Enterprise for ASEAN Initiative in October 2002. Significant progress was made in 2003, and the stage has been set for further achievements in 2004. With the newly enacted Singapore FTA to serve as a guidepost for free trade with ASEAN nations, last month we began to prepare for upcoming free trade negotiations with Thailand. At the Cancun WTO Ministerial last September, Cambodia was offered accession to the World Trade Organization, so it could take another step toward active participation in the global rules-based economy. Spurred by the progress of its neighbors, Vietnam is also working toward WTO membership, building on the foundation of a basic bilateral trade agreement with the United States that was approved by Congress in 2001. The United States signed a bilateral trade agreement with Laos in 2003. The United States is using TIFAs with the Philippines, Indonesia, and Brunei to solve practical trade problems, build closer bilateral trade ties, and work toward possible FTAs. Malaysia also now wants to proceed towards a TIFA with the United States.

The Middle East Free Trade Area initiative, announced by the President in May 2003, offers a similar pathway for the Maghreb, the Gulf states, and the Levant. In addition to helping reforming countries become WTO Members, the initiative will build on the FTAs with Jordan, Israel, and now Morocco; provide assistance to build trade capacity and expand trade so countries can benefit from integration into the global trading system; and will launch, in consultation with Congress, new bilateral free trade agreements with governments committed to high standards and
comprehensive trade liberalization.

The U.S.-Jordan FTA entered into force in December 2001 after close bipartisan cooperation between the Administration and Congress.

In 2003, the Administration launched free trade negotiations with Morocco, which we are pleased we completed last month. Our terms with Morocco provide immediate cuts in Moroccan trade barriers to wheat, corn, and soybeans, and new access for U.S. beef and poultry.

In January 2004, the United States began free trade negotiations with Bahrain. Agricultural products that could benefit from the FTA include meats, grains, fruits and vegetables, and dairy products.

Morocco and Bahrain have been leaders in reforming their economies and political systems. Our market opening efforts with these two Arab states are part of the Administration's broader goal of fostering prosperity, encouraging openness, and deepening economic and political reforms throughout the region.

In 2004, the United States will continue its efforts to bring Saudi Arabia into the WTO and will expand its network of TIFAs and BITs throughout the region. The United States now has nine TIFAs in the region, most recently signing agreements with Saudi Arabia, Kuwait, Yemen, Qatar, and the United Arab Emirates. As additional countries in the Middle East pursue free trade initiatives with the United States, the Administration will work to integrate these arrangements with the goal of creating a region-wide free trade area by 2013.

In Africa, the United States launched FTA negotiations with the five countries of the Southern African Customs Union (SACU): Botswana, Lesotho, Namibia, South Africa, and Swaziland. The U.S.-SACU FTA will be a first-of-its-kind agreement with sub-Saharan Africa, building U.S. ties with the region even as it strengthens regional integration among the SACU nations. Farmers would gain expanded opportunities in wheat, rice, and poultry.

The bilateral FTAs we have concluded or are pursuing constitute significant markets for the United States. U.S. goods exports to these countries were $66.6 billion in 2003. This would have made them the third largest U.S. export market behind only Canada and Mexico, and ahead of Japan. Our $4.2 billion in agriculture exports in 2003 made them our fifth largest market. The economies of these countries totaled $2.5 trillion in 2002 at purchasing power parity exchange rates, which would rank them as the world's sixth largest economy. And most are developing countries that offer significant growth opportunities in years to come. We are laying free trade foundations for win-win economic ties between America and these partners.

Enforcement: A Continuing Task

The vigilant enforcement of existing trade agreements is no less important than producing new ones. Indeed, enforcement is inherently connected to the process of negotiating new agreements. Without determined enforcement, new agreements will serve as a source of disappointment and frustration instead of an opportunity to create new jobs for workers and new opportunities for business. We need to assure the American public, and forewarn our trading partners, that we are
determined to use all available resources and remedies to combat unfair trade practices and secure a level playing field for American workers, farmers and businesses.

Over the past three years, we have been aggressive in ensuring that the interests of U.S. farmers and ranchers are vigorously protected.

Some of our efforts on behalf of farmers and ranchers include:

-- Reopening the Japanese apple market. We won a case against Japan in which the WTO overruled unscientific claims that U.S. apples could carry fire blight and damage Japanese agriculture. As a result, Japan has agreed to reissue import rules for U.S. apples by June 30th.

-- Winning a WTO case against Canada's discriminatory grain handling practices. Canada must now reform extra hurdles placed in the way of U.S. wheat exports including rules against mixing U.S. and Canadian grain as well as preferential pricing rules for transportation. We intend to appeal the remaining issues.

-- Filing a WTO case against Mexico's illegal high fructose corn syrup taxes. We attempted to settle this dispute through negotiations, in close consultation with our industry. Unfortunately, the negotiations did not resolve the matter, so now we will enforce our rights under the WTO.

-- Reopening the Indian market for American almonds. With a dubious scientific basis, in January, India instituted fumigation rules that blocked our almond exports. Before the regulations could stifle $70 million of U.S. exports, we convinced India to hold off until June to allow time to work out a long-term solution that will not undermine U.S. farmers' 2nd most important export to India.

-- Reopening the Mexican market to American beef. Mexico has lifted restrictions on 91 percent of U.S. beef products, a $935 million market in 2003. In another Mexican beef issue, a NAFTA [North American Free Trade Agreement] dispute panel recently handed down a ruling that should pave the way for the reconsideration of some anti-dumping duties on U.S. beef exports to Mexico.

-- Pressing our geographical indicators case against the EU. In February, the WTO created the dispute panel to address the fact that the EU's regulations do not provide national treatment for agricultural products and foodstuffs GIs [geographic indicators] and fail to protect pre-existing trademarks. We expect a decision this fall.

-- Convincing China to certify biotech foods, including soybeans. In March, after two years of working together, China issued permanent safety certificates for biotech soybeans, corn, canola, and cotton assuring that the quick-growing multi-billion dollar market will remain open to our farmers. Soybeans reached a record last year and so did our agriculture trade surplus with China. China has said decisions on other products' safety certificates will follow.

-- Winning a WTO case against Canadian dairy export subsidies. In May 2003, USTR followed up the WTO victory by signing an agreement between the United States and Canada that Canada would not export subsidized dairy products to the U.S. We are carefully monitoring Canada's compliance with the WTO ruling and its NAFTA obligations.

-- Continuing to push our WTO challenge to the EU's biotech moratorium. On March 4th, the WTO dispute panel was created and we expect a final report by October. USTR is also working with industry to evaluate whether filing another WTO objection to the EU's new biotech traceability and labeling regulations is the best course to address the issues.

There are many other examples because our day-to-day, bread-and-butter work at USTR is to work with American agriculture -- and other U.S. exporters -- to solve problems. We have worked to ensure exports of beef, pork, and poultry to Russia and Mexico. We have protected dry bean growers from Mexican restrictions, rice farmers from Taiwan's unjustified trade barriers, and kept EU markets open for our
wheat farmers.

These efforts will continue. For example, we are working closely right now with Secretary Veneman to remove new barriers against U.S. beef, related to BSE [bovine spongiform encephalopathy: "made cow diseas"] , and restrictions on U.S. poultry exports caused by recent outbreaks of avian influenza.

Ensuring a Level Playing Field with China

In the future, few relationships will be as important to U.S. farmers and ranchers as our trade ties with China. Since China joined the WTO, it has become America's 5th largest agricultural export market. Total U.S. exports to China grew 75 percent over the last three years, even as U.S. exports to the rest of the world declined because of slow global growth.

In 2003, senior Administration officials met frequently with Chinese counterparts to address shortcomings in China's WTO compliance. We delivered a clear message: China must increase the openness of its market and treat U.S. goods and services -- including agricultural products -- fairly if support in the United States for an open market with China is to be sustained.

As a result, China has taken steps to correct systemic problems in its administration of the tariff-rate quota (TRQ) system for bulk agricultural commodities, and relaxed certain market constraints in the soybean and cotton trade, enabling U.S. exporters to achieve record prices and sales. Approval of biotech soybeans, cotton, canola, and corn earlier this year -- and promised additional approvals -- has created greater certainty for U.S. exporters.

Nevertheless, China must do more. We continue to stress the need for structural change that ensures ongoing, open, and fair access -- not reliance on one-off sales and market access granted only after high-level political intervention.

U.S. farmers and ranchers are already benefiting from trade with China. Growth in exports to China of agricultural products has been robust; for example, U.S. exports of soybeans reached an all-time high in 2003 of $2.9 billion and cotton exports were $737 million, up almost 430 percent over 2002. Exports of hides and skins were $460 million in 2003. In addition, China has committed to buy $500 million of wheat. After growth of 140 percent between 2002 and 2003, China is the destination for 8 percent of all U.S. agricultural exports.

Since China is a growth market, particularly as the nation's middle class grows into the hundreds of millions, we are working to ensure that China becomes an integral part of the international trading system. China must not only import from the rest of the world, but also accept the practices and rules that create a level playing field.

Earlier this month, Commerce Secretary Don Evans, Secretary Veneman and I met with Chinese Vice Premier Wu Yi as part of the U.S.-China Joint Commission on Commerce and Trade (JCCT). The JCCT focused on many issues. In the area of agriculture, China agreed to implement new transparency procedures, announce approvals for several new biotech canola and corn products, ease the way for agriculture exports into China by providing the names of domestic quota holders and lift some of the BSE-related restrictions on U.S. beef exports.

Our attention remains focused on China to resolve new issues as they come up. With the help of new appropriations from Congress we have established a new office and added new staff to deal more specifically with China. At the same time, we reorganized our North Asia office to focus on Japan and South Korea, two critical agricultural markets.

In 2004, the Administration will concentrate on ensuring that: U.S. firms are not subject to discriminatory taxation; market access commitments in areas such as agriculture and financial services are fully met; standards are not used -- whether for technology or farm products -- to unfairly impede U.S. exports; China's trading regime operates transparently; and promises to grant trading and distribution rights are implemented fully and on time. The Administration will consult closely with Congress and interested U.S. stakeholders in continuing to press China for full WTO compliance, and will not hesitate to take further action to enforce trade rules.

Conclusion

During 2004, we will continue to push forward, step-by-step, toward the vision set out by President Bush of "a world that trades in freedom." It is a vision of a world in which a Virginia turkey farmer, a Texas rancher, a Minnesota corn farmer, a Washington State apple grower, and a North Carolina poultry farmer can sell his or her products or services in Costa Rica or Australia or Thailand or Morocco as well as across America. It is a vision of a world in which free trade opens minds as it opens markets, supporting democracy and encouraging tolerance, thereby making Americans more secure. It is a vision of a world in which a working family can save money at the grocery store because trade agreements have cut hidden import taxes. And it is a vision of a world in which hundreds of millions of people are lifted
from poverty through economic growth fueled by trade. It is the vision that builds a future for America's farmers and ranchers.