The United States sees agriculture reform as the cornerstone of World Trade Organization (WTO) negotiations and remains committed to an ambitious agenda, including the goal of having all WTO members open their markets more fully to farm imports, Deputy U.S. Trade Representative Linnet Deily says.

In a January 16 statement to the WTO in Geneva, Deily both responded to a recent WTO review of U.S. policies and outlined Bush administration goals for the trade talks, known as the Doha Development Agenda (DDA).

She defended current U.S. farm programs, noting that the United States is in full compliance with its WTO obligations and that the average bound U.S. tariff on agriculture products is 12 percent, compared to the average foreign tariff of 62 percent. Deily acknowledged that some "sensitive" U.S. farm sectors receive tariff protection in excess of the average but underscored that foreign suppliers receive market access in those sectors through tariff rate quotas (TRQs).

"The United States has complied with all of its Uruguay Round [WTO] commitments regarding TRQs and agricultural market access, and stands ready to provide additional market access as all WTO members move to open their markets upon conclusion of the DDA negotiations," Deily said.

With respect to the planned U.S. implementation of "country of origin" labels for certain commodities, Deily said that "at present, only fish and seafood labeling are funded and scheduled for implementation in 2004 under this program, while additional reflection is necessary for the other designated products."

Deily's statement also described U.S. implementation of the Agreement on Textiles and Clothing (ATC), under which textile import quotas will be phased out by January 2005. The United States will complete its phase-out program on schedule, she said, but added that ATC implementation by many U.S. trading partners has been a "severe disappointment." Barriers to U.S. textile exports "is one of the reasons our trade imbalance in this sector has become so lopsided," Deily said.

Regarding trade in financial services, Deily said the United States is "very open" to foreign participation in its banking sector, noting that foreign banks hold about 18 percent of all U.S. banking assets. She also noted that the U.S. Securities and Exchange Commission (SEC) has reached out to its foreign counterparts to explain new U.S. corporate governance rules and has, in some cases, made accommodations for foreign practices.

SECTORAL POLICIES

Agriculture

I was struck by one comment made on Wednesday suggesting that U.S. policy toward agricultural reform in the WTO [World Trade Organization] has been inconsistent. This is simply not the case. We have been clear from the outset of the DDA [Doha Development Agenda round of WTO talks] that agricultural reform is to us the linchpin of the negotiations. The U.S. negotiating proposal on agriculture calls for fundamental reform in all three pillars. This proposal reflects in depth consultations with our Congress and agricultural community. Last August we were called upon by many Members to work with the EU to bridge the substantial differences in our positions. The result was not put before Members as a take it or leave it propositions but rather as a platform on which to build. While Members raised concerns with the joint text, it nevertheless stimulated engagement. I don't dwell on the Cancun [stalled WTO negotiations in Cancun in 2003] experience today -- suffice it to say that the United States has had, and will continue to have, a high level of ambition for the DDA negotiations on agriculture on all three pillars as Ambassador Zoellick's [U.S. Trade Representative Robert Zoellick] letter to his counterparts made clear.

i. 2002 Farm Act

Many delegations expressed concern that the Farm Security and Rural Investment Act of 2002 (the 2002 Farm Act) increases federal transfers to U.S. farmers, which they believe contrasts in approach with U.S. proposals for substantial reductions in production-distorting domestic support in the Doha Development Agenda Round (DDA). First, it is important to note that the United States is on record in every forum and on every occasion that we will honor our Uruguay Round commitment on agriculture. The 2002 Farm Act allows us to meet these commitments, and we will honor all of them. Second, for the reasons we have explained, the 2002 Farm Act does not increase support; the USDA [U.S. Department of Agriculture] net outlays show trade-distorting domestic support trending downward; and our farm programs are still oriented toward fewer trade-distorting forms of support. Finally, with full knowledge and understanding of the potential implications for U.S. farm policy, U.S. farmers and ranchers have expressed their willingness to reform further and liberalize by supporting and developing with the Administration the U.S. agriculture negotiating proposal.

U.S. Agriculture Notifications to the WTO

A number of delegations have raised concerns that the United States has been slow to submit agriculture notifications to the WTO. We accept the criticism with regard to our domestic support notifications. Our most recent domestic support notification was for support during marketing year 1999. Let me reassure you that the United States is currently preparing domestic support notifications for submission to the WTO Secretariat and will submit them as soon as possible. We are committed to the timely notification set out for agriculture support and ask your indulgence as we attempt to bring our notifications current.

Market Access for Agricultural Products

Some delegations have pointed to the very limited number of U.S. agricultural products where producers are afforded substantive tariff-based protection, in particular, the sugar and dairy sectors, or where we apply non-ad valorem tariffs [duties set by some criteria other than as a proportion of the value] or tariff escalation. In general, U.S. agricultural tariffs are low, very low when compared to most other WTO Members. The average bound U.S. tariff is 12 percent, while the average foreign tariff is 62 percent. Nonetheless, certain "sensitive" sectors do receive tariff protection in excess of the U.S. average. We wish to point out, however, that we do not shut foreign suppliers out of these sensitive markets. In these sectors, we provide effective market access opportunity through tariff rate quotas (TRQs). U.S. administration of agricultural TRQs is transparent, fair, and seeks to provide the conditions to permit foreign suppliers maximum access to U.S. TRQs. The United States has complied with all of its Uruguay Round commitments regarding TRQs and agricultural market access, and stands ready to provide additional market access as all WTO Members move to open their markets upon conclusion of the DDA negotiations. We also remain committed to the elimination of tariff escalation and simplification of tariff application, including the elimination of the Special Agricultural Safeguard.

iv. Country of Origin Labeling

The issue of product labeling is not new to this house. Indeed, we have all dedicated considerable thought and work over the past two years in efforts to ensure clarity on the existing rules, as well as discussing options for additional understandings in this area. In the broadest sense this includes both direct product labeling as well as product documentation to assure proper product designations in the marketplace. Several different questions have been raised in this regard to pending U.S. Country of Origin Labeling. At present, only fish and seafood labeling are funded and scheduled for implementation in 2004 under this program, while additional reflection is necessary for the other designated products. For those following the debate in the United States, you are aware that this is a complicated issue, and the underlying thrust is how to provide meaningful information to the consumer and the product's respective production, processing and retail segments, while not allowing the costs to exceed the value-added.

Textiles

We appreciate the comments from Members concerning the quota phase-out program. We again urge Members not to lose sight of the fact that the important, watershed event of the completion of the quota phase-out program required by the Agreement on Textiles and Clothing (ATC) is 11 months away. Several delegations have raised questions about the manner in which the United States has implemented its commitments under the ATC. The main concern appears to be the hardy perennial of the textile debate in Geneva: Why has the United States decided to integrate the most sensitive products on 1 January 2005? The answer is the same, the United States never viewed integration as the primary way to liberalize textile restraints. Rather, liberalization was designed to occur as a result of progressively accelerating quota growth rates at the beginning of each successive stage of the ATC.

The benefits for exporting countries has been more than impressive. U.S. textile imports have grown by 122 percent since the start of the ATC. This increase in imports has led to an intense process of structural adjustment for the textile and apparel sectors. Textile employment in 2002, at 557,000 workers, was 25 percent below the 1994 level. Apparel employment in 2002, at 395,600 workers, was 56 percent below the 1994 level. Textile and apparel employment declined 42 percent between 1994 and 2002, for a total job loss of 697,800. The United States has continually reaffirmed to its trading partners that we will fully and faithfully implement the ATC as scheduled, and we are prepared to do so again today. While we can continue to debate how the ATC has been implemented, with the end of the ATC less than a year away it would seem wiser to look forward rather than back.

Several delegations also pointed out that U.S. textile and apparel tariffs remain high at an average rate of 15 percent. Although this is high compared to our overall industrial tariff average, it is low compared to the rates maintained on textile products by many exporting developing countries. We believe that the ATC provided for the liberalization of import restraints for all WTO Members. The barriers our textile exports continue to face is a severe disappointment for us. This is one of the reasons our trade imbalance in this sector has become so lopsided. For those exporting countries that want to reduce U.S. textile tariffs, the DDA provides another opportunity to harmonize and/or eliminate textile and apparel tariffs and eliminate non-tariff barriers. Given the sensitivity of these products for a large number of WTO Members, progress in this area can only be achieved in the context of broad participation encompassing key players, both developed and developing. This could be facilitated by a sectoral approach.

Financial Services

The United States has received a number of detailed questions regarding banking, securities and insurance. We have answered many and intend to quickly respond on the remaining ones. In regard to questions on the number of foreign banks licensed in the United States, over 70 foreign bank applications have been approved by the Federal Reserve since April 1, 2001. We understand that those banks also obtained any necessary additional licenses at the federal or state level. Let's be clear: the United States is very open to foreign participation in the U.S. banking sector. In fact, foreign banks hold approximately 18 percent of all U.S. banking assets.

In connection with the securities sector, delegations requested information on U.S. corporate governance issues, specifically regarding implementation of the Sarbanes-Oxley Act. The Securities and Exchange Commission [SEC] has reached out aggressively to foreign regulators and market participants to understand more fully how the requirements of the Act relate to local law or local stock exchange requirements. Where appropriate, the SEC has made accommodations for foreign market participants, including for audit committee requirements and internal controls reporting.

Regarding comments on U.S. state level regimes, the United States already provides quite good access through its current GATS [General Agreement on Trade in Services] commitments. That said, in some areas, the U.S. states have liberalized further, as evidenced in our initial GATS offer on services. The United States will continue its active outreach to the U.S. states for the purpose of the GATS negotiations.

The United States was questioned about a specific aspect of the U.S offer on financial services. We have put on the table the possibility of enabling mutual funds in the United States to obtain investment advice and portfolio management services from financial services suppliers located outside the United States. U.S. willingness to pursue this issue will depend on whether other countries also are interested in binding such access.