UNOFFICIAL TRANSCRIPT: BARSHEFSKY ON WTO MINISTERIAL (ITA accord equivalent to billion dollar world tax cut), December 16, 1996

Singapore -- Acting U.S. Trade Representative Charlene Barshefsky says that the "landmark" agreement to eliminate tariffs on hundreds of global information technology products is equivalent to a global tax cut totaling thousands of millions of dollars.

The Information Technology Agreement (ITA), concluded at the first ministerial meeting of the World Trade Organization that concluded in Singapore December 13, will go into effect once countries representing 90 percent of world trade in the products covered under the accord sign the pact. Currently, 28 countries representing 84 percent of global trade in information technology products have committed to the ITA, Barshefsky said.

"There is absolutely no question that implementation will begin in 1997," she said in a press conference here December 13 following the ministerial conference.

Barshefsky also expressed satisfaction that ministers gave the go-ahead to the WTO to begin studies of transparency in government procurement, investment and competition policies.

Barshefsky said that good progress had been made at the WTO meeting on advancing negotiations in basic telecommunications services and on reaffirming Uruguay Round commitments to move forward with negotiations on agricultural sector liberalization in 1999.

She also commented on the mention of labor issues in the WTO declaration and the importance of collaboration between the WTO and the International Labor Organization in assuring continued public support for trade agreements negotiations.

Following is an unofficial transcript of the Barshefsky briefing:

(begin transcript)

Let me say that I have been looking forward to this press conference because this is the first time I have sat down in five days. Let me first introduce the people who are up here, my deputy Jeff Lane, our chief ITA negotiators Dorothy Dwoskin and Andy Stoler. Andy also is our number two in our Geneva office. There are many other people whose names I would like to go through, Matt Rohde and Barbara Chattin, Clayton Parker, Margaret Sullivan, and, I apologize, but any one of a number of people who have been working just day and night to bring the ITA to fruition. But of all, I particularly want to single out Dorothy Dwoskin for her tireless, absolutely tireless efforts.

Let me also begin by thanking the Singapore Government, and in particular Minister Yeo, who with very deft handling was able to bring to conclusion a ministerial declaration that dealt with many subjects formally of contention among the ministerial participants, whether on agriculture or textiles, competition policy, labor standards, investment. All these issues presented complexity and his very able skillful handling of these matters is what helped bring the ministerial declaration to conclusion. Also Director-General Ruggiero, who helped put everything together, the ministerial declaration as well as his assistance with respect to the ITA.

I would also before I begin, thank all of the countries who worked so hard with the United States to reach what really is a landmark agreement with respect to information technology.

Just a short while ago, President Clinton phoned, and he expressed has delight with the outcome of the ministerial and also his personal gratitude to the many countries that participated. In particular, he wanted me to express his gratitude to the APEC nations which contributed. As you know, the President was very forceful at the APEC meetings in Manila with respect to the need for APEC leaders to endorse and work toward conclusion of an ITA by the Singapore Ministerial. That goal having been achieved, the President wanted me particularly to thank his APEC colleagues for this achievement.

The Information Technology Agreement, which was achieved, will eliminate to zero tariffs on hundreds of global information technology products, whether semi-conductors or telecommunications equipment, computers, computer equipment, software, a huge gamut of products. Product coverage at present represents five hundred billion dollars, one half trillion dollars, in global trade. That is based on 1995 figures, so the half trillion figure is quite understated relative to what we knew was a significant important in trade in these products in 1996.

The movement to zero by the year 2000 in all of these products really constitutes a global tax cut. It means that the creation of the information superhighway will he encouraged and promoted, not taxed. It means that countries, which produce and export these products will gain not only from tariff productions, which are very significant, but also with respect to what we know happens when tariffs are reduced.

We know from 50 years of GATT experience, you reduce tariffs, trade increases exponentially, and that is exactly what will happen here. So we have not only the savings from a global tax cut, which for U.S. industries, based on last year's figures, would have totalled over up a billion dollars, but you have, in addition, the spur of a very rapidly increased trade volumes and trade values in these products.

Countries that participate in the agreement will eliminate tariffs on IT products by the year 2000 on a maximum range of product coverage. In a very few limited cases, and this is spelled out with quite particularity, in limited cases, it may take a few more years beyond the year 2000 to get to zero tariffs. And, of course, the United States position in Geneva, for months and months, has been absolutely that flexibility needs to be built into the agreement on IT products because, of course, we are dealing with economies that are both very developed but also much less developed, but the exception from zero by the year 2000 are explicitly "limited".

Let me talk a minute about the schedule that is set out in the documents that you will review, if I can find my schedule. If you'll bear with me for one moment. It was right here. O.K. This is all spelled out in the documents that you will see. 13 December, 1996 is our ministerial declaration. It specifies the countries that have already, and the document is about 23 pages long, that have already committed to the ITA.

Let me read you the list of countries. It is 28 countries representing 84 percent of global trade in IT products. Those countries are Australia, Canada, Chinese Taipei, the European Communities -- that is the EC fifteen-- Hong Kong, Iceland, Indonesia, Japan, Korea, Norway, Singapore, Switzerland, Turkey and the United States.

Apart from these 28 countries, three additional countries have told us, and have issued letters of intent today, which you will see, that they intend fully to participate in what is going to be a short Geneva process, and I will take you through the schedule, and to participate in the ITA that will bring total global product coverage, I'm sorry, total trade volume coverage to 94 percent. Our threshold for automatic implementation of the agreement is 90 percent, or approximately 90 percent, of global trade coverage. With the 84 percent commitments today, (and) what will be an additional nine percent within the next week or two, there is no question this agreement is a full go ahead. There is absolutely no question that implementation will begin in 1997.

Let me then go through the chronology for you as to what happens now. 13 December is today. That's the ministerial declaration, copies of which will be available when the copy machines can churn them out. 31 January, 1997, so at the end of January, technical discussions in Geneva must be completed. The technical discussions revolve around the staging out of the tariffs between now and the year 2000. The agreement specifies that tariffs will be cut one quarter, one quarter, one quarter, one quarter, the first tranche beginning July, 1997, and ending in January, 2000. But the agreement also specifies that all of that may be accelerated for countries which wish to do so, and the agreement specifies that there is some alternative form of staging provided you get to zero in 2000. That's acceptable as well.

I've had extensive discussions with the European Union over the last three days, and will have further discussions in Geneva. It would be our hope that, at a minimum, we and the European Union would accelerate our tariff cuts. We would not wait to the year 2000 to go to zero, but those discussions will happen in Geneva. Then on March 1, 1997, this is the deadline for submitting all of the staging cuts which have been agreed. So all the technical details are then formally submitted in document form. On April 1, 1997, that is the deadline for all the countries to review everything that has been submitted, and to determine whether two criteria have been met for the automatic implementation of the ITA beginning in July.

Criterion number one: Do we have approximately 90 percent of global trade in IT products covered? We're already there. We know that is going to be a yes. Number two: Are all countries satisfied with the staging commitments that have been made, that is the way the tariffs will be cut to get to zero. I have absolute confidence the answer to that will be yes as well.

Then July 1, 1997, is the deadline for tariff bindings. One of the important points of this agreement is all the tariff cuts will be bound. They cannot be raised again. This is very significant, particularly in the developing world, where many tariffs are not bound firmly but can float within a range. These tariffs are all bound. July 1, 1997, is the deadline for tariff binding and the first tariff cut.

January 1, 1998, deadline for second tariff cut. January 1, 1999, the deadline for the third January 1, 2000, deadline for the final cut, that's zero. In the limited circumstance in which additional time is needed on specified products that will have already been spelled out in the schedules and agreed to, as part of the two criterion that have to be satisfied, and then those cuts will proceed. However, it has been agreed they will be staged. All this has been spelled out and is agreed to already formally by 84 percent of world trade in these products with the other nine percent coming on board before we begin our process in Geneva in several weeks.

Now, let me say simply that in the United States about 1.8 million jobs are hinged to high technology products, and in the last four years alone, even though the U.S. faces very substantial tariff barriers around the world to these products, U.S. exports in these products has increased 42 percent.

Imagine the rate of increase when tariffs are at zero. Let me give you a few examples. In countries like Korea, Thailand, and the Philippines, tariffs are as much as six times those in the United States on a variety of products. In semiconductors in Europe, for example, some tariffs are as high an 14 percent. U.S. is at zero. So the benefits of the agreement certainly for the United States will be substantial, but the benefits for Asia, for Europe and other countries will be equally substantial.

As a final point, let me say that the ITA agreement delivers on the focus of the President with respect: first, to the importance of the multilateral system as an on-going vehicle for trade liberalization; second, the importance of Asia to the United States economy; and third, the importance of market access as a means to foster our own domestic economic prosperity as well as a means to foster global growth.

I would repeat again that but for the President's accomplishments at the Manila leaders' meeting with respect to the ITA commitment by the Asian nations there would have been no possible way to have this agreement emerge here at Singapore.

Now let me spend just one moment on the Singapore declaration, which is the first declaration, of course, that's come out of the meeting. It is the other document that you will see today, with regard to the issues in that declaration, the United States is very pleased. We think a very good balance has been achieved in the document, and the aims that we sat out to accomplish by and large I think we have achieved.

On procurement, transparency in government procurement, there is agreed that there will be a study which will explicitly lead to an agreement on transparency in government procurement. This was a principal United States objective because access to government procurement markets worldwide is terribly limited, and we know many of those markets are characterized by substantial bribery and corruption. The greater the transparency, the greater the due process in government purchasing, the better chance the United States and other countries have to compete on a level playing field.

Second, with respect to labor rights, since the Eisenhower Administration, the United states has sought a framework from which we can pursue our labor objective in the context of global trade. We are talking about core labor standards, as you know, as enunciated by the ILO and by the UN. This is an area where the interests, the underlying interests, of developed and developing economies are the same, and this was very clear from the discussions that were held. As you may know, the core labor standards issue dominated three days of discussions among the ministers. The interesting thing was that for all the parties present the commitment to observing core labor standards, the commitment to increasing prosperity and social welfare, is unquestioned and viewed by the developing world, an well as the developed world, as an unquestioned series of principles, so that has never been in doubt.

For the United States, the debate has never been about protectionism, on the one hand, or barriers, on the other. It has been to achieve an enunciated consensus on the critical importance of worker welfare and the critical importance of striving to maximize worker welfare as we do trade agreements.

As you see from the ministerial declaration, or you will, we have achieved explicit reference to core labor standards and commitments to core labor standards. In the 50 years of GATT, we were never able to do that. And in addition, the document notes that there will continue to be an existing collaboration between the WTO Secretariat and the ILO Secretariat, which coordinate already on many issues.

The declaration also makes plain principles with which the United States absolutely agrees: that labor standards should not be used for protectionist purposes and that genuine comparative advantage of lower wage countries should not be undermined.

I'd make one additional note. That in the chairman's summing up statement additional comments were made with respective to the subject pertaining to the WTO agenda and likewise. In the heads of delegation plenary, which was held immediately before the closing session, the chairman made clear, upon reading the same statement, that his statement was his own, there was no consensus on his statement, that the legal consensus and binding consensus is that which appears in the ministerial declaration. We think that this is very important and needs to be noted.

In basic telecommunications, very good progress was made this week in advancing the negotiations on basic telecom. Reed Hundt, the chairman of our Federal Communications Commission, and I co-hosted a meeting on Monday (December 9) with a number of delegations interested in the global talks on telecommunications services liberalization. We expected perhaps 10 or 12 delegations. We had 32 delegations, virtually all of which represented ministerial level. There was an increasing amount of interest in these talks. Some countries indicated their offers would improve. We encourage that. We hope the ITA agreement will lead toward improvement in those telecom offers, after all the IT agreement are the cars and the trucks on the road, but the telecom agreement is the road. So, we hope the ITA agreement will lead to better offers in the telecom area. Certainly, as you all know, as we have said repeatedly, the United States must see -- must see, improved offers from a variety of nations if the talks are successfully conclude on February 15.

On the subject of agriculture, one of the key issues was to look at the implementation of Uruguay Round commitments. For the United States, this is particularly important with respect to agriculture. The ministerial declaration says that the reform process will continue, that we will remain true to the timeframes set out in Marrakesh, which means negotiations begin in 1999, which means the preparatory work will be completed by 1999 for those negotiations. This is very good news for U.S. agriculture. But, let me say, U.S. agriculture faces serious impediments around the world. Import barriers, state trading enterprises, export subsidies, unjustifiable and non-scientific sanitary and phyto-sanitary regulations hamper U.S. exports. The outcome of the ministerial gives us an opportunity to attack these problems head-on, but these problems most be resolved. Let me say that with respect to agriculture, there was a very large U.S. agriculture delegation that came here at considerable sacrifice, and we are very grateful for the work that they did.

On investment, the U.S. goal had been a modest work program which would not interfere with completion of investment negotiations on-going now in the OECD. That aim has been accomplished.

With respect to competition policy, we have ensured that work on competition will not threaten our laws which protect principles of fair pricing and fair competition. The work plan is expected to focus on the problems of cartels and other private, anti-competitive behavior which can impede foreign market access.

All in all, I apologize for the length of this explanation, but all in all, the United States is very pleased with the outcome of the first ministerial conference, as well as with the outcome of the ITA negotiations. We look forward to continuing a leadership role in the WTO, and we look forward particularly working in Geneva toward the implementation of the ITA agreement, July of 1997. With that, let me please invite questions.

QUESTION: It has been a long stated goal of the Clinton administration that trade agreements have to be a two-way street. How does that philosophy jell with the ITA and its application to China? Are you extending these deals to China on an MFN basis without China making commitments, or how do you expect to handle that issue?

ANSWER: First, let me say that, as in any tariff negotiation, you want a critical mass of those countries who are the major producers and exporters so that you avoid free riders. This is why we set a very high threshold on the kick-in for the ITA. We have already achieved it, but the threshold will be approximately 90 percent of global trade covered. This is, of course, as you know, an agreement within the WTO, and we will certainly look at the question of its application to China as we proceed.

Q: There is no decision yet on China?

A: We will look at that as we proceed.

Q: There was so much agreement and unanimity in observing core labor standards and the ILO convention. Why were three days spent on just negotiating words to be put into the declaration?

A: I think that's a very good question, because, as you know, the question is: What is the proper role of the WTO as a trade institution with respect to the issue of core standards or, more broadly, worker welfare? This is a complex debate. For some countries, the link is obvious and apparent. For other countries, a linkage is to be avoided between WTO or trade agreements, on the one hand, and worker issues, on the other. That is the ideological debate, and the text attempts to reconcile the ideological debate by putting forward principles with which we can all agree. No one wants to use labor standards for protectionist purposes, and if there is a genuine comparative advantage in the developing world, no one wishes to put into question that genuine comparative advantage. But by the same token, it is acknowledged well the ILO and WTO do work together. That is the fact. It is current reality, and the importance of the declaration is the explicit indication of the continuing collaboration that will occur in the future. But the ideological debate is, as I have described. As a practical matter, as a practical, political matter, the issue is really not very far apart. The WTO is committed to trade liberalization through trade agreements negotiation. If working people, whether in the United States, or the European Union, or in Indonesia, or Brazil, or Argentina, or Mexico, or Russia, if working people believe trade agreements threaten their jobs, if working people believe trade agreements lead to workers dislocation, there will be an erosion in the constituency for trade agreement and trade liberalization, and the foundation and existence of the WTO itself will be threatened. As a practical matter, if working people don't believe these agreements are in their interests, politicians who are elected by working people won't be able to negotiate them, and that threatens the free trading system.

We, therefore, must as a practical matter, ideology aside, recognize that issues of worker welfare and worker rights are absolutely a part of the trade agreements debate, whether ideologically one is happy about that or not.

Q: Just a technical clarification on ITA. You may have misspoken, or I may have misheard you. Before you said three additional countries have today told us...that will bring the total coverage to 94 percent. Your press release says six other countries bring it from 85 to 91 percent. What other countries?

A: I do apologize. Three are Asian countries. Three are not. I apologize. It is six. We are correct in our release, and I misspoke. We have the 28 countries that are listed. That is the 84 percent. Six additional countries -- three Asian, three non-Asian -- have already provided their intent to actively participate in Geneva and to join in the ITA. For these countries, by and large, the problem had to do with not enough time to really go through the product coverage scope. They just needed more time. That will then increase the coverage to above the trigger threshold.

Q: Above 90 percent?

A: Yes.

Q: Above 94 percent?

A: Whatever the number was in the release.

Q: The number would be just over 90?

A: I thought the number was 94. I thought that was the secretariat number, but let me ask Dorothy (Dwoskin).

Q: What Dorothy is saying is (it is) safest to say "just above 90" because the data are preliminary but, as the secretariat worked out the data, their initial projection was 94 percent. In any event, we will be above the threshold, whether it is just above 90 or 94 percent, we will be above the threshold.

A: Let me make one comment on the product coverage. You will receive a 14-page product coverage document. That has been agreed. This is the summary. The 14-page single space document is the summary of the product coverage. Were we to go through the products, the sub-products and the sub-sub-products, you'd be looking at a massive, massive, massive document. So this was the summary, which we thought would be the easiest and, in terms of copying, the cheapest thing we could provide.

Q: If I am not mistaken, I think you said that the study with regard to competition should not threaten our roles, you said. Do you include in those roles say legislation on anti-dumping?

A: Oh, no question. There's no question that from the point of view of the United States and, indeed, also the European Union the anti-dumping laws are not on the table. No question about that.

Q: Is that the understanding at this ministerial meeting is undertaking this study on competition and investments?

A: The study on competition is intended to focus on competition policy (anti-trust) -- in other words, anti-competitive practices that would impede market access, private anti-competitive practices largely.

Q: Oh, yes, it's to my surprise, but I just wanted to have confirmation.

Q: Given your remarks about the importance of Asian countries in securing a deal on the ITA, would the U.S. be sympathetic to looking at an Asian candidate as a successor to Renato Ruggiero?

A: I don't want to respond to that. Renato Ruggiero it two years left on his term, 1999? So come ask me in 1999.

Q: As part of this collaboration between the ILO and the WTO, would you see the WTO as promoting, endorsing, enforcing core labor standards? Secondly, Sir Leon Brittan has been talking about this millennium round that he wants to launch by the year 2000. After this meeting in Singapore, are you convinced that such an inter-sectoral round is necessary? You know, a global comprehensive world trade round.

A: With respect to your first question, plainly, labor standards are set in the ILO. There is no desire on the part of any WTO member, including the United States, to set or define labor standards in the WTO. So there's no question about that. With respect to the notion of a global round, there really has been virtually no discussion. One of the goals of the United States -- and perhaps an over-arching goal of the United States in this ministerial meeting -- was to establish the principle that the WTO was in many ways fundamentally different from the GATT system. One, that the WTO would be a forum in which members, trade concerns could be discussed -- whether it is this core labor standards issue, or agriculture, or competition policy, any one of a number of issues. That principle has been established. This is a forum in which ideas and discussion even of controversial issues can take place. Number two: of principal importance to the United States was to establish the fact that major trade liberalization could occur through the WTO without having to call for a global round, without having to wait for a global round. Because if we had to wait for a global round for the next bit of liberalization, the world would be waiting perhaps until well after the turn of the century, and then if the Uruguay Round in a guide, they would wait another eight years after that. We wanted to establish the notion that we could proceed a pace with market opening, with trade growth on an absolutely routine basis. The ITA establishes that principle. Both of those goals were very important to the United States and to many other countries here, and I think the WTO will be strengthened for those goals having been achieved. Thank you very, very much.

(end transcript)

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