*EPF412 03/16/00
Transcript: Schroeder Discusses U.S.-Thai Agricultural Issues
(Thailand's high tariffs a top concern) (4460)

Thailand's high tariffs are a top concern to the United States, says James W. Schroeder, deputy under secretary for farm and foreign agriculture services at the U.S. Department of Agriculture.

Schroeder discussed U.S.-Thai agricultural issues with the press during a March 16 roundtable in Bangkok.

He said the United States and Thailand have many common interests -- most notably increasing markets for their products around the world and reducing export subsidies.

But Thailand's tariffs -- 40 to 50 percent -- are the highest in Asia, Schroeder said. U.S. agriculture tariffs, by comparison, average about 10 percent, he said.

"We would like to see Thailand revisit, and perhaps reduce, some of its tariffs on agriculture products," Schroeder said. "We think that is of interest, not only to Thailand's consumers because it will reduce prices in the marketplace, but we think it's probably of interest to Thai producers as well."

"We think that reduction of tariffs, for example in the area of inputs, such as corn and soy meal, would make Thai industries, such as the poultry industry, more competitive," he said. "Reductions of tariffs in other consumer areas, such as meats, French fries, beer and wine, fresh and processed fruits which aren't grown in Thailand or are seasonally different, that those would not hurt the Thai producers, but help the Thai consumers and also give the Thai local industries, both the processing and the hotel industries, better chance to serve the exploding tourism market."

He also called on the Thai government to re-exam licensing procedures and excise duties that serve primarily to restrict trade.

"We think the lesson is clear from the last 50 years...that as you reduce restrictions, as you reduce tariffs, you increase trade and it benefits both those countries producing and those countries consuming," Schroeder said.

In 1999, the United States bought 14 billion dollars worth of goods from Thailand, while Thailand bought 5 billion dollars worth of American goods, said Schroeder. But, he said, with its booming economy, the United States doesn't worry too much about the trade deficit now.

"We have a good trade relationship with Thailand, which we think Thailand should be very pleased with," he said. "Thailand is the largest beneficiary of our GSP program.

"We want the Thai economy to grow and prosper. We would like to see the Thai agriculture economy remain strong. But we think with further efforts towards liberalization and more open trading that not only will we be able to perhaps export more agriculture products here, but that that will aid and assist Thai industries in the food area, as well as Thai consumers, to have a better deal," he said.

Following is a transcript of the press roundtable:

(begin transcript)

16 March 2000
Bangkok, Thailand

Press Roundtable with James W. Schroeder, Deputy Under Secretary for Farm and Foreign Agriculture Services, Department of Agriculture

MODERATOR: Good morning, ladies and gentlemen. Thank you all for coming today. We are very pleased today to have Deputy Undersecretary James Schroeder, U.S. Department of Agriculture, here today on his visit to Thailand, Vietnam and the Philippines. Mr. Schroeder has been meeting with several different ministries here in Thailand, and will have some more meetings tomorrow, which he will brief you on as well.

Also joining us today is Ms. Patricia Sheikh of the Foreign Agricultural Service. She is the Deputy Administrator for International Trade Policy. We're pleased to welcome her here today.

Now, what we want to do is ask Mr. Schroeder to make a few comments, and then we'll just open it up for discussion. Mr. Schroeder.

SCHROEDER: Good morning. Welcome. I'm delighted you're all here. I'm delighted to be here myself. I've been coming to Thailand for many, many years. It's always exciting to return and see the changes, to try and find a few things that haven't changed.

As Deputy Undersecretary for Farm and Foreign Agriculture Services, I have responsibility to oversee the Foreign Agriculture Service and the international aspects of our agriculture. That is not only trade and exports, but also our participation in international organizations, like the FAO. I also deal with our many food programs, our assistance programs, around the world.

I think Thailand and the United States have much in common. We both believe that a sound economy depends upon a sound agriculture. And to have healthy agriculture depends upon trade. Of course you all know Thailand is the world's largest rice exporter. Thailand is a major supplier of many agriculture and fish and forestry products: sugar, rubber, seafood, canned pineapple, and poultry meat, for example.

The United States, of course, is also a major agriculture producer and exporter. That's why we think we have much in common. We have tried to work with Thailand, which is an important member of the Cairns group, and in the multilateral arena to increase market access for our products around the world, to reduce export subsidies. I'm sure you know, over 80 per cent of the world's export subsidies in the area of agriculture are used by the Europeans. So it's in our mutual interest as agriculture producers and exporters to obtain better market access and reduce the subsidization of agriculture products in the world trading market.

A third area in which we hope to be able to work with Thailand is the reduction of agriculture tariffs. Now in the United States we have reduced our tariffs to an average of about 10 per cent. One of our objectives in the next round of multilateral negotiations under the World Trade Organization is a further reduction in tariffs.

Thailand, of course, has had financial difficulties. Thailand's tariff structure remains high. In fact, I was surprised to find that Thailand's tariffs are actually among the highest in Asia. Part of our talks this week have been with not only the Agriculture Ministry but also the Finance Ministry and the Customs Department. We would like to see Thailand revisit, and perhaps reduce, some of its tariffs on agriculture products. We think that is of interest, not only to Thailand's consumers because it will reduce prices in the marketplace, but we think it's probably of interest to Thai producers as well.

I don't know whether I need to give the statistics, but Thai tariffs for example average 40 to 50 per cent, and those are the highest among the ASEAN countries. We think that reduction of tariffs, for example in the area of inputs, such as corn and soy meal, would make Thai industries, such as the poultry industry, more competitive. Reductions of tariffs in other consumer areas, such as meats, French fries, beer and wine, fresh and processed fruits which aren't grown in Thailand or are seasonally different, that those would not hurt the Thai producers, but help the Thai consumers and also give the Thai local industries, both the processing and the hotel industries, better chance to serve the exploding tourism market.

There are some other trade restrictions that we are concerned about. We certainly believe that all countries, our own country to begin with, must be concerned about the health of its agriculture, farmers and its producers. But we believe that the best way to do that is through support measures and programs which do not affect or distort the marketplace. Some of the Thai programs, the licensing procedures, the excise duties, really only restrict trade. We would like the Thai government to re-examine some of those, and we think it would be good for Thai producers and the Thai competitive marketplace to perhaps re-examine and reduce some of those.

We think the lesson is clear from the last 50 years, which we've seen in the industrial and commercial area that as you reduce restrictions, as you reduce tariffs, you increase trade and it benefits both those countries producing and those countries consuming.

Just to summarize the figures between Thailand and the United States, last year we exported to Thailand less than 500 million dollars worth of agriculture, fish and forestry products. We imported from Thailand almost 2.5 billion dollars: rubber, tobacco, prawns, tuna. Almost five times the amount that we sold to Thailand, we bought from Thailand.

Of course, this is consistent with our U.S. practice of buying more than we sell. As you know, we have rather exploding trade deficit with the world. That is partly due to our very healthy economy. That has been of great benefit to countries such as Thailand, especially over the last few years. I was just advised that our total trade deficit with Thailand last year was 9 billion dollars. In other words, we bought from Thailand almost 14 billion dollars worth of goods, but only sold 5 billion (to Thailand).

We have a total trade deficit with the developing world of 140 billion dollars. I used to worry about this, but I studied economics 20-25 years ago, and I guess we worried about it then. But we don't worry about it now.

We have a good trade relationship with Thailand, which we think Thailand should be very pleased with. Thailand is the largest beneficiary of our GSP program. The United States, of course, is a major investor. I guess we're the second largest investor in Thailand, behind the Japanese. So have a good trade relationship. We want the Thai economy to grow and prosper. We would like to see the Thai agriculture economy remain strong. But we think with further efforts towards liberalization and more open trading that not only will we be able to perhaps export more agriculture products here, but that that will aid and assist Thai industries in the food area, as well as Thai consumers, to have a better deal.

That's my opening statement. We should be informal here. As been mentioned, Pat Sheikh is the Deputy Administrator of our Foreign Agriculture Service. She is in charge of our trade policy people. Hoa Huynh is an assistant of hers who also works in the foreign trade area. I don't know whether Pat would like to add something?

SHEIKH: I would just say that on the international side, in the multilateral context, we work very closely with your representatives in Geneva. Thailand is a major voice within the so-called Cairns Group that advocates further liberalization of agricultural products. As we open this next round of agricultural negotiations that are mandated from the Uruguay Round, we look forward to working with Thailand to ensure that all markets in the world are open to agricultural products so that agriculture can take its natural seat next to the industrial commodities that are being traded under open market conditions.

SCHROEDER: Everybody speaks English and we don't need translation. But if you don't understand something and need clarification, please ask and we'll see what we can do.

Q: What is the reaction from the Thai officials after you raised the issue of the tariff reduction on agricultural products?

SCHROEDER: We arrived Sunday, and yesterday we had meetings at the Ministry of Agriculture, the Ministry of Finance, with some of the Customs officials, and we will later be meeting with the Ministry of Commerce, with the Ministry of Industry. We've had very warm and friendly meetings. Obviously there have been questions and different views. We don't expect anybody to immediately respond. I think in general there has been an acceptance of our positions, and some receptivity on the part of Thai officials to look at some of these issues that we've raised.

For example, we had one problem with the Customs folks regarding wheat, and the way it would be classified. We think that has now been resolved. That will affect the tariff level on wheat. On some of the other issues we've discussed, we hope that perhaps in the future there will be some progress.

Q: What has the Thai side requested from the U.S. side about the opening of markets for foreign products from Thailand?

SCHROEDER: As the figures show, we think the Thai side should be fairly pleased with the openness of our market. As I mentioned, we have been importing very significant and growing amounts of seafood and other products. Generally we think our market is open in the area of fruits and vegetables. There are always concerns about pests that are transported. But our quarantine officials work closely with Thai officials, and generally we have no particular problem areas.

Q: Did you have any discussions about the GMO issue?

SCHROEDER: We discussed generally the question of GMOs. We want to continue to work closely with Thailand. As you know, we, along with the Thai Government, believe that one of the successes of the last Uruguay Round was to commit to resolving issues related to food, plant and animal health and safety, based upon science. That is the position that all countries basically subscribe to, and we hope can be maintained. We realize that many developing countries don't have the same scientific base that some of the developed countries have. What the United States has tried to do is indicate our willingness to work with Thailand. Actually, we do think Thailand has a history of good academic and scientific research capabilities. All countries want to assure their consumers that the food that's being sold in the marketplace is safe and that animal and plant health concerns will be addressed.

Now the question of GMOs has created great public discussion in Europe. Europe has been subject to several food scares, and they do not have some of the same institutions that other countries have had in this area. We hope to continue to work with the Europeans, but it's been difficult. But the bottom line is nobody wants to produce or sell unsafe food, but nobody wants or will be able to stop the march of science. The scientists are learning more every year, and there are great prospects for the future. I understand that Norman Borlaug was in Thailand just a week or so ago, and we've seen the remarkable achievements that have taken place in India and in various countries. The day is coming, if it's not here already, when we will have the ability to grow foods that will take less pesticides, less herbicides, grow in drier soils, produce varieties of rice, for example, which will be more nutritious. I think the future is very positive. What we have to do is not stop the march of science but to use science for our own benefit. And of course always try to assure ourselves that the new developments will be for our benefit and use.

Q: When do you expect that the members of the World Trade Organization will be able to launch the next round of the agriculture talks? What are the contentious issues at the moment? Maybe you can evaluate the negotiations in Seattle?

SCHROEDER: I think that we should recall history. We started these GATT rounds in 1948, I believe, and we had six or eight of ten of these, the Tokyo Round, the Kennedy Round. It wasn't until 1994, in the Uruguay Round, that two important things happened. First of all, agriculture was brought in on the same basis as other commercial and industrial products. Number two, that we now have a structure, an actual World Trade Organization. Before we had no organization, no arbiter. So those are two very important developments.

Now, agriculture and services, because they're essentially new, there was no way that one could deal with those in one round. So we need at least another round, and perhaps we'll have to have yet another round. Agriculture is on the table. We were quite close in Seattle to reaching agreement among most countries as to how agriculture would be dealt with, but frankly other issues came in which precluded a formal agreement at that time. But we now have a process. Our representatives are meeting in Geneva this month to begin, through an agriculture committee, to try and set up a process. I think we can look forward, if not this year then by spring of next year, to having a process agreed to for the next round.

SHEIKH: You asked what were some of the issues that are going to be discussed in this round. I would think that they'd be issues that were dealt with in the Uruguay Round but need further clarification, according to all the countries that belong to the WTO, such as domestic support. What kind of support should countries be allowed to give their farmers that would not be considered trade distorting. That whole discussion will take place. There's also an issue on the export side with respect to export subsidies. Deputy Undersecretary Schroeder mentioned the high level of export subsidies that the European Union is using to move their commodities onto the world market. Many countries in Seattle, including many developing countries, felt that we should discontinue the use of this practice. This issue I'm sure will be hot and center in the discussions.

Mr. Schroeder also mentioned market access. Many countries, including developing countries, would like to see more open markets. They'd like to see access opened up further. Here we would be talking about tariffs. We also would be talking about what we call tariff rate quotas, where we carved out quantity levels, quota levels for sensitive commodities. All countries had those sensitive commodities. Should we increase those quota levels? That discussion will take place.

Another big issue that we have been discussing in Geneva is what we call state trading enterprises, those entities that can distort trade of world markets. For instance with regard to wheat, the Australian and Canadian Wheat Board. Issues such as these were discussed in Seattle, and once the processes are determined in Geneva, my guess is they would again come under discussion, including possibly this whole issue of market access for genetically modified commodities.

Q: I heard that you're going to Vietnam and the Philippines. What are the issues that you will discuss with the officials in the two countries?

SCHROEDER: In Vietnam, as you know, we're interested in further developing our trade relations, and we've made some progress in the last few years. The United States is hopeful to finalize a trade agreement with the Vietnamese. Last year we essentially reached agreement in principle on a trade agreement. With that agreement, we hope to further develop our trading relations with Vietnamese. This is certainly a large and potentially strong developing country.

The Philippines, of course, is one of our historical close trading partners. We've had a good trading relationship over the many years with the Philippines. We hope to continue to develop that.

Q: First of all, I'm not sure whether the U.S. has the quota for import from other countries, import for agriculture goods from any country, a quota system. Do you have?

SCHROEDER: Yes, everybody understands the issue here. In trying to liberalize and develop market access for agriculture products, we recognize (that in) most countries, there are always certain products, certain commodities, that are very sensitive. The classic we all know about is rice in Japan. What we've tried to do in those cases is to ask that all countries at least open the market a little bit. We think that's healthy. We begin to get some diversity, some competitiveness, and hopefully the consumers will benefit. In the case of Japan, for example, they have established what we call a tariff rate quota so that a certain amount of rice can come in at very low or no duty. And after that the duty can be quite high and quite prohibitive.

The same situation exists in some countries on dairy products. In our country we have, for example, a tariff rate quota system on sugar. There is a historic reason for that; we've had a sugar program for many years. So we have a tariff rate quota on sugar, with a minimum that can come in duty-free, that is allocated among our historic suppliers, such as Thailand, Australia, Dominican Republic. Then above that, of course, a higher tariff would apply, which in many cases would be prohibitive.

Our hope on all these programs is, first of all, to see that these tariff rate quotas are administered fairly so that the minimum levels do in fact come in. Then hopefully over time those quotas will increase, and then maybe even at some point even disappear. Then we will have a free market. It is a way to have a transition. For example, an important part of our negotiations with China has been to establish this kind of tariff rate quota system for a number of products where the Chinese have agreed that a certain amount can come in at a very low tariff and after that, there would be a higher tariff. Most countries will have some of this type of program for what they consider to be sensitive products.

Q: I have heard that yesterday we asked that you expand the quota for rice, for tapioca.

SCHROEDER: I don't think we have a quota on tapioca. I don't think that we import much tapioca because we have lots of corn in the United States, so we don't need tapioca. I think the EU might have a quota on tapioca.

Q: So you only have a quota on sugar?

SCHROEDER: Dairy, like cheese, peanuts. I think that's about it. Coffee? No, no. We'll take all the coffee you can send us. At the right price.

Q: Could you update us? What's the latest regarding the dispute between Japan and the U.S. on fish and forestry products, how they're going to be dealt with in the new negotiations. I understand that was quite an issue some months ago.

SHEIKH: Those issues fell under the accelerated tariff liberalization scheme, leading up to Seattle. First of all, the Japanese had agreed, under APEC umbrella, that they would liberalize. Then they reneged on those commitments because they said that they didn't want to do anything in advance of then upcoming WTO negotiations. So they reneged. Then as a means to go after those commitments, it was agreed that those commodities that were agreed to in APEC would be dealt with in the Seattle agenda. The liberalization of those commodities could move forward first but they wouldn't be implemented until all the WTO agreements had been implemented. When Seattle fell apart, we're back to ground zero. Whatever the industry decides on how they want to proceed on these issues, we will take those issues up. They were sort of under the WTO umbrella, but they were on a fast track where we could discuss these changes and not implement them, but move to the point where the WTO negotiations would catch up and then all of them would implemented in the total package.

Q: Do you have any policy for the whole region, for the Southeast Asia region, for this agriculture product problem?

SHEIKH: I think that as Deputy Undersecretary Schroeder indicated, we don't see the whole ASEAN region as a problem. I think that, as Mr. Schroeder indicated, Thailand has the highest level of tariffs within the region. Thailand can exercise its leadership within the organization by either getting in line with the rest of ASEAN or these issues will most likely be dealt with in the next round. On the whole, the ASEAN is moving toward lowering their tariffs. I know they had an ASEAN Free Trade Agreement that's going to be implemented in a couple of years where they're going to have to bring their tariffs down. I think the movement towards liberalization is there. I don't think we need an overall policy with respect to ASEAN because we don't see an overall issue of high tariffs across the region.

SCHROEDER: We basically believe in the marketplace. The government cannot manage the trade deficit. That's quite clear because it keeps going up every year. We've been blessed with a very strong economy, very strong consumer demand, and so Americans continue to buy from the world. Our hope is that your economy and other economies will also improve and strengthen, and that your consumers will have the opportunity also to experience a greater variety and value of food products. I think too many people fear imports. They see the fact that if one thing comes in, then somehow that is going to adversely affect the domestic producers.

I use two examples that are dear to my heart. One is meat. The U.S. is, of course, one of the largest producers and exporters of meat in the world. We are also the largest importer. We import a lot of meat, from Australia, from Canada, from Mexico. The result of that is a wide variety and the ability of our processors to import certain kinds of meat and mix it with other kinds of meat to produce hamburger. It's basically a good thing.

Beer, look at beer. I can go five minutes from my house now in Washington and get a nice cold Singha. And yet Budweiser is not out of business. As you travel around the world now we find Australian beers, and British beers. It seems to be a good thing. People have more choice and more variety. It's good for everybody. And that's what we're trying to achieve, so that people can have choices and people can have better value, better variety at good prices.

SHEIKH: This past summer we went to twelve states throughout the U.S., twelve key states like California, Florida, certain Midwest states, to listen to what some of our constituents had to say about the next round of negotiations, and what they'd like to see done. I think what Jim was alluding to is the fact that they would like to see some of the markets that are more restrictive to U.S. products opened up. They made that very clear. We in the United States export a lot of food and we import a lot of food and it hasn't really hurt our economy. As a matter of fact, if you look at developing countries that have liberalized their economies, they've grown the fastest. It's a good thing to do and our constituents would like to see further access to markets in Asia, Latin America, Africa.

MODERATOR: Thank you very much everybody. I think we want to thank Mr. Schroeder and Ms. Sheikh for joining us today, and taking time out today to share their thoughts with us. Thanks everybody for coming.

(end transcript)

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: usinfo.state.gov)

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