*EPF312 11/20/2002
Transcript: Zoellick Hoping for More Asian Free Trade Agreements
(USTR sees possibilities with the Philippines, Indonesia, Thailand) (4160)

U.S. Trade Representative (USTR) Robert Zoellick told reporters at a roundtable discussion November 19 in Manila that the United States was looking to build upon present Trade and Investment Framework Agreements (TIFA) with the Philippines, Indonesia, and Thailand as foundations for comprehensive bilateral Free Trade Agreements with those countries.

In response to reporters' questions, Zoellick stressed that the United States has not "set any pre-conditions" for the initiation of negotiations for these new Free Trade Agreements.

Zoellick added that the Philippine government had a particular interest in discussing the extension of the Generalized System of Preferences (GSP), a special U.S. preferential trade system in which tariffs are removed on products from approximately one hundred developing countries.

"In the case of the Philippines, it's about a billion dollars of the Philippines exports last year, qualified for this (GSP). That's about 11 billion dollars of exports ... we're now reviewing additional product applications," Zoellick said.

Zoellick said he was especially looking forward to a "fuller discussion" about President Bush's Enterprise for ASEAN Initiative (EAI) with ASEAN Economic Ministers meeting in the Philippines during his visit.

"In the ASEAN-wide context, we will be talking about a work program ... that includes items like some of the work with customs facilitation, intellectual property, and standards; and some of the nuts and bolts of making trade work more effectively," he said.

(begin transcript)

PRESS ROUNDTABLE DISCUSSION
WITH USTR ROBERT ZOELLICK
Manila Peninsula Hotel
November 19, 2002


USTR Zoellick: Let me just start with a couple of comments, and I apologize; I am a little tired. We were up all night in Singapore. There really are two dimensions to my visit to Manila. One is the fact that my colleague, Minister Roxas, who was kind enough to host a meeting of the ASEAN Economic Ministers, but then, in addition, I'll be having some bilateral sessions with the President, and with Minister Roxas and some of his colleagues -- in what we call a Trade Investment Council session.

Now, the purpose of the meeting with the ASEAN Economic Ministers is a couple of things. One is that, and I hope to get a little bit of this in at our dinner tonight -- is that it's very important for me to have an opportunity to come out in the region and spend some time listening and learning from people about their perspective on economics and politics and, in the current environment, also the security dimension, with terrorism. I had met some of these colleagues recently at a meeting we had in Sydney, which was a meeting of twenty-five Trade Ministers from the WTO who trying to move ahead the Doha agenda, and I also saw some recently at APEC. But I think here we'll have a little bit more time for me to get a sense of what's going on in Southeast Asia.

And then, second, this gives me an opportunity to have a fuller discussion with them about President Bush's initiative that he announced at Los Cabos at the APEC meeting for the EAI -- the Enterprise for ASEAN Initiative. And, as you may know, this is an initiative that is a combination of ASEAN-wide, but also customized with bilateral relationships. In the ASEAN-wide context, we will be talking about a work program that we started to develop when I was last out here at a meeting with ASEAN Economic Ministers in Bangkok. I think it was the first time in about seven or eight years that the U.S. Trade Representative had come out here for a meeting. And so we will talk about some of the elements that we are proposing for that work program, and I'll be inquiring about the interests of my colleagues. And that includes items like some of the work with customs facilitation, intellectual property, and standards; and some of the nuts and bolts of making trade work more effectively. But then in addition, the Enterprise for the ASEAN Initiative was designed, given the range of ASEAN members, to meet specific needs. So with four countries that are not yet WTO members and so with them, the focus will be on WTO accession. With some countries, there is an interest in developing what we call a Trade and Investment Framework Agreement. But in the case of three countries -- the Philippines, Indonesia and Thailand -- we already have a TIFA, and it's a question of whether we can build on that TIFA to look for it as a possibility to a Free Trade Agreement, which is the other essence. Now in this case, I will also have a chance, with my colleague George Yeo of Singapore, to outline the core elements of the Free Trade Agreement we just concluded in Singapore. And that's at a stage where we've agreed on all the substance but one issue that our finance minister colleagues have to work out. And over the coming weeks, we'll be working on the text language.

And then, the third dimension with the ASEAN colleagues is that I will be interested in getting their view on the WTO, where I met with some of them, most recently in Sydney. So that will be the ASEAN Economic Ministers part. On the bilateral Philippines part, this is my first opportunity to be in the Philippines in this position. I was in the Philippines, here, when I was with the State Department in 1992. So it gives me a chance to talk to people on the ground about the economy and some of the challenges. Tomorrow morning we will start with a session with a combination of people from the business community and some from a broader cross-section so I can get a chance of hearing from them about what they believe is going on, and the challenges. And then I will, as I said, later in the day, I will have a chance to meet President Arroyo, and have a full-fledged bilateral session with Minister Roxas and his team.

And on that: I think it will give me an opportunity to get a further sense of the Philippines interest in the Enterprise for ASEAN Initiative, and where we can go with our TIFA. We've talked in the past about some common interests, and the Philippines has been improving intellectual property protection and we've talked about ways we can try to support that. There are areas that the Philippines has an interest in, particularly, what we call the Generalized System of Preferences. This is a special preferential trade for about a hundred developing countries where we've removed tariffs. In the case of the Philippines, it's about a billion dollars of the Philippines exports last year, qualified for this. That's about 11 billion dollars of exports. This law was just renewed in the trade act we passed and so we're now reviewing additional product applications. The Philippines has actually given us some products that we're trying to do on an expedited basis by early next year. And then, with other countries, we'll have it reviewed by the middle of next year. Obviously, there are other areas, we have agricultural interests we'll want to discuss, investment interests, and so we'll run through a bilateral list of items.

And then, with the President I hope to get a better sense of, sort of the overall reform agenda as she sees it, and how the United States can be supportive in that. President Bush has a particularly high regard for President Arroyo and obviously they have worked together in various summits like the APEC summit. And part of the message I'll also convey to her is a sense of solidarity, given the challenges and the tragedies that the Philippines has faced in recent months with terrorism, which is something we certainly understand, and our friends in Indonesia understand as well. So that's the essence of what the trip's about. So, why don't I take your questions?

Q: With regard to the EAI, are you going to sit with Secretary Mar Roxas on the possibility of starting formal negotiations already for a bilateral FTA under this?

USTR Zoellick: I think we're not quite at that stage. And that the purpose of the TIFA, the Trade Investment Framework Agreement, is to use this as a building block to try to deal with some of the bilateral issues and, frankly, to explore this. As you would see with the Free Trade Agreement we just negotiated with Singapore, when we do free trade agreements, they are very comprehensive; they are very demanding and challenging exercises. Many countries, as you may know, are interested in free trade agreements. And as the President's initiative suggests, we look with an open mind and an interest with the Philippines, but we want to try to make sure that if we go into it we can go into it in an effective fashion and move it forward. So, frankly, this will be one of the subjects that I want to get a sense from the President and Minister Roxas, is the degree of their interest and possible timing, and how we could work towards it. I have some ideas that I will share with that. At the time we launched the Enterprise for ASEAN Initiative, we had a very supportive response from the U.S. business community, including the U.S.-ASEAN Business Council, and one of the ideas that I actually explored just as I was leaving was to see whether a U.S. think tank might be interested in trying to do an analysis. And people from the United States and the Philippines can have an independent view of it, and I think there's been some discussion in the Philippines about having an independent institute do an analysis, and maybe they can do it together. So, as you know, trade is a subject that, on the one hand, people look at as an area of much opportunity, but it also requires adjustment and change. So you have to make the case with your public. So that may be something we can discuss.

Q: There has been a similar proposal with China and ASEAN to form a larger free trade area and they have a ten-year period. Are you looking at the same time frame or could it be longer?

USTR Zoellick: This really depends on the countries and we've welcomed China's approach, because, as I actually commented in the International Herald Tribune today, we're in an environment where Japan has not been an engine of growth and neither has Europe. And so, the United States has been the primary importer of the world to the order of a four-to-five hundred billion dollars trade deficit a year. And so we think it's constructive if China can also play a constructive role in growth. Having said that, what China has proposed is an ASEAN-wide arrangement that will probably not cover as many products. It will probably start with tariffs in industrial products, maybe some in agriculture. We're trying to come up with something that has a dimension like that with our ASEAN-wide work program. But we are already relatively open to many of the ASEAN countries through a combination of our WTO obligations and things like these Generalized System of Preferences that I mentioned.

So when we enter into a free trade agreement, as we did with Singapore, a lot of the work is not just on traditional tariffs. It's on intellectual property, investment, competition policy, services. So most of our work with Singapore was dealing with everything from telecommunications to financial services to tourism, to lawyers, and so it becomes a much more in-depth process. And because of that, it's important that we have a serious opportunity with our ASEAN colleagues to see who's ready to enter this. And that it's very convenient that we've just finished the Singapore agreement because now we have a template we can talk about with people. So we don't have a deadline in mind. One of the things I might learn on this visit is if the President and Minister Roxas have an interest in moving forward quickly, well then, we can try, over the course of coming months or a year, to set the framework for moving forward in a more rapid fashion. So, again, I go back to the first point: we come out here with some ideas, some possibilities, but also open to listen to what people -- the challenges and the ideas -- that people have here.

Q: The Philippines is looking forward to increasing its GSP products to the U.S. How much are you looking to give ... how much is the Philippines looking forward to?

USTR Zoellick: Well, let me just explain how that works. The Generalized System of Preferences in the United States had expired in September of 2001. So, the first thing that we had to do, which I was very pleased that President Bush pushed very hard for was that, in getting our overall negotiating authority, what we call the Trade Promotion Authority Act, we also extended the GSP, we renewed the GSP preferences, and other things actually, for Africa, the Caribbean and others. And so then, what we did is, for three countries, we undertook an expedited review -- for the Philippines, Argentina and Turkey -- for some specific products. I think in the case of the Philippines, it was pineapple juice. When we undertake that review, we have to go to an independent body, called the International Trade Commission, and they do an analysis of the sensitivity -- since we're unilaterally lowering tariffs to competition -- and so we have to be guided by that. And we hope to conclude that analysis, as I mentioned, I think by March 2003. But in addition, we are starting a fuller annual review for all countries, including another set for the Philippines, and we are getting those requests now. One of the things that I will probably have a chance to learn from Minister Roxas are some of the areas, the different products, that they will include.

I will mention one other thing of particular interest to the Philippines in that, at the time of the trade act that I mentioned, we also expanded trade preferences for the Andean countries; the Andean Trade Preference Act. And as probably some of you know, that included a zero tariff for tuna in pouches. There was a concern among the Philippines and Thailand about what that would do to their competitive position. So I was very pleased we were able to work out something of benefit to the Philippines and Thailand. Tuna in pouches represents about six percent of our tuna consumption and the Philippines and Thailand have special access to the United States, under what's called a Tariff Rate Quota which, in other words, up to a certain quota amount the tariff is lower, or zero. Zero. That quota amount had been set as a percentage of U.S. tuna production, but since U.S. tuna production is falling, the quota was coming down. We got it changed in the law so it's now set as a percentage of U.S. tuna consumption; what people are consuming. So the pie will now be growing. So when I met Minister Roxas in Los Cabos in Mexico, I was able to tell him that and I'll be able to tell the President that, too. So that's another benefit in a particular area.

Q: Regarding the FTAs -- how do you propose to do this? Will you do it the way -- the Japan approach -- where they negotiate bilaterally even as they negotiate ASEAN-wide FTA, or is it going to be the Chinese way, which is not bilateral at all but directly with ASEAN. And with which countries would you want to have an FTA first and last?

USTR Zoellick: I think you were just ... I apologize: I think you were just coming in as I explained part of it. No, no, that's okay. Ours is really a combination, in that we are very sensitive to ASEAN cohesion and so we have an ASEAN-wide work program to deal on common elements with all the ASEAN countries, in terms of moving for trade facilitation. But then we also recognize in ASEAN's growth, we realize ASEAN has countries like Laos and Cambodia and Vietnam that are not even WTO members. And so for them, our focus is WTO accession. And indeed, some of my colleagues who were just in Vietnam last week focused in on our bilateral trade agreement, not a free trade agreement, just a basic trade agreement, and the Vietnamese accession. Then, for one country in ASEAN, we are just finishing a free trade -- Singapore. So then, what we said is, for other countries that are interested in a free trade agreement, let's use what we call a Trade and Investment Framework Agreement, TIFA, to explore in greater detail and in a sense remove some of the impediments to a free trade agreement negotiation. And the three countries that have TIFAs that are ASEAN are the Philippines, Thailand and Indonesia. So with each of them we develop a customized, specialized work program. And what President Bush's initiative is, is saying we are looking towards a free trade agreements are very comprehensive. And one of the points that I'll be exploring here is the degree of interest in the Philippines in this and the timing. And so to come back to your question, there's a part that's ASEAN-wide and there's a customized part that meets each country's interest. The one other point I will distinguish from Japan, pardon my parochialism on this, but one of the reasons that Japan has a hard time doing free trade agreements is that they don't like to include agriculture. The United States free trade agreements are very comprehensive, including agricultural services, and the reason I was up at 5:30 am this morning was because we cover everything.

Q: You have met with the seven ASEAN leaders in Los Cabos, Mexico?

USTR Zoellick: The President did.

Q: Were there initial responses already?

USTR Zoellick: Very positive. Positive to the initiative, and one of the reasons I am here is to have a fuller discussion with my ministerial colleagues about it. So they had a brief discussion about what the President was proposing and we had a fact sheet, which is available on our website, and this gives me a chance to try to answer their questions more specifically. Which countries have been most interested? Thailand has expressed an interest. Minister Rini of Indonesia has expressed an interest, but I think she recognized that this is something that Indonesia would have to work towards. And at times, President Arroyo has expressed an interest in exploring this. It's going forward but that's one of the things I'll learn more tomorrow.

Q: So it's Thailand that's really more or less, most open.

USTR Zoellick: Well, I don't want to undermine the Philippines position. I'm seeing you before I see the President so I'll get a better sense from the President. I don't want to presume the position that she and Minister Roxas have.

Q: But what were the most outstanding concerns that would hinder or delay a fast track signing of an FTA?

USTR Zoellick: First you have to negotiate it. (Laughter)

Q: From your meeting in Los Cabos, what were the concerns, and from what countries?

USTR Zoellick: The first thing is that, when we do a free trade agreement and again, I'll contrast your colleagues question about China - our agreement with Singapore has somewhere between 15 and 20 chapters and so it's covering everything from the digital economy- to all degrees of competition policy, to agriculture -- it's an in-depth process. Perhaps one way to answer your question is, we look at these free trade agreements partly as a device that reform-oriented governments can employ to help connect to their own domestic reform program. Because, for example, we have investment rules to try to assure investors. We have intellectual property rules, which make more interesting for countries to have knowledge industries. We have an e-commerce chapter. Looking at the Philippines, where you have widespread English knowledge, it's a very strong possibility that you could plug into networks where we're having distribution systems based on English language connections, you know, call centers and things. I'm not trying to dodge you. I'm saying it's premature, because part of what I'll be doing over the next couple of days, is explaining how we do these and judging the sense of interest. And for all countries, we feel it's not a step function. It doesn't go from here to there. In other words, there's a building block process. For example, we've been working with the Philippines to strengthen intellectual property protection and enforcement, and if we can make some headway on that, that will make it easier to get into a free trade agreement. We've been working on trying to strengthen the customs system. That can be very costly and also has questions of transparency and potential corruption in various countries. So these are things that, if you try to work and improve for a country, you create the basis, the move to a free trade agreement.

Q: So there would be conditions that need to be met...?

USTR Zoellick: I wouldn't say it's conditions. I'd say it's a cooperative work program.

Q: Could you give us an idea how long the FTA with Singapore took?

USTR Zoellick: President Clinton had the first conversation with Prime Minister Goh in late November of 2000, okay? And so, we're just finishing it about two years later. That's a little misleading in that we had an election at that point, and we came into office and we had to build a team and, frankly, I had to work to get trade promotion authority done. But maybe one way to describe it is we're launching free trade agreement negotiations in Morocco, with five countries in Central America, with five countries in the Southern African Customs Union and, most recently, Australia. And with those countries, we are aiming for between a year and two years. It may take longer with the Southern African Customs Union because you've got countries that are quite at varied stage of development like Lesotho and Swaziland. But we're going to do our best to try to get a number of those agreements done during President Bush' first term, which runs till January 2005.

Q: Do you expect any coordination with China and Japan to develop a regional free trade framework there? In my sense, they are in the advance stage with negotiation with ASEAN nations. What kind of coordination would you expect?

USTR Zoellick: I wouldn't say that Japan is in an advanced stage. And I think China has just begun. I met with Prime Minister Go Chok Tong and he was describing to me that it was quite early. If you take the trade flows between the United States and the ASEAN countries, they're larger than they are with China. So with real trade and investment, it's much more significant.

Well, we all work together as part of APEC, and we're all members of the WTO. Some people always see this as a competition. We really don't. We're not mercantilists. In other words, I'm happy where people open markets wherever they can. From my point of view, for the United States that's been carrying a large load in the international trading system, I wish Japan would do more. I am pleased that China is doing what it's doing. We work together in the WTO and I hope all of us can get the Doha round done by 2005 as we said we would. We worked together in APEC. One of my goals last year was to get China and Taiwan into the WTO. One of the ideas that I've tried to introduce into the thinking of trade over the course of the past year, is you can work at multiple levels at once. You can work bilaterally, you can work regionally, and you can work globally in a mutually supportive system.

Q: Is it correct to say that we have to be out of the IPR watchlist, even before you consider negotiating with us for an FTA?

USTR Zoellick: We haven't set any pre-conditions.

Q: You said earlier that any negotiation involves an in-depth process. And you cited competition, investment policy, and IPR. Does it mean that if we are still in the IPR watchlist there will be no negotiations?

A: No, not necessarily. There is no pre-condition?

Q: Is the Philippines already going to be ... because I think that's one of the issues that Secretary Roxas wants to take up with you: the removal of the Philippines from the IPR watchlist?

USTR Zoellick: Well, then I'll let him take it up with me. Nice try though. (Laughter.) I've been doing this for a long time, guys. (Laughter.)

(end transcript)

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

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