*EPF410 11/21/2002
Transcript: USTR Sees Investment Agreements Before Free Trade Deals
(ASEAN Economic Ministers Nov. 20 joint press conference, Manila) (2480)

U.S. Trade Representative (USTR) Robert Zoellick says the United States and its ASEAN trading partners should work on setting up bilateral Trade Investment Framework Agreements (TIFA) before moving on to more ambitious Free Trade Agreements.

In a November 20 joint press conference of ASEAN Economic Ministers in Manila, the Philippines, Zoellick said ASEAN nations responded positively to the Enterprise for ASEAN Initiative (EAI) President Bush first presented at the recent APEC meeting in Los Cabos, Mexico.

The ASEAN nations, Zoellick said, suggested implementing the EAI by imbedding "the work plan concept within a TIFA" for all ASEAN members.

"Now at the bilateral level, as the President stated in his announcement, the next step would be, before having a free trade agreement (FTA), would be to have a bilateral trade investment framework agreement (TIFA) to lay the groundwork and to work through some of the issues and explore on both sides the degree of interest," Zoellick said.

The United States has TIFAs with the Philippines, Thailand and Indonesia, he said, while Brunei has "expressed an interest in developing one."

The timing of any free trade agreements, Zoellick added, is up to the ASEAN nations and the United States to determine together.

"We now have the model of our agreement with Singapore," he said.

The United States and Singapore reached an accord on a Free Trade Agreement for the two nations just before the ASEAN-USTR meeting took place.

Following is a transcript of the November 20 joint press conference in Manila:

(begin transcript)

Joint Press Conference
ASEAN Economic Ministers
Joaquin Guerrero Room
Manila Peninsula Hotel
Nov. 20. 2002

Secretary Mar Roxas, Philippines Department of Trade and Industry: Let me just begin by asking everyone to make sure that their cell phones are turned off or put on silent mode. There is a Chairman's Statement that is being reproduced now and will be made available at the end of this press conference. We are a little bit pressed for time so I'll just start with a very, very abbreviated opening remarks and then we'll open it up to Q & A from the media. You can ask myself as moderator, or any of the members here in particular, with respect to any of the questions that you might have. The ASEAN Economic Ministers and the U.S. Trade Representative had an informal consultation on a broad range of issues. In particular, we discussed the Enterprise for ASEAN Initiative which President Bush first presented to the ASEAN leaders at Los Cabos, at the last APEC meeting. USTR Bob Zoellick further elaborated and talked about the various elements of this EAI and the ASEAN Ministers expressed their welcoming this initiative coming from the U.S.

As initially conceived by the U.S. the EAI offers the prospect of a bilateral FTA's between the U.S. and individual ASEAN nations on a case by case basis and on a voluntary basis, each nation or economy volunteering to undertake the EAI opportunity on its own accord. As part of the discussions there was also mutual expressions of support for the accession to the WTO of ASEAN members that do not yet belong to the WTO in particular, Cambodia, Laos, [inaudible] and Vietnam. And the Ministers also expressed appreciation for the U.S. efforts and the U.S. expression of support for the normal trade relations, NTR, status for Laos, [inaudible]. As part of the U.S. presentation and also proceeding from the preceding AEM-USTR consultations in Bangkok, a specific work program was discussed, the elements of which are going to be finalized by the senior officials and this will provide part of the actual work undertaking in order to move closer relations forward.

In response to President Bush' initiative, the Ministers tasked our senior officials, as I had said earlier, to work out a specific work program under an ASEAN-wide Trade and Investment Facilitation Agreement framework. So that the actual work program will not be on any one specific matter but will be related to a more over-arching or a more comprehensive TIFA. That will be undertaken as between the U.S. and the ASEAN nations. The envisioned TIFA will have several unique characteristics - foremost of which will be a ten-minus-x or Opt-In, Opt-Out mechanism for some of the specific provisions that certain nations will have difficulty with.

We also discussed developments in the WTO Doha Development round work program, in particular the goings-on at Sydney in the mini-ministerial in Sydney, and we all likewise expressed to one another our continuing commitment to see the Doha Development Agenda to its successful fruition.

And finally, the Ministers discussed the benefits of having regular meetings, and the importance of enhancing channels of communication as between the AEM and the USTR. That's a short synopsis of the Chairman's statement. In the interest of time, we open it up now to Q & A.

Question: Mr. Zoellick,[inaudible]from Reuters. The U.S. is on the verge of signing a truce, FTA in the region, with Singapore. What do you see as the timetable for the other 9 members of the ASEAN. What impediments do you see towards realizing this trade (inaudible)?

USTR Zoellick: I was very encouraged today, in that, as you could see from our host, Minister Roxas' comments, the ASEAN countries as a whole responded to the President's initiative for the Enterprise for ASEAN- by suggesting that we imbed the work plan concept within a TIFA for all of ASEAN. So I think this was a very well-received, enthusiastic response from both sides. Now at the bilateral level, as the President stated in his announcement, the next step would be, before having a free trade agreement, would be to have a bilateral trade investment framework agreement to lay the groundwork and to work through some of the issues and explore on both sides the degree of interest.

We have TIFA's with the Philippines, Thailand and Indonesia and our friends from Brunei have expressed an interest in developing one. As for the timing of any free trade agreements, that is really up to the ASEAN parties to determine with us, because we wanted to open the door, we wanted to encourage it, we now have the model of our agreement with Singapore and Minister Yeo and I described some of that to our colleagues so they could get a sense of what is covered. At the same time we realized that entering a free trade agreement with the United States is a particularly serious endeavor. We do these in extremely comprehensive fashion. That has good parts, it also has challenging parts. The good parts is- some countries see this as a device they can use to help their own internal reforms. So if you look at the type of things we discussed with Singapore-- broad coverage of services, investment, aspects on intellectual property that are keyed to development. But at the other hand, because they're comprehensive, they obviously, people have to prepare the groundwork at home to be able to do these, and that's why we have the TIFA program.

So there's no particular plan or launch date other than the opportunity and a serious commitment on the United States to have the building block and have the discussions not only among governments but among private sectors, because this has come up in all our conversations-is that we need to build support in countries to do this. And on the U.S. side I would say I am extremely delighted that the businesses that are part of the ASEAN Business Council embraced us very warmly so that's the start of building support on our side.

Question: Sorry, sir. Mr. was discussing the [inaudible] suggest that some of the reforms that the U.S. would like to see are not going to be completed?

USTR Zoellick: The opt date, opt out clause was in the context of taking the idea for a work program that we suggested and even giving it greater form and structure through an ASEAN-wide Trade and Investment Framework Agreement. And the concept was actually one that ASEAN has used in its own context where recognizing that we've got a diverse levels of development here. We have 3 countries that are not yet members of the WTO and one of the things is part of our initiative and with ASEAN we want to get them to be members as soon as possible.

And other countries like Singapore and Brunei that are in a much higher stage of the income scale is that if we tackle a topic like financial services or intellectual property or one of the standards issues - well, frankly, the hope will be that all the ASEAN countries can eventually participate but we don't want to force countries to move more fast, quickly than they can. I will just say that I was discussing with Minister Roxas on the way down here the experience of ASEAN as it's enlarged. At least let him speak for himself but what I've observed is it's had a shared experience for some of the countries that have joined ASEAN. It's probably helped them with their WTO accession. It's helped them with regional integration and so the challenge, the balance that we are trying to strike in our initiative, President's EAI initiative, and in our discussions here today, is we want to respect ASEAN's coherence, respect its integration, recognize the economic benefits of its own free trade agreement, at the same time, recognize the reality. You've got countries in different circumstances.

Question: [inaudible]

USTR Zoellick: Well, I get this question a lot so I'm glad you actually asked it. It's that our approach is quite positive towards this. If you'll recall, one the objectives that I had last year which I was pleased to be able to accomplish, was to bring China and Taiwan into the WTO after a 15 year journey. China is a rising economic influence in the region so I think it's a good sign that China is reaching out to the ASEAN countries and suggesting that its growth will also lead to a shared prosperity in the region. Now, from a U.S. prospective- there's another benefit, in that we're running a current account deficit of about 4 to 5 hundred billion dollars a year. We talk about opening markets, well I have some good statistics to show how open we are. We're the one that is the importer of first, second and last resort for everybody. So as my European and Japanese friends tell us about opening markets I point to some numbers. But the big problem is that Japan's economy continues to struggle, Europe's economy continues to struggle. Ours has uncertainties but what would happen to this region if we weren't importing all these goods? If we can get some more balancing growth and have China be a source of imports for countries in this region, that's a positive.

But there's a third point as well and that is - it's that we recognize that as the ASEAN countries embrace these initiative, they, and it's totally normal, want to have options. And part of our Enterprise for the ASEAN Initiative, and the Japanese initiative is to suggest that regional integration is healthy, but we also think the ASEAN countries are global players. They're not just players in Southeast Asia and so if the United States can help do that, and create increased incentives for investments in the region, that's a win-win proposition for everybody.

Question: Tress Reyes from Nikkei. Can you tell us exactly what kind of reforms you talk about and do these reforms have to be in place before you can go into action, negotiations for an FTA?

USTR Zoellick: Didn't we discuss this yesterday? [laughter]

Question: Not specifically, reforms.

USTR Zoellick: We don't have a list of prerequisites and in fact I was thinking one of you is asking a question about intellectual property and watchlists. Maybe- was that your question? And I was thinking, as I went to bed last night, that shows how you affect me [laughter]- that we actually have a free trade agreement with Israel and Israel is on our watchlist. So there's no prerequisite. And we're negotiating free trade agreements with 34 countries in the western hemisphere and many of them are on the watchlist. We're not trying to use this as a hard and fast set of pre-conditions. We're trying to share with people our insights on what we think is important for economic development, how trade can support that, our experience with other agreements, and then determine which countries want to move towards that level of integration.

And in the ASEAN context, we now have a wonderful example through our agreement with Singapore. Singapore has already been open in the goods market and while it has many skills, it's not seen as a worldwide agricultural producer. So, not surprisingly, what we focused on in this agreement and why it's so interesting, globally, is the advances in services, in intellectual property and other aspects, and this allows us then to share with others what we did in this context. Now we're not saying that every trade agreement has to look like the one with Singapore, but what we do know is, and this is what we're trying to do ASEAN-wide and what we will try to customize for individual countries - there are some problems that cover all countries. Like customs facilitation. There are some problems that deal with making sure your custom's regimes work- have good information technology, don't edit additional costs so you can value goods properly. There are some like standards, like I was talking with some Filipino businessmen this morning about sanitary and phytosanitary standards for developing countries so they can export their goods. There are others that fit the category of financial services. How do we open financial services markets.

So what we're trying to do here is respect ASEAN own integration by having a work program like that ASRAN-wide and it's discussed in this agreement, and get ASEAN suggestions, and then with individual countries like Mar and I will meet this afternoon, there's individual problems to try to work. The world is a diverse place so we need to respect integration but at the same time we need to customize.

Question: So there are no political reforms that you would like to see in place?

USTR Zoellick: No, basically, the point on the free trade agreements is that free trade is about freedom and openness and so the prime point is that we'd like to try to help developing country democracies achieve the economic reforms to build support for openness. So again, it's not a pre-condition- it's a question- let me give you another example of it. We even now are negotiating free trade agreement with Southern African Customs Union- for those countries that are African democracies, very proud ones. One of them is a monarchy- Swaziland.

Secretary Roxas: Thank you very much.

(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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