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Barshefsky Question and Answer—October 19, 1999

Speakers: Alan H. McGowan, Syracuse University, Charlene Barshefsky, U.S. Trade Representative, and Mort Zuckerman, U.S. News and World Report
October 19, 1999
Council on Foreign Relations

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ROGER M. KUBARYCH: Thank you for a terrific summary of so many difficult topics. We know that there’s going to be an excess supply of questions, and so try to get as many questions answered and asked as possible, we’re going to bend over backwards to have you be really concise, and we’ll try to get through as many as we can. And we’ll just try to keep questions grouped, so if you have a follow-up, just raise two hands and we’ll try to maintain that kind of order. And then we’ll go around.

We’ll start right here. Please—three things. First, everything today is on the record, certainly the speech, which is wonderful, as well as the question and answers. And, two, please say your name and affiliation. It really is helpful. Thank you very much.

Mr. ALAN McGOWAN (Syracuse University): Alan McGowan, Syracuse University. I’d like to ask you to expand a little bit on your biotechnology point. It seems to me that the issue of genetically modified organisms, for which the environmental community is gearing up big time for the Seattle conference, is either a scientific dispute or a trade war with Europe or both, and it’s apt to be a very powerful barrier. You made an interesting comment about the transparency of regulations. Do you have a specific proposal to make at Seattle, and if so, what is it? And have you been consulting with other countries, and what do you think is the success of that proposal?

Ambassador CHARLENE BARSHEFSKY (US Trade Representative): This is a very complicated area. I think it is the area that may well be defining between the US and the EU on trade policy and on trade grounds in general. The view is this: The science is going to fall wherever the science falls. We’re comfortable with that as a baseline formulation; that is to say that sanitary, phyto-sanitary regulation, regulation on biotech ought to be science based, not politics based, not hysteria based, but science based. There is ample room in the current set of global trading rules that, where the science is indeterminate or where there is not a sufficient quantum of science, then countries can exercise precaution and take measures not to allow product to come in. And there’s ample ability within the current spate of trade rules to allow that, and of course we have, for many, many years, followed exactly that pattern in any event.

So then question then is: All right, if the science ought to be the governing force, bearing in mind the qualifier on the notion of precaution that I’ve just laid out, then what should the role of trade policy be? And it seems to me that, well, the trade policy is basically to ensure due process. It is to ensure that there is a regulatory regime that is known and knowable, therefore transparent, that spells out the requirements needed, the time line for consideration that then renders a decision.

Romano Prodi, the new president of the EU, as you know, has looked very carefully at the FDA as a model. Europe has no such model now, and you see this in sort of the hysteria that has gripped Europe on questions of food safety. There is no confidence among European consumers in any science-based regulatory regime in any of the member states, let alone on a Pan-European basis.

So we thought that the best means of pursuing this issue was not in any way to question scientific principles; indeed, to reinforce science as the governing factor, but to ensure that regulatory processes are transparent, they’re timely. They are not politicized; that is to say they have attached to them an aura of independence, de facto and de jure. And that is, I think, the role of trade policy: to encourage that kind of regulatory regime, whatever the specifics of the regime. We have worked very closely with FDA, with HHS, with NCI, with a number of the other scientific institutions on this, and we continue to do so.

Obviously the overarching principle to all of this is the following, and that is that countries have the right, under the current rules, to set whatever levels of health, safety, environmental protection that they deem necessary, regardless of the international standard. But science is the foundation principle.

KUBARYCH: Thank you.

Mr. MORT ZUCKERMAN (US News): If I may follow up, my name is Mort Zuckerman. I’m with US News. You know, Europe has had a very different experience. I mean, they had mad-cow disease...

Amb. BARSHEFSKY: Right.

Mr. ZUCKERMAN: ...in England, although as somebody once said, if they don’t think mad-cow disease has come to the United States, they haven’t met Congressman Bob Dornan. That’s a separate issue. The French argue that they have a very heavy commitment to nuclear power, and we don’t. In fact, we have a huge political opposition to nuclear power, and they draw that as an analogy to their resistance of genetically modified food and food products. I mean, how are we going to deal with that, whatever the theory is of rules-based and science-based approaches to this issue? It’s a huge political issue there, and we’ve got to find some way...

Amb. BARSHEFSKY: Right.

Mr. ZUCKERMAN: ...to cope with that. And how are we going to do that, notwithstanding the ideal...

Amb. BARSHEFSKY: Right.

Mr. ZUCKERMAN: ...that you say the science—they have no confidence in their government’s rules or reviews of this.

Amb. BARSHEFSKY: Right.

Mr. ZUCKERMAN: And it’s not going to happen for a long time.

Amb. BARSHEFSKY: Right.

Mr. ZUCKERMAN: In the meantime, we’re going to have a huge political crisis over there.

Amb. BARSHEFSKY: Well, I think probably at some point we’ll see the limit of trade policy in this area. There is a consumer perception problem in Europe. It is fed by the lack of confidence in their own food safety regime. It’s fed by mad-cow, dioxin, any one of a number of scandals, starting with tainted blood supplies in France, as you know. And so there is a crisis of consumer confidence in Europe.

I don’t have a trade policy response for that. I think that there are a couple of things, though, that ought to be done. One, I think certain responsibilities fall on the shoulders of American and other companies that are marketing what they’re marketing. There is absolutely no educative campaign in Europe on these issues of any organized extent. In certain countries where that has happened, in the Netherlands for example, those programs have been very, very effective. But there is no organized series of programs, and I think it’s incumbent on industry in particular to start providing that basic information.

I think, second, what I laid out in terms of—and it’s a longer-term solution—in terms of transparent approval processes. But, third, there’s I think an intermediate step that would be a good step. We have proposed to Europe, under the rubric of our trans-Atlantic economic dialogue and trans-Atlantic economic partnership initiative, that we get together beginning first half of next year scientists from both sides of the Atlantic; governments, both sides of the Atlantic, including member-state governments, not just the commission; academics; consumer groups from both sides of the Atlantic to see if, on some interim basis, there can’t be some agreements reached on the question of regulation, regulatory reform, the scientific bases. I mean, if you look at the two scientific communities, they’re not that far apart in terms of the biotech issues, and they weren’t far apart on the beef hormone issue.

Nonetheless, I think you have to get the scientists involved because that creates confidence where none had existed. And then you have, I think, this additional dialogue with the other groups. I think that may produce some interim result, even if only on an ad hoc basis, to try and get us over the hump before the EU actually installs a legitimate regulatory regime.

Mr. HARRISON GOLDIN: Ambassador, I’m Harrison Goldin. As you know well, the failure of the United States to conclude a WTO agreement with the Chinese last spring has been much criticized. Given the policy imperative of concluding such a deal going forward, I wonder if you think realistically that the focus of the discussions is going to be on improving the deal that was then pending or trying to preserve the deal in its then form or in simply trying to minimize the extent to which there is erosion in that deal?

Amb. BARSHEFSKY: I think the only relevant question is whether the deal that is finally arrived at is the right deal. And by `right deal,’ I mean a commercially meaningful deal with very substantial commitments by China, as it is capable of making as we know, and a deal that strengthens as well the WTO and does not create any adverse precedent for the other acceding countries, most particularly Russia.

As to the question that you’re asking of where are we now, in effect; what is the Chinese thinking on this, I can only speculate as well as you—maybe slightly better, but probably not by much—the only thing that matters at the end of the day is the agreement. And the rest, in terms of posturing, in terms of rhetoric, in terms of, `Should we have concluded? Should we not have concluded in April?’ is completely irrelevant. The only thing that will matter at the end of the day is whether China will, in fact, come forward with a range of commitments that we, Europe and others expect them to make. And we shall see what happens. I think they remain quite committed to the accession process, but the accession has to be on the right terms. It has to be on the right terms. That is crucially important.

KUBARYCH: Dan first.

Mr. DAN SHARP (The American Assembly): Dan Sharp with The American Assembly. Charlene, you’ve put forward a very impressive and ambitious set of goals for Seattle. Of those goals which are most important to you, what do you see as the major obstacles to achieving them, and what are your plans for dealing with those obstacles? Feel free to discuss both international and domestic obstacles, if you wish.

KUBARYCH: Sounds like a final exam question, doesn’t it?

Amb. BARSHEFSKY: This is where I would always raise my hand and ask for a second blue book.

Internationally, I think positions of most of the actors are fairly well-known. They don’t differ radically from the expected, but they do differ to some extent. Agricultural reform—of course, Europe, Japan, Korea aren’t too keen. Reform of services sectors, developing countries are somewhat concerned whether opening their markets for services trades will lead to a lack of indigenous services provided. Of course, the global experience is exactly the reverse, but that will take some education. Tariffs—I think there’s pretty broad agreement tariffs should come down further. I don’t anticipate much of a problem there.

You still have a split between the developing countries and the developed, although some developing countries over the last 10 years are bridging that divide somewhat. I think that will be helpful. On the other hand, you have some that have always taken a very activist anti-trade stance, and we would expect that to continue but not be dispositive of the outcome of Seattle.

On the domestic side, we’ve worked, I think, well with environmental NGOs, labor, with Congress, both parties on a strictly bipartisan basis. I think we’ll be putting forward items on the labor side, the environmental side, that those groups do like. It will never be enough. But there I think the challenge will be the global one, and that is a deep suspicion held by many countries that the new trade barrier of choice for the developed world will be labor and environmental issues. That is certainly not our intent because we see these initiatives as complimentary to an open trading regime, not in any way in opposition to it.

KUBARYCH: David.

Mr. DAVID MARK (New York University): David Mark, NYU. Apart from the biotechnical problems that you mentioned, and apart from the demands of the developing world, what do you see as the major demands of, let’s say Japan, Korea, the European Union, Mexico, Canada, on the United States that are going to be difficult for us to respond to? And will the lack of a fast-track agreement in the Congress hamper our...

Mr. ABRAHAM KATZ (United States Council for International Business): Our objective for that, and also on intellectual property. There’s some concern in the business community that you might give a little bit on some of the Indian and other demands on intellectual property in order to get what you want in the labor area.

Amb. BARSHEFSKY: Not concerned at all about intellectual property, nor should the business community be concerned about intellectual property rights protection.

With respect to competition, I’m not for any negotiation where the negotiating parameters are not only ill-defined, not defined and which I view as interposed as a means of delaying the agricultural liberalization—which is what the competition agenda is designed to do.

I, myself—I have a substantial interest in competition policy just because it’s a great area and it’s fun to think about. And it is a problem not in every country, by any means, but it is an acute problem in some. It seems to me there probably ought to be some form of work program. And, perhaps, one could envision down the road the formulation of an agenda that was doable, reasonable, getable. But I don’t see that now. If half the WTO members who don’t even have competition lost, what on Earth are we going to negotiate? So I think that there’s very little international support for a competition negotiation, but I would like to see forward work because you could see that area shaping up over time to be ripe for something. The question is: What is the something?

Investment—I think, likewise, there is quite tepid support among countries on investment, I don’t like the idea of negotiating an instrument which will give us less protection than our bilateral investment treaty, and that’s exactly what’ll happen in the WTO. Countries aren’t right—or aren’t ready for absolutely, unqualified commitments to national treatment, to non-discrimination, to ending investment review of a discriminatory nature. They’re not ready for it. They won’t do it. We already know that in the APAC context quite well, where we negotiated voluntary investment principles. And even on a voluntary basis, have numerous exceptions to the basics that are contained in our bilateral investment treaties.

So in my view there is probably some forward work program. Maybe there is, down the road, something that can be done that would be meaningful. There’s always something you can do—but why do it if it’s not meaningful—something meaningful to be done. But that won’t happen in this round.

KUBARYCH: Let me ask a related question. You have had quite a lot of success in the sectoral negotiations...

Amb. BARSHEFSKY: Mm-hmm.

KUBARYCH: ...in individual, narrower ones. And I hear from some people in the business community, essentially, `That’s good enough for us.’

Amb. BARSHEFSKY: Mm-hmm.

KUBARYCH: That, basically, why do we need to open big rounds at this stage when why not just leave it to Charlene and the approach of dealing, where useful, on a sectoral or industry level? What’s the counterargument to that? Which is a very pragmatic and—in saying that you’ve got a lot of successes, you can do more. Why risk those kinds of successes...

Amb. BARSHEFSKY: Mm-hmm.

KUBARYCH: ...in the morass of a big round?

Amb. BARSHEFSKY: Well, it’s one reason we don’t want to see the morass of a big round. We’d like a very focused agenda. Look, there are two ingredients here. One is a subject to negotiate, and the other is leverage. And you have to find the right balance between the two. Subject to negotiate? OK, pick agriculture, but where’s the leverage, particularly among major global actors who don’t want to reform. So you have to add a little something else to the stew. And what you add is services, because that’s on the docket in any event, and you probably throw in industrial tariffs. And between the three, you end up with enough going on that—and enough leverage in different areas that you can actually make something happen across the board.

So I’d like to see a round that is manageable, along the lines of some of our sectoral agreements. But you also have to have enough leverage to make it all happen.

Mr. GERALD LEVIN (Time Warner Inc.): Gerry Levin. What issues, if any, will or should creep into the presidential campaign that you’re working on?

Amb. BARSHEFSKY: What issues can or should? I do think it’s important, and I think that the major candidates are absolutely ready and willing to do this on both parts—of both parties. I think it’s very, very important to answer the criticisms and the assertions made by those candidates which take a very isolationist bent toward US economic and foreign policy. I think it’s terribly, terribly important that the US public not begin to believe that isolationism is ever in the interest of the United States. I do think that’s an issue on which the major candidates would be prepared to speak, and speak quite eloquently and strongly. It’s equally important for foreign policy as it is for trade policy. And for my two cents’ worth, that’s the issue that I think ought to be at the top of the agenda. That is to say, a greater appreciation on the part of the American public what it means to be a global leader, how we arrived at that position and why we should never give that position up.

KUBARYCH: This will have to be the final question. I sort of would like to go on much longer, but we really have to end exactly at 2:00. So I’d love your final question to be very short. Thank you.

Unidentified Man: It will be short.

Just on China, again. Is there any timework or framework for the next meeting with China about the WTO? And is it realistic to expect that we will have some kind of an agreement with the Chinese before the Seattle round begins?

Amb. BARSHEFSKY: We haven’t yet set up the time of our next meeting, but, you know, with China, there’s always a next meeting. So I have every confidence there will be a next meeting.

And in terms of overall time frame, I’m not so worried about the time. I’m worried about the agreement because that has to govern. I don’t ever set an arbitrary limit. I’m quite patient. It’s absolutely critical the agreement be the right agreement. And I wouldn’t prejudge how quickly or slowly the Chinese may move. As you know from—I’m sure from observing other negotiations, once they decide to take a decision, they take it and they do it. And that’s all very, very fast, however complex the talks seem to be.

So I would say that certainly this year’s an important marker for China. One, because of Seattle, and the fact that while they could participate in a new round, they would have no voice, certainly no decision-making capability. They don’t want that. Second, of course, big marker is simply the turn of the century, which is a very big date for many, many countries. That’s why we see many countries wanting to accede this year. It isn’t just Seattle. There’s also something rather historic, bigger headline nature of coming into the global system at the turn of the century. And I think that’s also an important marker for China. But we’ll have to see what they want to do and how quickly they want to move.