APEC Ministerial and Summit Meetings

12:00 P.M. EST

MODERATOR: Thank you all for coming. Thank you, Ambassador Schwab for coming. Ambassador Schwab has a good excuse for being a little bit late. She was over at the cabinet meeting and she has to leave pretty much right at 12:40, so let's not listen to me, but Ambassador Schwab if you'd like to make a couple remarks on the trip.

AMBASSADOR SCHWAB: Absolutely.

MODERATOR: And then we'll be happy to take your questions. This is on the record so everybody knows.

AMBASSADOR SCHWAB: Absolutely, thank you very much. I will be efficient in my opening comments so as to leave time for questions and conversation. I am very much looking forward to attending the APEC ministerial and then summit meetings next week in Hanoi. I will be traveling early next week with Secretary Rice and obviously my focus will be on trade relations in the region and with the region, the Asia Pacific region. I will be focusing on the Doha Round negotiations and the very important interactions that we have with the trade ministers represented at APEC on Doha and also we'll be conducting a variety of bilateral conversations. So the conversations that we will be having on trade and on economic development next week range from multilateral and Doha to regional and APEC to bilateral in terms of FTA negotiations that are going on, relationships with ASEAN and so on. So it's a very, very full agenda.

To put this into perspective, when you look at the Asia Pacific region, the region accounts for $1.6 trillion in U.S. trade, which is close to two-thirds of our global trade. So you can see how very important the region is to our economy and how important our economy is to the region. And there are some of the strongest leaders and allies that the United States has in the Doha Round negotiations in Geneva, and one of our objectives -- one of the U.S. objectives -- continues to be to resuscitate, to revitalize, to lay the groundwork so we can restart the Doha Round negotiations and that will be an important topic both in terms of bilateral discussions and small group meetings.

Countries represented in the region have been very important advocates for an ambitious, successful and balanced Doha Round outcome, so an extremely important set of conversations. And I will stop -- I will just stop right there and open the floor to questions or comments.

Yes, sir.

QUESTION: Could I ask a question about Doha? How realistic is it really to be able to use this APEC session and the meetings that you're having around it to reenergize Doha? I was at the AEI event that you addressed the other day where I think you suggested that it was up to others to come forward with suggestions. The U.S. had put its ideas on the table, now it was waiting for some proposals from others. We've heard a deafening silence in the meantime. I just wonder if it is realistic to try to sort of get this thing back on track or you think it's as dead a Beijing duck.

AMBASSADOR SCHWAB: I think it is definitely realistic for a variety of reasons. I think the most important thing to recognize is that since July, when we have had, you know, when the talks broke down, there have been evolving networks of very quiet conversations taking place under the radar screen. So for example the G-20 meeting that took place in Rio, the Cairnes Group meeting that took place last month -- the month before last -- the ASEAN trade ministers meeting that took place in Kuala Lumpur. And on the margins of all of those meetings, a lot of bilaterals and small group meetings, plus phone calls, plus senior official level meetings. So there is a vast network of very quiet, substantive conversations going on out of the glare of the media, quite frankly, that you get when you have a formal ministerial in Geneva.

And so, do we have any breakthroughs ready to announce? No, we don't, not yet. Is there clearly the will among, you know, most WTO participants to see this happen? The answer is yes. The question is how that will translate then into substantive outcomes. And I think the "who goes first" conversation is one that hasn't gotten us anywhere. As I said, we went first last October. It didn't, you know, didn't solve the impasse, or it did but for a very short period of time. And the level of ambition in the offers of others just didn't meet the level necessary to achieve the promise of the Doha Round in terms of economic growth, in terms of new trade flows, in terms of alleviation of poverty.

That said, as we go forward there's a lot of confidence-building that has been taking place, that needs to be taking place, a lot of quiet "what if" conversations that are starting to take place. And ultimately, if there is a breakthrough, it will be a breakthrough sort of in tandem. There'll be a handful of countries that understand that it's okay to take the risk of putting something new on the table because they know what will show up on the table from other key countries or groups of countries. So I think -- I mean the bottom line is definitely not dead, definitely in trouble. I mean there are fundamental differences, fundamental differences, among key trading partners on Doha.

One of the reasons that it is so -- that for us the APEC meeting is so important is that so many of the ambitious countries, the countries that are really ambitious for a successful outcome of Doha are in this region. So these are countries that understand the benefits of free trade, of more open trade, of generating new trade flows.

Yes, sir.

QUESTION: And what will be the most important topic when you meet Minister Bo Xilai this time? And I wonder if and when the United States will take the further step in WTO to ask China to protect IPR? And do think the new Congress will pose more pressure on you to be tougher with Chinese?

AMBASSADOR SCHWAB: I am looking forward to seeing Minister Bo again. We had a good set of meetings in August when I visited Beijing. I look forward to seeing him in Hanoi. The conversation with Minister Bo will be on all three of the areas I described: the multilateral, the regional and bilateral. Multilateral -- we would like to see China be more active in advancing an ambitious outcome for the Doha Round. China's part of the G-20 and can play an important role in that.

In terms of APEC, obviously China is a critical trading partner of ours in the region. And in terms of bilateral issues, the focus that we have is the extent to which our bilateral trading relationship can be accounted for by trade policy issues so, for example, intellectual property rights issues, market access issues. And we've talked very seriously about the extent to which China is acting in a manner consistent with its WTO obligations. The area of intellectual property rights is one where we've had an active dialogue going. We would prefer not to be going through a dispute process in the WTO. We would prefer to resolve the IP protection issues and that means both in terms of the legal framework and the enforcement, the actual enforcement.

So we'll be talking about those and hope that it means ultimately we won't have to litigate, but we have to litigate we will.

QUESTION: I understand that you are initiating the so-called FTAAP for a free trade agreement in Asia Pacific areas. Does this initiative (inaudible) include all the APEC members including Taiwan? And if China politically oppose this inclusion, what would be the reaction of the -- your reactions?

AMBASSADOR SCHWAB: We should -- let me talk about the issue of the potential in the future of an FTAAP, a free trade agreement among the Asia Pacific countries. That will be -- it's a topic that we anticipate will be discussed in Hanoi. Recognize if you go back to 1994 and the Bogor Goals that APEC embraced in 1994, this is a plan for trade liberalization among all the members of APEC that is supposed to be achieved for the developed country members by 2010 and the developing country members after that.

We aren't talking about suddenly launching a negotiation for a free trade area of the Asia Pacific region. I think over time we would hope to see that evolve and it's a good topic. It is a good topic for us to be discussing. I think for the countries represented at APEC, all of us have as our first priority a successful Doha Round negotiation. And so whatever we talk about in terms of trade will need to be consistent with that.

QUESTION: Just a housekeeping question on FTA, how many countries does the U.S. have FTA agreements with? How many are in negotiation and how many countries are --

AMBASSADOR SCHWAB: Oh, this is a quiz. Okay.

QUESTION: Well, maybe -- (laughter) -- final negotiations?

AMBASSADOR SCHWAB: We have ten in effect -- no, we have ten in effect -- no, no, no, but does that include the three that existed before we came in or we've done ten since we got here.

STAFFER: Ten since we got here.

AMBASSADOR SCHWAB: Ten since we've got here. So there were three in effect when the Bush Administration came in, we've negotiated ten since then. We have three that have been passed by the United States Congress that still need to be implemented. We have two that have been finalized and that's Peru and Colombia that await congressional approval. And under negotiation, we have a variety under negotiation, not all of them will be finalized but under active negotiation. For example, FTA negotiations with Korea, with Malaysia, with Panama and those are the three most active. So how many is that? Did we count that up? So we've got three, plus ten is 13 in effect; plus three that need to be implemented, that have been enacted by Congress; plus two that have to be enacted by Congress, plus several under negotiation.

QUESTION: Ambassador --

AMBASSADOR SCHWAB: Actually if you look -- oh, I'm sorry -- the Asia Pacific region, I mean going back to the question about the broader Asia Pacific concept, there are I understand at least 50 FTAs that either have been negotiated or are under negotiation or in discussion stages among the countries represented at APEC. So it gives you a sense of how complicated this is. And one of the activities that APEC has embraced and did in May, for example, when the trade ministers met, is furthering the integration across countries. So one of the things we've talked about is, for example, model FTA chapters. You know, can we develop model chapters for FTAs so that we're not creating the spaghetti bowl, so that the FTAs further regional and ultimately global economic integration.

QUESTION: Okay.

QUESTION: What's the prospect for (inaudible) fast track given the result in the election? I'm sure that you're (inaudible).

AMBASSADOR SCHWAB: Well, I think -- obviously trade votes in the United States Congress are always difficult. I mean you look at the vote on fast track in 2001 and you look at the vote on the Oman FTA just last year. I have no reason to believe that prospects for trade promotion authority are any worse or any better with the result of the election. I mean a lot of this is wait and see. If you look at comments that Congressman Rangel -- soon to be Chairman Rangel -- has made, comments that Senator Baucus, who is likely to be the Chairman of the Senate Finance Committee has made, both of them have spoken about the potential for bipartisan -- more bipartisanship in trade and that includes the prospect of trade promotion authority. So I think the key is going to be what it has always been, or what it has been since July, which is if we have the prospect of a good Doha Round agreement, we then have the prospect of trade promotion authority extension. And so I think that really is the -- that's really the answer.

And we'll see how their statements translate. But we have -- there's a long history of bipartisanship in trade in this country and I will take the new leadership at its word and will look forward to working with them.

Keep in mind we have been working with them all along. I mean, this is -- there are good relationships built up. We will continue obviously working with the Republicans in the House and Senate and with the Democrats in the House and Senate to advance the very ambitious trade agenda that President Bush has.

QUESTION: Ambassador, I'm just wondering about the FTA negotiations with the Democrats in power now in Congress and possibly the Senate. How that would affect your FTA negotiations underway including the one with Malaysia? Would that slow down talks?

AMBASSADOR SCHWAB: I think that's a very good -- I suspect you had a similar -- you had a similar question. (Laughter.) I think in my conversations with Minister Rafidah, in my conversations with Minister Kim, for example, I think we're all in agreement that when we negotiate these FTAs, it is the substance of the FTA agreement not the calendar that will dictate the outcome. However, because there is some uncertainty about trade promotion authority and the potential for a gap there, I think all of us would prefer to have these two FTAs concluded -- the negotiations concluded in time to take advantage of the current allocation of trade promotion authority. So that means finalizing the Malaysia FTA, finalizing the Korea FTA early next year.

That will only be possible if both sides of the FTA negotiation are confident that the agreement is in the interest of both countries. The only way you can negotiate and reach agreement and ultimately seek enactment in your own legislative body is if the agreement is clearly of mutual benefit. So I think in terms of the Congress here, again if it is -- if we have an FTA agreement that is clearly in the mutual interest of both parties, both partners, and we can show that here in Washington and Minister Kim can show that in Seoul and Minister Rafidah can show that in Kuala Lumpur, those are free trade agreements that have a good prospect of passage through the United States Congress.

QUESTION: I'm sorry -- I don't want to --

AMBASSADOR SCHWAB: Somebody who hasn't asked a question and then I'll come back to you.

QUESTION: Somebody who hasn't asked a question, yeah.

AMBASSADOR SCHWAB: Okay, go for it. (Laughter.)

QUESTION: Can we go back to Doha and the discussions that will take place, Secretary Schwab, in the lead up to APEC and APEC itself. The United States has put a position on the table, but will you -- I know you said at the AEI that you were not proposing to make any new proposals, at least publicly, but will Mr. Bush or will you make some new suggestions in the lead up to APEC and at APEC itself that might contribute to energizing the process? I mean, is it a priority to do that?

AMBASSADOR SCHWAB: Is the Doha Round -- is a successful, ambitious Doha Round agreement a priority? Yes, it is our top trade priority. It's the top trade priority presumably for all of the countries at APEC. I'm obviously not going to get into details about what will or will not be discussed. The United States is not going to be negotiating with itself. I mean, it does not serve any purpose for us to come in with some unilateral announcement if we aren't going to see significant market access by our trading partners.

How do you get to that point? The way you get to that point is very quiet conversations where you're sort of exchanging "what ifs," you're exchanging -- you know, what if I did this, could you do that? And where you've got the ability to then pull back -- if the answer is no -- to step back and say, okay, I guess that's not an option. So you're not locked into the "what if." You're also talking about red lines, you know, what is your critical red line? Because each country involved, each economy involved in this kind of a negotiation -- in fact it's the same thing with an FTA negotiation. Every country has red lines beyond which they can't go. And so part of the effort -- and there are always conversations going, and when I talk about these conversations, these are the conversations going on -- is learning what other countries' red lines are and articulating your own red lines so that expectations are realistic as to outcomes.

So are all of those conversations going to be going on in advance of APEC? Yes, of course, they're going on all the time. They're going in Geneva. They're going on in lots of different places at lots of different levels. Are we talking about the expectation of a major public breakthrough of some sort? No, we're too early.

QUESTION: But it is true that APEC could be -- if you can get a consensus on these market access issues, it would be a useful stick to beat the Europeans with, wouldn't it really? I mean, if you're, you know, putting it crudely. I mean, and I assume that's one of your objectives -- in these four walls. (Laughter.)

AMBASSADOR SCHWAB: You must be joking. (Laughter.)

QUESTION: Is the U.S. even prepared to consider the collapse of the Doha Round and what does that -- how would that affect your policy to seek more FTA?

AMBASSADOR SCHWAB: Well, the Doha Round did collapse, I mean, in July. It really did. And what we're talking about is can it be resuscitated. I mean, so it's not like it was just a pause, you know, someone hitting the pause button. It was a fundamental collapse and there are fundamental differences. You know, we all -- all of the countries, all of the economies that are part of APEC or part of the WTO, had the option of going a bilateral or a regional round. I think that all of us recognize that while you can accomplish some very -- you can make some very important accomplishments through bilateral and regional deals, you're able to be more comprehensive, you're able to be deeper, you're able to generate more market access on a bilateral basis. But there really is no substitute for any of us for a successful multilateral agreement.

And so I think all of us see the importance of having these kinds of negotiations, these kinds of agreements being developed in parallel. Because if you are talking about -- let's talk about the Doha Round itself. The Doha Development Agenda, the focus on development there, to accomplish that you need to have new trade flows. To have new trade flows you need new market access. New trade flows generate economic growth. The only way you're really going to generate global economic growth is if those trade flows are widespread. And developing countries -- I mean, talk about developing countries, 70 percent of the tariffs paid by developing countries are paid to other developing countries. They're not paid to developed countries; they're paid to other developing countries. And so there are very important market access advantages that can be had on a bilateral basis. I mean, for Korea or for Malaysia to have unlimited access to the U.S. market when other countries don't is a real competitive advantage.

On the other hand, it's still no substitute for a successful, multilateral agreement and multilateral trade liberalization. And I think that is clearly the position that the Government of Korea takes. That's the position the Government of Malaysia takes. Both Korea and Malaysia are very actively engaged in trying to get the Doha Round back on track. Australia, Singapore, both are FTA partners of the United States. Both are front and center in terms of trying to resuscitate the Doha Round. Australia has a, you know, alternative proposal out there that's generated some discussion. So you're talking in the region -- this region you really have remarkable leadership for a pro-trade outcome and that's what makes it so comfortable for the United States to be able to -- you know, for us to be able to go to Hanoi to have this kind of a dialogue.

And in the case of Vietnam, you know, Vietnam is about to join the WTO, a very, very exciting prospect. And Vietnam is also obviously going to benefit tremendously from a successful Doha Round outcome.

MODERATOR: One last question.

QUESTION: I have two questions.

MODERATOR: Make it one.

QUESTION: Let me ask about the purpose of APEC-wide FTA. This is a first question. What is the purpose of APEC-wide FTA? And I also ask about the possibility in Japan and U.S., why does the countries even bother?

AMBASSADOR SCHWAB: Let me begin with the second question, which is obviously the focus that we have right now in terms of negotiating FTAs are those free trade agreements that are currently under negotiation that can be accomplished within this trade promotion authority. And that is why, you know, at some point the train left the station. Malaysia has an opportunity to close its FTA with us in time for this TPA. Korea has the opportunity, a couple of other countries where these negotiations are ongoing.

In the case of any other FTAs or regional trade agreements, we're talking about prospective potential. You know, why talk about an Asia Pacific-wide trade agreement? I think the answer is just look at the trade flows and look at the trade investment flows among the countries represented in the Asia Pacific region. As I said, for the United States, $1.6 trillion in trade flows, good flows. And therefore, when you're talking about countries that are generally fast growing, you're talking about countries that understand the importance of trade localization and that the benefits are of a positive sum rather than zero sum exercise. It's sort of a no-brainer; it's sort of a logical step over time for the countries of APEC. And as I said, going back to my original point, just look at the Bogor Goals. I mean, the Bogor Goals from 1994 clearly established this roadmap. And so ultimately -- and we're not talking about tomorrow, we're talking sort of a long term prospect -- it makes a lot of sense for the countries in the region to be moving in that direction.

QUESTION: How about --

AMBASSADOR SCHWAB: Thank you all. That was my last answer. Thank you.