Press Briefing by Mickey Kantor, U.S. Trade Representative

The Briefing Room

1:06 P.M. EST

MS. MYERS: Ambassador Kantor will bring everybody up to date on NAFTA. The entire briefing will be --

Q: NAFTA?

MS. MYERS: I mean -- (laughter) -- I get NAFTA and GATT mixed up all the time. Mickey's decided to reopen NAFTA, and he wants to talk a little bit about that.

No, this will be on GATT, before the Ambassador leaves for Europe this afternoon, and then I'll come back and answer any questions you might have.

AMBASSADOR KANTOR: If we're going to reopen NAFTA, I'm leaving. (Laughter.) I wanted to just first review a little bit of what the President has achieved this year in trade -- just very, very quickly go into the Uruguay Round and then, of course, be open to your questions.

The President has made great progress this year in what he set out to do -- and that's opening markets and expanding trade. First of all, we implemented for the first time in American history immediate action programs and out of cycle reviews to enforce Special 301, that's the law that makes sure that our intellectual property rights for our companies are protected around the world. We opened the European market for the first time since the Marshall Plan in heavy electrical equipment. That's a market of $15 to $20 billion of potential a year.

We reached 20 percent semiconductor penetration of our semiconductors into the Japanese market for the first time due to the enforcement of the semiconductor agreement. We've put together the framework with Japan on opening their markets as well as the market access agreement at the G-7 conference in Tokyo.

We've concluded literally dozens of bilateral investment in treaties as well as market access agreements in textiles and apparel over the last 10 months. We, of course, reached the side agreements with Mexico and Canada on environment and labor. And then of course were successful with the President's leadership in getting the Congress to ratify the NAFTA agreement. It's now going to be proclaimed by Canada and will be implemented on 1/1/94 as promised and advertised by this administration. We have opened the Japanese market in government procurement for construction for the first time in history, given our negotiation with Japan.

The APEC organization -- Asian Pacific Economic Cooperation Forum adopted a trade and investment framework, which is the first major step towards our involvement in the fastest growing economic market in the world -- Asia. We also extended fast track on the Uruguay Round. It's the first trade bill in American history that has passed without amendment.

Today I leave for Geneva to continue our negotiations with first the European Community and then the remainder of the members of the other 115 nations in the world to try to finish the Uruguay Round. The President has stated again that we want a good Uruguay Round not just any agreement.

This morning Sir Leon Brittan, my counterpart, the Economic and Trade Minister for the European Community, called me from Brussels, and indicated he wanted to begin meeting with me tomorrow morning at 11:00 a.m. in order that we might finish our negotiations on the two outstanding issues that we had between the European Community and the United States. We then agreed to tentatively schedule what is known as a quad meeting Saturday night, assuming we could reach agreement -- that is Japan, Canada, the European Community, and the United States -- in order to obtain the quad's endorsement for what we had done; frankly, to make sure that the Japanese and Canadian governments, especially the Japanese government, meets their responsibilities in putting a package forward which meets the package that the European Community and the United States have agreed upon.

We obviously have two issues left with the European Community, which are of great importance to this country. One is the aerospace or aircraft industry, which is a $34 billion a year export industry, which employs 750,000 people in this country. We have to have an agreement that is going to keep that industry competitive. We also have to reach agreement in the so-called audio-visual or entertainment sector. That sectors has foreign sales of $17 billion a year, $5 billion trade surplus every year in that area, and employs about 700,000 people including the book and magazine publishing industry in this country.

And so what we have here are two major industries in which we have to finish agreements to keep them competitive. We have some indication from the European Community that they are ready to sit down in a serious discussion in order to try to finish this agreement off.

I would like to just cover what a Uruguay Round will mean to us. I think it's awfully important to understand that it has large implications for the United States. We have in the 18 industrial sectors that are covered in the Uruguay Round, 12 of them will, if it goes into effect, will reduce tariffs around the world to zero. Those tariffs are trade barriers to U.S. products. We are now the most productive country in the world. We have the most productive workers. We can compete with anyone. And those barriers to trade need to be torn down.

The Uruguay Round in 12 of the 18 sectors takes those barriers down, tariff barriers down to zero. We have major cuts in the other areas as well. That represents about three quarters of U.S. exports. In other words, we export about $430 billion a year; about $310 billion are represented by the industries in those 18 sectors.

We also have reached with the Europeans a procurement agreement in telecommunications and heavy electrical equipment. That agreement alone will open up about $40 billion of potential for U.S. companies in Europe alone. And so what we are doing in the Uruguay Round has an enormous potential economic effect.

Let me end by saying for the first time we are also opening up in the Uruguay Round or covering in the Uruguay Round the services industries, financial services, maritime, as well as audiovisual, which I have spoken of just about 35 or 40 seconds ago. The protection of intellectual property, trademarks, patents, copyrights, the ability to open up markets and financial services are of enormous benefit to a country like the United States, who is dominant in many areas in these services.

This agreement is potentially a very good one for the country. We have a number of things to take care of, including audiovisual, aerospace. We must preserve our trade laws, including our anti-dumping laws. We will not sign a Uruguay Round agreement that doesn't preserve our anti-dumping laws. And, of course, we have to make the kind of changes we have preliminary agreement on in the environmental area to make sure this is a treaty that does not --down environmental standards around the world due to trade.

Q: How much difficulty are you having with the U.S. dumping -- anti-dumping provisions? Are they an obstacle here that --

AMBASSADOR KANTOR: It's a difficult process. As you know --

Q: What is the formulation we're using, the formula for what we consider to be dumping? What's the price level? So they have to make --

AMBASSADOR KANTOR: The price level depends on the industry. It depends on the industry --

Q: what's the profit margin we're asking --

AMBASSADOR KANTOR: It depends on the industry and it depends on the cost, and it depends on the formula. The fact is that we are asking for 11 different changes in the current so-called Dunkel text or draft final act. We're currently in negotiations over that right now. As you know, we have tremendous opposition from a number of countries in the world. We have made it very clear though that a Uruguay Round agreement that does not substantially change that language and preserve U.S. anti-dumping laws is not acceptable. The European community is supporting us in that as is Canada supporting us in that view.

Q: It sounds like peace is at hand. It sounds like you've got in the bag.

AMBASSADOR KANTOR: Well, I'm old enough to remember others who have said similar kinds of statements. I'm not about to say it. It's not in the bag, nor -- there are some difficult negotiations to complete. I think the odds have certainly shifted in favor of a successful completion but we're not there. And let me say that we are absolutely clear -- my instructions from the President are absolutely clear -- unless it's a good agreement for American industry, American agriculture, for American services industries, we're not to sign it.

Q: Mr. Ambassador, you mentioned the quad meeting tomorrow night. Is Japan upset with the U.S.-E.C. agreement? And if so, are there any concessions that you're willing to make on electronics to Japan?

AMBASSADOR KANTOR: The answer is no to the latter. And in the former question is, we don't perceive Japan being upset. Japan has, in fact, been quite forthcoming in agricultural sectors. In rice, as you know, they have made a historic decision to open up their rice market for the first time. They have also increased their offer in beef. We believe they are willing to be forthcoming in the industrial sectors in some of the areas we've gone -- like in the wood -- wood and paper and pulp. Those are important industries here in the United States -- employ, gosh, about 1.6 million people. So they're large industries here in this country.

But we have not -- those offers aren't on the table yet. We are also obviously critically interested in opening up the Japanese financial services market.

Q: Well, what's the quad meeting about then?

AMBASSADOR KANTOR: Well, it's to have those offers increased on the part of Japan. Canada has increased its offers -- frankly, has been quite forthcoming. And I think Canada is strongly supportive of the agreement we have reached so far with the European Community.

Q: GATT officials are putting together a new text for the anti-dumping rules that will incorporate some of the changes that the U.S. wants, but -- and I guess this has been issued or is about to be issued. Does the United States accept this method of negotiation where this thing is just presented to us and we have to take it or leave it, or are you going to try and change it after it comes out?

AMBASSADOR KANTOR: I wouldn't characterize it as a take it or leave it negotiating proposition. Director General Sutherland has been quite open in many areas, and this has been one of them, to a continuous negotiation between the various parties. Ambassador Yerxa is meeting as we speak with the designee of Director General Sutherland in an attempt to work out a text that we can agree with. We're not there yet. And that's also in answer to your question, Helen -- we're not there yet. And if we're not, we're not going to have an agreement.

Q: In addition to what you said on Canada and Japan, could you give an overall rundown on the agricultural agreements -- have all the demands of the Cairns Group been met, and are they locked in stone?

AMBASSADOR KANTOR: I wouldn't characterize it as demands. I think all the interests of the Cairns Group have been met, and they are in support of what we have -- the agreement we've reached with the European Community. It is truly a very helpful agreement to our agricultural community as well as any other agricultural exporting nation. As a result of the changes in the Blair House agreement, we will be able to export about 7.5 million more tons of grain, another $1.2 million more tons of vegetable oil, will open up the European market tremendously in the areas of specialty crops, in the area of grains, in the area of other products, of meats, which were not as open to us as this agreement will allow them to be. It is a tremendous agreement for our agriculture community, and the Cairns Group, of course, who are agricultural exporting nations. They also would garner the benefit of those decisions.

Q: What is the status of the French and the German on the subsidy issue? Have the French backed down at all on subsidies?

AMBASSADOR KANTOR: Which sub -- I'm sorry, agriculture?

Q: Agriculture, right, I'm sorry.

AMBASSADOR KANTOR: Well, we have reached agreement on the Blair House -- in Blair House for the clarifications that basically the French wanted. It is probably in the best interest of all countries who are exporting -- agricultural exporting nations that we did so. It has really broken the logjam here, and I believe that the European Community -- well, I know, is in full support. We reached agreement on that in Brussels when we were there with the help of Secretary Espy.

I believe there are some discussions internally in the European Community as to how they're going to balance their various interests. But I'll leave that to them. I can hardly deal with my own politics, much less their politics.

Q: How much consultation was done in the Congress in the last couple weeks on the deal you're working towards? Are you working towards -- are you working towards an agreement that can pass?

AMBASSADOR KANTOR: The answer is yes. I have been on the phone now with a number of people. I was on the phone in the last 24 hours with -- I won't remember everybody -- Chairman Rostenkowski, Majority Leader Gephardt, Senator Danforth. I also talked to Congressman Levin. I have talked to Congressman Bachus of Florida. I've had dozens of calls and conversations about this agreement and there are going to be no surprises for the Congress, frankly. We're making sure of that.

Q: Do you think you'll have the support of, say, Congressman Gephardt for the deal --

AMBASSADOR KANTOR: You'll have to talk to Congressman Gephardt. I don't speak for him.

Q: Could you tell us what are the instructions of the President about the audio-visual sector? As you know, the French want an exception. What is the way for the compromise on that and would you be ready to offer something to the French like a -- or something? What's your idea on that, please?

AMBASSADOR KANTOR: Did you ask for my instructions from the President?

Q: And your ideas.

AMBASSADOR KANTOR: The answer to that question is no, I won't give you my instructions from the President.

Q: And what is your idea of a compromise, as you the French --

AMBASSADOR KANTOR: And I won't give you my ideas for a compromise. I'm going to save those for Sir Leon Brittan tomorrow morning. But we're not going to have an agreement with the community and we're not going to have a Uruguay Round without addressing this sector in an effective manner which preserves the competitive nature of this industry in this country. We're talking about $17 billion of foreign sales, nearly 700,000 people employed in the United States in this sector, and we are going to make sure they remain competitive.

Q: Ambassador Kantor, the President had written to Congressman Sprat, as head of the Textile Caucus, again that he, the President, would seek a 15-year extension or phase-out of that multifiber arrangement; and as the President, as recalled from the letter, if the United States could get agreement for this from, among others, the ASEAN nations and there were a couple of others, that the ASEAN nations have said that they will not go along and want a 10- year phase out. Is change still on the table in terms of duration?

AMBASSADOR KANTOR: Well we have sought it, and we're still seeking it. It's difficult, as you know. One of the reasons the round began historically was there were many nations in the world that wanted the United States to phase out it's multifiber arrangement, which has been in force and effect since 1962. We are still discussing that issue. You're correct about the position of the ASEAN nations, but that's still on the table.

Q: Various U.S. businesses have said that we would only be prepared to accept the MTO as proposed if the overall package were good enough. With all this progress do you foresee the overall package being good enough, and if not, what else would you need to see?

AMBASSADOR KANTOR: I'll be better able to answer that tomorrow night.

Q: Yesterday and again today, you received a letter from some of CEOs of large aircraft manufacturers. They've been calling for putting off the discussion on the aircraft until after the December 15th deadline, because you've been working at so long -- pretty far away from agreement. Do you see room for a compromise like that? Do you think it's possible that an agreement --

AMBASSADOR KANTOR: Well let me not speak directly to that. I'm always in this strange position of trying to be as forthcoming as possible with all of you but yet trying to negotiate an agreement. The fact is I've been on the phone this morning with representatives of the U.S. aerospace industry. We have a common position. I've also talked to Sir Leon Brittan, as I indicated, this morning. That's one of the first things on our agenda as we meet at 11 o'clock tomorrow morning. We hope we can reach a compromise that is effective for our industry.

Q: Is it necessary to get an agreement on aircraft before the 15th of December in order to get --

AMBASSADOR KANTOR: Well, it's necessary to have an agreement in the sector. Whether or not we have a new multilateral aircraft agreement which covers all nations is the question; we don't have to do that. But we have to have an agreement in the sector because the European Community, of course, finds itself in a very difficult position. Without an agreement and with the Uruguay Round, Airbus would be covered by the subsidy code under the draft final act, which would be very difficult for Airbus. So the European Community is very interested in taking itself out from under the subsidy code of the draft final act, and that is what has sparked these discussions.

Q: Are you satisfied with the access you're getting, especially in developing nations, for American financial services and other service exporters?

AMBASSADOR KANTOR: Not yet. We're working on that. Both Larry Summers and Jeff Shafer are in Geneva where they've been meeting bilaterally with a number of nations. We have made some progress, not enough yet, and we'll continue to work on that. But no, the answer is we're not satisfied yet.

Q: You were mentioning that Japan has some responsibilities still to take care of, and you mentioned that the financial market you're working on. Are there any other sectors that need to be worked on with --

AMBASSADOR KANTOR: Wood, leather, shoes, white spirits -- I think we're in good shape on agriculture. There may be a couple that escape my attention at this moment. Those are the major sectors right now. Historically, the Japanese have not wanted to open up the wood market. We've reached a zero for zero agreement with the Europeans. If the Japanese would come forward with the same kind of offer, it would be very helpful at this point.

Q: Two American farm groups and one of your predecessors, Mr. Yeutter, said they don't believe that from what they've seen that the market access agreements with the EC have made up for the losses that came from stretching out Blair House. Could you comment on that?

AMBASSADOR KANTOR: One, we have gains in stretching out Blair House, number one. And number two, this market access agreement in agriculture with the European Community is tremendously helpful to us. It's much larger than any agreement we've had in the past. And with all due respect to my predecessor, who I admire very much, he's not seen the details -- he couldn't have, and that's not his fault -- but it is a very good agrement for American agriculture. It would be very meaningful to us.

Thank you very much, I appreciate it.

THE PRESS: Thank you.

END1:26 P.M. EST