Statement of Kathleen A. Ambrose, Vice President
International Affairs and Co-Leader, Market Access Team
Chemical Manufacturers Association

Hearing on the United States Negotiating Objectives for the WTO Seattle Ministerial Meeting

August 5, 1999

Good morning. I am Kathleen A. Ambrose, Vice President, International Affairs and Co-Leader of the Market Access Team, of the Chemical Manufacturers Association (CMA).

CMA is a non-profit trade association whose 190 member companies represent 90 percent of the productive capacity for basic industrial chemicals in the United States. The U.S. chemical industry is a keystone of the U.S. economy and America's largest exporting sector. In 1998 alone, the industry tallied a $13.4 billion trade surplus, generating more than $68 billion in export sales. Chemical exports easily outpaced U.S. agricultural exports of $51 billion and aircraft and parts exports of $50 billion. U.S. chemical companies produce over 2% of America's Gross Domestic Product (GDP) and keep more than 1 million Americans at work. The chemical industry's strong export performance directly supports 180,000 of these high-tech, high-wage jobs.

CMA and its member companies are committed to the multilateral liberalization of trade and investment underpinned by a framework of rules implemented through the World Trade Organization (WTO). We support the launch of a new broad-based and flexible round of trade negotiations at the WTO Ministerial Meeting in Seattle and a negotiation process that allows for individual agreements to be implemented as they are completed. We believe strongly that early results in the round will not jeopardize the "single undertaking" objective of the round, which requires all WTO members to implement all negotiated agreements. Market Access and Accelerated Tariff Liberalization

A significant achievement of the global chemical industry in the Uruguay Round was the Chemical Tariff Harmonization Agreement (CTHA), whereby 23 trading partners included the harmonization of tariffs on chemical products to rates between 5.5 percent and 6.5 percent in their schedules of tariff concessions. Since the conclusion of the Uruguay Round, the number of countries joining the CTHA or applying CTHA rates has increased to 35.

CMA's highest priority is increased country participation in the CTHA. We have worked with the Office of the U.S. Trade Representative to include the objective of harmonizing chemical tariffs as one of the "early voluntary sectoral liberalization" (EVSL) initiatives in the Asia Pacific Economic Cooperation (APEC) forum. We continued these efforts through the transfer of the EVSLs to the WTO as the "Accelerated Tariff Liberalization" (ATL) process.

The ATL in chemicals is designed to build on the results of the Uruguay Round by bringing important chemical-trading countries into the CTHA. U.S. negotiators have aided the industry's efforts by including chemical tariff harmonization in the market access requests of trading partners that are in the process of acceding to the WTO. For instance, Chinese Taipei has already incorporated chemical harmonization in its schedule of concessions for implementation upon accession, and China agreed to implement the chemical and other ATLs as part of its April 8th package of market access commitments for WTO accession, provided that others in the WTO also agree to do so. And, Indonesia announced recently that it would also begin lowering its tariffs on chemicals.

ATL and the New WTO Round

CMA and its member companies firmly support broad-based and balanced results in the new round of WTO negotiations, and we support the "single undertaking" mechanism as a means to achieve such results that also reflect the interests of all parties. The single undertaking mechanism ensures that all elements of the negotiated results (except where explicitly exempted and agreed) are subject to unified dispute settlement and that all WTO members (developed and developing alike) agree to obligate themselves to all elements of the negotiations, without derogation, even though individual WTO members may be subject to differing timetables for implementation.

Our view is that both early results, such as the ATL, and a "single undertaking" can be fully accommodated within the upcoming round. It is essential that the timing of achieving results during the negotiations not be confused with the objective of a single undertaking at the conclusion of the round. Use of a common crediting mechanism that keeps a "running total" of all liberalization, together with recognition by all WTO members that they must participate in all agreements in the final package, removes procedural impediments to begin implementing negotiated results in specific sectors or issue areas as agreements are achieved. Thus, the timing for reaching agreement on specific elements is far less important than ensuring that the final negotiated result is balanced, reflects outcomes of interest to all parties, and is mutually binding on all WTO members.

As an incentive for participation in early tariff liberalization, WTO members can agree to provide countries with credit for guaranteed, bound trade liberalization enacted since the close of the Uruguay Round. The permanent binding of concessions can take place, as in the past, at the conclusion of the round, or a release from the provisional binding can be granted by the WTO should the round not reach a conclusion.

Achieving early results in the multilateral negotiations adds to the credibility of the WTO process by showing that it is not necessary to wait seven or more years, as we did in the Uruguay Round, before tangible outcomes can be shown. Early results will help to keep the negotiating process manageable while also maintaining momentum toward further liberalization. We think it is far better to implement trade liberalization on a regular, ongoing basis than it is to force all issues and sectors to be held in reserve for one "big bang", but agonizingly slow, result.

International Chemical Industry Supports New WTO Round and Chemical Tariff Elimination

The worldwide chemical industry is united in its endorsement of a new WTO round and the elimination of all chemical tariffs by all WTO members. In June, the International Council of Chemical Associations (ICCA)--a coalition of the chemical industry associations of the United States, the European Union, Japan, Canada, Mexico, Argentina, Brazil, New Zealand, and Australia--stated that the new round should build on sectoral and trade liberalization undertaken since the Uruguay Round and stressed that final results of all negotiations must be adopted in their entirety by all WTO members. Specifically, the group called for worldwide elimination of chemical tariffs for all WTO members and proposed a phased approach based on the level of existing tariffs. Furthermore, the ICCA called for the elimination of non-tariff measures, such as export licensing, quotas, dual pricing and trigger price mechanisms, and discriminatory standards.

In addition, the ICCA called for the establishment of a global, balanced and beneficial investment regime for all members of the WTO, advocated WTO rules for trade facilitation, supported current WTO disciplines for anti-dumping, and sought full implementation of the existing TRIPs agreement on intellectual property. The ICCA also urged clarification of the relationship between multilateral environmental agreements and WTO rules. We are attaching an overview of the ICCA statement on the new round.

Conclusion

CMA looks forward to working with the Members of this Subcommittee as you develop negotiating objectives for the upcoming WTO Round. In particular, we urge you to consider approaches to renewing the President's trade negotiating authority so that ATL tariff reduction commitments and other early results can begin while the round continues.

A new WTO round that combines early results with a single undertaking offers new opportunities for tariff liberalization, market expansion, and the guarantee of internationally accepted rules of fair trade. Without U.S. support of the WTO, its agreements, and its ongoing negotiations, the U.S. chemical industry will lose the benefits of free and fair trade, including export markets, and the U.S. economy will lose the chemical industry's significant contributions: export revenues, annual trade surpluses, and highly skilled jobs.

InternationalCouncil of Chemical Associations

CHEMICAL INDUSTRY STRONGLY SUPPORTS NEW TRADE ROUND, TARIFF ELIMINATION

Geneva, Switzerland, June 23 - Leading chemical trade associations today expressed strong support for a new round of multilateral negotiations in the World Trade Organization (WTO), including the elimination of all chemical tariffs by all WTO members.

The International Council of Chemical Associations (ICCA) meeting in Geneva, urged that all chemical tariffs without exception be eliminated by all WTO members. The group proposed a phased approach to tariff elimination, according to the level of existing tariffs. Furthermore, ICCA called for elimination of non-tariff measures, such as import licensing, quotas, dual pricing and trigger price mechanisms, and discriminatory standards.

ICCA said the new round should build on sectoral and regional trade liberalization undertaken since the end of the Uruguay Round, and stressed that final results of all negotiations must be adopted in their entirety by each WTO member. ICCA also expressed its strong support for the WTO as an institution, and welcomes the accession of new members to the WTO provided these countries adopt all the agreements required for entry to the organization.

The ICCA hopes that the period leading up to the start of the new round will provide an opportunity to broaden tariff harmonization for chemicals through expanded product and country coverage of the Chemical Tariff Harmonization Agreement, or through other mechanisms which achieve at least the same results.

In addition, the ICCA called for the establishment of a global, balanced and beneficial investment regime for all members of the WTO. The group advocated WTO rules for trade facilitation, supported current WTO disciplines for anti-dumping, and sought full implementation of the existing TRIPs agreement on intellectual property. ICCA urged clarification of the relationship between multilateral environmental agreements and WTO rules.

World chemical industry production exceeds US$1.6 trillion annually and almost 30% of this production is traded internationally. Within global trade in manufacturing, world trade in chemicals is second only to automobiles, far outpacing computers and related technology in third place. The International Council of Chemical Associations (ICCA) represents almost 80% of the world's chemical production. It is a coalition of the following chemical industry trade associations:

Asociación Nacional de la Industria Quimica (ANIQ) [Mexico] Canadian Chemical Producers' Association (CCPA) Chemical Manufacturers Association (CMA) [USA] Conselho das Indústrias Quimicas do Mercosul (CIQUIM) [Argentina and Brazil] European Chemical Industry Council (CEFIC) Japan Chemical Industry Association (JCIA) New Zealand Chemical Industry Council (NZCIC) Plastics and Chemicals Industry Association (PACIA) [Australia]

Media contacts:

Jeff Van, +1/703-741-5802

Kathleen Ambrose, +1/703-741-5920

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