HEADLINE: HEARING OF THE HOUSE WAYS AND MEANS COMMITTEE
SUBJECT: PRESIDENT BUSH'S TRADE AGENDA
CHAIRED BY: REPRESENTATIVE WILLIAM M. THOMAS (R-CA) WITNESS: ROBERT B. ZOELLICK, UNITED STATES TRADE REPRESENTATIVE LOCATION: 1100 LONGWORTH HOUSE OFFICE BUILDING, WASHINGTON, D.C.
BODY:
REP. RICHARD E. NEAL (D-MA): Thank you very much, Mr. Chairman.
Mr. Ambassador, I think the inference has been drawn a couple of times during the question and answer period that somehow there's an effort being made to take advantage of the dislocations that have occurred because of trade policies. And anxiety is a very powerful current, as you know, in public life and speaking to those issues is one of the obligations that House members have. So I guess I would reject the idea that we ought not to ask these questions in an effort to educate the citizenry as to the pros and cons of free trade. I think you can say with some certainty that one of the difficulties with the free trade debate, Mr. Ambassador, is that when the debate ends and the agreements are signed that the trade lawyers have their jobs, college professors have their jobs and the editorial writers have their jobs. But there are an awful lot of fine people who don't have their jobs any more, and speaking to that anxiety is a very, very important consideration.
Now, specifically let me ask you what are the barriers? Why are they so significant in terms of us penetrating the Indian middle class and Indian markets? What is the difficulty with that issue as you see it?
MR. ZOELLICK: First, Mr. Neal, I just want you to know I don't disagree with that. I mean, it's an anxiety we've got to be able to debate and argue about. And I think some of your colleagues took my comments that were related to more a general debate, which certainly we all know was being done over the past couple of months, for their positions and it's not the same.
REP. NEAL: Right.
MR. ZOELLICK: In the case of India, the problem here, Mr. Neal, is that India was one of the charter members in the GATT, which is now the WTO, and over 50 years, frankly, most of the cuts were made by developed countries, not by developing countries. And so India, more than almost any other developing country I know, has what they call very high bound tariffs. So in other words their agricultural tariff could be up to 110 percent. It's not. It's lower than that, but they could go up to that level. And similar in the manufacturing area, so their manufacturing tariff-our average is about 3 percent, theirs is about 30 percent.
It's been traditionally a very closed economy. Starting in 1991, after a balance of payments crisis, they started to change and there have been reform processes going on in India. And, as we all know, there are some parts of India in the high tech and software sector that are globally competitive. There are other parts, frankly, that they've got 650 million subsistence farmers that they're very worried about its effect on their democracy.
So it's an economy that is in the point of change. And, frankly, what I think we have to try to do-in part through the WTO negotiations, part bilaterally-is try to get them to recognize there are benefits-there are win-win benefits from doing business with us. But they're also going to have to be open to our products along the way and whether it be sanitary and phytosanitary standards like dealing with almonds, or whether it be tariffs, we need to get those lowered.
Now, the Indians themselves have often found it easier to lower their tariffs unilaterally. They do it through their budget, and they have been bringing down tariffs in some goods categories. One of the things when I took this job that I thought this was going to be a very important market, I created an assistant U.S. trade representative for South Asia because I felt this was going to be an area we're going to have to try to work with more.
And one of the things we need to do, Mr. Neal, is kind of actually not only deal with the government but the business community. Next week I'm going to be meeting a member from the Confederation of Indian Business because they see the larger interest. Try to build political support in their country to try to support liberalization, because they have some of the same challenges we have in anxiety and with a, you know, billion person democracy you can see the sensitivities.
So I don't mean to be letting anybody off the hook, but if we're going to try to open this up we need to get forces within India to help us support liberalization change and, frankly, tell them-like I told them in India a couple of weeks ago, look, I want to keep our markets open but it's going to be darn hard to do so if they don't open theirs.
REP. NEAL: And specifically-I've been on the Trade Subcommittee, as you know, for a long period of time --
MR. ZOELLICK: I'm sorry, I didn't hear?
REP. NEAL: I've been on the Trade Subcommittee --
MR. ZOELLICK: Yes.
REP. NEAL: -- for a long period of time and from the day that I went on that subcommittee, the issue of intellectual property rights in India was very divisive. Could you speak to the changes or the proposed changes that you're suggesting?
MR. ZOELLICK: It's actually getting better, and it's getting better for the reasons that I mentioned. The Indians are starting to recognize the importance of protecting intellectual property as they start to develop a knowledge industry. The current commerce minister, my counterpart, actually was an in intellectual property rights lawyer.
So their laws are starting to get better and their enforcement of the law is starting to get better. Now, there is still a long way to go but this is one area where, frankly, the challenge is more with China than it is with India. Not to underestimate it with India, but they're seeing the benefits in this area and it's sort of the type of thing I'd like to build more broadly.
And the other point, frankly-and here I want to compliment both our ambassadors. The prior ambassador Bob Blackwill who came back to Washington, and David Mulford are people that have really spoken out about the importance of the economic change and reform. And as you know, it's good to have somebody on the scene constantly getting the point.
REP. NEAL: Thank you very much.
Thanks, Mr. Chairman.