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Office of the Press Secretary

For Immediate Release January 29, 2000
                             PRESS BRIEFING

                           Davos, Switzerland

MR. SPERLING: Really, since Bill Clinton ran for President in 1992, he has been focused on finding a new consensus for open markets. And he has worked on that domestically and has given a series of speeches in the last two years, starting with one at the WTO in the summer of '98, summer of '99 at the ILO, a third speech at the Foreign Relations Council.

The President came here today because he wanted to talk in a very pointed and direct way about what the global community needs to do to form a consensus that can go forward. As he has said in his State of the Union and as he said again today, there is only one direction and that is forward; and that we need to figure out the way to do that.

For those familiar with a former U.S. sportscaster, this was very much the President's Howard Cosell trade speech -- tell it like it is and let the chips fall where they may.

The President spoke, I think, very directly and pointedly to each major constituency in the global community, including himself and the United States, and was both praiseworthy and constructively critical of what all of us need to do. In terms of the developed countries, such as the United States, the President was very clear that we have not done a good enough job in building the domestic support necessary for taking the steps needed to make developing countries feel that they are more full partners in the global community. And he pledged his support to fight even harder to get our CBI and Africa trade bills through, even though they have faced political resistance. And he obviously made the same challenge to Europe, in terms of agriculture subsidies.

He was again self-critical in challenging both ourselves and other developed countries to be willing to make the point, case, directly for imports. And he was very candid in stressing the fact that political leaders do that too little and gave, I think, one of the most forceful presentations on the power of imports in terms of helping the pocketbooks, the choices and the innovation of people in the importing countries.

To those who have expressed the importance of labor and environment and other values, the President agreed wholeheartedly of the need to find ways to bring other voices and other issues into the global economic process, and ways to struggle. But he also was very clear to them that there is no alternative to trade in reducing global poverty and raising standards of living. And I think he said it was dead wrong to think that one should stop the process of global trade or that the WTO is not serving a vital function going forward.

And to the developing countries, of which he devoted much attention to the efforts that needed to be made in trade and non-trade areas to bring in developing countries further into the global community, he also was clear that developing countries have to not assume that every effort to bring in labor and environment into global trade discussions or dialogues is but a pretext for protectionism -- that we need to be able to have a dialogue, and not fear that dialogue; and that developing countries, as with developed countries, need to be able to find ways domestically to ensure that growth is shared if we're going to build that support.

And so again, I think that the President believes strongly we need to move forward. He does not agree, as he said today, he does not agree with those who think we need to put off the launch of a new global trade round. He believes that we can and should try to move forward. But I think he also spoke very candidly and pointedly to what each of the relevant parties has to do, and has to reflect upon, for us to be able to go forward.

Let me have Secretary Summers say a couple words, and then we're both available for questions.

SECRETARY SUMMERS: What the President spoke about today was, I think, his fullest and most complete exposition of what is, I think, a new paradigm for thinking about international trade and international integration. Trade discussions, for almost all of the post-war period, have taken place within what I would call a reciprocal mercantilist paradigm: I want to export more; you want to export more; we'll both reduce our barriers; we'll both get to export more.

What I think is significant about the approach that the President has been leading towards evolving is that it goes beyond that post-mercantilist, that reciprocal mercantilist paradigm in a number of respects.

First, in recognizing that the integration of the trading system affects broad political values associated with economic development, freedom of information, the creation of democracies, the avoidance of conflict. Second, in recognizing explicitly that the ability to import is a source of substantial economic advantage, the President made clear his conviction -- which I think is shared by my economists -- that the durability of our own economic expansion without inflation owes much to the safety valve in a high-pressure economy that has been created by the possibility of imports.

And, third, that trade can't be divorced from other concerns. And he spoke, I thought, very powerfully to the fact that the trading system was part and parcel of a broader economic system in which people lived their lives. Just as we managed economic integration in the United States as our states cam together, that required thinking together, across the states, about issues that went beyond trade. So I felt the President made a similar kind of case globally. The solutions will differ, but the issue is very much there.

I think going forward that's what we're all going to be increasingly concerned with, which is the kind of new paradigm, more extensive view of trade that the President spoke about today.

Q The President touched on the subject of agricultural subsidies in Europe, and he said they should be put on the table. Could you expand on that, because, obviously, they are huge and they are a big political problem in Europe.

MR. SPERLING: I think the main point the President was trying to make was that in that context he was saying that it's very easy when you're at an international forum, or ministerial meeting, most of the ministers or experts will agree that developed countries should take further steps to open their markets, and at times even offer temporary preferential treatment to bring more developing countries into the global community. But that the failure has been too often the ability to build domestic support for doing that. And the President was recognizing that there are real domestic constraints; obviously Europe faces domestic political constraints in reducing their agriculture subsidies and their agriculture export subsidies.

But no one would benefit more from the reduction of those agriculture subsidies and export subsidies than the developing countries, than the poorest countries. It's certainly important to the farmers in the United States and elsewhere. But, again, I think in terms of what would mean most to helping developing countries, this would be most critical. This would be most important. The President was recognizing that that's difficult domestically, but those are the kinds of steps we're going to all have to take in building domestic support if we're going to be able to have a serious agenda for making those in developing countries feel that they are true and full partners in the global trading system.

Q The President mentioned several times -- the President mentioned new institutions that are needed in global trade and global trading. Are there any specifics that you're thinking of? Any new programs?

SECRETARY SUMMERS: I don't have any specific details to elaborate. Going back to the Naples summit, the President has been concerned with the question of the international architecture, which goes both to the ways in which the existing institutions function and to the ways in which they cooperate. I think what the President was saying today was that concerns like global warming, concerns like trans-border crime, concerns like cooperative research with respect to the new development of vaccines, concerns like child labor conditions, are all things that are going to have to find places within the international dialogue.

In part, this is happening as the WTO has become transparent already, and has recognized environmental issues to a greater extent than it had previously. In part, it's happened as the ILO has forged much closer and cooperative relationships with the international financial institutions. In part, it's happening through new institutions in the development banks, like the global environmental facility.

These are all examples of the kinds of things that the President is working to support and he believes we're going to need much more of in the 21st century, just as -- they remain just as when the United States came together, there were many more issues on which there became some federal role. There are going to be more issues not where global governance is required, but where some global cooperation and coordination is required.

Q You talked about the need for cooperation in the field of taxation. What is the future of the banking secrecy, particularly, the Swiss banking secrecy, according to you.

SECRETARY SUMMERS: Let me just say that I think we are all globally coming to an understanding that often the best way to support good governance, to resist corruption, to pursue crime is to trace its profits. And, therefore, there is already substantially increased cooperation in the area of money laundering and in the area of financial crime. And the United States will be pushing very hard in the months ahead going to the Okinawa summit and beyond for further strengthening of cooperation with respect to financial crime. And that inevitably will have implications for procedures regarding bank secrecy.

There is a proper balance that has to be struck between privacy concerns and law enforcement imperatives. But I would say to you that the day when the international community is prepared to sanction the laundering of criminal funds with no sunlight is coming to an end.

Q We've seen -- say this week, and over the last few weeks that a new trade round should be started, perhaps immediately, or as soon as possible. Tony Blair said something of the same yesterday. Obviously, the President was -- (cell phones ringing.)

SECRETARY SUMMERS: It's a veritable concert. (Laughter.) This is a special kind of globalization. Cell phones in harmony. (Laughter.)

Q The President was obviously saying that the United States is not opposed to a new trade round starting. But does the United States want it to start real soon?

SECRETARY SUMMERS: We would like to see trade integration move forward as rapidly as possible. But its moving forward has to be based on securing a consensus on crucial elements. And clearly important aspects of that consensus include agricultural policies, include a range of other issues going to trade barriers, include a range of issues of importance to developing countries, and include a range of issues having to do with the concerns the President expressed today about issues that the trading system impacts on. And so we're consulting with many others, looking towards finding the best approach forward.

MR. SPERLING: Can I just add -- the only thing I just want to add to what Larry said there is, there shouldn't be any question that we would like to see a new trade round launched as soon as possible. And if there was the necessary consensus to move forward this year, early this year even, the United States would clearly favor that. The President made that very clear when he spoke to Prodi -- was there as well in the USEU. So any notion that we would prefer to have it delayed, either past our election on to next year are utterly and completely false.

The issue is really that after Seattle it was delegated to Mike Moore to canvas the parties and to see if we were in a place to start coming forward. I don't think anybody wants to simply come together with no progress, with no sense of consensus. So as Secretary Summers was saying, I think the key thing is what the -- I think the key issue is the degree that that consensus can be formed and when that can happen. But there should be no question about the desire of the United States to move forward.

Q Among a number of the economists here, as well as a number of the executives that have spoken so far abut their view of Europe, particularly the euro, there's a strong sense of prevailing optimism for the currency and the continent in the year ahead. I'm curious whether A, you believe that sentiment is accurate; and, B, whether the commensurate weakening of the dollar versus the euro is something that would concern you in that regard?

SECRETARY SUMMERS: We stated our currency policy on many occasions. There has been a recent G-7 communique and I don't have anything to add to the comments I made in the panel this morning.

Q Do you think the sentiment is accurate?

SECRETARY SUMMERS: I don't have anything to add.

Q The President today did not mention one thing that he did mention when he was in Seattle, and that is the notion of working out some kind of regime for applying sanctions to countries that don't adhere to western style labor standards. Was that a conscious omission from this speech in order to try to soften the nature of the message about the importance of integrating labor and environment?

And the second part of the question is, did the President hear and has he responded at all to Prime Minister Blair's statement yesterday that one way to get trade talks moving again would be for a unilateral lowering of any kind of trade barriers to imports from the least developed countries in the world -- a unilateral lowering, not as part of a trade round.

MR. SPERLING: Let me answer both of those. We tried to state very many times in Seattle that our goal in going forward with the working group was simply to start a process, a dialogue in which there could be some form of recommendations, an ongoing dialogue in which there could be some form of recommendations given directly to the trade ministers in the future.

I know that some felt that the President's interview might have suggested otherwise, and we've tried to make very clear that that was not the case. The President was, in a sense, giving a long-term vision that as things get brought into the trading community, there should be some form of accountability. He never mentioned trade sanctions or anything.

And I think what he was trying to make very clear today is that these are not areas where anybody has all the answers. And our goal is to start a dialogue. And the notion of a working group or some form like that is a means in which developed and developing countries would be able to have discussions that would relate to issues that could deal with working conditions or labor, and development. But it would be in a context in which developing countries would have sufficient, if not even majority, participation. So I think what he was really trying to do right now is say that what he's looking for is a dialogue on how to go forward, and that no one should fear that dialogue. So I think he was very much trying to make that clear.

In terms of the unilateral preferences, when the President talks about moving forward on Africa, growth and trade initiative, and the Caribbean Basin Initiative, which is so important to many of the countries that had been hit so hard by Hurricane Mitch, those are things the United States is doing independently and separately. But we also understand that in doing that that is part of -- could be part of a larger effort. We are right now seeking two legislative measures to do that. There is no other way for us to go forward other than seeking Congressional legislation; again both with the Caribbean and Africa. So that is, in effect, our intent. The President mentioned that in the State of the Union. And we're hopeful that that can get done this year.

Q The White House staff billed this in advance as an effort to be sort of a counterpoint to the message that came out of Seattle. What's your view of what message did come out of Seattle? And what was the President trying to do here in response to that? And also, to the extent the message from here is different. How much of that is just the Swiss government's success at suppressing protest by using its police power, or what have you?

MR. SPERLING: I don't know how to respond to your kind of characterization of what we said this was going to be about. I think that the President has given, as I mentioned, a series of major speeches over the last two or three years in which he has sought to be at the forefront of an emerging consensus going forward. In the summer of 1998, when he called for greater transparency in the WTO in terms of amicus briefs, and proceedings' release of documents, that was fairly new at the time. By the time we got to Seattle, I think had Seattle gone forward there would have been at least significant progress in some of those areas.

I think what the President was trying to do today was to, as I said, come forward with a direct and pointed challenge as to what all of us had to do to go forward. And I think he tried very carefully to ensure that he was not pointing a finger at any one group of countries or protestors, but to realize that to have a consensus everybody's going to have to go a bit further.

And so I think what he was trying to do today was to, first of all, send the signal that there is only one direction on trade, and that is going forward, and that Seattle should not be seen as a setback, but just one more step along the way of learning that there are a greater number of issues that have to be incorporated in a new consensus on trade. And I think he came to make the case that for President Clinton and the United States, our intent is to go forward, to go forward vigorously, and to very vigorously encourage everybody to make the steps that are needed for that consensus. And if you look at what was holding things up in going forward, they were all elements of what he spoke about today -- issues of encouraging more openness and tolerance to a dialogue on labor and the environment; encouraging developed countries to do more in terms of preferences and access for developing countries. These are the ingredients that need to go forward.

Q In love and politics, timing is everything. Is this true in trade and economics as well? You've never seen a better economy -- United States. There seems to be a new sense of optimism in Europe, and there is clearly a sense of revival in Japan. So to what extent can we look at this as an opportunity to seek the moment, and not to let the moment go by?

SECRETARY SUMMERS: I think it is a moment of possibility, with increasing evidence of expansion in the industrialized world and very substantial repair in the countries that were most affected by the financial crisis. And it is a time when the question can be fairly asked: if not now, when?

Yes? -- we're going to try to give short answers, because we're going to run out of time.

Q I'll try to give a short question. As you know, you're going to be choosing a new head of the IMF soon -- not you personally, but a number of countries. I'm wondering if you had any words about what type of person you'd like to see in that job, what the qualities are that you would be looking for, and secondly, whether you had any advice about how that institution would want to behave in the future. Do you think there need to be any policy corrections, or perhaps a different approach to solving the types of problems that they solve? Thank you.

SECRETARY SUMMERS: We've said many times that we believe that the right person will be a person of substantial stature and credibility, a person who can bring the requisite expertise to the IMF, a person who can command broad-based global support, and a person who can support the ongoing process of change at the IMF. Some time ago, I spoke with respect to our vision with respect to the future of the IMF. It emphasized supporting private capital flows, emphasized transparency, and emphasized the importance of selectivity, and emphasized the importance in the poorest countries of a proper IMF role in the context of programs that emphasize social factors.

Q We just spoke to a couple of Republican members of Congress who are supportive of China in the WTO. They raised two concerns. First of all, about the recent Chinese government's pronouncements on encryption, secondly an anxiety that the trade legislation, once it comes to the Hill, might have binding language on labor rights and environmental protections. First, can you give us, Gene or Mr. Summers, any reaction or concerns the Administration has about the encryption language, and anything about whether or not the legislation will arrive with binding language on environmental regulations or labor rights?

SECRETARY SUMMERS: The encryption question is a consequential issue that there will be dialogue about, but not one that we believe should be linked to the WTO issue. With respect to the WTO legislation, the basic agreement is the agreement that Ambassador Barshefsky has negotiated. We will be working with members of Congress in both parties to find the best possible legislative vehicle, because it's important to get this done as rapidly as possible.

Q Will you allow binding language on those two points?

MR. SPERLING: We've been very clear about this that -- first, let me say that this agreement does have extraordinary protections, probably more so than any WTO accession in terms of special import safeguards that provide greater protection for 12 years than exist under our existing trade law, under 201, because it allows for protections against import surges from a specific country as opposed to having to show that on a global basis. Secondly, there was a 15-year provision that allows for special protections on anti-dumping using more of the non-market economy calculations.

So before we finalize the negotiations, we have listened very carefully to people concerned about those issues, and we did make those part of the negotiations.

But we've also been very clear about the following: we're not going to put on China conditions for admission to the WTO that have never been put on any other country before. And so no, we do not support putting exceptional and unprecedented conditions on this. We believe this is an excellent agreement. We will always make our voice heard, and we all will do whatever we can to continue -- regardless of this agreement, we would do whatever we can to continue to press China in the right direction on human rights and labor rights.

But the President feels strongly that we should not be putting exceptional, unprecedented conditions on China's entry in the WTO that have never been put on any other country before.

Thank you.