Thank you very much and I am pleased to be here. I have been on the job a grand total of three months and this is my first official visit to Brussels and the EU in this capacity. Generally what I want to do is talk a little about the conversation that we have had here and the meetings. Then start with answering the questions that you have.

I made my official call on DG (Director General) Trade David O’Sullivan, who is almost as new as I am so that is good fun. The two of us sat and looked at new issues and old issues: the bilateral relationship, and Doha, looking at developments with new eyes and new intentions. We had a good series of meetings with various colleagues yesterday. Then I had a chance to visit with a number of permanent representatives, to meet and gain their perspectives. I met with the American Chamber of Commerce International Trade Committee this morning. What am I leaving out? I think that is pretty much it. It has been a very busy two days.

We talked a lot about the Doha round and the Doha developments and how we can resolve our differences, but most important to move forward with the development agenda of the Doha development agenda and also meeting the ambitious deadlines that we face. As you well know the United States negotiating authority, trade negotiating authority is technically implementing authority that we use to get an active trade agreement through Congress, expires 2007, end of June 2007 and that clearly has an impact on our ability to negotiate and the willingness of other countries to negotiate with us. So the de facto deadline for … the stated deadline for the Doha round is the end of 2006. We have a lot of work to do, but we are going to get there. With Hong Kong having exceeded very, very low expectations and we have the opportunity to move the ball forward. The United States and the EU share a common desire for a very ambitious outcome in trade services and trade… manufacturing goods in trade with NAMA (non-agricultural market access). We have some differences, as you probably know, in agriculture and how ambitious we can and should be in agriculture to improve market access and how all of this fits into the broader development objectives that we share, of where we know that all of us will benefit by virtue of developed and developing countries alike being fully engaged participants in this round. No one should be in a position of sitting this round out. It is not in their or any of our economic interests. One of those wonderful things about being in the trade field, and I have been in and out of the trade field most of my career, is that unlike a lot of other areas of dispute negotiation where you have a win/lose environment, in international trade you really can have a win/win when the economic pie expands. That has been the mark of U.S. trade policy for quite some time.

We are ambitious and anxious to see the round move forward in other areas, development-specific areas, that we can pay attention to such as location and capacity-building, some of those I would be happy to talk about if any of you have questions.

We have also talked this week about issues that divide us or “hiccups” in the relationship that appear periodically. I was able to do a report on a very, very significant development in the U.S. last week when the Byrd Amendment was repealed. The Byrd Amendment was by the definition, was certainly by virtue of the WTO rules and regulations, illegal. The Congress took a very courageous stand and repealed it … When the vote took place in December on the budget reconciliation bill it contained the Byrd Amendment and the Vice President of the United States had to sit in a chair and break the tie. Last week in the House of Representatives the vote was 216 to 214. So this was not an easy undertaking on the part of the United States. And it is something the Administration should be proud of; it was absolutely the right thing to do. In this same piece of legislation, by the way, the United States did away with the Step II program, one of the commitments that we made in Hong Kong. Cotton producers in West Africa, some of the least developed countries in West Africa, these cotton producers had those subsidies, these export subsidies the United States had going out, and again it is something to be proud of. We are putting our money where our mouth is in terms of trade policy.

We talked about biotech that was before the case was... the panel findings were shared with us last night. We talked about a variety of issues, Airbus, that are sources of tension that we would like to see worked out. We also talked about areas of cooperation. The U.S.-EU Economic Initiative, where we are trying to build cooperation in areas like intellectual property rights and regulatory cooperation and reform. And I think that summarizes… that is a decent summary, I’ll just stop here.

Reporter: This is a question about Byrd. The EU has indicated they might keep the sanctions in place for some years because the U.S. based disbursements will continue to 2009. Can you tell us anything about how long the disbursements will continue past 2007 when its phased out and can you give me reaction to the possibility if the sanctions will remain in place?

Amb. Schwab: Well I think it is, as I have said, very, very significant, very positive development that the United States Congress repealed the Byrd Amendment. It will have a two-year phase out period. During that period of time you will start seeing the activity under the Byrd Amendment obviously drop off and ultimately fade out. There will be no duties collected after two years and the disbursements really will be dictated by where the cases are in the litigation process, the duty process of the United States. I think it would be most unfortunate if the EU decided to continue its retaliation at all quite frankly, given this very, very significant development and this very courageous thing a lot of members of Congress opted to do because they knew it was the right thing to do. And it is the right thing to do. When you retaliate, you know the philosophical discussion about trade policy, trade politics and retaliation, but generally in a trade dispute when you retaliate it is the last point in a process where you have failed to help a constituent that you went into consultations for or went into litigation on behalf of. In this particular case the EU should claim victory and remove the retaliation and we move on in the relationship.

Reporter: Do you know how long- do you have any sense how long the U.S. disbursements will continue as they work their way…

Amb. Schwab: The answer is no I don’t because that would be a subject of where the process is … in any given, and I know duty cases would be case specific, and honestly at this stage of the game I don’t think even the Commerce Department, that has jurisdiction, as you know, and is responsible for administering, I don’t think even the Commerce Department could tell you that, other than we are talking about small amounts of money that will be phased out as the litigation works its way down.

Reporter: Ambassador, what is your reaction to the interim ruling last night from the WTO on GMOs?

Amb. Schwab: You mean the confidential panel report (laughing).

Reporter: That’s the one.

Amb. Schwab: Well let me begin by saying I haven’t actually read it. My understanding is it is like 2000 pages long … 600-800 pages long … many hundreds of pages. So it is a tome. I have not read it, therefore I can’t comment on it, but if the press reports that I have read about it are correct, the reports in the media, I think it is a significant and positive development. Biotech foods, when you are talking about biotech foods, you are talking about an incredible opportunity for farmers throughout the world, particularly in the developing world because it has very important environmental implications. Where you are talking about farmers operating in countries where in the past you needed significant pesticides to bring about a bountiful harvest and with strains of the biotech food seeds you are able to produce healthy plants, healthy food stuff without resorting to the use of harmful chemicals. Both of those make this biotech a very, very significant area for growth in agricultural production and food consumption in the future. I think it is unfortunate how this is played out where the EU and individual member states have both made it very difficult for farmers and consumers to benefit from these foods and quite frankly it is unfortunate the extent to which certain groups have decided to “demagogue” the issue and mischaracterize the quality and the development and the environmental implications of biotech products.

But then I haven’t read the report. (all laugh)

Reporter: I know you haven’t read the report but what the EU said about the report is it doesn’t require them to make any new changes to their system and they say their system is completely in line with the WTO. They are being criticized for a past transition thing and the current system is very solid and totally vindicated. Is that the understanding the U.S. has?

Amb. Schwab: Well as I understand, the report showed up at 8 o’clock last night. Is that right David? David Shark is our deputy chief in our mission to the WTO and he was around at 8 o’clock last night. I don’t think by the time I got up this morning, it had perhaps been skimmed, rather than read thoroughly and I can’t comment on the report of its implications. But I will say that if you are a producer or exporter of biotech products and what you are looking for is to see ‘is this thing credible?’ and the proof is in the pudding. Are there barriers? What is the nature of those barriers? Do you have a transparent systematic means of entering the markets? And in some cases if you were to take a snapshot today the answer is yes and no. It is not just yes. So there is work to be done I suspect.

Reporter: You mentioned “hiccups” and seemed to suggest some systemic problems. Is there sort of a move to improve the way you talk to each other and perhaps improve the relationship?

Amb. Schwab: That is a really good question and I think it is sort of the inevitable that the … its inevitable that a trade relationship as large and significant as the trans-Atlantic trade relationship, it is inevitable that there are going to be issues. Sort of the old married couple syndrome. The key in any such relationship is being able to recognize how very important you are to each other’s economies, and not just in the trade relationship, but also in the political in terms of geo-politics the importance of the relationship is also fundamental. In terms of the economic relationship, the fundamental relationship, you can’t be surprised that there are issues. The question becomes … the questions relate to how you manage those issues. One is: is there a sincere effort on the part of both sides to resolve issues. What is the level of commitment?

There have been times, and I am not talking about now necessarily, over the years, where the level of rhetoric has perhaps exceeded what was necessary to resolve the issue. So it is a matter of managing the relationship, managing the individual, managing individual disagreements that [were] used. Many of these are heartfelt disagreements like the Doha Round. The United States believes that a lot of countries have been able to take a pass so far on the Doha Round by hiding behind the very modest EU offer on agriculture. Non-EU countries meaning Japan, India, Brazil, China, have had an excuse not to engage actively in the Doha negotiations. Not to show their hand either on agriculture or in manufacture access or in manufactured goods access or in services access.

We believe that the way to break this open would be for the EU to make a more forthcoming contribution on agriculture. The EU, which by the way, shares our ambition of a significant round of market liberalization in manufactured goods and services, believes that Brazil and India and these countries ought to go first and need to show their hand in terms of non-agricultural market access and services before the EU is in a position to be more forthcoming in their agriculture proposal. That is a difference both of substance and tactics, how do you manage that? Well it is in our interest to work with the EU to manage that because at the end of the day we had the same objective, which is a good outcome to the round. That is a poor example.

Coming out of Davos there is sense of some momentum with discussion about where we can act in concert where everybody at some point in time needs to come in with their offers. How strong a formula can we get for manufacturing goods? The U.S. and EU has an interest in working together on that. So in terms of managing the relationship overall, you need to make sure that we are addressing the disputes and they are real. Our concerns about launch aid … Airbus and launch aid are a very, very real concern, on the other hand you don’t want to sour the entire trans-Atlantic economic relationship because it is a relationship that is a benefit to us all.

Reporter: Was there anything concretely in the way you will talk? [inaudible]will you be doing anything concretely?

Amb. Schwab: I think if I had to pick one thing, aside from the ‘getting to know you’ exercise, I think the one thing I think I would like to see … you will have to ask David O’Sullivan for his perspective… I think I would like to see less negotiation about the shape of the table and more sitting down and looking at specific practical issues. It is sort of nitty-gritty, it doesn’t translate into anything that you would write about, but we spent immense amounts of time in the trade business negotiating about negotiating. What are the parameters? What are the parameters of these talks? You can spend years negotiating parameters. You can sit down and say ok here is a very specific issue, how can we address this specific issue? So we have some more systematic, pragmatic approaches dealing with themselves, rather than the dance, the ... exercise that we got through in many cases that can take years.

Reporter: On agriculture how do you see the critics on the EU side that the EU has already paid up because it is written in the CAP before while the U.S. is issuing a check on farm reform that may come, that may not come. You said that Byrd Amendment that the Congress took the fantastic step, first of all it took them years to take this step and liking the FSC mechanism will work for another 3 or 4 years. So seen from here it is nothing dramatic. Sadly and politically the Europeans are on the same ground, it is very difficult to make a new offer on agriculture as you know. There is nothing on, absolutely nothing on NAMA, and final point you are talking about ongoing relationship. The EU has the feeling that the U.S. is now flirting with Brazil, which is a kind of sub-partner … again the EU will come up and say “the reason why Brazil is not moving is because it feels secure, hiding behind that sort of improbable alliance with the U.S. and secondly, probably the EU managed to get Brazil very close to the U.S., but all the other manage to get all the member states, including the country I know best (France), behind Commissioner Mandelson. That is not very good for the prospect of the round (laughing).

Another Reporter: Could you go back to the issue of the blank check? There seems to be some increased rhetoric from Europe about the ability of the United States to deliver in the end.

Amb. Schwab: You can’t have it both ways. You can’t criticize the U.S. ag proposal as “this is what you were going to do anyway,” and then also “well you weren’t going to be able to deliver it.” It is not enough or it is too much. You aren’t going to be able to deliver it through Congress. So you can’t have it both ways. I think by any definition the U.S. agricultural proposal that was put on the table recognized that this is conditional (all our offers are conditional) on getting reciprocal access in other markets, in a variety of sectors. By any definition it was bold and forward leaning. You are talking about market access, domestic subsidies and export subsidies, all dramatic disciplines in all three pillars.

There is no guarantee, in fact under the current circumstances, there is no one in the U.S. who would be in the position to see that enacted in Congress because there is nothing there that we can show our constituencies that would make those concessions worthwhile. So the only way that the U.S. is going to be able to go forward with this kind of an offer and keep this kind of an offer on the table and ultimately see it or something like it enacted into law is if it is part of a broader package, a broader package of reforms and real significant market access opportunities, significant development opportunities, or significant opportunities for the developing world that we can take as a package and get enacted. Now the process that we use for enacting trade negotiations, I referred to it earlier, it used to be Fast Track and now it is trade promotion authority. That is a unique legislative mechanism that provides for implementation of a trade agreement through an up or down vote with no amendments and no filibusters. And for those of you who have watched the U.S. Congress, you know that the characteristics of legislative activities include filibusters, amendments, etc.

In 1974, for the first time, actually I will go back one step further. The authority for international trade rests with the legislative branch, rests with the Congress and not the Executive Branch. Since 1974, the Congress has periodically delegated that authority to the Executive Branch, but periodically not permanently, never permanently. And so the Executive Branch, the President, gets chunks of authority to reduce tariffs then called fast track, now called trade-promotion authority, to have enactment reductions of non-tariff barriers.

The way the U.S. would ultimately enact its commitments under the Doha round is through this fast-track process. In the case of agriculture it is much more complicated, you also have a multi-year process for farm bills. The current farm bill, the current framework under which U.S. agricultural authority was enacted, expires in the fall of 2007. So we are talking about a coincidence in timing. With solid consultations with the Congressional Agricultural Committee, as well as the Senate Finance, the House Ways and Means Committees, which are the principle committees who handle trade, we could see dramatic results in terms of what the U.S. does in compliance with its Doha obligations, if and when there is a reason to be forthcoming in talks. But they cannot be unilateral, they would never be unilateral.

Reporter: Is there anything that has given you the sense in the last couple days that makes you more confident, more hopeful that the EU will come forth with an ambitious agriculture offer?

Amb. Schwab: I think we may be moving beyond the “after you, after you,” “Alphonse, Gaston,” kind of rhetoric exercise that we have engaged in. We still believe that having the EU be more forthcoming would be the right thing to do. I think at this stage of the game we all need to move on and see how presenting offers in concert works. The promise of the dialogue that took place in Davos has yet to be realized and we will see if that ends up putting on the table the kind of offers that will generate further offers and will generate a really strong package.

Reporter: On Boeing- Airbus or Airbus-Boeing (laughter)

Amb. Schwab: You can say Airbus-Boeing because the Airbus case was filed first.

Reporter: Everybody seems to be happy to let the process run its course. It is going to take a very, very long time the report might be as big as the report on GMOs. Nobody seems to be willing to start negotiating again. Is this the perception, are you happy to let it run its course in Geneva for the rest of 2006 because Airbus will not be paid any launch aid for this year, not before this summer.

Amb. Schwab: Yes, but the money is in the bank.

Reporter: Yeah, sure. (laughter) They can borrow it.

Amb. Schwab: Going back to a comment I made earlier, when you get to the end of a litigation process, if you are in a position where you are retaliating; you have probably failed to serve your constituent interests. We are at the front end of this particular process. We are quite confident that if we were to let the litigation run its course that there would be a successful outcome for the United States. That said, we have maintained all along that we really would prefer to negotiate a solution to the litigation. It is not just the costs in terms of time and money, but it is also trying to resolve a problem. There is always going to be a dialogue on an issue as significant as Boeing-Airbus, Airbus-Boeing. There is always going to be a dialogue, we talked about it yesterday. Will there be negotiations, I don’t know yet. To the extent that we can take a very pragmatic look at the issues involved, maybe there is some room for negotiations. But for now I think both sides are fairly comfortable seeing the litigation move forward and perhaps it is something that we will engage in more formal negotiations.

Reporter: Can I just ask one, I want to come back to biotech? A large part of the U.S. case focused on the moratorium … the U.S. maintains that the moratorium still exists … is there a U.S. legal action possible to address the way the regulatory process is working now that the length of time is… goes through member states [that] inject a critical element into the approval process?

Amb. Schwab: You are several steps down; you are anticipating several steps that I can’t comment on, not having read the report. It is hard to know first of all what would be the impact on behavior? It is only after you see the impact of the report on behavior that could include decisions to appeal that could include changes to policies. As I said, the proof will be in the trade flows and the transparency and ease of the approval process. So it is really too early to answer the question. Ultimately though your question is answered by [asking] is the problem solved? Time will tell. But the question is “is the problem solved,” not who does what to whom at what point.