[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]



 
        U.S. EFFORTS TO REDUCE BARRIERS TO TRADE IN AGRICULTURE

=======================================================================

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON TRADE

                                 OF THE

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED FIFTH CONGRESS

                             SECOND SESSION

                               __________

                           FEBRUARY 12, 1998

                               __________

                           Serial No. 105-91

                               __________

         Printed for the use of the Committee on Ways and Means



                     U.S. GOVERNMENT PRINTING OFFICE
60-951                       WASHINGTON : 1999




                      COMMITTEE ON WAYS AND MEANS

                      BILL ARCHER, Texas, Chairman
PHILIP M. CRANE, Illinois            CHARLES B. RANGEL, New York
BILL THOMAS, California              FORTNEY PETE STARK, California
E. CLAY SHAW, Jr., Florida           ROBERT T. MATSUI, California
NANCY L. JOHNSON, Connecticut        BARBARA B. KENNELLY, Connecticut
JIM BUNNING, Kentucky                WILLIAM J. COYNE, Pennsylvania
AMO HOUGHTON, New York               SANDER M. LEVIN, Michigan
WALLY HERGER, California             BENJAMIN L. CARDIN, Maryland
JIM McCRERY, Louisiana               JIM McDERMOTT, Washington
DAVE CAMP, Michigan                  GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota               JOHN LEWIS, Georgia
JIM NUSSLE, Iowa                     RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas                   MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington            WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia                 JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio                    XAVIER BECERRA, California
PHILIP S. ENGLISH, Pennsylvania      KAREN L. THURMAN, Florida
JOHN ENSIGN, Nevada
JON CHRISTENSEN, Nebraska
WES WATKINS, Oklahoma
J.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
                     A.L. Singleton, Chief of Staff
                  Janice Mays, Minority Chief Counsel
                                 ------                                

                         Subcommittee on Trade

                  PHILIP M. CRANE, Illinois, Chairman
BILL THOMAS, California              ROBERT T. MATSUI, California
E. CLAY SHAW, Jr., Florida           CHARLES B. RANGEL, New York
AMO HOUGHTON, New York               RICHARD E. NEAL, Massachusetts
DAVE CAMP, Michigan                  JIM McDERMOTT, Washington
JIM RAMSTAD, Minnesota               MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington            WILLIAM J. JEFFERSON, Louisiana
WALLY HERGER, California
JIM NUSSLE, Iowa

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
version. Because electronic submissions are used to prepare both 
printed and electronic versions of the hearing record, the process of 
converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.




                            C O N T E N T S

                              ----------                              
                                                                   Page
Advisory of January 26, 1998, announcing the hearing.............     2

                               WITNESSES

U.S. Department of Agriculture, Hon. August Schumacher, Jr., 
  Under Secretary, Farm and Foreign Agricultural Services........    14
Office of the U.S. Trade Representative, Hon. Peter L. Scher, 
  Ambassador, Special Trade Negotiator for Agriculture...........    29
Agriculture Coalition for Fast Track, and National Pork Producers 
  Council, Nicholas D. Giordano..................................    71
American Farm Bureau Federation, Dean R. Kleckner................    54
American Meat Institute, Leonard W. Condon.......................    89
American Peanut Coalition, and Citizens Against Government Waste, 
  John E. Frydenlund.............................................   133
Chiquita Brands International, Carolyn B. Gleason................   127
Consumers for World Trade, Doreen Brown..........................   121
Sunkist Growers, Michael Wootton.................................    96
Thurman, Hon. Karen L., a Representative in Congress from the 
  State of Florida...............................................     8
Western Growers Association, David Moore, as presented by Anita 
  Brown, Schramm, Williams and Associates........................   109

                       SUBMISSIONS FOR THE RECORD

U.S. General Accounting Office, JayEtta Z. Hecker, Associate 
  Director, International Relations and Trade, National Security 
  and International Affairs Division, statement..................   144
American Sugar Alliance, Jack Roney, statement and attachments...   158
Biotechnology Industry Organization, statement and attachment....   171
California Cling Peach Growers Advisory Board, Dinuba, CA, 
  statement and attachments......................................   175
DeLaney, Paul H., Jr., Washington, DC, statement and attachments.   188
Florida Fruit & Vegetable Association, Orlando, FL, statement....   201
International Dairy Foods Association, statement and attachment..   207
National Lumber and Building Material Dealers' Association, 
  statement and attachments......................................   216
National Pork Producers Council, statement.......................   223
Smith, Hon. Robert F., a Representative in Congress from the 
  State of Oregon, statement.....................................   236
Wine Institute, statement........................................   240


        U.S. EFFORTS TO REDUCE BARRIERS TO TRADE IN AGRICULTURE

                              ----------                              


                      THURSDAY, FEBRUARY 12, 1998

                  House of Representatives,
                    House Ways and Means Committee,
                                     Subcommittee on Trade,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:21 p.m., in 
room B-318, Rayburn House Office Building, Hon. Philip M. Crane 
(Chairman of the Subcommittee) presiding.
    [The advisory announcing the hearing follows:]
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    Mr. Crane. Thank you. The committee will now come to order. 
Good afternoon.
    This is a meeting of the Ways and Means Subcommittee on 
Trade to consider the status of U.S. efforts to reduce barriers 
to agricultural trade. I want to welcome the witnesses and 
thank them for coming today. I'm sorry to announce that the 
chairman of the House Agriculture Committee, Bob Smith, will 
not be with us today. I hope to reschedule his testimony at a 
later date. He has supplied an excellent written statement for 
the record which is available for members to review.
    The trade agenda for U.S. agriculture which we plan to 
discuss today will be severely damaged if Congress and the 
President are not successful in passing legislation to extend 
the President's fast-track negotiating authority.
    Looking at the trends facing U.S. farmers from a strategic 
perspective leads only to one conclusion: opening foreign 
markets is essential for the future health of U.S. agriculture. 
The United States possesses the most efficient and most 
competitive agriculture sectors in the world. Our farmers 
capitalize on this country's rich natural resources and on 
their extraordinary ability to develop and apply the latest 
managerial and technological innovations in the achievement of 
ever-expanding crop yields. But because U.S. food consumption 
is projected to remain relatively stable in the future, the 
further elimination of trade barriers and the development of 
export opportunities is absolutely essential as we move into 
the 21st century.
    Currently, 96 percent of the world's population lives 
outside of the United States. The markets for the greatest 
potential for growth are abroad, not here at home. U.S. 
inaction on the fast-track issue dictates that we are missing 
opportunities every day to improve the well-being of U.S. 
farmers and safeguard their future. Europeans who we 
continually have to bring to the negotiating table on these 
tough issues will be thrilled if we fail.
    U.S. agriculture exports have doubled since 1985 reaching 
almost $60 billion last year. It is my view that it is the 
responsibility and the duty of the Congress and the President 
to preserve and support the continuation of this success story. 
The language in the fast-track bill laying out objectives for 
trade negotiating for U.S. agriculture is the strongest ever 
approved by the Ways and Means Committee, and my goal is to get 
it enacted into law.
    With these comments, I'll yield to our ranking member, Mr. 
Matsui, on an issue I know is important in his State of 
California.
    Mr. Matsui. Thank you very much, Mr. Chairman. I commend 
you for holding these hearings today on the United States' 
effort to reduce barriers to trade in agriculture. Agriculture 
exports account for over 30 percent of the United States' farms 
income and support nearly a million American jobs; one out of 
every three acres of our crop production is exported. The 
United States is the largest agricultural exporter in the world 
reaching a record of $60 billion or nearly double the level of 
imports in 1996.
    The United States is the most competitive nation in the 
world, of course, in agriculture. As a result, many 
agricultural and crude industry interests have been among the 
strongest supporters of renewing fast-track authority for the 
President. They recognize that the continued prosperity of 
American agriculture lies in further opening of foreign markets 
through trade agreements. At the same time, we need to 
recognize concerns raised by some of the agriculture interests 
about the impact of increased import competition on domestic 
producers and assure consumers that trade agreements will not 
result in the lowering of our food, safety, and health 
standards.
    So far, we have had an excellent record in the World Trade 
Organization, the WTO, on settling disputes affecting market 
access for agricultural goods. Significantly, the WTO 
vindicated the United States' complaints against the European 
Union's ban on hormone-treated meat and discriminatory banana 
regime; however, full and timely implementation of the results 
is essential for the system to maintain credibilityand domestic 
support.
    Much work remains to be done as the agricultural sector is 
still highly protected and subsidized around the world, and now 
the financial crisis is hurting our farm exports to Asia, of 
course, the largest and fastest growing market in the world at 
least in the short-term.
    Another round of negotiations in the WTO on agriculture is 
scheduled to begin in 1999. It is essential that these 
negotiations make further progress beyond the Uruguay Round to 
strengthen international rules against trade-distorting 
subsidies and to reduce import barriers. Meaningful market 
access commitments for agriculture exports are also essential--
to the ongoing WTO accession talks with China. Agriculture will 
also be an important component of the negotiations to be 
launched in April for a free trade agreement for the Americas.
    I welcome the testimony of Representative Karen Thurman, a 
member of our committee, and certainly, we will review the 
record of Chairman Smith. We look forward to the views of you, 
Representative Thurman, and, of course, the other witnesses 
that will testify today. Thank you.
    Mr. Ramstad [presiding]. Thank you, Mr. Matsui. Mr. 
Watkins, do you have an opening statement?
    Mr. Watkins. I should say, I look forward to hearing 
testimony and asking questions of several of you. Karen, I'm 
glad to see you.
    Mrs. Thurman. I'm glad to be here.
    [The opening statement follows:]
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    Mr. Ramstad. Our first witness, our distinguished 
colleague, Karen Thurman. Please begin Karen.

 STATEMENT OF THE HONORABLE KAREN L. THURMAN, A REPRESENTATIVE 
             IN CONGRESS FROM THE STATE OF FLORIDA

    Mrs. Thurman. Thank you, Mr. Chairman and members; I 
appreciate that. I actually came from the Agriculture Committee 
to the Ways and Means Committee, and one of the reasons that 
this was extremely important to me was because I knew that 
trade issues would begin to take an important part in this 
Congress and the future of this country. So, I speak from a 
feeling that I at least know Florida agriculture and hope that 
I have some good understanding of some other areas. While we 
may disagree because of our specialty crops, we don't 
necessarily disagree in the area of trade, but we do have some 
very big concerns in Florida.
    I want to thank the chairman for scheduling this meeting. I 
applaud your efforts in scheduling this hearing on obstacles 
that our Nation faces in trade. Agriculture, especially for 
Florida, perishable agriculture faces an uneven playing field 
abroad. In many instances, it is even denied entry into the 
game. Florida agriculture differs from agriculture in the 
chairman's State of Illinois. During the winter months, Florida 
is the only State which produces the many fresh fruits and 
vegetables that are so critical to the diet and health of 
Americans. The total economic impact for Florida agriculture is 
$54 billion. We are the winter basket--winter food basket of 
the United States.
    Yes, Florida and Illinois have different crops, a different 
climate, and different needs, but the challenges we meet with 
the rest of U.S. agriculture is one and the same. We 
competitively provide safe abundant food for American families 
and millions of families around the world, but we face too many 
closed doors as we try to open new trade opportunities. U.S. 
officials should not negotiate away the few safeguards left to 
American farmers nor should they reduce tariffs and other 
protections where unequal barriers and subsidies exist for 
major foreign producers.
    The U.S. showed its leadership with the passage of the 1996 
Freedom to Farm Act. This landmark legislation set forth a 
disciplined 7-year, phase-out of subsidies and price reports to 
American farmers. Farmers in other countries continue to be 
more protected than their U.S. counterparts. Inconsistent 
regulatory requirements, non-tariff trade barriers, and 
unworkable safeguards put unfair pressure on U.S. agricultural 
exports.
    Aggressive and thoughtful U.S. leadership is necessary to 
prevent any further erosion and disappearance of our food 
production. We must address tariff equivalency on most 
agricultural products, the elimination of export subsidies, and 
the establishment of meaningful rules on State trading 
enterprises now.
    Just as importantly, U.S. leadership must acknowledge that 
U.S. agriculture cannot truly enjoy free trade until all of its 
commodities enjoy fair trade. As I have stated many times 
before this committee, Florida has yet to get one orange into 
Mexico, and our citrus shipments into China remain blocked by 
their unfounded concerns about the Mediterranean fruit fly. I 
call upon our negotiators to seek workable and effective 
safeguards for seasonal and perishable commodities and to 
remove unfounded SPS barriers to all U.S. agricultural exports. 
Agriculture disputes at the WTO must be resolved quickly.
    Perishable agriculture products have many unique 
considerations. For instance, oranges, tomatoes, and peppers 
cannot be stored until markets change or trade disputes get 
resolved--often, very slowly. The United States should 
encourage the development of international trading rules that 
address the special concerns of some of our seasonal and 
perishable produce such as our fresh fruits, vegetables, and 
orange juice.
    On another side with food safety, I commend the President 
for his food safety initiative. We must ensure that our 
negotiators do not lower food and safety standards which are 
based on sound science. Let's keep in mind the recent food-
borne outbreaks caused by imported agriculture products.In 
March of 1997, almost 200 Michigan children were infected with 
Hepatitis A after eating imported frozen strawberries in their school 
cafeteria. In Florida, hundreds of Floridians were infected with the 
parasite, Cyclospora, from imported Guatemalan raspberries. The United 
States must retain its right to take appropriate science-based actions 
against imports when necessary. After all, if my Government tells me 
not to eat the fruits and vegetables in a certain country when I 
travel, why should I eat them at home?
    Florida agriculture believes that labor and environmental 
issues can and should be addressed as an integral part to any 
new negotiations. The health of U.S. agriculture and consumers 
is gravely impacted by the use of child labor in competing 
countries and their tolerance of contaminated waters for 
irrigation.
    American food production faces another threat but it is a 
domestic threat that we can readily control. It is the threat 
of conflicting policy. I do not understand why one agency is 
seeking to liberalize markets but other agencies are giving 
away the means which help us open those markets. Why do these 
agencies persist in giving our direct competitors significant 
competitive advantages over our own farmers?
    Mr. Chairman, I greatly appreciate this emphasis on 
reducing barriers to trade in agriculture. The concerns I have 
broached today represent all segments of Florida agriculture, 
especially the Florida Department of Agriculture and Consumer 
Services. For any more details, I would refer you to testimony 
that was presented to the Subcommittee on Risk Management and 
Specialty Crops of the House Agriculture Committee during the 
January 22 meeting in 1998 which was held in West Palm Beach.
    Agriculture, as I see it, continues to be an important 
component in our balance of trade. Our ability to produce food 
for the world remains one of our country's greatest strengths. 
Our trade policies and negotiations must not allow to be 
weakened U.S. food production and the safety of our food 
supply.
    I thank you, and I'll answer any questions. And if I could 
ask that my written statement be included for the record.
    Mr. Ramstad. So ordered.
    [The prepared statement follows:]
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    Mr. Ramstad. Thank you for your thoughtful testimony, 
Karen, and I just have two brief questions. First of all, you 
refer in your testimony to the broken promises of NAFTA. In 
your view, what were those broken promises, and how can they be 
addressed in a way that will restore the trust and faith that's 
desired for trade negotiations?
    Mrs. Thurman. Well, I think, Mr. Ramstad, one of the things 
that we talked about during the fast-track was some language 
that we actually were trying to get to trade representatives 
which, quite frankly, was not conclusive, but with our tomato 
industry particularly, the anti-dumping. When we saw dumping 
coming in Florida, tomatoes below cost which subsidize through 
their own country and we were never able to get any kind of 
remedy which was one of the things that was promised during the 
NAFTA; that there would be remedies available for our 
agriculture products.
    Mr. Ramstad. Thank you for your response, Karen. Let me ask 
you what I think is a key question here today. It is mind 
boggling to realize that our country spent about a little over 
$5 billion in direct payments to farmers in agricultural 
programs last year while the EU spent about $47 billion; over 
eight times as much as our country. Do you think that we could 
truly get reforms in this area in 1999 negotiations for 
agriculture if the administration does not have fast-track 
authority?
    Mrs. Thurman. I don't know, and--but let me say that in 
reading some of the material I know that the EU has been 
working on trying to reduce some of their subsidies. We were 
over there in England a couple of years ago; talked with the 
Parliament; they had, in fact, done some things at that point. 
It is my understanding that by the year 2002 they are also 
looking at trying to reduce some of areas within their 
subsidies as well. Now, whether they do that or not, I don't 
know, but they continue to be one of our biggest competitors.
    Mr. Ramstad. Well, again, I thank you. Mr. Matsui.
    Mr. Matsui. Thank you, Mr. Chairman. I have really no 
questions. Karen and I have talked a lot about NAFTA and our 
interpretation of the negotiations that went on in 1993, and we 
may differ a little bit, but, certainly, we have the same goals 
of making sure that our industries are put in a fair position 
to be competitive, and I think your efforts to try to help work 
in that direction are extremely helpful, and we, obviously, 
want to continue to work with you on that.
    Mrs. Thurman. Well, I appreciate that, and that's one of 
the reasons I wanted to testify. At least this lays it out a 
little bit as we go into further kinds of trade issues and 
discussions whether it's fast-track or whatever. We do have an 
awful lot of things in common much more so than that are 
different, so I hope that we can continue this kind of dialogue 
and conversation and thank you.
    Mr. Ramstad. Thank you. Mr. Watkins, any questions?
    Mr. Watkins. Karen, I appreciate your testimony. I think we 
have a real job to do if we're going to get the fairness up in 
the international marketplace for our farmers and our ranchers, 
and I'd be happy to have a bipartisan effort to do that.
    Mrs. Thurman. You betcha, thanks.
    Mr. Ramstad. Mr. McDermott. Too late for rhetoric. 
[Laughter.]
    Thank you, again, Mrs. Thurman.
    The next panel consists of the honorable August Schumacher, 
Jr., Under Secretary for Farm and Foreign Agricultural Services 
in the U.S. Department of Agriculture and the honorable Peter 
L. Scher, Special Trade Negotiator for Agriculture, Office of 
the USTR. Welcome to the subcommittee, gentlemen. We'll begin 
with you, Mr. Schumacher.

STATEMENT OF AUGUST SCHUMACHER, JR., UNDER SECRETARY, FARM AND 
  FOREIGN AGRICULTURE SERVICES, U.S. DEPARTMENT OF AGRICULTURE

    Mr. Schumacher. Thank you, Mr. Chairman, Mr. Matsui, Mr. 
McDermott, and Mr. Watkins. Chairman, it's a distinct pleasure 
to be here from the agricultural side to report in this 
committee. I'm delighted to be here with Ambassador Scher.
    American agriculture, like most other industries, is 
absolutely linked to the global economy as we've seen with the 
Asian crisis increasingly dependent on trade. Given the 
opportunity, American agriculture can meet export challenges 
anywhere in the world. Our farmers, ranchers, and others in the 
ag community have made investments in technology, 
transportation, research that have turned opportunity into real 
export success. I'll mention that we reached $60 billion in 
1996, $57 billion last year, and we really actually haven't 
plateaued. In the early nineties, we were going along about $42 
billion, $43 billion; a bit of a plateau, and that has jumped 
now in the late nineties to $55 billion, $57 billion, $59 
billion, $57 billion, and we're in that higher plateau now 
which I think is terrific.
    These sales generated close to 1 million jobs, and as we 
mentioned the trade surplus during the last year was $21 
billion. American agriculture has now registered trade 
surpluses in each of the last 37 years; an extraordinary 
record. The success of the American farmers and ranchers 
affects, certainly, a decade, many decades, of bipartisan 
efforts to put American agriculture on a level playing field in 
the global arena. The bilateral and multilateral agreements are 
working for the benefit of agriculture.
    In the last year alone, we mentioned the success in the WTO 
that Peter will talk about in Geneva on hormone treated 
animals, so our beef will now be able to, eventually, get into 
the EU. The Appellate Body released its review of the panel 
decision and clearly affirms the earlier finding that the EU 
ban was imposed and maintained without credible scientific 
evidence. Removing the beef import ban has now become a serious 
international obligation of the European Union and Members of 
Congress will be expecting them to fulfill it.
    Other accomplishments including the first commercial 
shipment of U.S. tomatoes to Japan; the lifting of Egypt's ban 
on imported poultry; gaining market access for sweet cherries 
to Mexico; preserving the market for U.S. pet food exports to 
Switzerland; implementing the pilot project to expedite 
shipments of live cattle from Montana, and Washington to 
Canada, and working, particularly, to open Chile market and 
reopen it to U.S. wheat--our successes have been solid and 
significant, Mr. Chairman, but we have serious challenges 
ahead. It is crucial that we work to support the international 
effort led by the IMF, the International Monetary Fund, to help 
the countries of Southeast Asia to help themselves. It is very 
much in the interest to America's farmers and ranchers and the 
American people in general.
    To conclude, we continue to face trade policy challenges 
with the European Union. It's unfortunate that the United 
States and EU have appeared to be on the verge of trade wars 
more often than not in the past few years. The list of issues 
that remain to be resolved include the EU ban on specified risk 
materials; European Union approvals for new biotech products 
that are coming out very rapidly and benefiting farmers and 
consumers; the veterinary equivalency issue; the circumvention 
in the European Union of export subsidies, and the continuing 
EU subsidies on canned fruit and wheat gluten. Mr. Chairman, 
let me assure you that we will do whatever is necessary to 
protect U.S. trade interests.
    We're also concerned about Canada's dual dairy pricing 
system and have launched a panel request in the WTO. We're also 
committed to preserving the hard won achievements of the 
Uruguay Round as we negotiate with China and Russia and many 
other countries on accession to the World Trade Organization.
    And then in conclusion, we've begun preparations for the 
continuation of the reform process begun in the Uruguay Round. 
We're looking at a number of key issues such as how countries 
are applying tariff rate quotas; state trading entities, both 
for import and export, and how to pursue further liberalization 
disciplines in the area negotiated in the Uruguay Round 
especially domestic support and market access.
    As you can see, Mr. Chairman, much work remains ahead, but 
we are optimistic about the future of U.S. ag exports and 
working under the leadership of Peter Scher and his great team 
at STR. We hope to work very closely with you in a bipartisan 
effort to overcome some of these challenges and to move 
forward. Thank you for holding this hearing.
    [The prepared statement follows:]
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    Mr. Ramstad. Thank you, Mr. Secretary. Well, let me just 
ask a couple of questions. First of all, to what extent are the 
Federal agencies charged with monitoring the agreement 
confronted with the competing goals of food safety and 
effective monitoring of the WTO Agreement?
    Mr. Scher. Sure, I'm happy to Congressman. Let me say, I 
think that both are very important goals, and one of the 
important elements of the----
    Mr. Ramstad. Ambassador Scher, if I may interrupt, I'm not 
used to doing this. I'm not the chairman; I'm a pretender here. 
Unfortunately, Chairman Crane took ill, and, hopefully, it's 
not serious, but he's not going to be back. Please give your 
testimony first which is proper procedure. I'm sorry I screwed 
up. I'll ask my questions later. [Laughter.]
    Go ahead, Ambassador.

   STATEMENT OF PETER L. SCHER, SPECIAL TRADE NEGOTIATOR FOR 
 AGRICULTURE, OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

    Mr. Scher. Mr. Chairman, this is a first for us both, so 
we'll muddle our way through it. You have my written statement, 
and so I will just summarize a couple of points, so we can get 
on to some of the issues of concern.
    First, let me say I am pleased to be before the committee 
and very pleased to be testifying alongside Under Secretary 
Schumacher who is such an important leader around the world for 
American agriculture.
    I want to start out by just recognizing that we are at the 
start of another year of economic expansion in this country. 
This is, in fact, the seventh year. Our unemployment rate is 
the lowest in nearly a quarter century. We've created nearly 13 
million new jobs. More Americans are working today than in any 
time since the Government began recording labor statistics. 
Now, I know this is not a hearing on the economics in the 
United States, but one cannot understate the role that 
international trade has played in our economic expansion. Since 
1992, exports have accounted for one-third of our growth, and, 
today, more than 11 million jobs now depend on exports.
    There is no other sector of our economy where the link 
between trade and today's economic prosperity is clearer than 
in agriculture, and as Under Secretary Schumacher and the 
chairman earlier pointed out, we've had near record 
agricultural exports of over $57 billion. I believe that the 
importance of trade to our agricultural community is 
underscored by our shrinking share of the world's population. 
We are near 4 percent--only 4 percent of the world's population 
and are reaching close to zero population growth, but the world 
is still growing, and the success of American agriculture, 
frankly, will depend on our ability to engage global consumers 
in the--that live outside our borders; the 96 percent of the 
world that do not live within the borders of the United States.
    So, despite our successes which are many, we still face 
many hurdles as Congresswoman Thurman pointed out. We still 
face high tariffs in Europe and elsewhere; trade restrictions 
which are very thinly disguised as science; administration 
schemes in many countries for tariff rate quotes that, frankly, 
mimic the tariffs that they were intended to replace, and state 
trading enterprises that restrict imports and unfairly compete 
with our exports. So, we need to continue aggressively our 
efforts to tear down these barriers using all of the tools at 
our disposable including the dispute settlement process in the 
WTO; including the agreements of the Uruguay Round, and, 
frankly, our own domestic trade laws.
    Mr. Schumacher referred to one of the most important 
victories--I know Mr. Watkins has taken a great interest in the 
beef hormone victory which we can talk about in a minute. Let 
me also say that we are currently using the WTO to challenge a 
number of practices which we believe violate obligations under 
the Uruguay Round. We are challenging the way Canada and the EU 
subsidize dairy exports. In fact, tomorrow, we will take the 
next step in Geneva in our case against Canada by asking for 
the formulation of a dispute settlement panel to hear our 
complaint. We are challenging Japan's testing program for 
fruit--I know an issue that's very important to the 
Congresswoman's constituents in Florida. We are challenging 
Korea's taxes on alcoholic beverages; Chile and the Philippines 
failure to open its market for pork and poultry.
    Let me say we have been very aggressive in using the WTO to 
assert our rights. In fact, we have brought more cases than any 
other country, and we are winning more cases than any other 
country. In fact, a third of the cases we have brought have 
been in the area of agriculture. We have new negotiations in 
1999 which are an important opportunity to address things like 
cap reform which was discussed earlier, and we've already begun 
preparations for that effort.
    Let me just say in conclusion, because so much of what was 
in my statement has been said by others, I often hear people in 
this country blame trade agreements as the cause of trade 
problems, and I want to strongly disagree with that notion, 
because it fails to recognize that the United States already 
has the most open market in the world. The objective of trade 
agreements is to open new markets and create new opportunities 
for our products. That is why we cannot shrink from the 
challenges of a global economy. Because as the chairman pointed 
out, as we hold back and we debate the merits of trade, our 
competitors are aggressively moving forward to seize new 
markets at our expense.
    Mr. Chairman, let me end there and simply say I look 
forward to working with you and the members of the subcommittee 
as we seek to forge new partnerships and create new 
opportunities for American agriculture. Thank you.
    [The prepared statement follows:]
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    Mr. Ramstad. Thank you, Secretary Schumacher and Ambassador 
Scher; both of you for your testimony, and, moreover, for 
working with us in a bipartisan, pragmatic, collaborative way 
on these important issues. That is appreciated; that's the way 
it should be done, and you're doing your jobs well.
    Let me ask you, first, Secretary Schumacher, in light of 
the Asian financial crisis, how is the Economic Research 
Service revising its forecast of agricultural exports? And, 
also, what commodities do you think will be most effective?
    Mr. Schumacher. Right, three things, Mr. Chairman. One, we 
looked at this very hard. Lat Hadamir is with me today, the new 
head of the Foreign Ag Service from California who's doing an 
outstanding job. He and I and the general sales manager spent 
two weeks talking to some 600 traders, government officials, 
and others in Asia to get an on the ground view of what was 
going on in Asia right after Christmas. During Christmas, we 
saw that there was some liquidity problems in Korea, and we 
felt that the economy's going to come back, and so we put on 
the guarantees on the GSM of about $1 billion; slightly 
increased it last week if that economy comes back, and that is 
having a resonating affect, we feel, and especially in key 
areas like cotton and meat and hides and skins, and also 
horticulture. We fought hard to get horticulture to keep that 
flowing very well. So, I think that's been taking up about $270 
million right away, and that's certainly had, I think, a 
stabilizing impact out there.
    We looked at other countries, and, over all, I think we're 
going certainly to see a softening, and the formal announcement 
will be made of the new export figures during the Ag Outlook 
Conference, but they certainly will be in the order of 3 
percent, maybe slightly higher, but in that area, but probably 
not below the plateau that we've seen the last 2 or 3 or 4 
years, but certainly on that newer plateau above $55 billion, 
and I think we're very competitive, and with the tools, GSM, 
and others, we're going to stay there.
    One of the key issues, however, as I said earlier, is that 
the IMF package, if you didn't have it, we couldn't have made 
the GSM, because they would not have been creditworthy because 
of liquidity and currency issues. So, with the IMF package, we 
came in quickly underneath that and are helping to stabilize 
exports to that critical market.
    Mr. Ramstad. And, hopefully, that message won't be lost on 
the present Congress as we look down the road.
    Let me ask you, Ambassador Scher, a constituent recently 
wrote to me that ``The IMF has been successful at getting 
Indonesia to do something that USTR has been aggressively 
working at for a long time; that is opening up their markets to 
agricultural imports with the exception of rice.'' Has the IMF 
been successful at opening markets as conditions for assistance 
in any other Nation?
    Mr. Scher. Well, I think that, frankly, you look at the 
whole IMF effort and what is going on in Asia, and the message 
out of this financial crisis is that the closed markets that 
Korea and Japan and so many other countries have followed don't 
work. In fact, they've led to this type of instability, and so 
the whole thrust of our efforts--this administration's efforts 
and the President's efforts is to move these countries to more 
market-based systems, and we have had success with Korea and 
with other countries in getting them to adopt more market-based 
systems which will lead to more open markets. One of the 
analogies I would point out--you know, we've heard so much 
about NAFTA and the criticism several years ago when the 
administration took efforts to help Mexico during their 
recession in 1995. The fact is by doing that we protected our 
own interests. As a result of the peso crisis in 1995, we lost 
about $1 billion in agricultural exports, but because this 
administration and the United States stood by Mexico and Mexico 
stood by their commitments to open their market, not only did 
we rebound within a year but we have now exceeded our 
agricultural exports by over 20 percent. So, this is an 
opportunity, I believe, to do what we all have been trying to 
do in a bipartisan fashion for many years: to move Asia and 
many of these countries into a more open market-based system, 
and I think it's clearly in our interest to pursue that goal.
    Mr. Ramstad. So, you're implying these are permanent 
improvements?
    Mr. Scher. Well, I think if these countries hope to remain 
stable economically, they need to be.
    Mr. Ramstad. And there is, in your judgment, then, the 
potential to work through the IMF for additional 
liberalization.
    Mr. Scher. Absolutely, absolutely.
    Mr. Ramstad. Very well. Thank you, again, both of you for 
your testimony. Mr. Matsui.
    Mr. Matsui. Thank you, Mr. Chairman. I want to thank both 
you, Mr. Secretary and Mr. Ambassador, for your testimony. Let 
me start with you, Peter. The recent Kodak. Fuji case ruling 
that last month, was completed and finalized, created somewhat 
of an uproar. In fact, there's a lot of interest in this issue 
on Capitol Hill. The fact that we've been out of session 
probably has dampened that somewhat, but probably in either the 
month of March and April it may intensify again. I know there's 
a couple of letters that are going around and certainly a 
bipartisan resolution that may be brought to the floor--it will 
probably have to go through our committee or subcommittee 
first. How has the WTO worked in terms of agriculture--and both 
of you can answer, but, Peter, you first, perhaps? It seems to 
me--I understand the record was 16 to 1--or 16 to 0; now it's 
16 to 1 after the Kodak case. Could you give me an idea of--you 
said a third of the challenges by the U.S. have been on the 
area of agriculture. Perhaps, you can state the impact of this 
on our interests.
    Mr. Scher. Mr. Congressman, let me say a couple of things. 
Obviously, we never like to lose a case. One of the common 
threads that run through trade negotiators I've found, whether 
it's been Mickey Cantor or Charlene Barshefsky is they're all 
bad losers. Having said that, let me say, again, we are 
bringing more cases in the WTO than any other country, and we 
are winning more cases in the WTO than any other country. We 
have a vested interest.
    Agriculture--the agricultural community in this country has 
a vested interest in maintaining the integrity of that system, 
because we can win. We are meeting our obligations. It's other 
countries that are not, and finally we have a system in place, 
as a result of the Uruguay Round, that countries understand 
they can't get out of their obligations. They can't block panel 
decisions, and, frankly, we are at the point now that merely by 
bringing cases even without seeing them through to the whole 
dispute panel, we are opening newmarkets, and, frankly, in 
Korea on the shelf life issue, simply by bringing the case and making 
clear to the government of Korea that we intended to pursue our rights, 
Korea agreed on a number of measures that opened that market.
    So, I would, again, say we hate losing cases, but we have 
to keep the broader picture in mind, and the broader picture 
here is that we are winning and will continue to win more cases 
than we lose, and I think our job is to support the system, and 
to, frankly, educate people around the country about how 
important this system is to our interests.
    Mr. Matsui. Do you have a dollar value--either of you have 
a dollar value in terms of what those 16 victories meant to us 
as compared to, perhaps, would have been otherwise?
    Mr. Scher. I don't offhand. We can certainly get that for 
you. I can tell you just last week we won a case against the EU 
which is always a great pleasure for the--[laughter]--in the 
computer field which, as I know, is important to some of your 
constituents which is valued at $500 million. I mean, these 
are--now--as Secretary Schumacher said earlier, now we have a 
binding obligation, and if countries don't abide by these 
rulings, we have the ability either to seek compensation for 
the loss or to retaliate, and we are going to be very 
aggressive in using all of our rights under the WTO.
    Mr. Matsui. Would you disagree with that, August, at all in 
terms of the impact of the WTO; the importance of it in terms 
of your department and how it operates?
    Mr. Schumacher. Well, certainly, Peter and I work closely 
together and the impact of the WTO has been very helpful--the 
combination--we have the IMF opening up--helping to open more 
transparency, and it's really helped us a lot in Asia and 
Indonesia on getting rid of monopolies and BULOG and others for 
our recourse, but I think as Peter said very clearly and very 
forcefully, the WTO has been very helpful to American family 
farmers.
    Mr. Matsui. With the Asian crisis now, and, obviously, the 
whole issue of the IMF funding is not certain yet in terms of 
the results of it, the Ex-Im Bank may have to take on a larger 
role in terms of making sure that we provide at least some 
assistance to some of these countries so that they might 
continue to purchase our exports, particularly agricultural 
exports. Is your Department working in that area now in terms 
of trying to, perhaps, rachet up the interest of Ex-Im Bank and 
some of the companies and countries to look at this?
    Mr. Schumacher. Well, we've had a number--several 
interagency meetings recently, and we have the tools provided 
by you in Congress for the general sales, the GSM program, and 
we've been using that, frankly, quite aggressively by 
increasing it $2 billion; that certainly has helped as I said 
earlier. A lot of the industry, especially in the West Coast, 
have maintained market share, because it's a liquidity problem, 
and once we can get through that with the IMF and other bank 
structural reforms that have been encouraged, these countries 
will be more transparent; more open to trade from all 
countries, and we certainly think we have a competitive 
agriculture and can compete--meet with competition in those 
countries.
    Mr. Matsui. If I could move over, Mr. Chairman, to anther 
area--I know my time is running out, but I do want to explore 
the whole issue of fast-track. Obviously, without fast-track, 
the 1999 negotiations, although they will continue and they'll 
go on and we'll prepare for them and we'll probably begin our 
negotiations; it is somewhat more difficult, obviously, and I 
don't want to get into, and you wouldn't want to get into, how 
difficult it will be because, obviously, that's something you 
want to keep somewhat proprietary, although I don't think 
anything proprietary anymore, but, you know, we do the best we 
can.
    In terms of the other countries that we're negotiating 
with--180 or whatever it is, 186--are they cooperating? I know 
the French are always a historic problem for us. Are we getting 
any kind of feeling that they're going to be helpful in trying 
to resolve? Not helpful in terms of working with us but in 
resolving the ag problems and subsidies?
    Mr. Scher. Some are. I mean the Cannes group, as you know, 
is taking a big leadership role. In fact, they're meeting in 
early April in Australia, and I believe Secretary Glickman is 
planning to attend that meeting--at the end of March? In March. 
But I think, again, without revealing any proprietary 
information, I think you're right.
    We are going through a process now of preparing for the 
next round in 1999. We're working with the administration; 
we're working with other countries, but I also think we can't 
kid ourselves here, and the fact is there are other countries 
that will use any excuse not only to not adopt the type of 
reforms that we're seeking but to block the type of reforms 
that we're seeking, and what I fear is that fast-track becomes 
just that excuse, and we have to be prepared that many 
countries--I'm not saying all--but many countries will use an 
excuse, our inaction, as an excuse not to come to the table and 
not to negotiate seriously.
    People will come to Geneva; we'll all make our statements; 
we'll have good meetings, but I think if we expect to obtain 
the type of reforms--I know earlier there was discussion of the 
EU's cap; I think Congressman Ramstad brought this up--that's 
the type of thing that we have to try to pursue in the next 
round in 1999, and we need to have every tool at our disposal 
to ensure that other countries are negotiating with us, and 
other countries are making tough political decisions that we 
have already made in this country. Without fast-track, it makes 
the job harder.
    Mr. Matsui. If I could just make an observation and not to 
ask a question, there's a lot of ag people in the audience 
right now. I think most of us that were working on fast-track--
and I know on the Republican side and Democratic side--were 
somewhat disappointed in the agriculture community's enthusiasm 
for this. We had a whole year to work on it, and it wasn't 
until right at the end did they come on board after they cut a 
few deals that were probably coincidental to the main thrust of 
getting fast-track.
    I guess what's a little troubling to me is that you got the 
WTO; we lost 1 case, but we won 16, and we really helped ag, 
because one-third of the cases we brought were for 
agriculture's interest, and so you're all being helped. Yet, 
when the opposition of the WTO comes out and starts pounding 
away--and I'll tell you, there's a lot of opposition to the 
WTO; you can see a real thrust to do some real damage to the 
WTO over the next few years; we know where it's all coming 
from--I don't hear from agriculture saying, ``Hey, look, we're 
the beneficiaries of this.''
    You know, in this town, it's the one who squeaks the 
loudest that's going to get the grease, and if you don't 
makeyour noise, two years from now, you can see the WTO greatly 
dismantled or diminished, and all of a sudden you're going to say, 
``Well, geez, how come we can't open up markets?'' Same thing applies 
to fast-track. I don't think we're going to get fast-track this year 
unless some miracle happens, and we're going to go right into the year 
1999, and then you're going to get into the presidential election year, 
and it may never happen, I think as Mr. Crane has been saying over and 
over again in 1997. And you're going to be the losers. There may be a 
few that are going to win out of this, but you're going to be the big 
losers, and you can't come back to us and start complaining once you 
find out that you are going to be the losers, and so I would hope that 
you would look more strategically instead of tactically next time we 
have an issue like the WTO or fast-track that you know is clearly in 
your long-term interests, but because of various reasons, because you 
want to try to squeeze the lemon for just a little bit more, you wait 
to the point where we can no longer be successful in a lot of our 
efforts. So, it's my hope that these hearings, perhaps, will be a 
lesson that you know what's in your interest, and you have to pursue 
your particular interests. Thank you, Mr. Chairman.
    Mr. Ramstad. Well, thank you, Mr. Matsui, and, again, thank 
you, Secretary Schumacher and Ambassador Scher for your 
testimony. Mr. Portman?
    Mr. Portman. Mr. Chairman, I don't want to hold things up, 
I know you've got a lot of panels, but if I could just make one 
quick comment and ask a question.
    I just want to thank the panelists for their support of the 
new WTO dispute settlement mechanism and just echo what Bob 
Matsui said which was many of us fought hard for the new, more 
binding WTO process. We said the old GATT panel system didn't 
work, because countries could veto it as the Europeans did 
repeatedly on various issues; twice on bananas, for instance. 
We had to argue against people who had legitimate concerns 
about sovereignty, and, frankly, back home it was not a 
terribly popular issue. Now, finally, we're at the point where 
we've got a couple good cases, the beef hormone case, which I 
know Mr. Watkins feels strongly about and the banana case; 
which I feel strongly about it. And I want to thank Peter 
Scher, particularly, because he has been out front and pushing 
this issue as we must on behalf of U.S. interests, but just to 
tell folks in the audience and others at USTR and in the 
administration, if we cannot--as Bob Matsui implied--be able to 
enforce these cases where we so clearly have a victory--I think 
in the banana case we have 20 some violations of international 
trade laws; the most of any case ever--if we can't do this, 
then what good is it and how can we move with not just 
retaining WTO but fast-track and other important liberalization 
measures that all of us support?
    So, Mr. Chairman, I thank you for the time and appreciate 
all the support, and I want to encourage USTR to continue to 
promote U.S. interests in this case. Thank you.
    Mr. Ramstad. Mrs. Thurman.
    Mrs. Thurman. Thank you, Mr. Chairman.
    Peter, let me just ask you a couple of questions that--this 
really goes to my testimony when I talked about the kind of 
conflicting policies that we were having. This question deals 
with methylbromide and the issues that have actually happened 
over the last couple of months. What I want to know right now 
is what USTR is doing to get those countries to change their 
policies? Because as you mentioned, and others will mention, 
that that is a major issue for the citrus industry, because 
Japan will not take our citrus without methylbromide. Are we 
negotiating or do anything in those areas as to what would 
happen once this goes into effect?
    Mr. Scher. Well, let me say a couple things. In terms of 
Japan, we are pursuing a WTO case against them right now on the 
issue of varietal testing, because we disagree--we don't 
believe there's any scientific basis for their regulations. To 
the broader issue of methylbromide in terms--and I think you're 
referring to the differences between the Montreal protocol and 
the Clean Air Act obligations--we need recognize that there are 
differences between our obligations under the 1990 Clean Air 
Act regulations and the Montreal protocol, and as the 
administration has said that we are committed to working with 
Congress to try to address those differences, because there is 
a disparity right now. We recognize it needs to be addressed, 
and we are committed to working with you and other members to 
try to address that.
    Mrs. Thurman. Maybe to Mr. Schumacher, then, because it 
also falls under your purview, and I know in earlier testimony 
before the Ag Committee there has been--at least from USDA, a 
concerted effort to try to do better research to find an 
alternative, but in--one of the things that I'm seeing and not 
necessarily, maybe, with Peter and yourself, but in other areas 
where there doesn't seem to be much coordination between the 
agencies. Who would be looking at the regulatory process? If 
other countries are allowed to continue to use methylbromide 
who might be our direct competition with us in citrus and we're 
phased out by 1998?
    Mr. Schumacher. Two thousand, 2000.
    Mrs. Thurman. Two thousand, and then--but some of these 
countries in 15 years down the road. So, maybe you can help me 
understand what the Department of Agriculture is doing. Are we 
speeding up some kind of research? What are we doing, on the 
other side, to help our agriculture community?
    Mr. Schumacher. Well, again, as Peter said, this is one of 
the most difficult ones we're dealing with, Congresswoman. I 
think in agriculture one with working through the interagency 
very closely through EPA and with working with STR, but the key 
one is what other alternatives and we've actually greatly 
expanded our research into the alternatives. It is not much yet 
underway, but we've seen an enormous amount of progress in 
things like biotech and others, we expect, hopefully, to come 
up with some alternatives that will help not only Florida but 
also California. It's a major issue we're working very hard on. 
Mr. Romerage, the Deputy, has taken great leadership on that 
issue.
    Mr. Scher. Could I just add one thing to that just to plug 
the President's budget? There is a substantial increase in 
research funds in the Fiscal Year 1999 budget for methylbromide 
research. I think it's an indication that we recognize that 
there is a real issue here that our agricultural community has 
not been shy in letting us know----
    Mrs. Thurman. Nor have they been shy in letting me know. 
[Laughter.]
    Mr. Scher [continuing]. And we have to figure out how to 
fix it.
    Mrs. Thurman. Let me continue on that same line. We had a 
problem just recently with some product coming in from some 
other countries that potentially had med fly. We stopped it. 
Florida really came out against it, because it potentially came 
into Florida. We'll go to the President's budget again then. 
What do you know is in Fiscal Year 1999 budget request for 
APHIS inspectors? How many in Florida and how many along the 
Southwest border?
    Mr. Schumacher. Well, that's, again, a very interesting 
question. I think my understanding is that APHIS has expanded 
its coverage in Florida and along the borders, and I believe 
there's money in for additional expansion. What I would like to 
do is get the exact numbers back to you, Congresswoman, and 
we're prepared to do that very quickly early next week.
    Mrs. Thurman. Since the Med fly is also one of those issues 
that keeps us out of these countries or superficially, I think, 
keeps us out of some of these countries, let me ask you this 
question, because this is a really--again, as an interagency 
issue. Do you think Florida has a med fly problem?
    Mr. Schumacher. Well, my understanding is, according to Dan 
who's sitting right behind me from APHIS, if there is one it's 
going to eradicated in March.
    Mrs. Thurman. Okay, but then I've got EPA saying we do or 
we don't--[laughter]--so we should get rid of any of the 
pesticides that we have available to us today to get rid of it. 
I mean, this is--somehow, we need to get this intercoordination 
going. I mean, we need to have these agencies understand what's 
going on on the other side, because it is really causing some 
major problems. We're getting some very mixed signals. That's 
not your fault. I just think it's the fact that these agencies 
don't sit down and talk to each other, and you've got to start 
doing that, because I think we're creating some real problems 
for us domestically. I thank you for your testimony.
    [The following was subsequently received:]
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    Mr. Ramstad. Thank you, Karen. When it's 10 below, we don't 
have Med flies in Minnesota. [Laughter.]
    Mr. Watkins.
    Mrs. Thurman. Do you have pretenders?
    Mr. Ramstad. Well, our State bird is the mosquito. 
[Laughter.]
    Go ahead, Mr. Watkins.
    Mr. Watkins. Thank you, Mr. Chairman, and let me say I want 
to express my thanks to Chairman Crane and members of this 
Trade Subcommittee for allowing me to participate. I know I'm a 
ex-officio, but I want you to know my heart--I'm genuine, 
sincere, and committed to international trade and to 
agriculture. I know I was probably obnoxious about the beef 
hormone ban with the European Union. I guess you were nodding, 
Peter, that I was obnoxious. [Laughter.]
    Mr. Scher. No, no; just that it was an important issue. We 
noted your interest.
    Mr. Watkins. I felt like I was, maybe to some extent, out 
of character, but a lot of people think I'm in character when I 
got obnoxious, but I thought it was so blatantly unfair.
    I might say to members of the panel I grew up on a cattle 
and peanut farm. I went to college and got a couple degrees in 
agriculture, so I'm genuine in my thinking. I can remember when 
I served as State President of the Oklahoma Future Farmers of 
America. As I traveled across the State of Oklahoma, I would 
talk about the fact that 16 percent of us were in the 
production of agriculture. Four years later at graduation, I 
was lucky enough to be the outstanding ag student at OSU. I got 
up and made this speech that there's only 12.5 percent of us in 
the production of agriculture. As a United States Congressman, 
I now make speeches, and I say there's 1.5 percent of the 
population in the production of agriculture. That's as clear a 
vision, I think, as I can put it on what's happened in the 
production of agriculture in this country.
    In 1996, we passed a farm bill here. I wasn't here at that 
time. We moved from subsidies to a free market, freedom to 
farm; depending on our international markets. So, it behooves 
us to do everything--and let me say ditto to what Bob Matsui 
said: it means that we, as agriculture, need to get together or 
we're going to leave our farmers and ranchers dangling out 
there.
    Now, I was unabashed and unconditional in my support of 
fast-track. I was deeply disappointed we couldn't get the kind 
of support we needed, and I imagine there's a lot of reasons 
for it. We put in the strongest agriculture language that we've 
every had in a trade bill in this country. Part of it was my 
language there, and we also put in a permanent chief negotiator 
for agriculture, which would have been the first time with 
ambassadorial status. As I said to a lot of my agricultural 
community, ``we should be out there supporting fast track''. 
Now, part of the problem was the beef hormone situation, but 
let me say, we've got to have WTO. We've got the greatest 
quality agriculture products in the world, and surely the WTO 
will rule in our favor. However, the biggest problem is that 
the beef hormone went into effect in 1989; 9 years ago. Now, 
we've got to get some kind of ruling, why so long?--I'm getting 
to the question, I guess--why so long?
    Mr. Scher. Congressman----
    Mr. Watkins. Pardon me, but I'm mean about this thing.
    Mr. Scher. No, no. I share your emotion. Let me first make 
a comment about the beef hormone. One of the reasons why so 
long is because under the old GATT there was not an enforceable 
mechanism, so we could bring as many cases--as Congressman 
Portman referred to the banana case; we won the banana case two 
times under the GATT, and you could say, ``Well, thanks, we 
appreciate your advice, but we're just not going to abide by 
the ruling.'' You now have--as a result of the Uruguay Round 
negotiations in 1994, which went into effect in 1995--you now 
have an enforceable dispute settlement mechanism. That's why 
we're winning so many cases, and that's why these countries, in 
many cases, abiding by it. But, I think, as Congressman Portman 
referred to, both about the banana case and the beef hormone 
case, these are very important tests of the WTO, particularly 
with regard to the European Union. The European Union was 
always quick to tell us we have to respect the multilateral 
system.
    I remember several years ago when I was working for 
Ambassador Cantor and we got into a little discussion with 
Japan over automobiles, and there was unilateral action 
threatened and many in Europe said, ``You can't do that. You 
have to respect the multilateral system. That's why we have the 
WTO.'' Well, we are respecting the multilateral system. We're 
using those processes, but now other countries have to respect 
it as well, and the only way we can demonstrate to the American 
people that being part of the WTO and being part of the World 
Trading System works is if Europe abides by these rulings.
    Mr. Watkins. What's the time limit, now we think we can 
start----
    Mr. Scher. In terms of beef hormones?
    Mr. Watkins. Well, the beef hormones we're expecting--
hopefully, through the appeal process we'll be able to get that 
beef--we better get there before election day. [Laughter.]
    Mr. Scher. Well, Congressman, I, of course, don't think in 
those terms, so it would be----
    Mr. Watkins. You should from now on. [Laughter.]
    Mr. Scher. I know, I know. I'm just very apolitical. Let me 
say that tomorrow in Geneva the appeal decision, the appellate 
decision of the--on the beef hormone case will be adopted by 
the WTO. The European Union then has 30 days to indicate 
whether or not it plans to comply with the decision, and let me 
make clear that we expect the WTO to comply with the decision. 
The panel was very clear, there is no scientific evidence that 
supports this ban, and, in fact, the panel went out and brought 
in another panel of scientific experts and said, ``You tell us 
whether or not there's a scientific basis for this ban,'' and 
they said ``No,'' and the appellate body upheld that finding, 
and, in fact, upheld the right of the initial dispute panel to 
bring in these scientific experts.
    Mr. Watkins. Peter, let me say I've been over there with 
the European Union; I met with them, and the agriculture 
ministry in France. Being a, I guess an agriculture farmboy. If 
Wally would just yield to me just a little bit--but as I 
kneeled down and dug in the soil in France, I looked up and I 
saw all these multitude of small farms. We all know we've 
shifted that to bigger farms. So, I stood up; I looked at the 
agriculture minister, and I said, ``Why all the small farms? 
Why are you taking it and going in the opposite direction?'' 
I'll never forget his answer. He said, ``Congressman, we went 
hungry twice in our life, World War I, World War II.'' He said, 
``We'll pay whatever the price it takes to maintain our 
agriculture in those countries.'' That we should never forget, 
and you should never forget it. They'll pay whatever price. 
Now, not only are they subsidizing internally the production, 
they're subsidizing externally to get markets and they're 
willing to lose. In fact, the European Union back in that time, 
five or six years ago, they were using 70 percent of their 
budget to subsidize agriculture against our farmers and our 
ranchers. Now, you've got a big job to do.
    Mr. Scher. And it's now up to 75 percent.
    Mr. Watkins. And I'd like to know--yes. I'd like to know 
what all--how many times have you gone before the WTO?
    Mr. Scher. How many times has the United States?
    Mr. Watkins. Yes.
    Mr. Scher. We have brought 35 cases.
    Mr. Watkins. No, I said you.
    Mr. Scher. Me, personally? We have a team of litigators who 
are much more adept at appearing before the WTO than I am, but 
we have a very good team of people who do that.
    Mr. Watkins. And this is the point I want to make: I don't 
know what those litigators' background, but they're dumb if 
they don't understand that 99.9 percent of our beef in the 
United States is grown with beef hormones. They were not 
willing--they didn't understand around that table that they 
were negotiating our ranchers right out of business with 
Europe. Now, either they don't care or they sold our cattlemen 
down the drain. Now, that's what I'm mostly--that's why I 
wanted to set the stage. It's not political to me, I'm sincere. 
We've got to have, Mr. Chairman, negotiators who understand 
agriculture--and Mr. Chairman is very patient, and I appreciate 
that, and I appreciate getting to kindly led this off. You may 
have saved a heart attack this afternoon. [Laughter.]
    Mr. Ramstad. Thank you, Mr. Watkins, for telling it like it 
is. Mr. Herger.
    Mr. Herger. Thank you, Mr. Chairman. I'm not sure if I can 
be quite as lively as my predecessor here from Oklahoma, but, 
Mr. Ambassador, I'm sure you can tell by the questioning and 
the fact that we're having this hearing that this is an 
incredibly important issue to the Congress; to those of us on 
Ways and Means; certainly, to the districts that we represent 
in the Nation. I also have been one who has supported our trade 
agreements over the years. I was a supporter of fast-track. But 
in supporting these agreements, we're doing so--I'm certainly 
doing so--with the presumption that the Administration is going 
to be enforcing the agreements that we're making. I mean, that 
has to be a given; that the Administration is going to be 
enforcing the agreements that we're making, and I share the 
same concerns of each of those who have questioned prior to me.
    I want to move to another question, and it has to do with 
the USTR and the issue of the EU canned fruit subsidies. 
Ambassador Barshefsky has acknowledged that the EU regime under 
which Europe has been subsidizing their canned peach producers 
with hundreds of million of dollars annually is ``an 
inequity''--that was a quote from her--that needs to be 
corrected. I understood that several months ago that resolving 
this problem was a priority at USTR, and my question is: What 
positive steps has the USTR determined to take over the next 6 
to 12 months to resolve the quote ``inequities'' and harm to 
the California industry that we all agree have resulted from 
the EU regime?
    Mr. Scher. Congressman, let me say a couple things. First 
of all, we are concerned that these subsidies are putting our 
producers, your producers, at a competitive disadvantage, and 
this is something--as you know, this is a long standing issue 
between the United States and the EU. We are working very 
closely with the industry to develop the strongest possible 
case and the strongest possible strategy to address this 
problem. I would rather not go into the specifics of that right 
now in a public hearing, but I'm happy to come up and go 
through those with you in your office or with your staff at 
your convenience, and one of the reasons I say that--one of the 
reasons we have been successful in the WTO, particularly on the 
agricultural front is that we do our homework before we go in 
there and that we go in there with the strongest possible case, 
so whatever action we choose to pursue on the issue of the 
canned peaches, we want to have the strongest possible action.
    So, I hope--I'm not trying to put you off at all, but given 
the fact that this will likely be subject to further 
negotiation, I'd rather not do that publicly, and I'd rather 
come up and talk to you privately and bring our team an go over 
what we believe we can do to address this issue.
    Mr. Herger. I can understand that, and I want to take you 
up on that. I would like you to come in and go over that with 
me.
    Mr. Scher. Okay. Can I--Mr. Chairman, if I--can I make--I 
want to make one other point, because I--one of the things that 
both Congressman Matsui and Congressman Herger brought up I 
think is relevant and that is this sort of--people, often, in 
this country look at a trade problem and say because we have 
this trade problem we shouldn't moveforward on other areas, and 
I think there were some suggestions that the agricultural community has 
not been as supportive as they should have been on fast-track, and I 
hate to come before the committee and disagree with any member, but I 
will say from my vantage point the agriculture community, frankly, has 
been the strongest supporter of our fast-track efforts, and I know Dean 
Kleckner is up next, and there is no stronger supporter in this country 
in the agriculture community for the adoption of fast-track than the 
farm bureau and the pork producers and the many of the industries that 
will be testifying later today.
    But there remains this disconnect between what we're trying 
to do and the success we're having around the world and how 
people perceive trade, and I think until we can try to bridge 
that and educate people about the realities of global economy, 
the fact is the biggest challenge in the next 30 to 50 years 
will be meeting world demand for food. We are in a position to 
take advantage of that challenge, and it doesn't serve the 
interests of Oklahoma or Ohio or California or Minnesota 
farmers if we don't have all the tools at our disposal to do 
that. So, I would like to just take a second and commend the 
agriculture community for their very strong and very forceful 
support and very continuing support for fast-track and hope we 
can work with you to build the type of consensus we need to 
move forward.
    Mr. Herger. Good. Thank you.
    Mr. Ramstad. One final question that Mrs. Dunn asked me to 
ask you, Ambassador Scher, if I can read her writing. Mrs. Dunn 
wanted me to inquire about a duty that Mexico has recently 
imposed on U.S. exports of apples.
    Mr. Scher. Right.
    Mr. Ramstad. I understand that this duty is high enough 
that it has virtually stopped U.S. exports of apples to Mexico. 
Do you intend to request consultations in the WTO on this 
matter which is of great interest to growers in the State of 
Washington?
    Mr. Scher. When you said Congresswoman Dunn, I was going to 
offer to ask the question for you. [Laughter.]
    No, this is--and she has communicated very forceful as have 
Chairman Smith and other people from Washington and Oregon 
about this. This is a very major problem and the actions that 
the Mexicans have taken to impose these duties are of great 
concern to us. We are working very closely with her industry in 
fact, right now. The duties are not final which is a fact that 
is relevant to our review of this, but we're reviewing our 
options, and we will get back to Congresswoman Dunn on what we 
believe the best way--I will tell you, in addition, that Deputy 
U.S. Trade Representative, Richard Fisher, was in Mexico this 
week and raised this issue, himself, with the highest levels in 
the Mexican government including the trade ministry and the 
foreign ministry, and so this is something that we're very 
concerned about, particularly as we see the problems in the 
Asian market for our northwest producers, and we will continue 
to focus on it.
    Mr. Ramstad. Well, thank you. I know Mrs. Dunn's on a plane 
back to her district. I know she'll be reading your response; 
probably getting back to you soon.
    Well, thank you again, Mr. Secretary, Mr. Ambassador, for 
your testimony and responding to the questions so well.
    The next witness is Dean Kleckner who is president of the 
American Farm Bureau, and, Dean, before you begin your 
testimony Chairman Crane asked that I think you were here when 
I explained that the chairman took ill--asked that I just 
state, for the record, his feelings, and I'm quoting now from 
our Chairman Crane who says ``As the president of the American 
Farm Bureau since 1986, Dean, you are the only farmer on the 
Private Sector Advisory team to the GATT when the Uruguay Round 
was launched. You have been actively involved in promoting free 
trade at the grassroots level for many years, and the Trade 
Subcommittee has benefited enormously from your work as I have 
as chairman. I want to thank you for your tireless effort on 
behalf of fast-track and urge you to continue to do everything 
possible to let the Nation know how important this legislation 
is.'' Those words from Chairman Crane.
    Please begin your testimony and welcome to the committee.

 STATEMENT OF DEAN R. KLECKNER, PRESIDENT, AMERICAN FARM BUREAU

    Mr. Kleckner. Thank you, Chairman Ramstad, and I thank 
Congressman Crane for his compliments and comments. I'm a 
farmer from northern Iowa, about 35 miles south of Austin, 
Minnesota. I grow corn, soybeans, and hogs on my farm when I'm 
able to be there. I'm serving as president of the American Farm 
Bureau which is the world's largest farm organization not only 
just in the U.S. but in the world, and our members grow all the 
280 or so commodities that are produced commercially in the 
country; there's farm bureau members growing all of them. And, 
Mrs. Thurman, I want to say just off the subject a little bit, 
we appreciate your support and your cosponsoring the farm 
legislation. I testified on that this morning before the full 
committee. Twice before the Ways and Means Committee in one day 
is a lot, but I'm here again. [Laughter.]
    We want to thank this committee for your support to pass 
fast-track in the last session and pledge to you that the 
American Farm Bureau is going to do everything we can to work 
on it yet in this session. I know there's a lot doubt of--I 
heard Congressman Matsui say it doesn't look good, and maybe it 
doesn't, but we're going to work on it, and we think turn a few 
votes around, and we can have it yet this year. We need it now.
    Our producers are the most effective and efficient 
producers in the world, but what we can't do is break down 
barriers created by other governments. This has got to be done 
government to government with our negotiators, hopefully, in 
the leadership role. What we, as producers, hope that we can do 
is have a positive impact on removing barriers created here at 
home.
    I want to discuss some of those barriers that I see that 
we're creating here. We continue to put economic sanctions on 
our trading partners which only have the effect of cutting our 
sales out of their markets. History has shown, gentleman and 
Mrs. Thurman, that economic sanctions are an ineffective means 
of resolving political differences. Short-sided budget 
reductions, also, and market development promotion programs; 
reduced resources for research--that's eating our seed corn, in 
other words; cutting back on human resources in overseas 
posts--and we're doing that--only reduce our ability to 
compete.
    I want to comment that the expertise that we have in our 
overseas USDA-FAS offices are the eyes and ears to us, and 
we're cutting back on that, and we simply cannot afford to do 
it. They help us resolve trade barriers before they become 
irritant. They could have resolved, Congressman Watkins, maybe, 
back then in a proper manner, the beef hormone issue. We're 
cutting back on those people now, and that's wrong.
    The economic crisis in Asia puts the entire U.S. economy at 
risk if strong, effective measures are not taken to stabilize 
the currencies in those countries. IMF has taken steps to see 
that this happens. We should not risk losing our biggest market 
by failing to provide IMF with needed funding to prevent 
economic disaster. Whether that means we continue IMF in the 
future, I don't know. I read the Wall Street Journal article 10 
days ago saying we shouldn't have an IMF, but it's there now, 
and we've got to use it now today.
    I'd like to submit, for the record, Mr. Chairman, a copy of 
letters of intent from Korea, Thailand, and Indonesia that show 
that critical, structural changes are part of the IMF program 
to bring stability to those markets, and they've committed to 
do that.
    Going on, failing to grant the administration fast-track 
negotiation authority has allowed our competitors to move 
forward while we watch market share disappear and see our 
leadership role in shaping trade diminish. We would not have 
the agreements that have made the United States a leader in 
international trade without the fast-track authority of the 
past. They wouldn't be there. At the beginning of the Tokyo 
Round there was no fast-track authority. At the beginning of 
the Uruguay Round there was no fast-track authority to 
negotiate. The world waited for two years to begin negotiations 
after September 1986 as you mentioned, Mr. Chairman or Chairman 
Crane mentioned. It was two years before we got fast-track 
authority. Nothing happened in those two years. I guess we 
negotiated the size and shape of the table and how soft the 
chairs were but not much else. You don't talk seriously without 
fast-track negotiating authority, and many people are saying we 
won't have the next round which is scheduled to start in 1999--
whether it will be called Millennium Round or whatever--we 
won't be a player without fast-track. We can't afford to wait 
for this authority in 1999 when the talks are due to begin.
    Our trading partners are not going to wait for us. We 
believe that the European Union has a number of issues they 
wish to move forward that they know we won't support. We won't 
be at the table without fast-track; EU goes forward. The beef 
hormone issue is maybe a tip of the iceberg for what they want 
to do. The same is true of Canada and a number of other trading 
partners in the WTO.
    Also, we are going to be very concerned if the 
administration negotiates trade deals without agriculture as 
part of the package. We strongly oppose any agreements or 
negotiations that exclude agriculture. We're currently losing 
market share in South American. Canada just negotiated a deal 
with Chile; eliminated tariffs 11 percent at the border. How 
can we compete with 11 percent tax at the border with Canada 
and Chile? Answer: we can't.
    Over 20 new agreements are in the western hemisphere in 
recent years; we're a part of one, called NAFTA. Nineteen, if 
not more, we're not a part of. Trade is our future; we can't 
reverse our course. Our share of international sales--of U.S. 
farm cash receipts now, is 30 percent and rising; it was 20 
percent a dozen years ago. Over 50 percent of our rice and 
wheat are exported; 40 percent of our soybeans and cotton have 
been exported in recent years; beef, pork, and poultry are 
lower, but it's increasing. Exports have doubled since 1998, so 
have exports of value of added products.
    Our agriculture exports are now $60 billion versus $29 
billion in 1985--some of you were in Congress, I think, In 
1985--it's more than doubled, and it's due to opening markets 
through trade agreements and multilateral trade negotiations. 
That's the only reason that happened. Developing countries now 
in Asia and the Pacific rim are more important than at the 
previous time. Over 40 percent of our U.S. ag exports now go to 
Asia. Last year that was $23 billion of the roughly $60 billion 
that was exported; $23 billion to that part of the world. We've 
got to have low duty--we give low duty access now to most 
Nations of the world. I heard Secretary Glickman say at our 
convention that our average ag tariff is about 2 percent, and 
he said trade fluctuations make more than that difference 
daily, and that's how open we are; other countriesaren't open. 
We can't open them without trade negotiations, and we've got to have 
authority to do it, and that's called fast-track.
    Three things that we believe should be in future 
negotiating authority and they're in there in the President's 
message last September: binding agreements to resolve sanitary 
and phytosanitary issues on the bases of sound science. You can 
argue with sound science, but there is a broad middle ground of 
science where it's peer-reviewed and the scientists do agree. 
The fringes don't agree; we write them off.
    Secondly, tariff equalization and increasing market access 
by requiring U.S. trading partners to eliminate tariff barriers 
within specified timeframes; eliminate them. Don't do what we 
did with Canada and kind of put it off. And we're not getting 
poultry, poultry products, and dairy products into Canada 
today.
    The third one, changes in international agreements in U.S. 
law and practices that would facilitate and shorten dispute 
resolution procedures and processes and that speaks directly to 
Florida and their niche markets with their vegetables.
    Our dispute resolution processes are working, but they are 
not time efficient to respond to market needs. Our trading 
partners continue to take advantage of the timeframes allowed 
within the process to delay compliance with banana findings--
beef hormones, the banana case would be examples of that also. 
There is a potential trade dispute or barrier for every product 
we have in the marketplace. I hadn't thought about that until 
recently. For every product we sell there's a potential barrier 
in place somewhere in the world. The list would go from unfair 
tariffs and phytosanitary barriers in Mexico and Japan to 
apples and wheat and pork into China. There is no product not 
affected by barriers somewhere in the world.
    Our trade agreements are good but not perfect. We must 
expand the existing market access and open new markets. Our 
negotiators have got to have fast-track authority or our 
trading partners will not meet us at the negotiating table. If 
I were them I wouldn't talk to us either without fast-track 
authority. It's a waste of time when fast-track is not in 
place. I wouldn't negotiate with us if I were from Europe or 
China or somewhere else. Tremendous resources and effort have 
been expended to create the current markets for U.S. ag 
products whose sells support millions of U.S. workers.
    In conclusion, our ability to gain and maintain market 
share is based on many factors including strong trade 
agreements; the administration's ability to negotiation freer 
and fairer market access with fast-track authority; sound 
monetary policies, and the ability to utilized market 
stabilizing tools such as a properly functioning IMF. It is 
extremely important to U.S. agriculture and the Nation's 
economic strengths that you all do the right thing and pass 
both of these trade measures early in this session of Congress. 
I urge you also to take the steps necessary to prevent us from 
creating our own trade barriers by providing funding necessary 
for the IMF to address the needs of our trading partners in 
Asia and to move as quickly as possible to provide fast-track 
authority to continue to open the markets. We're ready to work 
with you in any we can, and I thank you for this opportunity to 
talk with you.
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    Mr. Ramstad. Thank you very much, and thank you for your 
outstanding leadership as president of the Farm Bureau. I 
think, although it's probably already been printed, the 
Congress Daily pm quote of the day should certainly be from you 
from your testimony, ``We won't be at the table without fast-
track.'' How true that is. I just hope we can get that message 
out to the other members.
    Let me just ask you a question, If I may, Dean. Other 
Nations, as you know, are reticent to reduce their barriers to 
agricultural imports, and we don't have very many barriers to 
bargain away. Do you think we should be calling for another 
major round of negotiations along with the agricultural 
negotiations?
    Mr. Kleckner. Well, Congressman, I think in 1999, the WTO 
negotiation are supposed to be broad ranging agriculture. What 
I'm afraid of is ag. may be cut out of that. We're talking 
something about a transatlantic--I think it's called that--an 
atlantic trading authority with Europe. I met with Charlene 
Barshefsky yesterday or the day before, and said we would be 
unalterably opposed to negotiating a transatlantic authority--
or whatever it's called--without agriculture, and she said 
we're not going to do it. That was good news, but the WTO round 
that's scheduled to start in 1999--I'm hoping early 1999, not 
December 31. I think that's what Europe wants; if not December 
31, 1999, maybe the year 2005, but delay it as long as you can, 
but we're going to start it, and it should be major; it should 
encompass services and intellectual property and all the other 
things, and I think without a broad negotiation in 1999 WTO, 
agriculture probably can't do anything by itself. There needs 
to be a broad agreement like the GATT was, the Uruguay Round.
    Mr. Ramstad. Dean, in terms of new or ongoing negotiations, 
what are your specific priorities, your organizations specific 
priorities?
    Mr. Kleckner. Yes, the sanitary and phytosanitary we simply 
somehow must make sure that's scientifically based, and I know 
you can find a scientist somewhere in the world who will tell 
you anything you want to hear just like you can find a lawyer 
that will tell you anything you want to hear or anybody else, 
but there is a broad--I offended all the lawyers on the panel, 
didn't I? [Laughter.]
    I didn't intend to, but there's a broad, middle ground of 
science, in my view, that does agree, it's in essence peer 
reviewed, you forget the wings that will tell you what you want 
to hear. There's a broad, middle ground of science that agrees, 
and if they tell Dean Kleckner that the corn or the soybeans 
that I'm growing with BT or whatever it is are notsafe for 
human consumption, I want to quit growing them. I don't want to grow 
them anymore, but I don't want Europe telling us that we can't do it 
when science today says it's completely safe. And we need the--sanitary 
and phytosanitary is one; phase out tariffs in a time certain, and I 
don't think it has to be within five years. Some tariffs you can phase 
out in five years. It may take 10 or 15, but at least have an ending 
date to phase out tariffs. Those are very high priority.
    Mr. Ramstad. Well, thank you, again, Dean. I can tell you 
as one recovering attorney, I wasn't at all offended by your 
remarks. [Laughter.]
    Mrs. Thurman, Mrs. Thurman.
    Mrs. Thurman. I thank you for your comment earlier, and I'm 
sorry I missed your testimony.
    I guess the one thing that strikes me, and I know that 
you're here for the Farm Bureau, but I know that Florida has 
departed from the National Farm Bureau within the fast-track 
debate. I just kind of want that clarified, because I know that 
is a big issue, and I don't to mean to diminish your presidency 
and the people that you are representing, but for the panel 
members you need to know that the Florida Farm Bureau has not 
accepted this position and has been very concerned about what 
is going to happen to them in particular.
    But I do appreciate the fact that you have recognized at 
least two or three things that the Florida Farm Bureau has 
picked up and has said were very critical and the last three 
things that you talked about as well as some additional areas 
that they're very concerned about. So, I do appreciate the fact 
that you've included some of their issues within as we move 
forward into this debate, and I thank you for being here today.
    Mr. Kleckner. Thank you, Mrs. Thurman, I appreciate that. I 
get to Florida often; I hear the same things you hear only you 
hear it oftener. I've not changed many minds in Florida, but I 
think the thing that I think we need to keep in mind that you 
fix what's wrong with present agreements in the context of new 
agreements. If my Florida farming friends--and I have many in 
Florida; Carl Loop is the vice president of the American Farm 
Bureau. He and I are long-time buddies, and Carl is great; he 
was the first chairman of our Farm Bureau Trade Advisory 
Committee, but--and I know that Florida is more concerned, in 
my view, than any other State because of the niche marketing, 
the Mexican dumping. I personally think that the Mexican 
dumping of tomatoes and peppers, et cetera in Florida has zero 
to do with NAFTA and 100 percent to do with the peso 
devaluation, but it happened at the same time; NAFTA got the 
blame, and I can't convince my Florida friends that it isn't 
NAFTA's fault, and I don't think you can either. But you fix 
what's wrong by coming up with new agreements, and without 
fast-track negotiating authority--I've been told by people high 
in USDA--we can't even go to Mexico, Canada, and other 
countries to fix what's wrong because we don't have authority 
to talk. If Florida, for example, or North Dakota with Durham 
wheat or Maine with potatoes or beef in Montana or wherever 
concerned about the trucks coming across, if you really want to 
fix what's wrong, and there are things wrong, you should be in 
favor, in my view, of fast-track which gives us the authority 
to fix what's wrong. I've got good friends, Mrs. Thurman, in 
Florida that said the old saying, ``Fool me once, shame on you; 
fool me twice, shame on me.'' We've all heard it and probably 
said it. And my friends down there who grow oranges and 
grapefruit--disastrously priced right now, certainly 
grapefruit--are saying, ``I'm not going to be fooled again,'' 
and my answer is, ``Yes, there's things wrong, but we fix it in 
the context of new trade agreements, and we need fast-track to 
do it.''
    Mr. Ramstad. Mr. Herger.
    Mr. Herger. I don't have any questions at this time.
    Mr. Ramstad. Mr. Nussle.
    Mr. Nussle. Thank you, Mr. Chairman. I want to thank you, 
Dean, for coming in and speaking to us today. I'd like to go in 
two directions. One is on your testimony and the other is more 
having to do with regard to Asia and how what's going on in 
Asia affects the urgency of what you came to tell us today. 
Just yesterday it was reported by the Department of Agriculture 
there would be some concerns with regard to corn exports as an 
example.
    The first has to do with, I think, understanding and 
education. I don't think there's anybody in this room who does 
not have at their fingertips good information, statistics, 
dollars and cents, jobs created, jobs traded, jobs this--on a 
number of different agreements that we've had before us. 
Unfortunately, what I've seen in my district in Iowa is that 
far too few farmers have that same information at their 
fingertips. In this battle of demagoguery that is out there on 
the issue of, particularly, jobs lost as a result of trade, we, 
unfortunately, are losing the battle. It's much easier to blame 
a straw man of NAFTA than it is to get good information out to 
real people who are combining in the field and are sending a 
number of those bushels that they're dumping into their combine 
in one way, shape, or form, whether through value-added or 
whether through bulk commodities, to another place in the 
country and certainly throughout the world through trade.
    I would just urge you to do whatever you can to try and 
impress upon your farmers the urgency of fast-track and the 
need to be at the table if we're going to improve these 
agreements. This is not to blame; this is not to point fingers; 
this is only to suggest to you that on the street corners, at 
the grain dealers, or wherever you might meet farmers, they're 
just not getting that information and are listening to the Pat 
Buchanans and Dick Gephardts of the world that run around 
trying to scare people. It's on both sides; they're extremists, 
and they're doing us, I think, a terrible disservice. So that's 
my speech--amen.
    But I guess what I was more interested in is impressing 
upon you the urgency of getting that information to farmers; 
second, to get your opinion about how the urgency has changed 
as a result of what is happening in Asia.
    Mr. Kleckner. Thank you, Congressman Nussle. We come from 
the same State. I know the people at Dyersville, at Ertl, that 
lost their jobs blame it on NAFTA or something. That's human 
nature, I guess; it's not true, but that's human nature.
    It bothers me too, maybe even more than you, that we can't 
get the story out. I think to some degree the good things that 
have happened, the exports have gone up dramatically to 30%, a 
third of what we produce. Withoutexports, we're dead as 
farmers; we're dead. It's gone up, but we farmers accept it as just a 
matter of course, and we don't give credit to the trade agreements that 
created the atmosphere where we could export more. As human nature, 
again, we seize on the negatives. We're hearing all the bad things that 
are said from the Buchanans on one wing and the Gephardts on the other 
wing; organized labor who blames all job losses on NAFTA, or GATT, or 
something else, and spending a lot of money to get their message out, 
and we're finding it very difficult.
    I'm doing everything I can, and I've got kind of bully 
pulpit in my job, and I'm using the bully pulpit, but it 
bothers me that we can't get the true message out.
    I mean, we're not going to lose exports without fast-track. 
I think we're going to maintain what we've got pretty well; 
Asian crisis was something different. But we're not going to 
gain--as we increase production as we're going to do in 
agriculture, we're not going to gain the exports that we need 
for the increased production without new trade agreements. 
We're open now, we're taking everything from everybody, we 
can't get in there. We've got to have agreements to open their 
markets.
    The Asian crisis--I had in my testimony support for IMF. I 
honestly have some long-term wonderings about IMF and the 
philosophy that's involved, but right now we're here; IMF is in 
place. We need to use it, and I hope that the Congress will 
allocate the $18 billion, or whatever it is, a portion thereof, 
to make the funding. Asia is very important to us, and the 
strong economies, basically in my view, those folks over 
there--and I've been in most of those countries--work hard, and 
the economy will bounce back. I don't think it's going to be in 
1998, maybe not even in early 1999; but it will come back. In 
the meantime we've got to prop it up, and I think IMF funding, 
if it moves forward, will do it, and we will lose less exports 
than we would without it.
    Mr. Nussle. Thank you.
    Mr. Ramstad. Mr. Portman.
    Mr. Portman. Thank you, Chairman, and Dean, thank you, for 
your support of free trade, and as Jim Nussle said, it's a 
grassroots effort in my district. I think you're a district 
representative on this committee and subcommittee. It's been 
very helpful to those of us who want to open markets and lead 
to more agricultural exports, and all those other exports.
    I have a question for you. You testified about some of the 
Farm Bureau interests and future trade agreements. You talked 
about fast-track. I couldn't agree with you more that we have 
to have fast-track if we're going to get people to come to the 
table. In fact, that's a way to fix what's wrong. Rather than 
looking at it as a problem; it should be looked at as a 
solution.
    With regard to WTO, we talked a little bit earlier--I think 
you were in the audience--with Peter Scher about whether the 
beef hormone case, bananas case, and other cases involving 
agriculture at WTO are satisfactory to us; whether the 
implementation of a WTO decision was satisfactory.
    Do you have any specific reform suggestions on that? Are 
you satisfied with the way WTO's working or would you like to 
see some changes?
    Mr. Kleckner. Good question, Congressman. I supported what 
Peter Scher said.
    Under the old GATT agreement, the beef hormone issue and 
other ones went on forever. They could stonewall it. They'd 
lose court cases and say--or lose trade panels and say, so 
what; they wouldn't comply. Under the WTO the rules are in 
place, it takes about 18 months, and that's what the beef 
hormone case took. Now, that's the process. But 18 months is a 
heck of a lot different than 10 years or never.
    Now Europe has lost every appeal. They've got in my view 
three--in beef hormones they've got three choices; they can 
comply and let our beef in, which is what we want; or they 
cannot comply, and they can pay retaliation, or pay the amount 
of supposedly--we won't argue about how much that would be, but 
they can pay us in some way; or we can legally retaliation, 
which I hope we do if they don't comply.
    I have many good farming friends in Europe; I love them 
dearly. We have a beer or coffee together, and we talk, but 
their leaders in government pick at every little niche. It's 
like a thumb in the dike. There's a little crack, and they 
wiggle their way through, and expand it, and they drive trucks 
through. They're masters at that. And I think the WTO, and 
Peter Scher--I wasn't aware of the figures, but 35 cases we 
found he said, and most--two-third were in agriculture. We're 
winning most of them. It's to bad that we've got to file those 
cases. They ought to comply. But we're going to keep on filing, 
and I think we'll keep on winning them. And the beef hormone 
issue, I think it's settled, but how will Europe respond; we 
don't know.
    Mr. Portman. It's probably too early to assess how the 
changes since 1995 are working, but you are satisfied at this 
point that we have enough leverage to deal with, of course, 
these decisions.
    Mr. Kleckner. Congressman Portman, I think we do. It's a 
little bit early in the process. You're referring to WTO and 
the process here. It's a bit early. We've got to win some more 
cases, perhaps lose a few more. We lost--the first case we 
took, WTO; that was on gasoline from South America. I think we 
lost that one. We've been winning a lot since.
    We need to support WTO. It's the best we've got out there. 
Maybe it could bemade better. It possibly could be made better 
in the context of the next WTO round of talks. But it's so much better 
than the old GATT agreement; there really is no comparison.
    Mr. Portman. Well, I thank you again, and I hope that we do 
see results, whether it's on beef hormone, and bananas, and 
other cases; because if we don't it's tough to continue to have 
that grassroots support for free trade.
    Mr. Ramstad. Mr. Watkins, any questions?
    Mr. Watkins. I appreciate it. Let me say, Dean, thank you, 
and I appreciate the leadership of Farm Bureau on this.
    I was reflecting as we're talking. Maybe we need to have a 
summit among our agriculture groups, concerning not only fast-
track, but IMF. I'd like to suggest that we need to discuss 
that. We've got to monitor IMF. We've got to look at how a lot 
of the money's going in there, and how it's being utilized, et 
cetera, and make sure it's a positive way.
    But we were divided. Not too many--the farm groups did not 
support fast-track, but we did have a couple of key groups that 
found some rationale. To me it doesn't take a rocket scientist 
to know we've got to penetrate those markets around the world, 
with 96 percent of the consumers outside the United States.
    I don't know what our approach is going to be on the IMF 
right now. It may be a little shaky, but I think we need to 
analyze the role of the IMF.
    We need to closely monitor the IMF to ensure that they're 
not engaged in activities we cannot be supportive of.
    Let me say, I was alarmed about an article in The Wall 
Street Journal just a couple of weeks ago, where it stated that 
the European Union was going to enter into with some trade 
negotiations which would disclude--that would not include--
agriculture. That was quite alarming to me. It was like, we're 
going to just leave agriculture off from being around the 
negotiating table.
    I shot a letter to the USTR to express my concern and they 
gave me a letter back. I don't have a comfort zone with their 
response, and I didn't have a comfort zone with Peter's remarks 
when he left. I asked him about the article, and he said the 
European Union leaked that. I don't know exactly what that 
meant when he said the European Union leaked that article. I 
think we must be around the negotiating table with agriculture. 
We're going to give you the tools, all the tools in the world, 
to do that. So I hope you'll help us keep a running track of 
our progress.
    I'm concerned because politically, because agriculture as I 
mentioned a while ago, we're small in number, we're scattered, 
and thank goodness we do have some farm organizations. But 
sometimes I think it's easy for some of the negotiators to 
trade us off. Like to be farm-owned, that shouldn't have been--
anyone familiar with agriculture should have known that was 
going to be very, very harmful to our panel people in this 
country. That's why again I worked to try to put the chief 
negotiator's position in fast-track, because I felt like it 
would be one of the most important things we could do is to put 
someone who understood agriculture around that table.
    So I just want to say, help us monitor the IMF; take a good 
hard look at that. You also may want to consider trying to pull 
together a little summit of agriculture groups to try to make 
sure we're all singing the same song on this issue.
    So, Mr. Chairman, that's what I mainly wanted to say. I 
don't know if you have any remarks on that or not, Dean.
    Mr. Kleckner. Thank you, Mr. Watkins.
    On the issue of agriculture being excluded, as I mentioned 
a little while ago--I think they called it a trans-Atlantic 
meeting or Atlantic conference or something; it was Europe and 
the U.S. And we also heard, or probably read the same article, 
that said agriculture would not be a part of it.
    Europe doesn't want agriculture to be a part of it. They 
would rather talk about services, intellectual property, other 
trade-related items, and leave agriculture out, because it's so 
controversial in Europe. We can't allow that to happen. If we 
allow it to happen, agriculture is never going to make any 
change--we won't have the leverage that we have if we're lumped 
together.
    And I said to Charlene Barshefsky, at a meeting with her 
and Jeff Lang a couple days ago--just right out, I said, Ms. 
Barshefsky, if this happens, Farm Bureau is going to be 
unalterably opposed to it, and whatever results from it. 
Agriculture has got to be involved, either this one or at the 
WTO level. We've got to be there at the table.
    Mr. Watkins. Dean, I was working also on some legislation--
and my colleagues may want to join me in it--on the retaliation 
of how to implement--that we're still waiting now--let normal 
negotiations take place and trade take place. If they're 
willing to accept fines and not allow us, I want to use those 
fines--and this is what my legislation's supposed--I want to 
use those fines to advertise in that country that product that 
they're bearing.
    Will you join with me in that?
    Mr. Kleckner. I had heard about it before; it doesn't sound 
too bad an idea to me.
    We've always said let the European consumers--let them make 
their choice. Have American beef in their market. If they're 
really concerned about hormones, they won't buy it. But let the 
consumers make the choice around the world. Consumers ought to 
decide without governments deciding for them.
    Mr. Watkins. Thank you, Chairman.
    Mr. Ramstad. Thank you again, Dean, for your presence here 
today and your effective leadership; your support of fast-track 
as well. Thank you again.
    Mr. Kleckner. Thank you.
    Mr. Ramstad. The next panel--we're going to have to move 
along, because we have to conclude by 5:00, and we've got two 
panels left.
    The next panel, Nicholas Giordano, Assistant Vice President 
for Foreign Trade, National Pork Producers Council on behalf of 
Agriculture Coalition for fast-track; Leonard W. Condon, Vice 
President for International Trade, American Meat Institute; and 
Michael Wootton, Director, Federal Government Affairs, Sunkist 
Growers.
    Gentlemen, thank you for your patience, your indulgence, 
and for being here today to testify.
    Mr. Giordano, please.

 STATEMENT OF NICHOLAS GIORDANO, ASSISTANT VICE PRESIDENT FOR 
  FOREIGN TRADE, NATIONAL PORK PRODUCERS COUNCIL ON BEHALF OF 
              AGRICULTURE COALITION FOR FAST TRACK

    Mr. Giordano. Good afternoon, Mr. Ramstad and members of 
the subcommittee. I am Nicholas Giordano, and I serve as 
assistant vice president for Foreign Trade for the National 
Pork Producers Council. I'm testifying today on behalf of the 
Agriculture Coalition for fast-track, of which I am a co-chair. 
Our coalition is comprised of 72 members, representing 
agricultural producers, farm and food groups, trade 
associations, and companies in all 50 states; and is working to 
ensure free and fair market access for U.S. agricultural 
products around the world. I would note that Mr. Kleckner from 
Farm Bureau of course is--his organization is a member of this 
coalition, as is Mr. Condon to my right, and the American Meat 
Institute.
    American agriculture is twice as reliant on foreign trade 
as the economy as a whole. One-third of U.S. agricultural 
production must go into export markets just to maintain farm 
income. In order for U.S. agriculture to grow and prosper, we 
must be able to serve growing markets overseas. Secretary 
Glickman has stated it well, ``For American agriculture it is 
export or die.''
    Trade agreements, particularly the Uruguay Round in NAFTA, 
have played a crucial part in agriculture success. Last year, 
as you know, the administration sought broad fast track 
authority, including the authority to enter into and complete 
the Uruguay Round follow-on negotiations on agriculture, 
beginning next year, and to enter to bilateral or regional 
market-opening agreements beneficial to U.S. exporters. The Ag 
Coalition for fast-track unequivocally supports such a broad 
grant of authority.
    Let me put our position in perspective. Given our reliance 
on expanded trade, U.S. agriculture has always steadfastly 
supported the efforts of our negotiators to break down foreign 
market barriers. U.S. agriculture strongly supported and 
ambitious Uruguay Round and the NAFTA. But we have always seen 
the Uruguay Round and NAFTA as only first steps towards 
establishing a true level playing field for agricultural trade.
    Because of the great competitiveness of U.S. agriculture, 
the trade distortions that remain worldwide operate to the 
detriment of the United States. We have always been committed 
to the importance of the next round of agricultural 
negotiations, scheduled to begin in 1999 in the WTO. We favor a 
broad agenda for the upcoming negotiations, including not only 
the further reduction of tariffs, but internal supports, export 
subsidies, disciplines on state trading enterprises, rules for 
trade in biotechnology products, defending the SPS Agreement, 
and rules on tariff-rate quotas.
    The need for U.S. leadership is unmistakable. As 
Congressman Rangel once said, ``In world trade, the United 
States drives the bus.'' Without our full, unstinting 
involvement, there will be no serious agricultural negotiations 
under the WTO, because there will be no counterweight to the 
Europeans and others who want to maintain distorting trade 
practices.
    For our negotiators to have credibility and to have a seat 
at the bargaining table, this administration, any 
administration, must have fast track authority. Continued 
rejection of fast-track can only produce two possible outcomes; 
one is essentially that breaking down foreign market barriers 
will grind to a halt, particularly in its politically difficult 
sector, such as agriculture. This is the likely scenario in the 
WTO if we do not provide the leadership for which fast-track is 
a prerequisite. But the second scenario is that trade 
negotiation and expansion will continue to go on without the 
United States. Strategic alliances and preferential 
arrangements will be formed without us and around us. The rules 
of trade will be written by others for the benefit of others.
    For example, as you know, Argentina, Brazil, Paraguay, and 
Uruguay have formed a common market, MERCOSUR, that provides 
significant trade preferences to each other in this rapidly 
growing region of the world. Chile, one of the best economic 
performers in Latin America, has been particularly aggressive, 
signing trade agreements with Bolivia, Columbia, Ecuador, 
Mexico, Venezuela, MERCOSUR, and most recently Canada. As a 
result, these countries exports to Chile have a delivered price 
advantage of approximately 11 percent over U.S. products. 
Indeed, more than 30 bilateral and regional trade agreements 
are already operating here in the Western Hemisphere, and the 
United States is party to only one, NAFTA.
    The EU is already the world's largest trading bloc, and 
it's expanding into the emerging markets of Central and Eastern 
Europe. And the EU has also begun negotiations with Mexico and 
with MERCOSUR for free trade arrangements.
    The great irony is that as we hesitate and debate whether 
the administration should be given new negotiating authority, 
nations all over the world are moving forward, lowering 
barriers, negotiating with their neighbors in an effort to do 
what--to emulate what we've already done, to emulate the 
American model and our success of recent years. If we don't get 
back into the game, we will fall behind.
    Mr. Ramstad and members of the committee, I know you agree, 
we need fast-track, and we need it now.
    [The prepared statement follows:]
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    Mr. Ramstad. Thank you, Mr. Giordano.
    Mr. Condon, please.

   STATEMENT OF LEONARD W. CONDON, VICE PRESIDENT FOR TRADE, 
                    AMERICAN MEAT INSTITUTE

    Mr. Condon. Thank you, Mr. Chairman. I represent the people 
that process and pack meat, and sell it in world markets. And 
our members are clearly aware that the growth opportunities in 
our home market are very limited, and the future of the 
industry depends on exports.
    Exports are directly responsible for a growing share of the 
income received by U.S. livestock producers. Export sales of 
U.S. beef added over $110 per head to the value of each fed 
animal marketed in 1996; pork exports added almost $15 to the 
value of each hog sold. Without export markets U.S. cattle and 
hog prices would be much, much lower than they are today.
    Exports of red meats have grown rapidly over the past 
decade, reflecting economic expansion, cultural changes, and 
the success of U.S. efforts to open Asian markets. In 1996 the 
Asia Pacific region took over three-fourths of the $3 billion 
worth of beef and beef variety meets that U.S. packers and 
processors sold. Japan alone bought $1.9 billion worth. Between 
1987 and 1995 the value of U.S. exports of beef and beef 
variety meats to Japan tripled. In 1996 we exported $1.1 
billion worth of pork and pork variety meats, and Japan bought 
$756 million worth; a seven-fold increase from 1987.
    Let me make a few comments about fast-track and briefly 
support what you've already heard.
    The Uruguay Round was expected to the beginning of a 
process to liberalize trade in agriculture. For the previous 
many years under the GATT, agriculture wasn't comprehensively 
addressed, but the Uruguay Round was meant to be a start, and 
there's much work left to do. You'll see some numbers in my 
testimony as to what kind of tariffs we'll face in certain 
countries after the Uruguay Round is done. We're talking about 
tariffs of 150 percent in Europe. Canada will have a tariff on 
chicken of 238 percent.
    We face many other kinds of barriers in the world; 
restrictions on beef, and pork, and chicken, placed by the 
Philippines, Taiwan, Russia, Europe. We need action on these 
barriers immediately, and the best thing to do is get going 
with fast-track as Chairman Crane said.
    WTO accession. WTO accession negotiations provide another 
important leverage point for addressing market-access problems 
with those countries that are not now WTO members. We're 
talking about over 30 countries, but specifically countries 
like Russia, China, and Taiwan. Given its huge population, 
China has the potential to become the largest economy in the 
world and the largest importer of meat and poultry products.
    Beyond the significance of these three WTO-member 
candidates as important markets for our meat and poultry 
products, and the opportunity that the accession negotiations 
provide for solving access problems, the overall political and 
economic significance of Russia, China, and Taiwan suggest that 
the terms of accession for these countries will be extremely 
important. The trade policies of these countries will 
undoubtedly have a growing impact on global trade flows, and 
permitting these countries to enter the WTO on terms more 
favorable than those which apply to existing members, will 
seriously erode member support for the organization and weaken 
its disciplines.
    Support for the IMF. Regarding the need for action to 
stabilize the financial situation in Asia, AMI feels strongly 
that the United States should support the IMF as the leader of 
international efforts to help countries in the region. Only if 
these countries have stable, growth-oriented economies will we 
see global trade, including trade in livestock, poultry, and 
other agriculture products, recover and expand further.
    The IMF's efforts to shore-up the troubled Asian economies 
deserve U.S. support, because the multilateral agency is 
forcing badly needed reforms in these countries in exchange for 
its financial assistance. In many cases these reforms are 
consistent with the actions the United States has 
unsuccessfully advocated to these countries for years.
    GSM-102 credits. We urge USDA to make available additional 
credits for meat and poultry products under the GSM-102 
program. Under Secretary Schumacher mentioned earlier that USDA 
has made available two $50 million allocations for meat and 
poultry. Those were immediately used. The industry asks for an 
allocation of $500 million, and continues to believe that is 
the appropriate amount. At least in the near term, it is clear 
that the volume of our red meat exports to Korea and other 
financially-strapped Asian nations will be largely determined 
by the amount of GSM-102 credits available.
    On the hormones case, we commend the administration for its 
aggressive use of the WTO dispute settlement process to address 
trade restrictions which clearly WTO rules. We've heard a lot 
about bananas here today and beef. The significance there is 
the WTO dispute-settlement pipeline is a relatively long 
pipeline. The WTO agreement went into effect on January 1, 
1995, and so far we've had about 10 cases that have been all 
the way through the pipeline.
    Bananas is just ahead of beef in the pipeline, and what I 
have told my members, and anyone else who will listen to me, in 
the last year--so when they ask what is the community going to 
do on beef, I would say, watch what they do on bananas. If they 
try to weasel out of their obligations on bananas, they will 
probably do the same thing on beef. And my understanding at the 
moment is that's exactly what they're doing.
    Thank you very much, Mr. Chairman.
    [The prepared statement follows:]
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    Mr. Ramstad. Thank you, Mr. Condon. I want to thank you and 
the other witnesses as well, for adhering to the committee's 5-
minute rule, for presenting your testimony in summary form. I 
can assure you and the other witnesses that your entire 
testimony will be included in the record.
    Mr. Wootton, please.

  STATEMENT OF MICHAEL WOOTTON, DIRECTOR, FEDERAL GOVERNMENT 
                    AFFAIRS, SUNKIST GROWERS

    Mr. Wootton. Mr. Chairman, members of the subcommittee, I 
appreciate the opportunity to be here today. I'm Michael 
Wootton, director of Federal Government Affairs here in 
Washington for Sunkist Growers. We commend you for conducting 
this hearing in anticipation of what we believe will be very 
important agricultural trade negotiations scheduled to commence 
next year.
    Sunkist Growers is a nonprofit, farmer-owned marketing 
cooperative, serving 6,500 citrus farmers in California and 
Arizona. For 105 years Sunkist has successfully marketed citrus 
fruit grown by its farmer-owners, today producing approximately 
65 percent of the oranges, lemons, and grapefruit grown in 
California and Arizona.
    My cooperative enjoys a long history of developing and 
expanding markets around the world. Over 33 percent of our 
farmers' fresh fruit is marketed in foreign countries, 
accounting for 45 percent of our farmer's fresh fruit revenue.
    While progress in international agricultural trade was 
indeed made in the Uruguay Round, much remains to be 
accomplished. Tariff rates in many markets remain unjustifiably 
high, imposing tremendous economic and anticompetitive burdens 
on both the producer and the consumer. Uruguay Round 
negotiators did reduce or eliminate some tariff or non-tariff 
barriers, and as a result we currently see those still intent 
upon maintaining protectionist barriers against fair 
competition, resorting to the use of sanitary and phytosanitary 
claims to prevent importation of agricultural products.
    Uruguay Round Sanitary and Phytosanitary Agreement or SPS 
agreement, with its requirement that sound science be the 
foundation for all SPS standards for agricultural trade, at 
last has created some order out of chaos. The SPS Agreement is 
a significant achievement that should be further strengthened 
and expanded to compel all countries engaged in agricultural 
trade to adhere to internationally accepted SPS standards, 
norms, and practices, based upon sound science. Only by 
adopting and implementing science-based policies can 
subjective, unpredictable, and arbitrary requirements that 
constitute unjustified barriers to trade be successfully over 
come.
    SPS issues increasingly determine the course of 
international trade and agricultural products. SPS concerns, 
including pest quarantines have with growing regularity become 
the linchpin of trade negotiations, seeking market access for 
fresh produce.
    For example, our efforts to gain market access to the huge 
and potentially profitable consumer market in China have for 
years been stymied by protracted technical discussions and 
scientific exchanges between our technical experts and 
scientists from USDA, and their counterparts from the Chinese 
Ministry of Agriculture.
    Along with other SPS issues, we've responded to China's 
expressed concern about periodic outbreaks of Mediterranean 
fruit fly in California and Florida, but only when these SPS 
issues are resolved will market-opening talks yield results.
    Given this relatively new aspect of trade negotiations, 
manpower and resources of USDA agencies like APHIS and ARS, 
whose technical roles have become pivotal to success, are now 
spread dangerously thin. SPS management of production areas, 
swift eradication of destructive pests and diseases, mandatory 
certification that food exported is pest free, have become 
critical components of international trade. The discovery of a 
destructive Med fly in or near our production areas is the 
fastest way for us to lose our overseas markets. And that is 
why work of USDA's Agricultural Quarantine and Inspection 
Service to prevent exotic pests and diseases from entering the 
U.S. from abroad is vitally important both to the consumers of 
this country and to our industry.
    Tariff rates in many foreign markets remain, as I said, 
unjustifiably high, suffocating our competitive efforts. These 
tariff rates need to be reduced and harmonized with our own.
    Some quick examples. China, even when we overcome the SPS 
problems we face in negotiating with China, we still face a 40 
percent duty on citrus fruit, plus an additional 17 percent 
value-added tax. In Korea we face a tariff-rate import quota, 
which limits citrus imports. Tariffs on imports within the 
quota are pegged at 50 percent; tariffs on oranges outside the 
quota impose a stifling 89 percent.
    Now furthermore, Korea has granted the license to import 
its entire citrus quota volume to the control of its own Korean 
growers. The Korean citrus industry, albeit small and not an 
objective party, controls all citrus imports. This is clearly a 
conflict of interest, and one not likely to be favorably 
disposed toward fair treatment of U.S. fruit. We urge an 
opening up of that quota volume.
    Japan, our second largest market, imposes a duty of 40 
percent, nearly, on our winter oranges; 20 percent on our 
summer oranges. California and Arizona citrus producers last 
year paid Japan $38 million in tariff fees, just for the right 
to compete in that market.
    Sunkist Growers appreciates the opportunity to bring these 
matters to the committee's attention in the hopes that 
agricultural trade policy pursued by the government in 1999 or 
sooner will address these inequities important to our farmers. 
It is also for these reasons that we urge the Congress to grant 
to the administration traditional negotiating authority to 
remedy these problems.
    Thank you, Mr. Chairman.
    [The prepared statement follows:]
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    Mr. Ramstad. Thank you, Mr. Wootton.
    Mr. Nussle.
    Mr. Nussle. Thank you, Mr. Chairman. I just have one--it's 
more of a plea than a question. And that is, in your testimony 
as an example--of what I was trying to get at with Mr. Kleckner 
from the Farm Bureau.
    I have a real difficult time communicating the importance 
of this with my farmers, and I think that probably one of the 
organizations that I've seen that has done the best has been 
the pork producers. And we called to get information, as an 
example, we were able to find out that, how everyone of my 
farmers might be impacted, as far as in the sale of one head of 
pork; $10 is what they were suggesting may be the impact of 
trade.
    I don't want anyone to feel as though I'm blaming them. 
But, it's hard to get that same, per farmer, on-farm impact of 
trade across agriculture. And all of you are very good at 
summing it up, and putting it in the millions and billions of 
terms, as we are often times as well, but I think the battle of 
educating farmers on the importance of trade is going to be 
done on farm.
    And I recently tried to write an opinion article for the 
Iowa Farm Bureau Spokesman. So I had my staff call around, and 
I said, just tell me, on an average farm, tell me what the 
percentage would be of how many bushels of corn harvested went 
into trade. They couldn't tell me that. They couldn't tell me 
for soybeans. The most I got was $10 a head for hogs.
    The information I finally did get back took 3 days, and I 
was trying to write this article in order to try and educate 
farmers about this issue. All I'm trying to get at, is that I 
think if we're going to beat the demagoguery out there about 
the importance of trade and agriculture, we're going to have to 
personalize it, the way that the people who demagogue 
personalize it; and are able to point at one job, and say this 
job was lost as a result of trade. It may or may not have been 
lost, and thank goodness we have passed what we've talked about 
on many other instances, for that kind of job. But when it 
comes to $10 a head, or when it comes to however many bushels 
that are not available, or whatever it might be, we're not good 
at personalizing this for every farmer out there.
    So I would suggest, in my humble opinion, I think it would 
work better if we're able to personalize it, and anything you 
can do to assist in that regard, not only through your 
organizations, which I know does a good job, but through 
encouraging of other organizations, would be extremely helpful 
in this education process.
    Mr. Giordano. Mr. Nussle, I appreciate your kind words 
regarding the pork industry. We in agriculture, our coalition 
meet pretty much once a week, and discuss fast-track. And I 
will ensure that your comments are passed on. It's a difficult 
thing to get the message out. We're trying; we've had some 
success. Obviously, we need to do a better job, and we will do 
that.
    Mr. Nussle. If you're interested, I would be glad to meet 
with that coalition, and impart on them some unbelievable 
stories of just the misinformation that is out there in the 
hinterlands, outside the Beltway of Washington, because I'll 
tell you, farmers just do not see that $10 a head. They just 
don't see the importance of their involvement in the stream of 
commerce the way they need to, to impact the process in 
decision-making out here in Washington.
    So, anything that I can do to try and give you some, 
almost, horror stories involving folks who--I've gotten Farm 
Bureau and other commodity letterhead from county and other 
leaders within organizations that have told me to vote against 
fast-track when it was completely and totally counterproductive 
to their own interest, and I'd be glad to impart some of those 
stories if you're interested.
    Mr. Giordano. Thank you, sir.
    Mr. Ramstad. Mr. Watkins, any questions?
    Mr. Watkins. Yes. Mr. Chairman, I'd like all of you to 
know, Iowa and Oklahoma's here. My two colleagues and----
    Mr. Nussle. And Minnesota.
    Mr. Watkins. And so is Minnesota. Iowa, Minnesota--one of 
the same, corn country; they're too high on their corn. We've 
got to feed it.
    Mr. Ramstad. Just because they sit together, doesn't mean 
that----
    Mr. Watkins. Let me say quickly--the guys are sincere and 
have done a great job.
    United States has the world's lowest tariffs overall, and 
there's a lot of fear about WTO. But I don't know how we put 
the leverage, if we don't have WTO there to help us. If we 
believe we've got the greatest quality of agriculture 
products--and I believe that--if we believe that we have 
probably better environmental conditions, and health 
conditions, and labor conditions, we should not fear going in 
front of the WTO. We might be able to improve, but we shouldn't 
be fearing that.
    I've just got two quick questions. One. WTO's going to meet 
in 1999. Do we know when WTO will be meeting in 1999? Do you 
know when the WTO meets? Since this is going to be on 
agriculture, to try to be there, and try to do some things 
along the way.
    And also I wanted to ask, Mr. Condon, I think that you 
mentioned here that the tariff on beef presently is at 151.9 
percent in your community?
    Mr. Condon. Yes. Well, actually it's higher than that now. 
The Uruguay Round requires a minimum 15 percent reduction over 
6 years. This is what it will be after it goes down during the 
Uruguay Round.
    Mr. Watkins. I thought I was keeping up with it pretty 
good, but I'm just shocked when I realize it's that high, and I 
think most of our cattle people would be just as shocked as I 
am to realize we're going up against that kind of----
    Mr. Condon. We have a tariff-rate quota, zero duty for 
11,500 tons; that's our free access. Anything beyond that, it 
would be paying this tariff.
    Mr. Watkins. That's quite interesting. Thank you, Mr. 
Chairman.
    Mr. Ramstad. Thank you. And I want to thank you three 
gentlemen, again, for your presence and continuing counsel on 
these important issues. Thank you.
    Final panel of the day. Anita Brown, Associate, Schramm, 
Williams and Associates on behalf of Western Growers 
Association; Doreen Brown, President of the Consumers for World 
Trade; Carolyn B. Gleason, Counsel of Chiquita Brand 
International; and John E. Frydenlund, Food and Agricultural 
Policy Fellow, Council for Citizens Against Government Waste, 
on behalf of the American Peanut Coalition.
    Welcome, ladies and John, to the hearing. Let's begin with 
your testimony, please, Anita Brown.

  STATEMENT OF ANITA BROWN, ASSOCIATE, SCHRAMM, WILLIAMS AND 
      ASSOCIATES, ON BEHALF OF WESTERN GROWERS ASSOCIATION

    Ms. Anita Brown. Thank you, Mr. Chairman. I am Anita Brown. 
I'm with the firm of Schramm, Williams and Associates, and we 
are the Washington representatives for the Western Growers 
Association. The president of WGA, David Moore was planning to 
present testimony today, but as you know, the weather has not 
been so good in California, and he had problems associated with 
some flooding out there, so he was unable to attend the 
hearing. But we would appreciate your having his full written 
statement made a part of the hearing record.
    In the event the Subcommittee is not familiar with the 
organization, Western Growers, is a 3,300 member agricultural 
trade organization, which was organized in 1926. The 
Association's members, pack, grow, and ship more than half of 
the nation's fresh fruits, vegetables, and nuts.
    The Uruguay Round of the North American Free Trade 
Agreement has had varying impacts on Agriculture. Unfortunately 
in the horticultural section, fresh fruits and vegetables have 
not fared so well. A review of pre-NAFTA data, using the years 
1993 and 1997, indicates that U.S. exports of fresh fruits and 
vegetables to Mexico have declined by 9 percent and 7 percent, 
respectively; while imports of fresh fruit from Mexico have 
increased by 30 percent, and fresh vegetable imports from 
Mexico have increased by 57 percent. Note the sizable 
difference in the U.S. import/export figures.
    World trade data for the same period indicate that fresh 
fruit exports and imports have increased by 18 percent. On the 
other hand, U.S. imports of fresh vegetables have increased 48 
percent, while our exports have increased only 14 percent.
    As you can see, any agricultural success as a result of 
NAFTA, and to some extent, the Uruguay Round, has not been 
shared by the fresh produce industry. As a result, Western 
Growers Association, urges Congress and the administration in 
new trade agreements to focus more in addressing the continuing 
obstacles to export trade in fresh produce. One of those 
obstacles was noted earlier today by Mrs. Thurman and also Mr. 
Kleckner of the American Farm Bureau--sanitary and 
phytosanitary barriers.
    Your subcommittee press release asked witnesses to provide 
information on what we thought should be addressed in future 
trade rounds. WGA recommends four issues which I'll mention 
briefly. The first issue is phytosanitary barriers, which as I 
said earlier is one of the principle obstacles to trade and 
fresh fruits and vegetables. WGA's written statement outlines a 
number of phytosanitary barriers, many of which are based on 
unquestionable science. Some of these barriers have taken many, 
many years to resolve; as, for example the California tomato 
issue.
    The California Tomato Commission was able to get tomatoes 
into Japan this past year, as a result of 7 years of long, hard 
work. WGA believes that time frames for completion of studies 
or tasks should be imposed on all countries that raise 
phytosanitary questions, and suggests that such time frames be 
included in forthcoming trade negotiations. I note that the 
Farm Bureau witness also made this recommendation.
    WGA's second recommendation is harmonization. Various 
multilateral trade rounds have attempted to harmonize many 
topics that influence trade, but unfortunately country of 
origin markings, and labeling have not been topics for 
harmonization to date. The U.S. and Canada, after entering into 
a free trade agreement over a decade ago still have differences 
in lettering sizes on labels. The U.S., Mexico, and Canada 
continue to have different pesticide residue tolerances. These 
problems do not enhance trade, and certainly should not have 
any place in a free trade agreement.
    A third recommendation is adequate provision of personnel 
and funds for federal agencies. When the federal agency 
officials come to Capitol Hill in anticipation of a new trade 
agreement, they always furnish a number of analyses on the 
economic impact of the agreement, but they fail to provide an 
examination of the funding and personnel required for 
implementation, adequate monitoring, and enforcement of these 
agreements. Particularly at a time when we are entering into 
more and more trade arrangements, we must ensure that there are 
sufficient personnel and funds to help us achieve our export 
objectives.
    The last issue WGA would like to bring to your attention is 
transparency. Implementation of the Uruguay Round has not 
curtailed the need for more transparency in the countries who 
are members of the WTO. This is particularly true with regard 
to the European Union, whose entry price system for fresh 
fruits and vegetables is, to say the least, extremely complex 
and confusing. WGA believes that future trade agreements should 
try to ensure clear, detailed, and timely data on government 
support to its agriculture sector.
    Mr. Chairman, the trade policy of the U.S. must ensure that 
other countries open their markets to us. We cannot continue to 
open our doors to imports when other countries are raising 
barriers that deny us market access. The U.S. has had a very 
favorable balance of trade in agriculture for a number of years 
but interestingly a review of trade data indicates that the 
U.S. trade surplus in agriculture in 1997 was 23 percent below 
the previous year.
    WGA believes that the U.S. must continue to attack unfair 
and questionable sanitary barriers, and we must do this very 
aggressively.
    The Subcommittee's press release indicated an interest in 
the adequacy of current mechanisms for consulting with Congress 
and the private sector. Mr. Moore has been, for a number of 
years, a member of the USTR/USDA Agricultural Policy Advisory 
Committee (APAC); and also the Agricultural Technical Advisory 
Committee on Trade, in Fruits and Vegetables. WGA believes that 
these committees are indispensable in coordinating public 
policy goals and private sector needs.
    Regarding fast-track legislation, WGA understands the 
reason for and supports the general concept of fast track 
negotiating authority.
    With regard to the Subcommittee's interest in consistency 
and coordination among existing and future trade agreements, 
WGA believes there has been consistency and coordination for 
the most part at least in trade agreements involving 
agriculture; but encourages Congress, as the U.S. enters into 
more and more trade agreements to strengthen its oversight 
activities to ensure that this consistency and coordination 
will continue.
    Thank you, Mr. Chairman.
    Mr. Ramstad. Thank you very much, Ms. Brown, and Mr. 
Moore's complete statement will be included in the record as 
you requested.
    [The prepared statement follows:]
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    Mr. Ramstad. Now we shift to Doreen Brown, president of 
Consumers for World Trade.
    Ms. Brown.

STATEMENT OF DOREEN BROWN, PRESIDENT, CONSUMERS FOR WORLD TRADE

    Ms. Doreen Brown. Thank you, Mr. Chairman, members of the 
subcommittee. I am Doreen Brown, the president of Consumers for 
World Trade, and as a point of reference, I have served on the 
President's Advisory Committee for Trade Policy, and 
Negotiations, and also for 15 years I've been a member of the 
U.S. Delegation to the North American/European Union 
Agriculture Conference; the delegation that Dean Kleckner 
chairs.
    I'm accompanied today by Joan Schnittker, Senior Economist 
of Public Voice for Food and Health Policy; and Dale McNiel, a 
trade attorney at McLeod, Watkinson & Miller, who will assist 
us with technical information, if necessary.
    Consumers for World Trade is a national, nonprofit, 
nonpartisan organization that was established in 1978, and is 
dedicated to promoting the consumer interest in international 
trade policy through advocacy of trade liberalization and 
through educational programs. Although my statement today--the 
full statement--is focused entirely on the Sugar Program, I 
would like to add that Consumers for World Trade believes very 
strongly in the need for renewal of fast track negotiating 
authority, and urges Congress, as it has in the past, and will 
continue to do as long as necessary, to enact clean fast track 
legislation as expeditiously as possible. Without fast track 
authority we have no doubt that the 1999 WTO Agricultural Round 
will not be very productive for the United States.
    The last farm bill, the Freedom to Farm Act of 1996, phased 
out government price support, significantly reduced tariffs and 
export subsidies, and started agriculture on a journey toward a 
free and open world market; except for sugar and peanuts.
    The Domestic Loan Program for sugar was continued at the 
same loan rate for raw sugar that has been in effect since 
1985, and during the Uruguay Round of trade negotiations the 
U.S. Sugar Program was practically exempted. Sugar was singled 
out for a 4 percent tariff reduction while other commodities 
and products took cuts of 15 to 50 percent. Likewise, the 
provisions of the WTO Agreement on Agriculture had absolutely 
no impact on the U.S. Sugar Program. This most favorable 
treatment means that they have been clearly no market access 
liberalization for sugar.
    The defenders of the current U.S. Sugar Program claim that 
they are in fact advocates of free trade, and that they are 
willing to give up their special privileges as soon as the 
other countries, particularly the member nations of the 
European Union, do so as well. Well, that's sort of a red 
herring, because first the U.S. antidumping and countervailing 
DoD duty laws protect domestic industries from dumping by 
foreign businesses and from export subsidies by foreign 
countries. Therefore there is very little danger of European 
subsidized sugar being dumped on the U.S. market. And a second, 
and equally important point is that the U.S. has not waited on 
the Europeans or any other nation to eliminate their subsidies 
on other commodities, such as corn and wheat; we are not 
waiting for them to eliminate theirs before we eliminate ours.
    The U.S. negotiators are ill-equipped to push for expanded 
market access to other countries as long as we maintain a very 
restrictive special interest program, such as the Sugar 
Program. The anomaly of the Sugar Program has already been 
pointed out by one of our trading partners. The NAFTA panel 
that decided the dairy, poultry, and egg case against Canada 
pointed to the U.S. sugar tariff-rate quota as helping to 
justify its decision in favor of Canada's protectionist 
policies.
    This preferential treatment for sugar in trade agreements 
and foreign policy is detrimental to American interests. As 
president of Consumers for World Trade, I object to the fact 
that consumers ultimately pay the bill for the nearly $1.2 
billion annual cost of the Sugar Program that benefits less 
than 1 percent of America's farmers. As a consumer, I can 
assure you that this hidden billion dollar consumer tax is 
unfair, and could even be added to Congress' tax relief agenda.
    From an economic standpoint, the highly competitive U.S. 
food industry has to compete with foreign products made with 
world market sugar that is approximately half the price of our 
domestic price. This creates a powerful incentive to move 
plants and job opportunities to other countries. And from a 
trade point of view, I object to the maintenance of a special 
interest program, such as sugar, which benefits only a 
privileged few at a substantial cost to consumers, and which 
counteracts our country's efforts to liberalize agricultural 
trade.
    There is a large amount of economic data and trade history 
on the U.S. program in my full testimony. I look forward to 
having this in-depth information printed in the hearing record 
for further reference by the subcommittee.
    And in closing, Mr. Chairman, the U.S. Sugar Policy is a 
very damaging public policy that hurts American consumers, 
American business, American workers, American agriculture, and 
even our friends in developing countries. It is a policy that 
needs to be changed. The U.S. sugar quota system should be 
phased out to establish a free and open market for sugar.
    Thank you.
    [The prepared statement follows:]
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    Mr. Ramstad. Thank you very much, Ms. Brown. I can assure 
you your testimony in full will be included in the record.
    Ms. Gleason, please.

     STATEMENT OF CAROLYN GLEASON, COUNSEL, CHIQUITA BRAND 
                         INTERNATIONAL

    Ms. Gleason. Good afternoon, Mr. Chairman, and members of 
the subcommittee and full committee. I'm Carolyn Gleason, here 
on behalf of Chiquita Brand, to share briefly some views on the 
WTO as it relates to agriculture, with a special emphasis on 
the lessons derived from a case that's been referred to several 
times this afternoon, the banana case.
    Some of you may know that there isn't an agricultural 
policy anywhere on the globe that has been more heavily 
litigated in multilateral dispute settlements than the EU 
Banana Policy. It has now been exhaustively reviewed and 
condemned by four separate panels, and so has contributed quite 
a lot to our understanding of the WTO system, including as it 
relates to agriculture.
    In the interest of brevity, I'm going to move to some 
lessons that I think are most germane to the subject of this 
hearing, and in particular to the lessons learned on the 
shortcomings, potential and present, as regards to dispute-
settlement system.
    One very serious potential shortcoming that I believe needs 
immediate attention is the EU's questionable commitment to that 
system. As the American Meat Institute mentioned, the banana 
case is the first successful WTO legal challenge against EU 
agricultural policy, and is very widely viewed as the first 
major test of EU willingness to abide by its WTO obligations, 
particularly in the area of agriculture. And as the AMI witness 
mentioned, the early signals coming out of Europe are not 
exactly encouraging.
    The Commission has just issued a reform proposal that would 
in fact increase discrimination and restriction in the sector, 
this following exhaustive dispute-settlement. The Commission is 
even actively recruiting the Latin American complaining parties 
to the dispute to, in effect, buy into the opposed 
illegalities.
    This is conduct reminiscent of pre-WTO days when the EU 
routinely blocked panel ruling. Its behavior threatened to 
destroy the system then, and I believe will threaten to destroy 
the system again unless we prevent it from happening.
    As we learned in the GATT days, it doesn't matter how 
specific and how comprehensive the substantive disciplines are 
on agriculture, if our principle trading partners don't have 
the resolve to abide them. Before we can turn to the visionary 
goals for 1999, our most immediate priority has to be to 
reassure ourselves through dispute-settlement successes, actual 
successes, that the EU and our other major agricultural 
partners intend to honor existing WTO obligations.
    Because the EU is showing a contrary intention on bananas, 
one of two things need to happen before we gain comfort that 
this system actually works. Either the EU member states have to 
replace the proposal with a new WTO consistent one, or the EU 
will need to be forced into full compliance through WTO 
procedures. Based on EU conduct thus far, the latter is the 
likeliest scenario, and almost certainly will need to include, 
not only compliance arbitration, but also retaliation. If at 
the end of the reasonable period of time the EC is not in 
strict and perfect compliance on bananas, sanctions will have 
to be taken for the sake of the entire system.
    If we relent on this first case in which EU resolve is 
being tested, it will bless EU noncompliance in all the other 
cases, beef hormones and others, right on down the line, and 
will have the same destabilizing effect on the system that EU 
noncompliance had pre-WTO.
    After we gain confidence that the system is capable of 
delivering relief against our principle adversaries, attention 
is going to have to shift to the issue of how best to hasten 
the process of relief. You've heard reference to 18 months in 
beef hormones. That's without the reasonable period of time; 
add another 15 months for that. In very important ways, the 
process of getting relief now functions to the advantage of the 
offending parties, not the injured ones. The banana case is a 
good example.
    WTO consultations in that case began in October 1995. Full 
WTO compliance, assuming it occurs, will not be in place until 
January 1999, at the earliest, or more than 3 years after the 
proceedings began. And throughout that period, damages to U.S. 
interests have naturally compounded greatly; conversely, unfair 
advantages for EU firms have skyrocketed. Both the injuries 
suffered and the advantages gained are irreversible. WTO 
delivers relief on a going-forward basis. It makes no 
allowances for back damages.
    On the other hand, offending parties like the EU, know that 
by dragging procedures into overtime, pushing them into the 
slowest possible timetable--in our case 3 years--will suffer no 
adverse consequences. This is why, for example, the EU in the 
banana case felt comfortable appealing 19 findings of law, 
almost all of which were premised on well established legal 
findings.
    Whatever the legal cost of the EU of that maneuver, and the 
other maneuvers associated with resisting compliance, those 
costs have been dwarfed by the multimillions of dollars in 
additional unfair commercial benefits accruing to EU interest.
    This slow process of securing compliance isn't just a 
systemic inequity; it is also a disincentive for American 
agriculture to seek dispute-settlement relief in the first 
instance. In my written submission I've suggested ways in which 
this inequity and this disincentive might be improved in the 
1999 exercise.
    I'd just close by stating my full agreement with several of 
the other witnesses this afternoon that the WTO dispute 
settlement system is essentially the only remedial tool 
available to American agriculture for reducing foreign 
barriers. We have no choice but to make it work. The system is 
not going to have broad-based credibility unless we establish a 
visible model for strict WTO compliance in the banana case, and 
insist on that same standard in the other agricultural cases 
right behind us.
    Thank you, Mr. Chairman, for this opportunity to testify.
    [The prepared statement follows:]
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    Mr. Ramstad. Thank you, Ms. Gleason.
    Mr. Frydenlund, please.

  STATEMENT OF JOHN FRYDENLUND, FOOD AND AGRICULTURAL POLICY 
   FELLOW, COUNCIL FOR CITIZENS AGAINST GOVERNMENT WASTE, ON 
            BEHALF OF THE AMERICAN PEANUT COALITION

    Mr. Frydenlund. Thank you, Mr. Chairman and members of the 
subcommittee. My name is John Frydenlund. I'm the Food and 
Agricultural Policy Fellow at the Council for Citizens Against 
Government Waste. I'm accompanied today by Dale McNeill, a 
trade attorney with McLeod, Watkinson & Miller.
    I'm here to speak on behalf of the American Peanut 
Coalition, a coalition that believes that the U.S. can only 
take full advantage of tremendous opportunities to expand its 
agriculture exports if it pursues a progressive trade policy, 
and Congress moves forward and provides the administration with 
fast track negotiating authority.
    The American Peanut Coalition is a coalition of 
associations, representing taxpayer, consumer, public interest, 
manufacturer, distributor, and wholesale retail organizations, 
who believe that U.S. agricultural growth and prosperity will 
only come from competitiveness in the international 
marketplace.
    Our main objective is to bring about meaningful reform of 
the Federal Government's Peanut Program, by reducing and 
eventually eliminating excessive domestic support levels that 
are almost twice the world price, thus increasing imports and 
exports of peanuts. We are pro-farmer, pro-consumer, pro-
growth, and pro-competition. We believe that the current 
restrictive Peanut Program is detrimental to the export 
opportunities of all American agriculture.
    During previous GATT rounds, the United States agreed to 
tariff concessions on imports of virtually all industrial and 
agriculture products; however, in each negotiating round, 
peanuts were singled out for protection from international 
competition, and no tariff concessions were made on imports of 
peanuts and peanut products.
    The Uruguay Round was intended to produce substantial 
reforms of agriculture policies by reducing domestic and export 
subsidies and expanding market access. Unfortunately, the 
Peanut Program also escaped reform in that round. Congress 
moved to decouple farm income support from production decisions 
in the Fair Act of 1996. It's Freedom to Farm Bill eliminated 
deficiency payments and marketing loans, and replaced them with 
transition payments for virtually all farm commodities.
    As a result of the 1996 farm bill, farmers now have the 
freedom to farm almost everything, except peanuts. Only farmers 
who own or lease a production quota can legally grow peanuts to 
be sold for edible use. This means that the Peanut Program 
avoided meaningful reform in both the Uruguay Round and the 
1996 farm bill. In fact, the Peanut Program continued to force 
consumers in this country to spend up to $500 million more each 
year, because of artificially higher prices.
    When seeking fast track authority last year, President 
Clinton sent a letter to Congressman Charles Stenholm, 
suggesting that the administration would give preferential 
treatment to peanuts in future trade agreements in return for 
support on fast-track. This is a further example of peanut 
quota holders receiving special protection at the expense of 
the remainder of American agriculture.
    The U.S. Peanut Program is a glaring example of 
inconsistency with well-established agricultural trade policy 
and principles supporting fair and free trade. In a new era of 
U.S. agriculture, where almost every food commodity is produced 
and exported competitively in the world market, peanut and 
sugar stand out as completely contrary to the objectives of the 
rest of agriculture. Imports of foreign peanuts are strictly 
limited, as part of a scheme to keep domestic peanut prices 
well above the world market price. This gives other countries a 
basis to deny access to U.S. agricultural commodities. In fact, 
the U.S. will find it difficult to make a persuasive case for 
free trade in agriculture as long as it maintains a program as 
restrictive as the peanut program and severely limits imports. 
If the U.S. continues to unfairly deny access to its market for 
peanuts and peanut products, we can expect other countries to 
deny us access to their markets, with billions of dollars in 
U.S. agricultural exports.
    The future of U.S. agriculture lies in exporting 
commodities where we have a competitive advantage. Maintenance 
of the Peanut Quota Program and severe import restrictions on 
peanuts are contrary to the interests of corn, wheat, and other 
commodity producers who need to take advantage of expanded 
export markets. We cannot afford to let bad trade policy on 
peanuts interfere with our need to reduce barriers and level 
the playing field in the $600 billion global agriculture 
market. If we are to continue to be a strong player in the 
world markets, and to expand our agricultural prosperity, we 
must push for further reductions in trade impediments.
    For all these reasons, Mr. Chairman, Congress must make 
sure that peanuts are on the table in the next round of 
negotiations, and that peanuts do not get singled out again for 
special protection. We urge the subcommittee to seek more open 
trade in peanuts and to provide the same treatment for peanuts 
in future trade agreements that has been afforded to virtually 
every other agriculture commodity.
    If trade in peanuts and peanut products is not 
significantly liberalized, you can expect the demise of the 
U.S. peanut industry, as well as the undermining of future 
trade opportunities for the rest of U.S. agriculture.
    Thank you, Mr. Chairman and members of this subcommittee, 
for giving us this opportunity to present this testimony, and I 
request the entire statement be a part of the record.
    Mr. Ramstad. So ordered.
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    Mr. Ramstad. Thank you, Mr. Frydenlund, for your testimony, 
and for all the important work that the Council for Citizens 
Against Government Waste does. I might add that as a co-sponsor 
of both the bills to reform the sugar and the peanut programs, 
I certainly appreciated your input here today.
    I want to thank all the witnesses. Let me ask if there are 
any questions, Mr. Portman?
    Mr. Portman. As a free trader, I also want to echo those 
comments. I'm also the father of three young children who like 
peanut butter. So I agree, put peanuts on the table.
    But honestly, on the sugar and peanut program we have to be 
consistent, if we're going to ask the Europeans to open their 
markets. These are glaring examples. I'm glad you were here 
today to talk a little about that, cause we ain't perfect, and 
we need to do more; but we're better at least than most 
countries around the world, which is why WTO makes so much 
sense.
    Ms. Gleason, you made a number of points. You said that 
it's a litmus test, the banana case. And I just want to expand 
on that a little bit, and then ask you a question about it, but 
in three regards. One is in a legal sense, which I think is 
what you meant; that for other agriculture cases, whether it's 
beef hormones or any other number of ag cases, this is being 
looked to I understand by the international community as a true 
litmus test.
    The second though is a domestic-political litmus test. Both 
Peter Scher and Dean Kleckner mentioned sort of this disconnect 
between our successes in international trade liberalization and 
the political sense out there in the country about trade. The 
disconnect is, that we're having success opening markets, and 
trade is for the most part going our way. I think the fact is 
we've won 16 out of 17 cases in the WTO, for instance, and yet 
we continue to have a hard time convincing people that WTO, and 
fast-track, and other trade liberalization measures make sense.
    That disconnect is going to be also affected, and I think 
the disconnect will be broadened, and the gap will even grow if 
we cannot enforce these agreements, like the WTO case on 
bananas.
    I've got 600 plus good-paying jobs with Chiquita in my 
district, and yet people here in Congress tell me, well, this 
isn't a U.S. issue. Well, it is for me, and it is for anybody 
who represents a port, it's people who represent distributors 
of the product; they have a lot of investment obviously from my 
district, and elsewhere around the country in Central America. 
It's a U.S. company, it's a U.S. issue, and it's a trade 
liberalization issue.
    So I think if we're going to truly begin to close that 
disconnection, and begin to get people to think along the lines 
of trade being positive and not a negative force on employment 
and on U.S. opportunity, we've got to enforce these agreements.
    The third way it's a litmus test is looking from the 
perspective of the developing countries. I had the Panamanian 
finance minister in my office last week, who came in to give me 
a lecture about the U.S. and our trade policies, and he was 
right. I mean, he's essentially saying, look, if the U.S. lets 
us down on this one, why should we move forward with trade 
liberalization.
    They're new members of the GATT. We told them how great the 
GATT was. We told them that WTO makes so much sense, so they 
went through the process. They've made sacrifices. They are 
doing the right thing, and yet they're not sure we're going to 
stand by them, because he comes up to Congress, and hears 
people saying, well, we need to give the Europeans a break on 
this and that.
    The Panamanians are getting killed, as are the Costa 
Ricans, as are the Hondurans, as are these other developing 
countries that are trying to export something that they 
legitimately, on a level playing field--they don't want any 
deference; they just want to be able to engage in the trading 
system and enjoy the benefits that we keep telling them are out 
there. So I hope that we continue to stand by our cases, and 
continue to insist on compliance.
    But I want to ask you a question, because you mentioned 
this litmus test from a legal sense, so to narrow it back down 
to that. Do you see similarities between the way the Europeans 
have handled this case, and the way they've handled other ag 
cases that might be following this one, or preceded it?
    Ms. Gleason. Well, thank you, Congressman. Before I get to 
the litmus test question, let me say apropos the disconnect. 
When we speak of WTO's successes, we need to differentiate 
between the jurisprudential successes and the practical, real 
successes in hand. In the area of agriculture and in particular 
in the area of litigation with the EU, the jury is very much 
still out, which is why the banana case is going to be 
decisive. The model we see playing out on bananas will 
undoubtedly be repeated on beef hormones, and some of the other 
cases to come.
    Similarities. There are similarities. The EU--just to show 
you how the model is evolving, the EU is called upon, once it 
loses a report, to stand before the dispute-settlement body and 
declare its intentions as to whether or not it will fully 
implement the finding.
    What it did on bananas, which was the first ruling against 
it, was to wiggle. It rose before the body and said, we intend 
to honor our international obligations; very crafty language, 
designed to evade the language, ``we intend to honor our WTO 
obligations'', or ``we intend to fully implement the finding''. 
They were looking for language to confer them some flexibility.
    This week in Brussels the European 113 Committee met--and 
Len Condon might now know this--and determined to use that same 
obstreperous formulation for beef hormones, so we see it 
beginning to happen all over again.
    On the law, you have lawyers working overtime in the 
Commission, parsing and mincing the WTO findings to look for 
some justification to claim that black does not equal white on 
bananas. They're doing the same thing, as I understand it, on 
beef hormones. That's why we need to take a stand on bananas, 
or you bless nonconformity on beef hormones.
    Mr. Portman. One other quick question. This is for any of 
the panelists. What can this subcommittee and committee do to 
help? Whether it's beef hormones, bananas, or other cases, what 
should we be doing to encourage or even require adherence to 
these cases when we're successful?
    Mr. Frydenlund. Well, from our point of view with the 
American Peanut Coalition, I would reiterate the statement that 
we need to clean up our house too, so that we have a much 
better position from which to argue that the rest of the world 
needs to come around.
    Mr. Portman. Ms. Brown
    Ms. Doreen Brown. I agree thoroughly. You took the words 
out of my--the peanuts out of my mouth.
    Yes, in order to make a case on anything, you've got to go 
in and not have the odds stacked against you because of your 
own actions. And I think it would be beneficial to clean up our 
act not only in order to advance the process, but because it 
would benefit us, the United States, to the greatest degree.
    Mr. Portman. Ms. Brown.
    Ms. Anita Brown. I don't really have a comment, but I do 
agree with what Ms. Gleason had to say; that the banana case 
and the beef hormone case will probably be acted on in the same 
manner, that is, the EU will use the same tactics in the beef 
case.
    WGA has not been involved in a fresh fruit and vegetable 
case before the WTO, so I cannot comment much further.
    Mr. Portman. But it would probably be fair to say that it 
would be a likely reaction to a fresh fruit and vegetable case 
as well.
    Ms. Gleason.
    Ms. Gleason. I'd just encourage the subcommittee to lend 
its support to USTR as it conveys a message to Europe, which is 
now underway, that if there is not full conformity, that full 
recourse WTO procedures, including retaliation, will need to be 
taken.
    Mr. Portman. Thank you, Mr. Chairman.
    Mr. Ramstad. Well, thank you, Mr. Portman. And again, I 
want to thank the members of this panel, as well as the 
previous witnesses today. I thought this has been an excellent 
hearing, thanks to all the expertise at this witness table that 
we received. Hope you'll continue to work with us in a 
collaborative way.
    This now concludes the hearing of the Trade Subcommittee. 
The record will remain open until February 26, 1998. The 
meeting stands adjourned.
    [Whereupon, at 5:00 p.m., the hearing was adjourned subject 
to the call of the Chair.]
    [Submissions for the record follow:]


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