[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]
TRANSATLANTIC TRADE AGENDA: CONFLICT OR COOPERATION?
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HEARING
BEFORE THE
SUBCOMMITTEE ON
INTERNATIONAL ECONOMIC POLICY AND TRADE
OF THE
COMMITTEE ON
INTERNATIONAL RELATIONS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 29, 1999
__________
Serial No. 106-78
__________
Printed for the use of the Committee on International Relations
U.S. GOVERNMENT PRINTING OFFICE
63-070 CC WASHINGTON : 2000
COMMITTEE ON INTERNATIONAL RELATIONS
BENJAMIN A. GILMAN, New York, Chairman
WILLIAM F. GOODLING, Pennsylvania SAM GEJDENSON, Connecticut
JAMES A. LEACH, Iowa TOM LANTOS, California
HENRY J. HYDE, Illinois HOWARD L. BERMAN, California
DOUG BEREUTER, Nebraska GARY L. ACKERMAN, New York
CHRISTOPHER H. SMITH, New Jersey ENI F.H. FALEOMAVAEGA, American
DAN BURTON, Indiana Samoa
ELTON GALLEGLY, California MATTHEW G. MARTINEZ, California
ILEANA ROS-LEHTINEN, Florida DONALD M. PAYNE, New Jersey
CASS BALLENGER, North Carolina ROBERT MENENDEZ, New Jersey
DANA ROHRABACHER, California SHERROD BROWN, Ohio
DONALD A. MANZULLO, Illinois CYNTHIA A. McKINNEY, Georgia
EDWARD R. ROYCE, California ALCEE L. HASTINGS, Florida
PETER T. KING, New York PAT DANNER, Missouri
STEVE CHABOT, Ohio EARL F. HILLIARD, Alabama
MARSHALL ``MARK'' SANFORD, South BRAD SHERMAN, California
Carolina ROBERT WEXLER, Florida
MATT SALMON, Arizona STEVEN R. ROTHMAN, New Jersey
AMO HOUGHTON, New York JIM DAVIS, Florida
TOM CAMPBELL, California EARL POMEROY, North Dakota
JOHN M. McHUGH, New York WILLIAM D. DELAHUNT, Massachusetts
KEVIN BRADY, Texas GREGORY W. MEEKS, New York
RICHARD BURR, North Carolina BARBARA LEE, California
PAUL E. GILLMOR, Ohio JOSEPH CROWLEY, New York
GEORGE RADANOVICH, California JOSEPH M. HOEFFEL, Pennsylvania
JOHN COOKSEY, Louisiana
THOMAS G. TANCREDO, Colorado
Richard J. Garon, Chief of Staff
Kathleen Bertelsen Moazed, Democratic Chief of Staff
Subcommittee on International Economic Policy and Trade
ILEANA ROS-LEHTINEN, Florida, Chairman
DONALD A. MANZULLO, Illinois ROBERT MENENDEZ, New Jersey
STEVEN J. CHABOT, Ohio PAT DANNER, Missouri
KEVIN BRADY, Texas EARL F. HILLIARD, Alabama
GEORGE RADANOVICH, California BRAD SHERMAN, California
JOHN COOKSEY, Louisiana STEVEN R. ROTHMAN, New Jersey
DOUG BEREUTER, Nebraska WILLIAM D. DELAHUNT, Massachusetts
DANA ROHRABACHER, California JOSEPH CROWLEY, New York
TOM CAMPBELL, California JOSEPH M. HOEFFEL, Pennsylvania
RICHARD BURR, North Carolina
Mauricio Tamargo, Subcommittee Staff Director
Jodi Christiansen, Democratic Professional Staff Member
Yleem Poblete, Professional Staff Member
Camila Ruiz, Staff Associate
C O N T E N T S
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WITNESSES
Page
Honorable Charles Ludolph, Deputy Assistant Secretary for
Europe, International Trade Administration, U.S. Department
of Commerce................................................ 4
Honorable E. Bryan Samuel, Deputy Assistant Secretary for
Trade Policy, Bureau of Economic and Business Affairs, U.S.
Department of State........................................ 7
Willard M. Berry, President, European-American Business
Council.................................................... 24
Rick Reinert, President, REHA Enterprises, Inc............... 25
John Roberts Smaller, President, National Association for the
Specialty Food Trade....................................... 26
APPENDIX
Prepared statement:
Chairwoman Ros-Lehtinen...................................... 34
Charles M. Ludolph........................................... 36
Bryan Samuel................................................. 42
Willard M. Berry............................................. 48
rick Reinart................................................. 55
John P. Roberts.............................................. 57
TRANSATLANTIC TRADE AGENDA: CONFLICT OR COOPERATION?
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WEDNESDAY, SEPTEMBER 29, 1999
House of Representatives,
Subcommittee on International Economic Policy and
Trade,
Committee on International Relations,
Washington, DC.
The Subcommittee met, pursuant to call, at 11:05 a.m., in
room 2172, Rayburn House Office Building, Hon. Ileana Ros-
Lehtinen [Chairwoman of the Subcommittee] presiding.
Ms. Ros-Lehtinen. The Subcommittee will come to order.
Good morning. The State legislators of my home State of
Florida are up here for a Federal-State summit. So I will be
buzzing in and out and trying to be two places at one time and
doing a fairly bad job of it. So you will excuse me if I am not
here; and we have got a vote, so maybe we will do our opening
statements.
Thank you, Mr. Menendez.
Given the recent, continuing disputes between the United
States and the European Union, it would appear that
transatlantic relations are marred by conflict. Just a few days
ago, the House considered a resolution on the EU's
protectionist stance against the U.S. jet engine market and
``hushkits'' which are in compliance with the ICAO Stage III
guidelines on noise level standards.
However, most would agree that focusing solely on these
disputes would be oversimplifying the relationship.
The United States and its European partners have long been
leaders in the global economy and have generally developed and
maintained a strong common interest in working together to
strengthen the world trading system. This has become more
evident in the aftermath of the Cold War with U.S. and EU
policymakers arguing that the expansion of transatlantic trade
relations is the vehicle for a general strengthening of ties
and reinvigorating political and security relationships in the
form of The New Transatlantic Agenda--a goal we reiterated in
the Bonn Declaration adopted at the summit in June of this
year.
This view is presented alongside data which shows that
economic relations between the United States and Europe are
supported by significant trade and investment links.
Taking goods and services together, the EU and the United
States are each other's largest single trading partner. Last
year, trade in goods between the member states of the EU and
the U.S. increased almost 14 percent for exports and 10 percent
for imports compared to 1998. Taking only bilateral EU-U.S.
trade into account, it represents more than 7 percent of the
total world trade, as compared to 4 percent between the United
States and Japan.
By the same token, the two sides remain each other's most
important source and destination for foreign direct investment,
with a reported combined stock of over $800 billion U.S.
dollars. The United States supplied 63 percent of all foreign
investment in the EU countries and secured 58 percent of the
EU's total outward investment in 1998.
This reality, combined with the stated need to strengthen
an expand overall relations between the United States and its
European partners, led to the signing of The New Transatlantic
Agenda in 1995. The agenda contains a wide range of commitments
in foreign policy, security, and law enforcement. Yet a
substantial portion of it is dedicated to economic and trade
issues, drawing from recommendations offered by the business
sector on both sides through the Transatlantic Business
Dialogue.
For this reason, this hearing will not only address
specific unresolved issues in transatlantic trade relations,
but it will focus on the potential impact of European actions
and U.S. counteraction on the global arena--in particular on
the upcoming WTO negotiations in Seattle, and I will ask, with
unanimous consent, that my full statement be entered into the
record, and I would like to now introduce and recognize the
Ranking Member, Mr. Robert Menendez of New Jersey.
[The prepared statement of Ms. Ros-Lehtinen follows:]
Mr. Menendez. Thank you, Madam Chairlady. I appreciate this
hearing and the opportunity on one of the issues that I am very
much concerned about, which is the consequences to small
businesses as a result of some of our efforts to try to bring
the European Union into compliance.
Clearly, the European Union is the United States' most
important ally, one of our most important trading partners.
According to the Department of Commerce, the United States and
the EU have the largest two-way trade and investment
relationship in the world. Like our political relationship with
the EU, our economic relationship is extremely important to the
United States, particularly as the world economy becomes an
increasingly global one.
For the most part, we work with the EU through the WTO and
other mechanisms, like the Transatlantic Business Dialogue, to
break down trade barriers and enhance market access. The
conclusion of agreements, such as the December 1998 Mutual
Recognition Agreement, provide transatlantic benefits by
eliminating the need for duplicative product inspection,
testing or certification. We need to look at other ways to
expedite the conclusion of further mutual recognition and
regulatory reform agreements.
However, even allies and partners have disputes. Trade
disputes involving the EU's ban on the importation of certain
bananas and hormone-treated beef, as well as the EU's
promulgation of a regulation preventing ``hushkitted'' aircraft
from flying in the EU, have made front page news. These high-
profile trade disputes unnecessarily damage our normally good
relationship with the EU, and I am anxious to hear from the
Administration about their negotiations with the European
Commission to create an early warning system to head off
potential trade disputes and hopefully their unintended
domestic consequences.
But I would like to take a moment to address the unintended
domestic consequences of these trade disputes. While I share
the Administration's goals with regard to bringing the EU into
compliance on the banana and hormone-treated beef cases, I am,
however, deeply concerned about the impact of the retaliatory
tariffs on American businesses, particularly small American
businesses. By requiring all importers to post bonds equivalent
to 100 percent tariffs on the value of the imported products on
the retaliation list, we jeopardize the livelihood of small
importers throughout the country who may import only one or two
products, and I have several of these in my own congressional
district. I know they stretch throughout the country. These are
relatively small companies that, in fact, only import maybe one
or two products and when, in fact, EU strikes on one of those
two products, you leave them virtually decimated in the
process.
These small businesses are unable to withstand long-term
economic losses as a result of the tariffs imposed on the
products they import. It is extremely difficult for a small
business, for example, that imports liver pate or bed linens,
to understand why they are being punished for the EU's
restriction on the importation of bananas and beef.
That is why I introduced legislation, H.R. 2106, the Small
Business Trade Protection Act, which would exempt small
businesses from the retaliatory tariffs. The bill would limit
companies to importing 125 percent of what they imported in the
previous year, so that small companies do not become a conduit
for circumventing the retaliatory measures.
It seems that economic retaliation is becoming increasingly
common, but that we are not taking into account the domestic
impact of these actions. I hope to hear from our Administration
witnesses what steps the Administration is taking to help these
small, impacted businesses and to prevent further harmful trade
disputes.
Thank you, Madam Chairlady.
Ms. Ros-Lehtinen. Thank you very much, Mr. Menendez.
Mr. Cooksey for an opening statement.
Mr. Cooksey. I am anxious to hear the statements from the
people from the State Department. You know, I am concerned
about the problems that the people in the EU have in overcoming
their cultural tendency to stay with protectionism, which my
colleagues have just referred to, and as we are in this period
of globalization and e-commerce, that is increasing at the
speed of light. I would hope that the State Department holds
the line and does not let our people and our businesses suffer
just because the Europeans cannot overcome their tendency to
keep their roots implanted in the past, whether it be a
controlled market or socialistic tendencies or protectionism,
which certain countries are more guilty of.
So we are expecting you to hold the line and help bring
Europe into the 21st century.
Thank you, Madam Chairman.
Ms. Ros-Lehtinen. Thank you so much, Mr. Cooksey.
I would like to just briefly introduce both witnesses and
then we will recess for two votes. Our first witness is the
Honorable Charles Ludolph, who is the Deputy Assistant
Secretary for Europe, Market Access and Compliance, at the
International Trade Administration. He is responsible for
developing the Commerce Department's market access, country
desk trade and investment activities with Europe, counseling
more than 75,000 U.S. exporters a year and responsible for
assuring that U.S. businesses are aware of the conditions in
all European national markets.
Mr. Ludolph is deeply involved in the Transatlantic
Business Dialogue in implementation of the U.S.-EU mutual
recognition agreements. Since 1988, he chairs the U.S.
Government Committee on Standards Testing and Certification of
the European Union and also chairs the U.S. Government Trade
Promotion Committee, and we thank Mr. Ludolph for being with us
this morning.
He will be followed by the Honorable E. Bryan Samuel,
Deputy Assistant Secretary of State for Trade Policy for the
Bureau of Economic and Business Affairs. Prior to joining the
Bureau, Mr. Samuel served as Deputy Assistant Secretary for
Inter-American Affairs as Director of the Department of State's
office of European Union, OECD and regional affairs and was the
U.S. Negotiator of The New Transatlantic Agenda. Prior to that,
Mr. Samuel was Deputy Assistant U.S. Trade Representative for
North America and has worked extensively on United States-Japan
trade disputes and on agricultural disputes. He is the
recipient of numerous awards for excellence in the economic
field for his accomplishments during his tenure in the Foreign
Service, and we thank Mr. Samuel for being here with us.
Our Committee will be out briefly, and we will be right
back. Thank you.
[Recess.]
Mr. Cooksey. [Presiding.] We will resume the meeting. The
Chairlady will be here shortly.
Mr. Cooksey. Mr. Ludolph, if you would go ahead with your
testimony.
STATEMENT OF THE HONORABLE CHARLES LUDOLPH, DEPUTY ASSISTANT
SECRETARY FOR EUROPE, INTERNATIONAL TRADE ADMINISTRATION, U.S.
DEPARTMENT OF COMMERCE
Mr. Ludolph. Thank you, Mr. Chairman. I just want to
summarize very quickly my remarks. I, first of all, am pleased
that you have invited us here to discuss the importance of the
economic partnership we have with the European Union. We
welcome this Subcommittee's sustained and informed interest on
maintaining the health and stability of our economic
relationship between the U.S. and the European Union.
The Chairperson's opening statement, as well as Mr.
Menendez's early opening statement, characterized the economic
stake we have, so I want summarize there, but I did want to
emphasize that we have a very new situation with the European
Union in terms of a trade deficit. The U.S. trade deficit with
the European Union is growing very rapidly, and it is the
largest that we have had in the history of our relationship and
is now, based on July figures for 1999, $43 billion. That is
accumulating on top of a $60 billion cumulative deficit since
1995. This is a situation that is very, very acute for the
Administration and for the U.S. Government, and we are paying
attention very closely to this serious developing situation in
terms of this new trade deficit.
It is correct, as has been--we agree entirely with the
Committee's characterization of the high interdependence
between the U.S. and the European Union. Economically 6 million
jobs are created by investment in our respective marketplaces,
a total of 6 million jobs, 3 million in the United States and 3
million in the European Union. Therefore, it is very important
to have a well-managed, large, interdependent relationship, and
any relationship this large is going to have trade disputes.
The point and the object of the Administration and the U.S.
Government is to try to keep and address the trade disputes as
quickly as possible and to keep them to a minimum and to solve
them as quickly as possible.
We must strive to resolve all of these disputes so that our
rights and interests are maintained and also so that the
overall, largely trouble-free economic relationship can
continue to benefit both producers and consumers.
I am just going to briefly highlight two bilateral issues
that I think need to be--I would like to draw your attention
to. First is the issue of biotechnology and trade. The
Administration is increasingly concerned over the question of
European Union market access for U.S. agricultural exports
derived from bioengineering. The United States has long viewed
the EU's process for approving new agricultural products
through bioengineering as being too slow and nontransparent. No
new agro-biotech products have been approved in the EU since
1998, and this could affect not only the substantial, the
billions of dollars of worth of exports of agricultural
products being exported to Europe, but also, in turn, policies
that will affect the rest of the world and our exports to the
rest of the world in these products.
We will work energetically with the new EU's new
commission, to encourage this new commission to take a fresh
look at the approval process and labeling issues that they have
adopted to resolve this immensely important issue. If there is
a place where we need to avoid disputes and a place where we
think early warning is important, it is in this area of
biotechnology. U.S. farmers, U.S. companies in agribusiness
have invested an enormous amount of time and money in
developing a position in agribusiness for world exports, and it
is a very important benefit to both the consumers, as well as
producers of food, and the enemy is really starvation that we
are trying to address. So this is a very important area in
terms of early warning but also in terms of our imminent way to
avoid trade disputes.
Let me then just talk 1 more minutes about another issue
that is very much in front of us, which is in the aerospace
area. Aerospace is a key sector for U.S. exports, globally and
certainly with the European Union, and it is a global business.
You cannot sell an airplane just to Europe or in the United
States. You have to sell an airplane geared for a global
market. So we need to have harmonized regulations among all of
the players, both consumers as well as producers, on safety
issues.
One issue that has come to us is the issue of hushkits. The
Europeans have adopted a regulation on aircraft engine noise
that ostensibly is aimed at reducing noise, but in fact,
affects only U.S. producers of hushkitted aircraft and certain
engine manufacturers.
This regulation could affect and is affecting since April
1999 more than $2 billion worth of exports and the asset values
of U.S. airline companies. We have begun a process to develop
an international standard that would meet the European and U.S.
noise requirements that they hope to acquire, but in the
meantime this regulation they have adopted is affecting U.S.
exports in a near-term way.
We are in consultations with the European Commission. We
think those consultations are constructive. We think that they
are beginning now to see that they need to withdraw or begin a
mechanism to withdraw their regulation as we work toward a
solution in the ICAO. We hope that we will have good news for
this Committee, as well as for our industry, on this issue at
least, in the next month in terms of how it is maturing. The
European Commission and its member states are meeting today on
this issue, and so we should have some early information that
we will share with this Committee, if not today, later on this
week.
Let me then just quickly go on to the early warning issue
that you have highlighted in your opening statement. We work
really closely with the Transatlantic Business Dialogue. It is
important for governments, the Administration, as well as the
Congress, to be able to identify early where governments
believe issues need to be addressed, but we believe that the
earliest warning we can get are from the players in the
marketplace, both the Transatlantic Business Dialogue, as well
as from consumers and importers who are affected at the
earliest juncture by these regulations or know of drafts that
will affect them. We have begun in our consultations with these
civil society dialogues, particularly the Transatlantic
Business Dialogue, to get them to identify a list of issues
that they see coming down the road 2, 3, 4, or 5 years down the
road that may affect U.S. regulators, but will affect them; and
so we believe that an important part of this process is the
Transatlantic Business Dialogue and the private sector's being
able to have a broad and free dialogue with both the Commission
and the United States on identifying issues.
Let me just close by saying again, I want to thank the
Committee for holding these hearings. They are very important
to us. I want to thank in particular the Committee's interest
and help in particular that of the Market and Access Compliance
Unit of the Commerce Department. We have been underfunded in
past years, and we very much appreciate the interest this
Committee has shown in our continuing existence.
In summary, the demands on our relationship are very high.
Chances for conflicts in telecommunications, in electronic
commerce, in biotechnology and aerospace are present. The
relationship, however, is just simply too important to us
economically for us to allow issues to go on without effective
solutions that will address trade issues today and over time
will actually strengthen our bond between our respective
peoples.
Thank you, Madam Chairman.
[The prepared statement of Mr. Ludolph follows:]
Ms. Ros-Lehtinen. [Presiding.] Thank you very much, and
before I recognize Mr. Samuel, I would like to recognize Ms.
Danner if she has any opening statements.
Ms. Danner.
Ms. Danner. Madam Chairman, I do not have an opening
statement, but at the appropriate time I would like to inquire
of the gentlemen who are before us.
Ms. Ros-Lehtinen. We thank you so much.
Mr. Manzullo? Mr. Bereuter.
Mr. Bereuter. No.
Ms. Ros-Lehtinen. Mr. Brady?
Mr. Brady. No questions.
Ms. Ros-Lehtinen. Thank you.
Mr. Samuel?
STATEMENT OF THE HONORABLE E. BRYAN SAMUEL, DEPUTY ASSISTANT
SECRETARY FOR TRADE POLICY, BUREAU OF ECONOMIC AND BUSINESS
AFFAIRS, U.S. DEPARTMENT OF STATE
Mr. Samuel. Madam Chairman, thank you very much. Members of
the Subcommittee, I am pleased to have the opportunity today to
review our transatlantic trade agenda. If I may, I will just
briefly summarize my written submission.
I want to discuss the importance of U.S.-EU relations and
the need for cooperation with the European Union in the context
of the new WTO round in the state of play on various trade
disputes. The European economy now has the promise of renewed
vigor, and if growth continues, American firms should enjoy
expanded business and trade opportunities in Europe. Our
relationship with Europe is guided, first of all, by the New
Transatlantic Agenda process, which you mentioned, Ms.
Chairman, in your opening remarks. This ensures that from the
President to the working level we are in regular contact with
European counterparts.
The swearing in of the new European Commission 2 weeks ago
represents a new start for an institution that has been under
heavy criticism. The initial signals are quite positive for
increased cooperation and for progress in resolving our
differences. We also have a new European parliament with
expanded powers.
Last December, the United States and European Union
unveiled a Transatlantic Economic Partnership Action Plan. This
plan was designed to reduce regulatory barriers and more fully
realize the problem of transatlantic trade. Under the TEP, we
are moving forward on Mutual Recognition Agreements and are
working to conclude a model framework MRA for services which
could be followed by agreements in the insurance and
engineering sectors.
The United States and European Union have joined in
creating a stability pact to address regional economic and
political issues in southeastern Europe. The Administration is
drafting legislation to extend unilateral trade preferences for
that region, for the Balkan region; and the EU is moving in a
similar direction.
To alert policymakers to issues requiring attention before
they become intractable disputes, the United States and the EU
agreed at a summit last June to put in place an early warning
mechanism. The EU hushkit regulation, which Mr. Ludolph
addressed, is a good example of the type of issue which could
have been avoided with early warning. We have made clear the
need to make rapid progress in pursuing this mechanism.
Another area of mounting concern is the potential for
European government subsidies for Airbus' development of the
superjumbo plane. We are seeking a dialogue with the European
officials to resolve this issue before it gets ahead of us.
U.S.-EU cooperation is especially important to achieving
our goals in the WTO and the upcoming Seattle ministerial. We
want a market-access-oriented round of negotiations covering
agriculture, services, and industrial goods and structured to
achieve a single package of results in 3 years. We need to find
as much common ground as we can with the Europeans.
That being said, one of the most important U.S.-EU
differences as we approach the Round concerns export subsidies
for agricultural products. We seek their total elimination. We
and the rest of the WTO membership are less willing. We cannot
continue to pay the farm policies.
I now turn to a few WTO cases involving the EU: bananas,
beef and foreign sales corporations. With respect to bananas,
we have offered our ideas to the Commission on the WTO
consistent import regime and sincerely hope the EU will find a
solution satisfactory to our interest, as well as the interests
of those in the Caribbean. Regarding beef hormones, the U.S.
will continue to insist that the EU fully implement the WTO
ruling and lift its unjustified ban on our beef. On foreign
sales corporation, the WTO's final report appears to mirror the
interim report, which gave the United States until October 2000
to bring our legislation into line with WTO rules. We are
considering next steps and among those next steps certainly is
the possibility of an appeal.
Among the regulatory issues that have become a source of
transatlantic tensions, biotechnology, as Mr. Ludolph
mentioned, is particularly visible. Fundamental differences in
approach continue to divide us and are having a significant
negative effect on U.S. agricultural exports. I won't go into
detail now, but simply want to state that we are fully
committed to maintaining a science-based, rules-based approach
to trade in biotech products.
As we grapple with these regulatory issues, I would note
that as Charles Ludolph said, the Transatlantic Business
Dialogue has made a valuable contribution in highlighting
perspectives and areas where improvements to laws and
regulations ought to take place. Similarly, the Transatlantic
Consumer Dialogue and the Transatlantic Environmental Dialogue
are providing us with the perspective of their respective NGO
communities.
Take particular note of the role being played by the
Transatlantic Labor Dialogue in developing support for
incorporating core labor standards into our trade discussions
with the European Union. Finally, the Transatlantic Legislative
Dialogue, with the support of Chairman Gilman, has already
helped to enhance communication among legislators across the
Atlantic.
As you have seen, Madam Chairman, transatlantic cooperation
continues, albeit not without challenges. Thank you for the
opportunity to testify today, and I would be pleased to respond
to any questions.
[The prepared statement of Mr. Samuel follows:]
Ms. Ros-Lehtinen. Thank you so much, and we will begin the
questions with Mr. Menendez.
Mr. Menendez. Thank you, Madam Chairlady. I appreciate both
of your testimonies. In the time I have, I want to address
myself to an issue you have not discussed. I know it maybe
wasn't formally in your agenda, but it is to many people in the
country and to many small businesses in the country. Later, in
a subsequent panel, we will hear from other witnesses, one who
says, I would argue that under the Constitution, my U.S.
company has as much right to government protection as Chiquita,
Dole, and Del Monte, and I believe he is the gentleman who
comes from Mr. Sanford's district.
Another witness that I have invited to come will talk about
how, while we have won our WTO court fight on both bananas and
beef, we still have not gained market access, and Europe is not
particularly impressed by the punitive tariff impact on its
imports, but we are unfortunately creating a crushing blow on
small businesses, as I cited in my opening statement.
Mr. Ludolph, the Commerce Department is commerce abroad and
commerce at home. Can you give me a sense of what this
Administration is doing about the effect that small businesses,
most particularly, are having with these high tariffs we are
imposing on their very limited scope of import activity?
Mr. Ludolph. First, we take very seriously the effect on
the U.S. business in both directions, and we have held hearings
in our process of moving to our retaliation list. We have held
a series of public hearings to try to get at the effect on the
U.S. business community and minimize it to the extent possible.
It is true, however, that many U.S. businesses who import
products and are related to the European dispute are affected,
and we hope that is only for a short time.
We expect to go forward with our negotiations with the
European Commission on both hormones and bananas. These issues
are not over as far as we are concerned, and we continue to
expect to get market access and restore the market for the
companies under the retaliation.
On hormones and on bananas, we continue to work on
solutions with the European Union, and unfortunately, during
that time period, part of our negotiating strategy or part of
the reality is that some companies in Europe and in the United
States who have a stake in trade related to these public
hearings are affected. Our strategy is to go forward with the
European Commission and European Union to get market access and
to restore trade smoothly between the United States and Europe,
both in hormones and in bananas.
Mr. Menendez. How do you choose the items that you are
going to put on the list that affects small businesses in the
United States? I mean, it is very nice to say we hope that in
fact it will be for a short period of time; and it is very nice
to say that it is in the greater good, and we all understand
about sacrificing the greater good, but what I can't quite
understand is the rhyme and reason between the selection of the
items and the relationship between, for example, the things we
are trying to open up markets in Europe on, whether it be the
hormone beef, whether it be the hushkits, whether it be the
whole banana dispute.
I mean, how is it that we choose products that have
absolutely nothing to do with that and that, therefore,
subsequently impose an enormous burden; and what type of
balancing do you do in terms of choosing these items in the
context of domestic disruption on these companies?
I am talking about small companies. You know, the giant
companies, the very significant companies, they in fact have
the wherewithal normally, because they already import a variety
of issues or are diversified in other ways; but these small
companies, at the end of the day, by the time you are finishing
your dispute resolution, they may not exist.
Mr. Ludolph. We are studying the legislation that has, or
the bill that has been offered by this Committee. We understand
very much the point that you are making, as well as the impact
on the small business community. How we choose the products or
how we go about developing these retaliation lists depends very
much on how we can maximize the effect within the limits that
WTO makes available to us, $116 or $190 million worth of trade
to influence policymaking in key countries that have a big
stake and have made a political stake in these issues. So we
are balancing the effect on the U.S. economy, trying to
minimize the effect directly on the U.S. economy and we are
trying to maximize the effect within the limits the WTO
provides on the European economy in order to shift the balance
of negotiations to making a resolution in favor of the
interests and rights that we have under a WTO agreement.
Within that context, you have raised a very important point
about innocent bystanders in a small business, and we have not
yet in this Administration taken a position on this, your
legislation, but it is a very important point, and we are
looking at it very closely.
Mr. Menendez. One last point. Let me just simply say, these
people, they are the lifeblood of America's economy. They are
the ones who create more employment, and they are also the ones
who in fact do not have high-paid lobbyists to come here to
Washington and advocate on their behalf; and that, I think, is
one of the sad realities of their misfortune. You know, there
are opportunities for blanket--you know, you could put a
blanket increase in tariffs. You could go a variety of ways.
These smaller companies do not have the wherewithal to come
here to Congress, to lobby the Administration, and in essence,
they fall between the cracks; and I believe the only lobbyists,
they are the Members of Congress who represent them here, and I
really hope the Administration won't wait for the resolution of
this issue before they come to a conclusion to do something to
exempt those legitimate small businesses.
There are safeguards we offered in our legislation, I
believe that intelligent minds can even create others in which
they cannot be used as conduits for, circumventing what you
want to accomplish, but legitimizing at least that which they
were purchasing, and ensuring that at the end of the day in our
process to help the big companies that these small businesses
do not get affected in a way that--in fact, it is not just
about hurting their businesses. I am talking to you about--I
have heard from many companies who just simply cannot survive
if you continue this for a long period of time.
Thank you, Madam Chair.
Ms. Ros-Lehtinen. Thank you so much, Mr. Menendez, and we
echo those worries as well.
Mr. Cooksey.
Mr. Cooksey. Thank you, Madam Chairman.
We have discussed the issue of hushkits previously and in
other Committees that I am a Member of, or Subcommittee, and I
have been trying to get an answer, and I think the other people
are trying to be diplomatic or evasive. I know diplomacy is
your middle name, but I would really like to get an answer
about who is causing the problem about hushkits. You can come
out and say, it is this country or this company, and that will
be a short answer to my question. If you will do that, fine.
But if you are still going to be evasive like the other people
were on this issue, just tell me what companies and what
countries would benefit from our hushkits not being available
in that country.
Mr. Ludolph. I hope I am not evasive, but I don't know if I
will measure up.
Let me just start by saying that who is behind hushkits are
airports in Europe. Airports in Europe are politically now
becoming very active in pushing for reduced noise. That is
politically then, and economically--the response to that
pressure has become the hushkit regulation which is utterly
useless as far as we can tell and does not respond to the
concern of airports. So where the pressure is coming from is
airports.
The European Commission and the European Parliament are at
pains now to try to explain to airports that this hushkit
regulation doesn't really reduce noise; and that is where the
pressure is coming from, and that is where the political
problem is. Once you have adopted a regulation that doesn't do
what it is supposed to do, it is very hard to walk back.
Who would benefit if the hushkit regulation is sustained
are a series of companies, in particular Airbus and Rolls
Royce, and the countries that would benefit, aside from
essentially all 15 countries, think they would benefit from
reduced noise, but the countries that would benefit are the
countries that produce Airbus and Rolls Royce engines.
Mr. Cooksey. That is a good answer, and that answers my
question to a great extent. What are the chances of repeal of
the hushkit regulation as it is currently written by the EU?
Mr. Ludolph. The chances are less than even money; they are
less than 50 percent. The repeal issue is being reviewed by the
member state governments today in Brussels. My supervisor,
Under Secretary Aaron, has been on the telephone with the
European Commission, commission representatives, not the
Commissioner, Ms. de Palacio, but with the European Commission
staff as well as with the key member States who will be sitting
on that board today to discuss the repeal issue.
We believe, and my minister, my under secretary has
indicated, that we really have no way to go if there is a
decision not to entertain a mechanism for withdrawal or repeal
today; and we are waiting with great interest, again, hope with
some optimism, but with great interest to see what this
decision is.
Mr. Cooksey. Thank you. Very good answer.
Mr. Samuel, a question about the science-based rules on our
ag products or trade of ag products, and this is similar to the
question about the hushkits. There are countries that would
benefit probably more so than others, that are larger ag
producers.
Great Britain had a lot of hysteria. What are the other
countries that have had hysteria on this issue? I mean, I saw
the newspaper stories, and they were saying that monsters would
be created by people consuming these genetically engineered
products, by primarily Monsanto and DuPont, which have been
good for agriculture, but what other countries are involved
besides Great Britain?
Mr. Samuel. The entire issue of food safety has really come
to the fore in Europe from a number of instances. The first, of
course, is the mad cow disease problem in Great Britain, and I
think that has gotten a large part of the British population
concerned about the government's ability to regulate the safety
of food. In recent months, we have seen some other examples in
Belgium where dioxin was somehow introduced into animal feed
and was then passed on into meat products, meat and poultry
products. So certainly Belgium has shown these concerns. There
was the Coca-Cola flap not too long ago.
Among the countries certainly that have been looking at
this have been France, Italy, and Great Britain, and I would
say that is where there has been really--and Belgium--have been
the largest sort of political reaction and difficulty for those
governments in dealing with biotech products and convincing
their people that biotech products are, in fact, safe.
Other countries we have had a better dialogue, I would say.
For example, the Netherlands have had a long and very mature
type of regulation in place on these products, and we found a
way to deal with that market, but it is the uncertainty in some
of these other larger markets. Mr. Ludolph mentions Austria as
another good example.
Mr. Cooksey. One closing question. If we were in a meeting
of an EU country this morning and we were members of parliament
in France, the UK, Italy, and Austria, whatever, one of the
other countries, what are the charges they would be making
about the United States? What would they be saying about us
this morning? What are their major trade issues with us? If you
could just briefly give me the top three.
Mr. Samuel. Certainly, I would say, first of all, it would
be sort of unilateral trade actions which they charge us with,
and in this area, would be sanctions, on our sanctions policy,
that they sometimes feel they are affected by that.
Beyond that, I suppose it would be various subsidy issues
that would be partly--this is them trying to find a way to
lambaste us with the same sort of charges which we, I think
more rightly, make against them, and so they bring up again
some of our agricultural support policies, and I think that is
mostly a defensive mode, and similarly, in the Airbus sort of
trade and aircraft, they bring up defense programs and whether
or not these are subsidies.
I would say a third area is certainly State and local
practices that they feel go beyond the borders to affect them,
and perhaps you recall there was an issue having to do with the
State of Massachusetts, proposed restrictions on procurement
based on trade with Burma, and that again certainly energized a
number of the member states.
Mr. Cooksey. I have many more questions. I have more than
used my time. The chairlady has been more than gracious, and
thank you for your answers.
Ms. Ros-Lehtinen. Thank you so much.
Ms. Danner?
Ms. Danner. Thank you very much. My question will be
directed to you, Mr. Ludolph. My colleague just spoke of the
fact that some of us have heard about hushkits in other
Committees. Interestingly enough, quite a few of these Members
of this Committee are on that other Committee which is
Transportation and Infrastructure, and one of the things we
learned there was that with regard to the hushkits, the
decision was not made on noise decibels, but indeed upon
design, and that the design really reflected only American
design.
Would you like to tell us a little bit more about that
because, you know, the idea that it is simply to reduce noise
because airports want it, airports don't really know what kind
of a design is in that hushkit. They only know about noise
decibels, and yet that is not really what we are talking about.
Mr. Ludolph. I can't add very much except that this has
been the most astounding breach of the European Commission's
regulation for the past 40 years of practice in terms of
developing aerospace standards. You cannot really design either
an airport or an air traffic control system because much of
noise reduction has to do with the operation of the planes, not
the design of the planes. You can't really run an international
air traffic control system or design an international aircraft
based on having a lot of regional or national design
requirements. It would be a kind of Rube Goldberg type of
invention that would be flying around. It wouldn't be very safe
and it wouldn't be very energy efficient, if you tried to put
all of these design requirements for national requirements in,
and this is the major problem.
More than the fact that this little rule is going to affect
or is affecting $2 billion worth of exports today, which is not
only affecting but is eliminating $2 billion worth of exports
today. The major problem is that for 40 years we have had an
international standard system that has supported the growth of
air traffic globally. This little rule is the example of a
major breach in this system that could very well bring the
system down.
ICAO could be a thing of the past if this regulation is
sustained, with the effect that neither the Europeans nor the
U.S. will have effective noise control in the future because
Russia and Indonesia and all of these other countries will be
flying planes and operating them based on national standards
rather than international standards.
So this is a very grave problem that needs to be addressed
in a larger context.
Ms. Danner. Might we hope--and I think I sense some
optimism on your part--that with the new commissioners and the
new parliament that we might have a different approach to this
problem?
Mr. Ludolph. We also have had early meetings--again not
with Ms. de Palacio, who is in charge of this issue, but early
meetings with the new commission last week, and we do seem to
have new possibilities. So we are optimistic that this
commission will be taking a fresh look at the hushkit issue, as
well as several other irritants, and we expect that this would
be a very positive outcome.
Ms. Danner. One last question. You can tell that I
represent--TWA's largest number of employees live in my
district, so I am obviously always interested in aviation, but
I also represent 27 counties, so obviously I have a rural
constituency as well. My question is, do you or your
organization, Commerce Department, relate to Barshefsky when
you all determine what we are going to--and I followup on my
colleague's question with regard to what we are going to ban in
our country as they ban our beef. Because in looking through
this, I find that over half the articles that we are banning
are meat articles, and we are not really short on meat in this
country, and then two of them are pates. One is truffles. I
mean, these are not things that the average American sits down
daily to eat.
Why did we not, if you have the knowledge, and obviously I
need to inquire of her, why did we not address the things that
we really look for from those countries, wine from France,
Spanish goods from--pardon me, leather goods, I should say,
from Spain and from Italy? We really have touched things that
are not relevant, it seems to me.
Mr. Ludolph. Let me just say that our theory--and we worked
very closely through our industry sector advisory Committees
with the private sector. We have a small business, ISAC, that
we work closely with in terms of reviewing the impact of these
retaliations and looking at the overall policy of how to go
about this. But let me come back to the question of what our
theory is.
Our theory is to try to move the negotiations forward. We
don't see retaliation as the end of the issue. It doesn't serve
anybody's interest not to be exporting beef to Europe nor to
stop the import of products coming from Europe. Certainly, that
is not what the U.S. expects from WTO dispute settlements.
The theory is to make the pain of retaliation, to visit it
on the people who are benefiting from the protection. Animal
growers, animal farmers are the beneficiaries of the protection
that the Europeans put in place. Beef hormone is a
protectionist device to protect cattle ranchers in Europe. So
the theory is, we should then be inflicting pain on meat
products from Europe, and so that is why we emphasize meat.
Ms. Danner. So that theory is very relevant if we import a
lot of meat products from Europe, but if we are not importing a
great many meat products, it loses its relativity. I think,
from the light, my time has expired.
Ms. Ros-Lehtinen. Thank you, Ms. Danner.
Mr. Manzullo?
Mr. Manzullo. Thank you. As a cattle producer, you might
think that my question would be self-serving, but I am not
going to touch that issue. I want to talk about eggs.
We received a letter from Malquist Butter and Eggs, a major
egg producer in our congressional district. The Europeans must
stay awake 24 hours a day thinking about the various ways that
they can come up with these nontariff barriers. The latest is
that they won't allow any U.S. inedible egg products. Not the
incredible egg but the inedible egg products that are used for
pet food, et cetera, unless the American manufacturers add
fishmeal to the caramel coloring as an additional safeguard.
Yet the Europeans themselves are not required to add fishmeal
and caramel coloring. This is this is ridiculous.
My question is, first of all have you heard of this latest
one?
Mr. Samuel. No.
Mr. Ludolph. No, sir.
Mr. Manzullo. It is not because you are not knowledgeable.
It is because there are so many of them that come up day after
day after day. But what I was going to ask was did it fall
through the early warning system.
Mr. Samuel. It sure did.
Mr. Ludolph. You are our early warning, so we appreciate
the aggressive Committee--I don't know--it may be that U.S.
really has----
Mr. Manzullo. I really don't have any further questions to
ask.
Mr. Ludolph. If you could give us that material, we would
like to followup on it.
Mr. Manzullo. Absolutely. It is a letter that has been
circulated by Congressman Blunt going to Charlene Barshefsky,
and of course, we are signing on to it. I was going to ask a
question on it, but unless you wanted to comment on something
of which you have knowledge, I will just let somebody else ask
some more questions.
Mr. Samuel. We will be happy to followup. Our colleagues at
the U.S. Department of Agriculture may, in fact, know about it,
and it is just a lapse on our part.
Ms. Ros-Lehtinen. Mr. Manzullo is on the cutting edge of
the Information Age.
Mr. Bereuter?
Mr. Bereuter. Thank you, Madam Chairman.
Thank you for your testimony. I don't have many questions
for you at this stage. Thank you again for your presentations.
First of all, I will come back to some things that Ms.
Danner and Mr. Cooksey have talked about, specifically the
subject of genetically modified organisms. I think it is
probably important that you seek the information from our own
industrial agri-industry sources because the Europeans are
consuming extraordinary amounts of GMO products already by
European production. This is a kind of a red herring, but I
don't think that the European public probably understands that
this was a subject they might have addressed 10 years ago with
respect to their own products. This is some ammunition you need
to have on your belt.
The second thing I would say is that we need to reaffirm
the principles related to the sanitary and phytosantary accord
in the Uruguay Round, the SPS. Unfortunately, European
consumers do not have an FDA. They, therefore, I think are more
subject to scare tactics and concerns created by what happened
in Britain and Belgium.
I don't know if there is any effort on the part of the EU
but we really do need to insist on regulations, including
tariffs and nontariff barriers, that are based upon sound
science and which are based upon risk assessment. We have a
capacity, of course, today to measure one part for 4 billion
and beyond, and the scientists that come before us tell us it
is scientifically impossible to prove something is safe. You
can prove it is dangerous, but you cannot prove it is safe.
Risk assessment needs to be a factor or we cannot stop any
nontariff barriers that are placed against our products. It is
just impossible.
It goes back to the infamous Delaney clause in the United
States which hounded our own production and consumer sector. I
hope that we can really get them to focus on what is sound
science with respect to the products that we hope to export to
Europe. We need to put teeth into agreements to reiterate that
sanitary and phytosantary accord was supposedly put in place by
the Uruguay Round. It was put in place, but whether or not it
is violated more often than not, I don't know.
When we listen to Europeans talking to us today, moving to
another point, including members of the European Parliament, it
is clear that they are preparing their arguments against the
agricultural subsidies that we are voting for. We are going to
provide more financial assistance to the farm sector this year
than any year since the mid-1980's. We are about to put more in
there, but it is important that we cause the Europeans to admit
that there is a distinction between trade-distorting subsidies
and those that are not trade-distorting.
Ours are transition payments for the most part, and they
are increasing the transition payments. What they don't do is
distort trade. They are not putting us in an advantageous
position to compete for Third Country markets. Through their
subsidies, the Europeans have Taken Third country markets from
us. They will prepare to make a general assessment about what
we are spending in agriculture versus what they are spending
and say, ``See, you do it, too.'' The difference is whether or
not it is trade-distorting or nontrade-distorting. I think that
needs to be the focus. It is clearly part of their tactics and
strategy for the next round.
Let me just say one more point. I think we really have to
cultivate sound relationships with some of the countries that
are most affected by these nontariff barriers and the
subsidization of their export sector. Those countries include
Australia and New Zealand which are really hurt more than any
other countries by the trade war that we find ourself in with
the Europeans in trying to combat their trade-distorting
subsidies with some of our own. We don't fund them as well, but
still, it is the Australians and New Zealanders who are really
most directly affected by this.
I hope that perhaps you will try to revive or work with
anything that looks like the Cairns Group that might be
continuing or reestablished.
I guess I would ask you one final question as a part of
this. What do you think we can do to put in place effectively
the SPS accord in the Seattle Round?
Thank you, Madam Chairman.
Mr. Samuel. Just briefly, thank you very much.
Many of your statements sound just like the talking points
that were prepared for me. We agree 100 percent on what you are
saying on biotech and on genetically modified organisms, that
we have to have a science-based system. The Europeans have to
adopt a science-based system. We are working in several areas,
most importantly in the Codex Solimentaries, which is
identified in the WTO as the body that is responsible for this.
Europeans have introduced what we consider suspect notions
of precautionary principles into the work of that Committee.
Mr. Bereuter. Would you remind my colleagues of where the
Codex is funded and run?
Mr. Samuel. Sure. It is run out of the FAO and the
international organization.
Mr. Bereuter. When we think about authorizing money for the
FAO, we might think about the Codex.
Mr. Samuel. That is right. So that is very much an
important organization in trying to maintain its principles of
sound science.
We are doing work also at the OECD on what are the
regulatory procedures that different countries have in place
and how they can be effective. So we agree completely with your
statements on the need for sound science, and that is the way
we are promoting it with the Europeans.
I agree, too, as I mentioned in the earlier question, that
the Europeans are trying to stretch the plane and incorrectly
referring to our farm support programs as trade-distorting or
in any way a violation of the agricultural agreement from the
WTO. We are watching our amber box limits as we move forward,
and as you mention, our own export subsidies are minimal
compared to the Europeans.
We have been working with the Cairns Group. Secretary
Glickman was at their last meeting in Buenos Aires. We will
continue to work with the Cairns Group and would like to and
have in fact adopted very many similar positions. I note the
language on export subsidies in the recent APEC declaration
which was us working with Australia and New Zealand, I think to
get good language on elimination of export subsidies.
As far as the SPS agreement itself goes, we think that it
is a good agreement. It needs to be implemented better. We
don't want to see it reopened in the new round. We want to keep
it as it is; and the way to have it done, I think, is to keep
raising it again and again as a red flag with the Europeans
when we see examples, such as this egg example that Mr.
Manzullo mentioned. I think in its use that it is going to be
proven that it stands up in dispute settlement cases that we
have already seen on the hormones case. So, again, if it is of
use we will stick with it.
Mr. Manzullo. Mr. Brady.
Mr. Brady. Thank you, Mr. Chairman. I want to continue on
food safety.
First, I realized as Mr. Cooksey of Louisiana was talking
that we might have a perfect example that could reassure the
Europeans about food safety and the strength of the human body.
Louisianians have been both eating and marketing boudin for a
century. It is a sausage that defies genetic identification,
has a shelf life of 50 years and could be the next scientific
element just by itself, and every time Texans think we are
special and smart, we realize that the Cajuns have talked us
into eating that stuff, and so we are not all that bright.
You might want to use that example the next time they get
concerned over there.
In effect, today, as we know, we have a fresh start in
Europe. Although optimistic about it, and every time there is
an opportunity for change, we are not sure that is going to
occur. Earlier this week I noticed an announcement by David
Byrne of Ireland, the new EU Commissioner for Health Consumer
Protection, that in October he will be releasing in effect a
white paper outlining some of the principles of food safety
inspection for the future.
My first question is, what do you anticipate different, or
are we working with his office to at least identify areas of
common ground? Second, how do we make the case much better on
issues such as bananas? The issue isn't bananas; it is the
integrity of the World Trade Organization, that if we don't
have a dispute resolution that is timely, where the appeal
process is clear, that really jeopardizes trade all around the
world. Bananas are so much important because of that integrity.
Do we need to be raising the need for changes? Have beef
and bananas or other disputes identified some areas within the
appeal process that need to be clarified so that there is more
timely response? So the first one is, do we anticipate anything
different with Mr. Bern's report? Second, you know, are we
contemplating initiating, pushing for changes that could help?
Mr. Ludolph. Let me just start, Congressman, with the issue
of food safety. My minister, Mr. Aaron, met with David Bern's
chef du cabinet on the day that Mr. Byrne was sworn in. Mr.
Byrne has testified in addition to his comments about putting
out new food safety regulations that would restore confidence
among consumers in Europe and is intended to do that. He has
also stated that he is very dedicated to the issue not only of
consumer protection but also of sound science. These are very
important statements that were amplified and expanded in our
discussions Friday a week ago in Brussels with the his chef du
cabinet, Mr. Martin Power.
We have taken two steps here in the U.S. Government with my
colleague, Mr. Samuel. We have started an outreach campaign on
GMO's and on food safety dedicated to be addressing a lot of
the European concerns, and we have suggested to Mr. Byrne that
a joint government public hearing on the issues of science and
how science supports agrobiotech issues and biotechnology food
be held at an early juncture by the Commission, and that idea
is beginning to be very well received under this new
Commission. It went nowhere all summer under the hiatus we had
with the Commission's changes.
Finally, this January in The Hague, the U.S. Government
with the U.S. business community are inviting 300 scientists to
come together in The Hague to address the issue of
biotechnology in food. We want that conference to be in The
Hague, particularly because the Netherlands is very supportive
of what we are looking at in terms of sound science and
addressing the issue of precautionary principle, and Mr. Byrne
is also interested in participating in that conference.
These are changes that we see in the new Commission and a
new kind of willingness to look at sound science and as it
supports consumer protection. Their idea, as you point out, is
to move to bring confidence back to their consumers, and we
have to make sure, and I think this commissioner now is showing
that sound science is going to be really the only objective way
to support that policy.
Mr. Samuel. On the dispute settlement system of the WTO,
you are correct that the bananas case, first and foremost,
showed that there was a glitch in the system. It threatened to
become what we call an endless loop of litigation where one
country says, oh, no, it has done exactly what it is supposed
to do and the other country say, no, and they say, well, take
us back and start from the beginning on dispute settlement.
So that was resolved actually through some panels during
the course of the banana proceeding, we think in our favor, our
argument, in fact, that the panel that reviews the retaliation
is reviewing at the same time the implementation and the
consistency of the implementation.
We are in the process very much of working in Geneva. Our
Deputy General Counsel at USTR has taken the lead on this in
working with counterparts in Geneva to fix this glitch in the
WTO dispute settlement procedure. We think, first of all, it
will end the dispute about what the procedures are themselves,
and so of course not provide an opportunity to string it along;
but second, we think we can sort of trim some of the time
schedules. So we have learned now in the course of several
years since the course of the WTO that some of the 90 days,
don't need to be 90 days or the 60 days could be a little bit
less, and so we are working on that, too, and we are optimistic
that we will finish these consultations and get an agreement by
the time, if not before, certainly by the time of the Seattle
ministerial.
Mr. Brady. That is very important, and Mr. Ludolph, any
opportunity we get a chance, not only with the Commission, but
the European Parliament members who are directly elected, who
in their town hall meetings have to face the issue of food
safety, my experience with them; and as we had an
interparliamentary delegation to Texas to look at ag research,
GMO's, issues such as food safety, I think education, any time
we get an opportunity to educate members of the European
Parliament, as well as the Members of the U.S. Congress
together on this issue, it is worthwhile. I don't see it as an
artificial trade barrier, but a very real one where we have to
do a lot of work any chance we get; and I hear from our
European parliamentary members they want to be involved in
solving this as well. So just an observation.
Mr. Manzullo. OK.
Mr. Burr.
Mr. Burr. Thank you, Mr. Chairman. I really came to listen
and not ask questions, but I think Mr. Bereuter stimulated
something that I want to followup, and it is not so much a
question as it is a statement.
Let me suggest to both of you that sound science is an
important issue. Unfortunately, I don't think, yet, sound
science trumps politics, and for that reason, I am not too
confident that sound science will be a dominating or
determining factor on decisions that are made relative to
positions on trade.
I am sort of curious as to how the EU will respond when
hopefully this Congress addresses the tremendous ag disaster in
North Carolina this year.
I think the case will be made that North Carolina can't
take any more loans. They have to have direct payments. I am
sure that will create a new, if we are able to do it, crisis in
the relationship of the ag community and what the U.S. does to
the ag farmers, because we have, in fact, complained about
direct payments to farmers in the EU for some time, and clearly
that is not going to change in the foreseeable future.
Mr. Bereuter raised the question about health, and I want
to go specifically to that. He also raised the question of a
food and drug Administration. One of the attempts for one of
the mutual recognition agreements dealt with our acceptance of
European standards for drug approval and device approval, but
we are in a different situation. I think that we indeed have
the gold standard of that process, one that I have fought very
hard to protect.
The EU is in a different situation because, upon its
formation, they accepted the standards of all members, a wide,
varying array of standards that existed, some with a little
more credibility than others--not to highlight countries, but
clearly a system that I hope this country does not adopt with
open arms, a mix of 22 different approval processes that we, in
turn, turn around and assure the American public, this is all
safe and effective. I do believe that the most difficult thing
that we have to deal with in the future is not our trade
agreements, but it is our ability to harmonize the
international standards.
We can have explosive trade, but at some point, we hit a
wall that is so high because of our inability to harmonize
those global standards that it will bring trade to a
standstill.
I will let either one of you, or both, comment on anything
that I have referenced.
Mr. Ludolph. I appreciate and understand very much the
concerns that this Committee and other Committees have raised
on the implementation of MRA's and the implications it has for
harmonization, not only with the European Union that has
relatively high standards of regulation and enforcement, as
well as safety to protect their consumers and environment, but
more importantly with other countries outside the European
Union that have more difficulty not only developing high
standards, national standards, but enforcing them.
I have just come from a meeting of the Transatlantic
Business Dialogue this morning in which we discussed the
implementation of the medical device, MRA, and the slow pace,
the unsatisfactory--from a business community's point of view,
the slow pace of implementation. Implementation of the MRA and
medical devices, and for that matter, pharmaceuticals is slow
because the FDA is holding to its position that they must
inspect every one of these foreign inspect orates in the
European Union before we go forward with turning over
inspections to either conformity assessment bodies or private
bodies in Europe or with the governments.
So we expect that instead of a year's delay in developing
an MRA or implementing an MRA and medical devices that it may
take as much as another year before the FDA is satisfied that
medical device enforcement and procedures in Europe meet their
high standard for delivering safe products here in the United
States. That is a delay we are prepared to take, and that is a
delay that will be inconvenient to the constituents and the
business community for what they hope an MRA is going to
provide.
Mr. Burr. Let me note for the record that last year,
though, there was tremendous pressure on the FDA by our
negotiators to expedite that mutual recognition agreement, even
though serious, serious questions remain. So I thank you or
those who are responsible for allowing the FDA to go through a
thorough process, because I believe that the speed with which
they were asked to rubber stamp an agreement would, in fact,
break the gold standard that many people in the country have
grown to trust.
Mr. Ludolph. We very much appreciate the hearing that was
held last year on this issue, and it brought home a lot of
issues that had to be addressed by the FDA, as well as the
trade community.
Ms. Ros-Lehtinen. [Presiding.] Thank you so much.
Mr. Crowley.
Mr. Crowley. Thank you, Madam Chair. This is concerning the
hushkit issue in terms of the EU. Can you tell me why you think
that was imposed?
Mr. Ludolph. I am sorry, why the Europeans----
Mr. Crowley. Was it purely for noise control or was it
punitive, in your opinion?
Mr. Ludolph. Both. It was originally proposed under the
assumption or under the unexamined assumption that it would
address noise. It does not address noise. Today I can't really
persuade you that it has any other effect than protecting or
disrupting or eliminating certain kinds of technologies that
only American companies make for the European market.
So, originally it was proposed as a noise regulation. We
have brought it to the attention of European Governments that
this does not address noise at all and has the explicit effect
of eliminating more than $2 billion worth of trade.
Mr. Crowley. In other words, you are saying there is no
discernible difference between a hushkit engine and a fitted
engine that is already meeting those standards?
Mr. Ludolph. The hushkits are forbidden under this rule,
and there are about 1,800 airplanes in the world that would
benefit from hushkitting. So this would have an effect on them.
A more expensive way of retrofitting these 1,800 planes is
to reengine them. Many airlines can't afford to go this more
expensive way of reengining, and in many technologies, many
airplanes won't even support reengining with any effect. So all
of these proposals that the Europeans have come up with in
terms of design or technologies would really have little more
effect than taking airlines and aircraft out of the European
market.
Mr. Crowley. What steps are you yourself or the
Administration doing to address the issue?
Mr. Ludolph. David Aaron, my Under Secretary of Commerce,
is on daily phone calls because there are key meetings this
week in Europe on how to go forward. Our policy is to continue
to work with the FAA and the European Union on about a 14 month
program in ICAO to develop an alternative noise reduction
standard. Meanwhile, we have lost $2 billion worth of business
because the effect of their proposal is to eliminate our
competitiveness.
We also, therefore, need a second step. In addition to the
14-month harmonization of standards, we need the European Union
to withdraw or to begin a mechanism to withdraw that regulation
which does not contribute to noise and does not contribute to
the ICAO process.
The European Union are deliberating on our proposal for
withdrawal this week and through the rest of this month and in
the early part of October. I have already indicated to Mr.
Cooksey that we will get reports on a regular basis this week
and next, and we will be sharing that information with your
Committee.
Mr. Crowley. We would appreciate that information. Thank
you.
[The information referred to follows:]
Ms. Ros-Lehtinen. Thank you so much for an excellent
presentation, and as you can see, the issue of hushkits and as
Mr. Menendez brought out, how all of these tactics of the EU
impact on domestic small businesses is of great concern to this
Subcommittee; and we look forward to continuing our
conversation with both of you and your Departments. Thank you
so much.
We would like to introduce our second panel. It leads off
with Mr. Willard Berry, who serves as the President of the
European-American Business Council, formerly the European-
American Chamber of Commerce. Prior to joining the Council, Mr.
Berry led several national and State organizations involved in
international trade with primary emphasis on export issues. His
most recent assignment was that of Vice President for
Congressional Affairs at the national foreign trade council in
Washington from 1988 to 1992. Mr. Berry's background extends
beyond his experience as a trade associate executive, and he
has also served as a university professor for almost 10 years.
He will be followed by Mr. Rick Reinert, President of REHA
Enterprises. Mr. Reinert is a constituent of our colleague, Mr.
Sanford, a Member of the International Relations Committee.
Our final panelist is Mr. John Roberts, President of the
National Association for the Specialty Food Trade. Our
distinguished Ranking Member, Mr. Menendez, will introduce his
constituent.
Mr. Menendez?
Mr. Menendez. Thank you, Madam Chairlady. It is my pleasure
to welcome John Roberts, who is the President of the National
Association for the Specialty Food Trade. The NASFT is a not-
for-profit trade association which represents members who work
with high-value food items, including many small importers.
Recently, Mr. Roberts was appointed as a member of the U.S.
Department of Agriculture's Agricultural Policy Advisory
Committee for Trade and as an advisor to the Foreign
Agricultural Service. He resides in New Jersey, which is the
Garden State, and is a graduate of Seton Hall University, and I
believe he will testify about some of the domestic impacts of
U.S. retaliatory trade measures, and we appreciate you coming
from New Jersey today to give us your insights.
Ms. Ros-Lehtinen. Thank you so much for a most excellent
witness, and I would like to recognize Mr. Sanford so he may
introduce his constituent, Mr. Reinert.
Mr. Sanford. Madam Chairwoman, I would simply like to
introduce Rick as a hardworking American taxpayer from
Summerville, South Carolina, and I think that unfortunately if
what exists right now stays in place, Rick will basically be
the personification of the terms ``friendly fire.'' We all know
those movies wherein somebody is caught at the wrong place at
the wrong time and through no fault of their own they are
getting fired on.
Rick isn't getting fired on. He is getting bombed, and if
something doesn't change, he will truly be a casualty of war.
This is going to be tragic, given his background, in that he
served our country honorably in the U.S. military. During his
service with the army he was stationed in Germany for 3 years.
When he was there, he found a couple of products that he
liked. When he returned to the United States, he began
importing those products. One thing led to another--similar to
many American success stories, and Rick moved his business from
his basement to a 6,000-square-foot building. He grew a
successful business and things were going fine; and then all of
a sudden a trade war erupted, which brings us here today.
I would just say that I would beg of you to really listen
carefully to his story because what has happened to Rick
undermines the very principle on which trade practices are
built, and that is, trade law is supposedly about fairness,
making sure that one country has a fair relationship with
another country. What is going on with Rick right now makes a
mockery of the word ``fairness.'' .
I think it raises a dirty little secret that is happening,
similar to that of Bob Menendez's constituent: if you happen to
have the right lobbyist in Washington, to be the subject of
this problem. In other words, the dirty little secret here is
the power of money in Washington. For Rick, who can't afford a
lobbyist in Washington, to be the subject of this unfair trade
practice, again, makes a mockery of what we are trying to have
in place with our trade practices. I won't usurp his story, but
I would ask that you listen to it carefully.
Ms. Ros-Lehtinen. Thank you so much, Mark and Bob, for
providing us with such excellent witnesses who are on the front
lines of this trade war.
I would like to tell our panelists, as well as our
Subcommittee Members, that we need to be out of this room, at
the latest, at 1:05, because there is a 1:30 meeting and they
need the time to clean up after us, especially me. So if you
could please limit your time, and I am going to be closely
monitoring it. Thank you so much.
Ms. Ros-Lehtinen. Mr. Berry, we will begin with you. We
will be glad to put all of your statements into the record so
if you could summarize them that would be great.
STATEMENTS OF WILLARD M. BERRY, PRESIDENT, EUROPEAN-AMERICAN
BUSINESS COUNCIL
Mr. Berry. I will do that. Thank you, Madam Chairperson and
Members of the Subcommittee, for this opportunity to testify
and holding what we think is a very important hearing. The
Chairperson, in her opening statement, and some other witnesses
have remarked on the substantial character of the trade
relationship. Today, we are releasing this study. The Members
of the Subcommittee should have it, which is a State-by-State
analysis of trade and investment.
Ms. Ros-Lehtinen. We have all of those. Thank you.
Mr. Berry. But in the short period of time I have, I would
like to focus on the quantitative aspects of the relationship,
pointing to the enormous amount of jobs and that the number of
jobs, which is 3 million on each side, is doubled when you take
into account indirect employment.
When you look at the 12.4 million jobs in the United States
that are supported by exports from the United States to Europe,
when you look at the size of the exports, one of the things
which cannot be reflected in this study because of the way the
data are produced on a State-by-State basis within the
government agencies that collect the statistics is how that
growth has changed over just the last year.
New EU investment in the U.S. jumped from $26.7 billion in
1997 to $103 billion in 1998. That is an increase of 385
percent. At the same time, new U.S. investment in the EU leapt
from $18.9 billion in 1997 to $54.5 billion in 1998, an
increase of 288 percent. The total increased investment
relationship is nearly $900 billion. This is what we must
comprehend about the relationship.
Policy should be guided by an awareness of these strong
phenomenal ties. The factors that underlie this market
integration process should be better understood. Policies which
reinforce and support this dynamic should be pursued. These
developments would not be taking place were there not many
commonalities between the two markets: a common market-oriented
approach, shared competitive orientation, shared leadership and
technological developments, corresponding business practices
and compatible legal frameworks and commitment to global trade
rules. These factors and others define substantially
transatlantic cooperation.
Policy makers have, to a large extent, focused their
energies on the disputes and, in the public mind, these
conflicts define the European-American relationship. There has
been bilateral cooperation in approaching and managing a number
of areas: the emerging electronic marketplace,
telecommunication standards. There has been real progress
through extensive dialogue on data privacy which 1 or 2 years
ago was considered a very, very risky issue. There have been
other advances toward regulatory cooperation, mutual
recognition and, as some of the witnesses before mentioned,
early warning.
For the most part, however, the conflicts have captured the
attention of policymakers. This is not only unfortunate, but in
the long run, removes key officials from the real vitality that
the transatlantic commercial relationship involves.
Is the focus wrong when the total sanctions on bananas and
beef, $308 million, is less than three-tenths of 1 percent of
new EU investment in the U.S. last year?
There are a number of things that I could say--some
specifically--about the disputes. Clearly some changes need to
be made. There has to be more cooperation. We are particularly
concerned that there hasn't been more cooperation between the
U.S. and the EU in their approach to the WTO ministerial
agenda. We are pleased with the early warning. We are pleased
with a lot of the things that have developed within the
Transatlantic Business Dialogue.
I would be very happy to answer any questions. Thank you.
Ms. Ros-Lehtinen. Thank you so much, Mr. Berry.
[The prepared statement of Mr. Berry follows:]
Ms. Ros-Lehtinen. Mr. Reinert.
STATEMENT OF RICK REINERT, PRESIDENT, REHA ENTERPRISES, INC.
Mr. Reinert. Thank you, Congressman Sanford, for your kind
words, Madam Chairman and honorable Members. Let me first start
off by apologizing to all of you because I am going to use this
forum to discuss my problem and my company basically.
I brought with me a banana. This could have been produced
by Chiquita, Dole or Del Monte. I have also brought our product
along, which is Ombra Bath. This is our product we distribute
right across the United States and if you look at the back of
this product, there are no banana derivatives in this product.
The shape is not banana like, the smell is not banana like, it
is not yellow.
So my question is, why since March 3, 1999, do I have to
pay 100 percent tariffs on this product? I also would question
and point out to you that it has already cost me $20,000, and
this money I believe is mine. It is not the U.S. Government's
money. This is the money that is collected from honorable
business basically in the form of profits. Now, I have to give
to it the U.S. Government because they decide to make this
punitive trade action on Europe.
When I first learned about this whole thing it was through
Time magazine in February 1999. At that time, it was pointed
out to me by the USTR that the public debate period had closed
already in November 1998, and the USTR was very surprised that
I was still importing this product, but I would question them,
what would they have me do? Would they have me crawl into a
hole and close my business because they decided my business was
not worthwhile or my product was not worth having in the United
States?
I would also like to ask a pointed question to Ambassador
Charlene Barshefsky and Ambassador Peter Scher. Put the shoe on
the other foot. Say, if I had the power to implement these
tariffs, what would they do in my position? Would they close up
their business and go home? I am not prepared to do that.
I believe that this punitive trade action by the USTR is
having minimal effect on Europe. I would also tell you that
this is a hit list basically of the banana war and the beef
war, and every product on these lists----
Ms. Ros-Lehtinen. What is that list that you are referring
to, the same?
Mr. Reinert. The banana war hit list, the final list of 100
percent tariffs and also the list of the beef war, and I would
suggest to you that you could multiply that list by three and
there are three companies out there for each items importing
these goods, and these are the people you are hurting, U.S.
citizens and U.S. businesses, and I really question whether
this was really the effect that was wanted. Would it have not
been more equitable to put 5, 10, 15, even 20 percent on a
whole range of European goods, everything coming over?
I guarantee you change would have been effected
immediately.
I can tell you our product is made under the highest labor
standards in the world. The manufacturers have just received
ISO 9002 certification. Can Chiquita, Dole and Del Monte say
the same thing about their labor conditions? I would also like
to point out that the product that we are protecting here with
this trade action is not a U.S. grown product. It is a Latin
American grown product.
The Constitution, in my opinion, as I always learned,
protects everyone, regardless of size, political clout,
financial resources. So I believe I have as much right to
protection as anyone out there, any business, and I am also
under the understanding that this country was founded on its
opposition to unfair taxation. I do also believe that the
Europeans with their banana regime, it is contravening the
general agreement of tariff and trade, but I think it is
immoral to target one company because of the wishes of another.
In closing, I will tell you I have been making this
impassioned appeal to you because I am going to tell everybody
who is willing to listen to me, and I could never in my life
have believed that at some point I would be in a fight for my
very survival with the U.S. Government.
So let me just say this, and I don't want you to take this
out of context, but when you go back to your offices and your
constituencies and I go back to Summerville, South Carolina,
remember that me and everybody on this list are still going to
be paying these tariffs. I thank you for your time.
[The prepared statement of Mr. Reinert follows:]
Ms. Ros-Lehtinen. Thank you very much for excellent
presentation, and I think that you speak for everyone else on
that list.
Mr. Roberts.
STATEMENT OF JOHN ROBERTS SMALLER, AMERICAN COMPANIES
Mr. Roberts. Good afternoon, Madam Chair. Thank you,
Congressman Menendez, for your kind introduction. Thank you all
for the opportunity to present the views of smaller American
companies regarding the serious damage they faced from the
actions taken by our government during the recent trade battle
with the European Community.
The National Association for the Specialty Food Trade,
NASFT, is a not-for-profit trade organization, formed to
advance the interest of all segments of our industry. Our
Members' products are high value added food items. Although
headquartered in New York, the NASFT has a nationwide
membership of over 2000 specialty food suppliers, including
manufacturers, producers, distributors and importers, in
addition to a growing number of specialty retailers,
restaurants and chefs. Over 90 percent of our member companies
are U.S. based and are owned and operated by American citizens.
In particular, I want to emphasize that the typical NASFT
importer member, like Rick, runs a U.S. based, U.S. owned and
U.S. operated business and employs Americans in a wide variety
of professional positions and in both skilled and entry level
positions.
I would also like to make clear where the losses occur,
when a high value added consumer product, like those of our
Members and like Rick's, is excluded from our economy. Many
people don't realize that for each dollar lost to the foreign
exporter, the American economy loses $3. The details of that
are in my submitted statement. The U.S. economy bears 75
percent of the loss when these tariffs are put into effect. The
numbers are there. The people that made these decisions were
told that.
The NASFT strongly recommends and supports an aggressive
U.S. posture in identifying and correcting unfair and unequal
trading situations. We also expect our government's actions to
be effective. When retaliation is necessary we should inflict
maximum damage abroad while causing little or no harm to
American interests and it can be done.
The NASFT recommends four steps that we believe the U.S.
Government must take to stop making U.S. businesses victims of
U.S. trade policy.
First, the U.S. must expand its vision, play chess instead
of checkers in its trade policy and trade actions. Both the
banana and the beef disputes are examples of ill chosen battles
and short term thinking. We have won in the World Trade
Organization our court fight on both bananas and beef, but let
us face the facts. We still have not gained market access,
Europe has still not changed its policies, and the U.S. economy
is still suffering 75 percent of the total damage being done by
these retaliations.
My recommendation second is to make trade retaliation
create opportunities for U.S. companies. The careful selection
of items is a critical part of ensuring that we do maximum
damage to our opponents, while avoiding damage to our own
business and economy. The process we have detailed in our full
text requires greater finesse and more research than our
current process. It requires more work. But if we follow it, we
can turn the tables in our favor when we target the right
imports.
Recommendation third, specifically avoid damage to small
businesses. Small importers frequently concentrate on limited
product categories. This specialization is a good strategy
except when it becomes a liability when our government randomly
selects that category for punitive tariffs unrelated to the
dispute. The government agencies selecting and imposing the
tariffs have given no consideration, despite the testimony you
heard here today, to the impact of their actions on small
businesses.
The proposed Small Business Trade Protection Act offered by
Congressman Menendez would ensure that small U.S. businesses
engaged in importing would not be wiped out. The bill would
allow small businesses to know they will be protected and to
concentrate on business opportunities rather than looking over
their shoulder at government threats.
Recommendation fourth, protect America's reputation as a
safe food source. I ask you, what have we done to our image as
a safe food supplier by trying to force our way into markets
with a product, hormone treated beef, clearly unacceptable and
suspect by European consumers? You can force it onto the shelf,
you can't force the consumers to eat it without education.
Scientific evidence besides, you have to deal with their
emotional feelings.
What further damage will we do by fighting a similar battle
for genetically modified foods and seeds? We are deeply
concerned by these actions that sacrifice our reputation as a
safe food supply and severely damage our current and future
chances to grow U.S. food exports.
In conclusion, we encourage this Subcommittee to recognize
that the current approach is not working; that a new overall
approach is necessary; and that short term protection for small
business, such as a Small Business Trade Protection Act, is
essential.
Thank you very much for your attention. I appreciate any
questions.
[The prepared statement of Mr. Roberts follows:]
Ms. Ros-Lehtinen. Thank you so much. Mr. Sanford, if you
could lead the questions?
Mr. Sanford. I would just go back to, actually you had
mentioned Charlene Barshefsky, whose pronunciation I can never
get right. The unfortunate fact is that from time to time the
imposition of increased duties, as a result of a Section 301
unfair trade investigation, may cause serious harm to some
American businesses or consumers. If I am not mistaken that was
her letter to you last month.
Mr. Reinert. Yes.
Mr. Sanford. Could you tell me or tell the rest of the
Committee any of the things that you think fall as a
ramification or it is certainly to me a very callous letter
saying, well, there may be a few bad things that come your way
but we kind of need these casualties.
Mr. Reinert. Her answer, in my opinion, is unacceptable. I
don't accept that. What am I supposed to say? She tried, it is
unfortunate it happened, and we are stuck with it. I find
another means--I am trying to find other means, but the simple
fact remains this legislation and this policy has left a great
number of American businesses scrambling for survival, and I
can't believe that is the intention of our government.
I was apolitical at first. I have become more political, I
can guarantee that, but I really don't want anything to do with
the government. I just want to be left alone. I don't want any
imposition. I just want to do my job, that is all.
Mr. Sanford. Given our time, I will yield back, and I may
come back later for a question but so that everybody can
question. Go ahead.
Mr. Burr. [Presiding.] The gentleman's time has expired.
Mr. Menendez.
Mr. Menendez. Thank you. Mr. Roberts, I appreciate all of
your testimonies, and because of the concentration of time we
have, I would just like to go to the one part of your testimony
that you glossed over because of time constraints, which is the
process by which we could have Mr. Reinert and others not be in
the firing line of these trade retaliatory actions, at least to
make it more equitable for everybody. Could you give us a sense
of what your association is advocating in that regard?
Mr. Roberts. Certainly. It runs along the line of the bill
that you have submitted and has been posted and basically it
has a lot of logic. When we fought the battle for nutritional
labeling exemptions for small companies, Congress was very
strong on the fact that the 500 employee definition of small
business was much too large for this exception. So we started
with lower numbers and wound our way down and settled on 100
employees as being a good definition of a small business in the
food industry.
The second thing we wanted to do was to protect these
companies from having to pay the punitive tariffs. So what this
would do is say that any company that is an importer with less
than 100 employees would be allowed to bring in the same amount
they brought in last year with no punitive tariffs, and to
allow for some growth, a 25 percent over that level. That cap
though, by the way, is a very good safety factor. It means that
Nestle can't participate because the employee cap doesn't hit,
even if they had a product that was eligible, and it also means
that large companies are kept out and large internationals are
kept out.
The third thing, which says that you can bring in exactly
what you brought in last year plus 25 percent, means that you
cannot become a conduit, a front man for some other company. So
the rules would still work to prohibit big companies from
bringing in big amounts and would still be punitive to the
extent that they are to the Europeans.
I hope that explains it.
Mr. Burr. I thank the gentleman. Mr. Cooksey.
Mr. Cooksey. Mr. Reinert, I am very sympathetic to your
situation. I am from a small area with a lot of small business
people, and we actually have a lot of exports from Louisiana,
too. Is that a bath product?
Mr. Reinert. Yes, it is HTS code 3307.30.5000. I know that
by heart.
Mr. Cooksey. What would it do for a gray headed old man?
Mr. Reinert. You can try this. This is a herbal bath,
basically a luxury item, as all these items are I believe on
the list. They are pretty well luxury items. I don't think
there is any essential items on there.
Mr. Cooksey. Some of the women use them probably more.
Mr. Reinert. Our demographic is basically a woman. We sell
them right across the country.
Mr. Cooksey. My comment is that a lot of people come to
Washington with problems, and too often politicians want to
respond and they pass some law or the regulators pass the
regulation in response to pressure from legislators, and a lot
of them are done with good intention but have unanticipated
side effects, and I think that is unfortunate. I think that a
lot of these solutions are better found on a State level or
working out from businessperson to businessperson, even though
they are in different nations in different parts of the world.
I would tell you that the most rapid growing part of the
economy, that is growing at the speed of light, is e-commerce,
and one reason it is growing so rapidly is because it is
unregulated and untaxed. The politicians, this bunch up here,
have not been able to get into it yet, but when they do, e-
commerce will be bogged down and slowed down and cause
nightmares for businesswomen and businessmen like yourself. So
go back home and tell the people in government to get
government out of your life, and you will be a lot better off,
and in the meantime we will try to do something to make it
easier for you to do business.
I have a lot of confidence in the ability of people to do
business with each other, no matter what, where they are in
these global markets in the Information Age. The problem is
that government moves a lot slower than businesswomen and
businessmen do.
Mr. Reinert. Believe me, I have confidence in government,
too. I believe they are honest people. I believe some of the
actions they take are misguided, and I think they don't think
about the ramifications, but I believe Charlene Barshefsky is a
good person.
Mr. Cooksey. She really is and I am impressed with her.
Mr. Reinert. She is loyal and patriotic as I am, but I am
just trying to find a way to resolve this thing, that is all.
Mr. Cooksey. Let me tell you one more comment. The good
news is that as we move into more globalization in this
technology driven economy, governments and politicians are
going to become less important and less influential because
they cannot keep up with e-commerce, and that is good. So there
is going to be a better future in the next millennium, and we
will become less important.
Mr. Burr. I thank the gentleman. The Chair would recognize
himself.
Let me just ask if anybody is here from the Department of
Commerce, would they raise their hand. Your position with them
is what?
Ms. Moore. I am with basic industries in the international
Administration. I am a staff level person.
Mr. Burr. Your purpose for being here, were you instructed
by the Department to be here for this panel?
Ms. Moore. No. I was interested in being here to hear
testimony.
Mr. Burr. Let the record show her answer, and I would make
this point, too, especially our two witnesses here.
Part of the problem with trade decisions is nobody looks at
the human face behind them. I am sorry that there is not a line
of Department of Commerce people here to hear the story both of
you have to tell, you about your product, you about your
membership, and Mr. Berry, to some degree, to hear your
suggestions, because in reading through your testimony I think
there was some good ones there.
Let me suggest to you that our government will never be in
question because of the trade agreement, the health of our
government because of the trade agreement that we sign or don't
sign, but there are countries around the world that are
affected greatly by agreements that they either stand behind or
run from, and that presents the political problem that comes
into every situation that we are faced with, whether it is beef
hormones, whether it is bananas. It is not our political
problem. It is theirs.
I agree with all of you that we haven't handled it well. We
haven't taken time to understand it well. We have retaliated in
a way that affects people that nobody at the Commerce
Department knows who they are. I am glad that you were willing
to come up today and put a face with it. I am only sorry that
they weren't willing to come here and see that face because it
might have a long term effect.
Clearly there is a lot of interest on this Subcommittee.
There is a lot of interest in Congress that we get it right in
the future.
There is also every confidence, as Mr. Cooksey said, that
electronic commerce bypasses in the future a lot of the human
mistakes that we make, and whether we like it or not, commerce
between two parties is going to happen, and whether we are
willing to be there from a regulatory standpoint at the
beginning or not.
On behalf of this Subcommittee, let me thank all three of
you and assure you that all Members will have an opportunity to
review your testimony and the questions and the answers that
were given at this Subcommittee. This hearing is now adjourned.
[Whereupon, at 1;10 p.m., the Subcommittee was adjourned.]
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A P P E N D I X
September 29, 1999
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