[Senate Hearing 106-754]
[From the U.S. Government Publishing Office]





                                                        S. Hrg. 106-754

            CHINA ACCESSION TO THE WORLD TRADE ORGANIZATION

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

                                HEARING

                               before the

                       COMMITTEE ON AGRICULTURE,
                        NUTRITION, AND FORESTRY
                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                                   ON

            CHINA ACCESSION TO THE WORLD TRADE ORGANIZATION

                               __________

                             MARCH 1, 2000

                               __________

                       Printed for the use of the
           Committee on Agriculture, Nutrition, and Forestry

                    U.S. GOVERNMENT PRINTING OFFICE
67-570 CC                   WASHINGTON : 2000

_______________________________________________________________________
            For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 
                                 20402
?

           COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY



                  RICHARD G. LUGAR, Indiana, Chairman

JESSE HELMS, North Carolina          TOM HARKIN, Iowa
THAD COCHRAN, Mississippi            PATRICK J. LEAHY, Vermont
MITCH McCONNELL, Kentucky            KENT CONRAD, North Dakota
PAUL COVERDELL, Georgia              THOMAS A. DASCHLE, South Dakota
PAT ROBERTS, Kansas                  MAX BAUCUS, Montana
PETER G. FITZGERALD, Illinois        J. ROBERT KERREY, Nebraska
CHARLES E. GRASSLEY, Iowa            TIM JOHNSON, South Dakota
LARRY E. CRAIG, Idaho                BLANCHE L. LINCOLN, Arkansas
RICK SANTORUM, Pennsylvania

                       Keith Luse, Staff Director

                    David L. Johnson, Chief Counsel

                      Robert E. Sturm, Chief Clerk

            Mark Halverson, Staff Director for the Minority

                                  (ii)

  
                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing:

Wednesday, March 1, 2000, China Accession To The World Trade 
  Organization...................................................     1

Appendix:
Wednesday, March 1, 2000.........................................    47
Document(s) submitted for the record:
Wednesday, March 1, 2000.........................................    93

                              ----------                              

                        Wednesday, March 1, 2000
                    STATEMENTS PRESENTED BY SENATORS

Lugar, Hon. Richard G., a U.S. Senator from Indiana, Chairman, 
  Committee on Agriculture, Nutrition, and Forestry..............     1
Cochran, Hon. Thad, a U.S. Senator from Mississippi..............    43
McConnell, Hon. Mitch, a U.S. Senator from Kentucky..............    13
Roberts, Hon. Pat, a U.S. Senator from Kansas....................     4
Fitzgerald, Hon. Peter G., a U.S. Senator from Illinois..........    28
Grassley, Hon. Charles E., a U.S. Senator from Iowa..............    24
Craig, Hon. Larry E., a U.S. Senator from Idaho..................    22
Conrad, Hon. Kent, a U.S. Senator from North Dakota..............    29
Baucus, Hon. Max, a U.S. Senator from Montana....................     6
Johnson, Hon. Tim, a U.S. Senator from South Dakota..............    14
Lincoln, Hon. Blanche L., a U.S. Senator from Arkansas...........     8
                              ----------                              

                               WITNESSES
                                Panel I

Glickman, Hon. Dan, Secretary of Agriculture, U.S. Department of 
  Agriculture, Washington, DC....................................    10
Scher, Hon. Peter, Special Ambassador for Agriculture, Office of 
  the U.S. Trade Representative, Washington, DC..................    14

                                Panel II

Burrack, Tim, on behalf of the Nation Corn Growers Association 
  and American Soybean Association, Arlington, Iowa..............    42
Hardin, John Jr., on behalf of the National Pork Producers 
  Council, Danville, Indiana.....................................    36
Kress, Jerry, on behalf of the National Association of Wheat 
  Growers, Idaho Wheat Commission, and the Wheat Export Trade 
  Education Committee, American Falls, Idaho.....................    34
Moore, Sam, President, Kentucky Farm Bureau, on behalf of the 
  American Farm Bureau Federation, Louisville, Kentucky..........    32
Suber, Tom, Executive Director, U.S. Dairy Export Council, on 
  behalf of the Dairy export Council, Arlington, Virginia........    38
Wootton, Director of Federal Government Affairs, on behalf of 
  Sunkist Growers, Washington, DC................................    40
                              ----------                              

                                APPENDIX

Prepared Statements:
    Lugar, Hon. Richard G........................................    48
    Craig, Hon. Larry E..........................................    52
    Johnson, Hon. Tim............................................    50
    Burrack, Tim.................................................    89
    Glickman, Dan................................................    54
    Hardin, John, Jr.............................................    72
    Kress, Jerry.................................................    67
    Moore, Sam...................................................    62
    Scher, Peter.................................................    58
    Suber, Thomas M..............................................    79
    Wootton, Michael.............................................    86
Document(s) submitted for the record:
    WTO Accession Agreement, Charts, Fact sheets, and excerpts 
      from FAS online, submitted by Tim Burrack..................    94
    U.S. Courts `missed opportunity on China,' warns Suber, 
      statement submitted by Thomas Suber........................   193
    Letter to Hon. William J. Clinton, from Hon. Kent Conrad.....   187
    Letter To Hon. William J. Clinton, from Hon. Tim Johnson.....   178
    Letter to Hon. William J. Clinton, from Hon. Richard J. 
      Durbin.....................................................   180
    Letter to Hon. William J. Clinton, from Hon. Connie Mack.....   181
    Letter to Hon. William J. Clinton, from Hon. Don Nickles.....   182
    Letter to Constituents on decision to vote for PNTR with 
      China, submitted by Hon. Greg Ganske.......................   183
    Letter to His Excellency Li Zhao Xing, from The U.S. Senate..   187
    Letter to His Excellency Li Zhao Xing, from The House of 
      Representatives............................................   195
    ``Permanent MFN for China Will Do Nothing for America's 
      Farmers,'' submitted by Citizens Trade Campaign............   197
    Testimony of the Fertilizer Institute........................   199

 
            CHINA ACCESSION TO THE WORLD TRADE ORGANIZATION

                              ----------                              


                        WEDNESDAY, MARCH 1, 2000

                                       U.S. Senate,
         Committee on Agriculture, Nutrition, and Forestry,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:02 a.m., in 
room 192, Dirksen Senate Office Building, Hon. Richard G. 
Lugar, (Chairman of the Committee), presiding.
    Present or submitting a statement: Senators Lugar, Cochran, 
McConnell, Roberts, Fitzgerald, Grassley, Craig, Conrad, 
Baucus, Johnson, and Lincoln.

OPENING STATEMENT OF HON. RICHARD G. LUGAR, A U.S. SENATOR FROM 
   IOWA, CHAIRMAN, COMMITTEE ON AGRICULTURE, NUTRITION, AND 
                            FORESTRY

    The Chairman. This hearing of the Senate Agriculture 
Committee is called to order.
    In recent months we have heard much about China and, in 
particular, about the proposed terms of China's accession to 
membership in the World Trade Organization. The press accounts 
of the bilateral agreement reached between the United States 
and China, as well as the summary sheets issued by the 
administration, suggest this could be one of the most important 
international agreements ever for United States agriculture, 
especially now that American farmers have been hit for several 
year with slack demand and falling prices.
    China's proposed accession agreement is also a watershed 
agreement for the world trading system. The World Trade 
Organization [WTO] and its predecessor institution, the General 
Agreement on Tariffs and Trade, GATT, have provided the 
framework for world trade since 1947. Over the past 50-years, 
the initial GATT of about 40-countries has grown into the WTO 
of nearly 140-nations. In all that time, however, China, the 
most populous Nation in the world, has been neither a GATT 
contracting party nor a WTO member. Ironically, the World Trade 
Organization does not yet include the country with one-quarter 
of the world's population.
    There is, of course, good reason why China has historically 
not been a part of the multilateral trading system. The GATT 
and the WTO agreements were developed as rules for trade among 
market economies. GATT/WTO rules, to as great an extent as 
possible, attempt to ensure that trade is governed by 
competition and market forces. China's centrally planned and 
controlled economy operates on a different and incompatible set 
of principles. As a result, since 1949 China has been sitting 
on the sidelines of a multilateral trading system.
    Over the past decade, as other centrally planned economies 
have collapsed, Chinese leadership noted the tremendous 
inefficiencies of the system and, however modestly, began to 
liberalize the Chinese economy. And since the World Trade 
Organization came into formal existence with the conclusion of 
the Uruguay Round, the Chinese have been attempting to 
negotiate their accession to the multilateral trade system.
    Although China has not been a member of the GATT or WTO up 
to now, it has benefitted from the multilateral trade regime in 
a number of ways. Most importantly, the United States and a 
number of other countries have extended to China ``most favored 
nation'' status, meaning that China has access to our market on 
the same terms we extend to other WTO nations. This is a 
considerable privilege and one that China knows has great 
value. The United States now extends Most-favored-nation [MFN] 
status to China on a year-to-year basis. China seeks, as a part 
of its WTO accession, permanent MFN status, or as it has come 
to be known, a permanent normal trading relation [PNTR], the 
PNTR relationship.
    Any country that enters the WTO and obtains MFN status 
automatically secures the market access benefits that have been 
so arduously negotiated by the GATT and the WTO members in the 
previous eight negotiating rounds over more than 50-years. It 
has been asserted, inaccurately, in my view, that in the 
bilateral deal negotiated between the United States and China, 
the United States gains everything and gives nothing. This is 
more than a little misleading. What the United States gives 
and, more importantly, what China gains is permanent MFN access 
to our market and to those of other WTO trading partners. And 
to gain this privilege, China should be willing to give value 
in return.
    The good news is that China appears to have done so in a 
bilateral agreement that was struck last spring and finally 
affirmed between the Governments last fall prior to the Seattle 
Ministerial. The agreement appears to offer significant market 
access opportunity for the United States and has widespread 
support in our business community in general and the 
agriculture community in particular. The package includes 
significant tariff reductions on a number of agricultural 
products in which the United States is highly competitive, such 
as citrus fruits, stone fruits, raisins, shell nuts, canned 
sweet corn, soups, barley malt, beef, pork, chicken and turkey. 
And China also commits to creating significant tariff rate 
quotas in the major grain and oilseed sectors--eventually, 9.6-
million metric tons of wheat, 7.2-million metric tons of corn 
and 5.3-million metric tons of rice. These Tariff-rate quota 
[TRQ] amounts are many times the level of China's current 
imports of these commodities. China has also agreed to forego 
the use of export subsidies, to discipline the use of domestic 
support, and to abide by international rules on sanitary and 
phytosanitary regulations.
    On paper, this agreement looks very promising and the 
Office of the Trade Representative and the Department of 
Agriculture are to be commended for their work in achieving 
these impressive results. Senators will, of course, want to 
learn more about the specifics of the agreement. For example, 
the large tariff cuts and the very generous tariff rate quota 
levels specified in the agreement would be particularly 
significant for trade if China were a market economy with a 
vibrant and competitive private sector. The question is how 
significant for trade these will be in a situation in which 
access to the Chinese market is dominated by a state importing 
agency.
    Apparently, China has agreed to liberalize its import 
regime, to begin to develop a system of private trading rights, 
and to reallocate unused TRQ amounts to ensure full access. The 
specifics of these arrangements remain somewhat sketchy and we 
will be interested to hear more detail on these types of 
implementations and issues from administration witnesses.
    Today we will be privileged to hear from the Secretary of 
Agriculture Dan Glickman and from Ambassador Peter Scher. I 
welcome both of these gentlemen back to the Committee and thank 
them for being with us today and for being so forthcoming on 
all of these trade negotiations in the past. We look forward to 
their testimony.
    I would note that the Committee also invited the Secretary 
of Commerce, Mr. Daley, or a senior policy official of his 
choice to testify at the hearing. We thought this would be 
appropriate since the President has indicated that the issue of 
China WTO accession is the priority trade issue for his 
administration this year and because the President has 
designated Secretary Daley as the lead spokesperson on this 
issue. Secretary Daley's office indicated he had other more 
pressing, business today and his office also declined to 
designate a substitute witness. And thus we are sorry the 
Commerce Department will not be represented at the hearing, in 
light of the importance that the President has placed upon the 
issue.
    Nonetheless, we are delighted to have the witnesses that I 
have mentioned and we will ask them and a panel of witnesses 
representing a broad array of interests in the farming and 
agribusiness communities to testify as a second panel. We will 
have testimony from the American Farm Bureau Federation, as 
well as representatives of the grain, meat, dairy and citrus 
sectors.
    I have noted on numerous occasions in this committee the 
vital role that exports play today in the economic well-being 
of American farmers. Nearly one-third of all American farm 
acres are planted for the export market and when export 
opportunities decline, as they have in the recent several years 
because of the Asian financial crisis, farm prices and farm 
income suffer.
    I continuously urge the administration to assist our 
farmers in opening and competing for export markets. It is 
undeniable that the prosperity of the American farm sector 
depends upon it. China, a market with a quarter of the world's 
population, holds unparalleled promise as an export market for 
high-quality U.S. food, feed and fiber. We look forward to 
learning today more about China's proposed terms of accession 
to the WTO and about what it will mean for America's farmers.
    [The prepared statement of Senator Lugar can be found in 
the appendix on page 48.]
    At this juncture I would like to recognize my colleague, 
Senator Roberts, if he has an opening comment.

   STATEMENT OF HON. PAT ROBERTS, A U.S. SENATOR FROM KANSAS

    Senator Roberts. Thank you, Mr. Chairman.
    First I would like to associate myself with your remarks 
and let the record show that the Chairman has long been a 
champion and an eloquent spokesman and a common sense 
spokesman, as well, for a consistent and aggressive trade and 
export policy. I might add that the Chairman also has a great 
deal of expertise and also recognition in foreign affairs and 
national security.
    And the one element of this that I would like to stress 
prior to getting into my opening remarks is that in 1996 there 
was a commission formed on what America's vital national 
interests were. And interestingly enough, a bipartisan group 
and a very heavyweight group indicated the number one issue of 
concern was China's entree onto the world stage.
    And not only is this a trade matter; not only is this a 
matter in regard to our export policy and the WTO and China; 
it's a matter of national security. As the distinguished 
chairman has pointed out, our choice is whether or not the 
remain engaged with China, despite all of the challenges we 
have with that country or not.
    So consequently, I think it is very important and I credit 
the Chairman for his leadership on both accounts.
    I am delighted to see my colleague and friend, Senator 
Baucus, here. We wrote a letter recently to the Chinese urging 
them to go ahead with the previous agreement in regard to the 
purchase of U.S. wheat. And as of Monday, there was an 
announcement in that regard, Max, and I think we both would 
like to take a little pride in that effort, although 53 other 
Senators signed the letter. And I think it is 50,000-tons, as I 
recall, not enough hard red winter but some soft wheat and we 
will quarrel about that on down the road.
    Mr. Chairman, the Marines have landed in Hart 216 and as a 
member of the Senate Armed Services Committee, I am going to 
have to leave about 9:30 or 9:40. I do not want to be late for 
the Commandant. But having said that, I am going to just 
basically try to highlight here the statement that I have.
    I want to welcome my old friend and my fellow Kansan back 
to Capitol Hill. Dan, I appreciate all the hard work you do in 
behalf of our farmers and particularly in respect to today's 
subject matter, and that is in regard to international trade in 
China. I also want to welcome our ambassador, as well.
    And I want to thank you and express my sincere appreciation 
for your recent comments. You said this: ``Winning 
congressional approval of PNTR''--that is the acronym--``for 
China will be the number one issue for agriculture in the year 
2000.''
    You are on point. You are mounting the parapets. You are 
waving the flag. And I guess in Marine language it is two up, 
one back and feed them hot chow.
    However, let me point out that 3-months ago you said a very 
similar thing in Seattle. And I credit you and the ambassador 
and also our trade ambassador, and I sat in the Seattle hotel 
ballroom--we did not have much alternative; we were locked in--
and I listened as the Secretary posed a similar question to the 
one we are discussing today. Secretary Glickman said, ``What 
would be the consequences if, after all this preparation, hard 
work and negotiations, we made no progress and we failed?''
    What if I had to say that? What if Senator Harkin, who had 
just introduced our Secretary, had to go back to Iowa or, for 
that matter, Pat Roberts back to Kansas or Senator Baucus back 
to Montana? What if we had to go back and say that? I can tell 
you that is not an option. And Dan worked overtime; so did 
Charlene; so did everybody that was there at Seattle. 
Unfortunately, despite the untiring efforts on the part of our 
negotiators, the Seattle Round turned into a teargas round, Mr. 
Chairman, and little progress and sent a signal, I think, 
around the world that was most unfortunate.
    I am not trying to assess any kind of responsibility for 
that. I could but I will not. I just think that was most 
unfortunate.
    Well, now we have another shot. Now we have another chance, 
it seems to me, Mr. Chairman. We have leadership and commitment 
from most people in this room--a lot of witnesses, other 
members--Senator Baucus and I have been working on this for 
over 18-months--all the companies and the businesses and the 
constituencies.
    The question that I have to raise is the similar question 
raised by Senator Moynihan last week when he said, and I am 
quoting here, ``This is a very worrisome moment. It is a moment 
of peril. We had reason to believe that normal trade relations 
with China would be agreed to in this Congress.'' They were 
going to report that bill in regard to the Committee on Finance 
and he was worried in regard to leadership from the 
administration and worried about some slippage in the Congress.
    I just spent the morning earlier today over in the House 
trying to assess this situation with the staff of the House Ag 
Committee and members over there. I would report to you, Mr. 
Chairman, I think it is a little iffy and I am very worried 
about this. In the Senate we had all thought that we had the 
votes. We have not had a whip check.
    And I will tell you that some of the Senators that I know 
and I trust and whose advice and counsel I trust, who are free-
traders, they are worried about all the challenges we have with 
China. I am not going to go into the litany of them. I know 
that. But I am concerned about this. And unless we have a full 
and concerted, full-court press led by the Secretary and 
certainly those of us that are involved and the President and, 
more particularly, the Vice President of the United States, I 
think we are in trouble. And I sure do not want to bring this 
up and have it lost. And I am just on the cusp now.
    I think this is so terribly important for us. We have a lot 
of discussion about agriculture program policy. We must have 
the freedom to market. This is a crossroads issue. So it seems 
to me that with a lot of frustration and concern, I want to 
thank the Secretary for leading point and I am going to be 
riding with him. It is just like when I used to take him to 
Dodge City. I would stand there right beside him as his shotgun 
rider. Well, we are going to have to get the stage working, 
Dan.
    I would suggest to you, after March 7, we can get the Vice 
President on the White House lawn with the President and you 
and the Vice President and Max and me and we will do just like 
we did in the House, Jim, when I used to play basketball with 
the Vice President. He would shoot those threes and he would 
make a couple but he would not go underneath the backboard, 
would not do the rebounding, would not do the elbow work. He 
has to come down and do that, Dan. Otherwise, I think we are 
going to be in a world of trouble.
    I am not trying to put you on the spot. I am just trying to 
tell you this thing is an iffy situation right now and it 
should not be. Seattle should not have been and this should not 
be.
    So I welcome your support. Let's see. You ride point, I 
will ride drag, and we will get the job done.
    The Chairman. Thank you very much, Senator Roberts. You 
have already made a substantial contribution to the hearing. 
Let me say that Senator Harkin would like to have made one but 
he is involved in the education bill mark-up at this moment and 
is likely to be there for quite a while, I am advised.
    I would like to call now upon Senator Baucus, who has been 
commended, and correctly so, for his leadership.

   STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR FROM MONTANA

    Senator Baucus. Thank you, Mr. Chairman. Do I have to 
follow Senator Roberts?
    Mr. Chairman, Mr. Secretary, Mr. Ambassador, I think we all 
know the main point that Senator Roberts said is pretty 
accurate; namely, time is running out. This is so important, 
this agreement, that we all of us have to burn some more 
midnight oil and go the extra mile if we are going to pass it 
this year.
    My view is that we have several months yet. Once we get 
into June, close to the presidential conventions and elections, 
it is going to be more difficult. I also believe that the 
Chinese white paper complicated matters somewhat significantly, 
but that is just a complication. It is not a huge hurdle. There 
have been other developments across the Pacific between Taiwan 
and China--across the straits--that have been more significant 
by far than this.
    So I urge all of us to put all this in perspective, just 
keep calm and keep our eye on the ball, which is getting PNTR 
passed.
    Whatever you can do, I urge you also to talk to the 
Europeans in whatever channels are most appropriate because 
clearly the bilateral that China agrees to with the European 
Union [EU] is a precursor. It is a precondition probably to a 
PNTR vote. My guess is it is going to be difficult for the 
House to vote on PNTR before China and EU reach an agreement.
    In any event, the agreement would make it easier, and I 
know those talks have broken down temporarily and it is 
important we try to kick-start those and get them back on 
track.
    I also have urged Chinese representatives to take more 
concrete actions, not just the abstraction of the benefits of 
trade but concrete actions to show the benefits and to show 
that this is a commercial agreement and both sides benefit.
    As Senator Roberts mentioned, he and I and other Senators 
wrote a letter to President Jiang Zemin urging them to buy 
American products, particularly wheat, and they did send over 
their citrus team, and that is good and they did buy 50,000-
tons. The thought was once the Chinese show a specific action 
of buying wheat pursuant to the cooperative agreement, which is 
independent of the regular bilateral agreement, that shows good 
faith. It shows that China will live to its end of the 
agreement and it is helpful.
    I have also encouraged the Chinese to do whatever they can 
to show more transparency on their own in the interim, to show 
that they are down-sizing their state enterprises or reforming 
the banking system, just doing whatever they can to show that 
China is even more and more entering the free market arena. I 
think that will help give some confidence to some members of 
the House and Senate.
    With respect to the white paper and all the issues 
surrounding that, I just strongly urge those who are concerned 
about that issue to recognize that Taiwan and China and the 
one-China policy is going to be our policy for a long time and 
those are issues we can deal with, and will be much more easily 
dealt with once PNTR is adopted and we have the bilateral 
agreement consummated and China is a member of WTO. Those 
political issues will be much more easily dealt with.
    Conversely, it is much more difficult to deal with those 
issues if, by chance--certainly if we were to vote down PNTR 
but even if we were to delay a vote and not take up the issue 
this year.
    Agriculture is one of the main drivers here, clearly--you 
know that better than I--in all the terms of the bilateral. I 
think it is also important for the American people to 
understand that this is not a gift, this agreement with China. 
It is not a gift at all. I think some people across the country 
think it is a gift, that we are kind of doing something for 
China. We are granting PNTR. We are giving them something.
    Really this agreement is not a gift. It is a negotiated 
agreement which in many ways is a no-brainer in that it is 
almost one-sided for the United States in that our country is 
already open. We do not have trade barriers. They are very 
minimal compared with those in China. The tariffs will be 
reduced in China; the distribution system will be dismantled in 
the sense that American companies can use their own 
distribution systems, and all the other provisions of this 
agreement.
    So I just urge all of us. Senator Roberts made a good point 
about the President. I personally have spoken with the Vice 
President since this issue flared up. He is fully behind this 
agreement. In fact, I will not go into all the details but 
there are some misquotes in the press that got all this out of 
proportion. But he is fully behind the agreement totally, so 
that is not an issue.
    But the administration, all the administration, business 
community--I strongly encourage the business community to do 
more than just have their CEOs stop by and see members of 
Congress. They have to get their employees in their companies 
visiting the district offices of key House members a couple, 
three or four times, explaining in good, polite terms why this 
is such a good agreement for America, let alone the countries.
    I believe very firmly that the relationship between the 
United States and China if probably one of the most crucial 
relationships for the United States, for China and for the 
world. We are on the cusp right now of taking the right step, 
being on the right track with a good, solid relationship. We 
have it within our grasp to begin to put this together in a 
pretty good way.
    We only have a couple or 3-months and it is such an 
important opportunity, such an important opportunity, it 
behooves all of us to put partisanship aside, put some of the 
collateral peripheral issues aside and let's just keep our eye 
on the ball and get this commercial agreement put together. 
Then we can more easily deal with some of the other issues that 
we always will deal with.
    China is a separate country; United States is a separate 
country. They have their interests; we have our interests. But 
we have a mutual interest in getting this agreement together.
    I compliment all the work you have both done, Ambassador 
Scher. And as well as I know you, Mr. Secretary, I know how 
hard you have been working--very, very hard. You are to be 
complimented and credited for the terrific agricultural 
provisions of this agreement. We just have to get that word out 
better. Thank you.
    The Chairman. Thank you, Senator Baucus.
    Senator Lincoln.

STATEMENT OF HON. BLANCHE LINCOLN, A U.S. SENATOR FROM ARKANSAS

    Senator Lincoln. Thank you, Mr. Chairman. As always, thank 
you for your leadership in bringing about this hearing to 
discuss what is a vital issue to us in Arkansas. I appreciate 
the hard work that my colleagues Senator Roberts and Senator 
Baucus have done on this issue.
    It seems like oftentimes, Mr. Secretary, every time we 
visit with you it is a really timely thing. It is timely when 
it is emergency disaster, getting it out, getting it to our 
agricultural producers and other things. And I do agree with my 
colleagues that this is an enormously important, timely issue, 
something that we do not have a great deal of time to do.
    I appreciate very much the two of you all in your positive 
attitudes towards PNTR for china but I will also echo my 
colleagues' words, that we have to be as proactive and as 
aggressive as we possibly can in moving this issue forward.
    In reading the testimony of Ambassador Scher, he is right 
on target--that China's WTO accession is a clear economic win 
for the United States. And together with PNTR, it will 
definitely open up markets that especially vital to 
agriculture.
    As Senator Baucus mentioned, we are talking about opening 
up markets while U.S. markets are already open to that country. 
I am sorry that Senator Roberts is gone but if it takes all of 
us going down to the House gym to play basketball to get it 
done, in his analogy--I have only been down there once but I am 
willing to go back if that is what it takes.
    Senator Baucus. Show them the cast on your leg. You mean 
business.
    Senator Lincoln. That is true. I mean business.
    But I do think it is important and I will just ask 
unanimous consent from the Chairman to put my entire opening 
statement in the record. I would like to conclude by saying 
that, in the overall debate of what we have started this year, 
talking about surpluses and then talking about the strength of 
the economy in this country and how important it is going to be 
to the multitude of other issues that we are discussing, 
whether it is the solvency of Social Security, maintaining 
Medicare or other things, those are all absolutely essential--
educating our children, these are all dependent on the strength 
of the economy.
    If the economy in this country should take just a small 
turn, those issues that in the everyday lives of our 
constituents are so important are going to suffer a great deal. 
And certainly in my opinion, this is probably one of the single 
most important questions we will be asked as the Government 
that could help us to sustain this country's economy in a 
strong way.
    So I certainly find granting PNTR to China to be one of the 
most important things that we are doing and I encourage you all 
to continue not only in your positive attitude but turn up the 
heat, increase the progress and the aggressive with which we 
are tackling this and let us move forward. And thank you very 
much for being here.
    Thanks
    Senator Baucus. Mr. Chairman, if I might just very briefly, 
I forgot to mention. Yesterday I introduced legislation which I 
call the China WTO Compliance Act. The point of it is to give 
the administration, the executive branch, a little more 
authority to monitor compliance with the terms of the 
agreement. It is my thought that, that will help the American 
people, reassure the American people a little more that the 
terms of the agreement will be lived up to.
    Often we sign agreements and we tend to not forget about 
them but we do not worry as much about enforcement and 
execution. The point of this legislation is to help give us a 
little more reassurance that once the agreement is signed, 
execution and compliance will be followed. Thank you, Mr. 
Chairman.
    The Chairman. Thank you very much, Senator Baucus.
    The Chair would like to make two announcements, one of 
which is that we will have a vote at 10 a.m. So at that point 
we will take about a 15-minute recess. I wanted the witnesses 
to know that, as well as all who are observing our hearing.
    The second is there will be a mark-up in the Committee 
tomorrow at 10:30 on crop insurance risk management and other 
issues that are before the Committee in the Committee spaces. 
So for the benefit of all members and staff, we want to make 
certain we are all present for that.
    Secretary Glickman, our purpose in having this hearing 
today is really to accelerate consideration of the issue. We 
thought it was important to have a high-profile hearing at 
which you and Ambassador Scher could testify and make the very 
best case and likewise, elicit comments from the Senators, 
which you have heard and which I think are important in showing 
their individual leadership.
    It is a privilege, as always, to have you. I ask you to 
proceed. I will ask both of you to try to come within, say, a 
10-minute framework if that is possible. If it is not, there 
will be some leeway granted, as you know.
    Secretary Glickman.

STATEMENT OF HON. DAN GLICKMAN, SECRETARY OF AGRICULTURE, U.S. 
           DEPARTMENT OF AGRICULTURE, WASHINGTON, DC.

    Secretary Glickman. Thank you very much. Senator Lugar, 
Senator Baucus, Senator Lincoln, it is an honor to be here.
    First I would like to give credit to Ambassador Barshefsky 
and Ambassador Scher. Together with some help from our USDA 
team, they negotiated an extraordinary bilateral agricultural 
agreement, which I would echo what Senator Baucus says. Not 
only is it a no-brainer but in the area of agriculture, it is 
really a one-way street in favor of the interests of the United 
States of America.
    Recently I spoke at the National Farmer Union convention in 
Salt Lake City and there was a lot of deep concern about this 
agreement and a lot of the questions were asked about previous 
trade agreements and we gave away the store and there were 
import surges here and there and some of the issues, I think, 
the facts were wrong, but I understood what their concerns are.
    But then I said to them, I said this is not the same as 
those previous trade agreements. This is not North American 
Free Trade Agreement [NAFTA]. This is not other agreements. 
This is not an agreement whereby the United States is going to 
increase the access to our markets of another country or 
region's products. This is an agreement whereby another country 
agrees to increase the access of our products to their markets, 
period, with respect to agriculture.
    Now, Ambassador Scher and Ambassador Barshefsky may talk 
about the total effect, which I think is also very positive, 
but this is truly an agreement that is a one-way street in 
terms of how it affects agriculture. And it concerned me that, 
that message was not out there in the countryside, that there 
was a whole lot of collateral issues regarding exports, imports 
and trade policy that is kind of infecting this discussion 
here.
    And it is really important for me and I know the President 
feels this very strongly, to send a clear message as it relates 
to agriculture: this is a 100-percent positive in the interest 
of United States farmers agreement. It concerns me that we 
could miss this opportunity, and that would be very, very 
serious for America and for our farmers.
    The other thing is when I put my hat on, I had the 
privilege of, as you know, serving as a member and chairman of 
the House Intelligence Committee in the early 1990s and this 
agreement is also critically important to the national security 
of the United States. I mean why walk away from our leadership 
role, to try to influence other countries in the world? If we 
do not do this, our ability to influence their human rights, 
their environment, their labor policies will be dramatically 
reduced. I mean it will be extraordinary, the effect on our 
inability to influence that part of the world. And I think that 
is another point that Senator Baucus has made over and over 
again. I notice you, Senator Lugar, made the same point.
    So I just think for double purposes, it is a one-way win 
for American agriculture and it is critically important to the 
United States of America that we proceed with this. And the 
President feels this so strongly that he has sent his entire 
cabinet out to really focus on this as certainly the primary 
trade issue this year and one of the highest priority issues of 
anything that this administration is fighting for.
    And I want to also leave that as a clear message here. This 
is a very high priority issue and there is unanimous agreement 
within the administration that we should pursue this with full 
vigor, and that is a tribute to the leadership of our United 
States Trade Reoresebtatuve [USTR] in negotiating a good 
agreement that we can be proud of, and I think that is going to 
make a lot of difference.
    Now, I think we have sent these little cards up. You all 
may have these little cards. It is kind of a summary. I do not 
know if you have one. I want to make sure everybody has one. 
OK, they do.
    It is kind of my whole statement. On one page there is a--
--
    Senator Baucus. We appreciate it. We will hear from Mr. 
Scher now.
    [Laughter.]
    Secretary Glickman. Well, on one side it is all the tariff 
cuts, which are dramatic--meats, beef, pork, poultry, dairy, 
and all the other items. On the other side are the TRQ changes, 
which are dramatically increased. And there are obviously the 
key provisions for U.S. agriculture, which is significant, as 
well.
    I would say that we expect conservatively U.S. export gains 
to approach $2 billion a year, an increase as the Chinese 
reduce their tariffs, which should happen by the year 2005. And 
we see this agreement with China eliminating export subsidies, 
reducing trade-distorting domestic supports, establishing TRQs, 
and the other things and, as both Senator Lugar and Senator 
Baucus talked about, providing the right to import and 
distribute without going through state trading enterprises.
    I would also say, you know, this is not the easiest thing 
for China to do. Recently there was a story in the Wall Street 
Journal. This is a predominantly agrarian society, China. Its 
entire political system has been based upon the history of the 
nature of peasants and the agrarian population and the control 
of the central government over their people.
    Now, I am not a great historian or political scientist but 
it does not take a rocket scientist to know that the Chinese 
themselves, in moving into the 21st century and dramatically 
reducing their tariffs on all their agriculture products and 
the other items that are here, are also taking a fairly 
significant risk in terms of their political system. They are 
moving from an agrarian society to one that is more modern, 
urbanized, technologically advanced, and I am sure that causes 
some nervousness within the halls of power in Beijing.
    But the fact of the matter is that they are doing this, 
which means that their markets will become dramatically more 
open to our products in agriculture, which affects the heart of 
their last couple of thousand years of history. And you talk 
about an influencing factor to help change their ways. This 
probably would have more impact on their political system 
ultimately than anything else I can imagine, as well as helping 
America's farmers.
    Now, I would make a couple of comments. We do need to be 
vigilant to ensure that China lives up to its WTO commitments 
and also fully implements last year's agricultural agreement 
that reduces phytosanitary barriers for citrus, wheat and 
meats. That means we need China's leadership to make the 
changes necessary to ensure that trade in these products can 
begin without delay. Prompt purchase of these products, 
including wheat, citrus and meats, will be the clearest 
indication that China intends to honor its commitments.
    And I am fully cognizant of the letter that Senator Baucus 
and Senator Roberts wrote. As it was referred just this week, 
China purchased 50,000 tons of U.S. wheat. This will be the 
first significant shipment of wheat originating from the 
Pacific Northwest in over two decades and the first purchase 
under our Agricultural Cooperation Agreement, which Ambassador 
Barshefsky and her team negotiated, along with our help. This 
is encouraging news and we hope that there will be many more 
such purchases to come.
    While this is not a major purchase, it does break what I 
call the Tilletia controversa kuhn [TCK] Chinese embargo on 
U.S. wheat and recognizes that the agreement provides for a 
modern view of sanitary and phytosanitary measures and we are 
watching to make sure that this initial purchase is followed by 
additional purchases of wheat, as well as honoring the 
commitments the Chinese made on citrus and on meats. Those 
things are very important and I am sure to you all they are 
very important, to make sure that the Chinese know that we 
expect them to honor their commitments that they have made 
before.
    We are in an era in which American agriculture has been 
suffering and it is linked to the global economy and 
increasingly dependent on trade. As I have said before, we have 
nothing to gain and a great deal to lose by walking away from 
our agreement with China. The only winners would be the EU, 
would be Australia, would be Canada, would be Argentina and 
would be every exporter in the world, who will see us as 
engaging in a disarmament in world trade and will move in to 
suck up those markets from us. And once they are in, they will 
be in for good and we will be out for a very long time.
    So the fact is that it is a dog-eat-dog world out there. I 
cannot remember who on some TV show said that but I will repeat 
it and I am sure if they did not say it, they will after I have 
said it today. If we are out of these markets, we are lost for 
a very long period of time, and that hurts American 
agriculture, which is increasingly dependent on these foreign 
markets, as well.
    I believe that the WTO accession agreement with the U.S. is 
a bold statement that China intends to be a major player on the 
world stage. The Chinese have shown in these agreements they 
understand that they must commit to long-standing principles 
governing world trade--transparency, fair trade practices, 
peaceful settlement of disputes and, most importantly, the rule 
of law. The agreement that we negotiated is strong evidence of 
China's willingness to move beyond the stagnant, protectionist 
policies of the past and embrace economic and trade principles 
that will have a ripple effect on their economic, social and 
political institutions, as well.
    In fact, changes in Chinese agricultural policies are a 
good indication that China is beginning to see the advantages 
of stronger ties to the global economy. Now China's leaders, 
after years of increasing its grain production to meet the 
growing needs of its population, they are talking about the 
need for food self-sufficiency rather than food security, and 
pointing out that China might be able to raise farm incomes by 
diverting resources away from areas where they do not have a 
comparative advantage, like grain production, and into areas 
that would take advantage of the large Chinese labor pool, like 
horticulture products.
    In fact, Chinese policy-makers are now saying that China 
could live with a self-sufficiency rate of 95-percent, rather 
than 100-percent. And that may not sound like a lot but when 
you look at the history of China, that is a dramatic acceptance 
of economic reality. If China imported just 5-percent of its 
grain needs, that would equal 20-million-tons of grain a year, 
making China the world's second largest market for imported 
grain after Japan. That is why approving NTR for China is so 
important for America's farmers.
    This is an historic opportunity because what it can achieve 
in opening Chinese society goes way beyond the economic 
underpinnings of improved trade with China. In granting 
permanent NTR, we are not abandoning the principles we as a 
Nation have always valued but instead, we are providing 
tangible economic benefits to the American people.
    Mr. Chairman, that completes my statement and I thank you 
very much.
    [The prepared statement of Secretary Glickman can be found 
in the appendix on page 54.]
    The Chairman. Thank you very much, Secretary Glickman.
    Senator McConnell, I would like to recognize you for a 
moment.

STATEMENT OF HON. MITCH MCCONNELL, A U.S. SENATOR FROM KENTUCKY

    Senator McConnell. Thank you, Mr. Chairman, for 
accommodating me. I just wanted to introduce one of your 
subsequent witnesses briefly, an old and dear friend of mine 
who happens to be president of the Kentucky Farm Bureau, Sam 
Moore, who will be testifying on the second panel.
    Sam and the 250-members of the Kentucky Farm Bureau are 
actually in town this week. We just had a meeting with them 
earlier. I wanted to welcome him to our committee on behalf of 
everyone in Kentucky who is so proud of his leadership of the 
Kentucky Farm Bureau.
    Sam is an active farmer himself, raising beef cattle, corn, 
soybeans, feed grains and, of course, tobacco, which is so 
important to our state. He is from Morgantown, Kentucky in West 
Kentucky and has spent almost 50-years really around farms. He 
started very early.
    Sam has been extremely busy this last year trying to secure 
a substantial amount of Kentucky's phase 1 tobacco company for 
agricultural development in our state. He has done a remarkable 
job on that.
    And Mr. Chairman, I just wanted to thank you for the 
opportunity to interject here and introduce Sam, from whom all 
of you will be hearing a little bit later. Thank you.
    The Chairman. Thank you very much, Senator McConnell.
    Senator Johnson, do you likewise have a short introduction? 
We are delighted to hear from you.

STATEMENT OF HON. TIM JOHNSON, A U.S. SENATOR FROM SOUTH DAKOTA

    Senator Johnson. I will help expedite the process here and 
submit a statement, Mr. Chairman.
    I appreciate your holding this hearing. I think that 
expanded agricultural trade with China is a very key issue, 
both in terms of our economy and in terms of democratization 
and the other values that we hold, as well.
    So I am pleased to have this hearing today.
    [The prepared statement of Senator Johnson can be found in 
the appendix on page 50.]
    The Chairman. Thank you very much.
    Ambassador Scher.

 STATEMENT OF PETER SCHER, SPECIAL AMBASSADOR FOR AGRICULTURE, 
    OFFICE OF THE U.S. TRADE REPRESENTATIVE, WASHINGTON, DC.

    Mr. Scher. Mr. Chairman, thank you. I would ask that my 
full statement be included in the record and I will make brief 
remarks.
    The Chairman. It will be included in full.
    Mr. Scher. I am very pleased and honored to be here with 
Secretary Glickman because I do believe that the effort we have 
made with China has really been a team effort, in particular 
between USTR and USDA under the leadership of Secretary 
Glickman and Ambassador Barshefsky.
    If I might just take a minute, I would like to recognize 
three of the career people who have been part of this team and 
who normally do not get recognized but I think really deserve 
it here. Three people are here--Teresa Howes and Jason 
Hafmeister from my staff and Lynn Alfala from USDA's Foreign 
Agricultural Service.
    The Chairman. Please stand so we can identify you.
    Senator Baucus. That would be a good idea.
    Secretary Glickman. May I just interject? We have our Ag 
attache from Beijing who is here, Suzanne Hale. I would like to 
recognize her, as well.
    The Chairman. Suzanne is there; great.
    Mr. Scher. I have to say, Mr. Chairman and members of the 
Committee, these are people who very rarely get recognized but 
whose expertise and tireless work and very long nights really 
resulted in this agreement and I think they deserve the 
Committee's recognition and all of our recognition, as well.
    Senator Baucus. Mr. Chairman, if I might interject, I 
agree. I know Suzanne Hale. I was over in December to China. I 
know she represents everybody else. She is aces. She works hard 
and does a great job and I am glad, Ambassador, that you have 
recognized everybody because it is very true.
    The Chairman. I agree. Thank you for giving that 
recognition.
    Mr. Scher. Mr. Chairman, let me just say briefly I think, 
as Secretary Glickman and many of the members of the Committee 
have said, China's accession to the WTO is a clear economic win 
for the United States. Together with permanent normal trade 
relations, it will, for the first time, open the world's 
largest Nation to our goods, to our farm products, and to our 
services. Without permanent NTR, as Secretary Glickman said, 
our competitors in Asia and Latin America and Canada and Europe 
will reap those benefits and this, I believe, is the critical 
question facing Congress.
    Before I update you on the status of the negotiations on 
China's accession, I would like to just give a brief overview 
of the specific agriculture commitments because these 
commitments reflect every commodity of interest to the United 
States. They are comprehensive. They will be phased in over a 
very short period of time. They hold China to the same standard 
we would expect of all new WTO members. And, most important, in 
each case they reflect very specific enforceable commitments.
    We will be opening China's market for all commodities of 
significant interest to the United States and moreover, we will 
be addressing a broad range of policy issues of concern to 
American producers. China will make significant cuts in tariffs 
and will complete them by January of 2004. This is one of the 
shortest phase-ins for any accession in the WTO. And these will 
be in the commodities of top concern to the United States, 
everything from beef and pork to citrus, processed foods, wine 
and dairy. Tariffs will be reduced from an average of 31-
percent to an average of 14-percent for our priorities. China 
will establish a generous tariff rate quota system for bulk 
commodities, like wheat, corn, cotton, and rice.
    This will result, for the first time, in decisions on the 
imports of these products being made based on the market and 
not based on government edict.
    China will guarantee the right to import and distribute 
products without having to go through state trading enterprises 
or middlemen.
    China has agreed to cap and to reduce trade-distorting 
domestic support and it has agreed to eliminate the use of 
export subsidies. If we can get Europe to make the same 
commitment, we would be in pretty good shape in world 
agricultural trade.
    And, as somebody referred to, China agreed last year, even 
before entry into the WTO, to eliminate Sanitary and 
phytosanitary [SPS] barriers on meat, on citrus and on wheat, 
which resulted earlier this week in the purchase of 50,000-tons 
of wheat, the first such purchase from the Pacific Northwest in 
25-years.
    Let me say I think it is important to note, and I think 
both Secretary Glickman and Senator Baucus referred to this, 
while we are pleased that China has taken these steps under the 
bilateral agreement--they have sent the citrus team; they sent 
the wheat team; they purchased wheat--we are very concerned 
about how quickly they are implementing this agreement, 
particularly as regards to meat and poultry. And I think we 
have been clear to the Chinese, and I want to be clear to this 
committee, that we will not be satisfied until all of the 
necessary changes have been made by China to implement the 
agreement and exports of all three commodities have occurred. 
That is our bottom line.
    Overall, Mr. Chairman, the WTO agreement that we have 
negotiated addresses the full web of trade barriers in this 
market--barriers at the border, unfair restrictions on 
marketing within China, and unscientific inspection standards. 
But the work is not yet done. China must now complete bilateral 
market access agreements with a number of WTO members, 
including the European Union, and it must also complete a 
multilateral negotiation at the WTO, particularly covering 
commitments on rules, and these steps are proceeding. And we 
are encouraging countries to move as quickly as possible, 
including the European Union, including Mexico and some of the 
Latin American, countries, as well as China itself, to move 
this as quickly as possible.
    Mr. Chairman, let me conclude. I believe that the case for 
China's entry into the WTO and therefore for Congress's 
granting China permanent normal trade relations is very, very 
compelling. As Secretary Glickman said in his remarks, no 
changes to U.S. laws or import policies need to be made for 
China to become a WTO member, unlike any of the trade 
agreements we have ever brought before Congress. We change none 
of our market access policies. We lower no tariffs. We change 
none of our laws controlling the export of sensitive 
technologies. And we amend none of our own trade laws.
    We do risk losing the benefits of this agreement if we fail 
to grant China permanent normal trade relations. So we would 
obviously encourage--we are doing everything we can and would 
encourage Congress to do everything it can to consider this 
matter expeditiously. Thank you, Mr. Chairman.
    [The prepared statement of Mr. Scher can be found in the 
appendix on page 58.]
    The Chairman. Thank you very much, Ambassador Scher.
    The columnist Tom Friedman in the New York Times yesterday 
in a column called ``Eyes on the Prize'' said, and I quote, 
``It is now going to be very tempting for Congress, caught 
between the right-wingers, who have been energized by the 
threats from Beijing against Taiwan, and the left-wingers, who 
have been energized by Mr. Gore's ambivalent support for his 
own trade negotiators, to walk away from the Clinton deal for 
bringing China into the WTO. Nothing could be more reckless. 
This is the time to keep our eyes on the prize and the prize 
remains the stable, steady transformation of China into a 
responsible member of the world trading system, into a more 
free and open society. Few things are more important for world 
stability than that.''
    This is preface for my general line of questions today. 
Obviously we are interested, as an Agriculture Committee, in 
the very remarkable details that you have negotiated and 
recognition has been given to that and you are, in your 
testimony, illustrating that. Secretary Glickman, on his blue 
cards, has really given us all the facts.
    The problem that I foresee, however, is that a major reason 
and maybe the major reason for this agreement is the national 
security of the United States of America. It is not an original 
thought but many have suggested that our ability to work with 
Russia, to work with China so that these countries in due 
course move into a situation of democracy, human rights, market 
economic principles, freedom of the press, freedom of religion, 
is terribly important for the generation of our children to 
come and that if we fail in this respect over the details, then 
the consequences are likely to be great, given the proximity of 
weapons of mass destruction and the ability of nations to use 
these with awesome results.
    So we are talking about something that is very grave, and I 
would hope and I presume the President will make this case and 
the Vice President and each one of you on a number of 
occasions. This is a trade agreement and it is an extremely 
important one, but we are really talking about consolidation of 
China with the rest of the world and the globalization of that 
enormous population and that economy at a time in which 
apparently the Chinese are willing and perhaps at least 
portions of their society are eager to come into this. I stress 
this because I fear we could lose the argument if it is 
strictly a trade issue.
    I ask you, Secretary Glickman, from your experience in the 
House, to analyze once again the fact that there have been fast 
track authority votes in the House of Representatives, at least 
two of them fairly recently, in which House members, by sizable 
majorities, have rejected giving our President fast track 
authority.
    It seems to me to be unlikely that members who have voted 
against fast track authority, which clearly were trade votes, 
are likely to change their minds without an enormous effort and 
probably argumentation that goes well beyond the normal 
business of jobs and parochialism and protectionism and all the 
rest of the things that encumber our society even as we talk 
about trade.
    How can these people change their minds? What is the 
administration's strategy? Or is there is not a very good one, 
is there any very good reason to have the vote at all? That is 
a question being raised increasingly.
    Secretary Glickman. Well, I think that the administration 
has a clear strategy to try to sell this agreement, both to the 
American people and then, of course, the people would sell it 
to Congress. Let me make a couple of points here.
    One is the President himself agrees with you that this is a 
national security vote as much as it is a trade vote, and if it 
is focussed strictly on the dollars and cents of how much X we 
are going to sell over there, that, in and of itself, may not 
be enough to cut the deal and get it passed.
    The Chairman. That is my impression.
    Secretary Glickman. But I also think that in addition to 
that, it is important to recognize that this is not the same 
boat as fast track and this is not the same boat as NAFTA. This 
is a focussed vote on a trade relationship with one country, 
China, and it contains in most areas and particularly in 
agriculture, substance which is 100-percent in the favor of the 
United States of America. As Mr. Scher said, as others have 
said, we give up nothing, zero, nothing in the agriculture 
area. We do not allow access, for all purposes in the 
production agriculture area, to anything that is not already 
there. And, of course, our markets are open to the world.
    Now look at this. We sell China $14 billion worth of things 
a year--things, everything you can think of--a little 
agriculture, airplanes, some other things. They sell us $70 
billion worth of material. They have a 5-to-one advantage over 
the United States of America.
    What we are saying in this agreement is we would like to 
equalize that advantage just a little bit. And what Mr. Scher 
and Ms. Barshefsky has done is negotiated an agreement where it 
can only go in our favor. It cannot go the other way.
    That message is not yet out there in the countryside. There 
is the belief out there that this is just one more trade 
agreement, like every other trade agreement. And by and large, 
NAFTA, I think, has been positive for the United States. There 
have been some people who have probably not been helped as much 
as others, and the negatives and the horror stories have 
dominated the public debate.
    I could see that at a recent farm convention I was at where 
some people have talked about all these possible negative 
things that have happened on other trade agreements and they 
are putting them all on China now, when they have nothing to do 
with China at all. We just have to do a better job of selling 
that and getting the information out there.
    But let me just finally say the President--he has talked 
with many members of Congress; he has had them up to the White 
House. He intends to continue to do that. He agrees with you 
absolutely about the importance of this to our national 
security. Sorry for the long-winded answer.
    The Chairman. I think it was a very important answer. Even 
after you were with the National Farmers Union, as you know, 
the vote was still 64 to 62 against it. This is a farm group.
    Now apparently the word was there, I suppose----
    Secretary Glickman. Before I got there it would have been 
much more overwhelmingly negative.
    Senator Roberts. Yes, but which way?
    [Laughter.]
    The Chairman. Well, this is a significant agricultural 
group in our community and it is important that those of us in 
agriculture at least have as much enthusiasm and understanding; 
others in our society may not. So my plea would be that you go 
back to the group with some of the arguments that we are 
talking about today that are national security, in addition to 
the esoterics of trade.
    Now just one final question, and that is what if we do not 
have a vote this year? I have heard predictions that in due 
course, the Chinese will work out their problems with the EU 
and they will work out their rule-making situations with the 
WTO organization and that their accession to WTO might not 
occur in calendar 2000 but it might occur in the first quarter 
of 2001, with or without a vote of the United States.
    Is this true? And what are the implications if that format 
were to happen?
    Mr. Scher. The dangers for us I think is that we lose the 
benefits. I mean the WTO rules require that all countries, all 
members of the WTO be granted ``immediate and unconditional 
MFN.'' So if China becomes a member of the WTO which, as you 
know, the actual accession of China does not require a vote but 
the granting of permanent NTR does, then the risk if we do not 
provide PNTR is that China would have the right to say we do 
not need to provide the benefits to the United States because 
the United States is not providing us with the benefits that we 
are entitled to.
    So Europe, which will have provided permanent NTR, you 
know, all these Latin American countries, Canada, they will get 
the benefits. And even if it is just a short period of time, 
the leg up that our competitors--I mean, our wheat growers 
believe they have an opportunity to really compete effectively 
in this market. We do not want Canada and Australia and other 
countries getting in there before us and having better 
opportunities than us.
    So I think the dangers are very real and the risk is very 
significant that we would lose those benefits.
    The Chairman. Thank you very much.
    Senator Baucus, we will try to have a 5-minute limit so we 
can all ask questions.
    Senator Baucus. First, Mr. Chairman, I very much compliment 
you for holding this hearing as a forum to get the word out 
just how beneficial this agreement is.
    I have the same concerns that Secretary Glickman has. 
People in the country just think trade deals are not good and 
what are we giving up here? China is China; they do all those 
things over there and why are we doing this? And it could not 
be further from the facts and the truth.
    I urge, too, both of you to get around the country a lot, 
in addition to going to members of Congress. And use the bully 
pulpit of the White House to the degree the President gets 
around the country because he gets public attention when he 
goes around the country and he speaks. I know you guys do, too, 
but he gets a little more. It may take that to get people to 
understand just how important this is.
    Stating it even more directly, if by chance there is an 
unfavorable PNTR vote, my understanding is that we revert to 
Smoot-Hawley-era tariffs on Chinese products coming into the 
United States, up to 70-percent. It is very, very high. If MFN 
or PNTR is not granted, automatically we go to Smoot-Hawley-era 
tariffs, which is obviously just disastrous. All the main 
points have already been said but I just encourage us to keep 
working.
    One question I do have, let's say we get the agreement. How 
are we going to compete with Europe's export subsidies and 
other aggressive marketing tools, even though under the 
agreement, China has agreed to TRQ of roughly 7-million tons?
    Mr. Scher. 7.3 on wheat.
    Senator Baucus. 7.3 and then up to 9-million after a couple 
of years. Last year they bought about a million?
    Mr. Scher. Right.
    Senator Baucus. A little over a million. Of course, that 
was because of the Asian financial crisis.
    OK, we get a higher TRQ, 7- to 9-million metric tons. What 
assurance do we have that we are going to be able to take 
advantage of that in the face of European export subsidies?
    Mr. Scher. Let me say two things. Obviously we face 
European export subsidies around the world and that is a 
reality that we are trying to change in the next negotiations, 
which begin this month in Geneva.
    I think the view that we have taken, and we have worked 
very closely with the wheat industry on this, is that the TRQs 
for the first time give us an opportunity to compete. I mean 
before now, we have not even been able to compete for the 
market share because all the decisions in China are made by 
central planners. I mean now, under this new system, you are 
going to have the decisions shifted to the end users, to the 
millers, to the people in China producing animal feed.
    So our view is that we can compete in that market. 
Obviously it creates a disadvantage that we are all aware of, 
having to face European export subsidies, and we need to bring 
those down and we need to address those. And frankly, China's 
commitment not to use export subsidies is a fairly powerful 
message to the EU. But I think that the TRQ system does give 
us, for the first time, an opportunity to compete for the 
business. And I think our view and I think the wheat growers' 
view is that we can produce a quality product at reasonable 
prices and that opportunity will make the difference in China's 
market.
    Senator Baucus. You made a very good point with respect to 
the market mechanisms here. When President Jiang Zemin, who is 
head of COFCO, was in Montana a few days ago, I was struck with 
how often he would say, you know, we will buy if the price is 
right and the quality is right and the terms are right. Over 
and over and over, it was on a commercial basis, which I 
thought was a big change, a very important change, almost a 
profound change--that is, not political but on commercial 
terms, which means that we have a good opportunity because we 
believe we have high quality, good wheat, but it means even 
more that we have to work hard to compete.
    Mr. Scher. Right.
    Senator Baucus. We have to have the product. We have to 
have the price and clearly find some way to get the Europeans 
to back off a bit. But China does want, it seems, to negotiate 
on a commercial basis, which gives us a real opportunity, 
particularly since the mind set in China seems to be more 
commercial than it has been.
    Secretary Glickman. I met with him yesterday. In addition 
to saying what he said, he kept saying, ``Do not think of me as 
a government person; I am not. I am a businessman.''
    Senator Baucus. Yes, he made that same point to me over and 
over again.
    Mr. Scher. If I might add, I think it is an indication of 
the movement in China because I think people like President 
Zhou COFCO are being forced to be more efficient and they want 
to have the opportunity to buy wheat, particularly from the 
Pacific Northwest that they can get it at better prices.
    Senator Baucus. Thank you. Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Roberts.
    Senator Roberts. Thank you, Mr. Chairman.
    Tim Galvin, a former staffer of the sometimes powerful 
House Ag Committee, doing an outstanding job trying to get our 
exports cracking, I am quoting: The U.S. market share of global 
agriculture trade has eroded so much, ``this could culminate in 
the United States losing out to the European Union as the 
world's top Ag exporter in 2000.''
    In fiscal year 1981 and 1998, Tim said, ``World trade in 
agriculture doubled but U.S. exports lagged behind major 
competitors and overall U.S. market share fell from 24-percent 
in 1981'' when both the Secretary and I were serving on the Ag 
Committee, ``to 18-percent today.''
    ``Galvin and Agriculture Under Secretary Gus Shumacher,'' 
and Gus is in the room and I cannot think of anybody who has 
worked harder and persevered tirelessly in behalf of our 
exports, doing great battle in a very positive way with the 
European Union, and thank you, Gus, for your efforts, ``urged 
the panel to increase the budget for Foreign Agricultural 
Service [FAS] and said approving permanent normal trading 
relations with China and China's accession to the World Trade 
Organization would produce great gains.''
    When Dan and I were out at the convention, not at the same 
time but at the convention of the National Wheat Growers, this 
was the number one issue. When 105 presidents came in from all 
the counties of Kansas this week and they wore big buttons and 
they had this as the number one issue. I can say the livestock 
sector would do the same thing. I do not know about the 
National Farmers Union [NFU]. You always have folks, the 
exception to the rule or people who go upstream with high 
waders on. I think the water is a little high in that respect.
    Let me just say that this is a tremendous issue. I think it 
is a crossroads issue. I have already made my speech on that.
    Dan, at the last minute in the November negotiations, 
trading rights for fertilizer were apparently at the highest 
levels removed from the agreement, but both sides made a 
commitment, as you are aware, to address the issue in the 
coming months. We were able to get over 70 Senators--as a 
matter of fact, I think it was exactly 70, Mr. Chairman, in a 
letter and personal conversations with the Chinese ambassador.
    We met just this past week--Secretary Daley, you, others--
in regard to this subject. I was happy to learn the 
administration considers trading rights for the United States' 
fourth largest export to China top priority. Can you give me 
any update on these efforts?
    Secretary Glickman. I think Peter probably could.
    The Chairman. Mr. Ambassador, if I could just interject for 
a moment, to conserve both of your time, I am going to leave to 
vote. Senator Roberts I will leave in control of the Committees 
while he is questioning. Then Senator Craig and Senator 
Grassley will be back. In that way we will utilize this time.
    I apologize for interjecting.
    Mr. Scher. Senator, on the issue of fertilizers, as you 
know, we were able to reduce tariffs and eliminate quotas and 
get distribution rights, but the issue of trading rights was 
pulled back in November, essentially the right to export freely 
in China.
    We have been clear to the Chinese. In fact, Ambassador 
Barshefsky and I met with Vice Minister Sung from the Trade 
Ministry 2-days ago, I believe it was, and were clear to him 
that this issue had to be resolved and we have made a proposal 
to China on how to resolve it. We have done that in conjunction 
with our industry, with the fertilizer industry. And the plan 
right now is for Don Phillips, who is our senior China 
negotiator at USTR, to go to China next week to sit down with 
the Chinese and to work this out.
    But I will tell you that Ambassador Barshefsky, in every 
conversation she has with the Chinese, makes clear that this 
has to be resolved, and I think the letter from the 70 Senators 
weighed heavily with the Chinese on that.
    Senator Roberts. So you can take the letter of the 70 and, 
at the appropriate time--I know they are very interested in 
this whole trade agreement, in some kind of a whip check. You 
could say well, on one hand; then, on the other, here are 70-
votes that are very crucial.
    Monday China, as I have said, announced a purchase of 
50,000-tons of American wheat. One of the prospects for future 
purchases in relation to the PNTR--I do not want to put that 
thought in their mind but it is on everybody's minds in regard 
to future sales. If we do not do the right thing in regard to 
this trade agreement, it worries me in regard to future sales. 
And the ambassador has already indicated every one of our 
competitors is going to have a leg up. Would you care to 
comment on that?
    Secretary Glickman. Well, one is I told the President of 
COFCO and made the public statement that this was a good first 
step but this was not everything that we expected them to do in 
honor of their agreement under the bilateral arrangements, and 
50,000-tons is nice, a good step, but in the big scheme of 
things, it is a drop in the bucket.
    They also agreed, as part of this bilateral agreement, to 
implement it, would be to purchase wheat, citrus and meat 
products. We are going to follow this shipment of 50,000-tons 
to make sure that it gets into the ports, that the ports have 
been adequately instructed that the phytosanitary measures have 
been taken care of.
    I mean they still have work to do to ensure that they 
intend to implement the agreement that they have agreed to, but 
part of that implementation is purchase of additional 
commodities. We have made that message clear. I cannot tell you 
what is going to come between now and April and May of 
additional commodities but we would hope that more would come 
and we have relayed that to them.
    Senator Roberts. Thank you.
    Senator Craig.
    Senator Craig. Thank you, Mr. Chairman.
    Senator Roberts. Did you want to mark up crop insurance 
right now?
    Senator Craig. Done.
    [Laughter.]
    Senator Roberts. Just a thought.
    Senator Craig. We will let that one hang.
    Mr. Secretary, Mr. Ambassador, thank you very much. I will 
ask the unanimous consent that my full statement be a part of 
the record.
    Senator Roberts. Without objection, it is so ordered.

  STATEMENT OF HON. LARRY E. CRAIG, A U.S. SENATOR FROM IDAHO

    Senator Craig. I may not be here for the full hearing but I 
also want to recognize in the audience Jerry Kress from 
American Falls, who is here representing the National 
Association of Wheat Growers and the Idaho Wheat Commission.
    Mr. Secretary, I had the unique opportunity while you folks 
were duking it out in Seattle to take a trade mission to China. 
We were the first trade mission on the mainland following 
Ambassador Barshefsky's bringing together this agreement to 
bring China into the WTO with the normal trade relations.
    I must tell you that I was impressed with what I sensed was 
a very real commitment on the part of the Chinese. In fact, it 
was a bit unique, I am told by our shop over there, that 
President Jiang Zemin gave us nearly 2-hours of conversation--
not just me but literally sat down with all of those 
businessmen and women, wanted to know what they were doing and 
why they were there and what their interests were and talked 
passionately about his working with the ambassador to put the 
agreement together, spoke personally of his involvement.
    Now, I must tell you that was impressive to me because I 
think he recognizes how this agreement and ultimately our 
acceptance of it and work here with it brings them in and 
brings them down a road toward the rule of law, and it is 
something that we cannot miss and I hope we do not miss, that 
they are really opening the door not for us but for them to 
begin to participate in a set of rules and laws that we are all 
agreeing to as a part of the WTO that heretofore they have not. 
That is of significant importance and it has not missed them in 
any sense of the word.
    So I would hope and the reason I say this is I like to hear 
people like you say we are committed to getting this; we will 
come to the Hill and work in the trenches here to make it 
happen. Can I expect that?
    Secretary Glickman. You bet.
    Secretary Craig. Good, because that is what it is going to 
take. You and I both know the politics of this issue and the 
timing of this issue and the frustrations on all sides with 
different pieces of the puzzle. And I would also say that 
sometimes and right now the Chinese are sending signals that 
are frustrating as it relates to other issues that go on in 
that area and the ability to polarize a vote here or there 
against that, looking at the immediate versus the broader 
picture of the future and the relationship that future can 
bring us.
    So I think it is important that we move sooner than later 
and it will be especially true in the House, but we will make 
every effort to make it happen here in the Senate, and I think 
that we can do that.
    I must tell you that I agree with you that the 50,000-
metric-tons I hope is a beginning. We hosted the trade 
delegations in our office yesterday and they worked out of our 
office and we have met with them and we spent a good deal of 
time with them on the issue. I think it is important that we 
stay on top of it and you have already outlined your intent to 
stay on top of it as it relates to timing and movement and a 
clear show of good faith as it relates to this, to make sure 
that we can move expeditiously and in a timely manner. I am 
certainly going to encourage that on the Pacific side of this 
issue, at our ports, and would hope that we could get that 
done.
    But I stopped by this morning not only because we are all 
very, very interested in this but the timing is important and I 
think we miss an opportunity here if we stumble now at a time 
when the politics of this may at times be frustrating. But I 
will tell you that when you decide on an orchard, an apple 
orchard, that you are going to start pulling trees out and that 
orchard, under a normal market scenario, would have three to 5-
years of life left but you are pulling them out because a 
Nation decided they would go out and capture a market, and in 
the last decade, that is exactly what the Chinese have done and 
they are dumping in this market a concentrated apple juice that 
has taken, if you will, the safety net out from individual 
orchard operators' margins, and that is happening across the 
sunny slopes of Idaho today and the Yakima Valley of the State 
of Washington and it has put that industry in turmoil.
    It is critical, and I use this as an example that our 
trading partner China come inside and begin to play by the 
rules. They will grow by it and we will gain by it. And any 
failure on our part to miss this opportunity is a tremendous 
opportunity lost.
    Thank you both very much for being here. I caught the gist 
of your response to the questions of the Senator from Kansas 
and I think those were adequate for responding to the questions 
I had. I thank you very much.
    [The prepared statement of Senator Craig can be found in 
the appendix on page 52.]
    Senator Roberts. The Chair is delighted to recognize the 
distinguished Senator from Iowa, Senator Grassley, for any 
questions he might like to pose to the distinguished panel.
    Senator Grassley. Well, I thank the really junior Senator 
from Kansas.
    Senator Roberts. The Chair might welcome the second panel 
under the circumstances.
    [Laughter.]
    Senator Roberts. The Senator is recognized.

 STATEMENT OF HON. CHARLES E. GRASSLEY, A U.S SENATOR FROM IOWA

    Senator Grassley. I do have respect for you.
    First of all, I was here, Secretary Glickman, when you gave 
a very enthusiastic endorsement of why we need to proceed and 
also that it is a win-win situation for us, and I think that 
enthusiasm is very well and the extent to which it is 
duplicated and repeated by everybody in the administration as 
enthusiastically as you have said it will help us very much 
with the process of getting it through the Congress. So I thank 
you for that.
    I am going to focus on the Agricultural Access Agreement, 
as opposed to the market access portion of it, if I could, 
because China's implementation of this and what they 
demonstrate about adhering to past agreements and the 
enthusiasm with which they do it I think is going to set a 
stage over the next couple of months for how easy or how hard 
it is to get a normal trade relations with China bill passed, 
and obviously I am enthusiastic for the reasons you gave for 
that, our doing the normal trade relations with China.
    I am disturbed by reports that I have heard about China's 
lack of cooperation in implementing the portion of the 
agreement, particularly that covering meats, beef, pork and 
poultry. I understand that China is apparently saying that the 
Chinese language version of the agreement dealing with 
acceptance of United States meat is conditional, in a sense 
saying that the agreement allows meat to be shipped to China if 
China decides to accept our products.
    Is this, in fact, what China is saying? And in the process 
of answering that, could you tell us what I believe, that the 
English language version of the agreement is controlling?
    Mr. Scher. The short answer is yes to the last question. 
The agreement that was negotiated by our team and translated by 
our team is the same agreement. And frankly, we are very 
concerned--is probably an understatement--that China has taken 
no action to implement the agreement on meat, unlike citrus, 
which they have sent inspectors and wheat, as well.
    We have been very focussed on this issue. As I indicated, I 
think, when you were out of the room, Senator Grassley, 
Ambassador Barshefsky raised this issue earlier this week with 
China's Vice Minister for Trade, Mr. Sung, and she indicated to 
him that this was a top priority and frankly, this was about 
the credibility of the Chinese with our Congress.
    China committed to immediately begin accepting imports of 
U.S. meat and poultry that have been certified by USDA as 
wholesome. No other technical work needs to be done, and we 
expect China to begin doing that immediately. And we have been 
very clear with them in the starkest of terms that their 
failure to do that would be very unhelpful.
    Senator Grassley. Are they, in fact, saying it is 
conditional?
    Mr. Scher. I am sorry.
    Senator Grassley. Are they, in fact, saying it is 
conditional in regard to meat shipments?
    Mr. Scher. Well, there are a lot of different people saying 
a lot of different things, so I do not want to pretend to speak 
on behalf of the Government of China. The bottom line for us is 
they have not taken the steps they need to take and we have 
told them that they have to take the steps they need to take, 
that the support of many of the agricultural groups and many 
members of Congress--from the pork producers to the cattlemen 
and the poultry producers--frankly is contingent on their 
implementing this agreement.
    Secretary Glickman. If I just might add, the agreement 
language says--it is interesting--it says that China accepts 
the USDA Food Safety Inspection Service meat and poultry export 
certificate of wholesomeness as proof that FSIS-certified meat 
and poultry complies with U.S. inspection standards and 
therefore any meat accompanied by the certificate is eligible 
for import into China. So that is good.
    But on meats, there is still some insistence on their part, 
and again as Peter says, it kind of depends on perhaps who you 
are talking to there, that this allows them to postpone the 
implementation until they are satisfied with our meat 
inspection system and it is possible that they might request 
that we allow quarantine officials to inspect our system as a 
prerequisite for implementation. I do not know; perhaps that is 
for optical reasons within China. And if we open this Pandora's 
box, they will never implement the agreement.
    So I think your point is a good point. It is one that 
Ambassador Barshefsky is working on. I think we can work it out 
but it is not one that is resolved completely yet.
    Senator Grassley. I hope so because I had a chance while I 
was in Seattle to have a meeting with some of my colleagues 
with the trade minister for China and there was nothing about 
that meeting that was in any way negative about China's 
acceptance, not only the wording but the spirit of it, as well.
    In fact, I came away so enthused that, you know, there is 
no problem. Well, maybe if you look at citrus, you would say 
there are no problems, but in the segments of agriculture that 
come from the Midwest, it seems to me that we are being hurt 
because it is not being accepted and it seems to me that China 
then makes it a little more difficult for some Senators to vote 
for normal trade relations and I hope they realize that.
    Has China published its version of the Agriculture 
Cooperative Agreement? And if not, what is the delay?
    Mr. Scher. No, they have not published it. We can find out 
why. We have certainly published our version of the agreement 
and we also have--as you know, Ambassador Barshefsky in Seattle 
signed the Chinese version.
    Obviously they have communicated to some of the key 
ministries aspects of the agreement, which is why I think you 
saw the citrus-inspecting team here and why you saw the wheat 
team here last week. So there are steps being taken. Why they 
have not published, I just do not know.
    Senator Grassley. Mr. Secretary, I understand that you did 
a very good job of explaining to the Chinese in a seminar last 
year how our meat inspection system worked and particularly the 
certification process. When the Chinese attended this seminar 
last year, did you get a sense that they did not understand how 
our meat inspection system operates or that they needed more 
information? Because I am told that we keep hearing from them 
that they need more information about meat inspection before 
they can implement this.
    Secretary Glickman. It was last June, I think, when our 
Food Safety Inspection Service gave the training and no, I was 
not under the impression that at the time there were any 
additional difficulties--whether they wanted plant by plant 
inspection or other kinds of things, which would make it 
impossible for us to practically sell meat products over there.
    This is something that still has to be worked out. It is 
not yet totally resolved and I hope they are listening to this 
exchange.
    Senator Grassley. I have also heard that the Chinese, and 
at what level I do not know but they have told President 
Clinton that they do not want to implement the meat portion of 
the Agriculture Cooperation Agreement before they get into the 
WTO. Have you heard anything of that nature?
    Secretary Glickman. No, have not.
    Senator Grassley. Well, I guess maybe the last point I 
would make to the Chinese leaders is that I hope they do not 
try to link the two. Now, you have not heard of that. Maybe my 
information is wrong. But if there is any attempt to do that, 
that is going to be----
    Secretary Glickman. If they had said something to the 
President on this, I am sure it would have been passed down to 
us. I do not believe that is accurate.
    Mr. Scher. In fact, I think to the contrary, the President 
has made clear to the Chinese that this needs to be done and 
that the agreement and the commitment was that this would be 
done independent of the WTO.
    Secretary Glickman. Senator, I would just tell you quickly, 
you know, they have put together a team of senior officials 
within the departments in the White House full-time to manage 
this China WTO. Patrick Steele, who is the number two person at 
the Foreign Agricultural Service, is a senior member of that 
team full-time in the White House working on WTO. And David 
Lane, who is Secretary Daley's chief of staff, is kind of 
heading the team up. He is a pretty good conduit of information 
and if you or anybody else need to know if something like this 
is happening, you should feel free to contact him directly.
    Senator Grassley. OK. Maybe we can go beyond that and them 
I am done. And that is just the point that if you hear that, 
would you let us know?
    Secretary Glickman. Yes.
    Senator Grassley. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Grassley.
    I have just two more questions. The agreement we are 
talking about today has the tariff reductions that you have 
illustrated in your testimony. But in the past we have noted 
tariff reductions are of limited value where there is no 
competition among importers and where the tariff is being paid 
by our government agency.
    Now, you have touched upon this but can you explain in 
greater detail how the Chinese might go about liberalizing 
their import regime to make our tariff reductions meaningful?
    Mr. Scher. I think there are a couple of points to make. 
First of all, and I think you are right; obviously the tariff 
portion of this is an important portion but it is not the only 
portion, which is why trading rights for U.S. companies and for 
other foreign companies, distribution rights, and frankly, if I 
could just spend a minute on the tariff rate quota system is, I 
think, a perfect example of how Chinese is liberalizing its 
import regime.
    Right now decisions on imports of bulk commodities like 
wheat and corn and cotton are made by the Government. If the 
Government decides they want to import it, they imported it. 
Under the system, the new TRQ system, China will be required to 
issue import licenses--for example, in the wheat area, we are 
about 7.3-million metric tons of import licenses--to end users, 
to millers, to other producers. Those end users will then have 
the right to import. In some cases it is through the state 
trading enterprises but in many cases it is through private 
companies.
    So you are now shifting the burden of that decision-making 
away from the central planners, away from the Government to the 
market, and I think that is a perfect example of how China has 
recognized that the Government cannot continue to make these 
decisions.
    Secretary Glickman. There are also use-or-lose provisions 
in these proposals which say that if the public sector does not 
import, then those amounts can go into the private sector, 
additional amounts, which is, I think, a very positive step.
    The Chairman. China has committed to cap and reduce trade-
distorting domestic subsidies. However, the United States and 
other WTO countries are already bound by specific domestic 
subsidy reduction commitments. As I understand the agreement 
that China will have a determination of this through 
multilateral negotiations.
    Does this mean that China might be granted WTO membership 
before it makes a specific commitment on domestic support and 
if not, when will these multilateral negotiations commence?
    Mr. Scher. That will be done, Mr. Chairman, as part of what 
we call the protocol negotiations. Once the bilateral 
negotiations are finished, then we negotiate multilateral and 
what we call the rules. So China, in that context--we have had 
extension discussions with China looking at and frankly, the 
Economic Research Service at USDA has been critical in this, 
looking at the time period that China wants to use. And if you 
look at any of the time periods that China is talking about, 
you are talking about very limited use of domestic supports, 
frankly, less than a billion dollars where U.S. has $19 billion 
and EU has $60 some billion.
    So we are very confident that China will be bound to limit 
their domestic supports to a very small amount.
    The Chairman. Senator Fitzgerald, do you have questions?

  STATEMENT OF HON. PETER G. FITZGERALD, A U.S. SENATOR FROM 
                            ILLINOIS

    Senator Fitzgerald. Thank you, Mr. Chairman. Yes, I have a 
couple.
    I understand that Senator Roberts earlier brought up the 
issue of the fertilizers and their access to Chinese markets. I 
just want to echo his concerns about that. I agree with him and 
I hope we can work on that.
    I did want to ask you--some of the popular press accounts 
have connected the upcoming vote on normal trading relations, 
permanent normal trading relations with China, with China's 
accession to the WTO. Can you clarify the connection between 
permanent normal trading relations and China's membership in 
the WTO?
    Mr. Scher. Senator, there are two issues. China's actual 
accession does not congressional approval. The President has 
the right to make the decisions, as we have done in other 
cases. In order for the United States to get the full benefits 
of this agreement, Congress must grant permanent normal trade 
relations, and that is a requirement of the WTO. The WTO rules 
essentially say that all members are entitled to immediate and 
unconditional MFN or NTR. So that piece of it requires Congress 
to approve permanent NTR.
    So the result is if China enters the WTO but the United 
States has not granted permanent NTR to China, we risk losing 
the benefits of this agreement. And in that case, our 
competitors in the world market will have benefits in this 
market that we will not.
    Senator Fitzgerald. I am wondering and maybe you could 
elaborate a little bit on the upcoming amendments to the China 
permanent normal trading relations bill. Given the Vice 
President's remarks to labor leaders last week with respect to 
the agreement, I am wondering how committed is the 
administration to getting China permanent normal trading 
relations through the Congress?
    Secretary Glickman. The administration is not only 
absolutely committed; it is, at least in my judgment, the 
highest priority that we have on any kind of domestic policy 
agenda and that is everybody within the administration, 
including the Vice President. So I would not be concerned that 
the administration is not involved in a full court press on 
this issue.
    Senator Fitzgerald. Now, there is a potential for many 
amendments, I would imagine, to that bill. Were you hoping to 
keep it a clean bill?
    Secretary Glickman. We are hoping to keep it clean. We 
recognize that, for example, Senator Baucus has dropped in a 
bill which deals with the issue of monitoring. We think that 
there are a lot of things that are actually pretty good in his 
proposal. We obviously want to work with you but we would hate 
to see this become a receptacle for all sorts of amendments 
which would be counterproductive to what we are trying to do 
with China.
    Mr. Scher. I think one other point I would add, Senator, is 
the agreement cannot be changed. The agreement is what the 
agreement is. If there are amendments that do not seek to alter 
the terms of the agreement, then obviously I think, as 
Secretary Glickman said, we are open to look at those, but the 
agreement itself is the agreement.
    Senator Fitzgerald. And cannot be altered.
    Mr. Scher. Cannot be altered. No, it cannot be altered by 
amendment.
    Senator Fitzgerald. Well, I look forward to working with 
the administration and I applaud your commitment to trade. 
There is no question that opening up the Chinese market to our 
American agricultural sector, I think would be a great boon for 
our agricultural economy and certainly would benefit many 
states, especially my home state of Illinois, and I look 
forward to working with you gentlemen toward the success of our 
initiatives here.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Fitzgerald.
    Senator Conrad, do you have questions for the witnesses?
    Senator Conrad. Thank you. Thank you, Mr. Chairman. And 
thanks to Secretary of Agriculture Glickman and Ambassador 
Scher.

STATEMENT OF HON. KENT CONRAD, A U.S. SENATOR FROM NORTH DAKOTA

    I think the greatest concern that I have is that China has 
a bit of history here of making agreements and then not keeping 
them. There are a lot of things that I could reference. You 
know them better than I do. I think of where we were back last 
year where they signed an agreement and said they were going to 
drop their closing off shipments of U.S. wheat out of the 
Northwest. They were going to stop these spurious claims on TCK 
smut that were blocking our wheat shipments out of the 
Northwest. And they said when they signed that agreement that 
it would be effective upon signature. That did not happen.
    The meat agreement. I understand--I was not here. I 
apologize. We had a vote over on the floor. Senator Grassley 
apparently was making the point with respect to that.
    China has now made a purchase of wheat, a very modest 
purchase, but nonetheless a purchase that shows some good 
faith. Why is this agreement and how is this agreement going to 
be different? And how can we be certain that there will be 
compliance?
    Mr. Scher. Senator, I think this is a very important area 
and I know this is something that you have been focussed on and 
we in the administration have. I think we have taken steps in 
this agreement, frankly, well beyond what we have done in any 
other agreement, to give us as many enforcement tools as 
possible.
    For example, the commitments in the WTO agreement, for 
example on the administration of TRQs, are very specific, 
frankly, more specific than in any other agreement we have had 
with any other country. So, for example, China fails to 
distribute import licenses for the 7.3-million-tons of wheat 
under that TRQ; that will be a violation and we would have the 
right to go to the WTO to enforce that violation and if they 
found in our favor, we would have the right to retaliate 
against them.
    We have preserved all of our rights under our own trade 
laws, including our dumping, Countervailing duty [CVD] laws, 
and we have particularly guaranteed the right to use nonmarket 
economy anti-dumping methodologies.
    We have also created in this agreement, which is not the 
case in any other agreement with any other WTO member, a 
product-specific safeguard for import surges, which would only 
have to meet the standard of market disruption. You and I have 
talked a lot about the 201 law in relation to other countries, 
which has a standard of injury or threat of serious injury. In 
this case it would be a lower standard.
    So if there was an import surge from China, we would only 
have to meet the standard of market disruption. We can move 
much quicker than the normal 201 process and we can impose 
import restraints on China under that agreement.
    We are also going to create within the WTO a multilateral 
review mechanism. So it is not just the United States trying to 
beat up on China to enforce, but it is the other 134 countries 
that would have regular review of this agreement.
    I am not going to suggest to you it is going to be easy, 
but I think we have taken steps to really enhance our 
opportunity to enforce this agreement in a way that will 
benefit U.S. farmers.
    Senator Conrad. Let me ask the Secretary if I could, 
fertilizer is left out of this deal. It is a bit of a mystery 
to me as to why that is the case. Why have we wound up with 
this result, that fertilizer just seems to have been shunted 
off to the side?
    Secretary Glickman. Well, we have spoken about this before. 
Ambassador Scher talked about this with Senator Roberts. Maybe 
you want to repeat that, basically.
    Mr. Scher. Senator, we were able to reduce tariffs. We were 
able to create distribution rights and eliminate quotas on 
fertilizer. The sticking point in November became the issue of 
trading rights, essentially the right to export freely, an 
issue that Ambassador Barshefsky raised directly with Premier 
Zhu Rongji, and we have been very clear to China that this was 
an issue that needed to be resolved. We need to get trading 
rights for U.S. and foreign fertilizer producers.
    China has committed to us to work out a solution. We have 
worked with our fertilizer industry to develop a proposal, 
which has been presented to the Chinese. Our senior China 
negotiator at USTR, Don Phillips, plans to go to China next 
week specifically on this issue because obviously we recognize 
the importance of this issue and the number of Senators and 
House members who have written to us on it. So it remains a 
very high priority.
    Senator Conrad. Secretary, you have indicated we would see 
a very dramatic increase in our exports to China. What is the 
basis of those estimates and how confident are you in them?
    Secretary Glickman. They are Economic Research Service 
estimates. Part of that is based upon the TRQs, which will 
affect oilseeds and oilseed products. Cotton and grains bulk we 
estimate about $1.6 billion and that is a fairly conservative 
estimate. That is an annual increase by the year 2005. We also 
estimate an additional $350- to 400-million in citrus, meats, 
pork, poultry and fruits, vegetables in reduced tariffs, and 
most of this is due to the fact that if you have this little 
blue card that I have put out--I do not know if you have one or 
not but I put it out at every table--it is an estimate based 
upon the tariff cuts, along with the TRQ increases. The tariff 
cuts are very dramatic in the meats area and some of the dairy 
products area, in the citrus area, so that is the basis upon 
which the estimates are made.
    Now, I would also point out interestingly, and Peter, you 
could probably verify this; I understand that assuming this 
agreement is implemented, and we hope it will be, that the 
tariffs that the Chinese will have will be lower than the 
average tariffs, way below the world average tariffs and below 
what a lot of European countries have as tariffs.
    Mr. Scher. Right now, as you know, Senator, and you have 
raised this constantly, the average agricultural tariffs for 
WTO members range from the 40- to 50-percent range. For our 
priorities the average in China will be about 14-percent and 
overall they will be about 17-percent in agriculture, so I 
think we are making great strides on tariffs.
    Secretary Glickman. And then there was some elimination of 
export subsidies, as well, by China, which we put into that $2 
billion figure.
    Senator Conrad. And will they support the elimination of 
export subsidies for everyone? WTO round?
    Mr. Scher. The interesting thing frankly, Senator, we have 
not had a specific conversation about the next round with 
China. We have been focussed on getting this done. But I think 
one of the things we have seen is that the developing countries 
in the WTO have been some of the greatest advocates for the 
elimination of export subsidies. And frankly, China--I should 
correct this--China, which is actually a member of APEC--the 
APEC leaders last year put out a statement, and this included 
China, calling for the elimination of export subsidies.
    So I think we can be very optimistic that with China's 
entry, Europe will be even more isolated on the issue of export 
subsidies.
    Senator Conrad. All right.
    The Chairman. Thank you very much, Senator Conrad.
    Gentlemen, we thank you very much. You have been with us 
well over 2-hours of excellent testimony. It has been very, 
very helpful. We thank you for coming, as always.
    The Chair would like to recognize now a panel composed of 
Mr. Sam Moore, president of the Kentucky Farm Bureau; Mr. Jerry 
Kress, American Falls, Idaho, on behalf of the National 
Association of Wheat Growers; Mr. John Hardin, Jr. of Danville, 
Indiana on behalf of the National Pork Producers Council; Tom 
Suber, Arlington, Virginia on behalf of the Dairy Export 
Council; Mr. Michael Wootton, Washington, DC., on behalf of 
Sunkist Growers; and Mr. Tim Burrack, Arlington, Iowa, on 
behalf of the National Corn Growers Association.
    Gentlemen, we appreciate very much your coming to be a part 
of this hearing this morning. I will ask, if you can, to 
summarize your remarks within a five-minute time period. 
Without asking permission, let me just grant permission for all 
statements to be published in the record in full, and they will 
be.
    Mr. Moore, I will ask you to testify first and then each of 
the witnesses in the order that you were introduced and are 
seated at the table. You received a wonderful introduction from 
your Senator, Mitch McConnell, and we appreciated that and I am 
delighted that you are here. Would you please proceed?

   STATEMENT OF SAM MOORE, PRESIDENT, KENTUCKY FARM BUREAU, 
  LOUISVILLE, KENTUCKY, ON BEHALF OF THE AMERICAN FARM BUREAU 
                           FEDERATION

    Mr. Moore. Well, I do thank Senator McConnell for the 
generous introduction that he gave me.
    I am Sam Moore. I am president of the Kentucky Farm Bureau. 
I raise corn, soybeans, wheat, cattle and tobacco in south 
central Kentucky, Morgantown.
    I am here today on behalf of the American Farm Bureau, 
which represents more than 4.9-million member families in all 
50 States and Puerto Rico. Our members produce every type of 
farm commodity grown in America and depend on access to 
customers around the world for the sale of over one-third of 
our production.
    I appreciate the opportunity to speak before you today on 
the very important issue of the U.S. and China bilateral trade 
agreement and China's accession into the World Trade 
Organization. Farm Bureau has long supported China's entry into 
the WTO on a commercially meaningful basis. This agreement is 
good for the American farmer. Having China in the WTO will 
expand trade among all members, leading to increased global 
economic prosperity.
    Having China in the WTO will bind it to the rules of 
commercial law represented by the WTO and for China, this 
agreement will undoubtedly lead to increased economic and 
political freedom.
    This agreement is also good for American farmers and 
ranchers. China is broadly recognized as the most important 
growth market for U.S. agricultural exports. The Department of 
Agriculture estimates that China's admission into the WTO would 
lead to an increase of $1.7 billion in sales of agriculture 
products within 1-year, just about doubling our current exports 
to that large country.
    In addition, U.S. exports to the Asian region as a whole 
are expected to increase in the next few years as a result of 
China's accession into the WTO. This is likely to occur as 
Chinese consumption levels increase and China ceases to employ 
export subsidies. This agreement may be with China but it would 
have impacts far beyond Chinese borders.
    You know, it is no coincidence that the American farm 
economy started a decline at just about the same time that the 
Asian financial crisis took hold. Since 1997 we have lost 
nearly $10 billion in annual farm exports, with much of that 
loss to the nations in the Pacific Rim. To me there is no doubt 
that increased exports are the key to combatting our current 
farm situation. The agreement with China could spark that 
turnaround.
    In Kentucky, the Nation's leader in the number of small 
family farms, farmers are in great need of some new marketing 
opportunities. I know all of you are aware of the current 
problems facing tobacco, Kentucky's leading cash crop. In just 
3-years, our 45,000-tobacco-farmers have lost over 65-percent 
of their production quotas set by the price support program. 
That translates into more than a half a billion dollars in lost 
farm income in Kentucky alone in a very short time. Needless to 
say, we are faced with a very serious economic problem in rural 
Kentucky.
    Our governor and our state legislature currently are 
addressing this problem with legislation that would appropriate 
50-percent of the funds that Kentucky is to receive from the 
phase one of the master settlement agreement on tobacco. 
However, any expansion or diversification of our farm economy 
will hinge on finding buyers for the commodities we produce to 
replace lost tobacco income. Simply put, Kentucky farmers need 
marketing opportunities at home and abroad.
    I would like to also mention the commitment that the U.S. 
has retained or strengthened as a result of this agreement to 
protect the U.S. market from unfair dumping of products by the 
Chinese. The U.S. will retain our current anti-dumping 
methodology, which treats China as a nonmarket economy in the 
future without the risk of a WTO challenge. This provision will 
remain in force for 15-years after China's accession into the 
WTO. It is important that we were able to retain this 
provision, given the production characteristics of an economy 
dominated by state-and quasi-state-run operations.
    This agreement also ensures that American farmers and 
ranchers will have substantial protection against import surges 
of Chinese products. This mechanism, labeled the product-
specific safeguard, will address increased imports that cause 
or threaten to cause market disruption to any U.S. industry or 
sector.
    The Chinese have offered American agriculture a historic 
opportunity which would greatly enhance our export potential at 
a time when it is drastically needed. If this agreement is 
enacted, farm income in the United States will be positively 
impacted.
    China has also offered the equivalent of this bilateral 
negotiation to many of our competitors. China will join the WTO 
and our competitors will have the market to themselves unless 
Congress acts quickly to grant China permanent normal trading 
relations. Permanent normal trade relations would help provide 
for the continuance of the U.S. economic expansion and 
hopefully that expansion would flow into the U.S. agriculture 
sector.
    Farmers and ranchers are already hampered in developing 
export markets by our own unilateral sanctions and the unfair 
trading practices of other competing nations. We must ensure 
that we do not unilaterally disengage from this historic 
opportunity for American farmers and ranchers.
    We urge Congress to grant permanent normal trading 
relations with China as soon as the vote can be scheduled. 
There are a host of reasons to do so but none better than 
improving the daily life of the American people or American 
farmers and the Chinese people. Thank you very much.
    [The prepared statement of Mr. Moore can be found in the 
appendix on page 62.]
    The Chairman. Thank you very much, Mr. Moore.
    Mr. Kress.

STATEMENT OF JERRY KRESS, ON BEHALF OF THE NATIONAL ASSOCIATION 
OF WHEAT GROWERS, IDAHO WHEAT COMMISSION, AND THE WHEAT EXPORT 
        TRADE EDUCATION COMMITTEE AMERICAN FALLS, IDAHO

    Mr. Kress. Good morning, Chairman Lugar, members of the 
Committee. My name is Jerry Kress. I am a wheat producers from 
Idaho. I am pleased to be invited to speak today on behalf of 
the entire United States wheat industry.
    The Chinese market is critically important, not only to me 
but to the entire wheat industry. I want to make absolutely 
clear at the outset that wheat producers across the United 
States strongly support China's entry into the WTO and we urge 
in the strongest possible terms the immediate approval of 
permanent normal trade relations for China.
    I have been in China three times. Each time I was there, 
millers and end users emphasized the desire to have access to 
United States wheat, especially wheat from the Pacific 
Northwest part of this country. Unfortunately, China has 
maintained a nontariff trade barrier on U.S. wheat from the 
Pacific Northwest ports since 1972 and has also maintained that 
barrier from Gulf ports since 1996 due to the perceived threat 
of TCK, a wheat fungus. This barrier to the Chinese market has 
had a very negative economic impact on all U.S. wheat 
producers.
    In April of this last year, Prime Minister Zhu Rongji 
announced China's intention to lift its longstanding 
restriction on the import of U.S. wheat from areas where TCK is 
known to occur. This agreement allows U.S. wheat to move from 
any state or any U.S. port to any Chinese port so long as the 
tolerance level of 30,000 TCK spores per 50-gram sample is not 
exceeded. This level can be easily met by U.S. wheat exporters 
while acknowledging China's concerns about the disease.
    The TCK announcement followed more than 20-years of 
extensive and at times frustrating discussions between the 
United States and China, and I personally participated in some 
of those discussions and I know how frustrating they have been.
    But finally, the United States and China agreed to let 
science rather than political or other considerations determine 
the terms of trade between our two countries. This is in accord 
with the principles of the Uruguay Round agreement on SPS 
issues.
    In November of this last year, the U.S. and China completed 
negotiations on China's entry into the WTO. The WTO agreement 
was formalized when the Chinese language version was signed in 
Seattle in December.
    In accordance with this agreement, you have heard that we 
will be able to export more wheat because of the TRQ levels to 
China, and I will not go into the details of those because they 
have been presented several times to the Committee already.
    China has just demonstrated its sincerity about these 
agreements where it counts most--in the marketplace. Taking a 
major step toward implementation of its agricultural agreements 
with the United States, the People's Republic of China this 
week purchased 50,000 metric tons of United States wheat from 
the Pacific Northwest. The purchase is significant in that it 
is a reliable indication that the Chinese are establishing a 
sound basis for future trade with the United States.
    China is the world's largest wheat-producing country, the 
largest wheat-consuming country, and many years it is the 
largest wheat-importing country. The United States is the 
largest wheat exporter in the world. U.S. wheat exports to 
China have varied over the years, contingent upon Chinese 
needs. But through the early 1990s, China imported between 1-
million metric tons and 5.6-million-metric-tons of United 
States wheat each year. In recent marketing years, China's 
needs have declined and the market has declined significantly, 
due not only to decreases in China's needs but in their 
stringent enforcement of the zero tolerance policy on TCK.
    But we expect China in the future to once again become a 
major importer of United States wheat. We base our expectations 
on economic developments and production constraints in China. 
China has a huge and growing population, burgeoning coastal 
cities, growing demand, declining stocks, stagnant acreage and 
reduced domestic price supports. We anticipate that over a 
period of a few years, increased China trade will have a 
significant impact on the world's supply and demand situation 
for wheat, and that should be very positive for prices.
    To put it plainly, nothing else on the horizon could have 
such a big impact in the short term on U.S. wheat exports and 
the economic stability of the wheat industry or hold such 
potential for expanded growth in the future. In order for U.S. 
wheat producers to realize this potential, it is absolutely 
critical that Congress approves PNTR for China as soon as 
possible.
    By granting PNTR for China, Congress will be giving nothing 
away to China, the point that was made earlier. Our market is 
already open to them. However, you will be fulfilling one of 
the unmet promises of the 1996 Freedom to Farm Bill--that of 
continuing to provide export markets for United States farmers 
and ranchers. I believe that every farmer would rather have 
open and fair markets. Every farmer would rather receive a fair 
price for his product than to receive payments from the 
Government. Farmers want to add to the balance of payments by 
exporting our product. This point is especially timely now that 
the U.S. trade deficit has reached its all-time high.
    Various people, including Ambassador Barshefsky, have 
stated that it would indeed be ironic if the United States, 
after 14-years of negotiations, failed to grant China PNTR. By 
doing so, we would allow our competitors to have the benefits 
of opening the China market. This would amount to another self-
imposed sanction on the agriculture community, sanctioning us 
out of a major world market.
    I believe I speak for the entire United States wheat 
industry in saying we look forward to working with you and 
others in Congress to make PNTR for China happen this year. The 
wheat industry will do everything it can to mobilize grassroots 
support and you will see our members in the halls of Congress.
    It is necessary, however, for supporters in Congress and 
for the administration to exhibit strong leadership and 
cooperation in order to deliver a positive vote. The 
administration must make this an absolutely top priority and 
not be deterred from the right course of action by the 
difficulties of the primary and general election campaigns.
    We have heard this week the disturbing opinion expressed 
around Washington that it does not really matter whether PNTR 
is passed this year, that you can go ahead and pass it next 
year. We believe this is absolute folly. If you want to slap 
the Chinese in the face--they have come and they have 
demonstrated their sincerity and they bought U.S. wheat--if you 
want to slap China in the face, if you want to precipitate the 
potential fall of Zhu Rongji in China and the possible fall of 
the Government of Jiang Zemin, if you want to pave the way for 
the hardliners to regain sway in China and stifle Chinese 
reforms and give those who rattle the sabre against Taiwan the 
lead role and the sway in China, then fail to pass PNTR this 
year.
    The time is now. The opportunity is at hand. Do not be 
lulled by any temporary political advantage into believing that 
you can always set right next year what you fail to do right 
today. This is an opportunity that we cannot let slip away.
    Thank you again for the chance to appear today and I look 
forward to responding to your questions.
    [The prepared statement of Mr. Kress can be found in the 
appendix on page 67.]
    The Chairman. Thank you, Mr. Kress. As you have noted 
already, there is some urgency with this committee with this 
item and, of course, that is why we are having the hearing 
today and we appreciate so much your participation.
    The next witness is the distinguished Hoosier farmer. John 
Hardin and his family have been involved in international work, 
in addition to the specific work they have done, international 
trade for agriculture. It is a real privilege to have you 
before the Committee today, John. Would you please participate 
and testify?

 STATEMENT OF JOHN HARDIN, JR., ON BEHALF OF THE NATIONAL PORK 
              PRODUCERS COUNCIL, DANVILLE, INDIANA

    Mr. Hardin. Thank you very much, Mr. Chairman. I appreciate 
your remarks. I am a pork producer from Central Indiana and 
also run a grain farm.
    As of today, China's de facto ban on pork imports remains 
in effect, making it virtually impossible to export pork 
directly to China. There are two agreements that impact the 
future of U.S. pork exports to China. The first is the 
Bilateral Agreement on U.S.-China Agricultural Cooperation, in 
which China committed to accept beef, pork and poultry from any 
USDA-approved plant. In other words, China agreed to accept 
products from the same inspection system that assures the 
safety of the meat and poultry that Americans eat every day.
    The second agreement is the U.S.-China WTO Agreement that 
covers many issues and sectors, including pork. Unfortunately, 
the Bilateral Agricultural Cooperation Agreement, which both 
sides agreed became effective in Seattle in December, is not 
being implemented by the Chinese. China now argues that the 
Chinese language version of the agreement signed in Seattle 
does not obligate China to accept meat from all USDA-approved 
facilities.
    Now, I am not a linguistic scholar but I can tell you this: 
the English language version of the agreement, which was signed 
by both sides last April and which I understand is legally 
binding, requires China to accept pork, beef and poultry from 
all USDA-approved facilities. Moreover, China's recent request 
for further information concerning our meat inspection system 
underscores China's intention to disregard the agreement.
    Between late 1996 and early 1999, Chinese government 
officials made five trips to U.S. meat and poultry facilities. 
During this time, U.S. government officials and U.S. private 
sector representatives provided Chinese officials with 
exhaustive information on our meat inspection system. These 
visits and exchanges of information culminated in the signing 
of the Bilateral Agricultural Cooperation Agreement in April of 
1999. As a followup to the April agreement, last summer USDA 
hosted meat industry officials from every province in China for 
a training seminar based on the April 1999 agreement. Thus, 
there is absolutely no need to host another Chinese delegation 
or otherwise provide information to the Chinese concerning our 
meat inspection system. These delaying tactics by the 
Government of China must not be accepted by the U.S. 
government. We have an agreement and the Chinese must honor 
that agreement.
    I want to be clear that China's failure to implement the 
Bilateral Agricultural Cooperation Agreement is not the fault 
of our trade negotiators. They have been steadfast in pushing 
China to honor its commitment and to implement the bilateral 
agricultural accord. The failure to implement this agreement 
rests squarely on the shoulders of the Government of China.
    We have raised this issue privately with the Chinese to no 
avail. We are now compelled to speak publicly on this most 
important issue, as the time necessary to fully implement the 
Bilateral Agricultural Agreement is short. We are not alone. 
Our friends in the beef and poultry industries share these very 
serious concerns.
    To add insult to injury, the Chinese recently struck a deal 
on sanitary measures with the Canadians. According to reports 
from both the press and our Canadian counterparts, Canadian 
meat exports to China will soon begin.
    Mr. Chairman, I cannot overstate the level of concern in 
our industry regarding this issue. Our trade officials 
repeatedly have asked the Chinese to publish and publicize the 
bilateral accord in China. To date, the Chinese have not done 
so. At a minimum, China must publish regulations which 
explicitly provide that any importer in China can bring in meat 
and poultry from any USDA-approved plant.
    Having said all this, I want to make it clear that we 
continue to support permanent normal trade relations for China. 
In spite of the current serious problems, we remain optimistic 
that China will fully implement the Bilateral Agricultural 
Cooperation Agreement.
    Mr. Chairman, we appreciate your support and the support of 
the members of this committee and we look forward to working 
with you to make the bilateral agreement work and to get 
permanent normal trade relations for China passed. Thank you.
    [The prepared statement of Mr. Hardin can be found in the 
appendix on page 72.]
    The Chairman. Thank you very much, Mr. Hardin.
    Mr. Suber.

 STATEMENT OF THOMAS M. SUBER, EXECUTIVE DIRECTOR, U.S. DAIRY 
                         EXPORT COUNCIL

    Mr. Suber. Good morning, Mr. Chairman and members of the 
Committee. I am Tom Suber, executive director of the U.S. Dairy 
Export Council and I am very pleased to appear before you today 
to testify in favor of the U.S.-China trade agricultural 
agreement and, in particular, its impact on the dairy sector.
    The U.S. Dairy Export Council is a nonprofit, independent 
membership organization representing the trade interests of 
U.S. milk producers, proprietary processors, dairy 
cooperatives, and export traders. We maintain offices in eight 
countries, including two in China, to pursue our mission of 
increasing exports of U.S. dairy products worldwide. The 
council works closely with and coordinates with other dairy 
groups on activities of like interest and today the National 
Milk Producers Federation shares the views I am presenting to 
the Committee.
    With more than $24 billion in farm cash receipts, the U.S. 
dairy industry is the second largest agricultural commodity 
sector in the U.S. Beyond farm receipts, dairy processors add 
considerable value to milk as it becomes exportable products, 
such as cheese, butter, milk powder and specialty proteins.
    Most importantly for the subject at hand, however, U.S. 
ability to increase milk production is virtually unconstrained. 
In fact, U.S. milk supply grew a remarkable 3-percent plus last 
year, to reach a new record high.
    This makes our efforts to market U.S. dairy products for 
export all the more important to the industry and to the 
national economy, but the U.S. dairy industry is at a 
disadvantage in compared to the large export subsidies and high 
tariffs used by Europe, Canada, Japan and other members of the 
WTO. Precisely because of these trade distortions, the China 
agreement is extremely important. It provides for both greater 
sales into China, as well as providing a push for greater 
overall dairy exports by achieving greater reform and global 
trade. Thus, the U.S. dairy industry strongly supports the WTO 
U.S.-China Agreement and consequently calls for Congress to 
grant China permanent normal trade relations.
    One of the primary points I would like to make is that 
China, in joining the WTO, is granting all the concessions. No 
additional access to U.S. markets is provided to China beyond 
that which it currently enjoys. Once implemented, Chinese 
tariffs for key dairy products will be cut as much as fivefold, 
making imported dairy products less expensive to Chinese 
consumers.
    U.S. negotiators were remarkably successful in obtaining 
tariff concessions for dairy products in which the U.S. has 
either competitive parity or an advantage. In cheese, lactose, 
ice cream and infant formula, the declines are quite 
substantial and will increase our opportunities significantly.
    Because of China's existing import barriers and relatively 
low per capita income, dairy consumption is currently 
relatively low. However, as a market in transition, it offers 
tremendous potential to expand dairy product consumption. As 
their economy changes, per capita dairy consumption has 
increased. Urbanization, nutritional awareness, Westernization 
of their diets, income growth and availability have all had a 
positive effect on imports.
    Specifically, the fast food industry and other markets have 
had a profound effect on the consumption of dairy products. As 
a member of the WTO, China would be able to experience similar 
growth in a sector currently not as developed, where it uses 
cheese on pizza, hamburgers, yogurt and ice cream to drive 
sales of U.S. dairy products.
    Whey and lactose also constitute some of our largest 
exports to China. In fact, U.S. is the largest single supplier 
of both these products to China. Though considered a cheese by-
product, whey and lactose sales can increase plant productivity 
and profitability while also increasing the pressure on prices 
paid to farmers for milk made into cheese.
    The tariffs described above will apply to all the WTO 
countries, yet the agreement puts the U.S. in a greater 
position to compete for the Chinese market. Consequently, a 
second key point I would like to make is that if other nations 
ratify China's accession to the WTO and the U.S. does not, then 
the U.S. would likely forego any WTO tariff concessions while 
only our competitors would benefit.
    Therefore, permanent normal trade relations are critical to 
achieving what we estimate would be at least $135 million more 
sales after tariffs have been fully phased down for U.S. dairy 
products. We believe this is a conservative estimate based upon 
the potential of the market and the relative lack of capability 
of the Chinese to expand their own domestic milk production.
    In addition, the China agreement offers invaluable 
opportunity to continue the reform of worldwide dairy trade in 
the WTO due to China's promise to eliminate export subsidies 
for agricultural products. This will provide significant 
momentum to our effort to seek the elimination of all export 
subsidies during the current WTO talks.
    Like all WTO members, upon joining, China will be subject 
to binding resolution of trade disputes. In light of the recent 
favorable ruling of a WTO panel against Canada for its practice 
of circumventing its dairy product export subsidies, the U.S. 
industry is confident of the WTO's ability to eventually 
enforce fair and equitable trading practices.
    Of course, we know that not everyone share's agriculture's 
enthusiasm for granting PNTR to China. We believe some of these 
concerns are legitimate, of course, dealing with Chinese labor 
and human rights practices. However, we believe that bringing 
China to WTO as a full-fledged member is the best way to 
address these concerns.
    Beyond all the rhetoric and predictions however, what we 
believe is the simple truth is that China is on track to join 
the WTO whether the U.S. approves PNTR or not. If we deny 
permanent normal trade relations, our dairy competitors from 
Europe, Australia, New Zealand and Argentina will enjoy the 
benefits of the lower tariffs and we will not. We will put 
ourselves at a competitive disadvantage at the precise instant 
the world's largest market is opening itself up to the world. 
There will be a missed opportunity from which the U.S. would 
have a hard time recovering.
    On behalf of the U.S. dairy industry, I urge Congress to 
grant China permanent normal trade relations this year and we 
welcome this committee's interest in ensuring that benefits for 
dairy and agriculture in general are carried out. Thank you.
    [The prepared statement of Mr. Suber can be found in the 
appendix on page 79.]
    The Chairman. Thank you very much, Mr. Suber.
    Mr. Wootton.

 STATEMENT OF MICHAEL WOOTTON, DIRECTOR OF FEDERAL GOVERNMENT 
           AFFAIRS, SUNKIST GROWERS, WASHINGTON, DC.

    Mr. Wootton. Thank you, Mr. Chairman, Senator Cochran. I am 
Michael Wootton, director of Federal Government Affairs for 
Sunkist Growers.
    As you may know, Sunkist Growers is a 107-year-old 
nonprofit farmer-owned marketing cooperative comprised of 6,500 
citrus farmers in California and Arizona. Today our growers 
produce about 65-percent of the oranges, lemons, grapefruit and 
tangerines grown in Western United States. And we have enjoyed 
at Sunkist a long and successful history of developing and 
expanding foreign markets, to the point where today about 33-
percent of our fresh fruit is sold in overseas markets, and 
that accounts for about 45-percent of our farmers' fresh fruit 
revenue.
    I would like to first commend the Committee for holding 
this hearing today on the subject of the U.S. China 
agricultural trading relationship and examining whether the 
recently concluded U.S. China trade agreement enhances that 
relationship.
    Market access for U.S. citrus fruit exports to the huge and 
potentially profitable consumer markets of China has long been 
a goal and an objective both for the U.S. citrus industry and 
for our government. With growing intensity and determination 
since signatures were first affixed to the 1992 Bilateral 
Memorandum of Understanding entered into between the two 
countries, negotiators from the Office of the U.S. Trade 
Representative and from the U.S. Department of Agriculture have 
pursued this objective.
    Last spring these efforts finally reached fruition with the 
achievement of a citrus market access agreement which included 
acceptance by China of specific work plans and phytosanitary 
protocols for each of the U.S. citrus production states--
Arizona, California, Florida and Texas. This phytosanitary 
agreement and the implementing work plans and protocols 
constitute, in our view, a model for commodity trade 
agreements, negotiated by USDA and USTR in close coordination 
with the U.S. citrus industry.
    By accepting these terms, China has joined with the United 
States in adhering to sound science and pragmatism in its 
application to trade policy. China is committed to fully abide 
by the terms of the WTO SPS agreement requiring that all 
animal, plant and human health import requirements be based on 
sound science, not political or protectionist concerns.
    In keeping with the obligations of that agreement, as 
Secretary Glickman and Ambassador Scher noted, last month 
Chinese phytosanitary inspectors conducted a two-week 
inspection tour of Florida, Texas, Arizona and California and 
they concluded that all of the phytosanitary requirements 
incumbent upon the U.S. producers in that agreement had indeed 
been met.
    We are now awaiting an announcement by the Chinese 
government officially opening their markets to U.S. citrus for 
the first time since 1980. And as the Secretary earlier noted, 
certainly that market opening will certainly demonstrate to all 
concerned that they do indeed fulfill their commitments.
    So we are very eager to enter into that market. In fact, 
Mr. Chairman, I have a sample of one of our cartons ready-made 
for the China market, celebrating the Year of the Dragon, which 
we hope to fill with fruit soon and be able to ship.
    Under the terms of that U.S.-China trade agreement, 
benefits, in our view, accrue exclusively to U.S. interests, 
including the interests of our industry. China has agreed to 
dramatically reduce its tariffs on citrus imports from the 
current level of 40-percent to 12-percent by 2004. They have 
imposed no quota or volume limits, so we are eligible to ship 
whatever the market will demand.
    But in order to be able to benefit from these hard-fought 
trade concessions, China clearly must gain membership in the 
WTO and the Congress must extend PNTR to China.
    I should also note that ultimately when their tariff 
reductions take place, even including the fact that they have a 
value-added tax, that the burden on our imports into the China 
market will be still significantly less than the current tariff 
burden that we face in a mature market like Japan, which is our 
biggest market in Asia.
    In our view therefore, it is not an overstatement to say 
that China will in the course of the next several years become 
the single most important U.S. agricultural export market. 
Studies have indicated there is a consumer market with 
disposable income of upwards of 200-million people in China 
today. The middle class in China is projected to grow by 170-
million over the next 5-years.
    We urge the Congress therefore to extend to China the same 
normal trade relations policy granted on a permanent basis to 
133 WTO country trading partners. To our advantage, that 
membership will furthermore obligate China to adhere to the 
same rules of international trade and commerce as subscribed to 
by all other WTO member countries, including the United States.
    Thank you, Mr. Chairman. I appreciate the opportunity to 
present our views.
    [The prepared statement of Mr. Wootton can be found in the 
appendix on page 86.]
    The Chairman. Thank you very much, Mr. Wootton.
    Mr. Burrack.

   STATEMENT OF TIM BURRACK, ON BEHALF OF THE NATIONAL CORN 
     GROWERS ASSOCIATION AND AMERICAN SOYBEAN ASSOCIATION, 
                         ARLINGTON, IA

    Mr. Burrack. Thank you, Chairman Lugar, Senator Cochran. I, 
too, have an information-packed testimony this morning, so I 
will follow the example set by Henry VIII when he told his 
wives, ``I will not keep you long but it will be intense.''
    My name is Tim Burrack and I produce corn and soybeans in 
Northeast Iowa and I am here today representing the National 
Corn Growers and the American Soybean Associations. Both of 
these organizations see tremendous potential in the expanding 
Chinese market. The People's Republic of China, with a 
population estimated at 1.25-billion, is considered the most 
important growth market for U.S. agriculture.
    Economic expansion in China will contribute to increased 
consumption of food and fiber. It will also create export 
opportunities for U.S. farmers, but only if Congress eliminates 
the sanctions that treat China differently than any other 
trading partner.
    Last November, China and the United States completed 
bilateral negotiations for China's admission to the WTO. China 
agreed to one-way trade concessions, creating new market 
opportunities for corn and soybeans. In return, the United 
States agreed to grant China permanent normal trade relations.
    As a farmer from the Midwest, it is hard for me to see how 
Congress can say no to a deal like this. The agreement with 
China will significantly reduce the border restrictions that 
have kept U.S. farmers from fully benefitting from our 
comparative advantage in agricultural production. China agreed 
to rapidly cut tariffs by more than half on priority 
agricultural products and to end its system of discriminatory 
licensing and import bans for bulk commodities.
    As a corn and soybean farmer, I expect to benefit from the 
entire trade agreement. Increased exports of meat, poultry and 
dairy products will translate into increased domestic demand 
for grains and oilseeds, specifically corn.
    China has been a sporadic customer for U.S. corn farmers. 
Our exports spiked during the 1994 marketing year at 130-
million bushels. Two-years later, China did not buy a single 
bushel. Under the WTO accession agreement, China has committed 
to establish a tariff rate quota for corn. This will give us 
the opportunity to build markets rather than wait for China to 
let corn come in. The TRQ will apply to 177-million-bushels in 
the first year and increase to 283-million-bushels in the 
fourth year. With the TRQ, we can easily exceed the export 
levels of 1994.
    The state-run grain trading enterprise and private sector 
will share the quota. The private sector share will increase 
from 25- to 40-percent during the 4-year implementation. 
Additionally, any quota not used by the end of October will be 
released for private sector use. The introduction of private 
trade will ensure increased opportunities for U.S. corn 
exports.
    Perhaps the most exciting provision for U.S. corn farmers 
in China's commitment to eliminate export subsidies. China is 
the second largest producer of corn in the world, producing 
over 5-billion bushels last year. Over the last several years, 
China has aggressively exported surplus corn at the expense of 
U.S. corn farmers. In February the USDA increased its 
projection for Chinese corn exports by 120-million bushels to 
315-million bushels. When China eliminates export subsidies, 
U.S. corn will be very competitive in markets that have been 
buying subsidized Chinese corn.
    On soybeans, for the U.S. soybean industry, China 
represents the largest potential market for the 21st century. 
When the Uruguay Round agreement was concluded, the American 
Soybean Association conditioned its support on a commitment by 
the administration to make oilseeds and oilseed products a key 
priority. American Soybean Association [ASA] and the National 
Oilseed Process Association have met regularly with the USTR 
and the USDA over the past 5-years to emphasize the importance 
of obtaining a significant increase in access for soybeans, 
soybean meal and soybean oil into the Chinese market.
    The China WTO accession agreement negotiated last November 
is particularly beneficial to the U.S. soybean producers and 
the soybean industry. It will lock in currently applied tariffs 
on soybeans and soybean meal at 3-percent and 5-percent 
respectively. For soybean oil it will reduce and bind the 
current tariff from 13-percent to 9-percent and increase the 
amount of soyoil imports at this duty from 1.7- to 3.2-million 
tons over the 6-year period.
    The tariff on over-quota soyoil will be reduced to 9-
percent in 2006, after which the TRQ will be eliminated.
    U.S. soybean producers strongly support the China WTO 
accession agreement and urge Congress to approve PNTR relations 
for China as quickly as possible. We already have too many 
restrictions on U.S. farm exports in the form of unilateral 
economic sanctions. To turn access to the Chinese market over 
to our competitors after negotiating this agreement would deal 
a terrible blow to efforts to restore profitability to the U.S. 
farm economy.
    Conclusion. Quite simply, this is a one-way deal for U.S. 
agriculture. We gain access to the largest market in the world 
and we give up nothing in return. We may not know the magnitude 
of this market-opening opportunity for several years but what 
is abundantly clear is that U.S. farmers will only benefit from 
this trade agreement if Congress approves permanent normal 
trade relations for China.
    On behalf of the National Corn and Soybean Associations, we 
will be working diligently for passage of this agreement. Thank 
you.
    [The prepared statement of Mr. Burrack can be found in the 
appendix on page 89.]
    The Chairman. Thank you very much, Mr. Burrack.
    Senator Cochran, do you have comments or questions?

STATEMENT OF HON. THAD COCHRAN, A U.S. SENATOR FROM MISSISSIPPI

    Senator Cochran. Mr. Chairman, thank you very much. I came 
over to thank you for having this hearing and letting us have 
the opportunity to receive comments and statements from 
Secretary Glickman the U.S. Trade Representative's Office about 
the agreement that has been reached with China. And this panel 
has a particularly important role, I think, at our hearing 
today to tell us what the practical consequences are for a 
number of commodity groups and agricultural interests in the 
United States if we approve permanent normal trade relations 
with China and try to implement this agreement that has been 
reached.
    I support our approval of normal trade relations with 
China. I think it is in our best interest. I think it is clear 
that it will improve our opportunities to sell more of what we 
produce in that market and the potential for growth there is 
enormous, and you have all eloquently talked to that point.
    There have been some problems because of failure to reach 
agreement on some items, such as the export of fertilizer to 
China. We had hoped that, that agreement would include some 
language relating to the state-owned agriculture fertilizer 
enterprises in China and the monopoly that it now enjoys in 
that market. And unless some change is made in policy, it may 
very well continue as a government-owned monopoly in the 
future, or at least government-sanctioned monopoly in the 
future.
    I have had an opportunity to talk this week with both 
Ambassador Li of China and the Vice Minister of Trade and 
Economic Development, Minister Sung, who has been here in 
Washington. I hope that we have been able to impress upon the 
Chinese the importance of making this change and recognizing 
the importance of an opportunity for Americans and others to be 
able to sell chemical fertilizers in China.
    The European Union, as some of you have pointed out and 
observed, are continuing their round of discussions on an 
agreement. It may be that, that will offer an opportunity for 
the Chinese to make some commitment in this regard. We hope 
that they do.
    It may be difficult to pass legislation in the Congress 
right now on normal trade relations because of the white paper 
that has been written with respect to Taiwan and whether or not 
that is a new and different kind of impression that China has 
of their relationship with Taiwan needs to be explored.
    And there are other problems. I am not saying that 
everything is perfect and that we are going to have no 
complaints about policies in China. We will have, I think, more 
opportunities to have access to discuss these problems and to 
work out and resolve differences for our mutual interests, best 
interests, and in the cause of stability of the relationship 
and ultimately peace in the world.
    So I am hopeful that this is a step that the Congress will 
agree to take and I intend to do everything I can here in the 
Senate to push the process forward and see that we approve 
normal trade relations as soon as possible.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much, Senator Cochran.
    Senator Cochran has mentioned the fertilizer issue, as have 
several Senators today to specifically get a response from the 
administration on this issue. This is still unsettled business 
but I appreciate at least that the issue has been raised, and 
that was one purpose of our situation today.
    Three of you have mentioned unilateral economic sanctions 
imposed by our own government. This has been a subject of 
intense advocacy by this committee to remove them and we have 
passed legislation from the Committee that is agriculture-
specific. We have also tried various other committees in terms 
of more general policy changes, not without some success; 
namely, our own government has been imposing these fewer and 
fewer times and there is a more rational argument now in terms 
of the threshold of what ought to occur. But nevertheless, this 
still remains unfinished business and we appreciate your 
underlining it in your testimony.
    Mr. Hardin, you have heard earlier the discussion with 
reference to pork, I think Senator Grassley and Senator 
Fitzgerald and others have raised this issue on inspection, 
because it is a very serious one. You have gone into greater 
detail about the numbers of Chinese delegations and the degree 
of scrutiny with which all of this has occurred.
    What was your reaction to the administration witnesses as 
they tried to respond to this issue, as they did earlier on 
today? Do you feel any sense of hope, optimism, or what would 
you advise, having heard them?
    Mr. Hardin. Well, the purpose in my going into such detail 
was obviously to go beyond this room as to how very important 
this is to the pork industry for our final support. I remain 
hopeful, but the Chinese must fulfill their commitments.
    The Chairman. And it is apparent that they have not done so 
and they have bought pork apparently from Canada. With all 
these contacts you have had with the Chinese, do you have any 
inkling as to what is going on here?
    Mr. Hardin. I guess I will engage in some uninformed 
speculation. There are obviously many levels that need to make 
a change in Chinese society and I think we have to get down 
below the Chairman's level to confront that and move them 
along, but it is absolutely essential that we settle this now.
    I remember 9-years ago this spring Ambassador Hills told 
me, ``Withdraw your suit and I will get you access to the 
European Community.'' Kevin sitting behind you has worked 
innumerable hours on these types of issues with Europe and it 
is absolutely important that we settle this now and move on.
    The Chairman. Let me ask you, Mr. Suber, about the dairy 
situation. You have what I thought was an optimistic forecast 
of $135 million of sales. How would that be broken down? In 
your testimony you mentioned several types of products the 
Chinese might want to purchase but the logistics factors would 
seem to be considerable, except maybe for a solid product of 
some sort, and the distribution process. How did you come up 
with the sales forecast?
    Mr. Suber. The bulk of it, on a volume basis, we would say 
is in the ingredient sector, such as whey and lactose, which 
does not have a logistical issue because it moves 
unrefrigerated, much of which goes to animal feed for their 
burgeoning pork industry, in fact, but also into food 
processing that is gaining greater and greater sophistication 
in China.
    But on a value basis, a good chunk of that would be 
represented by cheese and ice cream. Cheese, the big driver, as 
I mentioned, for cheese consumption around the world has been 
pizza. The tariff on cheese has made pizza generally an 
uncompetitive menu item for most fast food chains. This will 
make it a competitive food item and the success that the 
company Tricon has had in its Kentucky Fried Chicken chain will 
be able to transfer to its Pizza Hut chain and to its 
competitors to drive more pizza consumption and we expect that 
it will be a player, not the only player but a player in 
providing cheese to that market.
    The Chairman. It was mentioned by you, Mr. Hardin, and 
maybe earlier by the administration witnesses in response to 
questions, that the agreement has not yet been published in 
China, which is a curious situation and, of course, difficult 
as you try to resolve the pork situation, but that could be 
true of others.
    Do you have any idea as to why? What have the Chinese 
people you have talked to had to say about that?
    Mr. Hardin. Well again, I believe there is resistance below 
the highest levels and the highest levels must dictate to those 
below what has been agreed on. And obviously China today is not 
a country of law, and this is part of the very essential 
transition to that, to make things move forward, and we must be 
firm.
    The Chairman. Senator Cochran, do you have additional 
questions?
    Senator Cochran. No, thank you, Mr. Chairman. We appreciate 
very much the assistance of this panel though, to our 
understanding of the practical consequences of this agreement.
    The Chairman. We do indeed. Many of you have had from your 
testimony extensive contact with Chinese citizens and 
government officials. As you heard from Senators today, who 
were not merely name-dropping, this has been a committee that 
has been internationally involved with a good number of members 
having visited China and had specific interest in this treaty, 
as well as in specific commodities, and that will continue to 
be the case. We are grateful for these contacts but they 
probably are very important.
    To pick up the point Mr. Hardin has made, the Chinese 
debates internally would appear to be very substantial. We have 
talked today about our debates and it is substantial and we 
admit this, but nevertheless, in China it is apparent that 
there are very diverse views as to whether this is a good thing 
or not for a society that might go forward or might not.
    So it is a critical moment for us to understand the 
politics of each other and to some extent through our dialogue 
perhaps to enhance the possibilities.
    We thank all of you for coming. We thank everyone who has 
participated in the hearing and the hearing is adjourned.
    [Whereupon, at 11:34 a.m., the Committee was adjourned.]
      
=======================================================================


                            A P P E N D I X

                             March 1, 2000



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

[GRAPHIC] [TIFF OMITTED] T7570.001

[GRAPHIC] [TIFF OMITTED] T7570.002

[GRAPHIC] [TIFF OMITTED] T7570.131

[GRAPHIC] [TIFF OMITTED] T7570.132

[GRAPHIC] [TIFF OMITTED] T7570.133

[GRAPHIC] [TIFF OMITTED] T7570.134

[GRAPHIC] [TIFF OMITTED] T7570.005

[GRAPHIC] [TIFF OMITTED] T7570.006

[GRAPHIC] [TIFF OMITTED] T7570.007

[GRAPHIC] [TIFF OMITTED] T7570.008

[GRAPHIC] [TIFF OMITTED] T7570.009

[GRAPHIC] [TIFF OMITTED] T7570.010

[GRAPHIC] [TIFF OMITTED] T7570.011

[GRAPHIC] [TIFF OMITTED] T7570.012

[GRAPHIC] [TIFF OMITTED] T7570.013

[GRAPHIC] [TIFF OMITTED] T7570.014

[GRAPHIC] [TIFF OMITTED] T7570.015

[GRAPHIC] [TIFF OMITTED] T7570.016

[GRAPHIC] [TIFF OMITTED] T7570.017

[GRAPHIC] [TIFF OMITTED] T7570.018

[GRAPHIC] [TIFF OMITTED] T7570.019

[GRAPHIC] [TIFF OMITTED] T7570.020

[GRAPHIC] [TIFF OMITTED] T7570.021

[GRAPHIC] [TIFF OMITTED] T7570.022

[GRAPHIC] [TIFF OMITTED] T7570.023

[GRAPHIC] [TIFF OMITTED] T7570.024

[GRAPHIC] [TIFF OMITTED] T7570.025

[GRAPHIC] [TIFF OMITTED] T7570.026

[GRAPHIC] [TIFF OMITTED] T7570.027

[GRAPHIC] [TIFF OMITTED] T7570.028

[GRAPHIC] [TIFF OMITTED] T7570.029

[GRAPHIC] [TIFF OMITTED] T7570.030

[GRAPHIC] [TIFF OMITTED] T7570.031

[GRAPHIC] [TIFF OMITTED] T7570.032

[GRAPHIC] [TIFF OMITTED] T7570.033

[GRAPHIC] [TIFF OMITTED] T7570.034

[GRAPHIC] [TIFF OMITTED] T7570.035

[GRAPHIC] [TIFF OMITTED] T7570.036

[GRAPHIC] [TIFF OMITTED] T7570.037

[GRAPHIC] [TIFF OMITTED] T7570.038

[GRAPHIC] [TIFF OMITTED] T7570.039

[GRAPHIC] [TIFF OMITTED] T7570.040

[GRAPHIC] [TIFF OMITTED] T7570.041

[GRAPHIC] [TIFF OMITTED] T7570.042

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


                   DOCUMENTS SUBMITTED FOR THE RECORD

                             March 1, 2000



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

[GRAPHIC] [TIFF OMITTED] T7570.043

[GRAPHIC] [TIFF OMITTED] T7570.044

[GRAPHIC] [TIFF OMITTED] T7570.045

[GRAPHIC] [TIFF OMITTED] T7570.046

[GRAPHIC] [TIFF OMITTED] T7570.047

[GRAPHIC] [TIFF OMITTED] T7570.048

[GRAPHIC] [TIFF OMITTED] T7570.049

[GRAPHIC] [TIFF OMITTED] T7570.050

[GRAPHIC] [TIFF OMITTED] T7570.051

[GRAPHIC] [TIFF OMITTED] T7570.052

[GRAPHIC] [TIFF OMITTED] T7570.053

[GRAPHIC] [TIFF OMITTED] T7570.054

[GRAPHIC] [TIFF OMITTED] T7570.055

[GRAPHIC] [TIFF OMITTED] T7570.056

[GRAPHIC] [TIFF OMITTED] T7570.057

[GRAPHIC] [TIFF OMITTED] T7570.058

[GRAPHIC] [TIFF OMITTED] T7570.059

[GRAPHIC] [TIFF OMITTED] T7570.060

[GRAPHIC] [TIFF OMITTED] T7570.061

[GRAPHIC] [TIFF OMITTED] T7570.062

[GRAPHIC] [TIFF OMITTED] T7570.063

[GRAPHIC] [TIFF OMITTED] T7570.064

[GRAPHIC] [TIFF OMITTED] T7570.065

[GRAPHIC] [TIFF OMITTED] T7570.066

[GRAPHIC] [TIFF OMITTED] T7570.067

[GRAPHIC] [TIFF OMITTED] T7570.068

[GRAPHIC] [TIFF OMITTED] T7570.069

[GRAPHIC] [TIFF OMITTED] T7570.070

[GRAPHIC] [TIFF OMITTED] T7570.071

[GRAPHIC] [TIFF OMITTED] T7570.072

[GRAPHIC] [TIFF OMITTED] T7570.073

[GRAPHIC] [TIFF OMITTED] T7570.074

[GRAPHIC] [TIFF OMITTED] T7570.075

[GRAPHIC] [TIFF OMITTED] T7570.076

[GRAPHIC] [TIFF OMITTED] T7570.077

[GRAPHIC] [TIFF OMITTED] T7570.078

[GRAPHIC] [TIFF OMITTED] T7570.079

[GRAPHIC] [TIFF OMITTED] T7570.080

[GRAPHIC] [TIFF OMITTED] T7570.081

[GRAPHIC] [TIFF OMITTED] T7570.082

[GRAPHIC] [TIFF OMITTED] T7570.083

[GRAPHIC] [TIFF OMITTED] T7570.084

[GRAPHIC] [TIFF OMITTED] T7570.085

[GRAPHIC] [TIFF OMITTED] T7570.086

[GRAPHIC] [TIFF OMITTED] T7570.087

[GRAPHIC] [TIFF OMITTED] T7570.088

[GRAPHIC] [TIFF OMITTED] T7570.089

[GRAPHIC] [TIFF OMITTED] T7570.090

[GRAPHIC] [TIFF OMITTED] T7570.091

[GRAPHIC] [TIFF OMITTED] T7570.092

[GRAPHIC] [TIFF OMITTED] T7570.093

[GRAPHIC] [TIFF OMITTED] T7570.094

[GRAPHIC] [TIFF OMITTED] T7570.095

[GRAPHIC] [TIFF OMITTED] T7570.096

[GRAPHIC] [TIFF OMITTED] T7570.097

[GRAPHIC] [TIFF OMITTED] T7570.098

[GRAPHIC] [TIFF OMITTED] T7570.099

[GRAPHIC] [TIFF OMITTED] T7570.100

[GRAPHIC] [TIFF OMITTED] T7570.101

[GRAPHIC] [TIFF OMITTED] T7570.102

[GRAPHIC] [TIFF OMITTED] T7570.103

[GRAPHIC] [TIFF OMITTED] T7570.104

[GRAPHIC] [TIFF OMITTED] T7570.105

[GRAPHIC] [TIFF OMITTED] T7570.106

[GRAPHIC] [TIFF OMITTED] T7570.107

[GRAPHIC] [TIFF OMITTED] T7570.108

[GRAPHIC] [TIFF OMITTED] T7570.109

[GRAPHIC] [TIFF OMITTED] T7570.110

[GRAPHIC] [TIFF OMITTED] T7570.111

[GRAPHIC] [TIFF OMITTED] T7570.112

[GRAPHIC] [TIFF OMITTED] T7570.113

[GRAPHIC] [TIFF OMITTED] T7570.114

[GRAPHIC] [TIFF OMITTED] T7570.115

[GRAPHIC] [TIFF OMITTED] T7570.116

[GRAPHIC] [TIFF OMITTED] T7570.117

[GRAPHIC] [TIFF OMITTED] T7570.118

[GRAPHIC] [TIFF OMITTED] T7570.119

[GRAPHIC] [TIFF OMITTED] T7570.120

[GRAPHIC] [TIFF OMITTED] T7570.121

[GRAPHIC] [TIFF OMITTED] T7570.122

[GRAPHIC] [TIFF OMITTED] T7570.123

[GRAPHIC] [TIFF OMITTED] T7570.124

[GRAPHIC] [TIFF OMITTED] T7570.125

[GRAPHIC] [TIFF OMITTED] T7570.126

[GRAPHIC] [TIFF OMITTED] T7570.147

[GRAPHIC] [TIFF OMITTED] T7570.151

[GRAPHIC] [TIFF OMITTED] T7570.148

[GRAPHIC] [TIFF OMITTED] T7570.149

[GRAPHIC] [TIFF OMITTED] T7570.150

[GRAPHIC] [TIFF OMITTED] T7570.127

[GRAPHIC] [TIFF OMITTED] T7570.128

[GRAPHIC] [TIFF OMITTED] T7570.129

[GRAPHIC] [TIFF OMITTED] T7570.130

[GRAPHIC] [TIFF OMITTED] T7570.154

[GRAPHIC] [TIFF OMITTED] T7570.155

[GRAPHIC] [TIFF OMITTED] T7570.156

[GRAPHIC] [TIFF OMITTED] T7570.157

[GRAPHIC] [TIFF OMITTED] T7570.158

[GRAPHIC] [TIFF OMITTED] T7570.159

[GRAPHIC] [TIFF OMITTED] T7570.145

[GRAPHIC] [TIFF OMITTED] T7570.146

[GRAPHIC] [TIFF OMITTED] T7570.152

[GRAPHIC] [TIFF OMITTED] T7570.153

[GRAPHIC] [TIFF OMITTED] T7570.135

[GRAPHIC] [TIFF OMITTED] T7570.136

[GRAPHIC] [TIFF OMITTED] T7570.137

[GRAPHIC] [TIFF OMITTED] T7570.138

[GRAPHIC] [TIFF OMITTED] T7570.139

[GRAPHIC] [TIFF OMITTED] T7570.140

[GRAPHIC] [TIFF OMITTED] T7570.141

[GRAPHIC] [TIFF OMITTED] T7570.142

[GRAPHIC] [TIFF OMITTED] T7570.143

[GRAPHIC] [TIFF OMITTED] T7570.144

