[WPRT 106-10]
[From the U.S. Government Publishing Office]


106th Congress                                                    WMCP:
 2d Session                 COMMITTEE PRINT                      106-10
_______________________________________________________________________

                                     


                         SUBCOMMITTEE ON TRADE

                                 OF THE

                      COMMITTEE ON WAYS AND MEANS

                     U.S. HOUSE OF REPRESENTATIVES

                               __________

                                 REPORT

                                   ON
 
     WORLD TRADE ORGANIZATION (WTO) MINISTERIAL MEETING IN SEATTLE,
                               WASHINGTON


                                     
[GRAPHIC] [TIFF OMITTED]CONGRESS.#13

                                     
                 NOVEMBER 30, 1999 TO DECEMBER 3, 1999

  Prepared for the use of the Committee on Ways and Means by its staff

                         ----------------------

                     U.S. GOVERNMENT PRINTING OFFICE
63-354 CC                    WASHINGTON : 2000



                      COMMITTEE ON WAYS AND MEANS

                      BILL ARCHER, Texas, Chairman

PHILIP M. CRANE, Illinois            CHARLES B. RANGEL, New York
BILL THOMAS, California              FORTNEY PETE STARK, California
E. CLAY SHAW, Jr., Florida           ROBERT T. MATSUI, California
NANCY L. JOHNSON, Connecticut        WILLIAM J. COYNE, Pennsylvania
AMO HOUGHTON, New York               SANDER M. LEVIN, Michigan
WALLY HERGER, California             BENJAMIN L. CARDIN, Maryland
JIM McCRERY, Louisiana               JIM McDERMOTT, Washington
DAVE CAMP, Michigan                  GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota               JOHN LEWIS, Georgia
JIM NUSSLE, Iowa                     RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas                   MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington            WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia                 JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio                    XAVIER BECERRA, California
PHILIP S. ENGLISH, Pennsylvania      KAREN L. THURMAN, Florida
WES WATKINS, Oklahoma                LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida

                     A.L. Singleton, Chief of Staff

                  Janice Mays, Minority Chief Counsel

                                 ______

                         Subcommittee on Trade

                  PHILIP M. CRANE, Illinois, Chairman

BILL THOMAS, California              SANDER M. LEVIN, Michigan
E. CLAY SHAW, Jr., Florida           CHARLES B. RANGEL, New York
AMO HOUGHTON, New York               RICHARD E. NEAL, Massachusetts
DAVE CAMP, Michigan                  MICHAEL R. McNULTY, New York
JIM RAMSTAD, Minnesota               WILLIAM J. JEFFERSON, Louisiana
JENNIFER DUNN, Washington            XAVIER BECERRA, California
WALLY HERGER, California
JIM NUSSLE, Iowa




                         LETTER OF TRANSMITTAL

                              ----------                              


                 U.S. House of Representatives,    
                       Committee on Ways and Means,
                                     Subcommittee on Trade,
                                    Washington, DC, March 23, 2000.

Hon. Bill Archer,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: I am pleased to transmit to you the 
enclosed Delegation report on the recent Subcommittee on Trade 
mission to the World Trade Organization (WTO) Ministerial in 
Seattle, Washington.
     From November 30 to December 3, 1999, WTO trade ministers 
met in Seattle for the third WTO Ministerial Conference, the 
first international meeting of its kind to be hosted by the 
United States. The key issue for member countries was to 
consider a framework for a new round of multilateral trade 
negotiations. This report contains an overview of the mission 
and summaries of meetings with foreign and U.S. officials and 
representatives of U.S. business and other groups interested in 
the launch of a new round of trade negotiations.
     The Delegation's visit was especially important in light 
of the outcome of the Ministerial Conference. Following 4 days 
of meetings, U.S. Special Trade Representative Ambassador 
Barshefsky, acting as Chairperson of the Conference, announced 
a decision to suspend negotiations, with direction to WTO 
Director General Mike Moore to engage in further consultations 
among member countries, in capitals and Geneva, on how to 
proceed. The trade mission also gave Members a chance to hold 
discussions with representatives of several of the labor, 
environmental, and consumer interest groups which protested in 
Seattle against WTO rules and procedures.
     This report describes the bilateral economic and trade 
issues investigated during the trip, including those associated 
with ongoing negotiations for China and Taiwan to join the WTO. 
As the year proceeds with further consideration of U.S.-China 
trade relations and other issues relating to the WTO, I hope 
the record of these meetings will be useful to you.
            Sincerely,
                                           Philip M. Crane,
                                                          Chairman.

Enclosure.
                       MEMBERS OF THE DELEGATION

                Members of the House of Representatives

Hon. Philip M. Crane, Chairman       Hon. Charles Rangel
Hon. Bill Thomas                      Hon. Sander Levin
Hon. Amo Houghton                     Hon. James McDermott
Hon. Jim Ramstad                      Hon. Richard Neal
Hon. Jim Nussle                       Hon. William J. Jefferson
Hon. Jennifer Dunn                    Hon. Xavier Becerra
Hon. Mac Collins                      Hon. Karen Thurman
Hon. Rob Portman
Hon. Phil English
Hon. Wes Watkins
Hon. Jerry Weller
Hon. David Dreier
Hon. Jim Kolbe
Hon. Kevin Brady

                          Member of the Senate

Senator Charles Grassley

                            Committee Staff

Angela Ellard                        Tim Reif
Meredith Broadbent                   Viji Rangaswami
Karen Humbel


                            C O N T E N T S

                               __________

                                                                   Page

Letter of Transmittal............................................   iii
Members of the Delegation........................................     v
Overview of the Mission..........................................     1
    Meeting with U.S. Trade Representative Charlene Barshefsky...     2
    Organization for Economic Cooperation and Development........     4
    Meeting with the Delegation from Taiwan......................     4
    National Retail Federation Lunch.............................     5
    Meeting with the Delegation from Canada......................     7
    Meeting with Environmental Groups............................    10
    Meeting with Mexican Trade Minister Ermenio Blanco...........    12
    Administration Briefing for Members..........................    13
    Meeting with the Delegation from India.......................    14
    Meeting with Chinese Foreign Trade Minister Shi Guangsheng...    17
    Dinner Hosted by Members of the Information Technology 
      Industry Council and the Business Software Alliance........    19
    Administration Briefing for Members..........................    20
    Meeting with the Delegation from Chile.......................    21
    Meeting with Australian Trade Minister Mark Vaile............    22
    Meeting on African Growth and Opportunity Act................    23
    Tour of the Port of Seattle and Operations of the U.S. 
      Customs Service............................................    24
    Dinner Meeting with the Coalition of Services Industries.....    25



                        OVERVIEW OF THE MISSION

    From November 30 to December 3, 1999, a delegation from the 
Ways and Means Committee visited Seattle, Washington to 
participate in the third WTO Ministerial Conference.
    The Uruguay round was the eighth round or series of 
multilateral trade negotiations under the General Agreement on 
Tariffs and Trade (GATT). The agreements reached at the end of 
1994 during the Uruguay round were noteworthy in that they 
greatly expanded coverage of GATT rules beyond manufactured 
goods trade to include agricultural trade, services trade, 
trade-related investment measures, intellectual property 
rights, and textiles. The so-called ``built-in agenda'' of the 
Uruguay round trade agreements calls for the resumption of 
negotiations by the year 2000 to further liberalize trade in 
agriculture and services, as well as the examination of 
government procurement practices and enforcement of 
intellectual property rights.
    Hosted by the United States in Seattle, Washington, from 
November 30 to December 3, 1999, the third WTO Ministerial 
Conference was to have formally launched these negotiations. At 
this meeting representatives of the 135-member countries of the 
WTO considered the procedures and substance of the ``built-in'' 
WTO agenda, as well as other issues including transparency, 
possible reforms to the dispute settlement system, treatment of 
electronic commerce, and the accelerated tariff liberalization 
(ATL) effort for industrial tariffs.
    However, in a major setback, on December 3, following 4 
days of meetings, Conference Chairperson Charlene Barshefsky 
announced a suspension of negotiations, stating: ``Our 
collective judgment, shared by the WTO Director General, the 
Working Group Chairs, and the membership generally, was that it 
would be best to take a time out, consult with one another, and 
find creative means to finish the job.''
    In Seattle, the Ways and Means Delegation discussed WTO 
issues with Delegations from other WTO member countries, 
including the European Union, Australia, Canada, Mexico, and 
countries seeking to accede to the WTO such as China and 
Taiwan. During these meetings the Members exchanged views on: 
(1) the status of negotiations to launch the ``built-in 
agenda'' (2) the removal of market access barriers in 
agriculture, services, textiles, paper, and other sectors; and 
(3) the status of negotiations for China and Taiwan to accede 
to the WTO. The Delegation received briefings from U.S. Trade 
Representative (USTR) Charlene Barshefsky and other U.S. 
Government officials and met with several industry groups 
including the U.S. Chamber of Commerce, the National 
Association of Manufacturers, the Information Industry 
Technology Council, the Business Software Alliance, and the 
American Paper and Forest Products Association, to discuss 
their objectives for the Ministerial and the new round of trade 
negotiations. The Delegation also had a chance to meet with 
representatives of several labor, environmental, and consumer 
interest groups, many of which protested in Seattle against WTO 
rules and procedures.
Monday, November 29, 1999
Meeting with U.S. Trade Representative Charlene Barshefsky
    Upon arrival in Seattle, the CODEL met with USTR Barshefsky 
to be briefed on the status of the negotiations as of that 
time. Attending from USTR in addition to Ambassador Barshefsky 
was Nancy LeaMond, Chief of Staff, and Emily Beizer, Assistant 
USTR for Congressional Affairs. Chairman Crane chaired the 
meeting and was joined by a number of Members of the CODEL, 
including: Representatives Dreier, English, Houghton, Kolbe, 
Levin, McDermott, Portman, Watkins, and Weller.
    Ambassador Barshefsky identified a number of goals that the 
United States was seeking to achieve in the talks under way. 
These included market access in the agriculture and services 
sector, as well as for industrial sectors, by way of reducing 
tariff and nontariff barriers. On agriculture, Ambassador 
Barshefsky stated that the U.S. position was to substantially 
reduce domestic subsidies and eliminate export subsidies, and 
that wide differences remained with the European Union on these 
issues. Other countries that strongly opposed the U.S. position 
in this area were Japan, Korea, and Switzerland. Europe in 
particular was using negotiating tactics such as asking the 
United States to give up food aid and ban deficiency payments.
    USTR Barshefsky said that the services negotiations were in 
better shape. In other areas, Ambassador Barshefsky indicated 
that Europe was still pressing for competition and investment 
negotiations, which the United States and a number of other 
countries opposed. Developing countries were also seeking a 
preferential market access package, which the United States was 
still discussing with Europe, as well as help in capacity 
building.
    Ambassador Barshefsky also indicated that one positive 
development in the WTO that would likely be reflected and 
confirmed in Seattle was the integration of a growing number of 
former Soviet bloc countries into the WTO system. Other issues 
the United States would be pressing included new technological 
areas such as biotech and keeping e-commerce free from tariff 
and nontariff barriers. Regarding biotech, the United States 
was seeking to establish a working group with a narrow mandate 
to examine how approval procedures for biotech products can be 
made more transparent and accessible to businesses and 
governments alike. In addition, she said the United States was 
still working hard to achieve gains in transparency generally, 
such as speedier derestriction of documents, including panel 
reports. Ambassador Barshefsky predicted that there would be 
gains agreed to in this area but that the larger U.S. goals of 
open panel meetings and similar objectives were still broadly 
opposed, even by Quad partners such as the EU, which argue that 
transparency reform would distort the government-to-government 
nature of the dispute settlement process.
    In the area of trade and the environment, Ambassador 
Barshefsky predicted that an agreement could be reached on so-
called ``win-win'' issues, such as eliminating tariffs on 
environmental goods and services and addressing fishery 
subsidies. In addition, there was a developing agreement to use 
the Committee on Trade and the Environment to actively review 
the work of negotiating groups.
    On the subject of the relationship between trade and labor 
practices, the Ambassador stated that the U.S. proposal for 
establishment of a working group was the single most 
controversial issue facing the trade ministers. Other areas 
that remained controversial included: implementation of 
accelerated tariff liberalization arising out of agreements in 
the Asia-Pacific Economic Cooperation (APEC) Forum (with Japan 
blocking on wood and forest products and the EU taking a strong 
position in opposition on those and other sectors); cultural 
carve-outs being sought by France and a few other countries; 
and how to proceed with respect to the Agreement on Antidumping 
and the Agreement on Subsidies and Countervailing Measures. In 
the area of intellectual property protection, Ambassador 
Barshefsky stated that the United States was working to defuse 
pressures for extensions of the deadlines for developing 
countries under the Agreement on Trade-Related Intellectual 
Property Rights (TRIPs). With respect to concerns over problems 
with epidemic disease and public health emergencies, Ambassador 
Barshefsky said that she believed solutions could be achieved 
that were consistent with the existing TRIPs Agreement.
    In response to questions, Ambassador Barshefsky said that 
in agriculture, the reductions the United States was seeking 
would not prejudice U.S. domestic programs, but if export 
subsidies were eliminated, the U.S. Export Enhancement Program 
(EEP) and Dairy Export Incentive Program (DEIP) programs would 
have to be eliminated as well. With respect to a question from 
Congressman Watkins about fixing the so-called ``endless loop'' 
problem frustrating implementation of dispute settlement panel 
reports, Ambassador Barshefsky stated that the draft agreement 
with Europe would fix that potential issue, but the agreement 
was at risk due to U.S. legislative proposals to adopt a 
``carousel'' retaliation approach. This is where sanctions on 
imported products or services are rotated at regular intervals, 
with the goal of making retaliation more effective in achieving 
implementation by the losing country.
    Asked about the U.S. approach on labor, Ambassador 
Barshefsky said that the United States was following the 
mandate provided in the Uruguay Round Agreements Act.
    In response to a question from Congressman Weller about 
Canadian so-called ``cultural'' restrictions and incentives in 
the motion picture sector, Ambassador Barshefsky stated that a 
number of U.S. States also provide incentives, albeit not 
``cultural'' restrictions, on the types of programs that may be 
broadcast.
    When asked by Congresswoman Thurman about particularly 
difficult sectors for the United States in agriculture 
negotiations, Ambassador Barshefsky described sugar and citrus 
as being in that category.
    Finally, Chairman Crane asked a number of questions 
concerning China. In response, Ambassador Barshefsky recounted 
the return to negotiations following the April bombing of the 
Chinese Embassy in Belgrade and the recently concluded 
bilateral agreement, and indicated that the United States was 
encouraging China to conclude swiftly its negotiations with the 
EU and other countries, as well as in the WTO Working Group, so 
that Congress could consider the final package in the context 
of consideration of permanent normal trade relations (PNTR).
Tuesday, November 30, 1999
Organization for Economic Cooperation and Development
    Members of the CODEL including Representatives Thomas, 
Nussle, Portman, and Collins attended a meeting with Donald 
Johnston, Secretary General of the OECD, and members of his 
staff including: Ken Ash, Deputy Director, Directorate for 
Food, Agriculture and Fisheries; Jean-Marie Metzger, Director 
for Trade; and Will Davis, OECD, Washington Center for Public 
Affairs.
    The OECD does research and concept development for 
industrialized nations and is currently working on data 
concerning electronic commerce and on competition policy 
issues. In the past, OECD research on agriculture trade was 
used to develop the Uruguay round standards on agriculture. The 
OECD has also observed EU debates over food safety and 
genetically modified organizations. European consensus on these 
issues is harder to achieve as there is no single European 
agency charged with developing standards or performing 
research.
    Members warned that EU agriculture policies remain a 
significant barrier to trade liberalization and that European 
intransigence on key issues is already leading U.S. farm groups 
to question the potential benefits of expanding trade 
agreements. Members pointed out that U.S. agriculture's 
increasing skepticism about trade was significant because U.S. 
agriculture had been a strong proponent of free trade in the 
past. They urged the OECD to communicate to European members 
that U.S. tolerance for the European Union's refusals to abide 
by WTO decisions, European export subsidies, and nontariff 
barriers, is nearly at an end. Members also expressed the view 
that in the United States, the European Union's positions on 
food and genetically modified organism safety seemed to be the 
result of European politics, not science.
Meeting with the Delegation from Taiwan
    Members of the CODEL attended a meeting with a Taiwanese 
Delegation of parliamentarians chaired by Deputy Speaker Yin-
Chyi Yao. Chairman Yao made most of the remarks but other 
Delegates did speak, including Huan-Chih Su, legislator and 
member of the opposition party, Democratic Progressive Party.
    In his opening remarks Chairman Crane said that China and 
Taiwan will accede to the WTO together, but first the U.S. 
Congress must vote on permanent normal trade relations for 
China. He said that Congress recognizes that Taiwan has waited 
patiently for entry into the WTO and that Taiwan is our seventh 
largest trading partner.
    In his opening remarks, Chairman Yao thanked Chairman Crane 
and the U.S. Delegation for the meeting and their support of 
Taiwan's accession to the WTO. He said that the Taiwanese 
people feel threatened by China and hope the Members can be 
helpful in continuing to stabilize the situation. Saying the 
Delegation from Taiwan represented all the different parties in 
their country, including the KMG (ruling party), the DPP 
(opposition party) and the Third Party (new opposition party), 
Chairman Yao introduced the group, which included Senators and 
City Council Members, as well as WTO Delegates.
    Congresswoman Dunn first thanked the Taiwanese Consul in 
Washington State for his help in the past. She then asked the 
Taiwanese Delegation if a congressional resolution supporting 
the Republic of China's entry into the WTO would be helpful or 
necessary. The Delegation responded by saying that WTO 
admission was long overdue, but that Taiwan had reached a 
mutual agreement early in the year with the United States and 
that it doesn't mind being admitted simultaneously and is 
willing to give the PRC about 3 or 4 months of additional time. 
They did emphasize, however, that Taiwan was to be admitted at 
the same time.
    Congressman Kolbe asked about intellectual property 
protection and what legal steps are being taken by Taiwan to 
protect privacy. The response from Senator Su and others was 
that there are several pieces of legislation that have been 
passed in the Taiwan Congress. Taiwan also has put in place 
border checks on exports and marking requirements for 
semiconductor chips. Senator Su said that Taiwan has already 
implemented much to protect IPR.
    Congressman Houghton mentioned the special relationship 
that the United States has with Taiwan. He also said he hoped 
the Taiwanese Delegates understand the feeling in Congress 
about the U.S. antidumping laws and how important they are to 
the U.S. system. Chairman Yao responded by saying that they 
appreciate this advice from Members of the U.S. Congress.
National Retail Federation Lunch for CODEL Crane and Members of the 
        European Parliament
    Members of the CODEL and representatives from the European 
Parliament attended a lunch hosted by the National Retail 
Federation: Mr. Michel Rocard (Soc.-France) Chairman, Committee 
on Employment; Mr. James Elles (EPP-U.K.) Member, Committee on 
Budgets; Mr. Arlindo Cunha (EPP-Port.) Member, Committee on 
Agriculture; Mr. John Corrie (EPP-U.K.) Member, Development 
Committee; Ms. Eryl McNally (Soc.-U.K.) Member, Committee on 
Industry, Trade and Energy; Mrs. Glynnis Kinnock (Soc.-U.K.) 
Member, Committee on Development; and Ms. Caroline Lucas 
(Greens-U.K.) Member, Committee on Industry, Trade and Energy.
    Chairman Crane addressed the group. He noted that his Trade 
Subcommittee has been following the preparations for the WTO 
Seattle Ministerial very closely because the meeting is a 
tremendous opportunity for building understanding and public 
support for the WTO and for showcasing how trade benefits all. 
He also stated his belief that it is important to focus on the 
new round as being an opportunity for trade liberalization.
    It is counterproductive to the goal of forcing open markets 
to goods and services, the Chairman continued, if the debate is 
sidetracked with undefined, nontrade issues in which there is 
absolutely no international consensus as to whether these 
issues should be raised at the WTO, let alone how to solve 
them. He mentioned in particular the administration's efforts 
to seek a working party on labor. The Chairman said that he has 
no objections to a working party if it is to focus on trade-
related labor issues, and in fact in the fast track debate he 
included broad language on labor. He also applauded efforts to 
make the WTO more transparent and to work with other 
organizations such as the ILO. In his view, however, the 
administration's proposal appears to go beyond that scope and 
covers issues that have a tenuous relationship to trade. He 
noted his concern that although the administration's proposal 
speaks of an analytical and not an advisory body, this is the 
first step to include an issue for which there is absolutely no 
international consensus.
    The most dangerous aspect of the administration's strategy, 
he noted, is that the United States will be put in a position 
of having to make concessions on important trade-liberalizing 
measures, forced to give up some of its important demands for 
expanding trade in return for getting agreement from its 
trading partners to put such issues on the agenda. At worst, he 
said, it will derail the successful start of the round. 
Instead, the negotiators should focus on the new services, 
agriculture, and industrial tariff negotiations, as well as 
opportunities to achieve interim goals in tariff 
liberalization, e-commerce, and transparency. In addition, 
implementation of WTO obligations by the developing countries 
must be improved.
    The Chairman then discussed the likely vote in Congress 
next spring on whether the United States should stay in the WTO 
(sections 124-125 of the Uruguay Round Agreements Act). He 
noted that Members will be studying the WTO in order to assure 
that it is in the best interests of the United States, does not 
threaten U.S. sovereignty, and is used to expand trade. He then 
emphasized that the bananas and beef hormone cases are 
important case studies as to the effectiveness of the WTO, and 
he told the EU Parliamentarians that he hopes that the WTO 
Members are able to make some progress in improving the dispute 
settlement mechanisms to avoid abuse of the system.
    The Chairman then raised the issue of Chinese and Taiwanese 
accession to the WTO, noting his hope to include both countries 
in the WTO as soon as possible. He congratulated Ambassador 
Barshefsky on achieving a bilateral agreement which provides 
significant access for U.S. farmers and manufacturers to 
compete in Chinese markets which have been protected for 
decades. He told the audience that he intends to work hard to 
move legislation granting China permanent normal trade 
relations next year.
    Finally, the Chairman discussed the role of the developing 
countries in the trading system. He said that the House made 
significant progress in expanding opportunities for developing 
countries in passing the African Growth and Opportunity Act by 
a large bipartisan majority. This legislation, for the first 
time, specifically encourages trade between the United States 
and African countries in sensitive sectors such as textiles and 
apparel. Chairman Crane concluded by saying that he hopes to 
quickly arrive at a conference agreement which moves away from 
the Senate version and provides meaningful benefits for Africa 
and the nations of the Caribbean Basin.
    Mr. Michel Rocard then addressed the group. He stated that 
about two-thirds of the ongoing U.S.-EU conflict is the result 
of misunderstanding, and only one-third represents actual 
substantive differences that should be discussed. He emphasized 
that the Social Democrats strongly believe in free trade. He 
questioned whether the WTO can manage without addressing labor 
and environment issues. He also noted that the WTO should 
incorporate provisions protecting family farms such as a 
subsidized protection program, noting that such programs have 
already been reduced by two-thirds because Europeans do not 
want to pay higher taxes. He concluded by saying that the WTO 
should deal with the issue of genetically modified organisms 
``quietly, with technique.''
    Congressman Thomas then addressed the group. He noted that 
the Republicans with agriculture constituencies support free 
trade. He emphasized that within a short timeframe, Congress 
must see progress on bilateral disputes with Europe or the 
United States is in danger of losing the vote to retain 
membership in the WTO. He therefore urged his European 
counterparts to help free traders in Congress on the WTO vote 
by coming into compliance.
    Congressman Levin then spoke. He noted that globalization 
is here to stay, and evolving economies are now more involved 
in trade than before. Issues concerning not only free capital 
markets but also free labor markets are now important. The WTO, 
therefore, must encompass labor and environment within its 
structure or lose control over the issues and the outcome. He 
then mentioned the Kyoto Convention, noting that if evolving 
economies do not take on the obligations of abiding by 
international environmental standards, they would have an 
unfair competitive advantage. He urged the audience to open its 
perspective, noting that the issue should not be decided on the 
streets but within the WTO.
    Congressman Levin also told his European colleagues that if 
the agriculture disputes between the United States and the EU 
are not resolved, they will undermine support for the WTO. ``Do 
not let these issues fester,'' he urged. The same is true, he 
argued, for labor and environment. Labor has traditionally been 
internationalist, he said, and the WTO must avoid economic 
nationalism.
    Mr. James Elles then concluded the discussion. He cited 
Thomas Friedman's latest book, ``The Lexus and the Olive 
Tree,'' which notes that there are three dynamics in the world 
today. The first is the traditional balance between nation 
states. The second is the balance between nation states and 
global markets. The third is the balance between nation states 
and individuals. The WTO must adjust, he emphasized, to the 
third dynamic. He also mentioned his strong support for an 
effort to create a WTO Interparliamentary Assembly.
Meeting with the Delegation from Canada
    On the afternoon of November 30, 1999, the CODEL met with a 
Delegation from Canada, consisting of representatives of the 
Federal Government and of various Provincial Governments.
    Chairman Crane opened the meeting by discussing the U.S. 
priorities for the Seattle Ministerial as articulated by the 
administration. He was critical of what he referred to as the 
administration's ``diversion with a working party [on trade and 
labor].'' He said that he is not opposed to discussing labor 
and environmental issues within the WTO, as long as they are 
directly related to trade. Otherwise, these issues should be 
discussed in other forums. Chairman Crane stated that the free 
trade agenda since World War II has been highly successful and 
that he hopes that it will not be derailed over differences 
concerning dispute settlement. He added that complying with the 
WTO's rules does not compromise member countries' sovereignty, 
since member countries are free to exit the WTO if they 
determine that continued membership is not in their interests.
    Chairman Crane's opening remarks were followed by opening 
remarks by the head of the Canadian Delegation, appearing on 
behalf of Trade Minister Pierre Pettigrew, who was not able to 
attend the meeting. The head of the Canadian Delegation stated 
that it was critical for the new round of trade negotiations to 
focus on agriculture. He expressed a desire to avoid a U.S.-EU 
battle over agriculture, in which Canada gets ``sideswiped.'' 
He also expressed concern about backsliding on agricultural 
commitments made during the Uruguay round.
    The head of the Canadian Delegation then addressed textiles 
and apparel. He said that the critical question here is how far 
the United States can go in opening its markets to textile and 
apparel imports.
    Next, the head of the Canadian Delegation then moved to the 
issue of trade and labor. He said that the International Labor 
Organization is the appropriate forum to address these issues 
and that the United States has been focusing too much on the 
WTO.
    Other issues that the head of the Canadian Delegation 
flagged as important to Canada were whether the U.S. Congress 
would grant the President fast track negotiating authority; the 
fate of the Free Trade Area of the Americas (FTAA); and 
prospects for China's admission to the WTO.
    With respect to China's admission to the WTO, Chairman 
Crane stated that the United States will have to grant PNTR 
status to China, which will require a vote by Congress. He said 
that it is hard to believe that the PNTR vote will be 
controversial, since China's accession to the WTO will lead to 
billions of dollars in increased U.S. exports. He said that 
votes against PNTR for China will come from those Members of 
Congress who are essentially protectionist. Chairman Crane then 
outlined the steps that must be taken before China formally 
accedes to the WTO: (1) completion of bilateral negotiations 
with the European Union and several other WTO Members; (2) 
completion of negotiations on a protocol of accession; and (3) 
the filing of a report by the WTO Working Party on China's 
accession. He stated that a congressional vote on PNTR would 
occur in ``late spring'' at the earliest. He added that a vote 
on PNTR becomes more ``worrisome'' as the Presidential election 
gets closer.
    Ranking Member Levin then offered comments on several 
issues. With respect to China's accession to the WTO, he said 
that the reason the vote on PNTR will be controversial is 
because what is at issue is the set of rules that will govern 
economic relations between two huge economies. He stated that a 
market structure and the rule of law remain weak in China. He 
added that China represents not just a market opportunity for 
U.S. and Canadian producers, but it also represents an 
important source of competition.
    With respect to fast track negotiating authority, Ranking 
Member Levin stated that the issue is whether labor and 
environment issues should be part of trade negotiations. He 
said that this relates to the FTAA as well as the WTO. He 
stated that labor issues are essentially economic issues, not 
human rights issues, and that they are part of the economic 
fabric. He then raised the question whether labor and 
environmental issues relating to trade will be faced in 
international organizations or in the streets. He said that he 
is not opposed to demonstrations, but that they do not resolve 
issues. He said that a working group on trade and labor in the 
WTO, as proposed by the United States, would open discussion of 
this issue. With regard to the suggestion that labor issues be 
left to the ILO, Ranking Member Levin stated that the ILO has 
no power to implement core labor standards. He concluded by 
stating that he would be discouraged if the United States and 
Canada are unable to cooperate on the issue of trade and labor, 
as well as agriculture and other issues.
    Next, a member of the Canadian Delegation asked members of 
the CODEL to comment on whether U.S.-Canadian trade is better 
handled in the WTO or bilaterally. Chairman Crane responded 
that there is potentially more work to be done on a hemispheric 
basis.
    Congressman Watkins then stated that there is a significant 
need for the European Union to open its borders to trade and, 
in particular, to lower its subsidies. He stated that Canada 
can play a key role in bringing about these changes. He then 
drew participants' attention to problems that the United States 
has had with the European Union, highlighting the ``endless 
loop'' problem that the United States has encountered in 
endeavoring to get the European Union to comply with decisions 
of the WTO Dispute Settlement Body. He reminded participants 
that Congress will have to vote next year on continued U.S. 
participation in the WTO (under section 135 of the Uruguay 
Round Agreements Act).
    A member of the Canadian Delegation then commented that 
there must be public support for the WTO, which means bringing 
labor and environmental issues onto the WTO's agenda. He then 
asked members of the CODEL to express their views on 
continuation of the U.S.-Canada Softwood Lumber Agreement.
    Congressman Weller then turned to the issue of television 
and film production. He said that this business is an important 
base for job growth in Chicago. He said that he is concerned 
about Canada's use of tax incentives to attract television and 
film production from the United States, on the one hand, and 
its invocation of ``cultural content'' as a reason to exclude 
U.S. television and film productions from its market, on the 
other hand. He said that what constitutes ``cultural content'' 
is questionable.
    Responding to Congressman Weller's remarks, a member of the 
Canadian Delegation stated that 92 percent of films shown in 
Canada are made in the United States. He said that Canada is 
just trying to fight for the remaining 8 percent.
    A member of the Canadian Delegation from the Province of 
Alberta added that tax incentives given for film production are 
given without regard to content. He then turned to the subject 
of trade in agricultural products, stating that what is needed 
is a clear map of where we are going. He said that the main 
issue is dismantling EU policies that hinder competition in 
European markets.
    Ranking Member Levin said that he understands the concern 
expressed by the representative from Alberta. He stated that if 
the United States supports Canada on agricultural issues, 
Canada should support the United States on issues considered to 
be U.S. priorities, including dispute settlement reform and 
preservation of the WTO Antidumping Agreement. He said that 
Canada has a high level of respect in international circles and 
should be asserting itself.
    Next, another member of the Canadian Delegation expressed 
frustration with EU agricultural subsidies. He asked whether 
members of the CODEL expected that the EU could be persuaded to 
reduce domestic supports.
    Congressman Watkins replied that the primary concern in the 
United States is with EU export subsidies. He said that there 
is less concern about domestic supports. He said that an 
important concern is the use of non-science-based regulations 
as trade barriers, as in the case of EU restrictions on 
importation of hormone-treated beef.
    A member of the Canadian Delegation then commented that, 
with regard to trade and labor, if the ILO is not given 
enforcement mechanisms, then relegating this issue to the ILO 
will be seen as a smoke screen and won't work.
    Another member of the Canadian Delegation, Mr. Jack Hill of 
Saskatchewan, then stated that an important U.S.-Canada issue 
is trade in durum wheat. He observed that Canada imports as 
much pasta as it exports wheat. He then noted a concern about 
the U.S. antidumping law. He stated that, contrary to a premise 
of U.S. antidumping law, selling goods at below the cost of 
production is not necessarily dumping. Such sales simply may 
reflect prevailing market conditions.
    A member of the Canadian Delegation from the Province of 
Quebec stated that Quebec supports free trade, but barriers to 
free trade must be lowered in ways that respect national 
values. She said that national culture is special and should 
not be treated just like any other good. With respect to 
agriculture, she said that Quebec wants to retain its supply 
management programs. Finally, she said that Quebec is opposed 
to certain provisions of U.S. immigration law, which have the 
effect of impeding cross-border trucking.
Meeting with Environmental Groups
    The Delegation met with representatives from the National 
Wildlife Federation (Mark Van Putten and Paul Joffe), Friends 
of the Earth (Brent Blackwelder, Mark Vaillantos, and Andrea 
Durbin), Defenders of the Wildlife (Rina Rodriguez), and the 
Center for International Environmental Law (Steve Parker). 
Chairman Crane welcomed the representatives. Congressman Levin 
opened the meeting by thanking the environmental groups for 
their participation and inviting them to offer their views on 
how environmental issues should be addressed in the WTO.
    Mark Van Putten, President of the National Wildlife 
Federation (NWF), stated that NWF wanted to work with Congress 
and the administration to develop ways to integrate 
environmental concerns into trade agreements. He noted that NWF 
had supported the North American Free Trade Agreement (NAFTA) 
because the organization had viewed the NAFTA's environmental 
side agreement as a first step toward integrating environmental 
issues into trade regimes. With respect to the WTO, Mr. Van 
Putten stated that NWF's goal is to ``fix the institution, not 
to trash it.'' Mr. Van Putten observed that there has been a 
tremendous loss of public confidence in the WTO, and this loss 
of confidence stemmed from the perception that the institution 
does not reflect the values of the public.
    Mr. Van Putten then summarized five ways in which WTO rules 
and processes should be reformed to address the public's 
concerns about environmental protection. The first two 
proposals related to inclusion of a standard of deference in 
WTO rules. Specifically, Mr. Van Putten stated that the WTO 
should defer to both legitimate national environmental 
regulations and standards, and standards and sanctions 
established pursuant to multilateral environmental agreements 
(MEAs, such as the Montreal Protocol and the Convention on 
International Trade in Endangered Species). Mr. Van Putten 
indicated that the environmental community was disappointed 
with the administration's ``lack of effort'' to incorporate the 
deference rules in the WTO.
    The third reform Mr. Van Putten offered was that WTO 
Members agree to interpret existing WTO rules to allow for 
regulation of imports based on production process methods 
(PPMs). Mr. Van Putten indicated that the administration had 
taken the position that it would be premature for WTO Members 
to make such a statement because WTO jurisprudence to date did 
not preclude regulation of imports based on PPMs. Fourth, Mr. 
Van Putten stated the WTO should conduct an environmental 
assessment of new trade rounds. Mr. Van Putten indicated that 
the environmental community was encouraged by the President's 
Executive Order that environmental assessments be conducted for 
future trade agreements, but was concerned that the 
administration's proposal did not include adequate processes 
for incorporating the results of such assessments into final 
agreements. The final reform offered by Mr. Van Putten was for 
increased transparency in the WTO. Mr. Van Putten indicated 
that the administration appeared to be pursuing this issue 
forcefully.
    Mr. Blackwelder, President of Friends of the Earth (FOE), 
began by noting that while environmental groups are diverse, 
they have a unified position on trade. Mr. Blackwelder 
indicated his support for many of the proposals offered by NWF, 
particularly with regard to increasing transparency in the WTO. 
Mr. Blackwelder stated that when a closed system, such as the 
WTO, overturns laws that have taken a significant amount of 
time and thought to draft and enact, public confidence is 
undermined.
    Andrea Durbin then outlined FOE's primary concerns. The 
first is that trade rules ``are superceding'' local and 
national laws. FOE advocates amending existing WTO rules to 
increase deference to local and national laws. Second, FOE 
opposes the proposed reduction in tariffs on forestry products 
under the accelerated tariff liberalization initiative. FOE 
does not believe that the administration should pursue the 
reductions given that the administration recently concluded in 
an environmental assessment that such reductions would 
exacerbate global deforestation. Third, Ms. Durbin expressed 
her group's opposition to negotiations on investment 
protections during the next round. Fourth, Ms. Durbin expressed 
FOE's concern about trade in genetically modified organisms, 
and stressed the need to allow countries to regulate products 
based on the precautionary principle.
    Congressman Portman responded to the environmental groups 
by stating that the environmental community should recognize 
that economic development leads to higher environmental 
standards. Congressman Portman expressed his support for some 
of the reforms suggested by Mr. Van Putten, and indicated that 
further discussions should take place with respect to the other 
proposals. Mr. Van Putten responded by reiterating that NWF and 
the other groups present were not trying to block economic 
development or the WTO but, rather, were attempting to ``fix 
it.''
    Congressman Brady commented that he would be interested in 
working on ways to ``fix'' the institution. He also expressed 
some reservation about the environmental groups' apparent 
blanket opposition to trade in biotechnology products, noting 
that advances in biotechnology have contributed to society.
    Congressman Levin closed the meeting by asking the 
environmental groups to meet with the Ways and Means Committee 
in Washington to continue the dialogue.
Meeting with Mexican Trade Minister Ermenio Blanco
    Congressmen Kolbe, English, and Levin met with Mexican 
Minister of Trade Ermenio Blanco, Undersecretary for 
International Commercial Negotiations of the Secretary of 
Commerce, Luis de la Calle and Artier Sarukhan, Advisor to the 
Minister of Foreign Relations.
    The primary topic of discussion was U.S. antidumping laws. 
Congressman English opened the meeting by emphasizing the 
political importance of maintaining U.S. antidumping laws to 
maintain support for broader trade liberalization efforts in 
the United States. Minister Blanco agreed that antidumping laws 
can be an important political ``safety value,'' noting that the 
Mexican Government was one of the most frequent users of 
antidumping laws in the world. He expressed concern, however, 
about the possible abuse of antidumping laws by other 
countries, citing antidumping cases against Mexican cement that 
were initiated by Ecuador and Guatemala.
    Minister Blanco noted that Mexico does not advocate 
eliminating antidumping laws but instead seeks only to make the 
process more transparent and less punitive in its initial 
stages. Congressman Kolbe noted that not all Members of 
Congress agreed with the position of Congressman English and 
that he personally would be receptive to reforming U.S. 
antidumping laws. However, he did agree that political 
consensus for reform in the United States was virtually 
nonexistent.
    The inclusion of labor and environmental issues in trade 
agreements was also a major topic of discussion. Congressman 
Sandy Levin pointed to the protesters in Seattle as a 
demonstration of support for including labor and environmental 
issues in trade negotiations. He added that much of the 
protesters information was factually incorrect, citing in 
particular the WTO dispute rulings on the Venezuelan 
reformulated gas case and the use of turtle excluder devices in 
harvesting shrimp. Here, Congressman Levin emphasized that, 
although the WTO ruled against the application of these 
environmental laws by the United States, the rulings were not 
antienvironmental. Instead, the WTO dispute settlement panel 
said that the laws were consistent with standards set under the 
WTO, but that the United States was applying the law in a 
discriminatory manner.
    Public transparency of WTO procedures, particularly the 
dispute settlement procedures, was also discussed. Congressman 
Kolbe indicated that he personally was very supportive of 
opening up the WTO procedures to greater public scrutiny, 
emphasizing that openness is a prerequisite to increasing 
public support for the institution. Minister Blanco sympathized 
with this position, but stated that the Mexican Government 
would not support greater openness of the process due to 
concerns that greater openness would introduce political 
elements into the WTO decisionmaking process. During the 
negotiations of NAFTA, U.S. trade negotiators told Mexico that 
involving nongovernmental organizations in NAFTA determinations 
would help to build public support for the agreement. However, 
he said, this did not prove to be the case.
Wednesday, December 1, 1999
Administration Briefing for Members
    Agriculture Secretary Dan Glickman, U.S. Trade 
Representative Charlene Barshefsky, Deputy U.S. Trade 
Representative Rita Hayes, Transportation Secretary Rodney 
Slater, Small Business Administrator Aida Alvarez, and State 
Department Undersecretary Stuart Eizenstat briefed Members on 
the status of the talks.
    Ambassador Hayes opened the meeting. Secretary Glickman 
then described the negotiations on the agriculture text of the 
Ministerial Declaration. With regard to integration and market 
access, he noted that the United States and the Cairns Group 
\1\ want to treat agriculture in a manner similar to industrial 
products, while the European Union opposes this effort. In 
particular, the Cairns Group seeks to maintain tariffs as the 
only form of protection. The EU and Japan argue that a number 
of nontrade concerns should be addressed, especially the 
multifunctional role of agriculture, food safety and quality, 
and animal welfare. The EU claims that such concerns are not 
trade distorting. Secretary Glickman noted that he thinks the 
WTO Members can work through these issues because the United 
States has sympathy on the issue of farmer lifestyle and land 
use as long as it is not trade restricting.
---------------------------------------------------------------------------
    \1\ The Cairns Group includes Argentina, Australia, Canada, Chile, 
Colombia, Fiji, Indonesia, Malaysia, New Zealand, the Philippines, 
Paraguay, Thailand, South Africa, and Uruguay.
---------------------------------------------------------------------------
    Secretary Glickman then discussed the issue of export 
subsidies, noting that the main question related to whether the 
subsidies should be eliminated over the short or the long term. 
The EU would agree only to a ``substantial reduction,'' further 
claiming that U.S. export credits are a trade distorting 
subsidy. The United States disagrees. He further noted that 
because Japan does not grant subsidies, it should be in 
agreement with the United States over the elimination of such 
subsidies. With regard to biotechnology issues, he noted that 
the United States is working with Canada on the establishment 
of a working group.
    Ambassador Barshefsky then briefed the Members. She noted 
that the situation in the streets on Monday was ``very 
difficult,'' and many countries were surprised that it was 
violent for so long. The peaceful portion of the protest, she 
said, illustrates the concerns about labor, environment, and 
transparency. She congratulated the AFL-CIO for its ``orderly'' 
protest.
    With respect to the negotiations, she stated that the U.S. 
goal is to develop an agenda that is specific yet broad enough 
so that meaningful negotiations could be launched with 
benchmarks and timeframes for the presentation of proposals 
within 6 to 9 months. She noted that such a deadline would have 
cut off 2\1/2\ years from the Uruguay round negotiations, 
signifying that the Seattle negotiations are already off to a 
fast start.
    With respect to the substantive issues, she said that all 
countries, except the United States, are seeking to put 
antidumping on the table. She also noted that most countries 
are ``extremely antagonistic'' to including labor and 
environment. Finally, she noted that most developing countries 
want to reopen the Uruguay round, particularly on the issue of 
implementation.
    Secretary Slater then described the status of 
transportation issues. In particular, he noted that investment 
in transportation helps everyone enjoy the benefits of trade. 
He mentioned that the Delegates would focus on Africa during 
Tuesday's discussions and on Latin America on Wednesday.
    Administrator Alvarez spoke about the importance of small 
business, noting that it is the fastest growing aspect of 
trade. The number of small business exporters in the United 
States has doubled, reaching 200,000 today, a full 97 percent 
of all exporters. She said that she wants the communique to 
mention the importance of small business.
    Undersecretary Eizenstat then concluded the briefing, 
mentioning a meeting with the World Bank, the International 
Monetary Fund, the International Labor Organization, and other 
international organizations to help developing countries 
strengthen their institutions and encourage capacity building. 
He also said that the United States seeks to give the head of 
the ILO the same observer status as the IMF and the World Bank.
Meeting with the Delegation from India
    The Delegation met with representatives of the Government 
of India, including the Indian Ambassador to the United States 
(Mr. Naresh Chandra), three members of the Indian parliament 
(Mr. Kamal Nath, Mr. K. Yerrannaidu, and Mr. Biplad Dasgupta), 
and a number of representatives from Indian industry.
    Ambassador Chandra opened the meeting by introducing his 
Delegation and offering a few observations on the protests and 
the importance of U.S.-India relations. With respect to the 
protests, Ambassador Chandra stated that he and other members 
of the Indian Delegation had an opportunity to engage the 
protestors in a dialogue, and as a result of the discourse, 
both sides came to the conclusion that their positions were not 
all that different. Ambassador Chandra offered as an example 
the shared concern for protection of the environment. On the 
importance of U.S.-India relations, the Ambassador stressed the 
economic ties between the two countries, noting that the United 
States is India's largest trading partner and accounts for the 
largest percentage of foreign direct investment. The Ambassador 
stated that India and the United States are linked in other 
ways, most significantly as two thriving democracies with rich 
and varied cultures. Ambassador Chandra went on to state that 
where the two countries do differ, the differences may not be 
all that deep. Ambassador Chandra offered as an example the 
difference in the two countries' approaches to building support 
for workers' rights globally. The Ambassador said that the 
difference does not lie in what the two countries believe--both 
value workers' rights--but in the forum each would use to 
pursue the cause.
    Congressman English noted that he was a long-time supporter 
of India, as well as a supporter of open trade. He expressed 
hope that India and the United States could address their 
differences on a key issue--whether the WTO Agreement on 
Antidumping should be renegotiated during the next round. 
Congressman English cautioned that reopening the Antidumping 
Agreement could jeopardize support for further trade 
liberalization measures in the United States.
    Mr. Yerrannaidu offered two comments on Congressman 
English's remarks. First, he said that 5 years of experience 
under the existing antidumping rules supported renegotiation. 
Second, he pointed out that certain U.S. practices, such as 
subsidization of wheat exports, result in dumping.
    Congressman English responded by noting that agricultural 
subsidies would be addressed in the next round. Congressman 
English then stated that the bulk of antidumping orders relate 
to steel, which is a highly distorted market globally. 
Congressman English indicated that the subsidization of foreign 
steel industries make it extremely difficult to determine 
whether dumping is occurring; he noted, however, that such 
difficulty was not a reason for revising the existing rules on 
antidumping, but rather a reason for ensuring that the rules 
remain in place. Mr. Yerrannaidu, in response, stated that the 
U.S. frequent use of the antidumping remedies and use of 
voluntary restraint agreements were having a chilling effect on 
trade globally. Congressman English countered that the United 
States continues to be the largest consumer for the world's 
goods, but it would be difficult to maintain that status unless 
it could protect its market from unfair trade. Congressman 
Weller expressed his support for Congressman English's remarks.
    Mr. Gopalakrishnan, from the Confederation of Indian 
Industries (CII), attempted to refocus the discussion by 
stating that the issue was not about dismantling the 
antidumping rules, but rather about offering something to the 
developing bloc. Mr. Gopalakrishnan stated that many developing 
countries do not feel that they have received benefits of trade 
liberalization measures negotiated during the past rounds. He 
stressed that the Government of India also faces resistance to 
engaging in further trade negotiations, and India and the 
United States should work together to address domestic 
opposition. Mr. Rohan Shah, a representative of the Indian 
Association of Chambers of Commerce, echoed Mr. Gopalakrishnan 
comments about the growing dissatisfaction among developing 
countries about the imbalance of benefits from past trade 
rounds.
    Another representative from the Confederation of Indian 
Industries added that the rules governing the imposition of 
antidumping and countervailing duty measures need to be 
revisited in order to ensure that antidumping and 
countervailing duty were not pursued to correct perceived 
distortions. The CII Delegate cited certain provisions of the 
Indian tax code, which he said could be construed as providing 
export subsidies, but which, in practice, do not. A 
representative of the Indian Export Council also spoke in favor 
of reopening the Antidumping Agreement. The Export Council 
representative noted that U.S. reliance on antidumping actions 
had created an environment of uncertainty for Indian producers 
and exporters.
    Congressman Kolbe focused his remarks on a number of 
specific bilateral issues. First, he expressed that the United 
States shared India's desire to see agricultural export 
subsidies reduced. Second, he commended the Indian Delegation 
for its government's efforts to bring India's intellectual 
property rights laws into conformity with its WTO obligations, 
particularly with respect to pharmaceuticals. Third, he noted 
U.S. concern about high tariffs maintained by the Government of 
India on agricultural products. Fourth, he expressed hope that 
India and the United States would be able to work together to 
increase transparency in the WTO process ``to dispel the 
mythology surrounding the WTO.''
    A member of the Indian Delegation responded to Congressman 
Kolbe's comment on increasing transparency. He stated that the 
Indian Government faced considerable domestic opposition to 
trade liberalization measures and that as a result, already had 
to explain to the Indian public ``everything that comes out of 
the WTO.'' Increasing public access to WTO processes would 
complicate that task, and could undercut, rather than promote, 
the Indian public's support for increased trade liberalization. 
One of the Indian parliamentarians added that the best way to 
build support for the WTO would be to eliminate barriers to 
trade in agricultural products, which primarily hurt the poor, 
and not to link labor standards and trade.
    Mr. Yerrannaidu echoed his colleague's comments with 
respect to the link between trade and labor, stating that too 
many ``other'' issues were being added to the WTO. Mr. 
Yerrannaidu stated that environmental issues should be handled 
in the U.N. Environmental Program, intellectual property issues 
in the World Intellectual Property Organization, and 
development issues in the U.N. Economic and Development 
Program. Mr. Yerrannaidu also expressed concern that the United 
States was being hypocritical about requiring other countries 
to follow multilateral trade rules, while it continued to act 
unilaterally. Finally, Mr. Yerrannaidu commented that the 
developed bloc was unjustly inhibiting developing country 
growth by restricting developing countries' access to 
technology. Mr. Yerrannaidu noted that many developed 
countries, such as Japan, were able to grow primarily because 
they could freely copy foreign technology. Under the current 
restraints, poor countries will remain poor, while rich 
countries get richer.
    Chairman Crane closed the meeting by noting that the United 
States shares the problem faced by the Indian Government in 
explaining the benefits of trade. Chairman Crane noted that 
even workers in export-oriented sectors, such as the aircraft 
industry, often fail to appreciate that trade supports their 
jobs.
Meeting with Chinese Foreign Trade Minister Shi Guangsheng
    The primary topic in the discussion between the Delegation 
and Chinese Foreign Trade Minister Shi Guangsheng was the 
status of China's ongoing negotiations to join the WTO, in 
light of the recent conclusion of the bilateral market access 
agreement with the United States. Both sides expressed 
enthusiasm about the agreement, with the Delegation making the 
point that the details of the pact will receive careful 
scrutiny in Congress and will be closely linked to 
consideration of legislation later in the year to grant China 
permanent normal trade relations treatment.
    Stating that many instances can be identified where China 
has failed to implement trade agreements after they are signed, 
Congressman Levin stressed the importance of improved 
implementation. Vice Minister Long Yongtu compared the 
situation of implementation of trade agreements in China to the 
entrenched problem of illegal drugs in the United States. ``You 
prohibit drug trafficking in the United States and it still 
goes on,'' he said. There are always some in any society who 
flaunt the law. Minister Long emphasized that the Chinese 
Government understands the importance of enforcement.
    Congressman Thomas discussed the need to establish a more 
transparent regulatory structure in China. Referring to 
provisions in the WTO Protocol which require transparency and 
stipulates that China will not enforce unpublished laws, 
Congressman Thomas went on to warn that ``the translation of a 
written agreement to reality is what cements the trust.''
    Pointing to requirements in the protocol requiring 
independent judicial review of government measures, Congressman 
Levin asked what he could tell his colleagues in Congress about 
the relatively weak judicial system in China. In response, Long 
said that the ``grey economy'' in China has damaged the Chinese 
Government, as well as the Chinese people, and that enforcement 
is first and foremost in China's interest. Congressman Dreier 
said that concrete moves to implement the rule of law are 
``necessary assurances that make the paragraphs more 
credible.'' Mentioning that he anticipates that some of his 
colleagues will say that the ``paragraphs of the trade 
agreement aren't worth the paper they are written on,'' 
Congressman Dreier went on to acknowledge that ``things don't 
work perfectly in the United States and your country is five 
times as large.''
    Minster Shi said that his government is ``screening all our 
rules as to whether they are consistent with the WTO,'' a 
process which may take 6 to 12 months. This process will 
probably involve legislative procedures to amend Chinese law in 
the National People's Congress and the State Council. He said 
that the Chinese Government has also engaged in public 
education regarding the ``abc's of the WTO.''
    Congressman Thomas said that the steps being taken to 
implement the rule of law, transparency, and the bilateral 
agreement hold great promise but that a number of Congressmen 
will need more of a comfort level. Citing the familiar saying 
``you are known by the company you keep,'' Congressman Thomas 
said he would be watching the issue of dispute resolution in 
the WTO and whether China was aligning with the United States 
in order to get Europe to open its market. In response, 
Minister Shi said that China will take the same position the 
United States does when it negotiates with other countries, 
i.e., China will demand market openings. Minister Shi agreed 
that the agriculture sector in Europe is subsidized, and said 
that China has abolished subsidies for agriculture and will 
work to get Europe to do the same.
    Congressman David Wu, who joined the Delegation for this 
meeting, asked how Congress can know for sure whether the 
Chinese Government will retain a long-term interest in staying 
engaged with the United States on the wide range of issues that 
Americans care deeply about. Minister Shi answered that respect 
for basic human rights is written into the Chinese 
Constitution. Maintaining that there are ``different 
interpretations of freedom,'' the Chinese Ambassador observed 
that protestors in Seattle were allowed to deny Delegates from 
135 countries the freedom to attend WTO meetings. He said that 
at the Conference on Women, held in China, there was a separate 
area for demonstrators to ``enjoy themselves.'' Paraphrasing 
Mark Twain's quote about travel being fatal to all prejudices, 
the Ambassador said he hoped that Chinese and Americans would 
compare notes and get to know each other better in the future.
    Chairman Crane observed that Prime Minister Jiu Rongji did 
not receive the proper credit for the outstanding negotiating 
work that he performed in April. Chairman Crane urged the 
Chinese to complete the remainder of the WTO accession process 
just as soon as possible, in order to facilitate consideration 
of legislation in Congress to grant China permanent normal 
trade relations treatment.
    In response, Minister Shi stressed that China was doing 
just that. He indicated he would lead a Delegation to Europe 
right after the Seattle Ministerial to work on this bilateral 
agreement which he predicted would be concluded at the end of 
January. Saying that China is a serious and earnest country 
with a thousand-year history, Minister Shi maintained that if 
it were not serious about enforcement, China would not have 
negotiated on its WTO accession for so many years.
    Chairman Crane and Congressman Dreier said that the 
likelihood was low that Congress would vote on permanent normal 
trade relations for China before late spring or early summer. 
The bill would need to proceed through the Committee process 
which will begin with hearings in February.
    Minister Shi said he thought the sooner permanent NTR was 
passed, the sooner U.S. interests could be realized. China's 
accession to the WTO is necessitated by continued reform in 
China and China's accession will accelerate the economic reform 
process. Without NTR there is no long-term foundation for the 
development of economic relations between the United States and 
China, he said.
    Congressman Brady raised the issue of Taiwan's accession to 
the WTO and the sale of arms to enemy nations. In response 
Minister Shi said that China will not oppose the accession of 
Chinese Taipei and Kinmin as a separate customs territory. He 
pointed to a statement by the GATT General Council that China 
will accede as a sovereign state ahead of Taiwan. ``Our request 
is to accede as a sovereign state ahead of Chinese Taipei as 
set down in the Chairman's statement,'' he said.
Dinner Hosted by Members of the Information Technology Industry Council 
        and the Business Software Alliance
    The Delegation attended a dinner hosted by members of the 
Information Technology Industry Council (ITI) and the Business 
Software Alliance (BSA) to discuss their agenda for the Seattle 
Ministerial which focuses on maintaining a liberal business 
environment for electronic commerce and industries linked to 
Internet communications. Electronic commerce, as defined by a 
recent WTO Secretariat study, includes the production, 
advertising, sale, or distribution of products via 
telecommunications networks. U.S. trade negotiators recognize 
that e-commerce is a valuable business tool and an important 
engine of economic growth. USTR reports that by 2005, an 
estimated 1 billion people will be using the Internet, and e-
commerce transactions in the United States alone may reach $1.3 
billion by 2003. Other estimates are much higher.
    ITI and BSA have taken the lead in pushing for the 
extension of the agreement in the 1998 Ministerial Declaration 
on Global Electronic Commerce for a moratorium among WTO 
Members on the collection of customs duties on e-commerce 
transmissions. Representatives of these industries also 
discussed the need to eventually reach agreement in the WTO on 
a statement of horizontal principles governing e-commerce, with 
the objective of creating a barrier-free regime for e-commerce. 
This would include Ministers reaffirming the applicability of 
well-established rules of international trade law, including: 
national treatment/nondiscrimination, MFN, transparency/
notification, and the applicability of current WTO obligations 
governing trade in goods, services, and intellectual property 
to e-commerce.
Thursday, December 2, 1999
Administration Briefing for Members
    Treasury Secretary Ron Slater, Deputy U.S. Trade 
Representative Richard Fisher, Undersecretary of State Alan 
Larson, and Ambassador Buddy McKay briefed the Members on 
developments over the last day.
    Ambassador Fisher began the briefing by noting that there 
has been some progress on agriculture, but there is a long way 
to go because the Europeans are not ``getting engaged.'' With 
respect to biotechnology, he said that the WTO Members were 
closer to agreement on a working group, with the Latin 
Americans unopposed and the Canadians being constructive. The 
European Union's proposal regarding compulsory licensing for 
pharmaceuticals is trade restrictive, and he emphasized that 
the United States ``will not tolerate'' it. He concluded by 
saying that there has been some progress on market access.
    Secretary Slater then spoke about services. He said that 
there is widespread agreement on what has to be done. The goals 
of the United States are to increase market access and 
transparency and to leave the door open to negotiating 
approaches that will lead to enhanced market access in the 
future.
    Undersecretary Larson mentioned the discussions with the 
Europeans on agriculture and the accelerated tariff 
liberalization effort. He noted that the European attempt to 
bring investment into the negotiations has limited support from 
other WTO Members. He noted that Egypt has been playing a 
leadership role among the developing countries.
    Ambassador McKay then spoke to the group about the 
importance of the Free Trade of the Americas (FTAA) effort, 
noting that it serves as a model for broad education and 
integration.
    Senate Finance Committee Chairman Bill Roth spoke to the 
members about an effort to create an interparliamentary body 
under the auspices of the WTO in order to encourage greater 
openness and transparency in the WTO, and to better inform 
legislators about WTO developments. He mentioned that he would 
be chairing a meeting later in the day in order to gauge 
interest by parliamentarians all over the world.
    At the end of the meeting, Congresswoman Dunn asked about 
the President's statements on labor during a press interview 
the day before, particularly his comment that core labor issues 
should be part of the WTO and enforced by trade sanctions. 
Ambassador Fisher replied that implementation of trade 
sanctions was not the purpose of the U.S. proposal to create a 
working party on labor. He said that the administration hopes 
for a recognition of the need to integrate labor but does not 
intend to develop a policy leading to trade sanctions. 
Ambassador Fisher said that the President did not mention 
sanctions in his luncheon speech the day before, and that 
speech represented his position on the issue.
    Ambassador Fisher then concluded by emphasizing that the 
United States is holding firm on the need to eliminate 
agriculture export subsidies. With respect to the ATL 
initiative, he noted that the Europeans are still resisting the 
U.S. effort to reach an agreement in this area.
Meeting with the Delegation from Chile
    Congressmen Crane, Brady, Watkins, Kolbe, Dunn, English, 
Weller, and Collins met with Chilean Ambassador to the United 
States, Mario Artaza, Chilean Director of Planning Ambassador 
Albert Van Clavier, and Chilean Economic Counselor Roberto 
Mattes. Chairman Crane opened the meeting by expressing his 
dismay over the failure of the U.S. Congress to approve ``fast 
track'' trade negotiating authority, which would allow the U.S. 
executive branch to begin negotiating with the Chilean 
Government for its accession to the North American Free Trade 
Agreement (NAFTA), thereby fulfilling a promise President 
Clinton made over 5 years ago. The Chilean Ambassador expressed 
appreciation for Chairman Crane's support of Chile's accession 
to NAFTA but noted that while his government was disappointed 
at the status of the negotiations, the Chilean Government 
continues to pursue a policy of further trade liberalization. 
He continued that trade liberalization was in the best 
interests of the Chilean economy, enabling the country to 
diversify their export base and raise the standard of living 
for the majority of Chileans.
    Congresswoman Dunn expressed concern that the Chilean 
business community was resentful about the failure of the 
United States to actively pursue a free trade agreement with 
Chile, and she asked for the Ambassador's perception of the 
Chilean business community's attitude towards the United 
States. The Ambassador responded that the Chilean business 
community was more disappointed than resentful. The Ambassador 
then noted that Chile sent a letter to the U.S. Secretary of 
State, Madeleine Albright, on August 8, 1999, indicating a 
willingness to begin negotiating a free trade agreement with 
the United States even absent the President's fast track 
authority. Unfortunately, the Ambassador concluded, the Chilean 
Government was still awaiting a clear cut response from the 
United States as to whether such a proposal would be acceptable 
by the U.S. Government.
    He then questioned whether labor and environment issues 
should be a barrier to pursuing a trade agreement with the 
United States, adding that Chile has some of the strongest 
labor and environmental laws in Latin America. He also stated 
that Chile has labor and environment agreements with Canada and 
would be amenable to discussing such issues in the context of 
negotiations for a free trade agreement with the United States. 
The Ambassador continued that conclusion of a free trade 
agreement with the United States would send a strong political 
message to the rest of Latin America as it would demonstrate 
international support for Chile's embrace of market 
liberalization and democracy, and recognize the success of 
their policies.
    Congressman Weller then asked for Chile's position on U.S. 
antidumping laws. The Ambassador expressed concern but 
understood that political support for reform in the United 
States was weak. He expressed frustration with the 
administration of U.S. antidumping laws, citing the Chilean 
salmon case. Here, Chile has a competitive advantage in salmon 
farming due to the cold water currents off the Chilean coast. 
Because of this comparative advantage, Chile has become the 
second largest exporter of salmon in the world. Yet, Chile has 
been kept out of the U.S. market because of U.S. antidumping 
laws. Nevertheless, he felt that antidumping was an issue that 
should be discussed as part of competition policy at a later 
date.
Meeting with Australian Trade Minister Mark Vaile
    Chairman Crane and Congressmen Collins, English, and Weller 
participated in the meeting with the Honorable Mark Vaile, the 
Australian Trade Minister.
    Chairman Crane began the meeting by noting that the 
President's remarks from the day before linking trade sanctions 
to core labor issues were disturbing. He asked the Minister for 
his assessment on progress in the negotiations.
    The Minister said that he was more optimistic than at the 
beginning of the week and that the message about the benefits 
of free trade is getting across. He noted that the Europeans 
are posing the greatest resistance to the elimination of 
agriculture export subsidies.
    Chairman Crane noted that the President's decision on the 
section 201 dispute involving lamb was ``demoralizing.'' If 
Australia, without subsidies, can undersell U.S. lamb 
producers, then they should not be restricted from entry in the 
U.S. market, he said. The Minister replied that the decision 
makes it difficult to sell free trade to the Australian people.
    Congressman English then spoke, noting that his district is 
unionized but export oriented. He applauded Australia's sound 
trade policy. He then asked the Minister for his opinion as to 
the prospects for the accelerated tariff liberalization 
negotiations. The Minister replied that the EU is resisting, 
but maybe ``cross trading'' would occur at the end of the 
Ministerial on that issue.
    Congressman English also emphasized that the push to reopen 
and weaken the antidumping agreement would create great 
difficulties and ``domestic fallout'' in the United States. He 
said that under such circumstances, it would be difficult to 
continue support for free trade. The Minister said that the 
issue of reopening the agreement had not been ``prominent'' in 
the last few days, but he cautioned that one must not 
underestimate Japan's ability to raise the issue.
    Congressman Collins mentioned a rumor that he heard to the 
effect that forest products would be pulled out of the ATL. The 
Minister replied that the risk is there, but he did not know of 
anything specific.
    With respect to the President's comments on labor, 
Congressman Collins noted that the President does not speak 
``off the cuff,'' and he opined that the President was 
``floating a trial balloon'' or has a hidden agenda on the 
linkage between trade sanctions and labor. The Minister noted 
that the position of the U.S. Government has not been to put 
such rules in the WTO. The position of the Australian 
Government is that the WTO is to be used for trade issues. 
There are more important trade issues to deal with in the WTO, 
he said, and the WTO should not be clouded with the labor 
issue. He noted that the EU proposal is more acceptable because 
it would establish a forum to discuss labor issues outside of 
the WTO.
    Congressman Collins responded by saying that the President 
is driven by politics, not principle in particular his 
eagerness to gain the majority in the House. He noted that if a 
working group is established, free traders should construct it 
in the best way possible to encourage trade. Congressman 
English added that not every Member in the House is as cynical, 
although the Members present certainly shared the concern about 
the President's motives.
    The Minister said that the developing countries are taking 
the lead in objecting to the U.S. proposal. If the WTO does 
anything in this regard, he said, it would be limited to the EU 
proposal or an UNCTAD-driven approach. Congressman Collins said 
that free traders should instead submit their ideas to a 
working group and use it to their advantage.
    Congressman Weller noted that he was grateful about the 
shared Australian goal to eliminate agriculture export 
subsidies. The Minister emphasized that this is ``the most 
fundamental issue'' before the WTO. The EU, he noted is almost 
standing alone, and there has been good progress so far.
    Congressman Weller then raised the issue of film 
production. He noted his concern that Australia is providing 
significant concessions to encourage making movies in 
Australia. The film industry is important to the Chicago area, 
he said, and a bidding war must be avoided. The Minister 
responded by saying that many subsidies and incentives have 
been eliminated because of budget constraints. Some state 
governments might still provide incentives, but the Australian 
Government is seeking to discourage them because they are trade 
distorting. He noted that Rupert Murdoch did not receive any 
incentives unless they were provided by New South Wales.
 Meeting on African Growth and Opportunity Act
    On Thursday afternoon, the CODEL attended a reception to 
support swift passage of the African Growth and Opportunity Act 
(AGOA). The meeting was chaired by Chairman Crane and 
Congressman Rangel, along with a number of other Members, 
including Congressmen Blumenauer, Dreier, Houghton, Levin, 
McDermott, Pomeroy, and Congresswoman Tauscher. Also in 
attendance were Transportation Secretary Slater, Assistant U.S. 
Trade Representative for Africa Rosa Whitaker, and a number of 
members of the African Diplomatic Corps.
    The highlight of the meeting was the appearance of the 
President, who emphasized the administration's strong support 
for passage of the AGOA. The President noted that the past 5 
years have been a period of promising stability and growth in 
sub-Saharan Africa, due to difficult economic and political 
reforms that many African countries are undertaking. He 
commended these countries and their leaders for the courage and 
farsightedness to undertake these reforms and pledged that the 
United States would support their efforts, including promoting 
passage of AGOA.
    The President pointed out that the AGOA would for the first 
time establish a trade and investment framework between the 
United States and the countries of sub-Saharan Africa. He 
complimented the supporters of the bill in both the House and 
Senate for their successful efforts in securing passage of the 
bill during the First Session of the 106th Congress, and 
pledged to work closely with them in the early months of the 
Second Session, to reach a conference agreement and enactment 
of the measure.
    Chairman Crane, Congressman Rangel, and Congressman 
McDermott emphasized the importance to both the United States 
and Africa of passing the bill. In particular, each emphasized 
the importance of the bill and its benefits to U.S. workers and 
firms and to African workers and firms. All reaffirmed the 
importance of passing the bill quickly in 2000.
Tour of the Port of Seattle and Operations of the U.S. Customs Service
    On Thursday, December 2, the Delegation toured U.S. Customs 
Service operations at the Port of Seattle. The purpose of the 
visit was to provide Members and staff, who have responsibility 
for authorization and oversight of the Customs Service, an 
opportunity to view trade facilitation and enforcement 
operations at this port.
    During a luncheon and boat tour of the Elliott Bay harbor 
hosted by the Port of Seattle and American President Lines, the 
Delegation viewed container terminal operations, the loading 
and unloading of export and import goods transiting the Seattle 
Port, fish processing and handling facilities, on-dock cold 
storage facilities, the main distribution center of Hasbro 
Corporation, grain terminals, shipyards, a North Pacific 
fishing fleet, and the port's new cruise ship terminal.
    Closer to Asia than any other major U.S. port, Seattle 
moves 1.5 million TEUs (20-foot container equivalent units) of 
cargo each year, connecting to markets throughout North America 
via transcontinental rail and trucking companies. Members 
discussed competitive challenges faced by the port as it works 
to attract business from the nearby Canadian port of Vancouver, 
which currently is gaining in market share, while Seattle is 
losing at a rate of 1-2 percent a year. Port officials cited 
problems associated with the harbor maintenance tax (HMT) and 
general congestion in the area as issues that could be 
addressed in order to bring more port business back to Seattle.
    The harbor maintenance tax, established by the Harbor 
Maintenance Revenue Act of 1989 (P.L. 99-662), imposed a charge 
for the use of a U.S. harbor or channel by a commercial vessel 
for loading and unloading commercial cargo. The HMT was 
originally set at a rate of 0.04 percent of the value of the 
cargo, and was increased to 0.125 percent, effective January 1, 
1991. In 1998, the Supreme Court held that the HMT constituted 
a tax on goods in export in transit and therefore violated the 
Constitution's export clause (art. 1, sec. 9, cl. 5).
    As a result of the Court's decision, Customs ceased 
collecting the HMT, but the administration has since proposed 
legislation to impose a cost-based user fee. Seattle Port 
officials do not support the administration's fee proposal 
because they believe the cost basis would be higher than the 
HMT in some cases. These port officials told the Delegation 
that they believe that the Port of Seattle has suffered 
diversion of cargo to Canadian ports and that the port of 
Vancouver even uses the HMT in its advertisements as an 
incentive to draw cargo away from U.S. ports.
    Disembarking the vessel at the Customs area, the Delegation 
received a briefing from the CMC Director, the Seattle Port 
Director, and the Special Customs Agent in Charge. Members 
observed mobile x rays scanning cargo for contraband, examined 
drug interdiction and antismuggling operations, and 
participated in a K-9 demonstration. Members also had the 
opportunity to meet with several other Customs agents and 
inspectors ``on the job,'' to see first hand how trade 
compliance functions for industry and government and explore 
what importers must do to have their goods released in a timely 
manner.
Dinner Meeting with the Coalition of Services Industries
    On December 2 the Coalition of Services Industries held a 
dinner in honor of the Delegation. CSI's membership includes 
companies in the financial, telecommunications, professional, 
travel and tourism, transportation and express courier, and 
information technology services sectors. In general, CSI 
companies have been active supporters of the WTO since 1994 
when the Uruguay round agreements brought services under the 
disciplines of the multilateral trading system for the first 
time. Major advances for this group were the WTO agreements to 
liberalize trade in: (1) financial services, which came into 
effect in 1995; and (2) basic telecommunications services, 
which came into effect in 1998. CSI company representatives 
spoke to the Delegation about the benefits to the U.S. economy 
of achieving greater opportunities for services firms, 
employees, and consumers within the context of the new WTO 
services negotiations that are scheduled to begin in 2000.

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