often forces us to emphasize certain elements over others. We risk losing focus on the broader goal.

The Seattle Ministerial offers an opportunity to pull all of these elements together, recognize the role of electronic commerce in promoting and facilitating international trade, and articulate what we call the "Trade Framework for the Information Economy."

III. OBJECTIVES FOR THE SEATTLE MINISTERIAL

We propose that the WTO Ministers, when they meet in Seattle, set forth the "Trade Framework for the Information Economy" through four related commitments. Taken together, these commitments provide a transparent, predictable, and technology-neutral international trade environment that will foster global economic growth and development.

These commitments are political only, and by that I mean that they would not be legally binding or enforceable. They would reflect the "best efforts” of trade ministers to keep electronic commerce "barrier-free."

The first commitment is to agree to continue the May 20, 1998 Moratorium on Customs Duties on Electronic Commerce (for at least the duration of the New Round) and clarify that the exemption from tariffs applies both to the transmissions themselves and to their contents.

Second, we want the Ministers to reaffirm that current WTO obligations, rules, disciplines and commitments (namely the GATT, GATS and TRIPS agreements) are technology-neutral and apply to e-commerce. We don't need to invent new trade rules when using the existing rules may serve us better.

Third, we want Ministers to commit to refrain from taking measures that could inhibit the growth of e-commerce and access to IT. Forbearance is a tough thing for governments to do, but that is what is needed and what we are seeking. However, should domestic measures be deemed necessary, even then the measures should be the "least trade distortive" as possible and subject to WTO principles (in particular, national treatment, non-discrimination, transparency, notification, review and consultation).

Fourth, we want Ministers to initiate the Trade Framework for the Information Economy. Let me be explicit: we are not proposing that the WTO embark on negotiations on issues that are not yet ripe for international agreement. But, there is much work to be done to broaden understanding of how electronic commerce is changing global business, to examine how current trade rules apply, and to assess whether new rules are necessary to provide a strong underpinning for the global information economy. The Seattle Ministerial offers an opportunity to initiate work on these critical issues.

Let me underscore the importance we attach to a political commitment by ministers to refrain from taking measures that restrict or inhibit electronic commerce. In order for all countries-both developed and developing-to reap the benefits of the information age, electronic commerce must remain as unimcumbered as possible from regulation and trade barriers.

One of the main reasons electronic commerce has grown so quickly is because the internet has not been singled out for regulation. We propose Ministers commit themselves to resisting imposing burdensome regulations that will inhibit the growth of electronic commerce and instead, when measures must be taken, make them the least restrictive.

A political commitment to "forebear" from taking measures that would inhibit access to or use of the Internet would provide the measure of certainty that businesses all around the world seek. And it would set into motion a dialogue among countries on the trade-distortive effects of potential measures-again, to the benefit of all WTO members.

In the last several months, ITI and its member companies have conducted four seminars in Geneva to acquaint WTO representatives from over 60 countries with the benefits of information technology and electronic commerce. We strongly encourage that the WTO's work on e-commerce include substantive dialogue with industry. ITI stands ready to provide whatever assistance we can to ensure that the Seattle Ministerial and the ensuing negotiations result in a transparent, predictable and technology-neutral trade environment that will foster global economic growth and development. This would be a "win" for all and another reason to celebrate the benefits of information technology as we reach the start of the 21st Century.

Thank you Mr. Chairman and I would be happy to answer any questions you might have.

Mr. PORTMAN. Director Jones.

STATEMENT OF SHELDON R. JONES, DIRECTOR, ARIZONA DEPARTMENT OF AGRICULTURE, PHOENIX, ARIZONA

Mr. JONES. I am Sheldon Jones, director of the State Department of Agriculture for the State of Arizona in Phoenix. I am grateful to you and to the Subcommittee as a whole for giving me this opportunity to speak on behalf of the State of Arizona on why it is crucial that the United States continue its ambitious trade agenda.

Now more than ever it is imperative that the United States negotiate and enforce agreements worldwide which will create open and fair markets for U.S. products and services. This process of engagement will ensure our continued growth and standard of living into the 21st century.

Allow me to begin by stating that Arizona fully supports legislation providing the administration fast track trade authority. An export-dependent industry, U.S. agriculture must be able to compete in foreign markets on a level playingfield. Without authority to negotiate trade agreements, the administration cannot fully assure agriculture a place at the table in the international marketplace. Comprehensive negotiating authority is needed to address high tariffs, trade-distorting subsidies and other restrictive trade practices. Fast track is also needed to pursue promising new opportunities for market-opening trade agreements in Latin America, Asia and elsewhere. Passing fast track legislation will provide the administration with the necessary authority to assure the U.S. competitiveness in foreign markets does not continue to suffer.

The United States has 4 percent of the world's population and controls 22 percent of the world's wealth. In the next 15 years, the developing countries in both Latin America and Asia are expected to grow three times as fast as the United States, Europe and Japan. With this information, it is clear that if 4 percent of the world's population is to maintain 22 percent of the world's wealth and create more wealth, we must open up the world's fastest-growing markets to U.S. products and services.

The World Trade Organization today is the result of 50 years of American leadership and the creation of an international trading system. This system is designed with the primary goal of tearing down foreign trade barriers and promoting a singular rule of law in the arena of international trade. The World Trade Organization has worked to cut tariffs and quotas on farm and ranch products worldwide. However, many will agree there is much more to be accomplished. I applaud both Ambassadors Barshefsky and Esserman for their commitment to address the concerns of the U.S. agriculture industry in its recent circulated objectives for the agriculture negotiations.

While I fully support the four objectives to which the USTR has committed its attention, I believe the trade issues facing agriculture in America extend deeper and deserve further specific attention. Today, I will touch on five issues which the State of Arizona views as critical to the success of any international trade system for agricultural products.

First, the State of Arizona supports the unilateral reduction of all foreign subsidies and tariffs on all agricultural products. Ample time has passed since WTO initiated agricultural trade reform, and it shouldn't be unrealistic to expect the WTO member countries to have significantly reduced agricultural dependence on government support. Arizona recognizes the prerogative of sovereign nations to support farmers and ranchers if they so choose; however, it is important that the WTO address the distortions these measures of support have caused to global production and trade.

The 1996 farm bill clearly established the expectation of this government that the United States agricultural industries would learn to compete internationally with minimal subsidization in the field and in the marketplace. We, as a whole, recognized the need to redirect this sector of our economy to a self-sufficient, market-driven industry. The days of heavy governmental assistance for farming and ranching in this country were over. This, as we all know, is just not the case throughout the rest of the world.

Without the elimination of unreasonable government field and market subsidization of WTO member countries' agricultural industries, U.S. farmers and ranchers cannot compete.

Equally important is the issue of tariffs placed on agricultural products. The State of Arizona supports the reciprocal reduction of tariffs in WTO member countries on U.S. agriculture products.

Second, the State of Arizona supports the implementation of rules for the trade of perishable and seasonal commodities. In fiscal year 1997, Arizona agricultural operations raising everything from artichokes to cotton lint, corn to honey, to tomatoes and watermelon generated nearly $2.2 billion in cash receipts from agriculture marketings. While Arizona produces a variety of crops, a great variety of commodities produced in my State are seasonal and perishable in nature. Presently no specific rules exist to deal with the trade of perishable and seasonal commodities. When asked if specific rules for perishable commodities were needed at the Agriculture Forum immediately preceding the Free Trade Area of the Americas Business Forum in Belo Horizonte, the head of the Uruguay round agriculture negotiating team agreed that the promulgation of such rules would be both helpful and advisable for all WTO member countries.

Third, the State of Arizona supports the implementation of a workable and meaningful dispute resolution mechanism. Presently, Arizona believes the avenues for dispute resolution within the WTO inadequately suit the needs of perishable and seasonal commodities. By their very nature, these commodities require timely solutions to ensure that perishable shipments are not lost to bureaucratic or political mechanisms.

In the new round of negotiations, Arizona recommends that the U.S. solicit clarification of the dispute settlement process with a strong enforcement mechanism, limited settlement appeals, and strict compliance deadlines.

Fourth, the State of Arizona supports the Uruguay round agreement on sanitary and phytosanitary measures and does not support opening them for discussion. Despite the adoption of the Uruguay round agreement on SPS issues, a number of WTO member countries continue to impose sanitary and phytosanitary measures

which are questionable at best in nature and sincerely lack a basis in sound science. These SPS measures create tremendous barriers to market access abroad for U.S. agricultural products.

While some WTO member countries wish to reopen he SPS agreement for amendment, the State of Arizona believes that the WTO's strict enforcement and thorough implementation of the current SPS agreement is absolutely essential to the success of any international trade system.

Fifth, the State of Arizona supports transparency and science in the genetically modified organism approval process and market access for GMOs. I support the administration's recently circulated position to the WTO entitled "Measures Affecting Trade in Agricultural Biotechnology Products." as a representative of a $6.3 billion industry in Arizona, I am tremendously concerned that the European Union's approval system for biotechnology products is a process rooted in hysteria and lacking transparency.

The State of Arizona continues to advocate for global market access for genetically modified organisms in all WTO countries. Further, we believe it is imperative that any process developed for approval of GMOs is fully transparent to all parties.

In summary, the State of Arizona advocates for and urges you to support the unilateral reduction of foreign subsidies and tariffs, implementation of rules for the trade of perishable and seasonal commodities, clarification of existing dispute resolution mechanisms, adherence by all WTO member countries to the Uruguay round Agreement on Sanitary and Phytosanitary Measures, and transparent market access for genetically modified organisms.

On behalf of the State of Arizona and Governor Hull and the agriculture industry, I thank you for this opportunity.

Chairman CRANE [presiding]. Thank you, Mr. Jones.
[The prepared statement and attachments follow:]

Statement of Sheldon R. Jones, Director, Arizona Department of
Agriculture, Phoenix, Arizona

Thank you, Mr. Chairman, for inviting my testimony on the importance of strong U.S. negotiation objectives for the World Trade Organization Seattle Ministerial Meeting in November. I am grateful to you and to the Subcommittee as a whole for giving me this opportunity to speak on behalf of the State of Arizona on why it is crucial that the U.S. continue its ambitious trade agenda. Now, more than ever, it is imperative that the U.S. negotiate and enforce agreements worldwide which will create open and fair markets for U.S. products and services.

This process of engagement will insure our continued growth and standard of living into the 21st Century. My testimony will touch on why an aggressive trade policy to open markets is important to the agricultural industries of Arizona's economy. Allow me to begin by stating Arizona fully supports legislation providing the Administration Fast Track trade authority. An export dependent industry, U.S. agriculture must be able to compete in foreign markets on a level playing field. Without authority to negotiate trade agreements, the Administration cannot fully assure agriculture a place at the table in the international market place.

Comprehensive negotiating authority is needed to address high tariffs, trade-distorting subsidies, and other restrictive trade practices through further World Trade Organization (WTO) negotiations. Negotiating authority is also needed to pursue promising new opportunities for market opening trade agreements in Latin America, Asia and elsewhere.

Equally important to nurturing existing trade alliances, is the commitment to ensure that trade liberalization continues so the agriculture industry can compete fairly in the global market place. As price supports continue to be phased out under the 1996 Farm Bill, international trade has become increasingly important to the stability of agriculture. Fast Track gives the U.S. the tools necessary to continue to

play a role in the trade liberalization process and the opening of overseas markets to quality agricultural products.

Passing Fast Track legislation will provide the Administration with the necessary authority to assure the U.S. competitiveness in foreign markets does not continue to suffer. The United States has 4% of the world's population and controls 22% of the world's wealth. In the next fifteen years, the developing countries in both Latin America and Asia are expected to grow three times as fast as the United States, Europe and Japan. With this information it is clear to see that if 4% of the world's population wants to maintain 22% of the world's wealth, or grow more control, we must open up the world's fastest growing markets to U.S. products and services.

Recently, the Arizona Department of Agriculture had the opportunity to participate in the formation of a coalition, known now as NFACT, with the departments of agriculture from New Mexico, Florida, California, and Texas. NFACT represents over 23% of total U.S. agricultural cash receipts, as well as 25% of the entire U.S. Congressional Delegation. Agricultural exports from the states represented by NFACT in 1997 alone were estimated to be over $5 billion. Among the positions these five states gained consensus is the issue of international trade. While we represent varied constituencies, our concerns with fundamental agricultural trade issues are similar. My comments today will reflect many of the concerns the NFACT coalition has expressed to the Office of the United States Trade Representative, the United States Department of Agriculture, and to Members of Congress in recent visits.

Arizona already benefits from a number of agricultural trade agreements. Since Arizona is the only documented fruit fly-free state in the United States, our citrus is in high demand throughout the world, especially Southeast Asia, China and Japan. With more than 25% of Arizona's farm receipts coming from cattle, our state benefitted from the significant reduction of beef export and slaughter tariffs by a number of countries following agreements reached at the Uruguay Round, including Korea, Japan, Mexico, and the European Union.

According to the Arizona Department of Commerce, economists agree that Arizona's overall economy will remain strong throughout 1999, with job creation heading the list of positive indicators. Exports of Arizona based companies topped $11.4 billion in 1998, a decline from the record-breaking total of $13.8 billion in 1997, but still the second most successful year in the state's history. Arizona exports topped $2.8 billion for the first quarter of 1999, down 3.7% compared to the first quarter of 1998. This decline has been attributed to the effect of the "Asian flu" on Arizonabased companies. However, Arizona exports to North American Free Trade Agreement (NAFTA) member countries have increased dramatically since the negotiation of the Agreement.

Western Blue Chip Economic Forecast (April), a consensus forecast of economists from 10 Western states, ranked Arizona #1 in the nation for nonagricultural job growth in 1998. With a 4.7% increase, Arizona surpassed Nevada which had held the top position for the past four years.

However, even with the tremendous job growth in urban populations of Arizona, my state's rural and chiefly agricultural communities are feeling the pinch. With sagging prices, labor shortages, increased costs and diminishing abilities to compete in domestic channels of trade, Arizona's farmers and ranchers are now, more than ever, looking to the global marketplace to earn their living. My testimony today will provide you with valuable insight to the concerns of Arizona's farmers and ranchers when faced with the challenge of gaining foreign market access.

The World Trade Organization today is the result of fifty years of American leadership in the creation of an international trading system. This system was designed with the primary goal of tearing down foreign trade barriers and promoting a singular rule of law in the arena of international trade.

The WTO has worked to cut tariffs and quotas on farm and ranch products worldwide. However, many will agree there is much more to be accomplished. I applaud both Ambassadors Barshefsky and Esserman for their commitment to address the concerns of the U.S. agriculture industry in its recently circulated "Objectives for the Agriculture Negotiations." While I fully support the four objectives to which the USTR has committed its attention, I believe the trade issues facing agriculture in America extend much deeper and deserve further specific attention.

Today I will touch on five issues which the State of Arizona views as critical to the success of any international trade system for agricultural products. Those issues are the Reduction of Foreign Subsidies and Tariffs, Implementation of Rules for Perishable and Seasonal Commodities, Dispute Resolution Mechanisms, Adherence to Sanitary and Phytosanitary Agreement, and Transparent Market Access for Genetically Modified Organisms.