boost US efforts to gain effective intellectual property protection and enforcement around the world and ensure that, if warranted, intellectual property negotiations can be launched at the proper time.

Statment of Pharis J. Harvey, Executive Director, International Labor

Rights Fund

Mr. Chairman and Members of the Subcommittee:

Thank you for the opportunity to offer testimony in these proceedings. My name is Pharis Harvey, and I am Executive Director of the International Labor Rights Fund. The ILRF is a non-profit organization that has worked for many years for the adoption and enforcement of domestic and international mechanisms to promote and enforce workers fundamental human rights. We have been particularly active in campaigns to establish and to monitor the link between international trade and labor standards.

My comments therefore are addressed to the issues of:

Trade and Labor Standards,

Access and Transparency,

Assessment, and

• Need for Bilateral Discussions

Although neither of these issues is, as yet, a part of the agenda for this year's Ministerial Meeting, each is an issue which the United States should strive to ensure is included on the WTO's post-1999 agenda for negotiations and further work.

I. TRADE AND LABOR STANDARDS

With regard to Trade and Labor Standards, my comments are directed to the issues of evidence to be drawn from existing trade and labor linkages, re-visiting the Singapore declaration, ILO-WTO relations, and the efforts of the Administration to build support for these issues.

The United States should press for a new Ministerial Declaration on trade and labor standards, to be adopted in 1999, based on a re-consideration of the 1996 Singapore Declaration; request regular reports from the WTO on its efforts to collaborate with the ILO; and strive for the adoption of a formal ILO role at the forthcoming WTO Ministerial Meeting.

In December of 1996, the United States failed in its efforts to have the WTO create a working party to examine the relationship between trade and labor. The issue did appear as part of the final communiqué from the Ministerial, although in a one-sided way; the Singapore Declaration recognizes that economic growth contributes to compliance with core labor standards, but it does not refer to the prospect that observance of core labor standards might be a positive influence on economic growth as the OECD reported in May 1996.

The Singapore Declaration called for the ILO and the WTO to continue their cooperation in their fields of mutual interest, but here also the effort appears to have been one-sided. While the ILO's Governing Body Working Party on the Social Dimensions of the Liberalization of Trade regularly publishes studies and updates on the issues and assesses the activities of other international actors, the WTO appears not to undertake any activities in this area at all. The ILO conference in June 1998 adopted a new Declaration on fundamental principles and rights at work reaffirming the rejection of labor standards as a means of protectionism and including a follow-up reporting mechanism. We are unaware, however, of any activities in this field by the WTO or any reports on the collaboration of these two organizations in the intervening period. The United States should demand that the two organizations publish a joint report on their collaborative activities.

The United States should press for a new Ministerial Declaration on trade and labor standards to be adopted at the 1999 Ministerial. The new declaration should refer both to the Singapore Declaration and the new ILO Fundamental Declaration. It should address the question of whether observance of core labor standards can make a positive contribution to economic growth and international trade. It should also set a broad program of work for the WTO and its negotiations on trade and labor in the next millennium.

Previous Declarations have acknowledged the ILO's leading role in the field of labor standards. A new declaration should require that the ILO be given an acknowledged role at the WTO in its discussion of trade and labor issues. In this regard, we propose that the United States press for the inclusion of the ILO as a formal participant at the 1999 Ministerial.

II. ACCESS AND TRANSPARENCY

The United States should press the WTO to adopt a high degree of transparency, both in access to its documents and in the conduct of its dispute settlement. The WTO oversees the rules regulating the international trading system. Both the rules and the system itself are intended to increase the economic participation of all people and the benefits they derive from economic growth and trade. Under the circumstances, the greatest possible degree of openness, transparency, and accountability to the people ultimately intended to benefit from WTO activities is nothing short of essential. The United States should take every opportunity to press the WTO to become more transparent in two vital areas: access to documents, and dispute settlement.

Access to information is crucial. Accordingly, the WTO should take steps to ensure that greatest possible access to its official documents, in the shortest possible time frame. As a base line, the presumption should be that all WTO documents would be publicly available. Relevantly this includes draft agendas, WTO secretariat working documents, official minutes, and the formal contributions of WTO members. All documents in these categories should be made publicly available as soon as they are available in all of the WTO's official languages. Since confidentiality may be necessary for some documents, standing guidelines for confidentiality should be promulgated after negotiation of their content with NGO and civil society representatives. The WTO should carry out strict oversight to ensure that confidentiality guidelines are being met, and that documents on topics that are no longer confidential are released publicly as soon as possible. The WTO should take the lead on devising appropriate means of disseminating all publicly available documents, including via libraries, electronic media, and document depositories. Naturally, it will be necessary for the WTO to take into account the varying capacities of some NGOs to gain access to material, particularly those that do not have access to electronic media.

The Dispute Settlement Process should be as open and transparent as possible, exempting only genuinely confidential information. As President Clinton suggested in his speech to the WTO Ministerial in May, civil society should have the opportunity to participate in the dispute settlement procedures. It could do this by means of briefs submitted amicus curiae. It may be appropriate to empower or require the dispute settlement panels to consult directly with NGOs as independent experts in particular fields.

III. ASSESSMENT

The United States should conduct and/or participate in studies of existing US and EU trade and labor linkages to determine the legitimacy of the opposition's claims. Opposition to any linkage between trade and labor standards in the WTO takes several forms. Among the objections is that any mechanism for enforcement of core labor standards through trade remedies would become (or is intended to be) a means for protectionism, disguised or otherwise. Another ground of opposition from some quarters is that the WTO and its rules-based system are inherently biased against the interests and cultural perspectives of developing countries. In our view, the operation of certain of the existing international trade and labor linkages provides fertile ground for study to determine whether these fears are well founded. We propose that the United States press for the conduct of an independent study of the application of certain existing trade and labor linkages. The United States should offer as a subject of study its own experience with the North American Agreement on Labor Cooperation, the United States' GSP program, and the OPIC worker rights linkage. The European Union should be encouraged to offer as a fourth subject of study the administration of the worker rights linkage in its GSP program. A small international team should conduct the study, with involvement from relevant governments, civil society and international organizations. As to the latter, obviously the WTO and the ILO would need to be key participants.

IV. NEED FOR BILATERAL DISCUSSIONS

Finally, the United States should work actively to build bilateral support for these initiatives. Now is the right time for the Administration to begin work to build the necessary political support to move these issues onto the WTO agenda. Several Heads of State and Heads of Government, including President Nelson Mandela and Prime Minister Tony Blair, adopted positions at last year's WTO Ministerial which were supportive of President Clinton's proposals for consideration of trade and labor issues, and for dialogue between the WTO and civil society. The United States must press at every opportunity for commitments from its many friends in the field of trade to use their best efforts to achieve these goals at this year's Ministerial. We

have no doubt that the Administration's efforts to obtain the support of those governments presently opposed to any linkage, or even to a discussion of the issue, will be considerably enhanced by the evidence of the study we have already proposed on the application of existing trade and labor linkages.

In its ongoing bilateral relationships, the United States should strive for constructive dialogue on the issue of trade and labor standards, particularly with those developing nations that have been stridently opposed to any link. The Administration should discuss with these countries their ideas on possible measures in a trade-labor linkage to safeguard against protectionism and cultural domination. The Administration should also consider development initiatives that could be pursued in tandem with efforts to seek support for a trade and labor link, including the important issue of debt relief. There is an obvious relationship between this issue and the trade and labor link, given the pressure that foreign debt puts on developing countries to pursue export oriented development policies.

Members of the Subcommittee, I am certain that each of you is aware of the significance of this hearing today. The United States is in a unique position to advance debate within the WTŎ on the issue of Trade and Labor Standards and to press for better mechanisms for transparency and accountability in WTO operations. It is my sincere hope that the proposals and suggestions I have made here today will help USTR to move forward in achieving these important goals. Thank you.

Statement of International Mass Retail Association, Arlington, Virginia

I am writing on behalf of the International Mass Retail Association (IMRA) to provide the mass retail industry's viewpoint on U.S. preparations for the World Trade Organization's 1999 Ministerial meeting, and specifically on agenda issues that we believe the United States should include in the next multilateral round of trade negotiations.

By way of background, IMRA represents the mass retail industry-consumers' first choice for price, value and convenience. Its membership includes the fastest growing retailers in the world-discount department stores, home centers, category dominant specialty discounters, catalogue showrooms, dollar stores, warehouse clubs, deep discount drugstores and off-price stores-and the manufacturers who supply them. IMRA retail members operate more than 106,000 American stores and employ millions of workers. One in every ten Americans works in the mass retail industry, and IMRA retail members represent over $411 billion in annual sales.

Increasingly, IMRA's members are operating stores in more than one market. As part of our industry's global expansion, our members face some important barriers to investment and trade. These barriers pose a significant problem, not only for our members, but for the many product suppliers with whom they work in strategic alliances. IMRA strongly believes that the United States should make distribution services, including retailing, a prime focus of the upcoming GATS 2000, "built-in" services agenda.

DESCRIPTION OF THE DISTRIBUTION SECTOR

Retailing, wholesaling, franchising and commission agents' services are traditionally considered the prime elements of the distribution service sector in the General Agreement on Trade in Services (GATS). While IMRA believes this is essentially a correct view, we also feel that distribution services should be viewed quite broadly as the unfettered ability to move merchandise through a supply chain. These activities include not only retailing, wholesaling, franchising and commission agents' services, but many additional ancillary activities and services.

The traditional distribution sector, which moves products through the supply chain to the ultimate individual consumer, is also characterized by additional activities including, but not limited to, inventory management, direct contracting for production of merchandise domestically and internationally, customs brokerage activities, consolidation and deconsolidation of merchandise, delivery and transportation services, storage services, garage services and fleet maintenance, sales promotion, marketing, advertising, installation and product service.

We have urged the United States government to take this broad view of distribution services as they move into the next round of service negotiations. It is absolutely essential that negotiations do not view sectors narrowly, because oftentimes service providers work in strategic partnerships. This is especially true with distribution services.

IMPORTANCE OF THE DISTRIBUTION SECTOR TO NATIONAL ECONOMIES Supply chain issues have become an integral part of consumer product manufacturing and marketing. No economy can be truly modern if it imposes barriers that slow the movement of goods between and among manufacturers, wholesalers, retailers and the consuming public. The most efficient economies-where consumers enjoy a high standard of living, a wide array of consumer goods, and low consumer pricesare those in which the distribution economy has been left relatively free of government regulation and barriers to investment and market entry.

Retailers and product manufacturers, working together in strategic alliances, have increasingly re-engineered the supply chain in industrialized nations. These technological advances have resulted in the emergence of large-scale mass retailing, which is capable of providing consumers large quantities of mass-produced products and exceptionally low prices. Mass production and mass retailing are important factors in the quality of life in the United States. Finally, these sectors consistently produce large numbers of jobs both directly and in ancillary services such as the transportation sector. Retailers are the largest private-sector employers in the United States economy.

Supply chain reengineering will continue to be a key element in global expansion of the retailing industry. Today the number of global retailers-those operating in more than one market-is expanding at a very rapid rate. What's more, these international businesses are growing faster than their domestic-only counterparts. These companies are radically changing the nature of retailer-supplier alliances. As these companies become truly multi-national, they will create vast new market opportunities for consumer product brands and manufacturers. Their relationships with product producers will be global, not local. These companies will become, over time, the export facilitators for most small and medium-sized product producers, regardless of their geography. These companies will create consumer markets where there were, here-to-fore, none at all, and they will be one of the main facilitators in creating international brands. Their role in supporting merchandise exporting can be critical to long-term U.S. trade and economic policy.

Consequently, IMRA strongly believes that the United States should focus on achieving market access improvements in distribution services as one of the primary agenda items of the next WTO round. Achievements in this sector can have important side benefits for U.S. merchandise exports.

SPECIFIC OBJECTIVES OF THE DISTRIBUTION SECTOR-BARRIERS AND REGULATORY CHALLENGES

Retailers face a number of barriers to market entry, including the following: Local equity requirements in excess of 49 percent, which require retailers to take a minority interest in joint-ventures.

Licensing requirements that, in addition to local equity, require approval of the store or facility's location and joint-venture partner. Often these requirements make it difficult for retailers to reach "critical mass" with respect to the number of local outlets. Mass retailing requires high sales volumes, in order to achieve profits. The mass retail model cannot be achieved in countries that require store-by-store licensing.

Competitive needs testing that allows domestic competitors a veto power over investments. Often times retailers are subject to review processes that allow competing local and domestic businesses the opportunity to disapprove a new store location or new investment.

Zoning and store-size restrictions and hours of operation restrictions, which although not trade-distorting, make investment unattractive in some markets.

Merchandise availability and import restrictions. High tariffs and local quota regimes are the chief culprits affecting retailers. Because retailers resell merchandise, any restrictions that affect the availability or price of merchandise are problematic. Import restrictions are not only a problem with our trading partners, but with the U.S. as well. The United States maintains high import barriers in some consumer products such as textiles, apparel and footwear.

Transportation barriers. Retailers depend upon the ability to move merchandise quickly from the manufacturer (domestic) or the port of entry (imports), in just-intime supply chains. Restrictions on the free movement of goods or non-transparent customs procedures that delay importation of goods have an impact. In addition, some retailers and many wholesalers need the ability to deliver goods directly to the consumer. Restrictions on air couriers or other modes of direct delivery have a critical impact on the ability to conduct retailing and wholesaling in some markets.

Standards. Retailers deal in a wide-variety of consumer products. Conflicting and overlapping product standards and testing methods make it difficult to integrate

global or regional operations. In addition, testing and certification practices can and do become non-trade barriers.

IMRA RECOMMENDATIONS FOR THE WTO AGENDA

GATS Agenda-Services 2000 Negotiations

Because of the critical role that distribution services play in promoting exports and building consumer markets, IMRA strongly urges the United States to make the distribution sector a prime focus for the GATS 2000, “built in" WTO agenda. We urge the United States to:

Obtain the broadest possible global GATS commitments on distribution services. In particular, IMRA urges the United States to seek a cap on local equity requirements for distribution sector investments of 49%, and the elimination of competitive needs or investment screening tests.

Obtain broad commitments to achieve open trade and investment policies in the telecommunications sector. Retailers need to have a choice of suppliers and services, and have the option of building their own private data communications networks. Obtain broad commitments to achieve more open trade and investment policies in the multi-modal transportation sector, and direct delivery services. Retailers require the ability to choose transportation suppliers and services, and have the option of building their own, private trucking fleets for local product delivery, or to contract with private delivery services for direct product delivery to customers.

Begin work on regulatory issues that affect retailing, including store size regulations and hours of operation that, while not necessarily trade-distorting, affect the ability of large scale retailing to achieve operating efficiencies.

Other WTO Agenda Items

IMRA also urges the United States to pursue other negotiating objectives, as follows:

Reduce barriers to consumer products. IMRA supports efforts to lower import tariffs on all consumer products and to eliminate any quotas that may exist on such products. Modern and efficient distribution of goods requires the elimination of barriers at the border. Quotas drive up costs and add non-transparent administrative burdens. ISAC 17's interests in lowering tariffs and eliminating quotas is strong and deep, and applicable as much to U.S. tariffs and quotas as to those maintained by our trading partners. For this reason IMRA urges the United States to:

• Seek broad and meaningful market access negotiations on the widest array of consumer goods possible, including the reduction of U.S. peak tariffs on products such as textiles, apparel and footwear.

Reaffirm the global commitment to ending textile and apparel quotas by 2005, as part of the review required by the Agreement on Clothing and Textiles.

Work to eliminate quotas on consumer products maintained by our trading partners in countries such as India.

Work to eliminate and discipline gray area measures, including U.S. measures like the Softwood Lumber Agreement, which are clearly outside the basic rules contained in the General Agreement on Tariffs and Trade.

Support efforts to improve trade facilitation, specifically in the customs area. Transparent customs administration that facilitates rather than hinders the movement of trade across national boundaries is absolutely essential to a modern distribution economy.

Work to achieve reciprocity or mutual recognition of testing and certification for national standards. Currently, many countries require importers to conduct their testing, certification and documentation for regional or country-specific standards, within the country or region. Such a requirement presents a non-tariff barrier. Retailers should have the ability to use authorized domestic testing labs for certifying compliance with national or regional standards of the destination market.

Maintain tariff neutrality for electronic commerce goods. Currently, the United States is pursuing a position that electronic transmissions associated with e-commerce should remain tariff free. ISAC 17 supports this objective, however we urge the United States to maintain tariff neutrality for products that can be delivered via the Internet, by pursuing a zero tariff strategy across the board for such products.

Certain products, most notably books, videos, software, and musical performances, can be delivered both in the physical world and also electronically via the Internet. Eliminating tariffs on the electronically transmitted products, without also eliminating the tariff on the physically delivered products would upset tariff neutrality. It makes no sense to impose a tariff on a physical product and not on its cyber