counter part. Such a policy would exacerbate intellectual property difficulties that already exist in the marketplace for videos, music and software. Consequently, IMRA urges the United States to seek zero tariffs on all books, videos, musical recordings and software, regardless of the mode of delivery.

CONCLUSION

The distribution economy is an enormous facilitator of international trade and U.S. exports. Retailers who purchase or develop operations in foreign consumer markets tend to take their supply chain relationships with them, providing many new export opportunities for U.S. brands and small U.S. manufacturers. The United States should recognize this key and emerging role of the industry by making distribution services one of the primary focus industries for the next WTO round.

Statement of Wingate Lloyd, ITT Industries, White Plains, New York, on behalf of the U.S. Chamber of Commerce

INTRODUCTION

I am Wingate Lloyd, consultant with ITT Industries. I am pleased to testify on behalf of the U.S. Chamber of Commerce, the world's largest business federation, representing nearly three million companies, 3000 local and state chambers of commerce, 775 business associations, and 85 American Chambers of Commerce abroad. The World Trade Organization (WTO), consisting of 135 member states, is responsible for the administration of existing trade agreements and serves as a forum for the trade liberalization negotiations that benefit millions of Americans. Liberalized trade ensures that American businesses, farmers, workers and consumers are able to trade their products under conditions that are fair and beneficial. Under the rules of the WTO, foreign markets are made more accessible to American producers, and American consumers are afforded a wider choice of products and services. As the largest economy in the world, the United States has the most to gain from an organization that works to reduce or eliminate tariffs, quotas, and subsidies, expand trade, and monitor participating nations to ensure that the rules of fair trade are being observed. Given that 96% of the world's consumers live outside the United States, foreign trade is vital to our future economic growth and prosperity.

Allow me to state at the outset that the Chamber strongly supports the productive, broad-based multilateral talks in the WTO and wants these upcoming negotiations to achieve specific commercial benefits as expeditiously as possible. These negotiations should aim at assuring more complete implementation of existing commitments under the WTO, further reducing trade barriers, and strengthening multilateral disciplines on unfair trade practices. The Chamber strongly supports the WTO and its objectives in creating an open and free global trading system, and is determined to maintain open markets, resist protectionism, and sustain the momentum of liberalization. We support the elimination of protectionist measures and support strong dispute settlement mechanism. We strongly favor opening service markets in the developing world and dismantling obstacles to agricultural trade. Specifically, the Chamber would like the Seattle Ministerial meeting to address:

Services

THE BUILT-IN URUGUAY AGENDA

International trade in services presents challenges to the multilateral trading system that equal in importance and complexity those challenges facing trade in goods. The WTO should remain the primary focus for services trade negotiations, with bilateral and regional cooperation playing a supporting role. The following broad principles should be applied in future services negotiations:

The General Agreement on Trade in Services (GATS) 2000 negotiations should seek to achieve much broader coverage of services sectors through new or improved national schedules of commitments and should go well beyond the standstill agreements which characterize many of the Uruguay Round commitments.

· The importance of enlisting domestic regulators in the process of services sector liberalization needs to be recognized. Reference principles should be adopted that move regulatory regimes to adopt a more competitive approach to their rule-making. • The ministers should closely monitor ratification and implementation of both sectoral agreements already signed and new agreements negotiated in the GATS 2000 talks.

Countries that are candidates for WTO membership must make strong commitments to services liberalization as part of their accession process.

The WTO should guarantee foreign service providers the right to service their distributed products before and after the sale, and to sell on a wholesale or retail basis using direct selling methods.

Agriculture

The goal is an agriculture trading system free of restrictions and distortions on trade in processed and unprocessed foodstuffs. Such a system should include further reductions and the scheduled elimination of tariffs and tariff rate quota expansions; the elimination of export subsidies, tighter disciplines on state trading enterprises; full participation by developing countries in the negotiations; tighter disciplines on technical measures; and insistence on science based regulation, especially as it pertains to biotechnology (e.g. genetically modified organisms (GMOs) and beef hormones). Regulatory inconsistencies among developed countries, particularly with respect to GMOs, place U.S. foodstuff companies at a severe disadvantage with respect to their competition. The U.S. Chamber opposes increasing attempts to apply the "precautionary principle" to various sectors of trade. If left unchecked this will constitute a major new non-tariff trade barrier.

IMPLEMENTATION OF MEMBER COMMITMENTS FROM THE URUGUAY ROUND

a) Intellectual Property Rights and E-Commerce

U.S. business assigns high priority to adequate and effective enforcement of intellectual property rights by WTO members. Foreign intellectual property rights violations continue to cost U.S. firms billions of dollars annually. At the Seattle Ministerial and beyond, actions should be taken to ensure prompt and full implementation of commitments undertaken by WTO members under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Substantial resources should be committed to monitoring compliance by signatories. U.S. business is concerned that many developing countries which were given transition periods in which to comply with TRIPS are not adequately preparing for full implementation of the Agreement by agreed deadlines. Compliance with those deadlines should not be reopened in future WTO negotiations.

U.S. business supports a market-driven approach to electronic commerce that promotes private investment and that continues a no tariff policy. We favor minimal government intervention in the regulations of this industry.

b) Tariff Liberalization

WTO members are committed to reducing or eliminating tariffs and non-tariff barriers on a wide range of industrial and agricultural goods. Tariffs and non-tariff barriers continue to restrict trade flows around the world and the ability of U.S. business to compete fairly in international markets. In an effort to protect infant or developing industries, many developing countries continue to maintain very high tariffs on a number of significant U.S. exports. Other barriers include import permits, duties, domestic content requirements, and sanitary/phytosanitary restrictions. The WTO should build on the results of Uruguay Round tariff liberalization. The U.S. government should urge that the WTO take a more aggressive role in promoting further tariff reductions. In particular, the U.S. government should assign high priority to increasing the number of signatories to existing Uruguay Round tariff elimination agreements. The U.S. government should make vigorous efforts to extend reciprocal tariff elimination to other product sectors. Steps taken at the Seattle Ministerial should include

(i) Adoption of reciprocal tariff cuts proposed in the Accelerated Tariff Liberalization (ATL) considered at the last APEC summit;

(ii) Conclusion of the second International Technology Agreement (ITA II) negotiations by the end of the Seattle Ministerial; and

(iii) Initiation of liberalization in additional sectors.

Government Procurement

WTO members should commit to more open and transparent government procurement.Host government preferences for local companies, and non-transparent contract award processes have effectively shut U.S. companies out of lucrative markets. The Chamber supports the continuation of the dialogue on measures in WTO to combat corruption, as well as broader public dissemination of procurement informa

Expanded Market Access

WTO negotiations should focus on liberalizing industries, such as energy, telecommunications, and utilities that are heavily regulated in many countries. Subsidies

U.S. business objects to the necessity of competing in many foreign markets with companies receiving government subsidies and preferential financing. U.S. business supports an expedited subsidy notification procedure. The U.S. government should continue to monitor closely operation of the WTO Subsidies agreement. U.S. business supports continuation of the Agreement's "dark amber" category, which is scheduled to expire this year.

Anti-Dumping

The proliferation of newly established anti-dumping regimes in a number of WTO member states is a growing concern for U.S. business. The WTO should monitor these regimes to ensure that they are implemented and administered in a consistent and professional manner and in full compliance with WTO standards.

a) Trade and Investment.

UNFINISHED BUSINESS

U.S. business seeks a set of legally binding multilateral rules which establish the highest standards for the liberalized treatment and full protection of investment. The WTO Trade-Related Investment Measures (TRIMs) agreement represents a useful step forward in multilateral cooperation but does not address numerous other important investment issues. The WTO rules and agreements pertaining to investment should be further strengthened.

Trade, Labor and Environment

U.S. business is facing an increasing threat of non-tariff barriers to trade which incorporate measures affecting "production of process methods" (PPMs), i.e., using how a good is made, as criteria for entry of goods or qualification for foreign ecolabels. Such measures would bar exports to a country if environmental or labor standards of production in the country of origin did not comply with the environmental or labor laws of the export destination. U.S. business strongly opposes such application of PPM criteria to trade. Further, the WTO must clarify how multilateral environmental agreements (MEAs) relate to the WTO system. To avoid creation of potentially significant new trade barriers, strict guidelines for the application of trade measures under MEAS must be established.

U.S. business reiterates its support of multilateral cooperation on labor and environmental issues, but stresses that these important issues should not be addressed in trade negotiations, whose intended purpose is to remove barriers to global trade and investment Pursuing labor and environmental goals in multilateral trade negotiations creates a serious risk that U.S. commercial competitiveness will be held hostage to non-commercial objectives. Many developing countries strongly oppose using trade negotiations to address labor and environmental issues. However, the use of trade sanctions to enforce labor and environmental agreements would have a seriously disruptive impact on the global trading system. As an example of constructive international cooperation, the U.S. Chamber welcomes the adoption by the International Labor Organization (ILO) of the 1998 Declaration of Fundamental Principles and Rights at Work and urges governments to cooperate in the implementation of follow-up procedures.

FUNCTIONING OF THE WTO SYSTEM

The next round of WTO negotiations should focus firs and foremost on expanding market access. However, WTO member states should also make needed improvements in the functioning of the WTO system as soon as possible, including:

a) Strengthening Dispute Settlement

The WTO Dispute Settlement Mechanism (DSM) represents a major improvement over the dispute settlement process provided under GATT. Nevertheless, there are deficiencies in the WTO DSM that need to be addressed. U.S. companies rely heavily upon the DSM to ensure that WTO member states implement their obligations in a timely and complete manner. Therefore, improvements to the operation of the DSM are a matter of priority concern to U.S. business and should be expeditiously addressed. Such improvements should include:

Greater Transparency. Action should be taken to ensure that the business community has greater access to the factual situations and arguments submitted to the WTO Dispute Settlement Body, as well as to the final reports of the panels and the Appellate Body.

•More Expeditious Procedures. U.S. business favors changes to the DSM which would (a) avoid delays in the establishment and operation of panels and changes and (b) encourage speedier implementation of panel results. The slowness of dispute settlement rewards WTO members who have not complied with their obligations by giving them the opportunity to delay implementation and then renegotiate earlier commitments. The U.S. government should use the Dispute Settlement Body review currently underway in the WTO to press for early improvements.

CONCLUSION

Let me conclude by reiterating that the Chamber strongly supports the WTO and its objectives in creating an open and free global trading regime. The WTO's market-opening efforts lead to domestic job creation and a better standard of living for member countries. Closing borders to trade is detrimental to economic well-being because protective trade policies result in less competition, business inefficiencies, and job losses. While the WTO goal of opening markets serves American interests in a direct and meaningful way, the United States must also continue to strengthen its competitiveness at home. This means continuous improvement in the quality of U.S. production processes, technologies, and the workforce. Support for the WTŎ should be seen as a useful part of the larger U.S. strategy to realize the economic potential of the global marketplace.

That concludes my statement and I will be happy to answer any questions.

Joint Statement of the National Retail Federation and J.C. Penney

Company, Inc.

I. INTRODUCTION

The National Retail Federation (NRF) is the world's largest retail trade association with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalogue, Internet and independent stores. NRF members represent an industry that encompasses more than 1.4 million U.S. retail establishments, employs more than 20 million people-about 1 in 5 American workers-and registered 1998 sales of $2.7 trillion. NRF's international members operate stores in more than 50 nations. In its role as the retail industry's umbrella group, NRF also represents 32 national and 50 state associations in the U.S. as well as 36 international associations representing retailers abroad. NRF is a founding member of the U.S. Alliance for Trade Expansion (USTrade).

The J.C. Penney Company, Inc. (J. C. Penney) and Eckerd Drug Stores operate 4,150 stores in the United States. They employ 260,000 full-and part-time workers. In addition, they operate stores in three countries, which are supplied with in part with products made in the United States. In 1998, they had combined sales of $31 billion.

II. RETAIL PRIORITIES

The NRF, J.C. Penney, and the entire U.S. retail industry support U.S. sponsorship of and participation in the upcoming round of negotiations under the auspices of the World Trade Organization (WTO) at the Seattle Ministerial Conference. Significant gains in trade liberalization and economic growth have been made in previous rounds of multilateral negotiations. We would like to see that progress expanded upon in the upcoming round.

On behalf of the retail industry, we want to express our concern on four key issues that we hope will be addressed in the next round of multilateral negotiations. A. Harmonization of Rules of Origin

The first issue of key importance to American retailers is the successful completion of the effort to harmonize international rules of origin. Determining the country of origin of products is an important responsibility in the administration and regulation of trade as it includes such functions as collecting statistics, applying proper tariff rates, allocating and tracking quotas, and effectively enforcing trade and customs laws. Differing rules of origin among WTO Member Countries being applied

to the same products has proven cumbersome on import/export transactions and impedes the expansion of international trade. Drastic and ill-conceived changes in the rule of origin could substantially disrupt current trade. This was amply demonstrated in July 1996 when changes in textile and apparel rules of origin resulted in onerous adjustment problems for U.S. importers of textile and apparel products, especially since these categories are still subject to a rigid quota system. NRF and J. C. Penney would encourage negotiators to remain mindful of the impact of any proposed changes on the ability of U.S. retailers to supply their customers with products within current quota and/or visa systems. We believe that any proposed changes in the rules of origin should be clearly articulated in a negotiated settlement that is simple to understand and does not materially interrupt current trade. Conversely, negotiators should reject rules that place unreasonable burdens on U.S. importers and could be subject to arbitrary and inconsistent interpretation by those responsible for implementing and administering them.

B. Customs Administration

The second issue of concern to America's retailers is Customs administration. NRF and J. C. Penney hope that this new round of multilateral talks can include negotiations to increase and enhance the transparency and speed of Customs administration. On this issue, retailers would like to see the creation of multilateral disciplines to facilitate the separation of the processing of goods by Customs officials from the processing of the documentation associated with the importation of those goods. Currently, the administration of Customs functions can be considered nontariff trade barriers. Also, NRF and J. C. Penney would like to see negotiators seek to reduce the delays between arrival of goods to, and release of goods from, the custody of Customs authorities. This could be accomplished first by developing a uniform measurement and notification of arrival-to-release times by WTO Members. Ultimately, a schedule for graduated reductions in these arrival-to-release times could be established. As an example, the U.S. Customs clearance process normally ranges from 1 to 5 days, but can be as long as 90 days on a rare occasion. By comparison, Mexico and Chilean Customs clearance procedures may range up to 3 days, and Brazilian Customs clearance procedures up to 40 days depending upon the port of clearance. Uniform clearance procedures will significantly aid retailers in providing consumers with goods on a more timely basis, preventing delays in shipping that are absorbed by consumer prices.

C. Implementation of the Agreement on Textile and Clothing (ATC)

Third, NRF and J.C. Penney are concerned about the continued progress of efforts to liberalize textile and apparel trade through the implementation of the Agreement on Textiles and Clothing (ATC). The decision of the U.S. to put off integration of many products into the ATC until the final December 24, 2004 deadline effectively will postpone any meaningful benefits to American families through liberalization of trade in this sector until U.S. quotas on these products are finally terminated. Even after quotas are phased out, companies will still face significant barriers as high tariffs will continue to keep the cost of these goods very high. The average U.S. apparel tariff is 16 percent, in comparison to the average tariff for all other goods, which is less than 4 percent. To date, the U.S. has eliminated only two of its 750 import quotas, which is only 6 percent of U.S. textile and clothing subject to restrictions. American consumers must pay these tariffs in addition to costs imposed on them from textile and apparel quotas. Furthermore, we believe this issue is also of critical importance to many developing countries from which the United States will be seeking concessions on a host of sensitive issues. As a result, retailers strongly recommend significant reductions in textile and apparel tariffs and urge a commitment from the WTO Ministerial Conference to continue progress on the implementation of the ATC, avoiding policies, practices, or initiatives that may undermine the benefits and timely implementation of the agreement.

D. Trade in Distribution Services

The fourth issue of concern to retailers is liberalization of trade in distribution services. The U.S. retail industry strongly supports negotiations to strengthen commitments from other countries on the distribution services sector. U.S. retailers realize that there are many attractive business opportunities outside the United States. Many foreign countries, in regions such as Latin America and Asia, have a growing middle class that increasingly demands the quality of service and broad selection of products that U.S. retailers can offer at competitive prices. Notwithstanding the current global economic situation, many U.S. department, specialty, discount and mass merchandise retail companies have opened stores abroad and are