SPS Agreement, and should oppose any attempts to undermine its risk assessment and sound science standards, particularly with respect to the "precautionary principle."

PhRMA also believes that USTR should use the built-in agenda of the Agriculture Agreement to elaborate key provisions of the SPS Agreement, focusing on the need to base measures affecting trade on sound science, rather than on political goals or vaguely phrased "consumer concerns" not grounded in fact. However, the U.S. Government should resist at all costs any effort to dilute the disciplines already found in the SPS Agreement, or to limit the scope of their application.

Customs and Tariff Issues

Finally, in addition to the issues described above, PhRMA member companies assign considerable importance to the following customs and tariff objectives:

Continuing the expansion of the pharmaceutical tariff elimination agreement, to cover both additional products and countries. The current agreement, reached in the Uruguay Round, brought significant benefits to millions of patients by eliminating the unnecessary tax on research and development, which serves no trade protective purpose in a globalized industry. PhRMA strongly believes that the agreement can be improved upon by revising the tariff nomenclature to permit coverage of new products without the cumbersome process of negotiating update agreements every three years. In addition, the many less-developed countries that have received "free rides" under this plurilateral arrangement should be brought into the fold, either through their direct inclusion in the pharmaceutical zero-for-zero agreement, or through full participation in the Accelerated Tariff Liberalization initiative. Finally, all additional countries acceding to the WTO should be required to become signatories to the zero-for-zero tariff agreement.

Prompt completion of the World Customs Organization's harmonization work program under the Agreement on Rules of Origin. This agreement will permit the industry to apply predictable origin rules for labeling and other purposes, based on the U.S. position that chemical reactions, normal dosage formulation, and activities resulting in a change in tariff heading confer the origin status of the country in which the prescribed activity took place. The failure to complete this work under the Uruguay Round schedule has resulted in uncertainty (and potential liability) in the industry and the international marketplace, due to conflicting local regulations and rulings, and questions about the applicability of foreign customs origins rules to drug registration agency rules.

Full implementation of the Customs Valuation Agreement by developing countries. This agreement lends predictability to customs valuation of traded finished drug products, bulk active ingredients, and intermediates. Arbitrary valuation schemes for dutiable products based on minimum values, projected resale prices, or other non-WTO compliant approaches, compound the negative effects of those countries' failure to participate in the zero-for-zero tariff agreement. The U.S. should urge all WTO members to adhere to the implementation schedule of the GATT/WTO Customs Valuation Agreement, without agreeing to requests for further delays. Conclusion

PhRMA appreciates the opportunity to present these comments on the upcoming WTO Ministerial Conference in Seattle. PhRMA looks to USTR and other U.S. trade agencies to seek significant improvements in the proposed new trade round to existing international trade rules, with the objective of eliminating all constraints to the operations of free markets on a global basis. At the same time, the U.S. Government must continue to seek compliance with existing WTO rules through vigorous enforcement efforts. PhRMA is committed to work closely with the Subcommittee to ensure that these objectives are adequately reflected in the Ministerial Declaration to be issued in Seattle later this year and in the ensuing round of negotiations.

Statement of PPG Industries, Inc., Pittsburgh, Pennsylvania

PPG Industries, Inc. (“PPG”) is an U.S. producer of flat glass, fiber glass, chemicals and coatings. With production facilities both in the United States and abroad, PPG manufactures and markets its products on a global basis. Thus, the company has a strong interest in expanding free trade and ensuring a fair international trading system.

In support of liberalizing trade and further reducing tariff and non-tariff barriers, PPG offers the following suggestions with respect to negotiating objectives for the World Trade Organization Ministerial meeting in Seattle.

I. IMPLEMENTATION OF EXISTING AGREEMENTS

The existing GATT 1994 Agreements which came out of the Uruguay Round and the work programs initiated by those agreements set forth the rights and obligations of all the WTO member countries. These are the rights and obligations for which the United States bargained as part of the multilateral negotiations that led to the creation of the WTO.

To the extent that member states have not and are not meeting the requirements of their obligations, the U.S., in some measure, is not receiving the rights for which it bargained. Implementation of these agreements and their accompanying work programs are of great importance to U.S. businesses. Further discussion of the WTO work programs appears under heading III below.

A. Agreement Compliance

Many WTO Members have not notified the appropriate Committees of their implementing legislation. This includes notification in important areas such as antidumping, countervailing duties, and customs valuation. Lack of notification suggests the possibility of non-compliance. Until there is appropriate notification, a given Committee cannot decide whether there is compliance.

Even when there has been compliance with basic reporting requirements, some Committees have not been able to obtain responses to follow-up questions regarding implementation. For example, the Committee on Subsidies and Countervailing Measures in a report prepared for the Singapore Ministerial noted that it had not been able to obtain answers to questions that had been put to Members following review of implementing legislation. [See Report (1996) of the Committee on Subsidies and Countervailing Measures at 5-6, G/L/126 (10/28/96).] The unanswered questions included questions regarding: perceived inconsistencies between the Agreement, newly-enacted legislation by various member countries, and pre-existing legislation and the potential for actions inconsistent with the Agreement if based on that pre-existing legislation. [Id. at 6.]

In these circumstances, it is hard for an U.S. company to measure the extent of the benefits that arise from the Agreements or to discern opportunities that might exist.

B. Future Compliance

Developing countries joining the WTO have been able to postpone compliance with a number of different agreements. For example, fifty-one countries have postponed compliance with the Agreement on Implementation of Article VII of the GATT 1994 for five years. [See Report of the Committee on Customs Valuation to the Council for Trade in Goods at 1, G/L/121 (10/29/96).] The TRIPS and TRIMS Agreements also include provisions which allow developing countries to delay implementation for five years.

This means that those developing countries which were original Members of the WTO and opted to delay compliance will all have to be in compliance by January 1, 2000. It is important for the WTO to begin steps now to ensure that these countries meet their obligations in a timely manner.

C. Reporting

Annex 1A to the Agreement Establishing the World Trade Organization containing the Multilateral Agreements on Trade in Goods establishes 175 notification obligations or procedures, of which twenty-six are periodic, for member states. [See Report of the Working Group on Notification Obligations and Procedures, G/L/112 at 3 (10/7/96).] WTO materials published to date indicate that many Members have not met these obligations.

For example, Article 25 of the Agreement on Subsidies and Countervailing Measures requires that Members provide a new and full notification of all subsidies every third year and updated reports in every intervening year. The first full notification was due on June 30, 1995 but only 76 of 131 Members had reported as of July 31, 1997, two years after the due date. Moreover, as of the mid-1997 due date for reporting, only 48 countries had provided their 1996 update and only nine had provided the 1997 update. [See WTO Annual Report 1997, Vol. 1 at 108.]

In addition, under Article 18.5 of the Agreement of Article VI of the GATT 1994 and a decision of the Committee on Anti-Dumping Practices, Members were required to notify their antidumping legislation and/or regulations by March 15, 1995. [See WTO Annual Report 1997 at 110.] As of June 30, 1997, forty countries had not made any such notification. Thus, significant numbers of countries have avoided scrutiny of their subsidies and their antidumping regime, despite their commitments as WTO Members.

In some measure, this broad failure to meet reporting requirements may be attributed to lack of resources. PPG therefore urges the United States Government to support the provision of assistance to developing countries that seek it.

Regardless of the reasons, the lack of compliance and reporting reduces the value of U.S. participation in and support for the WTO. To enhance the value of U.S. membership, the United States should support a number of different efforts, including:

(1) Ensure adequate funding for both U.S. monitoring agencies and a strong U.S. presence in Geneva;

(2) In particular, the USTR should ensure sufficient resources for participation in WTO dispute settlement proceedings;

(3) Work with WTO officials to ensure rapid public dissemination of all data submitted as a result of WTO notification requirements.

II. MANDATED NEGOTIATIONS

Article XIX of the General Agreement on Trade in Services calls for negotiations leading to progressive liberalization of trade in services. At the Singapore Ministerial, the Ministers endorsed the GATS Council's beginning to consider the guidelines and procedures for Article XIX negotiations. [See WTO Annual Report 1997 at 119.] Reduction in the costs of services (including financial, telecommunications, transportation, and distribution services) will enhance the ability to compete of PPG and other U.S. businesses that sell abroad.

PPG supports U.S. participation in negotiating efforts that will lead to greater liberalization in the service sectors. In particular, PPG urges the U.S. Government to focus on securing liberalization of distribution services, a service sector, which has effectively closed certain foreign markets to participation by U.S. goods manufactur

ers.

III. REVIEW OF EXISTING AGREEMENTS AND WORK PROGRAMS

As discussed under heading I above, many WTO Members have not yet fully complied with the notification and reporting requirements to which they agreed. Absent such reporting, it is not clear that those Members who have not reported are in compliance with existing agreements. In some instances, this makes it hard to determine the efficacy of existing Agreements.

In addition, PPG has the following specific comments regarding existing agreements and work programs:

A. Antidumping

The United States should focus the attention of the Members and the organization on the remaining implementation and notification failures. The United States should strongly oppose proposals, which would permit a general reopening of negotiations on either the subsidies or the antidumping agreements. These agreements, achieved after particularly difficult negotiations, have been in place for less then five years. Hence, such reopening is premature given the lack of experience and the evolving body of law within member countries as well as under the WTO Dispute Settlement Understanding, and should be strongly opposed.

Moreover, PPG further urges USTR to consider effective and meaningful anti-circumvention provisions, particularly in the antidumping agreement. Circumvention of legitimate and necessary remedies provided for by the agreement is the real issue of concern with regard to the operation of these agreements, not the ungrounded fears of some member countries that the remedies under the agreements might lead to unspecified abuses. [See, WT/GC/W/145, 8 February 1999, Čommunication of the Government of Japan.]

B. Subsidies

PPG agrees with suggestions of the United States and some other WTO Members that implementation could be improved by modifying the notification and review process such that updating notifications are eliminated and full notifications are made every other year, permitting a regular cycle in which subsidies are notified in the first year and reviewed in the second, etc. [WT/GC/W/107, 3 November 1998, Communication from the United States.]

Article 31 of the subsidies agreement calls for the WTO to review the operation of Article 6.1 (serious prejudice), and Articles 8 and 9 (non-actionable subsidies), and determine whether these articles should be modified or eliminated. PPG supports the continuation of these articles.

PPG further proposes that tighter rules be developed to preclude the circumvention of export subsidy commitments so that there is a fully shared understanding of what is permitted and precluded by commitments on export subsidies. PPG also encourages the President to vigorously pursue the application of countervailing duty laws to identifiable subsidies in non-market economies. Some of these subsidies, such as export subsidies, are easily identifiable and quantifiable.

C. Customs Valuation

PPG agrees with USTR that technical assistance should be focused on active assessment of specific needs of particular Members, to avoid a situation where a Member might refer to the lack of effective assistance as an explanation for a failure to meet obligations by the agreed-upon deadline.

PPG also shares the United States' concerns regarding the increased use by some Members of questionable valuation methodologies, sometimes combined with a preshipment inspection regime, as a substitute for more selective trade remedies, or to otherwise raise broad market access barriers. PPG agrees that Members should consider appropriate ways to address the misuse of valuation methodologies short of dispute settlement procedures, given the important relationship between valuation and market access. [See WT/GC/W/107.]

D. Dispute Settlement

PPG believes that to date the WTO dispute settlement process has worked reasonably well. However, the process could be significantly improved if it were more transparent. To that end, PPG supports public access to panel and appellate body proceedings, including access to adequate and timely public versions of submissions. In addition, the companies actually involved in the dispute should be allowed to submit amicus briefs and make oral presentations in both panel and appellate body proceedings. In this context, PPG welcomes the recent decision of the appellate body in the Shrimp-Turtle dispute, holding, among other things, that the agreement does not require that panels reject unsolicited submissions.

E. Rules of Origin

Currently, Article 1.2 applies the Rules of Origin agreement to antidumping and countervailing duties and to safeguard measures under Article XIX. In the absence of adequate anticircumvention provisions applicable to antidumping and countervailing duties, PPG proposes that USTR should seek the modification of Article 1.2, to eliminate antidumping, countervailing duty, and safeguard measures from the scope of the Agreement on Rules of Origin.

F. Trade-Related Investment Measures (TRIMS)

PPG encounters substantial obstacles in its export business in the form of trade related investment measures. Thus, PPG urges USTR to pursue a reopening of the TRIMS agreement to strengthen its provisions.

Article 9 of the TRIMS agreement calls for a review of the operation of the current agreement and consideration of whether the current agreement should be complimented with provisions on investment policy and competition policy. The agreement could be modified to allow majority interests by any member country in any business in other member countries, and to prohibit restrictions on the repatriation of investment and earnings. In addition, notification and elimination provisions should be enforced, pursuant to Article of 5 of the TRIMS agreement (notification and transitional arrangements). Efforts to broaden the agreement to include provisions on investment policy or competition policy, however, are premature (please see below at heading V.).

G. Trade Related Aspects of Intellectual Property Rights (TRIPS)

PPG shares the concerns of USTR that many developing country Members have as yet not started to conform their laws to the TRIPS agreement in preparation for full implementation of their TRIPS obligations no later than January 1, 2000. While PPG generally supports the WTO's efforts to integrate all developing countries in the multilateral trading system, this should include the enforcement of all obligations under the agreement by the agreed upon deadlines.

IV. INTEGRATION OF LEAST-DEVELOPED COUNTRIES

The integration of all developing countries in the multilateral trading system should include the enforcement of all obligations under the agreement, including the notification provisions, to all Members. In this context, PPG Industries also refers to its comments regarding Customs Valuation under heading III C above, and the

need for effective and specific technical assistance to developing countries that require it.

In addition, PPG Industries believes that benefits under the Generalized System of Preferences should be limited to the least developed countries. The current system grants preferential treatment to countries that do not need such preferences to compete in export markets. As a result the benefits of GSP for the least developed countries are diluted and MFN treatment is unfairly withheld from third country suppliers.

SINGAPORE MINISTERIAL MEETING WORK PROGRAMS

A. Trade and Investment

Negotiations within the OECD of an agreement on trade and investment have, to date, not been completed, and an agreement does not appear imminent. The OECD countries, of course, are much more homogenous in their stages of development and economies than the Members of the WTO. Given the apparent difficulty for the similar countries to reach an investment agreement, the likelihood of a WTŎ agreement in the near term does not appear strong.

PPG suggests that the United States support placement of these WTO negotiations on hold until such time as the OECD countries have reached an accord. Moreover, PPG believes that attempts to achieve a broad agreement on investment issues are premature, in light of the current international financial crisis and concomitant changes in the views of the trading partners regarding the desirability of the regulation of capital flows.

B. Trade and Competition Policy

Because of the great disparity in definitions of competition policy and what constitutes anti-competitive practices, it does not appear likely that any meaningful result can come from consideration of these issues. In connection with competition policy, PPG supports the views of the U.S. Department of Justice and the Federal Trade Commission that there are other, more practical, things countries can do to collaborate on competition policy.

PPG, however, has encountered anti-competitive practices in various arenas around the world and would like to see such practices outlawed. The most practical approach to global anti-competitive practices that PPG is aware of is the international coordination and information exchange undertaken by the Justice Department and the Federal Trade Commission. Therefore, PPG urges the President to support the suspension of the WTO effort in this area while supporting the efforts of Justice and the FTC.

PPG also urges the United States to strenuously oppose any efforts to use this working group as a means for re-opening consideration of any other WTO agreements, such as the antidumping agreement.

C. Transparency in Government Procurement

The stated goals of the Working Group on Transparency in Government Procurement are to study country procurement practices that foster transparency and then to develop recommendations for elements to be included in an agreement. [See WTO Annual Report 1997 at 142-43.] Such efforts will be beneficial, and the United States should support them. PPG believes that more tangible and significant results in the area of government procurement may be achieved by obtaining significantly more signatories to the Agreement on Government Procurement. PPG asks that the President include this as an objective in the United States trade negotiations.

VI. ELECTRONIC COMMERCE

Electronic commerce has great potential for the reduction of transaction costs, and the opening of additional markets. In addition, the application of electronic technology to the notification process holds the potential of increased transparency and improved implementation. [See also, infra, Tariff Bindings; WT/GC/W/107, 3 November 1998, Communication from the United States (PC Integrated DataBase).] Any review of electronic commerce issues, however, should be undertaken in the spirit of minimizing government interference, relying instead on self-governance by users and transparency. Government intervention will likely result in unneeded restraints, distort the development and application of new technology, and add costs. Thus, such intervention will compromise benefits attainable from the new technologies.

For example, the European Union has put into place a privacy directive that went into effect on October 23, 1998. [See Directive 95/46/EC, OJ L 281 (Nov. 23, 1995).]