While it is important to preserve citizens' privacy rights, it is possible that the approach taken by the EU will result in undue and extreme limitations on the movement of electronic data between countries over the long-term. Such limitations are likely to be disruptive, and the USTR should continue its efforts to reach an agreement with the EU which will avoid draconian results. In this matter and in the other E-Commerce arenas, the United States should support a program of limited government involvement and/or restriction. RESPECTFULLY SUBMITTED,

PPG Industries

Statement of Hon. Jack Quinn, a Representative in Congress from the State

of New York

Mr. Chairman and Members of this Committee, thank you for this opportunity to testify today on the upcoming WTO negotiations in Seattle.

These negotiations present the United States with an important opportunity to greatly expand fair trade. Unfortunately, a handful of countries are seeking to use these negotiations to weaken anti-dumping and countervailing duty rules. These rules have been extensively negotiated in previous rounds, and we must send a clear messgae to the Administration that attempts to dilute international fair trade rules will not be tolerated.

As you well know, these laws are vitally important to our basic manufacturing and agricultural sectors. They have been particularly important to the U.S. steel industry and its workers. Foreign-government subsidies and closed foreign markets continue to fuel a recurrent worldwide steel crisis, and it is U.S. mills and workers that have borne the brunt of the adjustment costs.

The United States, in fact, accepts a disproportionate share of steel exports from around the world, especially Asia. Public and private barriers-such as governmentimposed quotas and mill-to-mill agreements-limit imports into other major markets such as the EU and leave the United States as the world's "dumping ground." Most recently, our markets have been a target for steel turned loose by the collapse of demand in Asia and Russia.

Adjusting to the structural crisis in steel has been painful for our firms, workers, and communities. The industry has transformed itself, however, and modernized U.S. mills are now among the most efficient in the world. But U.S. mills cannot compete against foreign governments treasuries and foreign firms operating in protected markets.

Mr. Chairman, our anti-dumping rules and countervailing duty laws are the last line of defense against unfairly traded imports. Maintaining fair trade requires antidumping rules and countervailing duty rules-which ensure that exporters in closed markets do not abuse our open market policies.

Other countries' efforts to reopen the WTO agreements on these fair trade rules are poorly disguised attempts to weaken these rules. U.S. negotiators must not allow this to happen. This Committee approved an amendment to fast track legislation in 1997 that would instruct U.S. negotiators to reject any agreement that weakens disciplines against dumping and subsidies. We should send a strong message to the Administration that this issue continues to be a top priority. We cannot abandon these critical laws.

Indeed, we must work instead to enhance these laws. In this regard, I am proud to be a cosponsor of the English-Cardin bill, the "Fair Trade Enhancement Act." The amendments in this bill respond to the fact that current U.S. law makes relief unnecessarily difficult to obtain, imposing standards more onerous the those in our existing international agreements.

Having effective and up-to-date trade laws in place is important to internationally competitive U.S. manufacturing industries-particularly the steel industry, where international trade has been more heavily distorted by subsidies, closed markets, cartelization, and dumping than in any other economic sector.

I urge this Committee to send a strong message to the Administration that we will not allow our industries to be hamstrung by a weakening of international trade rules. I encourage you to support the English-Cardin-which proposes needed reforms to keep our fair trade laws a credible and effective deterrent into the next Millennium.

Statement of Ranchers-Cattlemen Action Legal Fund

This statement is submitted by the Ranchers-Cattlemen Action Legal Fund (“RCALF") in response to the Subcommittee on Trade's Advisory of July 8, 1999 regarding the Subcommittee's hearing on U.S. negotiating objectives for the WTO Seattle Ministerial Meeting.1 R-CALF, a non-profit legal foundation that monitors trade issues that affect cattle producers and petitioner in antidumping and countervailing duty investigations concerning imports of live cattle from Canada and Mexico, appreciates this opportunity to provide input into the crafting of U.S. negotiating objectives and to help ensure that the economic interests of domestic cattle ranchers are effectively represented in the upcoming WTO negotiations. This statement addresses key issues for the upcoming ministerial, including: (1) export subsidies and foreign trade barriers to U.S. exports of cattle and beef products; (2) the importance of U.S. tariff-rate quotas and special safeguards for the cattle and beef industry; (3) effective trade remedy laws; (4) special rules for perishable agricultural products; (5) improvements in dispute settlement; (6) sanitary and phytosanitary issues; (7) labor and environment issues; (8) State Trading Enterprises; and (9) rules of origin and country-of-origin labeling for beef imports.

I. FOREIGN EXPORT SUBSIDIES AND OTHER TRADE-DISTORTING MEASURES Many of our trading partners continue to provide substantial export subsidies and maintain significant trade barriers and programs which distort the flow of trade in cattle and beef products. Numerous programs and policies in addition to high tariffs impede the flow of imports of U.S. cattle and beef products into foreign markets. Other programs which artificially boost the production of cattle and beef abroad can encourage increases in imports of beef into the United States beyond the levels which would exist in the absence of such programs. R-CALF endorses the elimination of export subsidies and dramatic reductions in domestic subsidies which affect domestic production.

Listed below are examples of just a few of the programs that cause or may cause distortions in international trade flows in this sector.

Argentina

The Argentine Government and provincial governments have considered providing incentives to cattlemen to increase their herds.2 This policy could be designed to make up for the stock decline of the past several years ands to prepare for new export demands.3 According to embassy reports, such a program might include tax incentives or credit programs designed to increase the number of cattle.4 Australia

The Government of Australia maintains one of the strictest regimes on quarantine and phytosanitary regulations for imports of livestock and food products, which have been the subject of both the U.S. Trade Representative's National Trade Estimate Report 5 and WTO Trade Policy Review.6 For some of these, the Australian Government has not completed a risk assessment that would provide the WTO-required scientific basis for imposing such restrictions.7 Australia also continues to provide financial support for its beef and veal sector. The WTO's Trade Policy Review estimated that the sector received $A185 million in 1996.8

Brazil

Brazil's Agriculture Breeding Technology Development Program fosters the creation or improvement of breeding enterprises. Among other incentives, this program

1"Crane Announces Hearing on United States Negotiating Objectives for the WTO Seattle Ministerial Meeting," July 8, 1999 (No. TR-13).

2 Ken Joseph, Annual Livestock Report (AGR No. AR7065), foreign Agricultural Service, U.S. Department of Agriculture (U.S. Embassy, Buenos Aires, July 30, 1997).

3 Ken Joseph, Annual Livestock Report (AGR No. AR6050), foreign Agricultural Service, U.S. Department of Agriculture (U.S. Embassy, Buenos Aires, August 8, 1996).

4 Id.

5 Office of the United States Trade Representative, 1998 National Trade Estimate Report on Foreign Trade Barriers, at 13.

6 World Trade Organization, Trade Policy Review: Australia (1998) 72-75.

7 Office of the United States Trade Representative, 1998 National Trade Estimate Report on Foreign Trade Barriers, at 13.

8 World Trade Organization, Trade Policy Review: Australia (1998) 100.

provides a deduction of up to 8 percent of income tax owed. This program, which is paired with a program for industrial development, is allocated over $300 million annually.9

Brazil's Amazon Investment Fund and Northeast Investment Fund provide financial backing for firms that establish investment projects in the Amazon or Northeast regions of Brazil. The cattle industry is a priority industry for the distribution of funds available through these programs. 10

States in Brazil support programs to increase the production of beef. Incentives include tax cuts to the state value added tax, subsidized genetic programs, and sanitary assistance (such as for vaccinations). Another state program reduces the slaughter age of cattle, thus increasing beef production; through this program, producers receive a tax rebate for slaughtering younger cattle.11

The Brazilian Government offers tax and tariff incentives to promote exports. Exporters can receive an exemption from withholding tax for expenses in other countries for loan payments and marketing. Exporters can also be exempted from Brazil's financial operations tax for deposit receipts on export products. Excise and sales tax exemptions apply to agricultural export products. 12

In March 1997, the Brazilian Government enacted new import financing rules, which affect imports of U.S. cattle products. The rules require that importers purchase foreign exchange to pay for most imports once they are imported or 180 days before they are imported rather than pay for them as provided under the contract. This measure provides more favorable rules to Mercosur members. It in effect raises the price of many imports. 13

Finally, obtaining import licenses, which are required for imports into Brazil, can be burdensome, and thus impede U.S. exports. 14

Canada

The Canadian federal and provincial governments provide numerous subsidy programs which benefit Canadian cattle producers. These subsidy programs are currently the subject of investigation by the Department of Commerce initiated pursuant to petition filed by R-CALF.15

Chile

Consumer cuts of U.S. beef are not permitted to enter Chile unless first graded by Chilean standards. Yet, as Chilean meat standards are derived at the time of slaughter, i.e., upon slaughter in Chile, U.S. produced beef is in effect blocked from the Chilean market. 16

Colombia

Cattle producers in Colombia are encouraging their government to create variable import duties for beef through the Andean Price Band system in an attempt to restrict imports.17

European Union

The European Union's continuing ban on imports of growth promoting hormones in meat production is a very substantial barrier to U.S. cattle and beef producers' ability to export to that market. This ban is currently the focus of trade retaliation by the United States. 18

9 World Trade Organization, Communication of Brazil, G/SCM/N/16/BRA (July 5, 1996). 10 World Trade Organization, Trade Policy Review: Brazil (1996) at 112–133.

11 Joao Silva, Livestock Annual Report (AGR No. BR7625), Foreign Agricultural Service, U.S. Department of Agriculture (U.S. Embassy, Brasilia, August 1, 1997).

12 Trade Compliance Center, Country Reports on Economic Policy and trade Practices: Brazil (1998), available at "http://www.mercosurinvestment.com/brazil.html" (obtained from internet on July 25, 1998).

13 Trade Compliance Center, Country Reports on Economic Policy and trade Practices: Brazil (1998), available at "http://www.mercosurinvestment.com/brazil.html" (obtained from internet on July 25, 1998).

14 Trade Compliance Center, Country Reports on Economic Policy and trade Practices: Brazil (1998), available at "http://www.mercosurinvestment.com/brazil.html" (obtained from internet on July 25, 1998).

15 See Initiation of Countervailing Duty Investigation of Live Cattle From Canada, 63 Fed. Reg. 71889 (Dec. 30, 1998).

16 Office of the United States Trade Representative, 1998 National Trade Estimate Report on Foreign Trade Barriers, at 42.

17 Hector Sarmiento, Annual Report (Livestock) (AGR No. CO7016), Foreign Agricultural Service, U.S. Department of Agriculture (U.S. Embassy, Bogota, August 1, 1997).

18 See Implementation of WTO Recommendations Concerning EC-Measures Concerning Meat and Meat Products (Hormones), 64 Fed. Reg. 14486 (Mar. 25, 1999).

An EU-wide compulsory beef labeling system is set to take effect on January 1, 2000, and detailed application procedures are currently pending within the European Commission. According to the National Trade Estimates Report, "There is considerable concern that a lack of timeliness in announcing and transparency in implementing these regulations could disrupt U.S. beef sales to the EU." 19

Japan

Japan continues to maintain high tariffs on agricultural and food products. USTR reported that the United States is monitoring Japan's implementation of the Uruguay Round measures for agriculture, including safeguard measures for beef and pork.20

Uruguay

The Uruguayan Government is considering implementing a program to subsidize pasture improvement. The program would call for the government to provide $75 for each hectare developed for improvement, which would total about one-half the cost of such improvements. The program would cost about $150 million over a ten year period. Such a program would upgrade about 2 million hectares over a decade instead of 20 years, which is the current rate. Supporters of this program claim that it would assist Uruguay in expanding beef production and exports by about $500 million.21

Venezuela

The Venezuelan Government subsidizes agricultural credits

through the Fondo de Credito Agropecuario. In addition, Venezuelan agriculture is exempt from the country's revenue tax and its tax on capital assets.22 Venezuela is currently attempting to eradicate foot and mouth disease for the purpose of opening markets for its cattle and cattle products.23

II. THE IMPORTANT ROLE OF TRQS AND SPECIAL SAFEGUARDS TO U.S. CATTLE AND BEEF PRODUCERS

Given the significant economic difficulties which the cattle sector is now facing and the widespread barriers and distortions to trade in cattle and beef products, it is useful to highlight the importance of the tariff rate quotas and special safeguards currently in place for the cattle and beef industry. Domestic cattle ranchers who have been denied the full benefits of trade liberalization in previous trade agreements are currently in perilous economic health. Yet the industry has relatively few mechanisms in place to help it weather the current difficulties. One such mechanism is a system of tariff rate quotas (TRQs), which became operative upon the implementation of the Uruguay Round Agreements Act in 1995. A second mechanism is the special safeguards provision for imports of certain beef products, which also went into effect in 1995 and operates in accordance with Article 5 of the Agreement on Agriculture of the WTO. For the reasons discussed below, the United States should negotiate to retain these provisions in any new WTO agreement on agriculture.

Tariff rate quotas: The United States has long recognized the special sensitivities of certain agricultural products, including beef, in the marketplace. Prior to the conclusion of the Uruguay Round, the Meat Import Act of 1979 set quotas on imports of beef when the aggregate quantity of these imports on a yearly basis was anticipated to exceed a prescribed trigger level.24 During the Uruguay Round, the United States agreed to convert the quotas established by the 1979 Act into TRQs in order to bring U.S. law into conformity with the requirements of the Agreement on Agriculture of the WTO.25 The United States committed itself to a TRQ of 656,621 metric tonnes (MT) along with additional TRQs of 20,000 MT each for Argentina and

19 Office of the United States Trade Representative, National Trade Estimates Report on Foreign Trade Barriers (1998) at 106.

20 Office of the United States Trade Representative, National Trade Estimates Report on Foreign Trade Barriers (1998) at 206.

21 Gary Groves, Uruguay Livestock Situation Update (Global Agriculture Information Network Report No. UY 8004), Foreign Agricultural Service, U.S. Department of Agriculture (July 14,

1998).

22 World Trade Organization, Trade Policy Review: Venezuela (1996) at 89–90.

23 Jose Pasos, Livestock Annual Report (AGR No. VE7033), Foreign Agricultural Service, U.S. Department of Agriculture (U.S. Embassy, Caracas, July 30, 1997).

24 Committee on Ways and Means, U.S. House of Representatives, Overview and Compilation of U.S. Trade Statutes (1995) at 123-24.

25 USITC Pub. 3048 at 6-2.

Uruguay, dependent upon these countries being found free of foot and mouth disease (FMD) and rinderpest.26 In particular, a total of 64,805 MT is available to countries other than Australia, New Zealand, Japan, Argentina and Uruguay, each of which has its own separate allocation. The provisions do not apply to imports from Canada or Mexico.

Even for above-quota imports, the tariffs are relatively low, particularly when compared to foreign tariff levels. Further, while there has not been occasion to invoke the special safeguards provision since it came into effect in 1995, there should not be discussion of removing what are already relatively low levels of protection before foreign barriers are fully addressed.

The importance of the TRQS to the domestic industry can be seen from the recent situation with Canada, which has been exempted from the TRQS as a result of the U.S.-Canada Free Trade Agreement and the North American Free Trade Agreement.27 In 1989, imports of fresh, chilled and frozen beef from Canada totaled 87,110 MT. Those imports steadily increased to more than double that amount in 1994 and to nearly 270,000 MT in 1997.28 Presumably, had TRQS for Canada been in place, these import volumes would not have grown so substantially, displacing beef produced from U.S.-raised cattle.

There is no reason to believe that this increase in imports is because Canadian cattle producers are more efficient or competitive than their U.S. counterparts. The prevalence of subsidies throughout Canada which bestow benefits on Canadian producers and questionable sanitary and phytosanitary restrictions on imports of U.S. feeder cattle have essentially resulted largely in a one-way flow of trade in cattle and beef between the United States and Canada. Permitting such largely one-way trade in cattle and beef with Canada is untenable. Expanding such one-way trade to our trading partners in general would result in the destruction of one of the most efficient producers of cattle and beef products in the world.

Special Safeguards: Article 5 of the WTO Agreement on Agriculture includes a special safeguard provision which permits countries to resort to additional duties in the event that the volume of imports of a particular product exceeds a threshold or "trigger" level, or the price of those imports falls below a trigger price level. Section 405 of the Uruguay Round Agreements Act (19 USC §3602) requires the President to publish in the Federal Register a list of special safeguard agricultural goods as well as a trigger level and a trigger price. USDA has published the levels and prices in 1995, 1996 and most recently in March 1998. The current quantity-based trigger for beef is 817,803 metric tons. Although imports from countries with allocations under the TRQ system have not filled the levels set by the U.S. Department of Agriculture, the special safeguard provision nonetheless provides an important remedy in the event of a sudden surge in imports of beef.

III. IMPORTANCE OF MAINTAINING EFFECTIVE TRADE REMEDY LAWS

As important as it is to open foreign markets to U.S. exports, it is equally important that the current trade rules and remedies that exist to protect against dumped and subsidized imports be maintained. The trade remedy laws, including the antidumping and countervailing duty laws, are the few effective means that agricultural sectors such as cattle producers have available for addressing economic harm caused by imports of commodity products sold at below cost prices and/or that benefit from countervailable subsidies. U.S. producers of fresh garlic, fresh tomatoes, kiwifruit, sugar, oranges used to make frozen concentrated orange juice, red raspberries, fresh cut flowers, salmon, pistachio nuts, and live swine and pork, among others, have made successful use of the trade remedy laws to address injurious imports that did not conform to international trading rules when no other tools were available.

Dumped and subsidized imports of agricultural commodity products are especially harmful when commodity prices are otherwise already low. Surplus volumes of dumped and subsidized imports prolong depressed market conditions and prices

26 USITC Pub. 3048 at 6-2, 6-4 to 6-5. In 1995, Uruguay was granted approval to export fresh, chilled and frozen meat to the United States as Uruguay was determined to be free of rinderpest and FMD, and the United States gave permission for Argentina to ship beef to the United States in June 1997 for the same reasons. See 60 Fed. Reg. 55440 (1995); 62 Fed. Reg. 34385 (1997). Uruguay was expected to fill its quota for 1998. Source: Gary Groves, Uruguay Livestock Update (AGR No. UY8001), Foreign Agricultural Service, U.S. Department of Agriculture (U.S. Embassy, Buenos Aires, March 10, 1998). Argentina was not expected to fill its quota for 1998, its first full year of eligibility, but could be expected to reach its quota within several years, which will bring increased imports into the U.S. market.

27 USITC Pub. 3048 at 6-2 to 6-3.

28 Source: Bureau of Census, U.S. Commerce. Based on HTS 0201.10, 20, 30 and HTS 0202.10, 20 and 30.