should be reviewed to ensure that it does not undermine the effectiveness of the U.S. antidumping law.

Under existing U.S. practice for determining origin, semiconductors that are fabricated in one country but assembled in another country are treated differently for general trade purposes (such as for customs purposes) than they are for purposes of administering antidumping measures. The treatment of semiconductors in a general trade context is determined by rules of origin, which base a semiconductor's origin on the country where final assembly takes place. Antidumping investigations, on the other hand, employ fact-specific criteria to determine that a semiconductor is "from" the country of wafer fabrication (also known as diffusion). This is because a final assembly standard would allow foreign exporters subject to antidumping orders to evade those orders by simply changing the country of final assembly—a relatively simple and inexpensive change in the semiconductor industry.

Ongoing WTO efforts to harmonize rules of origin, however, may require the U.S. Government to change its current practice, so that it would no longer be able to employ these differing approaches. This requires the establishment of new rules of origin for semiconductors that will ensure that antidumping orders on semiconductors can continue to be effectively enforced.

SIA believes that fact-based scope determinations for antidumping purposes should be decoupled from general purpose rules of origin. While the WTO origin harmonization exercise must result in origin rules that facilitate international trade through easy-to-administer and consistently-applied criteriait is equally important that the origin harmonization exercise not disrupt the existing ability of governments to administer antidumping and countervailing duty orders.

This is in fact consistent with the ARO. The ARO sets out several objectives to be achieved as a result of the harmonization exercise. The preamble to the ARO notes that, in agreeing to the harmonization effort, WTO members recognized that clear and predictable rules of origin would "facilitate the flow of international trade" and sought "to ensure that rules of origin themselves do not create unnecessary obstacles to trade" while at the same time seeking "to ensure that rules of origin do not nullify or impair the rights of Members under GATT 1994." Indeed, one of the rights of WTO members under GATT 1994 is the right to impose antidumping or countervailing duty measures to remedy injurious dumping or subsidization. Accordingly, some countries have proposed content-based origin rules for electronics products to ensure that their ability to impose antidumping or countervailing duty measures is not restricted. The European Union, for example, has proposed a 45 percent value-add origin rule for all electronics products, even through such a rule could pose an obstacle to the free flow of trade in electronics goods.

To prevent WTO adoption of onerous origin rules while at the same time ensuring the effective administration of antidumping and countervailing duty measures, SIA believes that WTO negotiators must pursue a "decoupling" approach that would allow administering authorities in antidumping and countervailing duty cases to use fact-based criteria other than rules of origin in determining the scope of antidumping and countervailing duty measures. In turn, this would permit the WTO to adopt internationally harmonized rules for general trade that are different from, and not based upon, the standards used to administer antidumping and countervailing duty measures. This would also allow the harmonization of general purpose rules of origin in a manner that will facilitate, rather than encumber, trade, while also preserving an effective antidumping and countervailing duty remedy for all products.

FAST TRACK

In addition, I would like to emphasize in the context of the WTO Ministerial that the SIA strongly believes that fast track negotiating authority is crucial to reducing trade barriers that impede the development and growth of high-value-added U.S. industries such as the semiconductor industry. In addition to reducing tariffs around the world, U.S. trade policy must continue to be focused on eliminating non-tariff barriers. Fast track legislation is essential to U.S. efforts to reduce complex nontariff barriers that remain as significant obstacles to our exports in many countries around the world. We therefore support congressional enactment of fast track legislation at the earliest possible opportunity.

CONCLUSION

In conclusion, SIA strongly supports the efforts of the United States in pursuing stronger international disciplines on measures that restrict or distort trade and investment around the world. On behalf of SIA and our member companies, let me thank you again for this opportunity to share our views.

Statement of Larry R. Brown, Senior Vice President and General Counsel, Timken, Canton, Ohio

Dear Mr. Singleton:

The Timken Company herein submits its comments regarding the August 5, 1999, hearing of the Subcommittee on Trade on U.S. negotiating objectives for the World Trade Organization (WTO) Seattle ministerial meeting.

The Timken Company is a U.S. producer of tapered roller bearings, ball bearings, cylindrical bearings and various steel mill products (including bearing quality steel, high alloy steel and steel tubing) with worldwide sales of $2.68 billion in 1998. Timken is based in Canton, Ohio, and manufactures its products in many countries and sells them around the world. Thus, Timken has a strong interest in a fair international trading system that seeks to reduce tariff and non-tariff barriers over time while maintaining rules that prevent trade distortions that flow from dumping or subsidization.

As an efficient producer of high quality bearings, Timken can compete effectively with any other manufacturers of such products around the world where unfair trade practices are not employed. Accordingly, Timken recognizes the benefits that liberalized trade, with its reductions in tariff and non-tariff barriers, can have for it. However, many markets have proven difficult, if not impossible to penetrate despite superior technology and product from US producers. The US must be sure that liberalization undertaken by the US is not matched by continued closed markets abroad in law or in fact.

In addition, while Timken was generally pleased with the outcome of the Uruguay Round negotiations, many members have been slow in complying with the requirements of these agreements, and some are still not fully in compliance. While there has been some focus within the WTO and other organizations on improving compliance, it makes little sense to undertake additional obligations where our trading partners have not to date implemented those obligations already undertaken.

Timken's comments are divided into three sections: (1) a review of the existing WTO agreements, (2) a discussion of mandated WTO negotiations, and (3) an examination of difficulties of compliance with the WTO agreements.

I. REVIEW OF EXISTING AGREEMENTS.

Full and effective implementation of the agreements concluded in the Uruguay Round should be a top priority for the WTO in general, and, in particular, in the agenda that ministers will consider in Seattle. This is true for all agreements. Moreover, for some agreements in the rules area where there is limited experience by member nations and few dispute settlement decisions, Timken supports completion of the agenda items agreed upon in Marrakesh (e.g., development of meaningful anticircumvention provisions) and extension of the Art. 6.1 and Art. 8 subsidy provisions. Otherwise, Timken urges the US to oppose any reopening of the agreements on Rules as premature.

A. Antidumping Agreement.

As is true with many agreements, notifications by member nations as required by the agreement have been incomplete, although there has been an effort in recent months to clarify which non-responding members have in fact not used domestic law during the six month time period being considered. The US should encourage member nations to improve compliance with the notification obligations of the antidumping agreement and all other agreements. Moreover, the WTO receives copies of all Rules decisions from member nations but does not make them available on the internet to the public. This would be of substantial assistance to other nations, to businesses trading internationally, and to those who advise us. The US should push for increased transparency by the publication on the WTO web site of all administrative decisions received by the WTO from member nations.

Timken urges the United States to oppose proposals that would permit a reopening of negotiations on the Antidumping Agreement. Our trading partners have not fulfilled their obligations to negotiate with the US on a meaningful anticircumvention provision for the antidumping agreement despite the agreement in Marrakesh that it was a significant problem. The existing agreement otherwise is in no need of reexamination. Many countries have only in recent years brought their laws into conformity with the WTO agreement, and there are few dispute settlement decisions on the agreement. Reopening any of the Rules areas at this time

is not only premature but would, in light of the conflict between certain major trading partners on the rules, guarantee that the new Round would not conclude within three years.

B. Subsidies.

Like the other WTO agreements, the Agreement on Subsidies and Countervailing Measures has only been in place for five years and is not an appropriate candidate for substantive revision at this time. Timken does agree with suggestions put forward by the United States and some members that implementation could be improved by modifying the notification/review process such that updating notifications are eliminated and full notifications are made every other year. This would permit a regular cycle in which subsidies are notified in the first year and reviewed in the second.1

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 to determine whether these articles should be eliminated. Timken believes that Article 6.1 provides a useful definition of "serious prejudice" that should be retained. The United States should support the retention of these three provisions.

C. Customs Valuation.

Timken believes that technical assistance should be provided to those members in need of help in conforming to the Agreement on Implementation of Article VII. Such assistance should be focused on active assessment of specific needs of particular members to avoid a situation in which a member might fail to meet obligations by the agreed-upon deadline because of a lack of effective assistance.

D. Dispute Settlement.

Timken believes that, in general, the dispute settlement process has worked well. There are some significant procedural issues which should be considered for possible change, e.g., the issue of whether the Appellate Body, when it makes a legal decision that requires further fact-finding, should be able to remand to a panel. Timken believes that whatever decisions are made to resolve such procedural problems, they should not involve any extension of the already lengthy period the dispute settlement process currently takes. Businesses and their countries that have been aggrieved by a member's action already face a process that does not provide rapid relief. Further extension would extenuate any relief beyond a reasonable measure.

The United States has already expressed its concern that the WTO function in as transparent a mode as possible. Timken suggests that the WTO make available on the internet all filings in dispute settlement proceedings, including those made by non-governmental organizations and any other non-members. In this context, Timken welcomes the holding of the Appellate Body in the shrimp-turtle dispute that the Dispute Settlement Understanding does not require that panels reject unsolicited submissions.2 At present, as Timken understands it, the WTO retains an index of such filings but does not make them available to the public on-line. Given the relatively low cost of loading these documents onto the internet, the WTO should enhance its transparency by putting them there.

E. Rules of Origin.

The Timken Company notes that the technical committee forwarded the final HTS chapters to Geneva earlier this year. It is Timken's understanding that there are literally hundreds of open issues remaining. Timken believes that the proper forum for the resolution of the rules of origin (ROO) issues is outside of the new Round. Substantively, Timken is troubled that other countries have not accepted the positions presented by the US on some of the overarching issues that remain outstanding and on issues in Chapter 84 pertaining to bearings. Timken would strongly oppose any resolution of ROO issues that would undermine the integrity of existing antidumping duty orders on tapered and other bearings. Timken has suffered from substantial evasion of the orders over time and believes it would be inappropriate to create more loopholes by accepting certain of the proposed ROO options in Chap

ter 84.

F. Trade Related Investment Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).

1 See, e.g., WT/GC/W/107, Preparations for the 1999 Ministerial Conference-Communication from the United States (3 November 1998).

2 WT/DS58/AB/R, United States-Import Prohibitions of Certain Shrimp and Shrimp Products, AB-1998-4 (12 October 1998) at 76.

As is the case with Customs Valuation, WTO members, particularly those in developing and least developed countries, are in need of technical assistance to help them implement the provisions of the TRIMS and TRIPS Agreements. Timken encourages the United States to continue to support efforts to provide such assistance. It is critical that all countries bring themselves into compliance with these two agreements by the end of the year. Seattle is too late to see that such compliance has been accomplished.

G. Integration of Least Developed Countries.

Timken supports the efforts of the WTO and its members to integrate the least developed countries into the WTO system and urges the United States to continue its support for such efforts. In addition, Timken believes that the benefits under the Generalized System of Preferences (GSP) 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 normal trade relation (NTR) treatment is unfairly withheld from third country suppliers.

H. Industrial Market Access.

Timken generally supports inclusion of industrial tariffs in upcoming negotiations so long as they are addressed on a "request-offer" basis.

In addition, as U.S. and Australian communications have recognized, in some instances tariffs are applied at levels below bound rates, including through tariff regimes that appear to be complex, non-transparent, and discriminatory.3 Thus, Timken agrees that an important objective in the upcoming negotiations should be to improve and expand market access opportunities by lowering bound tariff rates to eliminate the disparity between applied and bound rates and by ensuring that the market access results provide greater certainty and transparency in the operation of tariff regimes.

In this context, Timken also applauds the efforts of the U.S. Trade Representative to support the preparation of updated electronic versions of the members' various tariff bindings.4 The US should ensure that such schedules when available are released to the public.

II. Mandated Negotiations.

Timken supports efforts to obtain liberalization in the service industry, including repair and maintenance services, financial services, telecommunication services, express integrated transportation services, distribution services, and transport services generally. On the whole, liberalization in these sectors will decrease the costs of doing business abroad and will help Timken and other U.S. exporters to achieve better access to export markets.

III. Compliance with Existing Agreements.

The existing Uruguay Round agreements and the work programs initiated by them represent that which the United States bargained for and agreed to as part of the multilateral negotiations that led to the creation of the WTO. To the extent member states have not and are not fulfilling their requirements, the United States is in some measures not obtaining that for which it bargained. Thus, the implementation of these agreements and any work programs inaugurated by them is of great importance to U.S. businesses, including The Timken Company. Until such time as the WTO is fully functioning and members are abiding by their current obligations, the United States should not seek major changes to WTO agreements that are not subject to further liberalization under the built-in agenda.

A. 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 26 are periodic, for member states.5 WTO materials to date indicate that many members have not met these obligations.

3 See WT/GC/W/132, Preparations for the 1999 Ministerial Conference-Communication from Australia (21 January 1999).

4WT/GC/W/107, Preparations for the 1999 Ministerial Conference-Communication from the United States (3 November 1998).

5 See G/L/112, Report of the Working Group on Notification Obligations and Procedures (7 October 1996) at 3 (7 October 1996).

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. The first due date for new and full notifications was June 30, 1995.6 At present, only 70 out of 119 members have submitted the notifications that were due at that time. Of those 70 submissions that were received, the average length of tardiness was fourteen months.8 For notifications due in 1998, only 35 notifications have been received, and only three of these were received by the deadline date.9 As of July 30, 1999, some forty members had not provided any of the notifications required under Article 25.10

Similarly, under Article 18.5 of the Agreement on 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, 1995.11 As of June 30, 1997, forty countries had not made any such notifications. 12 Such delays and partial responses are typical for all agreements. In these circumstances, it is difficult for a country or its citizens to discern the extent of the benefits that arise from the WTO agreements.

In some measure, this failure to notify may be attributed to lack of resources, and, as described above, The Timken Company supports 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 Congress should support a number of different efforts, including:

The provision of adequate funding for the U.S. monitoring agencies and a strong U.S. presence in Geneva; and

ment.

The provision of sufficient resources for participation in WTO dispute settle

In addition, Timken recommends that the USTR establish a mechanism that will allow private parties, which are concerned that notified materials are not publicly available, to request determination by the USTR of the status of such documents and commitments to gain the release and public dissemination of such information. 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. 13 The TRIPS and TRIMS Agreements include provisions that allow developing countries to delay implementation for five years. This means that those developing countries that were original members of the WTO and opted to delay compliance will all have to be compliant by January 1, 2000. It is important for the WTO to identify what, if any, efforts are being taken by developing countries to bring themselves into compliance. This approach is already taken in dispute settlement where losing countries are required to provide periodic reports of efforts being made to bring themselves into compliance. The same should be done for countries given an extended period for compliance.

IV. Conclusion.

The Timken Company strongly supports ongoing efforts to liberalize international trade and to strengthen our rules-based system. The upcoming negotiations should focus on the built-in agenda and traditional tariff negotiations. The existing Rules should not be reopened, although extensions of the Subsidy Articles that would otherwise expire should be agreed to and anticircumvention provisions should be added as contemplated in Marrakesh. Energy should be spent on improving compliance with existing agreements and on improving the transparency of the WTO generally and the dispute settlement system particularly. While not reviewed above, Timken strongly concurs with the existing position of the US that it is inappropriate at the present to launch negotiations in the competition policy area. There are many areas where bilateral cooperation needs to be developed before multilateral rules would be appropriate. Considering the problems experienced in the OECD on an invest

6G/SCM/23, Note by the Secretariat (30 July 1999) at 2. 7G/SCM/23, Note by the Secretariat (30 July 1999) at 2. 8G/SCM/23, Note by the Secretariat (30 July 1999) at 2. 9G/SCM/23, Note by the Secretariat (30 July 1999) at 2. 10 G/SCM/23, Note by the Secretariat (30 July 1999) at 1. 11 See WTO Annual Report 1997 at 110.

12 Id.

13 See Report of the Committee on Customs Valuation to the Council for Trade in Goods at 1, G/L/121 (October 29, 1996).