spanning the spectrum from entry level to executives. It is clearly a driver of economic growth in the world. Liberalization of the industry will lead to faster industry growth, which will not only spur direct growth in the industry, but growth in related industries such as manufacturing of transportation equipment, and building and related critical infrastructure development projects. Moreover, the travel and tourism industry represents sustainable and ecologically friendly development. B. Sector Status In general, the tourism and travel related services sector tends not to be heavily regulated and competition tends to be vigorous. There are, however, some significant exceptions to this broad generalization. C. Classification This sector includes hospitality, restaurants, travel agencies, tour operators, tourist guides services and other travel related services. The industry has developed since these classifications were drawn up, and the specific services covered under these broad categories need to undergo a thorough review and analysis to ensure that all services that should be covered are included. It should also be clarified that this sector includes travel reservation services and travel-related financial services, e.g. travelers checks and certain foreign exchange services, which are distinct from those covered under the banking, insurance and securities sector. (The tourism and travel related services sector does not include air or other transportation sectors, which are covered under the transport services sector.) D. Barriers Two of the most prevalent types of barriers fall under the rubrics of competition and investment, which could be addressed either horizontally or on a sectoral basis. (Needless to say, this industry, like many others, has substantial investments in trademarks and intellectual property, and has an interest in the outcomes on these and other general business concerns.) Competition Many countries impose significant restrictions, often only against foreign firms or enforce them in ways that favor domestic firms, on marketing and promotional initiatives, including loyalty reward programs. Investment One hundred percent foreign ownership is often prohibited, and the form of doing business is commonly restricted or controlled. In addition, when operating through a franchise network, repatriation of profits, payment of royalties, and other similar issues frequently become problematic. Movement of Personnel A third horizontal issue is of particular concern to the industry, and that regards the freedom of movement for business personnel. The ability of travelers to move freely around the world is the lifeblood of the travel and tourism industry. The industry has an abiding interest in liberalizing the restrictions, not only on tourists and the industry's own management, but generally on businesses' ability to locate the proper personnel in the locations where they are most needed. The other barriers are not covered in the general issues, though some do affect other sectors, as follows: Privacy Many companies in the travel industry maintain records regarding customers' travel preferences in order to serve particular needs better. Many countries are proposing, or have already enacted, onerous restrictions on the flow of this type of information. Many countries also require the disclosure of overseas spending by customers, thereby discouraging foreign travel by their citizens. Tourist Financial Services Many countries proscribe significant restrictions on the provision of financial services for travelers. Sale of travelers checks are often restricted to certain limited types of financial institutions, as are foreign currency exchange services even though they pose no risk to a country's financial system. Finally, access to local ATM networks is occasionally prohibited. Taxes on Overseas Spending Some countries penalize their citizens when they travel abroad by imposing taxes on overseas spending, often in ways that unfairly discriminate among payment products. One large South American country, for example, imposes a 2 percent transaction tax on credit and charge card spending abroad, but imposes no special taxes on cash purchases. As a large proportion of spending by international travelers is transacted through credit card payment systems, this tax discourages international travel and tourism. E. Negotiating Objectives The U.S. objective should be the removal of as many of these barriers as possible. Unfortunately, it is too early in the process to identify firm industry-wide priorities. Chairman CRANE. And next is Mr. Kleckner. STATEMENT OF DEAN KLECKNER, PRESIDENT, AMERICAN FARM BUREAU FEDERATION, PARK RIDGE, ILLINOIS Mr. KLECKNER. Thank you, Mr. Chairman and Members of the Subcommittee. I am Dean Kleckner, and while I office in Park Ridge, Illinois, I am a north Iowa farmer, raising corn, soybeans and hogs on that farm, and one of the four ACTPN members sitting at the table today. Now there are three of us left. Agriculture is one of the few industries that consistently runs a trade surplus. The United States along with agriculture must be at the negotiating table in the next WTO Round with trade negotiating authority to ensure that this trade surplus continues. U.S. agriculture is now reeling from low commodity prices. Given an abundant global supply and a stable U.S. population rate, the job of expanding existing markets and opening new export markets for agriculture is more important than ever. Agriculture's longstanding history of a trade surplus will not continue if agriculture is relegated to the sidelines as new negotiations commence. Personally, I am concerned that agriculture will be left behind if we do not structure the negotiations properly. The next round of negotiations should encompass all sectors as a comprehensive single undertaking. By this we mean all aspects of the negotiations should be concluded simultaneously in order to get the best results for all sectors. In other words, as was said in the Uruguay round, agreeing it should be here, too, nothing is agreed to until everything is agreed to. I have submitted for the record a copy of the Seattle Round Agriculture Committee's policy objectives for the next round. The Farm Bureau chairs this coalition, which consists of 80 agriculture organizations representing producers as we are, also processors and agribusinesses. U.S. agriculture is united in its views for the next round through this coalition. The very first principle of this coalition is that of a single undertaking. The United States will have the greatest success in the next round of trade talks if negotiations are concluded as a single undertaking without the possibility of an "early harvest" or provisional implementation of early agreements. We are very concerned-very concerned about concluding early results for any sector, recognizing in doing so will require devoting substantial resources and will likely sidetrack the important structural issues that need to be addressed in order for this round to be completed in 3 years. Now, eight quick items. We have set a goal to complete the agriculture negotiations by the end of 2002, 3 years. Our producers need results in a timely manner. Two, we call for the elimination of export subsidies by all WTO members by a date certain and as soon as possible. Three, we believe that new negotiations must include a recommitment to binding agreements to resolve sanitary and phytosanitary issues based on scientific principles in accordance with the WTO Agreement on Sanitary and Phytosanitary Measures; that is, the SPS agreement. The provisions of the Uruguay round agreement are sound and do not need to be reopened, the SPS agreement. Four, the next round should result in tariff equalization and increased market access. By requiring our trading partners to eliminate tariff barriers within specified timeframes, we need to adopt a framework that was used in the Uruguay round wherein there are no product or policy exceptions to such tariff reductions. All WTO member countries should reduce tariffs, both bound and applied, in a manner that provides commercially meaningful access on an accelerated basis. Five, quickly here, regarding state trading enterprises, or STES, we must impose disciplines on STES that distort the flow of trade in world markets. Six, and very important, Mr. Pepper mentioned this, but we must ensure market access for biotechnology products produced from GMOs, genetically modified organisms. All WTO member countries should reaffirm the principles of the WTO SPS Agreement, provisions which we believe cover trade in GMOs. And I might say six "a" here, the United States should not agree to a Working Group on Bioengineered Products at the WTO. The formation of such a group will derail the resolution of trade issues concerning bioengineered product policy and not likely result in a consensus approach. Seven, we must end the use of all nontariff barriers to trade. And, last, eight, our negotiators must make changes to trading practices that would facilitate and shorten its dispute resolution procedures and processes. In summary, Mr. Chairman, we support liberalization of global agriculture markets that will result in the true reform of the current trading regime and bring about fair trade for our producers. This is our opportunity to address the trade imbalances that hamper our domestic producers from both an import and an export perspective. The U.S. must demonstrate leadership in setting the agenda for this round of trade talks and is submitting proposals for the structure of the negotiations. Mr. Chairman, I thank you. Chairman CRANE. Thank you. Statement of Dean Kleckner, President, American Farm Bureau Mr. Chairman, members of the Committee, I am Dean Kleckner, president of the American Farm Bureau Federation and a hog, corn and soybean farmer from Iowa. I appreciate the opportunity to testify before you today regarding negotiating objec tives for agriculture in the next round of trade talks in the World Trade Organiza tion. The American Farm Bureau is the nation's largest organization of agricultural producers. Farm Bureau represents over 48 million member families in the United States and Puerto Rico. Our members produce every commodity grown in America and depend on access to customers around the world for the sale of over one-third of our production Agriculture is one of the few US industries that consistently runs a trade surplus, posting a positive balance of trade every year since 1960. The United States along with agriculture, must be at the negotiating table in the next WTO round in a meaningful way, with trade negotiating authority, to ensure that this trade surplus continues. The ability of U.S. agriculture to gain and maintain a share of global markets depends on many factors, including obtaining strong trade agreements that are properly enforced, enhancing the administration's ability to negotiate increased market access for U.S. agriculture and building in the necessary changes to the WTO dispute settlement process to ensure timely resolution of disputes. When Congress passed the 1996 Freedom to Farm Act, it phased out farm price supports, making U.S. agriculture more dependent on the world market. American farmers and ranchers produce an abundant supply of commodities far in excess of domestic needs and their productivity continues to increase. Exports are agriculture's source of future growth in sales and income. As you are well aware, U.S. agriculture is reeling from low commodity prices. Given an abundant domestic supply and a stable US. population rate, the job of expanding existing market access and opening new export markets for agriculture is more important than ever. Agriculture's longstanding history of a balance of trade surplus will not continue if we are relegated to the sidelines as new negotiations in agriculture commence. Moreover, global food demand is expanding rapidly and more than 95 percent of the world's consumers live outside U.S. borders. Despite significant progress in opening U.S. markets, agriculture remains one of the most protected and subsidized sectors of the world economy. In addition, U.S. agricultural producers are placed at a competitive disadvantage due to the growing number of regional trade agreements among our competitors. U.S. leadership of the global trade liberalization agenda has paid off for American agriculture. If the United States now leaves it to others to form new trade pacts and write future rules for trade, U.S. producers, processors, and exporters will be severely disadvantaged in the competitive marketplace of the 21st century. We are counting on this administration and Congress to ensure that U.S. farmers and ranchers have a significant place at the negotiating table, armed with the tools they need, including trade negotiating authority. WTO MINISTERIAL As you know, the Seattle Ministerial Conference will serve as the kickoff for the new negotiations on agriculture and other sectors in the WTO. As the host country for this ministerial, the United States and its trade policies will be in the spotlight. Given the economic turmoil and technical barriers being experienced in many of our important export markets, the launching of new negotiations to further open markets has never been more important. The United States has an unprecedented opportunity to lead these negotiations to a successful outcome and should play a central role in influencing the debate early regarding the structure of the negotiations. Specifically, the administration should take a stand now on a number of different issues, including what sectors will be negotiated in this next round and what approach will be used for the negotiations (formula approach versus request-offer, or some combination thereof). These negotiations are too important to agriculture, and other sectors, to let other WTO member countries dictate the negotiating agenda. OBJECTIVES FOR THE NEXT ROUND Higher living standards throughout the world depend upon mutually beneficial trade among nations. We urge that trade policies be developed that promote the growth in world trade. To this end, U.S. negotiators must comprehensively address high tariffs, trade-distorting subsidies, and other restrictive trade practices in the new round of negotiations on agriculture. The American Farm Bureau Federation supports expediting action on the next round for agriculture in the WTO. Our market is the most open in the world. We cannot sit idly by while our competitors trade openly in our market, but deny us access to their markets on equal terms. We must begin the negotiations and conclude them as early as possible to put U.S. agricultural producers on a level playing field with the rest of the world. To this end, we have set a goal to complete the agricultural negotiations by the end of 2002 to ensure that our producers gain increased market access in a timely manner. First and foremost, the next round of negotiations should encompass all sectors as a comprehensive, single undertaking. By this we mean that all aspects of the negotiation should be concluded simultaneously in order to get the best results for all sectors. The United States will make the greatest gain in the next round of trade talks if negotiations are concluded as a single undertaking without the possibility of an "early harvest" or provisional implementation of early agreements. As you are aware, this issue has attracted significant attention in recent weeks given the administration's desire to achieve early tariff reductions for the eight Asia Economic Pacific Cooperation (APEC) sectors. We are very concerned about concluding early results for any sector recognizing that doing so will require a substantial devotion of resources to accomplish and will likely sidetrack the important structural issues that need to be addressed in order for this round to be completed in three years. Second, we must call for the elimination of export subsidies by all WTO member countries. Our producers cannot compete against the mountain of spending by our primary competitors, like the European Union (EU). The EU spends in excess of eight times the level of domestic and export subsidies as the United States. Data from the U.S. Department of Agriculture and the European Commission show that total EU domestic and export subsidy expenditures for 1997 exceeded $46 billion compared to $5.3 billion spent by the United States. This level of spending distorts world trade and undermines U.S. producers' competitiveness in vital export markets. Third, we believe that the new negotiations must include a recommitment to binding agreements to resolve sanitary and phytosanitary issues based on scientific principles in accordance with the WTO Agreement on Sanitary and Phytosanitary Measures (SPS Agreement). The provisions of the Uruguay Round SPS Agreement are sound and do not need to be reopened. The United States has successfully litigated several SPS cases that underscore the strength of this agreement. Cases have now been tried that set precedence in each of the three areas of the SPS Agreement. For example, the successful U.S. litigation of the EU beef ban strengthens the provisions regarding human health, the Japan varietal testing case underscores aspects regarding plant health, and the Australia salmon case bolsters the animal health text of the SPS Agreement. Any change to the SPS Agreement would expose the sound scientific principles now embedded in its provisions-changes that the EU would relish making to restrict rather than facilitate trade. Fourth, the next round should result in tariff equalization and increased market access by requiring U.S. trading partners to eliminate tariff barriers within specified time frames. Our producers compete openly in their own domestic market with their foreign competitors, but are shut out of export markets due to prohibitively high tariffs. We need to correct this imbalance for our farmers and ranchers. All WTO member countries should reduce tariffs, both bound and applied, in a manner that provides commercially meaningful access on an accelerated basis. Fifth, we must impose disciplines on state trading enterprises (STEs) that distort the flow of trade in world markets. Every effort should be made to craft an agreement that sheds light on the pricing practices of STEs and ends their discriminatory practices. Our producers have lost too many sales in third country markets due to the noncompetitive, nontransparent operations of STES. Sixth, we must ensure market access for biotechnology products produced from genetically modified organisms (GMOs). Significant delays and a lack of transparency in the regulatory approval process for GMOs in the EU have heightened the need for science based, transparent provisions governing bioengineered products. We cannot continue to be held hostage to the EU's nontransparent, discriminatory procedures that deny market access for our GMO products. All WTO member countries should reaffirm the principles of the WTO SPS Agreement, provisions which we believe cover trade in GMOs. Most importantly, the United States should not agree to a working group on bioengineered products in the WTO. The formation of such a group will derail the resolution of trade issues concerning bioengineered products and will not likely result in a consensus approach. Next, we must end the use of all nontariff barriers to trade. There are several practices that have been employed by our trading partners to shut out competition in their domestic markets. These practices include, but are not limited to, domestic absorption requirements, discriminatory licensing procedures, price bands, and the administration of tariff rate quotas that prevent true competition. Provisions to ad |