59

RESOLUTION

WHEREAS, the United States isthe work's greatest agricultural nation and every American, together with people throughout
the world, enjoys the benefits of our nation's agricultural effort, and

(WHEREAS, Florida agriculture is major contributor tothe health and well-being ofthe citizens of the State of Florida, the
‘ation and the world with annual sales of raw farm products of nearly six billion dollars, which provide 45 billion dollars of economic
bene hoe whe row, proce, apr, ima anc sd provide gods wd servis ese fr apt proton;

JBEEREAS Pra pron the riot atts spy of win eb, ste st cr prod ei
the sole domestic supplier of many of these commodities for several months each year,

WHEREAS, eating fresh fruits and vegetables each day provides good nutrition and reduces the risk of heat disease, cancer
and other chronie diseases; and

WHEREAS, as 4 resuk of the unperalelod escalation of shipments and import surges of tomatoes and otber vegetables fom
‘Mexico at below the cost of production over the past three years, Florida's percentage share ofthe U.S. market has continued to decline
cach year, and

WHEREAS, Mexico, in contravention of the trade lass ofthis nation, bas shipped agricultural products at below the cost of
production over the past three years resulting in the decline of Florida's percentage share ofthe U, S. market during this ime; and

WHEREAS, the dramatic devaluation ofthe Mexican peso has avoentusted very negative effects on Florida agriculture,
‘rippling this industry aod placing a major threat on its continued existence.

NOW, THEREFORE, BEIT RESOLVED tat the Qoverer ndCabinet ofthe Sate of Flr do bereby re the President
‘of the United State, the Congress, United States Trade Representative Mickey Kanto, and Chairman ofthe International Te
men en Wace ts pomp aces rncns fons ln inal ec al prone cf
the Nowth American Free Trade Agreement, and to quickly take appropriate administrative action to prevent further adverse effects on
Florida's agricultural industry.

BE IT FURTHER RESOLVED that the Governor and Cebinet urge the Florida Legislaue to ake immediate action against
nai trade practices by supporting budget request to allow fall and immediate legal pursuit inthe courts of remedies provided by
courent U, S trade law.

IN TESTIMONY WHEREOF, the Governor and Cabinet ofthe State of Florida have hereunto subscribed their names and
Dbave cause the Offical Seal ofthe Stale of Florida to be hereunt affixed in the ity of Tallahassee on this 28th day of March, 1996

PA

‘LAWTON CHILES
GOVERNOR

‘THAM
‘SECRETARY OF STATE

‘BOB BUTTERWORTH
ATTORNEY GENERAL

JONER OF A\ TURE



128

farmer cannot relocate his or her plants. Or, how do you replace
the micro-climate - this is impossible. But a door knob factory
can move its equipment to another region in the U.S. - or even to
another nation to compete in the world market.

Sexious Injury or Threat of Serious Injury to a Seasonal
Perishable Industry

A seasonal perishable crop industry is frequently one that sells
its crop in a few weeks to two months, before another region in
the U.S. starts its marketing season for that crop. If there is
an import surge during the production and harvesting of the first
Seasonal crop, by the time the other domestic seasonal crops
enter the market, the imported crop and the first seasonal crop
have been sold in the market. Consequently, the first crop
suffers the injury and the second, third and following seasonal
crops are not injured by the import surge. Yet, under the
existing law, all the seasonal perishable "like crops are
required to be considered as one industry. The effect of the
current law is that, under the above scenario, the first
harvested seasonal crop is eventually forced out of business.

Need for Legislation

The law does not recognize the seasonality situation of growers
of perishable fruits and vegetables. At the current time,
seasonal growers are considered to be a part of a national
industry that may produce and sell during the whole year, which
may include entirely different times of the year from that of
seasonal growers. If growers in one region produce and sell at a
time when no other domestic growers are producing and selling,
economic data of all the domestic regions are nonetheless
considered in determining whether there is import injury to the
one region

Application of H.R. 2795 Legislation in the Safeguard Program

A more specific example of how the legislation would function is
provided in the following scenario:

A seasonal "like" perishable crop, asparagus, is grown in five
distinct locations in the States of California, oregon and
Washington. The crop is grown in these different regions because
of the micro-climate and soil type that is required for growing
the crop successfully and to continue the supply of fresh produce
to the consumer. The asparagus is first harvested in January in
southern California and harvest is completed in the State of
Washington in late June. British Columbia continues to harvest
into July. The crop has a shelf life of two to three weeks, and
each separate growing area normally sells a substantial percent
of its crop before the next, further north area starts selling
ite crop. An import eurge of the crop creates an injury or
threat of injury to the first-in-time harvest and sold crop.

‘The seasonal perishable crop, asparagus, for the first particular
growing season would have standing to file a petition, if the
crop demonstrates to the USITC all the existing safeguard
xequirements, plus if all of the production of the asparagus is
sold during the growing season and the demand for asparagus in
that season is not supplied, to any substantial dearee, by
producers of the article in’a different growing region’ of the
country and different season.

If the imported crop caused two seasonal perishable crops, not
necessarily selling at the same time, to file the safeguard
petition, then the two seasonal perishable industries would be
required to provide the USITC with their economic data and
perhaps have their cases merged into one case.


25

THOSE WHO OPPOSE H.R. 2795. THIS LEGISLATION IS NOT PRESCRIPTIVE -- IT
DOES NOT LEGISLATE A RESULT, NOR DOES IT CREATE A NEW CATEGORY OF
REMEDY. WITH THE CHANGES MADE BY H.R. 2795, OUR WINTER GROWERS WILL
STILL HAVE TO MEET THE TEST FOR BEING CONSIDERED A TRULY SEASONAL
INDUSTRY; THEY WILL STILL HAVE TO RECEIVE A FAVORABLE FINDING FROM THE
ITC; AND THEY WILL STILL BE AT THE PRESIDENT’S MERCY FOR THE DECISION
ABOUT WHAT RELIEF THEY MIGHT RECEIVE. THEY ARE NOT ASKING FOR SPECIAL
TREATMENT, ONLY THAT THEY BE ALLOWED TO ACCESS THE RELIEF AVAILABLE TO
OTHER INDUSTRIES UNDER CURRENT U.S. LAW.

THERE WILL BE SOME WHO MAY ASK WHY THE CHANGES ARE NEEDED IF OUR
PEPPER AND TOMATO GROWERS ARE CURRENTLY PURSUING A SECTION 201 ESCAPE
CLAUSE CASE. THE FACT IS THAT THE NUMBERS HAVE BECOME SO BAD FOR
TOMATOES AND PEPPERS THAT THE SEASONAL ISSUE IS LESS OF AN IMMEDIATE
PROBLEM FOR THEM. HOWEVER, THERE ARE OTHER WINTER INDUSTRIES, LIKE
ZUCCHINI, SQUASH, AND EGGPLANT THAT ARE UNABLE TO MEET THE YEAR-ROUND
NUMBER THRESHOLDS BUT ARE STILL IN GENUINE JEOPARDY. IT BEARS NOTING
THAT, HAD THESE CHANGES BEEN IN PLACE, OUR TOMATO AND PEPPER GROWERS
WOULD HAVE HAD AN OPPORTUNITY TO SEEK RELIEF BEFORE ENDURING A SECOND
SEASON OF LOSSES. EVEN SO, PASSAGE OF H.R. 2795 TODAY WILL CERTAINLY
BOLSTER THEIR CURRENT SECTION 201 CASE IF THERE SHOULD BE AN APPEAL.

FLORIDA'S WINTER FRUIT AND VEGETABLE GROWERS PERFORM A UNIQUE
FUNCTION FOR THIS COUNTRY. THEY COMPETE HEAD-TO-HEAD ~- NOT WITH OTHER
AMERICAN PRODUCERS, BUT WITH FOREIGN PRODUCERS -- TO PROVIDE WINTER
FRUITS AND VEGETABLES FOR AMERICANS. PRIOR TO THE PASSAGE OF THE NAFTA
IMPLEMENTATION LANGUAGE, THEY RECEIVED ASSURANCES THAT THERE WOULD BE
SAFEGUARDS AND RELIEF MEASURES IF, AS SOME OF THEM SUSPECTED MIGHT
HAPPEN, THINGS WENT BADLY. WHILE H.R. 2795 WON'T FIX THE WHOLE
PROBLEM, IT WILL BE A STEP TOWARD FULFILLING THE COMMITMENTS THAT WERE
MADE TO THESE HARDWORKING FLORIDIANS WHO TODAY ARE STRUGGLING TO STAY
IN BUSINESS, FEED THEIR FAMILIES, AND CONTRIBUTE TO THE U.S. ECONOMY.


154

FMI and its members are sympathetic to the difficult market conditions for Florida
growers, On the face of it, a U.S. industry that has lost market share to imports and that forecasts
its own continued decline is a cause for concern. If the Florida winter vegetable industry were to
be eliminated, consumers would be adversely effected. Consumers need both domestic and
foreign produce during the winter months and in our view there is plenty of opportunity for both
foreign and domestic products to expand the market and grow their products.

There are several factors that have caused this loss of market share. Adverse weather
conditions in recent years have reduced Florida's growing season, reducing production.
According to the U.S. Department of Agriculture, Mexico’s percentage of the total winter
vegetable supply has increased eleven percentage points from 37 percent to 48 percent since the
peso was devalued in December 1994. See enclosed information.

This reduced market share is also a factor of price and quality. Winter vegetables are
highly perishable items. The fact is that Mexican growers produce and pack vegetables that are
equal, and often superior in quality, to product that is available domestically during the same
time period, Many consumers prefer the better tasting tomatoes grown in Mexico over the
product available from Florida

California and other producers of seasonal agricultural crops who support H. R. 2795
claim that only a small number of industries would be eligible to seek this relief. Even if this
claim is accurate the dollar value of the crops is significant. If foreign competition is kept out of
the market U.S. consumers will encounter higher fruit and vegetable prices. Proponents also
claim that H.R, 2795 would only provide temporary relief for a few years. However, current
safeguard law allows up to eight years for relief. Eight years of higher priced seasonal produce
is not a “temporary” condition from the consumer's point of view.

In addition to reducing U.S. supply and choice and raising prices for consumers, H.R.
2795 will have an even more far-reaching effect. The United States is the largest exporter of
agricultural products. By changing the trade faw in this fashion, we are inviting our trading
partners to retaliate on exports from the United States. As a result, the enactment of the
legislation will harm U.S. consumers, U.S. producers who export, and U.S. workers employed by
companies who export

For all these reasons, we respectfully urge the subcommittee to reject this protectionist
legislation that will benefit a few domestic growers at the expense of consumers around the
nation

Sincerely,
“ay oy
oan

Tim Hammonds

President and CEO.

Enclosure


149

For all international standards of law, relief under Section 201 would continue to be
available only to legitimate domestic industries; a "domestic industry" could not be created
simply to qualify for Section 201 relief. Relief under Section 201 would likewise continue
to be granted only in those extraordinary cases where harm to the domestic industry is
determined to be "serious" and where the relevant imports are determined to be the
“substantial cause" of that harm.

Because the proposed legislation would correct the flaw in U.S. law in a limited way
consistent with international agreements, there would be no legitimate international basis
for foreign countries to “retaliate” against U.S. interests, Thus, any suggestion that
retaliation may ensue from these measures is unsubstantiated and simply designed to
stimulate opposition among the uninformed.

Vv. onclusic

In sum, in order to remedy an unintended flaw in Section 201, which has prevented
seasonal producers of perishable agricultural products from seeking legitimate relief from
harmful imports, this Subcommittee should promptly approve H.R. 2795 and send it to the
floor for action. Circumstances are so critical in Florida that time is of the essence for
purposes of obtaining import relief.

FFVA will make itself available to all members of the Subcommittee to answer
questions or address concerns about this vital measure.

Attachment

\BESTOLOWUTESMBA. 001


COMMITTEE ON WAYS AND MEANS
BILL ARCHER, Texas, Chairman

PHILIP M. CRANE, Illinois SAM M. GIBBONS, Florida

BILL THOMAS, California CHARLES B. RANGEL, New York
E. CLAY SHAW, Jk., Florida FORTNEY PETE STARK, California
NANCY L. JOHNSON, Connecticut ANDY JACOBS, Jr., Indiana

JIM BUNNING, Kentucky HAROLD EF. FORD, Tennessee

AMO HOUGHTON, New York ROBERT T. MATSUI, California
WALLY HERGER, California BARBARA B. KENNELLY, Connecticut
JIM McCRERY, Louisiana WILLIAM J. COYNE, Pennsylvania
MEL HANCOCK, Missouri SANDER M. LEVIN, Michigan
DAVE CAMP, Michigan BENJAMIN L. CARDIN, Maryland
JIM RAMSTAD, Minnesota JIM McDERMOTT, Washington
DICK ZIMMER, New Jersey GERALD D. KLECZKA, Wisconsin
JIM NUSSLE, lowa JOHN LEWIS, Georgia

SAM JOHNSON, Texas LF. PAYNE, Virginia

JENNIFER DUNN, Washington RICHARD E. NEAL, Massachusetts
MAC COLLINS, Georgia MICHAEL R. MCNULTY, New York

ROB PORTMAN, Ohio
JIMMY HAYES, Louisiana
GREG LAUGHLIN, Texas
PHILIP S. ENGLISH, Pennsylvania
JOHN ENSIGN, Nevada
JON CHRISTENSEN, Nebraska
PHILLIP D. MoseLey, Chief of Staff
JANICE Mays, Minority Chief Counsel

SUBCOMMITTEE ON TRADE
PHILIP M. CRANE, Illinois, Chairman

BILL THOMAS, California CHARLES B. RANGEL, New York
E, CLAY SHAW, Jr., Florida SAM M. GIBBONS, Florida

AMO HOUGHTON, New York ROBERT T. MATSUI, California
MEL HANCOCK, Missouri WILLIAM J. COYNE, Pennsylvania
DAVE CAMP, Michigan LF. PAYNE, Virginia

JIM RAMSTAD, Minnesota RICHARD E. NEAL, Massachusetts

DICK ZIMMER, New Jersey
JENNIFER DUNN, Washington

ap


119

years to make necessary adjustments, provided those nations
followed the same strict procedures followed by our International

Trade Commission

Incidentally, we are frequently faced with reference price
problems in the European Union, and I have heard the EU has even

implemented a new license system for crops

Conclusion

In closing, I ask you to reflect on the prospects of my family
and other families that have decades of work invested in their
trees and vines. There is simply no ability to move these plants
to Mexico, or other parts of the U.S. Industrial plants may be
capable of relocation, but we do not have that option with

respect to our orchards and vineyards.

The proposed legislation before you is not contrary to global
trade. Instead, it merely gives a grower impacted by an import
surge, a few years to make the necessary adjustments to that new

competition.

In 1987 your committee made great progress on Congressman Bill
Thomas’ fast track perishability amendment in attempting to
protect perishable crops. We urge you to move H.R. 2795 forward

to complete the legislative project.


68

HLR. 2795 is designed to protect fewer than 80 U.S. growers of winter tomatoes in
one state. Unfortunately, it also threatens the rest of American agriculture, our
nation’s largest industry. We oppose H.R.2795 because it is anti-farmer, anti-
rancher, anti-grower and anti-consumer.

Our coalition has nothing against any particular group of farmers. Most of
us represent farmers. In fact, we encourage the Administration to work with these
Florida growers to address their concerns within the guidelines of the NAFTA and
the WTO. We object to this seemingly obscure measure because it seriously
imperils our larger agricultural export sector. We simply cannot support a solution
that violates carefully negotiated trade agreements with the misguided protectionist
sentiments driving this bill.

Agricultural exports are one of the dramatic success stories of our economy.
America’s agricultural exports are expected to reach a striking $60 billion this year.
That represents a one-third increase in just two years. This export surge is
-benefitting virtually all sectors of our farm and rural economy. NAFTA and the
WTO are working for agriculture. Let’s not jeopardize this success.

It is interesting to note that $60 billion of agricultural exports is twice the
combined value of America’s exports of aircraft and automobiles in 1995. In my
own area, the dollar value of corn exports is expected to grow by over 20% this
crop year. Wheat exports could wel! climb nearly 30%, meat and poultry 25%,
dairy products 12%, oil seeds and products 10 % and horticultural products 10%.

Not just farmers, but many others benefit — manufacturers, distributors and
retailers of farm equipment, seed, fertilizer and other supplies, shippers, ports, and
the financial world to name a few. Not least among the gainers is the American
consumer; because our ability to more fully utilize our farm resources tends to keep
food prices at affordable levels.

Because of our successful export policies and projected growth, American
agriculture has embarked in a new direction in the Federal Agriculture
Improvement and Reform Act of 1996. Congress unshackled American farmers
from years of production controls so that we will be better able to satisfy consumer
demand abroad as well as at home. At the same time, the government safety net
becomes smaller each year. We strongly supported these actions with the
understanding that our export markets would continue to grow.


152

The Honorable Philip M. Crane
May 1, 1996
Page 2

that this legislation was needed to allow the domestic industry
even the possibility of addressing increased imports.

Another concern raised -- related to the recent 201 petition
filed on behalf of the domestic tomato growers -- | was whether
this legislation is needed in light of the new investigation. It
is important to note that the damage to the winter tomato industry
is so devastating that the industry believes that it will show such
great harm that even if every tomato grower in the country is
considered as required under existing law, they will still be able
to prove serious injury. Secondly, the winter tomato industry has
taken this action and filed an anti-dumping petition because they
believe they have to take every possible action to protect
themselves against dumping and unfair practices which are
devastating their industry.

This bill will not provide the winter tomato industry with a
remedy; it will simply allow that industry (and all other seasonal
industries), which produce and market when no one else is in the
market, access to the trade remedy process. ‘The industry will
still have to prove what any other domestic industry must prove:
that imports are a substantial cause of serious injury.

This really is not a question of whether this will solve
seasonal industry's trade problems. It will help. The question
really should be, however, should Congress exclude seasonal
industries from having access to this trade remedy process. We
believe there should be equal access to the process; that is what
this legislation provides.

CONCLUSION

Under the existing law, all other industries have access to
the 201/202 remedies. This bill mandates nothing. It is totally
permissive. It simply provides a seasonal industry with access to
a trade remedy process. That access is currently denied only to
seasonal industries. This legislation is about fairness and equal
access.

Sincerely,

cc: Florida Congressional Delegation
Wayne Hawkins

Executive Director
Florida Tomato Exchange

wans-165027


719

segment of the domestic industry was at risk. Although introduced in order to
assist a tiny segment of the Florida agricultural sector, this legislation risks
triggering a protectionist trade cycle which could have a severe negative effect on
the entire U.S. economy. In addition to forcing U.S. consumers to pay higher
prices, it would likely lead to retaliation against U.S. exports by our trading
partners seeking to protect their "seasonal producers from competitive U.S.
goods. Because the United States is the world’s largest exporter, we stand to lose
the most from such tariff increases.

Finally, I would like to make one overarching point. This may seem like a trivial
issue to some — a technical bill designed to remedy a narrow problem — but make no
mistake, this is a big issue. It is not substantively narrow and, without a doubt, its passage
would send an important signal that in this election year, the U.S. Congress is open to
protectionist legislation. We at the Council of the Americas and the U.S. Council of the
Mexico-U.S. Business Committee urge you not to start down this destructive path.

Thank you for this opportunity to address your committee on this important issue. I
would be happy to answer any questions you might have for me.


15

Chairman CRANE. Today we are going to hear from a number of
distinguished witnesses. And because of time constraints, and I
know there are witnesses that have plane deadlines and I know
Members do, although ours are flexible obviously, I would ask that
all of the witnesses try and compress your presentation to 5 min-
utes or less. But all written statements will become a part of the
permanent record.

So with that our first witnesses are several of our distinguished
colleagues, Senator Bob Graham from Florida, Hon. Porter Goss
from Florida, Hon. Ed Pastor from Arizona, Hon. Charles Canady
from Florida, and Hon. Dan Miller from Florida. So we will proceed
in the order I just recited, and please move those mikes around to
accommodate everyone.

Senator GRAHAM. Mr. Chairman, if it would be permissible, I un-
derstand that Congressman Canady has a serious time constraint
and I would defer to Congressman Canady as the first speaker,
with your permission.

Chairman CRANE. Very good; absolutely.

STATEMENT OF HON. CHARLES T. CANADY, A REPRESENTA-
TIVE IN CONGRESS FROM THE STATE OF FLORIDA

Mr. Canapy. Thank you, Mr. Chairman. Thank you, Senator, I
appreciate that. I am in the midst of a markup in the Judiciary
Committee now and an amendment is pending.

I want to thank you, Mr. Chairman, for calling this hearing. I
appreciate very much the opportunity to appear before you and
Members of the Trade Subcommittee today to offer my support for
H.R. 2795. This legislation, as has been discussed, is designed to
clarify the definition under section 202 of the Trade Act of 1974 of
a domestic industry with regard to trade investigations on perish-
able agricultural commodities. This is an issue of great importance
to domestic growers and producers not only in my district in Flor-
ida but all over the United States.

The domestic winter tomato industry initially sought relief from
Mexican import surges during the early part of 1995. However, the
International Trade Commission determined in April 1995 that the
growers were not able to justify an investigation into import surges
under the existing law. Under current law, the domestic industry
definition regards products like perishable agricultural commod-
ities as a whole industry and does not take account for the fact
that seasonal growers of a particular perishable agricultural com-
modity, such as tomatoes, face drastically different market condi-
tions at different times during the year. The current law simply ig-
nores the realities of the market for perishable agricultural com-
modities.

This unrealistic whole industry approach to perishable agricul-
tural commodities makes it very difficult for growers who have suf-
fered from seasonal import surges to obtain any relief. This inad-
equacy in the current law demands the urgent attention of this
Congress. And until the Congress acts, American growers will con-
tinue to face devastatingly unfair competition with no effective
remedies available to them from their own government.

H.R. 2795 corrects this inequity by providing that the market for
fresh produce and perishable commodities be defined on a seasonal


128

STATEMENT OP

Terence P. Stewart
STEWART AND STEWART
2100 M Street, N.W.
Washington, DC 20037
Telephone: (202) 785-4185

Before the Subcommittee on Trade
of
The Committee on Ways and Means
United States House of Representatives

Hearing on H.R. 2795
April 25, 1996
L Introduction

Thank you for the opportunity to testify today on H.R.
2795 which would amend the Trade Act of 1974 and that Tariff
Act of 1930. My firm currently represents the petitioners in
the ongoing Section 201 investigation of fresh tomatoes and
bell peppers. However, I appear here today not on behalf of
any client or client group but in my individual capacity. As
such, the views expressed are my personal views and do not
necessarily reflect the views of any client or those of other
members of my firm.

MUS. Escape Clause

Current U.S. escape clause provisions are contained in
Section 201 et seq. of the Trade Act of 1974, as amended [19
U.S.C. §§ 2251-2254]. In a Section 201 investigation, the
International Trade Commission is charged with the
responsibility of determining whether an article is being
imported into the United States in such increased quantities as
to be a substantial cause of serious injury, or threat thereof,
to the domestic industry producing an article like or directly
competitive with the imported article.
As stated in the annual Qverview and Compilation of
prepared by the staff of this Committee:

From the outset of the trade agreements
program in 1934, U.S. policy of seeking
liberalization of trade barriers has been
accompanied by recognition that difficult
economic adjustment problems could result
for particular sectors of the economy and,
if serious injury results from increased
competition by not necessarily unfairly
traded imports, then domestic industries
should be provided a period of relief to
allow them to adjust to new conditions of
trade. Beginning with bilateral trade
agreements in the early 1940s, U.S. trade
agreements, and eventually U.S. domestic
law, have provided for a so-called “escape
clause” or "safeguard" mechanism for import
relief. This mechanism, while amended over
the years, has provided authority for the
President to withdraw or modify concessions


134

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74

and enact something like that of their own, how would those farm-
ers react?

The third point I would make is that this legislation is inconsist-
ent with our announced emphasis on insisting that our trading
partners live up to their trade agreements with us. In January,
Secretary Kantor, then U.S. Trade Representative, announced a
major initiative creating a special unit at the U.S. Trade Rep-
resentative’s Office to monitor and ensure compliance by our trad-
ing partners with our trade agreements. How can we be credible
in this effort if we enact legislation like H.R. 2795, which purports
to create a new category of agricultural industry, or at least permit
the ITC to recognize such a thing, specifically to sidestep our un-
dertakings in NAFTA and the WTO?

The fourth point that I would make is that we need to consider
the costs to the consumers that will result from this legislation.
That, after all, is what trade agreements and legislation are all
about, improving consumer welfare, This legislation will almost
surely raise store prices of tomatoes for families and housewives in
the interest of protecting one tiny segment of the overall U.S. to-
mato growing industry, a segment which, according to press reports
and the ITC documents, is dominated by 4 families, and involves
fewer than 100 growers and a limited number of shippers. We need
to ask whether this is a necessary and appropriate step at this mo-
ment in 1996, even in defense of the interests that are at stake.

Finally, we need to consider the costs and consequences of retal-
iation that will surely follow the enactment of this measure. This
is a judgment matter, but as Mr. Roh will explain, under the WTO,
countries that are on the receiving end of safeguards action as a
result of legitimate and fair trade are entitled either to compensa-
tion or to the right of retaliation to a level commensurate with
their loss of market access.

Since the U.S. administration currently has no authority to offer
compensation in the form of tariff reductions to Mexico, retaliation
is the only course left open, and retaliatory action could legiti-
mately be taken against any export or any industry from any other
part of the United States. This raises the question, why should ex-
porters in Texas or California or Ohio or Michigan, producers of
unrelated products who are, so to speak, innocent bystanders as far
as the tomato issue is concerned, pay the price of retaliation that
will almost surely follow from this special protection for a small
segment of the overall U.S. tomato growing industry?

All of these considerations, as well as the more detailed points
that are made in my prepared statement, lead to only one over-
whelming conclusion, in my view. Passage of H.R. 2795 or similar
legislation would be a very bad mistake in terms of overall U.S.
trade and economic interests.

[The prepared statement follows:]


32

Chairman CRANE. Thank you, Dan.
Now, Peter Deutsch, who was not introduced earlier, who is testi-
fying as a Congressman from Florida, as well.

STATEMENT OF HON. PETER DEUTSCH, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF FLORIDA

Mr. DeuTscH. Thank you very much, Mr. Chairman. I will be
very brief.

I just want to point out again, which we have done, that this is
a bipartisan issue in Florida. This letter, I think, really expresses
our views very well.

I would, though, like very briefly to try to respond to what our
colleague from Arizona said. I am ready for this issue to be decided
on the equity and on the merits, because the reality is that I think
the Florida farmers are only looking for what is fair. They can com-
pete in a fair environment. What they are really only saying is ex-
actly what this bill does. Let us question a seasonal issue, because
the crops really are seasonal crops. But when you go out to the
whole year, it just becomes a problem to prove the case.

It truly is a seasonal crop. It is a seasonal crop in Florida and
different parts of the State. That is all we are asking for. You have
to decide, but when you look at the merits, I think you will, I hope,
and I am convinced, really will decide with us, so thank you very
much.

Chairman CRANE. Thank you, Peter.

Mr. Thomas, do you have any questions for our remaining wit-
nesses?

Mr. THomas. I do not necessarily have a question, but I do also
want to respond to Mr. Pastor in absentia, that he had to leave and
he was not able to stay. We are not talking about stopping fair
competition. We are talking about the dumping of a product. The
argument that freedom to farm means you ought to be able to carry
out unfair trade practices simply is not the case.

The other part of his testimony, I guess, that bothered me was
the idea that somehow people who are small farmers and who only
possess the dirt and therefore cannot leave should be disadvan-
taged to the big business guy who can spend millions of dollars to
set up an operation, in this particular instance in Mexico, but oth-
erwise, all around the world, and that we had better wake up to
the fact that there is a growing season for every perishable com-
modity in the United States somewhere in the world. If we are not
going to look at it the way this bill wants to look at it, then we
will sectorially or segmentally be wiped out by every other region
of the world as the product comes in.

The other thing that was mentioned but needs to be underscored,
Mr. Chairman, is that we have almost a case history of what you
can do if you have 100 percent of the product in one location, and
that is the U.S. garlic industry, which is virtually 100 percent in
California. There is virtually one growing season. We had enor-
mous competition from the Chinese dumping their product on the
market. Had we not sought and gotten relief in a timely fashion,
the next year’s plantings would have been significantly reduced be-
cause they could not have competed and you would have had a sig-


103

STATEMENT OF THE
AMERICAN FARM BUREAU FEDERATION
‘TO THE

ROUSE COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON TRADE

Presented by
Carl B. Loop
Vice President

American Farm Bureau Federation

April 25, 1996

Good afternoon. I am Carl Loop, Vice President of the
American Farm Bureau Federation and President of the Florida Farn
Bureau Federation.

‘The American Farm Bureau Federation is the nation's largest
general farm organization, representing over 4.5 million member
families in all 50 states and Puerto Rico. Our members raise
virtually every commodity grown in the United States. It is a
pleasure to appear before the subcommittee today to offer our
views on H.R. 2795.

Farm Bureau supports H.R. 2795 because it extends to
seasonal perishable agricultural products the same safeguards
afforded other commodities. We urge the committee to move
quickly to enact these reforms, but to narrow your focus to
perishable agricultural products, so export markets for other
commodities are not harmed.

Sections 201-204 of the Trade Act of 1974 authorize the
President to help domestic industries adjust to import
competition, after a review by the International Trade Commission
(ITC). ‘These provisions give the President the authority to
withdraw or modify concessions or impose duties for a limited
period of time. ‘These provisions, enacted before the passage of
the North American Free Trade Agreement (NAFTA), were intended to
provide domestic industries with transitional relief from import
surges to give them the opportunity to adjust to increased
competition.

While current law does expressly provide transitional relief
for most U.S. industries and products, it does not provide a
mechanism for perishable agricultural products to gain the same
types of transitional relief measures offered to other U.S.
products. Relief is simply not available for many crops grown in
my state.

‘That fact was demonstrated last year when the Florida Tomato
Exchange filed a petition with the ITC seeking provisional relief
under section 202(d) of the Trade act of 1974 for fresh winter
tomatoes. The Commission ruled that the winter tomato industry
of Florida could not be examined separately from the summer
tomato industry of California. In effect, the Commission ruled
that both types of tomatoes are the same because of its
determination that the expression “like or directly competitive
article" meant that all tomatoes produced in the U.S. in a
calendar year define a single industry. Because of this, the
Florida Tomato Exchange withdrew the petition.

In effect, this means that current law, as evidenced by the
ITC ruling, does not distinguish or recognize the differences
between similar products produced during different and separate
marketing seasons. As a result, current law discriminates
against perishable crops with separate marketing seasons -


39

H.R. 2795 is a narrow and focused attempt to respond to the particular
commercial circumstances of perishable agricultural products. The bill does not
expressly override the current standard for determining domestic industry under
USS. law. Rather, within the existing law, the bill does permit the International
Trade Commission (ITC) to consider whether it is appropriate to define the
domestic industry in a manner that takes into account the seasonal nature of
perishable agricultural products. It is worth emphasizing that the bill does not

require the ITC to reach a particular result.

L would like to comment briefly on the role of the North American Free
‘Trade Agreement (NAFTA) in this matter. Understanding the problem is an
important step in seeking a solution. Some have attributed the recent surge in
imports of Mexican winter vegetables to the effects of NAFTA. In fact, there
have been comparable surges in Mexican tomatoes at various times during the past
twenty years. While the most recent surges have coincided with the early stages

of NAFTA phase-in, NAFTA is not the problem.

In fact, tariffs on tomatoes and other winter vegetables were relatively low
before the NAFTA was passed. Other than phytosanitary requirements, our only
barrier to imported tomatoes has been a tariff. The current Most Favored Nation
tariff rate for tomatoes is 4.4 cents per kilogram (March 1- July 14, 1996). Under
NAFTA, the current tariff on Mexican tomatoes is 3.2 cents per kilogram (for the
same period). The difference between these two rates -- about halfa penny per
pound -- is not sufficient to cause the surge in imports we have experienced. We
have a problem in Florida with Mexican tomatoes -- but it’s not caused by

NAFTA.

I thank the Committee for the opportunity to offer USTR’s views on this,

legislation, and I’m happy to try to answer any questions you might have.


164

BRPacrFic BROKERAGE: Co.

UF MANSON CUSTOMS BROKER

age

associations, the food marketing industry, California tomato
growers and U.S. trade law experts have all written to the ways &
Means Committee criticizing the bill. A significant cross-section
of the pro-free trade community has also opposed the legislation.
If successful, this bill would:

1. Require the U.S. to make trade concessions that could harm
other U.S. exporters.

Both the NAFTA and the WTO require countries imposing safeguards
measures to compensate the affected exporting countries by making
"concessions having substantially equivalent trade effects.” If
the countries involved cannot agree on appropriate compensation,
then the exporting countries may decide to unilaterally suspend
equivalent" benefits owed the United States, perhaps by raising
tariffs or reducing quotas on some U.S. products. The United
States would not be able to specify the industry which would suffer
these new trade burdens. However, it would be normal for a foreign
country hurt by new : barriers to impose its compensatory
measures on products which are most vulnerable to them.

2. Encourage other countries to employ the "seasonally"
principle to restrict U.S. exports.

This proposal sets a dangerous example for other countries that may
wish to enact similar changes in their own laws. Major American
exporters -- of goods ranging from apples and peaches to corn and
wheat, and perhaps even toys and seasonal clothing -- could find
themselves being denied the opportunity to compete fairly in their
current export markets. As the world's largest exporter, the
United States has the most to lose from introducing new forms of
protectionism.

3. Diminish the ability of the U.S. to hold other countries
to their trade commitments.

‘The Clinton Administration, recognizing the fundamental importance
of ensuring that trade promises are kept, recently launched a high
profile initiative to "enforce" existing trade agreements. For the
United States to breach its own obligations under those same
agreements only undermines this “enforcement” initiative. U.S.
industries hurt by the failure of foreign government to comply with
their trade obligations could find it harder to obtain adequate
remedies.

CUSTOMS HOUSE BROKERS + AGENTES AOUANALES


64

Chairman CRANE. I want to thank you both for your appearances
here today and appreciate the input in helping us to resolve this
situation. Any printed matter, as I indicated before, will be made
a part of the permanent record.

With that, our next panel is comprised of witnesses who are in
opposition to H.R. 2795, Keith Heard, the senior vice president of
the National Corn Growers Association, on behalf of Ad Hoc Coali-
tion of Commodity Groups on Trade Issues; Ambassador Philip
Hughes, managing director for Washington operations of the Coun-
clo of the Americas; Charles E. Roh, Jr., a partner at the law firm
of Weil, Gotshal and Manges; Humberto Monteverde, president of
the Fresh Produce Association of the Americas; and Albert C
Zapanta, executive vice president of the United States-Mexico
Chamber of Commerce.

If you gentlemen will get comfortable, I will remind all of you
again, try and summarize your statements in 5 minutes or less, but
any printed matter beyond that will be made a part of the perma-
nent record.

With that, we will start with Mr. Heard.

STATEMENT OF B. KEITH HEARD, SENIOR VICE PRESIDENT,
NATIONAL CORN GROWERS ASSOCIATION, ON BEHALF OF
AD HOC COALITION OF COMMODITY AND FOOD GROUPS ON
TRADE ISSUES

Mr. HEARD. Good afternoon. My name is Keith Heard. I am sen-
ior vice president of the National Corn Growers Association, rep-
resenting the country’s hardworking corn farmers who depend for
one-quarter of their livelihood from the export markets. I am also
appearing on behalf of the Ad Hoc Coalition of Commodity and
Food Groups on Trade Issues, a broad array of organizations rep-
resenting a large share of the Nation’s agricultural products.

Mr. Chairman, I will summarize my remarks and ask that the
full text be submitted for the record. I also have a letter the Coali-
tion sent to Chairman Archer I would appreciate being added to
the record, as well.

Chairman CRANE. The full statement of each of the witnesses
will be placed into the record.

Mr. Hearp. Thank you. Like my organization, all the members
of this coalition are deeply committed to the U.S. trade policies that
foster the continued expansion of American agricultural exports.
We are opposed to any trade policy that may jeopardize these ex-

While H.R. 2795 is designed to protect tomatogrowers, it also
threatens the rest of American agriculture, our Nation’s largest in-
dustry. Our coalition has nothing against any particular group of
farmers. As a matter of fact, many of us represent farmers. We en-
courage the administration to work with these Florida growers and
the others here today to address their concerns within the guide-
lines of NAFTA and the WTO. However, we object to this seem-
ingly obscure measure because it seriously imperils our larger agri-
cultural export sector.

Agricultural exports are one of the dramatic success stories of
our economy. Our exports are expected to reach a striking $60 bil-
lion this year, representing a one-third increase in just 2 years.


148

activities. S. Rep. 93-1298, 93rd Cong., 2nd Sess., Nov. 26, 1974: reprinted in U.S. Code
Congressional and Administrative News, 93rd Congress, Second Session 1974, Volume 4, at
7266. The Report further directs that

"where a corporate entity has several independent operating divisions, and
only some of these produce the domestic article in question, the divisions in
which the domestic article is not produced may be excluded from the
determination of what constitutes the ‘industry’ for the purposes of the
Commission investigation and finding.”

Id. Despite congressional intent that Section 201 relief be made available for all deserving
domestic industries and relevant portions thereof, Florida vegetable growers in dire need
of assistance have de facto been denied this recourse by reason of administrative
interpretation.

‘The legislation introduced by Representatives Shaw and Canady, and similar
legislation introduced by Senator Graham in the Senate (S. 1463) would remedy the
unintended flaw in Section 201 by clearly defining the standing terms to provide recourse
to industries producing perishable agricultural products in a distinct season. Legitimate
seasonal perishable agricultural industries would no longer be prevented from seeking relief
under Section 201 for serious injury caused substantially by increased imports.

um. i Reli
for Florida Winter Vegetables

Since last year’s Section 201 tomato ruling by the ITC, imports of Mexican vegetables
have continued to surge. This is the case for virtually every major Florida winter cro
tomatoes, cucumbers, eggplant, peppers and squash. Early this season, Mexican shipments
of some commodities were 60% ahead of 1995 shipments for the same period. (See
attached.)

These ongoing surges have resulted in a dramatic collapse in prices for Florida
growers. Many Florida producers cannot recover costs of production for their crops.
Hundreds of Florida growers may not survive another season in this marketing environment.

‘The safeguard relief laws of this country must be made applicable 10 such
circumstances if they are to have meaning to the whole of American agriculture. Moreover,
if the laws are not clarified to address seasonal considerations, American consumers will be
left in the very near future without a domestic winter vegetable industry, a result Congress
surely must want to prevent.

Iv. Fi 798 and S. 14
With Internation:

‘The proposed legislation has been criticized by some who would argue that passage
of this measure would violate the United States international obligations, and thereby
expand protectionism and invite retaliation. No clear explanation has been given in support
of these allegations. As USTR will affirm, nothing about this legislation conflicts with the
international obligations of the United States. By clearly defining the "domestic industry”
in Section 201, the proposed legistation remains consistent with the terms and definitions
set out in NAFTA, GATT Article XIX (the "Safeguards" Article), and the WTO Safeguards
Agreement.

With respect to the issue of NAFTA-consistency, which often receives special
‘emphasis by the opposition, this legislation would not in any way diminish the rights of
Mexico or Canada under NAFTA Article 802 to seek exclusion from any 201 proceeding
on the grounds that exports of products from their countries do not account for a substantial
share of total U.S. imports or contribute importantly to the serious injury at issue. See 19
USC. $§ 3371, 3372.


35

tural products. The clarifications incorporated in H.R. 2795 would
help correct this deficiency.

Clearly, this bill has its origin in the difficult situation faced by
Florida producers of tomatoes and other winter vegetables. The ad-
ministration has been working very closely with Florida growers
and their representatives to cushion the impact of relatively high
levels of imports of competing Mexican produce entering the U.S.
markets during Florida’s prime harvesting season. The administra-
tion has initiated a number of actions specifically designed to assist
Florida growers of winter vegetables.

Frankly, this is a tough problem that has existed for many, many
years. There is no single answer to addressing it. Our approach has
been to pursue a package of initiatives designed to deal with what
is a very difficult situation.

We have done a number of things, including improving the collec-
tion and dissemination of pricing, production, and trade data; ef-
forts to ensure the effectiveness of the existing tariff rate quota on
tomatoes; a push to increase domestic and foreign outlets for Flor-
ida tomatoes and other winter produce; and an effort to foster a
greater dialog between Mexican and Florida producers on problems
of mutual concern. We also support legislation which would apply
to Mexican tomatoes the same packaging requirements that prevail
in Florida.

Another important element of this package is the administra-
tion’s support of this bill here before you today. Last year, the Flor-
ida Tomato Exchange and its constituent members sought relief
under U.S. safeguard law. The WTO and the NAFTA both allow for
safeguard procedures. Indeed, most of our trading partners have
safeguard laws on their books.

I would only note there in response to a question that Mr.
Houghton asked regarding the 201 action that was filed, the an-
swer is yes, another 201 petition has been filed on tomatoes and
bell peppers, as well as an antidumping investigation. The ITC has
initiated its second 201 investigation involving tomatoes and the
antidumping petition was also initiated by the Commerce Depart-
ment. Those are both very recent developments in just the past few
weeks.

In commenting on this, we note that Congress passed the safe-
guard law to provide a remedy, under certain circumstances, for
U.S. industries that are hurt by imports. Unfortunately, the exist-
ing statute has not worked for the Florida tomato industry. The
1995 petition failed, in part, because of the interpretation of the
current law definition of what is a domestic industry producing a
like or directly competitive product. The law was interpreted so
that all U.S. growers of fresh tomatoes were considered one indus-
try.
In fact, tomatoes are produced on a seasonal basis. Different
parts of the country produce the product at different times. Florida
produces virtually all of the tomatoes grown in the United States
for the market during the winter months. It competes directly with
Mexican imports during that season.

Lumping the Florida industry together with the rest of the coun-
try does not reflect the reality of the fresh tomato market. This in-


67

Statement by B. Keith Heard
Senior Vice President, Public Policy
National Corn Growers Association

Before the
Subcommittee on Trade
House Committee on Ways and Means
Concerning H.R. 2795
April 25, 1996

Good afternoon. My name is Keith Heard. I am Senior Vice President of
the National Corn Growers Association, representing the country’s hard-working,
corn farmers, who rely on export markets for one-quarter of their livelihoods.

T am also appearing today on behalf of the Ad Hoc Coalition of Commodity
and Food Groups on Trade Issues, a broad array of organizations representing a
large share of the nation’s agriculture products. The Coalition includes:

Northwest Horticultural Council
North American Export Grain Association, Inc.
National Association of Perishable Agricultural Receivers
American Meat Institute
Food Marketing Institute
National Pork Producers Council
National Turkey Federation
National Grain and Feed Association
USA Poultry and Egg Council
Fresh Produce Association of the Americas
National Corn Growers Association
United Egg Association
International Apple Institute
National Broiler Council

Like my organization, these groups are deeply committed to U.S. trade
policies that foster the continued expansion of America’s agricultural exports,
thereby creating jobs and improving our balance of trade.

We are opposed to any trade policy that might jeopardize those exports.


104

offering protection to non-perishable crops, but not to
perishable crops.

The deficiencies in current law mean that growers of
perishable crops, with very distinct market windows, including
farms in Florida, do not have access to the types of relief
measures we need to adjust to the incredible increase of imports
of some perishable crops from Mexico. Farm Bureau commends the
Subcommittee on Trade for holding this hearing to learn firsthand
how it is affecting farmers in my state. We hope that you will
correct the deficiencies in the law so we have a mechanism that
provides necessary safeguards and transitional measures that
allow us to compete

Make no mistake, imports of fruits and vegetables are
causing serious and perhaps permanent damage to many Florida
farmers. According to USDA data, Florida tomato growers lost on
average $1,571 per acre in 1994 and $2,728 in 1995 - a combined
loss of more than $209 million. As a rule of thumb, each $50,000
in lost revenue translates into one less American job. This
equates to the loss of over 4,000 permanent jobs. Florida pepper
growers over the same two year period lost more than $26
million.’ Florida cannot continue to absorb these kinds of
losses. Without the type of transitional relief that is afforded
other products in similar situations, Florida simply will not
survive in the winter vegetable industry, This would result in
the loss of even more jobs - both seasonal and permanent

Perishable crops are clearly different from other
commodities. Some perishable crops, like fresh tomatoes, peppers
Or sweet corn can be stored for only limited periods of time. A
mature green tomato has a shelf life of about 21 days. A
Conato can be stored for 7-14 days.” Peppers have a/shelf Life of
8-10 days. Sweet corn should be consumed within 6-10 days.

After these crops are harvested, they must be marketed
immediately. If market conditions are poor during harvest,
farmers of perishable crops cannot wait for prices to improve
They also cannot hold them on the vine or in the field waiting
for better markets. They must take the market price at the time
of harvest or not sell at all. Producers of non-perishable crops
have the opportunity to store their product for extended periods
of time if market prices are low. They can wait for market
conditions to improve. Farmers of perishable crops cannot. The
price at harvest is the price they must take.

Clearly, some commodities produced by the Florida winter
vegetable industry have separate and distinguishable marketing
seasons than similar crops in other states. Florida is the
exclusive domestic supplier for several months of the year for
some perishable crops for example, bell peppers from January to
April (Table 1). The Florida winter tomato industry is similar
(Table 2)

California is also the exclusive U.S. commercial producer
for many commodities including artichokes, garlic and kiwifruit.
It also is the exclusive U.S. producer for many commodities
during specific times of the year. California is the exclusive
U.S. producer of avocadoes from March to June. It is the
exclusive winter producer of asparagus.

Because of climactic conditions, some states are the sole
producer of many commodities and have exclusive access to
consumer markets. This exclusivity means that no other U.S.
growing region is capable of competing during a particular
marketing season. Because of this exclusivity, certain
perishable commodity markets are clearly separate from other

* Data compiled from USDA, Agricultural Statistics Board,
National Agricultural Statistics Service, Vegetable Annual, 1993-
95.


167

THE

PRO
TRADE Ae, 198

GROUP

‘The Honorable Philip M. Crane
Chairman

Subcommittee on Trade

‘Ways and Means Committee

United States House of Representatives
clo 233 Cannon House Office Building
Washington, DC 20515

Dear Chairman Crane:

This isto commend the Waye and Means Committee for its decison to asec its jusiadiction
toreview H.R. 2796, «bill that would change U.S. safeguards law:

Under thi legislation, the United Statee would unilaterally change the long-accepted globel
definition ofa “domertic industry” to recognize veparate“sessonal industries.” This is « weeping
change that would, it effect, enable certain industries to obtain import restrictions despite the fact
that their case har already been snsucceneully filed with the U.S. International Trade Comission

The recent tomato case is an exampl

Enisting trade law has, in many case, served our economy and U.S. business interests well
‘As the Committee considers ths legislation, we urge you to remember that i is sane to make
substantial changer to our trade lawe where a very strong case has not been made that that law is
ineffective,

Although this legislation is deiven by narrow interest, ite negative ramifications for U.S.
trade are broad. The passage of H.R, 2795 would put U.S. trade interests in immediate jeopardy
because it violates the principles of international trade commitments made by the United States
within NAFTA and the World Trade Organization (WTO). As a result, in addition to Mexico, the
actual target ofthis legislation, 15 countries have already put the United States on notice om thie
matter. IFLR. 2795 o similar legislation becomes law, we would invite these countren and mote to
retaliate agoinst U.S. exports, We aio would invite «challenge hefore the WTO.

Passage of H.R. 2795 would signal that Congress has embraced protectionist legislation
uring this election yeas. As you know, the United States is the world’s largest exporter, with exports
accounting for 50 percent of our domestic economic growth in the last five years, We must not
jeopardize thi growth, and the jobs it exeates

‘The PTG in abroad coalition of U.S. companies and organizations that represent U.S
exporters, importers and consumers, inchiding manufacturing, agricultural, wholesaling retailing.
service and civic intrest, which actively seek to develop competitive markets and promote tade. It
was founded in 1986 and is committed to expanding, not restricting, trade and promoting policies
which achieve that goal end renultant economic prooperity. We were actively involved inthe
development and passage of the Omnibus Trade and Competitiveness Act of 1988 and played an
‘equally active role in the consideration and enactment of UR implementing legislation. We are
comaritted to helping develop and implement constructive, trade expanding polices, lave and
regulations. The postions of the PTG represent a consensus view although PTG pattcipante may
have varying views on particular iste.

1709 N STREET, N.W., WASHINGTON D.C. 20036
‘TELEPHONE: (202) 331-8045; FAX: (202) 331-9191
CHAIRMAN: EDWARD J. BLACK, COMPUTER & COMMUNICATIONS INDUSTRY ASSOCIATION
‘TREASURER: WILLIAM PETERSON, CONSTRUCTION INDUSTRY MANUFACTURERS ASSOCIATION
EXEC. DIR/COUNSEL: BRUCE AITKEN, AITKEN IRVIN LEWIN BERLIN VROOMAN & COHN



126

Mr. SHAW. Thank you.
Mr. Stewart.

STATEMENT OF TERENCE P. STEWART, MANAGING PARTNER,
STEWART AND STEWART, WASHINGTON, DC

Mr. STEWaRT. Thank you, Mr. Chairman.

At the beginning of this hearing, some on the panel took the po-
sition that the correct standard for evaluating whether or not this
legislation should be enacted would be whether or not it is WTO-
consistent. You have heard the statement from the U.S. Trade Rep-
resentative’s Office that it is. I would like to add just a few com-
ments in support of what the USTR’s Office had to say.

There are several rules in the construction of the GATT and now
the WTO documents. First, not all things have to be in an agree-
ment for them to be doable by a country. Second, various agree-
ments within the package can be looked at to try to glean an un-
derstanding of how the WTO might look at any particular issue.

With those principles in mind, let me refer the Trade Sub-
committee to the agricultural agreement, article 5, which deals
with special safeguards. This was the provision that was put in
within agriculture for the most sensitive products of the countries
who were negotiating, which was virtually the entire world.

Article 5.6 of that agreement specifically recognizes within a spe-
cial safeguard provision the right, indeed, the necessity to consider
whether products are perishable or seasonal, albeit the very situa-
tion that you all are considering here with regard to the rest of the
safeguard agreement.

Let me just read paragraph 5.6.

For perishable and seasonal products, the conditions set out above,

dealing with when special relief can be provided,

shall be applied in such a manner as to take account of the specific characteristics
of such products. In particular, shorter time periods under subparagraph 1(a) and
paragraph 4 may be used in reference to the corresponding periods in the base pe-
riod and different reference prices for different periods may be used under subpara-
graph 1(b).

In other words, in the agriculture agreement itself, there is a rec-
ognition that you have to give special treatment, special consider-
ation, to the unique characteristics of perishable and seasonal prod-
ucts. That is all that this bill attempts to do within the context of
our safeguard agreement.

US. law currently recognizes the right to deal with regional in-
dustries. That is consistent with WTO obligations in the antidump-
ing context, even though there is nothing within article 19 or the
safeguard agreement that deals with regional industries. No one
has challenged the U.S. right to have a regional industry definition
in its law.

Similarly, here, too, a seasonal provision would do nothing more
than give commercial recognition of a commercial fact within our
statute; and as far as retaliation goes, no country is entitled within
the parameters of NAFTA or the WTO to retaliate against the
United States for implementing law without taking a challenge.
Any law of the United States that affects trade can, of course, be
challenged if a country disagrees with its consistency. Should we


45

tion. In fact, if my memory is correct, Mr. Thomas has also in the
past been an author of various kinds of provisions to look at this
issue of seasonality of product in terms of various kinds of relief
efforts under our trade laws.

Mr. THomas. Would the gentleman yield?

Mr. PAYNE. Yes.

Mr. THOMAS. We were very successful in the early and
mideighties in getting the U.S. Trade Representative to understand
that when you find relief favorable of a perishable commodity and
that relief occurs 9 months, 12 months after the fact, it does not
bring a whole lot of relief. We passed a series of bills which pro-
duced a 27-day perishable commodity fast track procedure, includ-
ing review by the President, and I believe it has been very success-
ful in meeting the needs of unique products under unique cir-
cumstances.

I thank the gentleman for yielding.

Mr. Payne. Thank you very much, and thank you, Madam Am-
bassador, and thank you very much for the good job that you are
doing at USTR.

Ms. HILLMAN. Thank you very much.

Chairman CRANE. Mr. Portman.

Mr. PorTMAN. No questions.

Chairman CRANE. Ms. Dunn.

Ms. Dunn. No, I have no questions. Thank you.

Chairman CRANE. We want to thank you, Ms. Hillman, for your
testimony and appreciate your appearance today.

With that, I would like to invite our next panel, made up of two
State Departments of Agriculture. We have Becky Doyle, director
of the Department of Agriculture in my home State of Illinois, and
Dr. Martha Roberts, deputy director for food safety from the Flor-
ida Department of Agriculture and Consumer Services. Dr. Roberts
will read the Florida Commissioner, Robert Crawford’s, testimony.
He was not able to be with us today.

With that, I would again ask you if you could try and keep your
presentations to 5 minutes or under. Any additional printed mate-
rial will be a matter of the permanent record and I would like to
yield to Ms. Doyle.

STATEMENT OF BECKY DOYLE, DIRECTOR, ILLINOIS
DEPARTMENT OF AGRICULTURE

Ms. DoyLE. Thank you, Mr. Chairman. It is good to see you. I
do not get to see you often enough in Illinois.

I hope you can be a part of this, because this is based on Illinois
agriculture. I am here representing today not only Illinois agri-
culture but the State of Illinois. Our agency serves more than
75,000 farmers and all of the consumers in the State of Illinois.
Like others in our economy, our farmers depend on export markets
for a growing share of their incomes. I have long believed in and
worked for free trade and I represent a Governor, Jim Edgar, who
also worked with Congress and recent administrations to promote
more open world markets.

fe are even stronger supporters of free trade today as we see
the benefits that are accruing to Illinois farmers from NAFTA and
WTO. For example, agriculture exports represent approximately 23


87

As written, H.R. 2795 could increase tariffs and thereby increase
the cost of many perishable imports to everyone in the United
States all year long. If H.R. 2795 is adopted, and if eventually tar-
iffs are raised, higher prices could be charged by the entire indus-
try, even though the injury was claimed by a very small group.

For example, growers could get into the greenhouse tomato busi-
ness and then complain just to get import relief for nongreenhouse
tomatoes. Such complaints should be a business problem, not a leg-
islative or political one. But with H.R. 2795, it would become a na-
tional issue and resolved at the Federal level.

There is also the possibility of a grower planting a small field in
one area and then claiming seasonal injury from imports, even
though the grower may have thousands of acres in another area
that are profitable. In other words, I see a lot of possibilities for
abuse with H.R. 2795.

A seasonal industry may sound like a plausible idea to the unin-
formed, but in the real world of agriculture, it is an absurd idea.
If a seasonal industry is to be a reality, dates must be established
for the season. If the season is from the first picking until the last
harvest, a season for the winter tomato industry would extend from
October to June. But that period is too long, because many areas
in the United States will be producing tomatoes so that imports
will not be the only competition. There will be multiple competi-
tors.

To isolate a specific and narrow time in which imports compete
with domestic tomatoes would involve picking arbitrary dates, say,
January through March. That will mean the same tomato vine
would belong to two industries, because, do not forget, a tomato
vine will continue to produce into spring. The same tomato vine
that competed with Florida winter tomatoes from January through
March will suddenly become a noncompetitive vine on April 1 un-
less the April domestic tomato claims injury. In that case, the same
winter vine would now belong to the spring tomato industry, ad
nauseam.

You can see, Mr. Chairman, how ridiculous this can get. You can
see also that some packing, sheds, tractors, and other equipment
used in the winter tomato industry suddenly will become part of
another industry on an arbitrary date. That does not make eco-
nomic sense.

The tomato vine might seem like an extreme example of a sea-
sonal industry, but take almost any product and you will see how
the concept of a season is a moving target. In many cases, a season
in the harvest travels north with the weather. Conceivably, each
region can claim injury from imports and there would be a rolling
procession of petitions as the weather changes from winter to
spring to summer. Mr. Chairman, I doubt very much that this
Committee has that in mind.

We see this bill as just another Florida demand for special treat-
ment. Mr. Chairman, your Committee and administration already
have given Florida special favored treatment. When NAFTA was
negotiated, Florida got tariff rate quota for tomatoes. It also got a
10-year phaseout of tariffs for tomatoes, while other commodities
were done in 5 years or less. Florida also received a special exemp-


8

Mr. SHAw. And I would yield at this time to the gentleman from
California.

Mr. Tuomas. Thank you very much for yielding. I said I was not
going to make an opening statement but the mention of the Califor-
nia problem, I think needs a bit of explanation because it appears
as though this is just a tomato problem and a Florida problem. And
the gentleman from Florida is absolutely correct; it is not. There
will be a subsequent panel with representatives from California.

Our problem is somewhat different but the same. California is
900 miles long and we have a series of growing seasons and they
move north. One of the products directly affected by this are
grapes. The point that I want to make is that if you analyze all
of the grapes grown during a year as a like product you are going
to run into problems, because just as the tomato growing season.
from the beginning of the year to April is 95 percent exclusive in
Florida, the grape growing season in California is literally from
April until almost September. But in any particular geographic
area, especially in the early months, it is virtually 100 percent of
the product grown.

If you, as some of the detractors want us to do, try to judge like
products 6 months apart, this is what happens. These are grapes.

if we try to compare a like product 6 months from now, these are
raisins, and they are not like products. Time does make a dif-
ference with perishable commodities.

I thank the gentleman for yielding.

Mr. SHaw. I thank you. I do not have a like example to show,
this is a tomato and this is a tomato 6 months later, and I am not
sure you would want to see it anyway.

[The opening statement of Mr. Ramstad follows:]


H.R. 2795, SAFEGUARD INVESTIGATIONS OF
PERISHABLE AGRICULTURAL PRODUCTS

THURSDAY, APRIL 25, 1996

HOUSE OF REPRESENTATIVES,
COMMITTEE ON WaYS AND MEANS,
SUBCOMMITTEE ON TRADE,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:04 p.m., in room
B-318, Rayburn House Office Building, Hon. Philip M. Crane
(Chairman of the Subcommittee) presiding.
[The advisory announcing the hearing follows:]

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42

going on with Mexico, we have stone fruit that cannot cross the
border because of phony phytosanitary arguments by the Mexicans
because we are unwilling to allow weevil-infested avocados to come
across and they honestly believe that we are dealing with this as
a political decision rather than a scientific one.

It seems to me that this kind of action by this Committee would
probably go a long way toward beginning to get some of the folks
who share borders with us and who are in free trade agreements
with us, to realize that we are going to base it upon science and
we are not going to base it upon politics. I believe this is based on
science representing growing seasons, not on politics. Do you think
that is a fair statement? [Laughter.]

You can say “yes” and I will give up my time.

Ms. HILLMAN. What I will directly comment on is we obviously
are going to take the position if we are acting within our WTO and
our NAFTA obligations, there is no justification for retaliation.

Mr. THomas. That is what I was looking for. Thank you very
much.

Chairman CRANE. Mr. Shaw.

Mr. SHAW. Thank you, Mr. Chairman.

I will be very brief, in that I think you agreed with what he said,
whatever that was. I would like to express the appreciation of the
Florida farmers for the amount of attention that the Trade Rep-
resentative has given to this very real problem, recognizing that it
is a very real problem and for being very supportive.

I just wanted to repeat one thing I said in my opening statement,
which I believe deserves being repeated, that our Florida farmers
cannot afford the labor to pick the crops for the price that the
Mexicans are bringing these tomatoes into this country. It is clear-
ly out of our hands and it is in the hands of the Congress and I
would hope that we move forward.

Chairman CRANE. Mr. Houghton.

Mr. HouGuton. Mr. Chairman, I wonder if it would be possible,
and if the gentleman would accept, if I could ask Mr. Shaw a ques-
tion here.

Chairman CRANE. Certainly.

Mr. HOUGHTON. If the 201 case has been resubmitted and injury
is proven and therefore remedies are given, would this legislation
be necessary?

Mr. Suaw. I would like to defer to the Trade Representative on
that. I think that it desperately needs clarification, and I would
like to also point out that for these farmers down in Florida, there
is very little that you can grow during the summer months. So they
are totally dependent upon the winter months because in the sum-
mer the sun gets so intense during that period of time and the bug
problem becomes very acute. So they strictly are confined to a sin-
gle window here. But if Ms. Hillman has an answer to that, I
would defer to her.

Ms. HILLMAN. I guess I would answer your question in two ways,
Mr. Houghton. One is this bill is obviously not directed solely at
this issue of Mexican tomatoes. It is a more generic problem with
respect to perishable products. So the administration would take
the view that because the bill is directed at a broad category of per-
ishable agricultural products and not solely at the Florida tomato


161

H, R. 2795 redefines a “domestic industry” as a “seasonal industry” for the
purpose of providing safeguard relief to those seriously injured by increased imports.
In other words, Florida growers of winter tomatoes would suddenly make themselves
cligible for protection, even though they represent a fraction of the U. S. tomato
industry.

for

‘The United States has already given its word on how an “industry” is defined

both in the World Trade Organization (WTO) accord and the

safeguard purposes,
North American Free Trade Agreement (NAFTA). It cannot violate its word now

without facing serious consequences. For example:

1

Both the NAFTA and the WTO require nations imposing new safeguard
measures to compensate affected exporting nations by making
“concessions having substantial equivalent trade effects.” This instantly
makes H.R. 2795 a no-win measure.

‘The bill would encourage other countries to employ the “seasonality”
principle to restrict U. S. exports. Major American exporters — of goods
ranging from apples and peaches to com and wheat ~ could find
themselves being denied the opportunity to compete fairly in their current

export markets.

The legislation would diminish the ability of the U. S. to hold other
countries to their trade commitments. The United States, recognizing the
fundamental importance of ensuring that trade promises are kept, recently
launched a high-profile initiative to “enforce” existing trade agreements.
For the United States to breach its own obligations under those same
agreements would only make a mockery of this “enforcement” initiative,
which is designed to assist exports of many United States goods and
services.

The bill could disrupt imports of numerous “seasonal” products from
other U. S. trading partners in Europe, Canada, Israel, Chile and
elsewhere that are consumed or processed throughout the United States.
Imports could face new barriers whenever a group of “seasonal” U. S.
producers (no matter how small) is found to be injured by import
competition.

For all these reasons, we strongly oppose this legislation. It is not about fair
trade or "leveling the playing field", let alone about free trade. Rather, it is a
misguided attempt to unilaterally change the rules of international trade by a self
serving few that will do serious damage to U. S. interests.

Enclosures: NAPAR Member List

NATIONAL ASSOCIATION OF PERISHABLE AGRICULTURAL RECEIVERS


73

Mr. SHAW [presiding]. Thank you, Mr. Heard.
Ambassador Hughes.

STATEMENT OF HON. G. PHILIP HUGHES, MANAGING DIREC-
TOR, COUNCIL OF THE AMERICAS; EXECUTIVE DIRECTOR,
U.S. COUNCIL OF THE MEXICO-U.S. BUSINESS COMMITTEE;
AND FORMER AMBASSADOR TO BARBADOS

Mr. HuGHES. Thank you, Mr. Chairman, distinguished Members
of the Committee. My name is Philip Hughes and I am the manag-
ing director for Washington operations of the Council of the Ameri-
cas, a multisectoral business association comprised of 250 U.S. cor-
porations with interests in Latin America. I am also the executive
director of the U.S. Council of the Mexico-U.S. Business Commit-
tee, the U.S. side of the oldest private sector organization between
Mexico and the United States. While both of these organizations
are primarily focused on Latin America, let me emphasize they are
USS. organizations comprised of U.S. companies.

Iam honored to appear before the Committee today on behalf of
the members of the Council of the Americas and the U.S. Council
to express our strong opposition to H.R. 2795. I have detailed testi-
mony which we will submit for the record and I would like to sum-
marize that testimony by emphasizing really five main points, Mr.
Chairman, if I may.

Mr. SHAW. Yes, without objection.

Mr. HUGHES. First, the legislation in question, we believe, sets
a very dangerous precedent by purporting to set up seasonal agri-
cultural production as a legislated industry category, or more pre-
cisely, to permit the ITC to find that there is such a seasonal agri-
cultural industry. Even if that could be sustained in the WTO,
which Mr. Roh will explain it probably cannot, such an action
would open up the possibility of other countries using a similar tac-
tic to restrict lower priced U.S. exports of agricultural products.
Being a temperate zone country, many of our agricultural exports
are produced seasonally. Examples of many fruits and vegetables
come to mind, some of which Mr. Crane and Ms. Dunn have al-
ready mentioned.

If we can define two domestic industries the way the ITC de-
scribed it, one that is distinctive only because it competes with im-
ported Mexican tomatoes at certain times of the year and another
that produces during the rest of the year—that is how the ITC doc-
uments characterized this issue—think of how many U.S. agricul-
tural exports could be discriminated against if other countries fol-
lowed our example and did the same thing.

The second point I would like to make, as the largest agricultural
exporter in the world, we have the most to lose. In the first 2
months of this year, I am informed, we exported about $861 million
in agricultural products to Mexico.

Texas is the top agricultural exporter to Mexico, followed by Lou-
isiana, Kansas, Nebraska, Missouri, Tennessee, Washington, Iowa,
Illinois, Arizona, California, Arkansas, Minnesota, Wisconsin, Okla-
homa, Colorado, Florida, New York, Michigan, and North Dakota.
Those are the top 20. If farmers in those States saw their agricul-
tural exports to Mexico curtailed in the event that the Mexicans
would follow the example we would be setting with this legislation


82

US, COUNCILor tHe
MEXICO-U.S, BUSINESS COMMITTEE

A COMMITEE OF THE COUNCIL OF THE AMERICAS.
{iti HE SPORES OF THE CHAMBER OF COMMERCE OFTHE UNITED TIES + AMERICAN GHAMBER OF COMMERCE OF WERCO, AG

Statement of Charles E. Roh, Jr.
Before the Subcommittee on Trade of the
Committee on Ways & Means
Regarding H.R, 2795

Executive Summary

H.R. 2795, if enacted, would be inconsistent with U.S. obligations under the
World Trade Organization Agreement and the North American Free Trade
Agreement. Under the terms of those agreements, the United States is allowed to
impose “safeguard” restrictions on imports of products that cause or threaten serious
injury to the U.S. industry producing the like or directly competitive product. H.R.
2795 would narrow the definition of the U.S. industry more than is allowed in an
effort to make it easier for the United States to impose such import restrictions. Any
safeguard action that was imposed pursuant to H.R. 2795 would likely result in
retaliation against innocent U.S. exporters, especially exporters of farm products.

Me. Chairman:

‘Thank you Mr. Chairman. My name is Charles Roh and, together with Mr. Hughes J
am testifying concerning H.R. 2795 on behalf of the U.S. Council of the Mexico-U.S.
Business Committee.

Jam a partner in the Washington office of Weil, Gotshal & Manges. Previously, I
spent 14 years working for the Office of the United States Trade Representative, including
three years as Legal Counsel to the USTR Mission to the GATT and three years as Deputy
Chief Negotiator for the United States of the NAFTA.

Mr. Hughes is focussing on the policy issues involved in H.R. 2795, while my
statement will focus on the question of the compatibility of the bill with U.S. obligations
under the North American Free Trade Agreement (NAFTA) and the World Trade
Organization Agreement (WTO). This testimony largely incorporates a paper that my
colleague David Oliver and 1 prepared on the same question for the U.S. Council of the
Mexico-U.S. Business Committee, which was submitted to the Subcommittee on February
29, 1996.

Our main conclusions regarding H.R. 2795 are that

© the proposed amendment is incompatible with the obligations of the NAFTA
and the WTO; and

© U.S. exports of other agricultural or industrial products would pay the price
for this bill, because U.S. action under the proposed amendment would almost
certainly result in retaliation against U.S. exports or, perhaps worse, adoption
Of similar policies by our trading partners that would harm U.S. exports.

1. Background

HLR. 2795 would significantly amend the safeguard provision of Section 201 of the
Trade Act of 1974 by changing the definition of “domestic industry” and adding a definition
of the term “like or directly competitive article.” The effect of these proposed changes
would be to allow the International Trade Commission (*ITC*) to exclude certain U.S.
producers of the relevant like product from the domestic industry in order to make it easier
for “seasonal industries" to obtain relief from import competition under Section 201 of the
Trade Act of 1974

Iai06 sineeL NM. + SUE 490 + WASMNGION B. 70008

ana/seaN28 + fay 02/6 ORE


H.R. 2795, SAFEGUARD INVESTIGATIONS OF
PERISHABLE AGRICULTURAL PRODUCTS

HEARING

BEFORE THE

SUBCOMMITTEE ON TRADE

OF THE

COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS
SECOND SESSION

APRIL 25, 1996

Serial 104-64

Printed for the use of the Committee on Ways and Means

ae

U.S. GOVERNMENT PRINTING OFFICE
37-830 CC WASHINGTON : 1997

For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402

ISBN 0-16-054196-4
a



108

‘W994 Arcivals From Produc CWT) Based on unload/arrvalfgures in 22 major U.S. cies
vax [65 [mar [arr [may [yun [yur [auc [sep [oct | nov [osc | 1994 | 1993
ALBAN ~{—|—]-]|—]2]4]e]s]-]—]—|e ls
ARAKSAS - ~- || — | 20 [3 —|—|-|-—|[% | 8
‘AUTOR a | — | — |] 20 | 298 | 612 | 725 | 661 | 643 | 400] 98 | 3.455 | 3.703
co.orao0 wf} —f-p: [2 fe f-f te fo | fo [io
ONDA 823 | 750 | 742 | 928 | 1.182 | 719 } 80 6 | 251 | 590 | 703 | 6.058 | 6.800
GEORGIA wef xfufs [ifs [os |— |e | 2
Twn | [P| Ts [a | — | 2» | 39
DUAR —~[i fi a [2
exTucey 2 [8 | 2 a] a
touisana 3]u 4 [3
agray [a [as @ [ig
rassaowsers | | — wn | || ~~ [-- [3 [3
HICK = - [— | — [-- [2 [9 w- | ~ {102 [97
sou —{—]—-|{—]—|—[2 [Ts [2a [os
ew fase a| a fa] s {2 [fins [is
ew Yon sfefays fs] |s [»
NORTH OROLIIA ww | [3 - [2 [ »
ono 9 fa fo fats vo [130
ewnsvan 3[feof{s [i iso [ua
PUERTO a 5 |
RICO
SOUTH wif7 fits | 2 4 | 3H
CAROLINA
‘TENNESSEE 35 | isi | 7 | st 316 | 309
Tews - 3 [7}o}]ef2}o aif
‘GIN ~ ua] 7 [a9 [so [| 6 | — | 344 | 295
WASHINGTON ~| ||] Jy] [3 | uf
TOTAL rs | 155 | v0 [ om [| 200 | vase | sae | vase | uot | roe | gon | on | an | see

TiS aria pores gereraly represent 33 percent to 60 percent ol tata produa ongnatng For mewedual sources Gertied. Some sates. noaDly
on the West and Midwest, ae comparatvely underrepresented by arvals quoted. Figures ae intended only to wdcate relate avalabiy of

product

1. Includes some greenhouse tomatoes


131

If the Commission were to adopt the seasonal
definition of domestic industry under H.R. 2795, the bill would
instruct the Commission to define the like product as that
produced by the domestic industry during the applicable growing
season. The imported product subject to investigation would
likewise be limited to the products entered, or withdrawn from
the warehouse for consumption, during that growing season.

The bill is consistent with commercial reality and
permits relief to be provided to the limited industry directly
affected by the import problem. Thus, the relief granted is
consistent with the underlying spirit of U.S. law and our
international obligations. See, e.g., Agreement on
Implementation of Article VI of the General Agreement on
Tariffs and Trade 1994, Article 4.2 (in regional cases, relief
should be limited to extent possible to regional imports);
Agreement on Agriculture, Article 5.6 (agriculture special
safeguard provision recognizes seasonal products and limits
relief to seasonal period where criteria are met).

V.  H.8.2795 Would Be Consistent With US, WIO Obligations

H.R. 2795 would be entirely consistent with U.S.
obligations under the Uruguay Round Final Act. For example,
the Agreement on Agriculture contains a special safeguard
provision which’ allows countries to provide special safeguard
measures when the volume of imports of a specified agricultural
product exceeds the "trigger level” during any given year.
Agreement on Agriculture, Article 5. The Agreement only
permits additional duties on these imports until the end of the
year. The Agreement aiso permits safeguard measures when the
price of the imports falls below a “trigger price.”

In the case of perishable and seasonal products,
however, the Agreement recognizes the need to take into account
the special characteristics of the products. To wit,

For perishable and seasonal products, the
conditions set out above shall be applied in
such a manner as to take account of the
specific characteristics of such products.
In particular, shorter time periods under
subparagraph i(a) and paragraph 4 [trigger
volumes] may be used in reference to the
corresponding periods in the base period and
different reference prices for different
periods may be used under subparagraph

1(b) (trigger price).

Article 6 (bracketed material added).

Thus, member states are permitted to adopt trigger
volume and price levels taking into account the specific
characteristics of the perishable and seasonal products.
Specifically, member states can shorten the time periods to
measure import volumes for perishable and seasonal products.
Likewise, "trigger prices" can include different reference
prices for different periods. These provisions have been
impldmented in 19 U.S.C. § 3602.

Stated differently, the WTO already specifically
recognizes the commercial reality of perishability and
seasonality. There is no reason for such recognition not to be
formally added to U.S. law. H.R. 2795 is a vehicle to clarify
existing U.S. legal rights.

Thank you for the opportunity to testify. I would be
pleased to respond to questions.


159

‘The growing and shipping of tomatoes and other vegetables is essential to the employment
of thousands of field workers near the United States border in the States of Sonora and
Sinaloa, Mexico. If not employed by Mexican agriculture, these field workers would be
looking at illegal immigration into the United States in order to make a living.

Any disruption of the vegetable industry in Mexico brought about by a change in the
present NAFTA Agreement, as far as agriculture is concerned, would also be a serious
blow to American commerce and exports into Mexico. We alone, one company out of
about 50 operating in agriculture in Western Mexico, import into that country from the
United States approximately 8,000,000 corrugated boxes made in the United States with a
value of approximately $6,400,000 (American dollars), seed worth approximately
$1,000,000, drip irrigation systems, glue for boxes, box making machines, potting material
for green house production, twine for staking vegetable plants, fertilizers, insecticides,
fungicides and any other number of capital items. This process has been going on for
years, and any disruption of this process or curtailing production will surely increase illegal
immigration into the United States and disrupt a much needed flow of money into Mexico.

‘What all of us operators in the integrated North American market fear most is retaliation.
We are afraid that Mexico would seize the opportunity to claim “seasonal relief” from our
perishable products. This legislation could initiate a series of retaliation/counter
retaliatory measures. In the agricultural production sector from my talks with Mexican
interests, I am afraid that the Mexican government would retaliate by stopping the
importation of grain, apples, California wine, and many other items produced in the United
States and shipped into developing markets in Mexico. In the end, consumers would pay
more because their buying options would be limited, and. the majority of U.S. growers
that prefer to operate in an integrated North American market would have their sales
opportunities limited.

‘As the world’s leading exporter of agricultural products, the United States should be

setting the right trade policy examples, not the wrong ones. I strongly believe that H.R.
2795 is a wrong example.

OB ne

cc: Hon. Leon Panetta
Rep. Sam Farr


Iv

Costa Rica, Government of, His Excellency Sonia Picado, Ambassador; El
Salvador, Government of, His Excellency Ana Cristina Sol, Ambassador;
Guatemala, Government of, His Excellency Pedro Miguel Lamport, Ambas-
sador; Honduras, Government of, His Excellency Roberto Flores Bermudez,
Ambassador; and Nicaragua, Government of, His Excellency Roberto
Mayorga-Cortes, Ambassador, joint letter ..

Dole, Hon. Bob, a U.S. Senator from the State o

Florida Congressional Delegation, statement...

Florida Fruit and Vegetable Association, Orlando, FL, Michael Stuart, state-
ment and attachment ....

Florida Tomato Exchange, letter

Food Marketing Institute, Tim Hammonds, letter and attachments .. .

Kolbe, Hon. Jim, a Representative in Congress from the State of Arizona,
letter . seseee

Meyer Tomatoes, King City, CA, Robert L. Meyer, letter

National Association of Perishable Agricultural Receiv
more, MD, J. Gary Lee, letter and attachment ...

Pacific Brokerage Co., Nogales, AZ, James F. Manson, letter

Pro Trade Group; Association of International Automobile Manufacture:
Citizens for a Sound Heonomy, Computer & Communications Industry As.
sociation; Construction Industry Manufacturers Association; Consumers for
World Trade; International Trade Council; National Grain and Feed Asso-
ciation; North American Export Grain Association, Inc.; and U.S.-Mexico
Chamber of Commerce, Edward J. Black, joint letter and attachment ...........

Page


109

Mr. SHAW. Thank you, Mr. Loop.
Mr. Lawrimore.

STATEMENT OF BARRETT S. LAWRIMORE, EXECUTIVE DIREC-
TOR, SOUTH CAROLINA TOMATO ASSOCIATION, CHARLES-
TON, SOUTH CAROLINA

Mr. LAWRIMORE. Thank you, Mr. Chairman and Members of the
Committee. My name is Barrett Lawrimore. I am the executive di-
rector of the South Carolina Tomato Association. I represent 17
farms who handle 2,600 acres of tomatoes in the State of South
Carolina, and that is all of the tomatoes grown there except for 347
acres by 1 Florida grower.

So I have been exposed to seasonal agriculture for a long time.
lam a retired county extension director for 30 years, and I am also
a member of Charleston County Council as the chairman of that,
and that, I do not have any opposition, so I can understand how
you have to work for your constituents, although they would give
me another term free, and I really appreciated that. But in one
way or another, I have been involved in seasonal work for a long
time, and if I live as long as Strom Thurmond, I will make 70.

I asked to testify this afternoon to help make the point that this
measure, H.R. 2795, enjoys a broad-based support in the U.S. sea-
sonal agricultural community. Those of us who are deeply involved
in perishable agriculture, be it tomatoes, cucumbers, eggplant,
squash, grapes, watermelon, or any number of horticultural sec-
tors, have long shared a concern that we do not enjoy fair and
equal access to the U.S. trade remedy laws, and I want to repeat
that, because we do not because we are seasonal. I would like for
you to come down and let me show you our seasons. This leaves
us feeling dangerously exposed, even helpless, against an influx of
foreign products.

In relaying this concern, we do not mean to assign blame to Con-
gress for slighting seasonal agriculture. This body, to its credit, has
tried in the past to be sensitive to the special realities and needs
of seasonal producers. Your provisional relief mechanism for per-
ishable products is an example. Unfortunately, as last year’s to-
mato case demonstrated, procedural refinements of this sort cannot
begin to help us if the basic underlying substantive standard is un-
favorably skewed.

You have already this afternoon heard that underlying problem
described in some detail by trade and legal experts. Although I am
no lawyer or neither a trade scholar, I am experienced in seasonal
agriculture and can restate the issue from that perspective.

Let us begin with the plain fact that there are distinct seasonal
sectors in agriculture. No one credibly disputes this. If these same
seasonal sectors suffer from imports during their growing season,
the law, as it is now interpreted, is more likely than not to leave
them without relief. The reason is this: Seasonal sectors are not en-
titled to be analyzed in their relevant growing season. They are ar-
tificially grouped with production that falls outside of the season
and that, virtually everyone would agree, you have to be competi-
tive in your season.

This irrational, clumsy approach to seasonal agriculture raises
two obvious questions. Question one, if the objective of the safe-


30

Chairman CRANE. I would like to yield now to our colleague from
Florida, Dan Miller.

Senator GRAHAM. Mr. Chairman?

Chairman CRANE. Yes, Senator Graham?

Senator GRAHAM. If I could ask your permission, I am afraid that
I am going to have to leave. Again, thank you for holding this hear-
ing.

Chairman CRANE. We thank you for giving us the time. Thank
you so much, Senator.

Our colleague from Florida, Dan Miller.

STATEMENT OF HON. DAN MILLER, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF FLORIDA

Mr. MILLER. Thank you, Mr. Chairman. I would like to submit
my written testimony for the record and I also have a statement
from the members of the Florida congressional delegation, includ-
ing both of our U.S. Senators, with all the Florida members, Demo-
crats and Republicans, with the exception of one, supporting this
particular legislation.

(The statement of the members of the Florida congressional dele-
gation can be found on page 13.)

While I disagree with my colleague from Arizona, the question is
not an issue of fairness versus free trade. I supported NAFTA and
GATT and the Florida delegation was the swing vote on NAFTA
and GATT. We were basically given a lot of assurances that what
is happening was not going to happen.

I realize the problem we are having is not a NAFTA issue, it is
related to the peso problem and such. But the problem we are hav-
ing is serious, because I have farmers in my district that have been
there fourth and fifth generation, which is really old in Florida. We
have two tomato seasons, for example, in my district, one in the
fall and one in the spring. Our tomatoes do not compete with New
York tomatoes or Michigan tomatoes or Illinois tomatoes. Our to-
matoes compete with Mexican tomatoes and there has to be a fair-
ness and that is part of the problem here.

That is what this bill does. It gives us the opportunity to say, is
it really going to be fair trade? When you get down to the issue of
NAFTA and GATT and future trade agreements, we need to make
sure that they always remain fair.

I think my colleagues have stated very well the position of the
Florida delegation, and I hope you will give serious consideration
to this as one potential remedy to some of the problems. We feel
it is unfair. Thank you.

(The prepared statement follows:]


89

STATEMENT OF Ht HUMBERTO MONTEVERDE
FRESH PRODUCE ASSOCIATION OF THE AMERICAS

Mr. Chairman, my name is Humberto Monteverde. I am the
president of the Fresh Produce Association of the Americas, an
organization that represents well over a hundred U.S. importers,
exporters and distributors of fresh produce in Nogales, Arizona.
Tam also the owner and president of HM Distributors, a family-
owned business that packages and distributes fresh produce
throughout the United States. I speak also today for everyone
along the Arizona-Mexico border who depends on trade for their
Livelihood.

We oppose H.R. 2795.
1. Trade in Fresh Produce is Important to our Community

Nogales is ghe gateway city to the Mexican state of Sonora in
southeastern Arizona. Trade is vital to our community. Imports of
fresh produce are the backbone, the muscle, and the lifeblood of
this community of 40,000 people during the winter months.
Importers and distributors are responsible for hundred of millions
of dollars of trade in fresh produce. Our industry has created
thousands of jobs in Nogales and throughout the state -- ranging
from truck drivers to mechanics, office clerks and secretaries,
warehousemen to laborers, hotel restaurant and retail employees to
service station attendants.

We also export U.S.-made paper products, seed, fertilizer,
farm equipment and chemicals to fresh fruit and vegetable growers
in Mexico. These products are manufactured throughout the United
States and in our own backyard. For example, a Weyerhaeuser
manufacturing plant in Yuma, Arizona - not far from Nogales - ships
40 percent of its output of containers to Mexican growers in
Sinaloa. Wooden pallets, which are used to transport boxes of fresh
produce, are also manufactured in Nogales and shipped to Mexico.
‘The fresh produce industry is without question a major factor in
the economic well-being of southern Arizona.

Each of these industries could be placed in immediate jeopardy
if this legislation is passed. In an area that is already
suffering from 20 percent unemployment, we can ill-afford to lose
any more jobs.

II. This legislation is Bad Trade Policy

We oppose this legislation not only because it threatens our
livelihood, but also because we understand the importance of free
trade to the United States. Contrary to our commitments under the
GATT and the NAFTA, this measure promises to trigger a perilous
protectionist trade spiral. Essentially, it would help to shield
a relative handful of U.S. farmers against competition from
imports. In the process the bill would:

(1) Invite retaliation by our trading partners against U.S.
products. Both the NAFTA and the WTO authorize such
‘compensatory steps.

(2) Encourage U.S. trading partners to adopt similar
protections to shield their commodities from U.S.
competition.

(3) Undermine the U.S. drive to persuade other nations to
honor their trade commitments.

(4) Establish a precedent allowing virtually any small group
of producers of a perishable product in the United States
or abroad to define themselves as "seasonal" regardless
of whether or not that industry as a whole has been
injured by imports.


84

exclude domestic producers of the like product in defining the domestic industry. Indeed,
Article 4 of the Safeguards Agreement states the opposite, It defines “domestic industry” as
the "producers as a whole of the like or directly competitive products operating within the
territory of a Member, or those whose collective output of the like or directly competitive
products constitues a major proportion of the total domestic production of those products."
(Emphasis added.)

In the Tomatoes case, the U.S. industry tried to argue around the requirements of
Section 201 by urging that the term "directly competitive products” in Section 201 should
allow the United States to exclude certain domestic producers of the admittedly like product
(fresh tomatoes) and limit the domestic industry to those producers that face competition
from imports at particular times of the year.

‘The ITC properly rejected this argument in Tomatoes on the grounds that it was
inconsistent with the statute and unsupported by the facts.’ Noting that the Commission
must guard against "industry definitions that are drawn artificially narrow simply to make
relief more likely,” the Commission correctly concluded that the "concept of ‘directly
competitive’ in the statute serves to expand the class of producers of products who may seek
and obtain relief, rather that to create a subclass of preferred producers who may seek and
obtain relief."

‘The Commission’s ruling in the Tomatoes case was consistent not only with U.S. law,
but also with longstanding GATT precedent. "Directly competitive” is a term of art in
GATT. GATT panels interpreting Article III.2, which also distinguishes between "like"
products and "directly competitive” products, have repeatedly held that “directly competitive”
refers to a broader grouping of products than those that would qualify as "like" products.
That is, “directly competitive” products would encompass those products that are not
sufficiently similar in characteristics to be "Iike" products, but which have similar end uses
and ace considered commercial subetutes, Ses, te nan =

1 , BISD, 348/83, 116-17
(1987)(whiskey, brandy, and vodka found tobe Separate ike products within a single
category of directly competitive distilled liquor products on the basis of their use and
characteristics); United States -- Measures Affecting Alcoholic and Malt Beverages, BISD,
398/206, 276-77 (1992)(various types of wine that arguably constituted separate like products
“would nevertheless have to be regarded as ‘directly competitive’ products"); EEC =:
‘Measures on_Animal Feed Proteins, BISD, 258/49, 63-64 (1978) (vegetable and animal
proteins for feedstuff could not be considered “like” products but did constitute “directly
competitive” products in light of their final use and technical substitutability)

Thus, the term "directly competitive” in the WTO agreements refers to the nature of
the product and its uses and commercial substitutability for the like product in question. ‘The
inclusion of “directly competitive” products within the WTO agreements only serves to
broaden the potential category of producers that can seek safeguard relief, ie., to those
categories of producers that, while not producing “like” products, are nevertheless producing
4 product that is substitutable for the imported product,

H.R. 2795, however, would turn the “directly competitive" concept on its head and
use it to define a narrower domestic industry. H.R. 2795 would legislate a reversal of the
‘Tomatoes determination by authorizing the [TC to exclude certain like product producers

(Gncluding the same “seasonal” producers claiming injury with respect to their production at

3, Tomatoes at 1-10-11 and I-13.

4, Tomatoes at 1-11, note 26. The ITC's conclusion regarding the meaning of
“directly competitive” products is supported by the legislative history of Section 201,
which defines “directly competitive” products as those that “although not substantially
identical in their inherent or intrinsic characteristics [i,¢., are not "like products"), are
substantially equivalent for commercial purposes, that is, are adapted to the same uses
and are essentially interchangeable therefor." See S. Rep. No. 1298, 93rd Cong., 2d
Sess. 121 (1974), reprinted in 1974 U.S.C.C.A.N. 7186, 7265.



12

Chairman CRANE. Thank you.

Mr. SHAW. Mr. Chairman, we had a number of our delegation
members, in fact, probably over half of them who were going to tes-
tify and I suggested to them, to save time that they put their state-
ment into the record. So without objection, I would hope that the
Committee Chairman would allow that.

Chairman CRANE. That will be done.

{The information follows:]


54

ter from then ITC Chairman Don Newquist further stated that,
“limiting the scope to the winter marketing season would focus on
the time period when imports are of greatest concern to competing
domestic growers.”

Since the NAFTA Implementation Act requires ITC monitoring
until January 1, 2009, for the purposes of expediting relief either
under section 302 of the Implementation Act or section 202 of the
Trade Act of 1974, then it is critical that we have a workable defi-
nition that recognizes commercial reality.

Mr. Chairman, in the dead of winter, when the rest of our Nation
sleeps under a blanket of cold and snow, Florida is producing the
fresh fruits and vegetables for our Nation. This absence of other
winter-producing areas in the United States was also recognized
very clearly by the 1991 GAO Report on United States-Mexico
trade where they very distinctly showed the seasonality of our pro-
duction and other States’ productions of fruit and vegetables for the
Nation’s food supply.

H.R. 2795 corrects or clarifies the law and recognizes that perish-
able agricultural products and producers may exist in the market-
place during distinct periods of time. For the trade laws of our Na-
tion to work, for the international trade agreements we have
signed to work as Congress envisioned them, the special safeguard
provisions must be effective for all agricultural products, not just
for those products stable in long storage conditions and not just in
those areas that produce throughout the year. H.R. 2795 is an ef-
fective measure. We should not fear retaliation from measures con-
sistent with international trade agreements.

I urge your support of this legislation and we would very much
like to provide you copies of resolutions from the Governor and cab-
inet of the State of Florida, from the Florida House of Representa-
tives, and from the Florida Senate regarding enforcement of trade
laws. Thank you, Mr. Chairman.

[The prepared statement and attachments follow:]


96

The legislation is also counter to the U.S. position as a world
leader for open trade. As the Nation with the world’s largest econ-
omy and the most exports, it is imperative that the United States
first set an example for open trade; second, work to open foreign
markets; and third, to hold other countries to trade commitments.
This would be made increasingly difficult if the United States does
not maintain an open market on its own territory or honor its own
commitments.

H.R. 2795 is certainly counter to the spirit of the North Amer-
ican Free Trade Agreement. In addition to directly affecting the
United States-Mexico commercial relations, the legislation also sets
a precedent for other limited interest groups in the United States
who look to protection rather than competition as an engine for
prosperity.

The Fort Lauderdale Sun-Sentinel in April of this year noted
that much of the advantage for Mexican tomatogrowers comes from
an investment in technology and products imported from the Unit-
ed States, technology the Florida growers passed up. An editorial
concludes, “Florida’s 80 tomatogrowers should begin finding their
own solutions. Florida’s farmers could take a classic free enterprise
approach. They could concentrate on growing excellent tomatoes,
trying to exceed the Mexican standard.” Also it should be noted
that while the Florida growers seek protection from Mexican com-
petitors, many of the workers they employ are from Mexico.

The United States, Mexico, and Canada negotiated a fair agree-
ment to boost economic activity in North America, making competi-
tion an engine of economic growth. Too much effort went into
NAFTA to allow a special interest to unravel a portion of the trea-
ty, a treaty that has clearly benefited a wide coalition of exporters
in the United States.

Too many sectors in the U.S. economy are vulnerable to legisla-
tion that mirrors H.R. 2795. Many U.S. crops could be considered
seasonal in other nations. Definitional gerrymandering will not
serve interests in the United States, Mexico, or elsewhere in the
world. We respectfully urge the Trade Subcommittee to vote no on
H.R. 2795. Thank you, Mr. Chairman.

{The prepared statement follows:]


75

AN AFFRATE OF HE AMERICAS SOCIETY WC,

¥écounce OF THE AMERICAS

ISOG SIMEEL NW. SUTEGRO WASHINGTON, OC 20008 TEL: (202) 699.0724 Fax (zor) 639-0788

AND
U.S. COUNCIL OF THE MEXICO-U,S. BUSINESS COMMITTEE

STATEMENT OF AMB. G. PHILIP HUGHES
HEARING ON
‘THE SAFEGUARD INVESTIGATIONS OF PERISHABLE AGRICULTURAL PRODUCTS

SUBCOMMITTEE ON TRADE
COMMITTEE ON Ways AND MEANS
UNITED STATES HOUSE OF REPRESENTATIVES

APRIL 25, 1996

‘Mr. Chairman and distinguished members of the Committee, my name is Phi
‘Hughes and I am the Managing Director for Washington Operations for the Councit ofthe
Americas, a multi-sectoral business association of 250 U.S. corporations with interests in
Latin America. I am also the Executive Director of the U.S. Council of the Mexico-U.S.
Business Committee, the U.S. side of the oldest private sector organization between Mexico
and the United States. While both of these organizations primarily focus on Latin America,
let me emphasize that they are U.S. organizations, comprised of U.S. companies.

T am honored to be appearing before you today on behalf of the members of the
Council of the Americas and the U.S. Council to express our strong opposition to H.R. 2795
— one of the most protectionist pieces of legislation introduced into the Congress in recent
history. As indicated by earlier correspondence from the Chairman of the U.S. Council of
the Mexico-U.S. Business Committee, former Secretary of Commerce Robert Mosbacher, we
have been concemed for some time about the progress of this legislation.

History of the Issue

Last year, tomato growers in Florida petitioned for safeguard protection from Mexican
tomato imports, claiming that their production in the months of January through April was a
“seasonal” domestic industry, separate from the rest of the U.S. tomato industry, and so
should be treated as a separate “winter tomato industry." The petition was rejected by the
International Trade Commission (ITC) for a number of reasons, including the fact that
‘current law requires that the domestic producers petitioning for relief must constitute a major
proportion of domestic production, and does not have special provisions for identifying
separate "seasonal industries.”

In their ruling, the Commission noted that they must guard against "industry
definitions that are drawn artificially narrow simply to make relief more likely." They
concluded that the “concept of “directly competitive” in the statute serves to expand the class
of producers of products who may seek and obtain relief, rather that to create a subclass of
preferred producers who may seek and obtain relief."' H.R. 2795 is intended to reverse the

* Fresh Winter Tomatoes, Inv. No. TA-201-64, USITC Pub. No. 2881 at I-I1, note 26
(April 1995).


36

terpretation made it more difficult for the Florida growers to dem-
onstrate injury. .

H.R. 2795 is a narrow and focused attempt to respond to the par-
ticular commercial circumstances of perishable agricultural prod-
ucts. The bill does not expressly override the current law for deter-
mining domestic industry under determinations under U.S. law.
Rather, it permits the ITC to consider whether it is appropriate to
define the domestic industry in a manner that takes into account
the seasonal nature of perishable agricultural products. It is worth
emphasizing that the bill does not require the ITC to reach a par-
ticular result but permits it to do so.

I would like to comment, then, just very quickly on the role of
NAFTA in this matter. Understanding the problem of how we have
gotten to this, I think, is somewhat important to sorting out how
best to seek a solution. Some have attributed the recent imports of
Mexican winter vegetables to the effects of NAFTA. I would note
that in the past, there have been comparable surges in Mexican to-
matoes at times over a period of almost 20 years. While the most
recent surges have coincided with NAFTA, given the 20-year his-
tory, it is clear that this is not a NAFTA problem.

Indeed, the tariffs that exist under current law for non-NAFTA
product is in the order of 4.4 cents per kilogram. The current tariff
under NAFTA for Mexican tomatoes is 3.2 cents per kilogram, a
difference of barely half a penny per pound. So clearly, this tariff
differential between NAFTA and non-NAFTA products is not what
is causing the surge in imports.

With that, seeing that the light is on, Mr. Chairman, I will thank
the Committee for this opportunity to present USTR’s views on the
legislation and I would be happy to answer any questions that you
might have.

(The prepared statement follows:]


48

Ms. Doye. I hope that you will keep in mind how amazing these
gains have been since enactment of NAFTA and the WTO accords
and what H.R. 2795 would be imperiling. In just the past 2 years,
US. agricultural exports have jumped by: one-third to $60 billion.
Protecting American agriculture’s ability to make such gains is ob-
viously much more important than unfairly protecting a single sec-
tor of our vast agriculture industry from fair competition.

We feel there is little doubt that H.R. 2795 would imperil those
gains. If passed, the bill would require the United States to make
trade concessions that could harm other U.S. exporters, encourage
other countries to employ the seasonality principle to restrict U.S.
exports, and disrupt imports from other U.S. trading partners.

Perhaps most troubling, however, is how this proposed action
could undermine the progress toward stability and order in the
global economy which we have worked so hard to achieve. The
United States has long been pressing other nations not only to ac-
cept more open markets but to enforce these new rules, to live up
to their obligations, and we should, too.

[The prepared statement follows:]


gq

Our seasonal perishable crops do not have the option of being
stored. First, our crops normally have a shelf life of two

three or four weeks and they must be consumed during this period

If there is an import surge, we do not have the luxury of storing

the crop even for a few days

Under the existing 201 law, if we were to bring an action, our
economic information would be rolled into the economic
information for the entire nation, even though the other

harvest (s) of the same seasonal perishable crop was not impacted

by the import surge.

If the seasonal perishable crop experiences competition from an
import surge, we cannot move grapevines or trees to another

growing area, so that we could produce at another time

When we are faced with the unique experience of competing against
a significant currency devaluation, our orchards and vineyards

will be abandoned if we cannot compete against the surge imports

I would like to show you a picture of my citrus grove and
vineyards, that would have to be abandoned, if we could not

remain competitive against an import surge(s).


53

Chairman CRANE. Thank you, Becky.
Dr. Roberts.

STATEMENT OF BOB CRAWFORD, COMMISSIONER OF AGRI-
CULTURE, STATE OF FLORIDA DEPARTMENT OF AGRI.
CULTURE AND CONSUMER SERVICES; AS PRESENTED BY
MARTHA ROBERTS, PH.D., DEPUTY COMMISSIONER

Ms. Roperts. Mr. Chairman, Members of the Subcommittee, I
am Martha Roberts, Deputy Commissioner of Agriculture for the
State of Florida, representing Commissioner Bob Crawford, who re-
grettably could not be here due to conferencing on our budget today
by the Florida legislature.

The legislation before you today clearly and positively affects
both Florida agriculture’s perishable fruit and vegetables industry
and agriculture nationwide. Mr. Chairman, it is my distinct privi-
lege to present to you strong support from agriculture for the pas-
sage of H.R. 2795. This legislation, we believe, is a natural step for-
ward in recognizing the unique characteristics of the ever-changing
landscape of agriculture. We want to express to the bill’s sponsor,
Congressman Clay Shaw, the gratitude of the people of Florida for
the leadership demonstrated by his efforts to pass this needed leg-
islation.

I am pleased that the legislation recognizes a distinct and critical
difference that we must not forget. Perishable fruits and vegetables
cannot be stored like corn, wheat, and other grains, nor can they
be stored indefinitely either frozen or refrigerated, like meat and
poultry, and held off the market until prices change. So the trade
laws that affect perishable products grown in short, concentrated
growing seasons must be relevant trade laws.

Congress has labored long and hard to write laws that promote
trade and provide remedies for those adversely affected by trade.
At the core is a recognition by Congress that as we move to expand
trade, domestic producers may be impacted by new conditions of
trade.

Mr. Chairman, the Subcommittee has been the originating point
of the laws that seek to ease this tension. The safeguard provisions
written into the law by this Committee may one day have critical
importance to any producer facing newly global competition. For
these measures to truly be safeguards, they must work effectively.

The creation of safeguards for winter-produced fruits and vegeta-
bles was one agreement made by Congress at the end of the
NAFTA debate. In relation to this, in June 1994, the International
Trade Commission published report 2771 regarding “The Monitor-
ing of U.S. Imports of Tomatoes.” Section 316 of the NAFTA Imple-
mentation Act required the commission to monitor U.S. imports of
fresh or chilled tomatoes and peppers. And in an opening letter to
Congressman Sam Gibbons, then ITC Chairman Don Newquist ex-
plained the difficulties of monitoring and reported that recognition
of seasonal production would not be possible without statutory
change.

Florida producers and delegation members had been told that
section 316 was included in the NAFTA Implementation Act in an
attempt to monitor the volatile fresh seasonal market for winter
fruits and vegetables produced October through May. The ITC let-


138

Translation
A review of prices conducted by (USOA] shows that in the first
months of 1996 the prices paid to Florida vegetable growers were at

levels sti}l lower than the average for 1995 ($492.96/MT), and much lower
than those of 1992 ($646.62/MT).

fir: ff March, hi i

affiliated to CAADES in Sinaloa, regulated the flow of exports.

Cémphasis added].

Source: Servicio Nacional de Informacion de Mercado [National Market

Information Service--SNIM], Marketing In the U.S. of Six of the
Main Vi Pr nM In the 1993-96 > March

20, 1996, at 38. The SNIM report was prepared based on
infomation from USDA sources (Vegetables and Specialties,
Situation and Outlook Report; Agricultural Outlook; Market News
Serviced. Id. at 40.


49

STATEMENT OF BECKY DOYLE
DIRECTOR, AGRICULTURE DEPARTMENT
STATE OF ILLINOIS

Good afternoon. My name is Becky Doyle. I am the Director of the Illinois Department
of Agriculture, and 1 very much appreciate the opportunity, Mr. Chairman, to appear before this

‘Committee today.

My agency serves more than 75,000 farmers in our state. Like others in the Illinois
economy, these farmers depend upon export markets for a growing share of thei incomes. { have
long been a believer in free trade, and I represent a Governor who has worked with Congress and
recent administrations to promote more open world markets. We are even greater believers in
free trade today as we see the benefits that are accruing to Illinois farmers from the North
American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO) accord.
For example, agricultural exports represent approximately 23 percent of all Illinois exports to
Mexico and 7 percent to Canada.

1 am disturbed, therefore, by the sudden re-emergence of protectionist arguments in this
nation, both in electoral politics and in legislative and regulatory affairs. I am particularly
troubled by this nation’s willingness, so soon afier years of solid negotiations to open global
markets, to consider breaking its word and unilaterally changing the rules, If we open this door,
it will be an open invitation to other nations to do the same, creating a downward spiral which

can only have disastrous effects.

The seemingly small issue at the root of the legislation before this committee today is

being supported by this protectionist rend and, at the same time, serving as protectionism’s


18

country. Thus, should the United States take an emergency action against one of its trading
partners, we would have to compensate that country for doing so. As stated in Article
801(4) of the NAFTA,

‘The Party taking an action under this Article shall provide to the Party against
‘whose good the action is taken mutually agreed trade liberalizing compensation in
the form of concessions having substantially equivalent trade effects or equivalent
to the value of the additional duties expected to result from the action, If the
Parties concerned are unable to agree on compensation, the Party against whose
‘good the action is taken may take tariff action having trade effects substantially
equivalent to the action taken under this Article

‘Thus, if we could not reach agreement on how to pay our trading partners to compensate for
our actions, they would be completely within their commitments to the NAFTA and the
WTO to take immediate retaliatory action in the form of increased tariffs on U.S. goods.

Perhaps the most important aspect of the issue of retaliation is the fact that the target
of this reprisal does not have to be the producers and employees in an industry producing the
same or similar products. This means that as a result of the change in law proposed by H.R.
2795. all U.S. export would face the possibility of being slapped with retaliatory tariff
increases. So the burden of these measures could easily fall on products or sectors totally
unrelated to the initial action, The effects of such a trade-distorting protectionist cycle would
likely be felt throughout the economy, and for many years to come.

3. Interna

mnal Response

Any safeguard measures taken under this proposal would likely be challenged
successfully under the WTO and/or NAFTA auspices, resulting in a finding that the United
States had violated its international obligations. Already, 15 countries have notified the
WTO that they consider this proposed change in law a violation of international law. Even if
that were not the case, U.S. exports would most certainly face very significant repercussions

H.R, 2795 would open a pandora's box of other protectionist actions by our trading
partners. Facing the inevitable internat pressures for protection and given the fact that the
largest economy and most fervent advocate of free trade and free market capitalism had
turned its back on international obligations. it seems clear that our trading partners would
adopt legislation to redefine the "domestic industry” language in their relevant trade law in a
‘way that would make it easier to impose restrictions on competitive U.S. products. A wide
array of U.S. exports, from apples, peaches, com and wheat to snow tites, Christmas toys
and seasonal clothing, could find the playing field in their current export markets tilted
suddenly and sharply in favor of their local competitors. As Chip Roh said,

The United States, as the world’s leading exporter of agricultural products, would
have a great deal at stake were the requirements for applying safeguard actions
watered down in the manner contemplated by H.R. 2795. In Mexico, Canada,
Europe, or Japan, new restrictions on products such as com, apples, beef or
poultry could be contrived. Moreover, while this development would certainly
impact U.S. agricultural exports, the "who's competing with whom” approach
contemplated by the bill could be used in the context of any number of industries
of vital interest to U.S. exporters.*

In summary, 1 would like to reiterate what Mr, Mosbacher said in his letter to you
earlier this year:

By amending the Trade Act of 1974, H.R. 2795 would make it easier to obtain
“safeguard” protection from imports, even in those cases where only a small

* "Comments", page 4.


88

tion from the Federal Government to use two chemicals on its to-
matoes that are banned for use on imports.

In addition, Florida growers demanded marketing money from
the taxpayers of Florida and the Florida Department of Agriculture
responded by giving $1.9 million over the last 5 years for pro-
motional efforts. That means the few multimillionaire tomato-
growers in Florida are getting tax money to get richer. Now the
same Florida growers are getting at least $1.5 million in Florida
taxpayer money to file petitions against Mexican imports.

H.R. 2795 sets a bad precedent. The bill creates bad trade policy.
It exposes American exports to retaliation. It is a bad idea, a bad
bill, and just simply bad for America and American consumers.

Thank you for allowing me to address this Committee today. We
will be very glad to answer questions.

[The prepared statement and attachment follow:]


43

situation, the ITC granting relief in the tomato situation may not
address the more generic problem of perishable agricultural prod-
ucts.

Mr. HOUGHTON. Maybe I could just reclaim my time, then. I un-
derstand that, but the point is, it has been brought up because
there is a tomato issue, not because there is a cabbage issue or
something like that.

But I just wonder, in the overall scheme of things, and maybe
I could ask your——

Mr. THomas. I think I can answer your question. The first 201
was argued on seasonality and was turned down because the law
did not provide that. That is the basis of this legislation.

Their second 201 petition is based upon the industry as a whole,
in which it is going to be far harder for them to show injury as that
portion of the U.S. tomato industry, which is the front of the entire
US. industry.

So my guess is, not wanting to anticipate a decision, it will be
very, very difficult to show injury on a 201 case when the Florida
tomato industry is looked at as a portion of the entire domestic to-
mato market. So I do not think they are going to win their second
201, in my opinion.

Mr. HOUGHTON. You may be right, and I do not want to prolong
this thing, but I am assuming, for the sake of argument, that that
is not the case and that there will be some correction made. I may
be wrong, but that is the assumption.

I guess what I am getting at is that from a practical standpoint
in terms of NAFTA and retaliation and all sorts of things like that,
if there were a chance for you to get some sort of relief, would not
the relief be better through the 201 process, which is a sort of a
worldwide approach, rather than having a specific piece of legisla-
tion where people just are infuriated at the United States?

Mr. SHAW. Better to go through NAFTA?

Mr. HOUGHTON. Better to follow through the 201 process rather
than having this particular piece of legislation.

Mr. SHaw. I think, as Mr. Thomas pointed out, that you need
that extra piece of the puzzle to recognize the seasonality of the in-
dustry. The Florida industry closes down, basically, and if you
spread it out over an entire year when Florida is not even produc-
ing tomatoes and Mexico, likewise, is not producing tomatoes, it be-
comes, as Mr. Thomas says, very, very difficult, if not impossible,
to even make the case.

Chairman CRANE. Mr. Payne.

Mr. PAYNE. Thank you very much, Mr. Chairman, and welcome,
Ambassador Hillman.

Ms. HILLMAN. Thank you.

Mr. PAYNE. Thank you very much for your testimony. I am trying
to understand this issue, and certainly, I am very interested in get-
ting it resolved and it seems this amendment is probably the very
best way to approach that. It is a broader amendment than one
simply to address the issue that is going on in Florida at the
present time.

There are those who say, though, that there are concerns and
there are reasons that we should expect that this would not with-
stand the scrutiny of a WTO panel. Apparently, their concerns


129

and impose duties or other restrictions for
a limited period of time on imports of any
article which causes or threatens serious
injury to the domestic industry producing a
like or directly competitive article,
following an investigation and determination
by the U.S. International Trade Commission
(ITC) (formerly the U.S. Tariff Commission).

Id., 104th Cong., 1st Sess. at 96 (Committee Print, WMCP:
104-6).

Because unfair trade practices are not the basis for
action, U.S. law and our international obligations under the
GATT and now the WTO, have imposed the most difficult standard
for obtaining relief. Injury must be “serious” not merely
"material." Causation is similarly more difficult: *a
substantial cause" vs. a cause. Finally, unlike antidumping or
countervailing duty actions, where relief is provided, the
United States must provide compensation in the form of other
tariff reductions or face potential retaliation. This latter
situation was modified in the Uruguay Round negotiations, so
that no retaliation is permissible during the first three years
of relief. See Agreement on Safeguards, Article 8:3; T.
Stewart & M. Brilliant, "Safeguards," in

1717 ~ 1820,
Kluwer Law and Taxation Publishers (T, Stewart editor) (1993).

Mm. Past Experience and Existing Restrictions on Domestic Industry Definitions

Relatively few escape clause actions initiated over
the years have resulted in relief actually being granted to
domestic industries. There are a variety of reasons including
the difficulty of the injury standard, the construction of the
term “substantial cause" and the very limited willingness of
past Administrations to grant relief where an industry was able
to obtain an affirmative determination by the International
Trade Commission. It is not clear to what extent
Administration reluctance has been premised upon a desire not
to grant further trade concessions on other products. If that
has been the basis for refusal to grant relief, U.S. escape
clause cases may be more successful in the future than they
have been in the past.

The International Trade Commission in making
determinations of whether domestic industries are materially
injured or seriously injured under the antidumping and escape
clause laws conducts an investigation to obtain information on
the specifics of the particular industry and market situation.
U.S. law and international agreements have recognized that
industries and competition can be defined in terms of whether
products are produced in certain regions for regional
Consumption or whether there is temporal and location overlap
in how products are sold. See, ¢.g., Agreement on
Implementation of Article VI of the General Agreement on
Tariffs and Trade 1994 Article 3.3 (cumulation of imports
permitted where “conditions of competition” indicate it is
appropriate), 4.1(ii) (regional industry factors); 19 U.S.C.
1677(4)(C) (regional industry defined) and 1677(7)(G)
(cumulation). Even in situations where the Commission has not
found regional industry criteria to be met, the Commission has
examined whether imports which primarily enter and compete in
one market area have negatively impacted producers in that
area. See, @.ds, .
Inv. Nos. 731-TA-684~685 (Final), USITC Pub. 2862, at 1-21
n.124 (March 1995); .
Tay. Nos. 303-TA-15, 701-TA-213 (Final), USITC Pub. 1596 (Nov.
1984).



118

STATEMENT OF MIKE BOZICK
NATIONAL ALLIANCE FOR SEASONAL AGRICULTURAL TRADE

Good morning Mr. Chairman and Members of the committee. My name
is Mike Bozick and I am the vice president and general manager of
Richard Bagdasarian, Inc., a family farming company that raises

citrus and table grapes in southern California

Today I am representing the National Alliance for Seasonal
Agricultural Trade. NASAT is an ad hoc group of associations
committed to providing temporary relief from fresh fruit and
vegetable surge imports for growers of the same crops in the U.S
Our members are the California Farm Bureau, Western Growers
Association, Imperial Valley Vegetable Growers Association and

the California Desert Grape League.

I am also representing eighty (80) table grape growers who
provide 14,000 seasonal farmworker jobs. In addition to the
required benefits such as disability insurance, workmen’s
compensation insurance, and unemployment insurance, we also
provide medical and health insurance, and there are a few of us

who have profit-sharing plans

NASAT previously submitted our statement on the proposed
amendment to section 201 to the Committee on March 1st; I would
appreciate if the March 1st statement would be printed in your
Committee’s hearing record. {1 will summarize the NASAT statement

today. (Pause to let the Chairman accept your statement)


122

Annual Seasonal Perishable Crops

Annual seasonal perishable crops are fruits and vegetables that
require planting each season. Annual crops such as radishes,
peppers, tomatoes, potatoes, strawberries, etc., will normally be
a one season crop, (some regions may have the advantage of
obtaining two crops in a growing season, as lettuce in Salinas,
California), and the crops will be harvested and sold during a
period of the year. The time period from planting to harvest
will range from two to five months depending on the crop.

As an example, in January, strawberries are grown in south
Florida and certain parts of California. Strawberries, like
other seasonal perishable crops, need a certain type of soil,
temperature, adequate water, and daylight. After several months
when the temperature changes, the crop is harvested, sold and
consumed, and it will be another year before the strawberry is
planted in the area. A second, different region will be
producing the strawberry after the first area completes its
production. (Most likely if the strawberry were planted in a
second region at the same time, the crop would be a failure
because the second area lacks the necessary environment). If the
first crop area experiences import surge competition, the crop
will not be planted in that area in the following years, but
later harvested strawberry production in different regions would
continue in the future because they were not impacted as a result
of the import surge.

Perennial Seasonal Perishable Crops

Perennial crops are crops that once planted, produce for more
than one season (year). Unlike annual crops, perennial seasonal
perishable crops do not produce in commercial quantities for
three or more years after being planted. Some crops have more
than $10,000 per acre invested, not counting the land, before the
crops start producing.

Perennial crops can be segmented into two types: perishable and
semi-perishable. Examples of perishable perennial crops are
asparagus, peaches, nectarines, grapes, mangos, papayas, cane
berries, etc. Semi-perishable perennial crops include dates,
chestnuts, citrus, apples -- crops that need refrigeration and
can last months before being consumed.

Specific Differences in Annual and Perennial Crops

Seasonal perennial perishable crops are different from annual
perishable crops because they are permanently planted on the same
acreage and demand different considerations. Annual crops
normally are rotated because of pest build-up in the soil.

A major difference between the annual and perennial crop is the
time required before the perennial crop can be commercially
harvested. For example, dates may require some ten years before
they can be commercially harvested; pistachios, some six years;
citrus, three to four years; and asparagus, five years. Once
perennial crops begin producing they continue to produce for a
number of years. For example, asparagus plants produce for
fifteen years, whereas, an annual crop like peppers produces for
only one year

Another principal difference between the seasonal annual crop and
the seasonal perennial crop is the inability to relocate the
perennial crop, if the crop suffers from an import surge. First,
it is horticulturally impossible to relocate the seasonal
perennial crop that has tree, vine or bush roots for production
in the following season. Secondly, some of the seasonal crop
regions are quite small in area because of environmental
limitations. Many of these areas have supported the perennial
crops for decades and the plants are replaced every ten, fifteen
and even thirty years. How do you relocate 15,000 acres of peach
trees, or relocate hundreds of acres of asparagus or mangos? The


127

lose such a challenge, the first opportunity the United States has
is to modify its law to bring it into conformance.

In the context of whether the sky would fall, whether all of the
US. agricultural exports would suddenly find themselves subject to
retaliation, first, such action would be clearly contrary to our trad-
ing partners’ obligations with the United States and one need only
take a look at the track record of 201 in the past to evaluate the
reasonableness of the claim of potential retaliation.

Safeguards have been provided as a central element of every
trade agreement the United States has entered since 1934. It has
been the promise to American business and workers and commu-
nities that there will be time to adjust if things unanticipated hap-
pen. Yet less than 10 percent of cases that have ever been filed
have resulted in relief actually being afforded to domestic indus-
tries. If one looks at regional industries, to my knowledge, there
has never been a regional case brought under section 201. There
have only been a handful of regional cases brought under the anti-
dumping law.

So a concern about the sky falling and all of agriculture being
subject to retaliation, even assuming our trading partners were not
going to abide by their international obligations, is nonsense.

With regard to the issue, Mr. Chairman, that I heard you com-
menting about with regard to the Mexicans withdrawing product
from the market in March of this year in tomatoes, there is a large
sheaf of documents that has been submitted to both the Commerce
Department and the International Trade Commission, which do not
come from the State of Florida but come from Mexican newspapers
that refer to the Mexican producer organizations holding back huge
quantities of tomatoes for the specific purpose of increasing prices
in the United States, the very risk to U.S. consumers when the
only real competitor in the United States, namely the seasonal in-
dustry that directly competes with the imports, is knocked out of
the box.

That is the risk in Florida with regard to tomatoes and bell pep-
pers. It is the risk that occurs in California with regard to grapes.
It is a risk that can occur to many seasonal industries. Thank you
very much.

{The prepared statement follows:]


151

May 1, 1996

VIA HAND DELIVERY

The Honorable Philip M. Crane
Chairman

Subcommittee on Trade

Ways and Means Committee

U.S. House of Representatives

1104 Longworth House Office Building
Washington, D.C. 20515

Re: H.R. 2795

Dear Mr. Chairman:

The following comments are submitted for the record on behalf
of the Florida Tomato Exchange in response to questions raised at
last week's hearing on this legislation.

This bill would allow the International Trade Commission (ITC)
to consider the seasonality of perishable agricultural commodities
in connection with its determination of a domestic industry in
Section 201 and 202 safeguard proceedings (Trade Act of 1974). The
bill does not require the ITC to accept a seasonal industry
petition. The language is merely permissive in nature, and will
allow the ITC to consider the seasonality of a domestic perishable
agricultural product industry. Presently, the ITC does not believe
is has the authority to recognize a petition filed by a seasonal
industry. However, the safeguard provisions do recognize
manufacturing industries, other agricultural industries and even
allow for recognizing an industry which is limited to a geographic
or regional area.

The bill permits the ITC to consider in the definition of an
industry only those producers who produce the perishable
agricultural commodity during a particular growing season if the
producers sell all (or almost all) of the production in that
growing season, and during that growing season, other domestic
producers of the commodity, who produce during a different growing
season do not supply, to any substantial degree, demand for the
commodity.

Before th ittee on Trade, Ways and Means

Opponents of the bill suggested it was not GATT/WTO or NAFTA
consistent. However, the official arbiter of the issue is the U.S.
Trade Representative (USTR). Ms. Jennifer Hillman, General
Counsel, USTR, stated unequivocally that this bill was consistent
with all the U.S. international trade obligations. Moreover, Ms.
Hillman did not believe complaints of retaliation against other
industries and other commodities were supportable. And,
significantly, Ms. Hillman noted the administration’s strong
support for this bill. In other words, this bill is GATT and NAFTA
legal and claims of dire consequences to various industries and
threats of retaliation by our trading partners were simply, but
completely, discredited.

In addition, Ms. Hillman noted that NAFTA was not the cause
of increased imports of winter fruits and vegetables, and
discussions of NAFTA changes were not relevant to the consideration
of this bill. Ms. Hillman noted that periodic surges of winter
fruits and vegetables had been noted over at least 20 years and


1990/91
1991/92
1992/93
1993/94
1994/95

1990/91
1991/92
1992/93
1993/94
1994/95

*May not total 100% due to rounding.

155

Winter Vegetable Supply for 1990/91 - 1994/95
(October -June Season)

Mexico
-(Percent of Total Supply] *-~
35

48

57 25

a7 37

43 40

34 48
Florida Mexico Other
- --(400 1b. units)-
22654 16286 8218
27007 11683 8775,
22393 17616 8039
20883 19289 8630
15799 22159 4037

cucumbers, eggplant, squash, snap beans and peppers

Source:

USDA Agricultural Marketing Service

Total

47158
47465
48098
48802
45995,

Winter vegetables include tomatoes,


CONTENTS

‘The advisory of April 9, 1996, announcing the hearing ...

WITNESSES

Office of the U.S. Trade Representative, Hon. Jennifer Hillman, General
Counsel ..

‘Ad Hoc Coalition of Commodity and Food Groups on Trade Issues, B. Keith
eard ...
American Farm Bureau Federation, Carl B. Loop
Bozick, Mike, National Alliance for Seasonal Agricultural Trade
Canady, Hon. Charles 7, a Representative in Congress from the State of
jorida
Council of bassador G. Philip Hug!
Crawford, Bob, Florida’ Department of Agriculture and
as presented by Martha Roberts .
Deutsch, Hon. Peter, a Representative in Congress from the State of
Doyle, Becky, Illinois State Department of Agriculture ..
Florida Farm Bureau Federation, Carl B. Loop .
Florida, State of, Department of Agriculture and Consumer Services, Bob
Crawford, as presented by Martha Roberts .
Fresh Produce Association of the Americas, Humberto Monteverde
Goss, Hon. Porter J., a Representative in Congress from the State of Florida
Graham, Hon. Bob, a U.S. Senator from the State of Florida ..
Heard, B. Keith, National Com Growers Association and Ad Hoc Coalition
of Commodity and Food Groups on Trade Issues ..
Hughes, Ambassador G. Philip, Council of the Americas
of the Mexico-U.S. Business Committee ..
Illinois, State of, Department of Agriculture, Becky Doyle
Lawrimore, Barrett S., South Carolina Tomato Association
Loop, Carl'B., Florida Farm Bureau Federation and American Farm Bureau
Federation
Miller, Hon. Dan, a Representative in Congress from the State of Florida ..
Monteverde, Humberto, Fresh Produce Association of the Americas
National Alliance for Seasonal Agricultural Trade, Mike Bozick .
National Corn Growers Association, B. Keith Heard
Pastor, Hon. Ed, a Representative in Congress from
Roberts, Martha, Florida Department of Agriculture and Consumer Services,
on behalf of Bob Crawford .
Roh, Charles E., Jr., U.S. Council of the Mexico-U.S, Business Committee
Ros-Lehtinen, Hon. Ileana, a Representative in Congress from the State of
jorida
South Carolina Tomato Association, Barrett 8. Lawrimore
Stewart, Terence P., Stewart and Stewart ..
United States-Mexico Chamber of Commerce, Albert C. Zapanta
U.S. Council of the Mexico-U.S. Business Committee:
Ambassador G. Philip Hughes .
Charles E. Roh, Jr
Zapanta, Albert C., Unit

SUBMISSIONS FOR THE RECORD

Arizona, State of, Hon. Fife Symington, Governor, letter

amy

143


145

While our governments understand the importance of
maintaining viable domestic production against import surges,
we also recognize that the discipline of trade liberalization
requires the maintenance of open markets with predictable
rules.

We are heartened to note that United States-Central
American agricultural trade has steadily increased over the
past few years. During 1994, for example, total United States
agricultural exports to Central America exceeded $758 million,
representing an increase of roughly 65 percent from the level
five years earlier.

Similarly, the United States has become an increasingly
important market for Central American agricultural products.
From 1990 to 1995, US imports of Central American agricultural
goods grew by 20 percent. These impressive trends, which will
benefit both the farmers and consumers in the United States,
in Central America, and throughout the world can only continue
if together we advance, and abide by, a clear and consistent
path of trade liberalization in agriculture.

We appreciate the opportunity to register these views.
Please accept the assurances of our highest consideration.

Sincerely,

Gea Maynpe: Cb’ Da ®shrnso|
oO May Cortes Ana Cristina Sol
Ambassador of Nicaragua Ambassador of El Salvador

ado
x of Costa Rica


106

Yearly totals from 1994 to 1995 are similar. Tomato exports
increased 58 percent in 1995 from 1994 totals. Pepper exports
increased 20 percent. In 1993, before NAFT: tomato exports
totaled 882.9 million pounds. In 1994, the first year under
NAFTA, tomato exports totaled 829 million pounds, a drop of 54
million pounds or 6 percent from 1993.

In 1993, before NAFTA, pepper exports totaled 223.18 million
pounds. In 1994, pepper exports totaled 213.21 million pounds, a
drop of 10 million pounds or 5 percent from 1993.

The peso devaluation means consumers in Mexico took an
almost 35 percent reduction in per capita income overnight. This
price instability caused a crisis of confidence. Businesses lost
confidence in the peso as did many Mexican farms. For that
reason, many farms sought dollars for their products regardless
of price since they had no confidence that pesos received today
would be worth the same tomorrow. This is why consignment sales
are standard operating procedure for Mexican fruit and vegetable
shippers. Consignment sales are sales where fruits or vegetables
are shipped without a firm price. A price is assigned after
reaching U.S. markets based on other sales for that day.
Consignment or “open” sales are clear signs of seller
indifference as long as payment is made in dollars.

If the Mexican government does not implement sound economic
and fiscal policies that lead to a strong peso, imports of
perishable commodities will continue to stream into the U.S.

Without a stronger peso, our winter vegetable markets will
continue to be more attractive to Mexico's farmers, regardless of
price. This is the key reason why current law needs to be
amended to change the definitions of “domestic industry" and
“like or directly competitive article.*

We need to make available to domestic producers all the
relief from the impact of import surges to which they are
entitled under our trade agreements. Failure to realistically
define the scope of an industry should not preclude the
availability of relief.

For these reasons Farm Bureau supports H.R. 2795 and urges
the subcommittee to act quickly to pass this important
legisiation.

Thank you for the opportunity to appear here today.

F:stm\Loop. 425


66

Mr. Chairman, America is a very strong agricultural country and
we will be negatively affected by this legislation. The message I
want to leave here today is that all of agriculture, with $60 billion
of exports, is concerned about this legislation. I appreciate the op-
portunity to present that side of the story, as well.

Thank you, Mr. Shaw.

(The prepared statement and attachment follow:]


52

3. Diminish the ability of the U.S. to hold other countries to their trade

commitments.

The Clinton Administration, recognizing the fundamental importance of ensuring that trade
promises are kept, recently launched a high-profile initiative to "enforce" existing trade
agreements. For the United States to breach its own obligations under those same agreements
only undermines this "enforcement" initiative. U.S. industries hurt by the failure of foreign
governments to comply with their trade obligations could find it harder to obtain adequate

remedies.

4. Disrupt imports from other U.S. trading partners.

Although the "seasonality" legislation was proposed to protect Florida growers from
imports of Mexican tomatoes during the winter months, it could disrupt imports of numerous
"seasonal" products from Europe, Canada, Israel, Chile and elsewhere that are consumed or
processed through out the United States. Imports could face new barriers whenever any group

of "seasonal" U.S. producers is found to be injured by import competition.

, Perhaps most troubling to me, however, is how this proposed action could
undermine the progress toward stability and order in the global economy which we have worked
too hard to achieve. The United States has long been pressing other nations not only to accept
more open markets but to enforce these new rules, to live up to their obligations. For us to now
be the one considering going back on its word, as H.R. 2795 would do, suggests the beginning
of the breakdown of the system. We cannot afford to let this happen. We cannot afford to play
fast and loose with the famework of the international trading system. We cannot afford to pass

HR. 2795.


101

STATEMENT OF CARL B. LOOP, PRESIDENT, FLORIDA FARM
BUREAU FEDERATION; AND VICE PRESIDENT, AMERICAN
FARM BUREAU FEDERATION

Mr. Loop. Thank you, Mr. Chairman, Members of the Commit-
tee. I appreciate the opportunity to be here this afternoon. I appre-
ciate you all having these hearings.

My name is Carl Loop. I am vice president of the American Farm
Bureau Federation and also president of the Florida Farm Bureau
Federation. Farm Bureau supports H.R. 2795 because it extends
the same safeguards afforded other commodities to seasonal perish-
able agricultural products.

Sections 201~204 of the Trade Act of 1974 authorizes the Presi-
dent to help domestic industries adjust to import competition. After
a review by the International Trade Commission, the ITC, these
provisions give the President the authority to withdraw or ‘modify
concessions or impose duties for a limited period of time. These
provisions were intended to provide domestic industries transi-
tional relief from import surges to give them the opportunity to ad-
just to increased competition.

While the current law does expressly provide transitional relief
for most U.S. industries and products, it does not provide a mecha-
nism for seasonal perishable agricultural products to gain the same
type of transitional relief measures offered to other U.S. products.

Practical relief is simply not available for seasonal perishable
crops grown in my State. That fact was demonstrated last year
when the Florida Tomato Exchange filed a petition with the ITC
seeking provisional relief under section 202(d) of the Trade Act of
1974 for fresh winter tomatoes. The commission ruled that the win-
ter tomato industry of Florida could not be examined separately
from the summer tomato industry of California. In effect, the com-
mission ruled that both types of tomatoes are the same because of
its determination that the express “like or directly competitive arti-
cle” meant that all tomatoes produced in the United States in a cal-
endar year define a single industry.

In effect, this meant current law discriminates against perishable
crops, offering protection to nonperishable crops but not to perish-
able crops. Current law, as enacted by the ITC ruling, also does not
distinguish or recognize the differences between similar products
produced during different and separate marketing seasons.

The deficiencies in current law mean that growers of perishable
crops with very distinct market windows, including farms in Flor-
ida, do not have access to the type of relief measures we need to
adjust to the incredible increase of imports of some perishable
crops from Mexico. We hope that you will correct the deficiencies
in the law so that we have the mechanism in the law that provides
necessary safeguards and transitional measures that allow us to
compete.

Make no mistake, imports of fruits and vegetables are causing
serious and perhaps permanent damage to many Florida farms.
Without the type of transitional relief that is afforded other prod-
ucts in similar situations, Florida simply will not survive in the
winter vegetable industry.

Perishable crops are clearly different from other commodities. If
market conditions are poor during harvest, farmers of perishable


26

Chairman CRANE. I will happily do that if you guarantee me I
can catch a 6 o’clock flight.

Senator GRAHAM. I do not do guarantees, but it is better if I
leave. [Laughter.]

Chairman CRANE. Thank you, Porter.

Next, Ed Pastor.

STATEMENT OF HON. ED PASTOR, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ARIZONA

Mr. Pastor. Thank you, Mr. Chairman, for allowing me to testify
before the Committee. As you know, there is a saying that “reason-
able people will differ,” and I hope to give you the other side of the

stor’

The reason I am here is that I represent the part of Arizona,
Nogales, Arizona, through which many of the Mexican tomatoes
enter the United States. It is of great interest to American
businesspeople, at least in the area I represent, that we do not pass
this legislation. This is a bipartisan issue. I believe that you have
before you a letter from Governor Symington, who is a Republican,
as well as my Republican colleagues from Arizona, expressing their
opposition to this legislation.

Mr. Chairman, in the winter when you and your significant other
go shopping and you come to the vegetable counter you probably
will see red vine-ripened tomatoes. These tomatoes are luscious,
beautiful in color, and equal in price to others you see that are
greenish or light pink in color me hard. You probably buy the red
tomato which appeals to you, and it’s very likely that this tomato
has been grown in Sonora, Mexico. It is being grown there because
American businessmen have invested in that product. They have
sold seed. They have sold greenhouses. They have sold fertilizer to
Mexican farmers. So there is an American interest in this product.

Very recently I hosted Senator Graham, Congresswoman
Thurman, Congressman Foley, and Congressman Ewing in Ari-
zona. We made a trip into Nogales and into Sonora, Mexico, so they
could see the process. I have to tell you that the reason the Florida
growers are finding themselves in difficult straits is they cannot
compete—basically, because of how the tomato is grown, packaged,
and delivered to the marketplace and the final choices the Amer-
ican consumers make. Because of the products and the price they
are buying and consuming tomatoes that are grown in Mexico.

So, those that lose if this piece of legislation is passed will be
your constituents, your consumers who, in the winter, are looking
for a product that they can buy that is affordable and yet has the
quality they expect. Others who lose if this legislation is passed
will be the American businessman or businesswoman who has in-
vested in the production of this product. I stated before that Amer-
ican businesses sell the seeds and the fertilizer to Mexico and hire
the people who transport these products. They have an investment
in the Mexican tomato and will be negatively impacted if this legis-
lation is implemented.

I spent 1% years on the Agriculture Committee talking about the
freedom to farm. The philosophy that I heard from its Chairman,
Mr. Roberts, to its many Members was that the American farmer
now would have to compete in a free market, and in order to com-


agricultural products.

In the case of perishable agricultural products, direct competition among growers is
limited based upon the shelf life of the product. Thus, growers in Virginia do not compete
with winter growers in Florida. It is the perishable characteristics of fresh vegetables that
justifies the seasonal industry definition. If fresh vegetables harvested in the winter months
could be stored into the summer months that might be a different matter. 1 believe this
legislation closely follows the intent that our safeguard laws apply to situations where
products compete directly.

The bill simply provides producers of perishable agricultural products a fair
‘opportunity to have their claims investigated by the ITC. They will still be required to show
that increased imports are a "substantial cause" or threat thereof of “serious injury" to the
industry. This legislative change does not reduce the standards of sections 201 and 202 or
eliminate any parts of the ITC’s investigation.

This legislation, H.R. 2795 is now before this committee for consideration. Mr.
Chairman, | urge the immediate adoption of H.R. 2795, a bill that advances fair trading rules
for American farmers in crisis. This bill is a step towards making NAFTA work as it was
intended.


105

producers of the same or like commodity. While there is overlap
of seasons where like commodities from other states and regions
compete, a tomato grower in any other state outside Florida is
unable to compete with Florida growers for the January fresh
tomato market. Because of the highly perishable nature of these
commodities, they also cannot be stored long enough to hold them
to compete during a different season. For these reasons, Florida
has an exclusive and separate winter vegetable industry for
several commodities, Current trade law does not recognize this
“separateness or “exclusiveness.* As a result, current law is
inadequate because it provides transitional relief to some
commodities, but not to perishable crops with separate growing
and marketing season. In that regard the definition of “like or
directly competitive article" needs to be changed so it
recognizes separate and exclusive market seasons.

There are other reasons why current trade law should be
changed. The tremendous increase in vegetable imports from
Mexico is due primarily to the devaluation of the peso - a policy
change resulting from U.S. help and encouragement.

On December 20, 1994, the Mexican government devalued the
peso by 15 percent and has since allowed the peso to fall further
relative to the dollar. Today, one dollar will purchase 7 pesos~
an effective peso devaluation of 50 percent. The effect on
tomato and pepper exports from Mexico were dramatic.

WEEKLY SHIPMENTS OF MEXICAN TOMATOES AND PEPPERS

10,000 pounds

Week Ending ‘Tomatoes Peppers
10/1/94 688 -
10/8/94 568 -
10/35/94 728 :
10/22/94 752 665
10/29/94 876 2,155
11/5/94 1,004 735
21/12/94 560 2,680
11/19/94 352 3,855
11/26/94 676 2,240
12/3/94 - 2,520
12/10/94 1,016 Peso 31360
12/17/94 1,704 Devaluation 7,314
12/24/94 2,160 7,350
12/31/94 2,764 91940
1/7/95 2,644 13,615
1/14/95 31052 21,585
2/21/95 31336 12,005
1/28/95 41004 14,105
2/4/95 41388 15,330
2/11/95 31976 16,065
2/38/95 4/248 10,360
1/25/95 5.120 14,070
3/4795 4,452 13,930
3/11/95 4,312 15,820
3/18/95 3.652 12,410
3/25/35 21844 11,900
4/1795 21564 6,730
4/8/95 1,988 7,070

Exports of tomatoes from Mexico in January of 1994 totaled
108.08 million pounds. In January of 1995, the first full month
after the peso devaluation, exports jumped 34 percent to 144.96
million pounds.

Exports of peppers from Mexico in January of 1994 totaled
46.33 million pounds. In January of 1995, the first full month
after the peso devaluation, exports jumped 11 percent to 51.01
million pounds.


162

NAPAR MEMBERS - April 10, 1996

A. & J, Produce Corporation
‘Adams Produce Company, Inc.
Andrews Brothers Inc.

Arrow Farms, Inc.

‘Aunt Mid Produce Company
Maurice A. Auerbach, Inc.

Big Bear Stores Company

Boston Tomato Company, Inc.
Brigiotta's Produce & Garden Center

Brismark/The Queensland Chamber Co-Op

Capital City Fruit Company, Inc.
Carbonella & DeSarbo, Inc.

Caruso Ine.

Castellini Company

G. Cefalu’ & Brother, Inc.

Chep USA

W. D. Class & Son

Coastal Sunbelt Produce Company
Collotti & Sons Inc.
Community-Suffolk, Inc.

Peter Condakes Company, Inc.
Consumers Produce Company, Inc.
Corey Brothers Ine.

Costa & Harris Produce, Inc.
DiAmrigo Bros. Co. of New York, Inc.
DiMare/New England Farms

Dixie Produce & Packaging Inc.
Fast Food Merchandisers, Inc.

G. Fava Fruit Company

Joseph Fierman & Son Inc,

‘Al Finer Company

Finest Fruits, Inc.

Ellis Fleisher Produce Company
Four Seasons Produce, Inc.

Fruitco Corporation

Giant Food Inc.

Paul Giordano & Sons, Inc

Goodie Brands Packing Corporation
‘The Grand Union Company

R. S. Hanline & Company, Inc.
The L. Holloway & Brother Company
The Horton Fruit Company, inc.
Hunter Brothers Inc.

J.C. Banana Company

J.L. W. Produce, Ine,

James Produce, Inc.

Jumbo Produce
E. W. Kean Company Inc.

Kleiman & Hochberg, Inc.
Klinghoffer Brothers, Inc.

T. M, Kovacevich-Philadelphia, Inc.

L & M Produce Company, Inc.

Lyons Distributors, Inc.

M, & R. Tomato Distributors, Inc.
‘Tom Maceri & Sons, Inc.

Maryland Fresh Tomato Company, Inc.
Massave Produce, Inc.

Nardella, Inc.

Joseph Notarianni & Company, Inc.
Morris Okun, Inc.

P & C Foods

Pennbox, a division of Libla Industries, Inc.

Pinto Brothers Inc.
Post & Taback Inc.

Procacci Brothers Sales Corporation
Quaker City Produce Company

RLB Food Distributors

Edward G. Rahll & Sons, Inc.

Reddy Brand Packers, Inc.

Riccelli Produce Inc.

Rocky Produce, Inc.

William Rosenstein & Sons Company
Rosenthal & Klein, Inc,

D. M, Rothman Company, Inc.

Royal Banana Company, Inc.

Rubin Brothers Produce Corporation
Ryeco Inc.

Safeway Inc

‘The Sanson Company

Ben B. Schwartz & Sons, Inc.

Serra Brothers Inc.

‘Smelkinson/Sysco

Standard Fruit & Vegetable Co, Inc.
Stires Recording Thermometer Company
Storeys' Fruit And Produce, Inc.
Strube Celery & Vegetable Company
United Fruit & Produce Company, Inc.
United Fruit & Produce Company, Inc. PA
Verdelli Farms, Inc,

‘Tony Vitrano Company

Wakefern Food Corporation

D. Wiggins Sales, Inc.

Wishnatzki & Nathel, Inc.

NATIONAL ASSOCIATION OF PERISHABLE AGRICULTURAL RECEIVERS


165

PACIFIC BROKERAGE Co.

‘TTF MANSON CUSTOMS BROKER

4, Disrupt imports from other U.S. trading partners.

Although the "seasonality" legislation was proposed to protect
Florida growers fron imports of Mexican winter tomatoes, it could
disrupt imports of numerous “seasonal” products from Furope,
Canada, Israel, Chile and elsewhere that are consumed or processed
throughout the United States. Imports could face new barriers
whenever a group of "seasonal" U.S. producers (no matter how small)
is found to be injured by import competition.

very truly yours,
PACIFIC BROKERAGE CO.

a

Jamés F. Manson

By:

SFM’ gmn


34

Mr. HouGHTON. Thank you.

Chairman CRANE. Mr. Neal.

Mr. NEAL. I have no questions at this time, Mr. Chairman.

Chairman CRANE. Mr. Camp.

Mr. Camp. Thank you, Mr. Chairman.

I have some concerns about this approach, particularly the possi-
bility that other nations may retaliate against U.S. exports of per-
ishable products as a result of this. So I just wanted to set that
out there for the record and I wondered if either of you had any
comment on that.

Mr. DeuTscuH. I guess I keep going back to the facts being the
facts. And to Mr. Houghton, you would still have to prove dumping.
You would still have to make a determination. Do you really be-
lieve that there exists a concept of a distinct product of winter veg-
etable? The farmers tell us there really is. The facts show that
there really is.

So I think that if, in fact, we were dumping, someone could, in
fact, do that against us, if there were a distinct product. But I
think that is the whole purpose of free trade, that it should be free,
competitive trade, but if a country wants to dump products below
cost, they should not be allowed to because that destroys the whole
concept of a free international market.

Mr. Camp. I thought it was a seasonal issue, not a dumping
issue. It is both?

Mr. DEuTSCcH. It is a seasonal issue, and the legislation will
allow you to argue that there is a distinct season. That is what the
legislation does.

Mr. Camp. Dan, do you have any comments?

Mr. MILLER. That is the issue of dumping. You cannot dump
Mexican tomatoes in August because they do not have Mexican to-
matoes, I do not think, much in August. So the question is, we
want to have that defined as a separate product category as such.
But as far as retaliation, I do not know the answer to that.

Mr. Camp. Thank you.

Chairman CRANE. Mr. Payne.

Mr. PAYNE. I have no questions. Thank you.

Chairman CRANE. With that, I want to thank our panelists for
their presentations.

Our next witness is Hon. Jennifer Hillman, General Counsel of
the USTR. And again, if you can compress your presentation to 5
minutes or less, all printed material will be a matter of the perma-
nent record.

STATEMENT OF HON. JENNIFER HILLMAN, GENERAL
COUNSEL, OFFICE OF THE U.S. TRADE REPRESENTATIVE

Ms. HILLMAN. Thank you, Mr. Chairman. I appreciate the oppor-
tunity to present the administration’s views on this bill, H.R. 2795,
a bill which would amend the Trade Act of 1974 to clarify certain
definitions of domestic industry and like articles in certain inves-
tigations involving perishable agricultural products.

The administration supports this legislation. Unfortunately, safe-
guard mechanisms available under existing legislation often are
unable to address the unique circumstances of perishable agricul-


115

Mc. Chairman and members of the committee, you have a policy
decision before you today. Section 201 is a trade relief program
that can provide relief for industrial products and many
commodity crops -- but it does not provide relief for perishable
seasonal agricultural crops. However, you have an opportunity to

provide equal treatment for seasonal perishable crops.

I was hoping that the U.S. Department of Agriculture would
testify here today, because the Department could explain the
complexities and volatility of the fresh fruit and vegetable
market. The average consumer does not see the price fluctuations
because they are shielded by the supermarkets. However, it is
not unusual to have prices move by 100, 200 or even 300 percent

in a day or two in the fruit and vegetable markets.

There is much confusion about the proposed legislation in the
Mexican agricultural and U.S. agricultural communities. 1 would
like to describe what the legislation will not -- and I repeat,

will not -- do:

@ The amendment, if enacted, will not immediately increase

tariffs on tomatoes and bell peppers;


186

Translation from El Debate, March 12, 1996, 9, 1a-a

I ht Tat

EL DEBATE de Los Mochis. - As a measure arising from an attempt
to overcome the serious decline in the prices of ripe tomatoes faced
starting last week in the United States, producers of this state agreed
to return to their places of origin all the products present at the
border of colors § and 6, the more mature; to suspend packing the product
this weekend, and, starting tomorrow, to ship to the market only color 3
as a maximum, of 90% grade.

The agreement was signed Friday at a meeting with
representatives of tomato growers of this state held within CAADES, Or
Jorge Antolin Rojo Leyva sald yesterday.

The head of the Department of Economic Studies of the Farmers’
Association of Rio Fuerte Sur stated that this measure attempts to
overcome the serious decline in prices of this product which began to
appear starting last week In the neighboring market.

He pointed out that although the agreed upon measures are basic,
it was necessary to establish them as a means to reduce the supply of the
product in the U.S. market and to promote the resurgence of prices in the
short term.

The problems which appeared since last week in the United States
in the marketing of ripe tomatoes are rather sertous, and artse precisely
from the high production volumes which have been handled, but "we hope
that with the measures taken the situation will return to normal in the

short run."


iba Se Senay,
Resolution

Bp Senator Winns

1 resoltion argg the nied Sixes to take ation to sap trier abwrest fics
om lacus miaral producers canard bp Mein impor.

WHEREDD, she Bid seater is the woes greatest ogra! ration amb the ate oe eps. te
benefits of ur nation's mriuaral floes, and

WRERERS, Fide mpi is a male emibue  ie belh nd tL vng of te cites of thie sate,
the nation, a the we, it) anual ses of ras farm proba of nearly $6 bition tabich pobibes SAS hii of
remomit benefit to te to grat, rocees, taser, insre, fee, and probbe qpobd ab rbces necessary fot
arintarl predation,

WHERENS, this ate bas produced tbe msioiy of the nation's swonp of wine Ful, ogra, cus,
ua cre probit a i the able tomestic sppler of may of thee commodities foc several mot tah pea, anh

WHERERS, ws cenit ofthe meecaecd exalaton of sipments mad import surges of tates md other
legeabies from Ateneo t bln te cost of proburon, ober the past 3 pes. this sat's percentage share ofthe
‘Domestic market as becneD eth pear, mb

WHEREAS, te remmse eatin te Mei peso bas accented very negative elects on apie
is ae, ciping his indus and placing x mor tre on its contined existe, OW. THEREFORE,

Be A Resoted bp the rast of the Grate of Porta

Cnet Chnioaan of the Faeraial Cede Commision Bear Water, she Bresbent of the Bute Mears,

RE HE SUREHER REDELVER tet ces tis reatin be Dispatied to the President of te Bite
‘Staten, te reset ofthe Bate ines este, 0 the dopeaker af te Vnied Sates Ronse of Representations,
‘to emt mabe of the Sloiba Deegan to the Wted Slate Congres, to the Bnd Gare Crade Representative,
sb t the Chairman of the Fntemahensl Ceabe Commission.

Soe
Secrary of te Seaute



112

scribed. We must prove that we have a workable, adjustable plan,
and finally, the President has to approve this program.

I go back and I say the rampant planting of Mexican table
grapes, in 1994, the Mexican table grapegrowers exported 4 million
boxes to the United States. In 1995, they exported 8 million boxes
to the United States, double their production. This is due to the de-
valuation of the peso and another factor. They could not go to the
national markets so they put it here in the United States.

The relief would give seasonal perishable crops a period of a few
years to make adjustments, and that is all we are asking for. We
are not asking for anything special.

I have heard that some were opposed to the legislation in fear
that other nations will implement similar or mirror legislation. It
was my understanding that in the NAFTA, there was a cap that
you could put on. If they wanted to increase tariffs on a particular
crop, they could only do it a certain percentage. It could not be an
exorbitant amount.

If another crop, a crop of another nation, were affected in the
same manner, I would have no problem supporting that, as long as
they met the same guidelines and had to go through the same
hoops that I would have to go through with a 201 case.

In closing, I ask you to reflect on the prospects of my family and
other families that have decades of work invested in their trees and
vines. There is simply no ability to move these plants to Mexico or
other parts of the United States. Industrial plants may be capable
of relocation, but we do not have that option.

The proposed legislation before you is not contrary to global
trade, contrary to what we may have heard here earlier. Instead,
it merely gives a grower impacted by an import surge a few years
to make the necessary adjustments to that new competition.

I remember reading in the Congressional Record that a former
Secretary of Agriculture said U.S. agriculture should not fear im-
port competition since we had the best technology and scientists.
What the Secretary did not mention, however, was that the cul-
tural practices developed in our country, any new variety that we
develop, are immediately picked up by our competition, by our for-
eign competitors. Nor did he mention the currency devaluation. All
the best technology, scientists, and bank loans cannot protect the
U.S. grower from a devaluation such as the December 1994 Mexi-
can devaluation.

I might add that in meeting in Hermosillo, or outside of
Hermosillo in Mexico, I think it was in February, the Mexican
banks told Mexican growers, if you wanted a loan to bring your
crop in this year, you had to export your grapes to the United
States in order to bring the dollar into Mexico.

Thank you, and I will be happy to answer any questions you
might have.

[The prepared statement and attachment follow:]


16

ITC's determination in this case” by amending the Trade Act of 1974 so that separate
“seasonal industries" would be recognized in the definition of "domestic industry,” thus
allowing for safeguard protection in cases where only a segment of the domestic industry is
at risk.

‘That is where the issue should have ended, but it gained political momentum even
though the industry, according to The Wall Street Journal, is dominated by only four families
“whose operations are highly diversified and, by all accounts, profitable more years than
not." The Wall Street Journal article from which I quote, written by Helene Cooper and
Bruce Ingersoll, gives an exceptionally astute analysis of this issue. I would encourage all
interested parties to read it,

Basis for Opposition to H.R. 2795

In international trade law, safeguard/emergency action provisions are exceptions to the
rule. They permit signatory countries to increase tariffs above agreed levels, impose quotas
or take other measures ordinarily prohibited by the agreements in response to harm caused
by imports. If strict criteria are met, they allow a country to raise barriers to trade, when
cunexpectedly large increases in the import of those goods cause serious injury to a domestic
industry. The criteria are strict for good reason, to prevent abuse of the law. For these
discussions, the operative words here ate "domestic industry." These provisions are intended
to be used when an entire industry is at risk, not just a small segment of that industry
separated from the rest by geography and production season.

‘The members of the Council of the Americas and the U.S. Council of the Mexico-
U.S. Business Committee believe that trade-liberalizing policies have brought and will
continue to bring prosperity to the Americas, and are committed to the letter as well as the
spirit of the NAFTA and the WTO. In addition to being a clear violation of NAFTA and the
WTO, as my colleague Chip Roh has clearly shown in his analysis prepared for the U.S.
Council of the Mexico-U.S. Business Committee, we believe that passage of H.R. 2795
would impede free trade and lead to retaliation by our trading partners seeking to protect
their producers from competitive U.S. products.’ Since this retaliation would not be limited
to winter tomatoes, or even to agricultural products in general, it has potentially harmful
ramifications for many sectors of the U.S. economy.

H.R, 2795 also sets a very protectionist precedent for U.S. trade policy and would
severely weaken the United States’ credibility on trade-related issues, particularly given the
U.S. government's recently announced actions to ensure our trading partners’ compliance
with trade agreements. Even faced with extremely difficult economic conditions and intense
internal pressure, Mexico has been true to the NAFTA and has not resorted to protectionist
maneuvers such as these. For the United States to break its own word when it comes to
international trade agreements only impugns our country’s good name in world trade fora.

‘The most basic reasons we oppose H.R. 2795 are economics and history, both of
which teach us that protectionism is a short-sighted policy which encourages inefficiency and
increases prices in order to shelter certain segments of the economy from competition. The

7 See 141 Cong. Rec. £2388 (daily ed. Dec. 19, 1995) (statement of Rep. Shaw); 142
Cong. Rec. S441 (daily ed. Jan. 26, 1996) (statement of Sen. Graham) ("This legislation is
intended to facilitate a different result by the ITC in cases with facts similar to those
presented in the case filed by the winter tomato growers.").

> “Playing Catch-Up", Helene Cooper and Bruce Ingersoll, The Wall Street Journal,
April 3. 1996.

+ *Comments on Miscellaneous Trade Proposals (Advisory No. TR-17)", Charles E.
Roh, Jz, and David W. Oliver, for the U.S. Council of the Mexico-U.S, Business
Committee, March 1, 1996.



28

STATEMENT OF THE HONORABLE ED PASTOR
‘Arizona - Second District

before the

SUBCOMMITTEE ON TRADE
House Ways and Means Committee

APRIL 25, 1996

wr Chairnan,, thank you for the opportunity to testify before the
Subcommittee regarding H.R. 2795 which py ‘to include
Maeasonality* ag a factor in defining an industry for the
purposes of granting import relief. I am here today becau
Pill drastically affects the Mexican vinter tomato industry which
is very important to the Arizona economy. I would like to

explain why H.R. 2795 is a dangerous piece of anti-competitive
legislation that may lead to the misuse of import relief and
dismantle the strides the U.S. has made toward open and free
trad

Mr. Chairman, the majority of Mexican fresh winter tomatoes cone
through Nogales, Arizona, in my district. Due to their excellent
quality and flavor, these tomatoes are in high demand and this
demand has created numerous employment opportunities for
shippers, retailers, truckers and others in Arizona. Export
businesses have also benefitted from this constructive trade
relationship. Many Arizonan businesses export agricultural
supplies, seeds, tractor parts, cardboard cartons, wooden
palettes and other supplies to Mexico. These exports help Mexico
ship back fresh winter produce. This two-way trade alliance has
created jobs, wealth and stability on both sides of the border.
To the people along the border, trade is not an abstract concept,
it is very much a tangible reality. Open and free trade with our
partners in Mexico has had a positive impact on Arizona's
economy. However, these trade policies have increased
competition for domestic winter tomato growers. H.R. 2795 is a
legislative "fix" to reduce competition from foreign markets and
Protect domestic agricultural markets.

If H.R. 2795 is passed, it would allow domestic winter tomato
growers to obtain import relief from Mexican winter tomatoes by
adding a new "seasonality" factor to the definition of a
“domestic industry." Presently, in accordance with the World
Trade Organization (WTO) agreement, import relief is granted if
import injury affects the industry'as a whole. If a *seasonal"
industry is permitted, domestic winter tomato grovers would
suddenly be eligible for protection from Mexican tomato imports
even though they represent a fraction of the U.S. tomato
industry. It seems to me that these actions undermine the very
spirit of open and free trade by restricting foreign competition
rather than allowing the marketplace to determine the outcome.

The anti-competitive effects of this legislation will reach far
beyond the agricultural industry. Once seasonal relief is
provided for the agricultural industry, other seasonal
industries, such as the Christmas products industry and the
clothing industry, vill follov suit. Making import relief easy
to obtain for seasonal agricultural products sets a precedent. for
other seasonal industries to seek protectionist favors as well.

H.R. 2795 will have a negative affect on U.S. exports when our
trading partners respond by imposing their own trade barriers.
Nogales, Arizona, in my congressional district, is a key
U.S./Mexico crossing point and as such, we communicate often with
our friends across the border. Numerous countries, including our
Mexican neighbors, have expressed tremendous concern over the
possibility that the U.S. might impose protectionist trade
barriers such as those contained in H.R. 2795. If this
legislation is passed, I feel it is inevitable that Mexico will
retaliate with their own trade restrictions on U.S. agricultural



94

Penny Tariffs

But Nafta doesn’t appear to be the problem. The U.S. tarifé on
Mexican tomatoes was only 1.4 cents per pound before Nafta took effect
in January 1994; lowering it to the present one cent hardly makes a
difference. (Mr. DiMare says: "Nafta made it easier for Americans to go
down there and set up shop.") The real issue is the peso devaluation
that allows Mexicans to cut their dollar prices. But many of the
Mexicans’ production costs - including everything from pesticides to
tractors - are denominated in dollars. As a result, says Ms. Cook, the
agricultural economist, the cost competitiveness of Mexican growers
hasn’t improved in proportion to the devaluation.

The number of Florida tomato growers has declined in recent years
According to the Florida Tomato Growers Exchange, 88 growers are now
producing tomatoes, down 10 from a year ago. Thé dropouts stayed in
agriculture but "chose not to grow tomatoes this year," says Bernard
Hamel, a field representative for the exchange.

There are many factors in the decline beyond Mexican
competitiveness. The winter-vegetable business, like all American
agriculture, is consolidating as corporate farms swallow smaller
producers. ‘Some growers have sold acreage to developers as suburban
sprawl moved their way. Others lost struggles over land use and water
management .

still, Florida tomato production is rising while acreage is holding
steady. Growers produced nearly 1.2 billion pounds in 1980-1981 on
46,300 acres, according to a University of Florida study, and 1.6 billion
pouinds on 50,600 acres in 1994-1995. There have been’ dips and spikes
in between, but the trend is up. ‘Keith Collins, chief Agriculture
Department economist, says, “There are some awfully big tomato producers
down there."

Family-run businesses - particularly those owned by the DiMare,
Gargiulo, Heller and Esformes families-have dominated the field. Some
growers began as peddlers and wholesalers, and some grew tomatoes in Cuba
until Fidel Castro forced them out.

Mr. Diare, the 55-year-old grandson of a Sicilian immigrant, got
his start in the tomato business from his father, who sold fruit froma
pusheart in Boston. The family now runs one of the largest vegetable
operations in the country, with farms in California, Florida and south
Carolina. Mr. DiMare himself has done quite well. In 1988, he and two
associates tried to buy the New England Patriots professional football
team, He has gotten to know most of the political heavyweights in
Florida, and many nationally; just last year, presidential candidate Pat
Buchanan criticized Nafta at a rally at a’ Diare packing plant near
Miami.

‘The Florida growers tend to play down their production and marketing
might and are secretive about earnings. But Monsanto, after studying the
books of one family, the Gargiulos of Naples, Fla., paid $108 million for
its far-flung opration. Tomatoes in Florida and elsewhere account for
more than 50% of the revenue of the Gargiulo operation. During the past
five years, Gargiulo’s revenue more than doubled to $114 million yearly,
according ‘to disclosure reports filed by Calgene, a subsidiary of
Monsanto. Calgene and the Gargiulo business are being merged with Collier
Farms, a Florida grower acquired for $26 million.

Many large growers try to have operations in enough areas to grow
and pack produce year round, offsetting vagaries of weather, currency or
market fluctuations and changes in trade law. The Gargiulo family, in
fact, grows tomatoes in both Florida and Mexico and ships tons of
tomatoes into the U.S. from its Sinaloa joint venture.

Many California and Florida growers have different views of the
Mexican threat. While Floridians produce mostly in the winter, the
Californians grow mainly for the summer market and compete against
Mexicans in nearby Baja California. But the Californians aren’t blaming
Nafta.

Indeed, many California growers have relocated or entered joint
ventures in Baja, lured by lower land and water costs, cheaper labor and
fewer regulations. They also consider themselves more used to

competition than the Floridians, who for years have had a virtual lock
on the winter-tomato market. Says Edward Beckman, president of the
California Tomato Board: "My growers compete with growers in 28 states.©


STATEMENT OF REPRESENTATIVE JIM RAMSTAD
WAYS AND MEANS SUBCOMMITTEE ON TRADE
HEARING ON H.R. 2795, A BILL REGARDING SAFEGUARD INVESTIGATIONS
OF PERISHABLE AGRICULTURAL PRODUCTS
APRIL 25, 1996

Mr. Chairman, thank you for calling this hearing today to explore
the effects H.R. 2795 would have on the U.S. industries
producing perishable agricultural products.

Certainly, it is important to utilize safeguard mechanisms and
grant our domestic industries temporary relief in appropriate
circumstances.

At the same time, considering the importance of free trade and
foreign markets that are open to American products, it is
imperative we also discuss the potential consequences of this bill
on all U.S. exports and trade relationships.

Mr. Chairman, thanks again for calling this hearing. | look
forward to listening to the testimony of today’s witnesses and
exploring in greater depth these important issues.


qT

fate of mercantilism and the theories of Adam Smith and David Ricardo, among others,
prove that international trade creates economic benefits for both buying and selling countries.
Free trade is probably the single-most important policy we can follow to raise the standard of
living of ordinary people across this country.

International trade expands the number of markets in which a country can sell its
goods, which results in greater production and greater use of inputs (including labor), thus
increasing domestic employment, International trade does increase competition, but
competition is something that should be encouraged. Competition reduces the prices
consumers pay, and makes domestic companies more efficient, thus allowing them to
compete in what we all recognize is a global economy.

As the leaders of the 34 Western Hemisphere nations gathered in Miami on the
‘occasion of the Summit of the Americas said,

A key to prosperity is trade without barriers, without subsidies, without unfair
practices, and with an increasing stream of productive investments. Eliminating
impediments to market access for goods and services among our countries will
foster our economic growth. A growing world economy will also enhance our
domestic prosperity. Free trade and increased economic integration are key factors
for raising standards of living, improving the working conditions of people in the
‘Americas and better protecting the environment.’

‘Impact_on U.S. Businesses

I would like to focus the balance of my comments on the specific ways that this

ion will affect U.S. companies. While the imposition of certain emergency actions is
d by the Safeguards Agreement and the NAFTA, they are not without costs for the
ing country. If passed, H.R. 2795 would negatively impact U.S. businesses in at least
three specific, and very significant ways:

1. Increased Cost to Consumers

Basic supply and demand economics shows that the initial cost of legislation such as
this will be born by the consumers of the goods in question. If, in a free market economy,
domestic industry cannot produce goods that are competitive in both price and quality with
\ike goods from foreign suppliers, consumers will demand that those goods be imported. If
the price of those imports is artificially inflated by tariffs or restriction of supply, the
consumers of those goods will be forced to pay more than they should.

H.R, 2795 was introduced to protect Florida's tomato producers from imports of
Mexican winter tomatoes, but what is at risk here is not just a higher price for the slice of
tomato that goes on your hamburger in December. Other imports would almost certainly be
affected, Astute businessmen in all sorts of industries would not miss the opportunity to gain
protection from competitive imports. Imports from Canada, Europe, Chile and Israel could
be the next targets of such actions whenever a group of “seasonal” producers (regardless of
the percentage of the domestic industry they actually represent) is hurt by competitive
imports.

2. Compensation/Reté

An

Under the Safeguards Agreement and the NAFTA, safeguard actions by the United
States initiated under H.R, 2795's new definition of domestic industry would invite
retaliatory trade action by those countries affected by our actions. While allowing for
safeguard action, these agreements also require compensation to be provided for the affected

5 “Summit of the Americas Declaration of Principles”, December, 1994


83

‘As we understand it, the proposal is intended to reverse the April 1995 determination
of the ITC in the Eresh Winter Tomatoes case.' In that case, Florida tomato growers
argued that producers of tomatoes in the months of January through April should be treated
as a “seasonal” domestic industry that was separate from the U.S. domestic tomato industry
asa whole. Petitioners based their case on the claim that theirs was a separate domestic
industry on the ground that producers in the January to April period “are the only producers
producing a product which is “directly competitive’ with the imports.”

‘Tomatoes, Inv. No. TA-201-64, USITC Pub. No. 2881 at I-11 (April 1995).

‘The ITC held that the petitioners’ argument was inconsistent with the statute and not
‘supported by the facts. Id, at I-10-11 and 1-13. In reaching its conclusion, the Commission
pointed out that "[p}etitioners’ proposed domestic industry definition leads to the arguably
illogical result of two separate industries producing tomatoes with identical characteristics
and uses, some produced in the identical facilities, where the only distinction between them
is that one produces products which are ‘directly competitive’ with imports entering at
certain times of the year." Id, at I-11 (citation omitted),

Hl, H.R. 2795 Violates the WTO Agreement and NAFTA

H.R. 2795, if enacted, would violate the safeguard provisions of the WTO (which
incorporates the GATT) and the NAFTA (which explicitly incorporates the rules of the WTO
for this purpose). As discussed below, the safeguard rules allow import restrictions under
specific circumstances involving serious injury to a domestic industry. H.R. 2795 would
violate those rules by redefining the "domestic industry” in a way that is inconsistent with the
WTO rules. ‘The WTO rules are set out in Article XIX of the GATT and in the Agreement
on Safeguards. Article XIX, also known as the “escape clause,” authorizes WTO member
countries to restrict imports of products where increased imports of those products “cause or
threaten serious injury to domestic producers ... of like or directly competitive products.”
‘The WTO Agreement on Safeguards elaborates and expands rules for the application of
Article XIX measures.

GATT Article XIX is an exception to fundamental obligations of the GATT. Article
XIX permits member governments to increase tariffs above tariff bindings, impose quotas
that would otherwise be prohibited by GATT Article XI, or take other measures ordinarily
prohibited by the GATT in response to harm caused by imports -- even where the imports
are fairly-traded. In fact, Article XIX is the only exception allowing restrictions of this kind
against fairly-traded products. As an exception to the GATT's basic obligations, the
safeguard provisions of Article XIX and the Safeguards Agreement would, as a matter of
‘well established GATT interpretation, be construed narrowly against the country invoking the
exception,

Section 201 of the Trade Act of 1974 implements in U.S. law the safeguard rules of
the WTO and the NAFTA.? Section 201 authorizes the President to take appropriate action
to assist a domestic industry in cases where the ITC finds that imports are a "substantial
cause of serious injury, or the threat thereof, to the domestic industry producing an article
like or directly competitive with the imported article." 19 U.S.C. § 2251(a). H.R. 2795
‘would amend Section 201 to permit the ITC to exclude certain producers of the relevant like
products from the domestic industry to make it easier for "seasonal" industries to claim
relief. It would even permit the exclusion of the very same "seasonal" producers requesting
relief to the extent that they produced the same products at other times of the year. In our
view, the proposed amendment would not withstand scrutiny by a WTO panel. Nothing in
Article XIX or the WTO Safeguards Agreement suggests that a party may deliberately

1, See 141 Cong. Rec. E2388 (daily ed. Dec. 19, 1995) (statement of Rep. Shaw);
142 Cong. Rec. S441 (daily ed. Jan. 26, 1996) (statement of Sen, Graham) ("This
legislation is intended to facilitate a different result by the ITC in cases with facts
simitar to those presented in the case filed by the winter tomato growers.").

2. See S. Rep. No. 93-1298, 93rd Cong., 2d Sess. 121 (1974), reprinted in 1974
U.S.C.C.A.N. 7186, 7265.


5

qualify as an industry and, therefore, gain protection from import
surges as other industries do.

Florida’s fresh tomato industry, which provides 95 percent of the
fresh market tomatoes during the winter months has been dev-
astated during the past two growing seasons by Mexican tomato
imports. Mexican tomato imports comprise 95 percent of all tomato
imports and Mexico is the primary competition to Florida during
the winter season. This import surge by Mexico has resulted in
Florida tomato producers receiving prices that are below the cost
of production, losses by Florida farmers in the amount of $209 mil-
lion, and the loss of over 10,000 jobs.

Many Florida tomato farmers have had to watch their tomatoes
rot in the fields because the cost of harvesting them is more than
the price that they can receive if the tomatoes were sold. I would
like to repeat that. The cost of harvesting them is more than they
can receive for these tomatoes at the market.

With these types of losses sustained by one industry in just 2
years it is clear that the Florida tomato farmers will not survive
if they are not able to access the transitional relief available to
other agricultural industries. The Trade Act of 1974 already au-
thorizes the President to provide trade remedies if the ITC deter-
mines that the domestic industry has been seriously injured by im-
port surges.

A problem arises, however, when the producers of perishable ag-
ricultural commodities such as fruits and vegetables apply for relief
under section 201. The statute does not allow the ITC to examine
the impact of imports on the domestic industry on a seasonal basis,
but rather only on a yearly basis.

In April 1995, the ITC denied relief to the domestic winter to-
mato industry even though the ITC recognized that the perishable
nature of the tomatoes precludes the interchangeability of tomatoes
harvested and marketed at different times of the year. The ITC
was unable to consider seasonality without statutory authority pro-
viding for a seasonal industry, and that is what we are here for
today.

Our bill would simply correct this problem by changing the defi-
nition of the domestic industry to permit but not require the ITC
to consider the impact of perishable agricultural imports on a sea-
sonal basis as opposed to only a yearly basis. This definitional
change would ensure that transitional trade relief is also available
to domestic seasonal industries which compete directly and often
unfairly with international producers during the same growing sea-
son.

I believe the bill will be of significant assistance to those portions
of the domestic agriculture industry which are currently bearing
the full brunt of low-cost international competition such as the
Florida tomato industry. Let me emphasize, however, this is not
just a Florida bill. Other States such as California have exclusive
seasonal industries. California is the only U.S. producer of avoca-
dos from May to June and the sole winter producer of asparagus.
Current law, however, does not recognize these exclusive seasonal
industries, and thus limits their access to section 201 trade rem-
edies.


lll

I am also representing 80 table grapegrowers who provide 14,000
seasonal jobs in southern California, farmworker jobs. I am giving
you some numbers here because I am going to say something in a
moment. In addition to the required benefits, such as disability in-
surance, workers’ compensation insurance, and unemployment in-
surance, we also provide medical and health insurance and there
are a few of us who provide profit sharing plans.

We, as an individual company, provide full-time employment for
150 people in our citrus packing plant. The entire valley's wages
range from $5.70 to $6 an hour. I say that because I have been
competing effectively with the Mexican table grapegrowers for 30
years.

You have received our statement. I would appreciate if you would
put that in the record, sir.

Before I begin my statement, I want the Committee and Mem-
bers to know that I am not a lawyer nor an economist. I am a
grower of citrus and table grapes and have been growing these
crops for 30 years. I know when I am faced with economic condi-
tions beyond my control, such as Mexico’s devaluation of its peso
and the rampant planting of table grapes in Sinaloa.

I urge you and your staff to read NASAT’s 1996 statement of
March 1. It explains a lot of things today that people really did not
understand. There are a lot of crops that are involved and it gives
examples of the seasonality of these crops.

I am here today to oppose the North American Free Trade Agree-
ment. NASAT believes if Mexico had not devalued its currency, we
would not have found it necessary to create our organization. We
hope history will not repeat itself as our Nation enters into other
free trade agreements.

There is much confusion about the proposed legislation in the
Mexican agriculture and the U.S. agriculture community. I would
like to describe what the legislation will not—and I repeat, will
not—do. This amendment will not, if enacted, immediately increase
tariffs on tomatoes and bell peppers. The amendment will not
make these procedures easier for the seasonal perishable commod-
ity petitioners. And the amendment will not permanently increase
the tariff or impose a quota on the imported produce.

The legislation will require a seasonal perishable crop experienc-
ing an import surge to demonstrate to the International Trade
Commission all the safeguard requirements currently in the law. In
addition, the petitioner will have to show that all, or a substantial
percentage of, the crop that is sold during the growing season, and
that the demand for the crop is not met to any substantial degree
by producers in a different growing region and a different season.

Seasonable perishable crops such as wheat, corn, apples, and
pears can be stored. We cannot keep our fruit more than 2 to 3
weeks in storage. We do not have the option of storing the fruit.
If there is an import surge, we do not have the luxury of moving
our trees and vines anyplace else. We cannot go to Mexico. We can-
not go to the San Joaquin Valley. There is a permanent investment
that we are faced with.

The pending legislation will not provide for instant relief for sea-
sonal perishable crops. All the requirements of the existing law
would have to be proved, in addition to meeting the test that I de-


81

they have also turned on its head the use of the term “directly com-
petitive.”

Mr. Chairman, it is perhaps worth a word on that. In the safe-
guard agreement, when we talk about producers of the like or di-
rectly competitive product, the use of the term “directly competitive
product’ is not intended to narrow the group of producers of the
ike product but rather to allow a more expansive view beyond pro-
ducers of just the like product. Those who have been arguing for
this bill have taken the view instead that what we should include
is only those producers of a like product who are competitive in a
particular season. Whatever the policy arguments for that, that is
not an interpretation that is sustainable, in my view, under the
WTO Agreement.

Mr. Chairman, I think it is most unlikely that the WTO will give
the safeguard agreement the kind of reading that would be needed
to justify H.R. 2795. The safeguard provisions are likely, if any-
thing, to be read narrowly, since they are an exception to the
WTO’s normal trade liberalizing rules. That is especially so be-
cause under WTO rules, a country that takes a safeguard action
that complies with the safeguard agreement is exempt for 3 years
from the normal obligation to give trade compensation or suffer
trade retaliation.

So what are the consequences of adopting H.R. 2795? Under the
WTO and the NAFTA, safeguard actions carry a price. As just
noted, safeguard actions that are found not to conform with WTO
rules will give rise to a right on the part of the countries harmed
by the safeguard action to trade compensation or trade retaliation.

The NAFTA has a different rule. Under the NAFTA, that right
of compensation or retaliation exists whether or not the safeguard
action was taken consistently with international rules and it is an
immediate right of retaliation. So if we take a safeguard action,
whether or not it is a legitimate safeguard action, against Mexico
or Canada, they will have an immediate right to retaliation. There
is no need for the retaliation to be on the same product. They can
simply choose products of their choosing of similar value to restrict.

That means, Mr. Chairman, that some U.S. exporters who have
done nothing wrong will find that they face new restrictions
against their exports because the United States has restricted im-
ports under this law.

I should add that the consequences for U.S. trade interests are
not necessarily any better if this law passes, and as I think is most
unlikely, the law is upheld in the WTO. As already noted, Canada
and Mexico would still have the right to retaliate because there is
no grace period from the retaliation right in NAFTA. There would
be a grace period with respect to other countries for 3 years under
WTO rules, and that might seem like a good result.

However, Mr. Chairman, as the world’s largest agricultural ex-
porter, we would have set a precedent that other countries would
be sure to use against our exports, perhaps not in exactly the same
products, perhaps not in exactly the same way, but the fertile
imagination of international lawyers could certainly find many
ways to act against our exports.

Thank you, Mr. Chairman.

[The prepared statement follows:}


107

TABLE 1: BELLPEPPERS - AVAILABILITY

1994 Arrivals From Produc 1,000 CWT.) Based on unloadiarvai figures in 22 major US. cities

yan [Fee [mar [ara [may fiun [jut [auc | see [ocr [nov [oec | 1994 | 1993
HUAN wef | [Te vf f—]-] t 3
‘auroRnt - | | | [om [res | ise [13 | ves [tas [oe [4 [97 [on
coLotD0 | —[-—[-—]-]—T— ]2 Jy — 2]
CONNECT .|-]-]—T-]—T— fo to fT 2
DELAWARE —|--[--[—[—]-—]-—To [—]— J — 1
onok 270 | 22 | 317 [329 | 36 | 9 | + | [| as [177 | 265 | 2053 | 1708
GEORGIA -- | — | — |---| 3 [xe] oo] s | 2 | 2% | is | 2 | 25s | io
UNOS | —P— [ [ff Fe Jays mo | 39
‘WOK [| ]--[- [-- [a [se [Ts TT - is fos
rem - —j2f2 fe s fa
touisuna wo fi | |- uf
MATUARD -{—}rf3afili es
moose | | — |] — | —f—[—f—]* fe Ta Em
CHG ~ |] — |] ~ [| | 2 fa | 3 ~ | 7 | %
S008) [| -[—-[T— fo fo fo [ —[3 |] 7
EW JASE | — | —- | - | — | — [35 | 7 [a | 2 [3 | [ie | 203
‘EW YORK ~ || [| - |] fv fe [se [2 [| [oo
wonmarouna | | [ —~ [| — [34 [oe | 6 [3 fo | — | — | oe [oi
ow a wo ful s a3 [iu
‘HEN Se !
Perea 717] 3 7 |
HODE GUND 2fe|[— -{3 [4
soomoroum |. | [| — [--[ — [2 [2 \ ~|s [3
TEANESSEE —|-—-[—[—-]—fo fo] |] [3 [2
Tens won Pome fm ff 2 fo ff fs [on [ise [2 |e [106
cn f—[—~f—[—{—fel7lfule fs | 8
wasuwct ||| — |—] — 7 Jos f— |---| is | 20
ON
WEST ee 1 ~ p—
VIRGINIA
TOTAL azo | 252 | 37_| 329 | 395 | a4 | 300 | 365 | 367 | 326 | 350 | 303 | aor | 3.7

TS arrvaligres generally repreent 3) percent to 50 percent ol ota produ ongrang For indwGual sources Wentfed Some sates AOtIy
athe West and Midwest, are comparatvely underrepresented by aruas quoted. Figures are tended only to ncieate relate avalabity of
product


92

PLAYING CATCH-UP
With Little Evidence, Florida Growers Blame
Tomato Woes on Nafta

Cheap Imports From Mexico Are ‘Killing Us’,
They Say in a Familiar Refrain

Soft Produce in Hard Boxe:

Beate Mipercose ot She well Seeeee Souraal
HOMESTEAD, FL. - For years, tomato grower Paul J.DiMare has been
predicting the demise of the business that made him wealthy.

Back when Jimmy Carter was president, Mr. DiMare accused trade
officials of "driving Florida farmers out of business" by failing to stop
Mexican growers from selling tomatoes below cost. The Carter
administratio didn’t do anything, Plorida’s tomato industry didn’t
collapse, and Mr. DiMare is still growing and packing tons of produce on
the edge of the Sverglades, about 30 miles southwest of Miami.

Now, Mr. DiMare is again decrying a surge of Mexican tomatoes and
imploring the president to impose quotas and tariff increases. As before,
he speaks in apocalyptic terms. Mexican growers are “killing us*,
told Agriculture Secretary Dan Glickman in a public discussion. “They
are absolutely murdering the state of Florida."

To Mr. DiMare and many other Florida growers, the villain these days
is the North American Free Trade Agreement. The growers are exploiting
the anti-Nafta backlash in this election year; indeed, Mr. DiMare keeps
a thick sheaf of favorable news clippings on his desk. Yet the growers
face problems that go far beyond any trade pact:

Pre-Nafta tariffs on Mexican tomatoes were already low, and the
treaty’s initial tariff reduction cute their price by less than a penny
a pound. What makes all Mexican exports-including produce-more
competitive is the 40¢ peso devaluation, brought on in 1994 by that
country’s economic troubles. Mexican growers wil) lose that advantage
if a recovey revives the peso, as many experts say will happen.

Mexican growers have improved the shelf life of their vine-ripened
tomatoes, taking away an advantage once enjoyed by Florida, which picks
its tomatoes green and exposes them to a gas to speed up the ripening
process. Indeed, one U.S. agricultural official says Mexican tomatoes
te far better" than those from Florida, but Mr. DiMare says "it
dosen't really matter" how tonatoee taste because they are condiments,
seldom eaten alone.

Hurricanes, cold snaps and other weather woes have hurt Florida
tomato yields in'recent years, enabling the Mexicans to capture a greater
share of the market. Says Roberta Cook, an agricultural economist at the
University of California, Davis: "Mexico often fills supply gaps when
Florida production is down

‘Down the Tubes’

Florida growers insist that Mexican imports endanger thousands of
U.S. jobs. Unless President Clinton intercedes "within the next few
weeks, the Florida tomato industry is going down the tubes", warns Wayne
Hawkins, general manager of the Florida Tomato Committee. Yet the
state's industry is dominated by the DiMare clan and three other families
whose operations are highly diversified and, by all accounts, profitable
more years than not.

Mexicans see Florida growers as intransigent. They “have stated
flatly that they dont’t want to talk," says sduardo Palau, head of
CAADES, a group of growers in the state of Sinaloa on Mexico's Pacific
Coast. "They just continue harassment through legislated proceedings."

Floridians aleo get little sympathy from their counterparts in
California, whose summer-harvest tomatoes compete with Mexico's crop.
*All this is about protecting those four big guys," say Ken Moonie, vice
preajdent of ‘the California tonatoe operations of Calgene ‘Inc. a
Subsidiary of Monsanto Co., which is also becoming a Florida grower.
"It’s not like corn or any agricultural commodity where thousands of



60

Chairman CRANE. Thank you, Dr. Roberts.

Ms. Doyle, I would like to ask a parochial question, as a fellow
Illinoisan. What is the magnitude of our agricultural exports on a
yearly basis, I mean the total, not to a targeted area but totally?

Ms. DoyLe. We always have trouble identifying that, because
most of our exports are our corn and soybeans, which are blended
with Iowa and Missouri corn and soybeans. But we are a $9 billion
industry in the State of Illinois and it is primarily corn, soybeans,
pork, and beef, and about one-third of that is exported.

Chairman CRANE. Of that total number of exports, have you any
idea what percentage goes to Mexico and what to Canada?

Ms. Doy te. No. I know the figures of what goes to Mexico from
Illinois, 23 percent of it is agricultural, and Mexico is our third
largest trading partner, so it is a pretty significant number.

Chairman CRANE. Yes, that is. I want to thank you both for your
testimony and yield to Mr. Thomas.

Mr. THomas. Thank you. I represent an agricultural district, one
of 52 congressional districts in California, and my value-added is
almost $3 billion, two-thirds of which is exported.

In looking at your testimony, I guess it was written before you
heard the USTR representative because your third point on page
4 would seem to argue against what the USTR said, where you say,
“The Clinton administration, recognizing the fundamental impor-
tance of ensuring that trade promises are kept, recently launched
a high-profile initiative . . . for the United States to breach its own
obligations under those same agreements”—I believe she indicated
they did not believe they were breaching the obligations. They
thought they were consistent with GATT and WTO.

Ms. DoyLe. That is not what that says. That does not indicate
that they do believe that they are breaching it. That indicates that
I believe they are breaching it.

Mr. THOMAS. So, there is a disagreement between the U.S. Trade
Representative and the Secretary of Agriculture of Illinois?

Ms. DOYLE. Not the first time.

Mr. THomas. When there is a contest over whether or not the
Europeans have violated agreements on corn gluten or on other
products that may be important to Illinois, I assume you are going
to be looking to other regions of the country to strongly support
your claims about unfairness, because all this bill does—there are
no guarantees, there are no preferential treatments, there are no
preconceived conclusions. All it does is create an opportunity to be
heard to determine whether or not in seeking relief you can have
it. That is all this does.

Ms. DoyLe. I understand that, but while it is doing that, it also
changes the NAFTA Agreement.

Mr. THoMas. Obviously, we have a disagreement about that, be-
cause frankly, the Mexicans have changed the NAFTA Agreement
by fiat at the border on a number of agricultural products. So I
guess if we are going to get into a contest of whether or not we are
inside the law or outside the law, what these folks have done is
come to seek redress inside the law. We will always have a dis-
agreement over whether or not it affects an international tradin;
agreement unless and until it is tested at the international level.

Ms. DoyLe. I understand.


56

Florida producers and delegation members had been told that Section 316 was included in
the NAFTA Implementation Act in an attempt to monitor the volatile fresh seasonal market for
winter fruits and vegetables produced October through May. The ITC letter further stated that
“limiting the scope to the winter marketing season would focus on the time period when imports
are of greatest concem to competing domestic growers.” Since the NAFTA Implementation
Act requires ITC monitoring until January 1, 2009, for purposes of expediting relief under
section 302 of the Act or section 202 of the Trade Act of 1974, it is critical that we have a
workable definition that recognizes commercial reality.

Mr. Chairman, in the dead of winter when the rest of our nation sleeps under a blanket of
cold and snow, Florida is producing the fresh fruits and vegetables for our nation. This absence
of other winter producing areas in the U.S. was recognized by the 1991 Goverment Accounting
Office Report on U.S.-Mexico Trade and showed the seasonality of our production for our
nation’s health and food supply.

HLR. 2795 corrects or clarifies the law and recognizes that perishable agricultural
products and producers may exist in the marketplace during distinct periods of time. For the
trade laws of our nation to work, for the international trade agreements we have signed to work
as Congress envisioned them, the special safeguards provisions must be effective for all
agricultural products, not just for those products stable in long storage and not just for those areas
that produce throughout the year. H.R. 2795 is an effective measure, and we should not fear
retaliation from measures consistent with international agreements.

Mr. Chairman, The Governor and Cabinet of the State of Florida, the Florida House of
Representatives, and the Florida Senate, have in three separate resolutions this month recognized
the unparalleled effects of imports on Florida agriculture and have resolved that they urge
Congress to take prompt action to enforce all provisions of the trade laws of this nation, to
enforce all provisions of the North American Free Trade Agreement and to quickly take
appropriate administrative action to prevent further adverse effects on Florida's agricultural
industry. Mr. Chairman, H.R.2795 will provide positive action to prevent further adverse effects
and will do so in a manner consistent with the international trade agreements of our nation. I
urge your passage of this measure.


18

carefully reviewed this bill and found it to be consistent with these two trade
agreements.

In conclusion Mr. Chairman, H.R. 2795 is not an anti-free trade
measure. It simply expands the investigative powers of the U.S. government
to ensure that fair trade occurs. Imports of Mexican vegetables are up
dramatically compared to last year. Mexican growers have boosted
shipments of virtually every major Florida winter crop. Earlier in this
season, shipments of some commodities were up by more that six-hundred
percent over the same period last year. The impact on Florida vegetable
producers has been devastating. Due to the drastic collapse in prices, many
Florida producers cannot recover the costs of production. Hundreds of
producers in Florida have already gone out of business and many more have
indicated that they cannot survive another season under similar conditions. If
this legislative initiative is not passed, the domestic producers will face future
growing seasons of continued unfair trade practices by foreign producers --
while the government of the United States sits idly by.

Mr. Chairman, the measure before you today ensures that this critical
American industry can gain access to already existing trade relief. I urge you
to expeditiously consider and support this important measure.

Thank you Mr. Chairman and members of the subcommittee.


‘As leaders of agriculture in the mates we represcat, we would like 10 express our opposition to
8.1462 and S.1463, and companions H.R. 2921 ana HR. 7795, respectively. If enacted, these
Dills could significanuly reduce the gains the agriculture sector has mado in the international
marketplace. We belleve the gains we have made In the last fow years are jumt the tip of he
leeberg for U.S. agriculeure,

‘Just last year, U.S, agricuhural exports toraled $54.1 billion. The projection for 1996 te a
America Free

'S. 1462/ALR. 2921 would provide protection for Florida tomato growers from competition.

‘During both trade agreements’ negottions, legal protection was agreed to in the form of tariff

‘ate quotas (TRQs) end engshy phase-out periods. The Florida toneato indusnry has a. 10-year

phase-out period for ts TRQ. S.1462/F[R.2921 would provide additional protection by requiting
i i Florida industry

domestic
‘those bills create a noo-tariff barrier and fal short of mocting “national treatment” stand. rde under
the NAFTA and GATT. Dally, we work to remove similar barriers and fight national treatment
violations to improve opportunities for U.S, agricultural exports. A change like this would affect
‘our nation’s abillty to fight for export opportunities,

‘Secondly, the Congress has marketing order quality standards that both domestic and.
produce man met regarions of how thy packaged. These standards protect U.S.
‘and are i inte. Without the 10

from ty produce
packing standards, U.S. conmumers will sil reoaive quality produce.

2g ann 2795 3 pare even me creo tn te ame ‘These two bills
‘would the definition of a
Soundy.? The “tensonal industry” dation would prove adetiea! protections over and
stove owe negated under he NABTA and GAT. Thon wo wade sgremnense were
of time to

eres ngewe ls ang wee eto pe. 8.1463 and
FLR.2795 would create a from foreign everything we
fave wodked fe dsl dele 10 your to open owas mshetn,

‘Changes like these go. ‘everything our trade. ‘agread to under the NAFTA and

‘evaluate the impact that reduced foreign trade would have on the.
tenzwor It clearly ono thar we cannot afford, eepocially when federal pollcy is directing U.S.
‘agriculture producers 10 be more responsive to the marketplace.

‘We would like (o submit thess comments for the committee's record when hearinga arc held, and
‘nge you to joln us in opposing this legislation.



51

If successful, this bill would:

1 Require the U.S. to make trade concessions that could harm other U.S.

exporters.

Both the NAFTA and WTO require countries imposing safeguards measures to
compensate the affected exporting countries by making "concessions having substantially
equivalent trade effects.” If the countries involved cannot agree on appropriate compensation,
then the exporting countries may decide to unilaterally suspend "equivalent" benefits owed the

United States, perhaps by raising tariffs or reducing quotas on some U.S. products.

2. Encourage other countries to employ the “seasonality” principle to restrict

US. exports.

This proposal sets a dangerous example for other countries wishing to enact similar
changes in their own laws. Major American exporters — of goods ranging from pork and
peaches to corn and wheat — could find themselves being denied the opportunity to compete
fairly in their current export markets. As the world’s largest exporter, the United States has the

most to lose from introducing new forms of protectionism.


80

Mr. SHAW. Thank you.
Mr. Roh.

STATEMENT OF CHARLES E. ROH, JR., PARTNER, WEIL,
GOTSHAL AND MANGES, WASHINGTON, DC; ON BEHALF
OF THE U.S. COUNCIL OF THE MEXICO-U.S. BUSINESS
COMMITTEE

Mr. Ron. Thank you, Mr. Chairman. My name is Charles Roh
and I am a partner in the Washington office of Weil, Gotshal and
Manges, but I am also here on behalf of the U.S. Council of the
Mexico-U.S. Business Committee.

In a previous life, I must say, I spent 14 years working for the
U.S. Trade Representative’s Office and it was my privilege there to
work for opening up export opportunities for many U.S. agricul-
tural interests, including some Florida products, so I am sorry to
be here in opposition to something sought by the Florida delega-
tion.

My colleague, Ambassador Hughes, has summarized the U.S.
Council’s policy objections to H.R. 2795. I will summarize our con-
cerns in terms of our rights and obligations under international
trade agreements.

For reasons discussed at greater length in the statement I sub-
mitted for the record, it is our view that H.R. 2795 is not consistent
with the rules of the WTO Agreement or of the NAFTA. As you
know, Mr. Chairman, both the WTO and NAFTA allow temporary
import restrictions, such as quotas or high tariffs, if increased im-
ports of a product cause or threaten to cause serious injury to do-
mestic producers of the like or directly competitive product. Those
import restrictions, which are commonly called safeguard or escape
clause actions, can be imposed even on fairly traded products,
which is why international rules allow such restrictions only in
very narrow circumstances.

The WTO's safeguard agreement elaborated the previous GATT
rules for when safeguard actions could be taken. One of these
elaborations was a definition of the domestic industry, which is de-
fined to mean “the producers, as a whole, of a like or directly com-
petitive products, operating within the territory of the member, or
those whose collective output of the like or directly competitive
products constitutes a major proportion of the total domestic pro-
duction of those products.”

H.R. 2795 would breach this WTO standard and reverse a deter-
mination made only last year by the ITC under existing U.S. law.
H.R. 2795 would allow the ITC in the case of perishable agricul-
tural products to adopt a seasonal definition of the U.S. industry,
counting only those U.S. producers who sell all or almost all of
their product in a particular growing season and disregarding all
other U.S. producers of the like or directly competitive products. No
provision of the WTO or NAFTA allows such a redefinition of the
safeguard standards.

Proponents of H.R. 2795 have urged their redefinition of the in-
dustry standard so as to make it easier for certain producers to ob-
tain import restrictions. They have argued for a broad and flexible
interpretation of safeguard rules for this purpose. In the process,


142

legislation would allow you folks to do that. Then it is up to you
to prove your case and plead it. All we want to do is try to give
you the opportunity.

I want to thank you for the testimony. Thank you very much.

Mr. SHaw. Thank you.

Mr. Loop, let me ask you a question. You heard the testimony
of the previous panel and the statement that the tomato was a pe-
rennial and how long the season could be, with one bush growing
up to 10 or 7 feet, anyway, the witness indicated, way over his
head. Are you familiar with that type of a tomato and what success
would you have in adopting that type of a tomato to the State of
Florida?

Mr. Loop. No, sir, I am not familiar with it. 1 am not saying it
cannot be done, but I cannot visualize it being a practical commer-
cial way to do it.

Mr. Suaw. I would sure like to get some of those seeds. Of
course, I would probably get in trouble with the Ethics Committee
if I did not buy them, but I would like to buy some of those seeds
and try them out. That sounds like a wonderful, wonderful thing.

I would like to thank this panel. I would like to thank all the
panels and all the people who came to Washington this afternoon
in order to share with us their experience, their fears, their con-
cerns on both sides of this particular issue.

It is a most important issue when you are talking about the
number of jobs that we are talking about, when you are talking
about whole industries—and we are not only talking about Florida;
this is not a special favor to Florida, when you are talking about
a bill like this that is permissive in nature. It does not demand
seasonality, it just allows the Trade Representative another consid-
eration in his negotiation and his working out problems with other
countries.

I think that the fear that has been stated by some of the wit-
nesses is unfounded. However, I can understand that people do not
like to rock the boat, particularly when you are talking about inter-
national trade.

But we are talking about industries leaving this country. Once
they are gone, they are gone. You do not get them back. Then you
will find yourselves really at the mercy of foreign countries. This
fresh fruit and vegetables is a very important part of our lives here
in the United States and we should have all the protection that is
available under existing trade laws and is consistent with the trade
laws as they have been negotiated in these agreements, as they
have been negotiated with the other countries.

Thank you very much. This hearing is concluded.

(Whereupon, at 4:39 p.m., the hearing was adjourned.)

{Submissions for the record follow:]


Mi FREE TRADE

Lawsuit
battles
imports

ITC will study Florida's
claims cf harmful surges
in Mexican volume.

By Larry Waterfield
Washiagwos, D.C. Editor

Sats expend a
da

Ha prcuee in
Earced oy Seavy impor of Men-

fopeenest sours safeguarés
ec: aguics: irutt and vegetagie
er: surges,/ out Florida Cains
spose salegsarés are adequate,
srnval of sur industry is

See Lawsuit Page 2A

185

a
red, Crawiord sad,

Bing Florida

sands to lose $1 ou-

Lona year é Mesan
ed

pruarion, The eeetag,
desorbed by parc

‘Shem 1 read about it in the new

papers.”
‘The Mexican Embassy, comacad
Daw bad zo ofical

sions of NAFTA,

‘The pares pian wo “teet agais in
Meio, though a daca bas tot yet
boar set Paul Drazek, specal as
‘simant for Sade at the U.S. Depa
ent of Agrcirare, is ieading US.
efors to Gnd a soiution to the dis

pu

Ppodsigues said Frida also may
Se a cunrcg complaint apne
Mexico in April or eariy May, an
“event that also would crigger an in
‘vestigation of shipments, prices and

Frankel,
dent af he Fras Projece Asoo:
‘ton of the Americas, Nogales. Ariz.,
of the Florida

Crawlont ane
20) ewer at a
pacers in Perea

He said che mariet needs =v0

growing areas 1 ‘ceep prices reas
sonable and ‘bat Menco s ccizg a3
Ruch as it can wo eep Sum occ
jag the saree
Hie also said it s common =
produce induscy 1 sel

eds

‘ope of ae
‘ing money for he exxre seaton,

But Fords

continuing 20 icdby
legislation that if allow the ITC
to take into account che seasonal
aspect of the nerd buncess
‘when assessing wade comage.

. Thal legisladon is mailed is te
Hoje Ways and Means Comat
we. In adcition, Florida is Saceng
legislation introduced by Rep.
Sonny Bono, RCaif, ha woud
require imparted produce +0 cary
‘country of origin labeling at retail

‘Mile Stuart, executive vice presi
dest of te the Honda Frat & Ver

stable Association. was in Wasiing-

on, D.C, March 13-14 29 meet 1



13

Statement of Members of the Florida Congressional Delegation
H.R. 2798
Before the House Trade Subcommittee
April 25, 1996

We, the undersigned members of the Florida Congressional Delegation, support the immediate
enactment of H.R. 2798, a bill to clarify the definition of domestic industry for the purpose of
trade investigations in perishable agricultural commodities. As the Senate has already passed this
legislation, its timely passage in the House of Representatives is vital.

We are extremely concerned over the impact of the high volume of tomato imports from Mexico
and the devastating impact they have had on the Florida tomato industry. As the Florida tomato
industry is clearly its own distinct industry, we are extremely supportive of changes in current law
to delineate this difference. Outside of Florida, this legislation will have a positive impact on
producers of all seasonal agricultural commodities produced nationwide. Finally, according to the
United States Trade Representative, this legislation is consistent with all of our current trade
obligations.

We appreciate the Subcommittee’s attention to this most serious matter and look forward to the
speedy enactment of this bill into law.

int fouls
6 Gh. We



137

14-AsESTATALES
Regresan tomate enviado a EU

EL DBBATE deLoe Mocis.- Como rocdida emergente
para tritar de superar el grave desplome en los precios det to:
‘mate maduro enfrentado a partir de ls seraina pusads en lov
Emrados Unidos, toe productores del eado acordaron regre-
san 4 mus lugares de origen (odo el producto enatente en fa
fronvera en bor colores 5 y 6, on eda maduros; tuspender cate
fia de semana el empaque del producto, y « parne de mafane
slo canalaar al mercado el color & coma mésumo, a 90 % de
calidad.

Bl acuerdo fue signado ol viernes on una reuaién sostenida
on Jos cepresentacves de los productores de romate del rca-
dou en la Con de

AN. SiN _ZOMINGG 326 MAR:

7/t/%

Apunté que sin bien las medidas acordadas von de fondo,
‘a necesane iraplantarts como una forma de reduc fa Ofer:
(8 del producto en ef mercado exadourdense y penaar ea vot
«etctivacén de fos preciog en el como plano.

Indic que para eno fut necrsane también, adeads de rc:
{ar todo el producto imadury eustente en la Froneers, finda
_mentalmente en los colores § y 6, suspender roraimente ayer
‘tude y hoy dotningo el proceso de empacar la legumbre en
todos los empagues de evade,

Rojo Leyva tefald que de fs musma manera, 2 parur de
smafana se impondeda restreciones de calidad en lox envios,

momlzane

: Agrkolas
let Estado de Sinaloa, inform ayer el Lic. Jorge Anrolla
Rojo Ley,

El urular'del Departamento de Esrudioe Econtémicos de la

‘Atociacibe de Agreculrotes del Rio Fuerr Sur, sefiaks que con

1 rn ac pel fe pe hn
dd products qr 4 paror dels emana pata Comentaron 4
Dretenate ela vp plata comercial

la PGJE »
con reprimir
a invasores *

funque 1¢ trate de un recla-
mo justo, declard Efrain

La decracida surge des-

= Presumen p'

anistas irregularidades en las
‘finianzas det Ayuntamiento de Guasave

aque romate con colores 3
‘one misieno y con «190 por ciento de canta.

Los problemas que i han presentado « parur de la vemana
recientemente conchiia en los EU para a comereieide de
Jos tomiates maduros son bastanne scrwt, derivado precss-
snente de bo clevaioe vokimenes de praducodn que 4 baa

imaplantadan

does” y cero resi aces ;
‘Bawo fo sumtenta co la soticibad que yma


55

Testimony of
Commissioner Bob Crawford
State of Florida

Before the
Subcommittee on Trade , Committee on Ways & Means Considering
H.R. 2795

April 25, 1996

Mr. Chairman, Members of the Subcommittee, I am Bob Crawford, Commissioner of
Agriculture for the State of Florida. It is my duty to protect the hetlth, vitality and
competitiveness of Florida agriculture. The legislation before you today, clearly and positively
affects both Florida agriculture’s perishable fruit and vegetable industry, and agriculture
nationwide. Mr. Chairman, it is my distinct privilege to present to you strong support from
agriculture for passage of H.R. 2795. This legislation is, I believe, a natural step forward in
recognizing the unique characteristics of the ever changing landscape of agriculture. I want to
express to the bill’s sponsor, Congressman Clay Shaw, the gratitude of the people of Florida for
the leadership demonstrated by his efforts to pass this needed legislation.

Tam pleased that this legislation recognizes a distinct and critical difference that we must
not forget. Perishable fruits and vegetables can not be stored like corn, wheat or other grains,
they can not be stored indefinitely frozen or refrigerated like meats and poultry or held off the
market until prices change. So the trade laws that affect perishable products, grown in short
concentrated growing seasons, must be relevant trade laws.

Congress has labored long and hard to write laws which promote trade and provide
remedies for those adversely affected by trade. At the core is the recognition by Congress that as
we move to expand trade, domestic producers may be impacted by new conditions of trade.

Mr. Chairman, this subcommittee has been at the originating point of the laws which seek
to ease this tension. The “safeguards” provisions written into law by this committee may one
day have critical importance to any producer facing newly global competition. For these
measures to be “safeguards”, they must work effectively.

Safeguards for winter-produced fruits and vegetables was one agreement made by
Congress at the end of the NAFTA debate. In relation to this, in June, 1994, the International
Trade Commission published Report 2771 regarding the Monitoring of U.S. imports of
Tomatoes. Section 316 of the NAFTA Implementation Act required the Commission to monitor
USS. imports of “fresh or chilled tomatoes” and peppers. In an opening letter to Congressman
Sam Gibbons, then ITC Chairman Don Newquist explained the difficulties of monitoring and
reported that recognition of seasonal production would not be possible without statutory change.


ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

SUBCOMMITTEE ON TRADE
FOR IMMEDIATE RELEASE CONTACT: (202) 225-1721
April 9, 1996
No. TR-22

Crane Announces Hearing on H.R. 2795,
a Bill Regarding Safeguard Investigations
of Perishable Agricultural Products

Congressman Philip M. Crane (R-IL), Chairman of the Subcommittee on Trade of the
Committee on Ways and Means, today announced that the Subcommittee will hold a hearing on
H.R. 2795, legislation amending the definitions of "domestic industry” and "like or directly
competitive article" in safeguard investigations involving perishable agricultural products. The
hearing will take place on Thursday, April 25, 1996, in room B-318 of the Rayburn House
Office Building, beginning at 2:00 p.m.

BACKGROUND:

‘Trade agreements such as the North American Free Trade Agreement (NAFTA) and the
Uruguay Round Agreements contain "escape clauses,” which are safeguard mechanisms that
permit signatories to grant domestic industries temporary import relief in certain circumstances.
Sections 201-204 of the Trade Act of 1974, as amended, which implements these provisions, sets
forth the authority and procedures for the President to withdraw or modify concessions and impose
duties or other restrictions for a limited period of time on imports of any article which causes or
threatens serious injury to the domestic industry producing a like or directly competitive product,
following an investigation and determination by the U.S. International Trade Commission (ITC).
‘The purpose of this authority is to facilitate efforts by the domestic industry to make a positive
adjustment to import competition.

On December 15, 1995, Congressman Shaw (R-FL), for himself, Congressman Canady
(R-FL), Congressman McCollum (R-FL), and Congresswoman Thurman (D-FL) introduced
H.R. 2795, legislation that would change the definitions of “domestic industry” and “like or
directly competitive article" in certain cases involving perishable agricultural products.
Specifically, the bill would permit the ITC to assess the impact of imports during a particular
‘growing season on a domestic industry limited to producers of a like or directly competitive
perishable agricultural product during that same growing season. The ITC, in the past, has
traditionally examined the impact of imports on the domestic industry on a yearly, not seasonal,
basis.

On January 31, 1996, the Subcommittee requested written public comments on the
legislation, due March 1, 1996.

In announcing the hearing, Chairman Crane stated: “The hearing will provide us a good
‘opportunity to assess the impact of this legislation on the U.S. industry seeking safeguard relief, as
well as any consequences to U.S. agricultural exports and U.S. efforts to open markets abroad,

I also intend to address whether the bill is consistent with our obligations under the NAFTA and
the World Trade Organization (WTO)."

FOCUS OF THE HEARING:

The focus of the hearing is to examine the impact of H.R. 2795 on the U.S. industries
producing perishable agricultural products, the effect on U.S. industries that export such products,
and the extent to which the bill is consistent with U.S. NAFTA and WTO obligations.

(MORE)


163

BPACIF IC BROKERAGE Co.

TF MANSON CUSTOMS BROKER

April 16, 1996

Mr. Phillip Moseley
Chief of staff

Committee on Ways and Means
U.S, House of Representatives
Washington, D.C.

Dear Mr. Moseley:

DANGERS OF H.R. 2795
"SEASONALITY" LEGISLATION

‘The House Ways & Means Committee will consider legislation at a
hearing in April that is designed to provide a quick protectionist
fix for Florida and some California fresh fruit and vegetable
growers. Sponsored by Representative Clay Shaw (R-FL), this bill
(H.R. 2795), identical to one Senator Bob Graham (D-FL) slipped
through the’ Senate under unanimous consent procedures (5.1463),
would invite reciprocity by Mexico, as well as other countries, and
harn larger U.S. interests.

This bill is aimed at safeguards law, which, in the U.S. and
elsewhere, provides relief when a "domestic industry" is seriously
injured by increased imports. ‘The legislation would violate the
accepted purpose of safeguards law -- as well as the NAFTA and the
WTO Safeguards Agreement - by redefining "domestic industry" as a
"seasonal industry" when determining eligibility for increased
import barriers.

Florida growers of winter tomatoes produce only a modest fraction
of tomatoes grown annually by the U.S. industry. Last year, the
U.S. International Trade Commission not only found that weather,
rather than imports, was the chief source of the Floridians!
problems =~ but that in any case they were too small a portion of
U.S. tomato growers to qualify as a "domestic industry." Hence,
the unprecedented move to create a new “seasonal industry"
category.

Sixteen nations have already objected to the legislation at the
WTO and nearly twenty countries have written Congress and the
Clinton Administration with their concerns. In addition, U.S.
State commissioners of agriculture, grain and meat export


72

and peaches to corn and wheat, and perhaps even toys and seasonal clothing--would find
themselves being denied the opportunity to compete fairly in their current export markets.

3. The bill virtually invites immediate retaliation against US agricultural
exports, including meat and poultry products to Mexico, because they are always visible,
easy to target, and inevitably opposed by a vocal constituency.

4, The legislation would diminish the ability of the US to hold other countries
to their trade commitments. The United States, recognizing the fundamental importance
of ensuring that trade promises are kept, recently has launched a high-profile initiative to
“enforce” existing trade agreements. For the United States to now breach its own
obligations under those same agreements would only make a mockery of this
“enforcement” initiative designed to assist exports of many US goods and services.

5. The bill could disrupt imports of numerous “seasonal” products from other
US trading partners in Europe, Canada, Israel, Chile and elsewhere to the detriment of
consumers throughout the United States, Imports could face new barriers whenever a
group of “seasonal” US producers (no matter how small or limited in scope) is found to be
injured by import competition.

For all these reasons, we strongly oppose this legislation. It is not about fair trade or
“leveling the playing field,” let alone about free trade. Rather, itis a misguided attempt to
unilaterally change the rules of international trade, and it promises to do serious damage to
US interests.

Sincerely,
Ad Hoc Coalition of Commodity and Other Groups on Trade Issues

Northwest Horticultural Council, PO Box 570, Yakima, WA 98907

North American Export Grain Association, Inc., 1300 L St. NW, Washington, DC 20005

National Association of Perishable Agricultural Receivers, $906 Wilmary Lane,
Baltimore, MD 21210

American Meat Institute, 1700 North Moore Street, Arlington, VA 22209

Food Marketing Institute, 800 Connecticut Avenue NW, Washington, DC 20006

National Pork Producers Council, 122 C Street NW, Washington, DC 20001

National Turkey Federation, 1225 NewYork Avenue NW, Washington, DC 20005

‘National Grain and Feed Association, 1400 K Street NW, Washington, DC 20005

USA Poultry and Egg Council, 2300 West Park Place Blvd., Stone Mountain, GA 30087

Fresh Produce Association of the Americas, P.O. Box 848, Nogales, AZ 85628

National Corn Growers Association, 201 Mass. Ave. NW, Washington, DC 20002

United Egg Association, 1303 Hightower Trail, Atlanta, GA 30350

International Apple Instinte, 6707 Old Dominion Drive, McLean, VA 22101

National Broiler Council, 1155 Fifteenth Street NW, Washington, DC 20005


27

pete we had to pass new farm legislation which allows farming de-
cisions based on market demands. That was the spirit of freedom
to farm.

This piece of legislation, H.R. 2795, detracts from the freedom to
farm philosophy because basically you are dealing with the prob-
lem legislatively so that farmers in the Southeast do not need to
compete with the product that is being brought. This legislative fix,
Mr. Chairman, goes against the philosophy of the freedom to farm.
We now need to compete on a global basis and let the marketplace
determine what products are consumed and produced.

I also think H.R. 2795 negatively impacts the spirit of free trade,
and I would argue that it is against the spirit of NAFTA and WTO.
In fact it reduces competition and may cause other countries who
send their products to this country to retaliate if we build this wall
to protect one particular item, the winter tomato.

Thank you, Mr. Chairman, for allowing me to testify.

Chairman CRANE. Thank you.

Mr. Pastor. I would ask that I can submit my written testimony
for the record.

Chairman CRANE. Without objection, so ordered.

(The prepared statement follows:}


10

many commodities — not just fruits and vegetables. Mr. Chairman,
the definition of “seasonal industry” is not the same in all countries
and regions. Because of climatic, technological, cultural or other
differences, products not considered seasonal in the United States may
be seasonal elsewhere. For example, my pork industry colleagues tell
me that in Mexico, pork is considered a seasonal product.

+ Passage of this bill would encourage other groups within our own
country to ask for special safeguards. This no doubt could well result
in trade disputes, and in the end, reduced trade and higher prices to
USS. consumers.

. Passage of this bill would invite immediate trade retaliation from
Mexico. Under the rules of international trade, it would require the
United States to provide trade compensation should we take safeguard
actions. But more significantly, it sets the stage for other countries to
call for special safeguards based on the very arguments in this bill.

H.R. 2795 is not simply about Mexico but our entire trading system. I can
assure you that retaliation and/or compensation claims would not be directed at just
our "seasonal" exports. Rather, other countries would likely target our export
products that most trouble their own constituent farmers, ranchers, or growers.

Mr. Chairman, America’s leading agricultural export states are California,
Illinois, Texas, Nebraska, Iowa, Kansas, Indiana, Washington, Minnesota and
Arkansas. Eight of those states are represented on the Ways and Means
Committee.

This, Mr. Chairman, is perhaps the most important reason I am here today
— to remind Committee members that H.R 2795 is a threat to the livelihood of
their constituents and to our nation’s farmers in general.

I therefore urge this committee to reject a bill that is specifically designed to
assist a very few, but that could be detrimental to many.


146

Before the Ways & Means Committee
Subcommittee on Trade
United States House of Representatives

Hearing on H.R, 2795 - A Bill Regarding Safeguard Investigations
of Perishable Agricultural Products

‘Statement of the Florida Fruit and Vegetable Association

Mr. Michael Stuart
Executive Vice President
Florida Fruit & Vegetable Association
Post Office Box 140155
Orlando, Florida 32814-0155
‘Tel: 407-894-1351

April 25, 1996

I. Introduction

‘The Florida Fruit and Vegetable Association ("FFVA") appreciates the privilege of
submitting this statement on behalf ofits members in strong support of H.R. 2795. FFVA
is a non-profit, agricultural trade organization the mission of which is to enhance the
competitive and business environment for producing fruits and vegetables in Florida by
effectively managing issues and providing collective services for the benefits of its members.
Its membership includes fruit and vegetable growers, packers, and handlers throughout the
state of Florida,

‘The membership of FFVA is actively supporting passage of H.R. 2795 to correct an
inequitable administrative application of Section 201 law that results in a denial of relief for
‘some seasonal agricultural industries, even when those industries can show serious harm due
to imports.

Il. The Vital Need for Statutory Clarification

Florida fresh winter tomato producers have tried, but failed, to obtain essential relief
from surges of harmful Mexican imports in the past year. Faced with near financial ruin
during last year’s winter season, the Florida winter tomato industry filed a petition on March
29, 1995, with the International Trade Commission ("ITC") under Section 202 of the Trade
‘Act of 1974, seeking relief from profoundly increasing volumes of imports from Mexico.
‘The industry further sought, under Section 202(d) of the 1974 law, provisional relief pending
the completion of the ITC's full 180-day investigation and 60-day Presidential review period.
Despite their urgent need for relief, petitioners were forced to withdraw the case after the
TTC’s negative provisional relief determination because three ITC commissioners ruled that
the Florida winter tomato industry must artificially be grouped and analyzed with all US.
tomato growers, even though those other growers did not produce or sell during the relevant.
season or compete with the harmful imports.

A Inequi fc of a "Product LineTM
‘Analysis for Seasonal Industries
In last year’s Section 201 proceeding, petitioners, the Florida Tomato Exchange and
its members, sought relief from imports of fresh winter tomatoes entering the United States
during the months of January through April. Those fresh tomato imports during January
through April, and those imports only, were subject to the investigation.

‘The statute defines the term "domestic industry” to mean:


63

about retaliation. These are perishable crops. It is a big problem
for_us.

Chairman CRANE. But you are into the export market with those
products?

Ms. DUNN. Yes.

Chairman CRANE. Mr. Houghton.

Mr. HouGuTown. I would just make a quick comment. I would like
to ask Dr. Roberts, let us just assume H.R. 2795 passes. Are you
not always going to have two problems, short term and long term?
Are you not always going to qave the weather and the currency
value problem in the short term, and are you not always going to
have, particularly in your State, the increasing appreciation of land
and the difficulty of farmers to compete not only with Mexico and
other places but also inside the United States? Are not those going
to be constant pressures?

Ms. ROBERTS. Yes, Mr. Houghton, you are absolutely correct, but
farmers are used to dealing with the pressures of weather. This
last year, we had a freeze event. But again, we were able to move
product. Regrettably, oftentimes when there is damage in one area,
a farmer in another area can have product to sell.

What we are asking for is a change in a definition that would
have it permissible for the ITC to look at those crops on a seasonal
basis. The farmers deal with weather. That will always be with us.
We can be competitive. We are competitive now with agriculture
anywhere around the world. We can produce and sell crops com-
petitive with anyone. What we cannot deal with are unfair prac-
tices that are not in conformity with the laws we have today. This
change in definition would recognize a fact of life. In the commerce
of today, we have seasonal commodities.

Mr. HouGuTon. Thank you.

Chairman CRANE. Another question just came to my mind, and
I will direct it to you first, Clay, and that is, do we export tomato
juice?

Ms. Roperts. Mr. Chairman, we do not produce tomato juice in
Florida. The types of tomatoes that are grown for the process oper-
ations in California are an entirely different species and grown in
different types of culture and there is a whole area of processed
products of which the State of California is the greatest producer
in that category.

Chairman CRANE. So only California can make tomato juice?

Ms. Roserts. No, sir, I did not say that. I said that the species
grown for processed tomato products are entirely different species.
They are grown under a different culture with mechanical harvest.

Chairman CRANE. But I mean they are not grown in Florida?
You are saying that kind of tomato is not grown in Florida?

Ms. RoBerTS. That different kind of tomato is not currently
grown in Florida in large quantities, sir.

Chairman Crane. Thank you.

Ms. Dunn.

Ms. Dunn. I do not have a question, Mr. Chairman. I would just
like to thank the panel for coming before us today and giving us
a good objective view from two different sides of the aisle.

Chairman CRANE. Mr. Portman.

Mr. PorTMAN. No questions.


20

tion’s perishable commodities producers. Without this relief, jobs in
the perishable commodities industry will continue to be seriously
at risk.” Congressman Shaw has previously placed this letter in the
record so I will not be redundant.

But this proposal has the strong support of Senator Dole. He
supported it when it unanimously passed the Senate on January
26, 1996. He supports it in this letter of April 24. You will hear
shortly from representatives of the administration supporting this
proposal. So the strong bipartisan base which led in NAFTA contin-
ues in its recognition of the importance of this legislation.

The consequences of failure to act are serious. Not only will they
be serious to this specific industry, but in my judgment they will
undercut a fundamental basis for future free trade agreements. If
American citizens do not believe that the rules established in
NAFTA can be meaningfully enforced, what confidence are they
going to have in future free trade agreements? I believe this issue
is fundamental to building and continuing the base of American
support for the principles of expanded trade.

Mr. Chairman, I see my time is up but I want to just make one
final point. That is that there is a sense of urgency with this legis-
lation. The winter vegetable industry in Florida begins planting in
the early fall in order to meet production schedules that commence
in October and November. So, unless this industry has some assur-
ance that it will not be bludgeoned as it was in the last two winter
seasons, you are going to see a lot of fallow fields in our State, and
I suspect in other States, as a result of the unwillingness to make
the heavy commitments that are required to grow the winter vege-
tables for Americans at the risk that they will again be subjected
to the kind of predatory practices that have so damaged the indus-
try in the last two winters.

So I would urge, Mr. Chairman, expedited attention to this mat-
ter by this Subcommittee, by the Full Committee, and by the
House. And I can assure you, and with the support of Senator Dole,
that it will get similar urgent attention in the Senate. Thank you,
Mr. Chairman.

[The prepared statement follows:]


37

TESTIMONY OF

JENNIFER HILLMAN,

GENERAL COUNSEL

OFFICE OF THE U.S. TRADE REPRESENTATIVE
COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON TRADE
‘April 25, 1996
Mr. Chairman, I appreciate the opportunity to present the Administration's

views on H.R. 2795 -- a bill which would amend the Trade Act of 1974 to clarify
the definitions of domestic industry and like articles in certain investigations

involving perishable agricultural products.

The Administration supports this proposed legislation. Unfortunately,
safeguard mechanisms available under existing legislation often are unable to
address the unique circumstances of producers of perishable agricultural products.

The clarifications incorporated in H.R. 2795 will help correct this deficiency.

Clearly, this bill has its origin in the difficult situation faced by Florida
producers of tomatoes and other winter vegetables. The Administration has
worked closely with Florida growers and their representatives to cushion the
impact of relatively high levels of imports of competing Mexican produce entering,
the U.S. markets during Florida's prime harvesting season. The Administration
has initiated a number of actions specifically designed to assist Florida growers of

winter vegetables.

Frankly, this is « tough problem that has existed for at least twenty years.
There is no silver bullet to solve it. Our approach has been to pursue a package of

initiatives to deal with a difficult situation, These actions include efforts to


157

er meine
iketood Congress of the Hnited States =
= Bouse of Representatives eager dor
‘@ashington, BE 20515-0305 seroma
May 8, 1996

Honorable Philip M. Crane

‘Chairman

Committee on Ways and Means

Subcommittee on Trade

1104 Longworth HOB

‘Washington, D.C. 20515

Dear Mr. Chain: fel.

Tam writing to express my strong opposition to H.R. 2795, which is virtually identical to S.
1463.

H.R. 2795 would amend Section 201 of the Trade Act of 1974 by altering the definition of
"domestic industry" and "like product” for purposes of determining whether a domestic industry
is seriously injured by a surge of imports. The bill would allow seasonality to become a factor in
determining the impact of imports on a domestic industry.

Admittedly, I have a parochial interest in this legislation. If passed, it would have a serious and
detrimental impact on Arizona's economy. Many Arizona importers, customs brokers,

and distributors rely upon the winter vegetable trade for their livelihood. Should
this trade be curtailed, it could have a devastating impact on many small and medium sized
businesses.

But my opposition to this legislation is deeper than Arizona's interest. The legislation invites
retaliation from our trading partners and could undercut many of the gains the United States
agricultural sector has made in the world marketplace. Many foreign countries, following our
example, could justifiably target and exclude U.S. agricultural products such as apples, peaches,
‘corn and wheat by utilizing “seasonality legislation” similar to that being considered here in the
United States,

HLR. 2795 and $, 1463 harm the American consumer. They could be used to disrupt numerous

“seasonal” products from other U.S. trading partners including products from Europe, Canada,
Israel and Chile. Exctuding these seasonal agricultural products from the U.S. market would
adversely effect both the price and quality of agricultural products available to American
consumers.

1 appreciate your consideration of these factors as you examine the impact of this legislation on
American agricultural brokers, producers and consumers. I request that this letter be made a part
of the record on H.R. 2795.

Kélbe
fember of Congress.


57

State of Florida

House or REpresENtTATIVES

House Restotion No, 9195

By Representatives Haris, Boyd, Greene, K. Prt, Mackenie, Mackey. Rojas, Diz de a Portilla, Flanagen,
Fuller, Zeb, Semble, Minton, D. Saunders, Sui, Bronson, Bari, Lacs, B. Saunders, Weber. Caton,
Cosgrove, Kelly and Laurent

‘A esolution forthe protection
‘of Florida agriculture

WHEREAS, the United States isthe world’s greatest agricultural nation and every American, together with
people thoughout the worl, enjoy the bereits of our nation's apricuharal effors and

WHEREAS, Florida agriculture is a major contributor tothe health and well-being ofthe eiiens ofthe
state, the nation, and ihe work with anual sles of raw farm products of nearly 6 blhon, which provides $45.
billion of economic benefit to tose who grow, process, anspor, insure, nance, and provide goods and services|
necessary for agricultural production, and

WHEREAS, Florida has produced the majority ofthe nation's supply of winter fut, vegetables, cits
and citrus proves, and isthe sole domestic supplier of many ofthese commodities for several months each year,
and

WHEREAS, eating fesh fruits and vegetables each day provides good nutiton snd reduces the risk of
heat, cancer and chronic diseases, and

WHEREAS, as 2 result of unparalleled escalation of shipments and inp surges of tomes and other
segetbles from Mexico st below the cost of production, over the past three years, Plaids percentage share ofthe
United States market has continued to decline each year, and

WHEREAS, the dramatic devaluation ofthe Mexican peso has accentuated very negative fects on
Florida agriculture, cripling his industry and placing a mjc threat on its continued existence, NOW,
‘THEREFORE,

Be I Resolved by the House of Represemtaives ofthe State of Florida
‘That the House of Representatives ofthe State of Florida does hereby urge the Charman of the
International Trade Commission Peer Watson. the President of the United Stats, the United States Trade
Repretemative Mickey Kantor, and Congress to take prompt action to enforce all provisions ofthe trade laws ofthis
tation, 0 enforce all provisions ofthe North American Fee Trade Agreement, and to quickly take whatever
‘administrative action ae within thee power wo prevent further adverse effets on Florida prodction of tomatoes,
Peppers and other crops.
[BE ST FURTHER RESOLVED thatthe Florida House of Representatives affirms the need io take
> immediate ation aginst unfair ade practices and soppons immediate egal pursuit nthe cours ofthe remedies
‘provided by curtent Usited Sites rade law.

‘This isto cei the foregoing was adopted on Apri 12,1996.



23

Chairman CRANE. Thank you, Senator Graham. We thank you
also for inconveniencing yourself by coming over to the House side
to testify before the Committee. .

With that, I would like to yield to Porter Goss.

STATEMENT OF HON. PORTER J. GOSS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF FLORIDA

Mr. Goss. Mr. Chairman, thank you. In the interest of time, and
because of the fact that I cannot say it any better, I would like to
associate my remarks with Senator Graham and Representative
Canady. I would like to congratulate you for what you are doing.
I think basically what we have done is identify a real problem and
you have provided a real solution and I think now it is just a ques-
tion of getting on with it.

I have also been advised while I am sitting here, Mr. Chairman,
that there is a rule on the floor that I have been asked to come
immediately to assist with in order that we can all get out of here
this evening. If you would allow me to be dismissed, and that quid
pro quo, I will be quickly gone.

[The prepared statement follows:]


144

By permission of the Chairman

ENW.E. 1034.05.96

May 8, 1996

The Hon. Philip Crane, Chairman
Subcommittee on Trade

House Ways and Means Committee

1104 Longworth House Office Building
Washington, DC 20515

Dear Mr. Chairman:

We are writing on behalf of the Governments of Nicaragua,
El Salvador, Honduras, Costa Rica and Guatemala to express our
concerns over recent proposals (as enshrined in HR 2795, as
introduced by Congressman Shaw, and S. 1463, which passed the
Senate on January 26) that will alter the definitions of
“domestic industry" for agricultural safeguard purposes to
isolate seasonal production.

These legislative initiatives appear to contradict the
United States of America's international obligations under
several international trade agreements, such is the case
concerning provisions under the North American Free Trade
Agreement (NAFTA), and the Agreement on Safeguards in the
Final Act of the Uruguay Round Agreement on the General
Agreements on Tariffs and Trade.

Disaggregating domestic industries along seasonal lines
would appear to violate the spirit, if not the letter, of
these agreements. In this last regard, our countries --and
other WIO members such as Canada, New Zealand, Brazil, Chile
and Colombia -- have already expressed their preoccupation for
the pending legislation before the WTO and urged the United
States to reconsider the proposed amendment.

We feel that such an initiative sends the wrong signal
regarding the promotion of liberalized trading regimes, both
in the context of the WTO and in the context of the FTAA
process, of which the NAFTA is an important element.

Moreover, efforts to unilaterally restrict access to the
United States tomato market seem inconsistent with parallel
efforts by the United States to open markets in other
countries that are important trade partners in the
agricultural sector.


90

For those of us who depend on international trade, we must
ensure that the principles and the integrity of the NAFTA and the
GATT are preserved. We must also ensure that a stable and
predictable trading regime is protected. So, regardless of whether
or not this bill was designed to reduce imports of Mexican produce
or widgets from the European Union, I would oppose it. While
support for the NAFTA and the GATT may be waning in Washington, DC,
it is strong in Arizona.

III Florida Tomato Growers -- still vying for Protection

Mr. Chairman, as we all know, perhaps too well, among the
strongest supporters of this legislation are growers of fresh
fruits and vegetables in Florida - particularly a handful of tomato
growers. During the winter months, Florida is the primary domestic
suppliers of fresh tomatoes. It competes primarily with imports
from Mexican tomatoes during the months of January through April.
Although most of Florida's production takes place coutside of these
four months, it is this period that they seemed to be most
concerned about. I guess that’s because you cant’t seek protection
from domestic competition.

Although I have tremendous sympathy for growers who have
suffered financilly, I have little sympathy for this group of
producers that number about eighty. In fact, the industry is
dominated by four families, who, by all accounts, have profited
handsomely from growing tomatoes. Paul DiMare, one of the leading
proponents of import protection, runs one of the largest vegetable
operations in the country.

Florida growers have complained about Mexican imports for well
over 20 years. A recent Wall Street Journal article chronicled:
"Back when Jimmy Carter was president, Mr. DiMare accused trade
officials of ‘driving Florida farmers out of business’ by failing
to stop Mexican growers from selling tomatoes below cost. The
Carter administration didn’t do anything. Florida’s tomato
industry didn’t collapse, and Mr. DiMare is still growing and
packing tons of produce.”

In any event, it seems that each time they have asked for
import protection in recent years, they have found a sympathetic
political ear in Washington. Short of defeating the agreement
outright, Florida growers received exceptional consideration under
the North American Free Trade Agreement. Tariff rate quotas were
imposed on a variety of fresh winter vegetables, including
tomatoes, and their tariffs were subject to a slow, ten-year phase
out. Each day I am reminded of this, as I pay more for the produce
that I import from Mexico.

Yet, there is little evidence that Florida growers have been
harmed by imports. In fact, last year the International Trade
Commission determined that whatever problems the Florida growers
were experiencing resulted from factors other than imports,

As far as I'm concerned, the Florida growers have injured
themselves. They refuse to produce the type of tomato that U.S.
consumers want. Florida grows green tomatoes and then gasses them.
Mexico, on the other hand, produces a vine-ripe tomato -- much like
those ‘that you grow in your own backyard during the summer.
Supermarket receipts show that demand for Florida mature green
tomatoes has declined, while demand for Mexican vine-ripe and Romas
has increased. The Wall Street Journal quoted Mr. DiMare as saying
“it doesn’t really matter" how tomatoes taste because they are
condiments, seldom eaten alone. An April 7 article in Fort
Lauderdale’s Sun Sentinel reported that even Mr. DiMare’s packing
houses in Tampa, Chicago and elsewhere purchase Mexican tomatoes.


44

have to do with article 4 of the safeguards agreement which says,
as it defines the domestic industry, that they are producers as a
whole of the like or directly competitive products operating within
the territory of a member of those whose collective output of the
like or directly competitive products constitute a major proportion
of the total domestic production of those products.

In other words, it sounds as if it is problematic in terms of trying
to separate either by producer or by season an industry like this
in the context of what is in the WTO Agreement. Could you com-
ment on that, because I am trying to understand this and trying
to understand how it relates to the WTO Agreement.

Ms. HILLMAN. Sure. What you are getting at is the issue of how
broadly you can define this industry as a whole, producers as a
whole. What we would argue is that our actions if this amendment
were to pass would be consistent with our WTO obligations because
they have that same definition of those that are affected, producers
as a whole of a like or directly competitive product.

The argument goes to what is going to be viewed as a directly
competitive product, whether or not you are going to view a
January-grown tomato as directly competitive with a June-grown
tomato. Clearly, what the ITC would be asked to determine on a
case-by-case basis, based on the facts of the particular situation, is
whether or not those items are, in fact, directly competitive, given
that they are grown and sold and marketed in a different season
when, theoretically, prices and other factors in the market are dif-
ferent for the product, that it has a seasonality to it, it has a lim-
ited time that it can be sold.

It would be a case-by-case determination on the facts by the ITC,
where the ITC would be given the liberty of making a determina-
tion that products grown in this seasonal basis is not directly com-
petitive with products or not like—I mean, they would make a de-
termination of whether they are like or directly competitive with
products grown in a different season. What they would be then de-
ciding is whether or not they want to grant relief based on competi-
tion between imports coming in at the same time as that group of
directly competitive products from a given season.

So what you are really getting at is giving the ITC discretion to
determine on a case-by-case basis what is a like or directly com-
petitive product to the imports coming in. You would be then choos-
ing the producers as a whole of the product that is, again, like or
directly competitive with that season of product coming in.

Mr. Payne. So again, then, your position and the position of the
administration is that this amendment clearly falls within the-—

Ms. HILLMAN. We take the view that this would be consistent
with our WTO obligations and consistent with our NAFTA obliga-
tions, given that they are based on the same definition of who is
eligible for relief.

Mr. PAYNE. You mentioned this has been going on for a very long
time and is not directly related to NAFTA. Have there been other
attempts such as this in the past to try to deal with this, or are
you familiar with them?

Ms. HILLMAN. The issue of the seasonality and whether there
should be changes, my understanding is, yes, the Congress at var-
ious points has considered a number of different pieces of legisla-


85

‘other times of the yeat) from consideration in order to define the domestic industry on the
basis of the degree of competition from imports at certain times of the year.’

‘Thus, the bill's application of the concept of "directly competitive” products is at odds
with the accepted meaning and use of that concept in the WTO agreements. If enacted and
challenged in the WTO, the proposed amendment would almost certainly be found by a
WTO dispute settlement panel to be inconsistent with the obligations of the United States
under the WTO agreements. Similarly, because Chapter 8 of NAFTA incorporates the
obligations of the WTO in this respect, if it were challenged under NAFTA, the proposal
also would be found to violate NAFTA.

III. Consequences of H.R. 2795 for U.S. Industry

‘The issue raised by the bill involves much more than the interpretation of arcane
concepts of the WTO agreements. Enactment of the bill would have several harmful
consequences.

First, any safeguard action by the United States under this proposal would almost
certainly generate retaliatory trade action by the affected countries. ‘The Safeguards
‘Agreement and NAFTA permit member countries whose products are subject to safeguard
actions to suspend "substantially equivalent concessions" to the trade of the country applying
the safeguard measure (unless the parties otherwise agree on an amount of trade
compensation). Safeguards Agreement, Art. 8(2); NAFTA, Art. 801(4). Because the
Proposed amendment would not be consistent with the Safeguards Agreement, the three-year
moratorium on retaliatory action (set forth in Article 8(3) of the Safeguards Agreement)
would not apply. Article 801(4) of NAFTA does not limit the right to retaliate in response
to safeguard measures (even if validly imposed) by such a moratorium and, therefore,
safeguard actions pursuant to the proposed amendment likewise would be subject to

it retaliation by Mexico or Canada without even the need for a dispute settlement
process,

Second, we would fully expect that safeguard measures taken under this proposal
would be challenged in the WTO and/or NAFTA, and, for the reasons discussed above, we
think that any such challenge would be successful, resutting in a finding that the United
States had infringed its international obligations.

Third, in the very unlikely event that a WTO or NAFTA panel were to find the
proposed amendment consistent with U.S. international obligations, the overall consequences
for U.S. trade policy would still be negative. Specifically, in that event, we would expect
U.S. trading partners to adopt legislation that would redefine the relevant "domestic
industry" in’a way that made it easier for those nations to impose restrictions on U.S.
products. The United States, as the world’s leading exporter of agricultural products, would
have a great deal at stake were the requirements for applying safeguard actions watered down
in the manner contemplated by H.R. 2795. In Mexico, Canada, Europe, or Japan, new
restrictions on products such as corn, apples, beef or poultry could be contrived. Moreover,
while this development would certainly impact U.S. agricultural exports, the "who's
competing with whom" approach contemplated by the bill could be used in the context of any
number of industries of vital interest to U.S. exporters.

5. Proponents of the amendment acknowledge that the intended beneficiaries would
be like product producers that compete with imports at a particular time of the year
rather than producers of different products that are substitutable for the imported like
product. See 141 Cong. Rec. £2388 (daily ed. Dec. 19, 1995) (statement of Rep.
Shaw).


62

Mr. SHAW. I disagree, we are on two different planets. You fear
retaliation against crops grown in the State of Illinois, which are
not readily perishable. These are crops that can be stored. These
are crops that if you do not sell them in one month, they are good
in another month. The tomatoes are not that way. For tomatoes,
and particularly in the State of Florida, you just have your winter
seasons, and that is exactly it.

What we are simply asking for is to give the Trade Representa-
tive the ability to look at the tomato industry or the fresh fruit and
vegetable perishable industries as a single industry.

Ms. Doy_e. In the first place, I am not here just in concern over
retaliation against Illinois crops. And in the second place, Hlinois
does grow perishable crops. I think beyond growing perishable
crops, we also produce a lot of meat, which is perishable.

Mr. SHAW. It is not perishable like tomatoes.

Ms. DoyLe. That is probably true, but it is very important——

Mr. SHAW. I can bring in a steak that was purchased a couple
months ago and it is still in fine shape, there is no question about
that, but with tomatoes, you just cannot do that.

Ms. DoyLe. I understand that.

Mr. SHAW. So we are really in here trying to get the cooperation
of the full Congress to look at this as we looked at NAFTA, and
that is a nationwide basis. We are not just individual pockets of
production here, there, and yonder. We are just simply asking that
the right thing be done, and the right thing to be done is to not
put us in a situation where we are going to lose tens of thousands
of jobs, we are going to put farmers out of business, and being from
Illinois and your particular position, you understand how that
works, and that we are going to destroy a whole industry of my
State because of fear of retaliation.

We are not asking for anything to be strictly imposed. We are
simply asking for the ability of the Trade Representative to view
a seasonal crop as a separate industry, rather than looking at that
particular crop on a 12-month basis, because without some type of
relief, the Florida tomato industry will not survive. I mean, they
are selling the stuff cheaper than we can pick it, and that is wrong.
You put the Florida producers out of business and we are going to
be totally dependent upon the foreign producers of these tomatoes.

I think it is extremely shortsighted not to make that type of re-
lief available to be given by the Trade Representative to the farm-
ers of the State of Florida.

Ms. Dore. Thank you.

Mr. SHaw. Thank you, Mr. Chairman.

Chairman CRANE. I have a generic question based upon this last
exchange. Peaches are perishable, are they not, and apples? Do we
export them?

Mr. Suaw. No, they freeze them. You can freeze them. You can
can them. You can can tomatoes, but you cannot freeze them, I do
not think.

Chairman CRANE. Do we export apples or peaches or pineapples
or——

Ms. Dunn. If the gentleman will yield, we have a couple in
Washington State, apples, pears, cherries. We are very concerned


86

Mr. SHAW. Thank you.
Mr. Monteverde.

STATEMENT OF HUMBERTO MONTEVERDE, PRESIDENT,
FRESH PRODUCE ASSOCIATION OF THE AMERICAS; ACCOM-
PANIED BY LEE FRANKEL, EXECUTIVE VICE PRESIDENT,
FRESH PRODUCE ASSOCIATION OF THE AMERICAS

Mr. MONTEVERDE. Good afternoon, Mr. Chairman and honorable
Members of the Subcommittee. My name is Humberto Monteverde.
I am president of the Fresh Produce Association of the Americas,
Nogales, Arizona, and I represent the American businesses and al-
lied industries involved in the sales and distribution of Mexican
produce. I am accompanied today by Lee Frankel, executive vice
president of the association.

I have submitted a written statement which I will summarize
and add a few comments. I would like my written statement to be
included in the record as if read. I also would like to submit for
the record an excellent article about the Florida tomato industry
from a recent issue of the Wall Street Journal.

Mr. Chairman, the bill before us, H.R. 2795, does not mention to-
matoes or seasonality, but we all know that it is about Mexican
fresh winter tomatoes. H.R. 2795 continues the so-called tomato
war between Florida and Mexico from last year, when the U.S.
International Trade Commission said the law does not recognize a
seasonal industry, and, therefore, tomatoes harvested in south
Florida from January to April do not qualify its growers to safe-
guard import relief under section 201.

A seasonal industry sounds plausible, but let me tell you that the
tomato is a particularly bad example to use for a seasonal industry.
A tomato vine takes 90 to 120 days to produce fruit. Furthermore,
a tomato is a perennial, although it is usually planted and har-
vested as an annual. A tomato vine planted in the early fall can
be harvested until late spring, when the climate is too hot in Mex-
ico for the flowers to set and produce fruit.

Let me clarify one thing. Tomatoes are imported from Mexico al-
most every single day of the year, with the exception of Christmas
and New Year’s and Easter, when they close American customs.
During the winter seasons, both Florida and Mexico ship tomatoes,
but they ship different types of tomatoes. Florida ships mature
greens, which are picked green, then artificially processed to
degreen them. Mexico, in contrast, ships vine-ripened tomatoes
which are left on the vine and picked only when there is natural
color to them.

In addition, if Florida growers lost any money this year, it was
because of reduced production because of the weather, since prices
were the highest they have been in years.

H.R. 2795 is applicable to any perishable agricultural product. It
can be used by a lot of agricultural groups and that is why it is
such a dangerous piece of legislation. If H.R. 2795 is adopted, it
will allow almost anyone to claim injury from imports. A small
group of growers can claim injury during a very short and specific
period of time, even though other growers are doing very well.
There is nothing to require import relief to be narrowly con-
structed.


121

National Alliance
For
Seasonal Agricultural Trade

NASAT Statement
Submitted to

The House Ways and Means Committee
April 25, 1996

Introduction

‘The National Alliance for Seasonal Agricultural Trade (NASAT)
supports K-R. 2795, legislation that would permit an industry
growing seasonal perishable crops successfully to seek assistance
under Section 201 et sea. of the Trade Act of 1974, as amended,
commonly known as the "escape clause" or "safeguard" legislation.

NASAT membership includes organizations that represent growers of
seasonal perishable fruit and vegetable crops. These annual and
perennial crops are grown mostly in the State of California.

rox Compet iti L

Where there is injury to a domestic industry due to increased
levels of imports of a like or directly competitive product,
safeguard action may be taken under Sections 201 et sea.. Relief
includes the imposition of, or increase in tariffs, or increased
quotas, and trade adjustment assistance. Relief which is not
automatic is temporary, and the domestic industry must inform the
U.S. International Trade Commission ("USITC*), why the petition
is filed, and how it will make a positive adjustment to import
competition.

Problem

asonal_ Indust Peri

crops

NASAT’s concerns are directed to those seasonal crops that are
perishable. To understand why NASAT members support H.R. 2795,
it is necessary to understand the difference between industrial
articles, agricultural crops, and seasonal perishable crops.

Under Section 201 et sea., there appears to be no distinction
between the industrial article, "industry" agricultural crops and
semi-perishable seasonal crops. However, the seasonal perishable
crop cannot qualify for an adjustment remedy under the safeguard
law.

industrial Product

‘The door knob industry is a good example of an industrial
article. It can be made any place in the United States every day
of the year; in places that are cold or hot with little rainfall
or abundant rainfall; in the winter or in the summer; in the
State of Washington, Maine, or Texas. The determining factors
for location of such an industry would probably be sufficient
labor, proximity to transportation and proper zoning for the
plant. Unlike agriculture, seasons of the year do not normally
impact the production of the industrial article - the door knob.

one "Industry" Agricultural Crops

Examples of a one "industry" season semi-perishable crop would be
corn, wheat, soybeans, oats, barley, etc.. ‘These crops are
mainly grown in the Midwest and depend on a certain environment,
but they are one-season crops and can be stored for months and
perhaps more than one year. USITC would consider the nation’s
crop collectively as the "industry", whether it is grown in Iowa
or Georgia.

NASAT © 1005 12th Street @ Suite A © Sacramento, California 92714 # (916) 446-1495


124

Scope of Relief

The proposed legislation would amend Section 201 et_seq. to
permit, for the first time, seasonal agricultural crops to
receive the same opportunity that is provided other industries.
‘The number of industries that would be eligible to seek relief
under this legislation would be small, and the scope of relief
would be extremely narrow. The legislation would not provide
immediate relief, and any relief provided would not be permanent
but temporary for a few years. In the last twenty one years,
only one agricultural crop, canned mushrooms, was successful’ in
receiving relief (adjustment assistance}

‘The legislation would provide the opportunity for the seasonal
perishable agricultural industry to have an opportunity to

succeed with a safeguard case. If successful at the USITC level,
the industry mst still have its case approved by the President.

2: patible wit ich

The Analytical Index! for the interpretation of Article 31x

See Tee Peiietat contitions for the article tobe fulfilled and
these are:

"(i) the product in question must be imported in increased
quantities;

"(ii) the increased imports must be the result of unforeseen
developments and the effect of the tariff concession; and

"(i4i) the imports must enter in such increased quantities
and under such conditions as to cause or threaten serious
injury to domestic producers of like or directly competitive
products.

Applying the above principles to the problem of seasonal crops
the petitioner must comply with the above conditions or the
safeguard petition will fail before the USITC. H.R. 2795 merely
permits the seasonal perishable crop that is grown during a
particular growing season and sells all or most all of the
production during that growing season to have a reasonable chance
of succeeding before the USITC if it can comply with the
safeguard principles described above in this section.

Mirrored Legislation

Concern has been expressed that if the U.S. adopts this amendment
other nations will implement the same program. NASAT has been
concerned with trade barriers that prevent their fresh fruits and
vegetables from entering foreign nations. an example of a
safeguard type of program is the European Union reference price
for fruits and vegetables. This permits the E.U. to increase
tariffs on fruits and vegetables every year when the E.U.'s
produce is being sold. Switzerland, during the very small Swiss
asparagus production, can place a $5.00 per pound duty on
California asparagus. Yet the Uruguay Round did not eliminate
these practices.

These foreign programs do not have the agency proceedings
required by the U.S, safeciard statute. If the B.U. and other
foreign countries were to mirror the U.S. safeguard law, as
amended with the proposed seasonal perishable legislation, NASAT
would be elated. U.S procedures would be preferable to the
current trade system used by many nations to discourage exports

1 U.S. ITC Inv. No. TA 201-43, Mushrooms

uide to GATT Law and Practice,

2? GaTT, Analytical Index: Gi
Updated 6th Edition (1995)


31

TESTIMONY OF CONGRESSMAN DAN MILLER
BEFORE THE HOUSE WAYS AND MEANS SUBCOMMITTEE ON TRADE
APRIL 25, 1996

Mr. Chairman, I come before the Trade Subcommittee in support of H.R. 2795, sponsored
by my Florida colleague Clay Shaw, Jr. I appreciate the opportunity to testify before you today,
and I hope the Committee sees the merit in H.R. 2795.

I represent the Palmetto-Ruskin area of Florida, where citrus, tomatoes, and other crops
thrive in the balmy temperatures and bright sunshine. The mild temperatures permit two growing
seasons, and most of the produce enjoyed by Americans in the winter comes from either Florida
or Mexico. My district is the second largest tomato producing region in Florida. The tomato
industry is a key component of our local economy, worth about $100 million last year.

Our farms are independent, family owned enterprises. Many have been in operation for
‘over a hundred years. There are few institutions in Florida that go back one hundred years!

Although our growers have been fiercely competing with Mexican farmers for the past
decade or so, a year ago the market crashed. In an election year, the Mexican government had
been secretly inflating its currency to get a short-term economic boost. When the bills came due
and the Mexicans could not meet their foreign debt obligations, the peso absolutely collapsed,
We all remember the rancorous debate over the Administration’s Mexican bailout plan.

The crash of the peso destroyed the Mexican market for tomatoes, and last year they
turned their eyes north to the U.S. market. The Mexicans desperately want dollars, and they are
literally dumping tomatoes in the United States at distress prices. The perishable nature of fresh
tomatoes means that the market is especially sensitive to supply-- you can’t store the tomatoes
and wait out the flood until the price rises. The peso remains in the gutter, and this season things
were even worse-- in December Mexican shipments were 80% higher than the previous year.

Our trade agreements permit the ITC to take action when extraordinary surges of imports
injure American industries. A Section 201 petition our growers filed last year for dumping relief
was denied by the ITC. That's because, by law, the ITC looked at the tomato industry as a
whole, including other states and different growing seasons. Unfortunately, Mexican winter
tomatoes compete almost exclusively with Florida’s crop, so our state has borne the brunt of the
peso-led surge. The legislation before the House today will make a technical change in the law to
allow the ITC to consider damage to seasonal industries. It does not require sanctions. It simply
allows the ITC to look at the Florida winter market for what it is: a specific industry

I support free trade, I voted for both NAFTA and GATT. America’s economic future
lies in access to world markets. This is especially true for agriculture. As the rest of the world
develops and grows in wealth and population, America’s farmers will provide their sustenance.

However, our tomato growers need the same protection under our trade laws as other
products. The peso crash has destroyed the orderly transition to a free market envisioned in the
NAFTA agreement. When Florida citizens see crops left in the fields to rot because it costs more
to pick the tomatoes than the farmers would receive from selling them, that undermines support
for free trade in general. Selling below the cost of production-- dumping-- is illegal under existing
USS. trade laws if the dumping causes injury. We know that Mexico is dumping its tomatoes, and
it is readily apparent that Florida tomato growers are being injured in this dumping. I urge my
colleagues to support this bill


156

Agneutural Quttook/Maren 1996 Economic Research Service/USOA 13

Florida & Mexico Compete in U.S. Fresh Vegetable Market

Increased US, imports of winter fresh extended Baja season further weak- turned tothe U.S. market to car dol-
‘vegetables from Metco have led ‘ened Florida's fall-season market. las. The peso's rate of exchange
Flonda growers to demand Federal and increased from 3 pesos per dollar in
seat acuon fo lessen the impact on When the Mexican peso devalued ia December 199410 over 7 peso it
domestic producer pices. In January late December 1994, Mexican vege- arly 1996. In Mexico, growers are
1996, Florida began stepping up {able producers had an additional paying US. dolar based pices for
inspections of al produce coming into incentive fo expon winter fesh vege- inputs ike sed and feralize, andthe
the state, focusing on potential sanitary tables othe US. market. During higher costs may have reduced the
and phytosanitary volions nd pep. ana fe (998,05. mpors of aly respons of Mexico's rower,
ér labeling on produce sipping con- the st vegetables inceased 13 per- However he shor-ierm net effect of
‘nines. Also, Florida growers are cent even tough mich of Mexico's __peso devaluation appears to have given
Seeking mote frequent monitonng of crop had been planted and there was Mexican producers a profi advantage,
incoming produce atthe US-Mexico limited opportunity vo increase area_-—weeause vegetable producers ae
border ab means for more mely ta- planted. version fom Mexico's ing lower real wages
{ff protection. Somestic market accounted for some

of the increase, while higher yields During calendar 1995, the value of
Florida growers’ concern focuses on also likely conabuted. Florida's winter fresh vegetable pro-
sux fresh vegetables (fomatoes. bell Auction decreased to $702 million,
peppers. cucumbers. eggplant snap «The weakness ofthe peso continued down from $1.2 billion in 1992. fn
Sears, and squash) prodvced during ito the caren 199596 season, affect. arly 1996, prices received by Fonda
October to June. The term “winter” ing Mexico's fruit and vegeuable sup- growers for these vegeabes, which
fresh vegetables applies to this group ply and demand. Mexico's inflasion __ account for three-fourths of Fonda's
| because of intense competion during and unemployment rose. and consumer __ffesh vegetable indus. have averaged
January to March. tn the winer furchasng power devined. Reduced below year-eates levels and well
months, Menico's exports peak. and etmand is acontibulng factor in the below 1992. Inthe near term, with
Flonda’s production sconcentated in SO.percent drop in US. horacultural prospects for continued weakness of
the southern part of the stat. near export to Mexico during 1995, the peso, Florida growers are likely:
Homestead and Immokalee continu facing suf competion in the

1 In response to sluggish domestic de- U.S. market forthe six winter fresh

tn the late 1980's, Florida typically ‘mand, Mexico's vegetable producers vegetables,

supplied 45-50 percent of the US.

srarket (Octobe Ture) for these vege-
aan eae ares ess ees, Hida Supplies @ Shrinking Share of US, Winter Fresh Vegetables

cent, and oer sources (pancipaly
California) sold 15-20 percent. or
Fiondas share has decreased from $7

petcent in 1991/92 to 36 percent in
1994/95, and the 1995796 share could
decline further.

‘Weather has been a significant factor
‘in Florida's market share during the
last five seasons, Florida's share was
above average in 1991/92 because sev-
{ eral BI Nino storms (arriving in
Mexico in late December) sharply
| reduced Mexican supplies for export to
the U.S. Similarly, weather reduced
Flonida's supply—and market share—
during 1994/95, beginning with dam-
age from Tropical Storm Gordon. The
1995/96 season started late in Florida,
due to cook and rainy weather. In
aidition. Mexaco’s Baja California
shipped tomatoes through December—
Several weeks later than usual. The



‘808 O0LE
ANSAS

Wnited States Senate

April 24, 1996

Honorable Philip M. Crane
Chairman

Committee on Ways and Means
Subcommittee on Trade

2104 Longworth HOB
Washington, D.C. 20515

Dear Mr. Chairman:

I would like to express my support for H.R. 2795, which is
virtually identical to §. 1463 passed by the Senate earlier this
year. I understand a hearing will be held on H.R. 2795 in the
near future.

H.R. 2795 will allow the International Trade Commission to
consider the seasonal nature of perishable agricultural

This

commodities when making determinations of trade relief.
relief already exists in current trade law to assist domestic

industries that are harmed by price-based import surges

H.R. 2795 will ensure that this relief is made available to

our nation’s perishable commodities producers. Without this
relief, jobs in the perishable commodities industry will contimue

to be seriously at risk.
I appreciate your consideration and support for this
important legis]: a

BOB DOLE


189

qn SERVICIO NACIONAL OF INFORMACION Cf M
affine te

ocasicy nes de US Dis. (2.2 millones ce

tuciones TM). Esto refleja una caida de 1a
interro de produc-  produccién de las hortalizas en
ra tara en la de- ese estado del 18.8 en volumen,

. oss la rayor ren- yy del 38% en valor. Adends, 18
rsreado externo, aportacién de la entidad en la
Tantiere sub-  produccién estadounidense de hor-
frente al aSlar, contri-  talizas pasé de 14.3% en 1992 a
buyersn a liberar una mayor 10.2% en 1995. También la parti-
cferta exgortaple de estes ble-  cipacién _respecto al total de
nes Srea cosechada en los E.U.A. tan~
bién cay6, al ubicarse en 13.68 y

Sin entara2. no se deze perder de Lit, respectivanente.

= Lteres nacion

han ter:do que ha~ Ea conclusién, les analistas del
@ costes de produccién SOA consideran que ia fuerte

coma res

ja competitividad de las hortalizas

mexicanas prevista en el mercado
estadounidense,  provocaria que
los agricultores ‘de Florida de
las seis hortalizas de invierro
Ras importantes, continden reci-
biendo renores niveles de precios
por sus productos, por lo mencs
en el corto plazc.

Una revisién de los precios heen

jos prireros meses de
precios pagados al productor de
hortai:zas en Florida se ubicaron
en niveles todavia inferiores ai
pronedio de 1995 (492.96 déla-
res/TM), y muy por abajo de los
de 1392 (646.62 Dls./TM)-

positives
@1 conercic
3 pais séio se da en
iar. Se tal manera, si Sin embargo, en las primeras st
Sa ganancia de mercados © manas de Tarzo, varias enpacado
vexicanas ene. ras de tomate, afiliadas a la
sca 52 2 CAADES en Sinaloa, regulacon los
jujos de exportacién. A ello se
agregaron los dafos consecutives
del huracan Opal en octubre, les
precipitaciones intensas de no-
Vienbre’95 y enero’96, asi cono
las heladas de fin de diciembri
todo le cual reduje les rendi-
mientos y en alguios casos, la
calidad de la hortaliza. Estos
millo-  dafios aparentenente se refiejaron

Se dere sestacar que el

gicanzS los

» 03400 waeen OF
ve Seas ag (tan s30atat


47

“the domestic producers as a whole of the like or directly competitive article
or those producers whose collective production of the like or directly
competitive article constitutes a major proportion of the total domestic
production of such article.”

19 U.S.C. § 2252(c)(6)(A)(i).

‘Those Florida tomato producers comprising the Florida Tomato Exchange and its
members represent the entire fresh winter tomato industry in the United States. They, and
they alone, are the U.S. tomato producers during the winter season, January - April
Accordingly, they alone produce the U.S. products that compete with the imports subject to
the investigation. On that basis, petitioners logically argued that an industry recognized by
commercial market standards as distinct from all other industry segments, based on its
unique seasonal nature, should be recognized as distinct for purposes of seeking essential
relief under our trade laws. Indeed, the Section 201 statute seemed to require such a
finding, since the “domestic industry" to be analyzed by the ITC must be one that competes
directly with the subject imports. Where the scope of a 201 investigation is limited to
imports during a distinct period of time -- framed by a clearly defined agricultural growing
season -- and those imports are perishable products with a very limited “shelf-life,” the
relevant “domestic industry" in such a case must be the industry that produces and sells its
products during the same time period.

‘Two ITC commissioners, Commissioners Rohr and Newquist, agreed based on the
following reasoning:

“Although it may be somewhat unusual to define an industry on the basis of
less than full-year production, in this instance, in our view, such a definition
more fully realizes the statute’s disjunctive mandate that the industry produce
an article ‘directly competitive’ with the imports. Clearly, tomatoes harvested
in the USS. in the summer and fall months do not compete directly, nor for
that matter indirectly, with imports which enter the U.S, between January and
April.”

Fresh Winter Tomatoes, Inv. No. TA-201-64 (Provisional Relief Phase), Pub. 2881
(April 1995) at 1-25.

‘The three-member “majority’ acknowledged that the statute on its face does not
expressly prohibit ‘a four-month industry definition, but declined to depart from the
administratively established “product line” analysis. Following that analysis ~ which only
takes into account factors such as physical properties of the article, customs treatment, and
uses -- the Commission majority insisted on defining the domestic industry as all growers
and packers of common round tomatoes within the United States during the full calendar
year. This artificially expansive interpretation was used even though the record fully
demonstrated that product grown outside of the January through April period did not
compete with, and thus was not impacted by, the harmful imports.

By so ruling, the majority effectively held that a definable, deeply impacted segment
of American agriculture could not avail itself of necessary import relief. On behalf of all
winter vegetables that are now feeling the pain of import surges from Mexico and are
legitimately entitled to the safety net of U.S. import relief laws, FFVA views this
administratively dictated result with strongest alarm and opposition.

B. ancy of and S. 1463

Nothing in the express language of the statute nor its legislative history indicates that
Congress intended to preclude access to relief under Section 201 for seasonal industries that
produce perishable agricultural products. Quite to the contrary, legislative history indicates
that 201 relief was intended to be accessible to aif legitimate U.S. industries, as well as
certain relevant subsets of industries. The Senate Report on the 1974 Trade Act explicitly
stated that the term “industry” in Section 201 included entities engaged in agricultural


158

= 771 ie 800 CONNECTICUT AVE., N.W.
= WASHINGTON, 0.C. 20006-2701
a TELEPHONE: 202/452-8444

a2 - FAX: 202/429-4519

E-MAIL: FMI@FMILORG
FOOD MARKETING INSTITUTE WEBSITE: HTTP./WWW.FMILORG.

May 3, 196

‘The Honorable Philip Crane
Chairman

Trade Subcommittee

Ways & Means Committee
House of Representatives
Washington, DC 20515

Dear Mr. Chairman:

The Food Marketing Institute is pleased to provide this statement for the Trade
subcommittee hearing on H.R. 2795. FMI opposes H.R. 2795, legislation amending the
definitions of “domestic industry” and “ike or directly competitive article” in safeguard
investigations involving perishable agricultural products because it will lead to reduced choice
and higher prices for U.S. consumers.

‘The Food Marketing Institute (FMI) is a nonprofit association conducting programs in
research, education, industry relations and public affairs on behalf of its 1,500 members
including their subsidiaries — food retailers and wholesalers and their customers in the United
States and around the world. FMI’s domestic member companies operate approximately 21,000
retail food stores with a combined annual sales volume of $220 billion — more than half of all
grocery store sales in the United States. FMI’s retail membership is composed of large multi-
store chains, small regional firms and independent supermarkets. Its international membership
includes 200 members from 60 countries.

‘As the purchasing agent for consumers, food retailers and their wholesalers are primarily
concerned with providing their customers with a wide variety of high quality products at the
lowest possible price. This is especially true for fresh fruits and vegetables. These products are
an extremely important part of a healthy diet and the produce section is a crucial factor in
bringing consumers into stores. Indeed, according to FMI’s TRENDS research, quality produce
is the most important feature in selecting a primary food store (Trends in the United States.
Consumer Attitudes and the Supermarket, 1995, Food Marketing Institute).

According to the enclosed information from the U. S. Department of Agriculture's
Agricultural Marketing Service, Florida is a major supplier of tomatoes, bell peppers,
‘cucumbers, eggplant, snap beans and squash for about nine months (October to June) of the year.
During the winter months of January to March, there are two primary sources for vegetables in
the United States--Florida and Mexico. H.R. 2795 is intended to reduce or eliminate this
‘competition to the U.S. market during these winter months by creating an artificial three month
season for Florida winter vegetables. This would mean that consumers would face reduced
supplies and higher retail prices for their winter vegetables. We strongly oppose this effort to
artificially limit consumer choice in the produce departments around the country.



46

percent of all Illinois exports to Mexico and 7 percent of all of our
exports to Canada.

We are disturbed, therefore, by the sudden reemergence of pro-
tectionist arguments in this Nation, both in electoral politics and
in legislative and regulatory affairs. I am particularly troubled by
this Nation’s willingness so soon after years of professional solid
negotiations to open global markets to consider breaking its word
and unilaterally changing the rules. We feel that if we open this
door, it will be an open invitation to other nations to do the same,
creating a downward spiral which can only have disastrous effects.

Trade agreements are, after all, a realignment toward compara-
tive advantages which create the efficiencies which benefit consum-
ers and, in the long run, also protect and benefit producers.

The seemingly small issue at the root of the legislation before
this Committee today is being supported by what we see as a pro-
tectionist trend and, at the same time, is serving as protectionism’s
poster child. That is why 15 other nations have already objected to
this measure and why the 14-member Cairns group has expressed
its concerns. A vote by this Committee against H.R. 2795 would not
only be of great importance in and of itself, it would also send a
message to our trading partners and to leaders in the U.S. Govern-
ment that we must protect the sanctity of our trade agreements.

I am not the only State Agriculture Director opposed to H.R.
2795. My views are shared by directors and commissioners from
other large agricultural States. Most of the 50 States, especially the
large agricultural States, can identify a sector of their agricultural
economy which has been hurt, at least apparently hurt, by recent
trade agreements. But rather than ask Congress for a special pref-
erential treatment, we are working within our States to try to help
those sectors that have been harmed, help them identify different
options. I would respectfully suggest that the proponents of this bill
might want to work with the producers in their States, also, to do
the same.

In a letter to your Committee, several State directors or commis-
sioners of agriculture stated that this bill could significantly reduce
the gains the agricultural sector has made in the international
marketplace. We would like to present a copy of that letter for the
record.

Chairman CRANE. Without objection, so ordered.

[The information follows:]


6

This bill is not about trade protectionism. It is about allowing all
industries access to existing trade remedies when they are injured
as a result of import surges.

I would like to also, Mr. Chairman, put into the record a letter
that I have from Senator Dole expressing his support for H.R.
2795,

Chairman CRANE. Without objection, so ordered.

[The information follows:]


40

Chairman CRANE. Thank you very much, Ms. Hillman.

Let me open with a question. Does H.R. 2795, in your estimation,
violate the principle that the domestic industry examined must be
the domestic industry as a whole, so that as long as a product that
is grown in one season is like a product grown in another season,
there is no basis for a distinction based on seasonality?

Ms. HILLMAN. Mr. Chairman, our view would be that what you
are looking at in the statute is whether the product produced as
a whole of a like or directly competitive product is what you are
looking at, and the issue here goes to what is directly competitive
or like, if you will, a January-grown tomato. I think what you are
getting at is the issue of whether or not a January-grown tomato
is directly competitive with a June-grown tomato.

Given that it is a seasonal product, the concept that you are get-
ting at with this bill is whether or not products grown in one par-
ticular season that are a seasonal product are like or directly com-
petitive with products grown in a different season. What you are
saying is you are giving the ITC the discretion to make the deter-
mination that they are not directly competitive with products
grown in a different season.

Chairman CRANE. My understanding is that a number of coun-
tries have alleged already in the WTO that the bill would be WTO
illegal, including 14 members of the Cairns group, which rep-
resents one-third of the world’s agricultural trade. How many coun-
tries have made this allegation and does this put us in an unten-
able position?

Ms. HILLMAN. In our judgment, it does not. We do not believe
that the legislation would be inconsistent with the WTO. Indeed,
current U.S. safeguard laws mirror exactly the WTO's definition of
what is a domestic industry, meaning the definition that producers
as a whole of the like or directly competitive product.

As we read the bill, the new provisions would not replace the
current WTO-consistent definition, even for perishable agricultural
products. The bill would simply permit the ITC to consider the
unique circumstances of perishable agricultural products under the
existing definition. Therefore, we do not believe that the bill can be
read as inconsistent with our WTO obligations.

I would add that given that the NAFTA sort of relates to the
same definition under the WTO, we would make the same argu-
ment, that the bill is not inconsistent with our NAFTA obligations,
either.

Chairman CRANE. Thank you.

Mr. Thomas.

Mr. THomas. Thank you. Thank you very much for your testi-
mony. What I get out of it is that in looking at the current U.S.
law defining domestic industry and the WTO Agreement on safe-
guards, all we are in essence doing is giving the option of adding
at the end of each of those definitions a phrase like “marketable
at that time,” because when you deal with perishable commodities,
what it is, is a product that is marketable at that time. I think it
is a long overdue approach.

The other thing I want to ask you is, do you not believe we in-
crease the ability to find it appropriate under WTO if we increase


120

I remember reading from a congressional hearing record that a
former Secretary of Agriculture said U.S. agriculture should not
fear import competition since we had the best technology and
scientists. What the Secretary did not mention, however, was
that all of our technology, any new variety or cultural practice
developed in this country, is immediately picked up by our
foreign competitors. Nor did he mention currency devaluation
All the best technology, scientists and bank loans, cannot
protect the U.S. grower from a devaluation such as the December

1994 Mexican devaluation.

Thank you, and I will be happy to answer any questions you may

have.


19

Mr. SHAW. Mr. Chairman, before Mr. Canady leaves I would like
to point out that he originally brought this bill to my attention and
together we filed it. So he has certainly been the No. 1 player here
in the House.

Chairman CRANE. Very good. You are excused for understandable
reasons, but we also thank Senator Graham for having yielded.
With that, we will yield to Senator Graham.

STATEMENT OF HON. BOB GRAHAM, A U.S. SENATOR FROM
THE STATE OF FLORIDA

Senator GRAHAM. Thank you very much, Mr. Chairman. I want
to thank you also for holding this hearing and commend you for
your long years of leadership on behalf of full fair trade for the

nited States. I think that is the essence of the issue that is before
us this afternoon.

Mr. Chairman, with your permission I would like to file for the
record my full statement and confine my remarks to a few extem-
poraneous points.

Chairman CRANE. Without objection, so ordered.

Senator GRAHAM. The issue before us today is not a surprise.
During the consideration of the North American Free Trade Agree-
ment it was anticipated that there would be this issue between per-
ishable agricultural products of a variety of forms and product com-
ing from Mexico. For that reason, in the implementing legislation
of NAFTA there was a special directive to the ITC to monitor the
perishable agricultural industry in order to assess the impact. So
what we are debating today is by no means unexpected.

Second, a fundamental principle of fair trade is that it be ruled
by a set of laws. Fair trade is not a jungle. It is a regulated set
of relationships to benefit the citizens of all of the nations who are
involved in that trade.

A fundamental principle of the law is that a right for which there
is no remedy is no right. And that essentially is what agricultural
producers of perishable products have found to be the case with our
relationship with Mexico. There is a stated right to be protected
against activities which result in the sale of a product below the
cost of production, which therefore damages a significant American
industry. But the fact is, without the ability to recognize seasonal
aspects of a perishable agricultural industry, whether they are the
seasonality of grapes in California or peppers and tomatoes in Flor-
ida, it is a right without an effective remedy. The purpose of this
legislation is to provide that effective remedy.

hird, this is a very bipartisan issue. As we all know, the pas-
sage of NAFTA was extremely contentious. It depended upon votes
on both sides of the aisle in both Chambers for its success. The
leadership of the Republican Party supported NAFTA, as did a
Democratic President supported a NAFTA Agreement which had
largely been negotiated under a Republican President. So from its
beginning, NAFTA has had strong, bipartisan support.

The same is true of the matter before you today, Mr. Chairman.
Congressman Shaw read from a letter dated April 24 from Senator
Bob Dole in support of this legislation. If I could just read another
two sentences from that same letter in which Senator Dole says,
“H.R. 2795 will ensure that this relief is made available to our Na-


14

Signatories to Florida Congressional Delegation Statement on H.R. 2795

Senator Connie Mack
Senator Bob Graham

Rep. Charles Canady
Rep. Karen Thurman
Rep. Mark Foley

Rep. Porter Goss

Rep. Dan Miller

Rep. lleana Ros-Lehtinen
Rep. Alcee Hastings
Rep. Harry Johnston
Rep. Lincoln Diaz-Balart
Rep. Cliff Steams

Rep. Joe Scarborough
Rep. Bill McCollum

Rep. Clay Shaw

Rep. Corrine Brown
Rep. Carrie Meek

Rep. Tillie Fowler

Rep. John Mica

Rep. Mike Bilirakis

Rep. Dave Weldon

Rep. Pete Peterson
Rep. Peter Deutsch


WAYS AND MEANS SUBCOMMITTEE ON TRADE
PAGE TWO,

DETAILS FOR SUBMISSIONS OF REQUESTS TO BE HEARD:

Requests to be heard at the hearing must be made by telephone to Traci Altman or Bradley
Schreiber at (202) 225-1721 no later than the close of business, Monday, April 15, 1996. The
telephone request should be followed by a formal written request to Phillip D. Moseley, Chief of
Staff, Committee on Ways and Means, U.S. House of Representatives, 1102 Longworth House
Office Building, Washington, D.C. 20515. The staff of the Subcommittee on Trade will notify by
telephone those scheduled to appear as soon as possible after the filing deadline. Any questions
concerning a scheduled appearance should be directed to the Subcommittee staff at

(202) 225-6649.

In view of the limited time available to hear witnesses, the Subcommittee may not be
able to accommodate all requests to be heard. ‘Those persons and organizations not scheduled
for an oral appearance are encouraged to submit written statements for the record of the hearing.
Al persons requesting to be heard, whether they are scheduled for oral testimony or not, will be
notified as soon as possible afier the filing deadline,

Witnesses scheduled to present oral testimony are required to summarize briefly their
varitten statements in no more than five minutes. THE FIVE-MINUTE RULE WILL BE,
STRICTLY ENFORCED, The full written statement of each witness will be included in the
printed record.

In order to assure the most productive use of the limited amount of time available to
question witnesses, all witnesses scheduled to appear before the Subcommittee are required to
submit 200 copies of their prepared statements for review by Members prior to the hearing
‘Testimony should arrive at the Subcommittee on Trade office, room 1104 Longworth House
Office Building, no later than noon on Tuesday, April 23, 1996, Failure to do so may result in
the witness being denied the opportunity to testify in person

WRITTEN STATEMENTS IN LIEU OF PERSONAL APPEARANCE:

Persons or organizations wishing to submit a written statement forthe printed record of the
hearing should sut at least six (6) copies of their statement, with their address and date of
hearing noted, by close of business, Thursday, May 9, 1996, to Phillip D. Moseley, Chief of Staff,
Committee on Ways and Means, U.S. House of Representatives, 1102 Longworth House Office
Building, Washington, D.C. 20515. If those filing written statements wish to have their
statements distributed to the press and interested public atthe hearing, they may deliver

200 additional copies for this purpose to the Subcommittee on Trade office, room 1104 Longworth
House Office Building, at feast one hour before the hearing begins.

FORMATTING REQUIREMENTS:
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Note: All Committee advisories and news releases are now available over the Internet at
GOPHER.HOUSE.GOV, under ‘HOUSE COMMITTEE INFORMATION’.


132

Mr. SHAw. Mr. Stewart, I would ask that a few of these accounts
of Mexicans holding back on the crops be submitted, and I would
ask unanimous consent that the record be kept open in order for
you to submit that to the Committee to be a part of this record.

Mr. STEWarT. We would be pleased to do that, Mr. Chairman.

Mr. SHAW. Without objection, so ordered.

[The following was subsequently received:]


110

guard law is to ensure responsive, fact-finding-based relief, why
allow the government to engage in a fictional analysis that ends up
effectively discriminating against seasonal producers? Question
two, are seasonal producers for some reason less entitled than oth-
ers in U.S. commerce to receive fair analysis and responsive emer-
gency relief?

Never once have I heard a comforting answer to any of these
questions. True, I have heard a lot of legal and technical fine points
about administrative precedents, all to explain why a fictional
analysis is a perfectly appropriate trade remedy framework, but I
can assure you that few, if any, U.S. farmers who are actively en-
gaged in the hard work of seasonal agriculture grasp or appreciate
the logic of any of those arguments. I would go further to bet that
comparatively few U.S. citizens outside the beltway would grasp or
appreciate why our trade remedies are structured so as to dis-
regard commercial reality.

I have likewise heard from those who oppose the measure that
an analysis based on commercial reality is disallowed under inter-
national law. I would only respectfully point out that the U.S. Gov-
ernment, which negotiates our international obligations and which
is responsible for upholding those obligations and protecting not
some, but all, U.S. commercial interests, has carefully analyzed
this bill and determined it to be both legal and highly desirable.
I find that decisive and hope that the Committee will, too.

This Subcommittee has a tradition of understanding and trying
to accommodate the special needs of seasonal agriculture. H.R.
2795, as much as any other measure previously considered, is fun-
damental to ensuring that trade remedies work for seasonal pro-
duction. Seasonal farmers have for too long been denied equal ac-
cess to safeguard relief, even when they can prove they are suffer-
ing significant injuries due to imports. With our neighboring coun-
tries to the south increasingly active in the production of perish-
able crops, U.S. producers deserve more responsive attention and
analysis under U.S. trade remedy laws. Please help us achieve that
by quickly approving H.R. 2795 and assisting in its rapid enact-
ment.

That concludes my remarks, and I will be around for any ques-
tions, if you need them.

Mr. SHAW. Thank you.

Mr. Bozick.

STATEMENT OF MIKE BOZICK, NATIONAL ALLIANCE FOR SEA-
SONAL AGRICULTURAL TRADE, SACRAMENTO, CALIFORNIA

Mr. Bozick. Thank you, Mr. Chairman and Members of the Com-
mittee. My name is Mike Bozick. I am vice president and general
manager of Richard Bagdasarian, Inc., a family farming company
that raises citrus and table grapes in southern California.

Today, I am representing the National Alliance for Seasonal Ag-
ricultural Trade. NASAT is an ad hoc group of California associa-
tions committed to providing temporary relief from fresh fruit and
vegetable surge imports for growers of the same crops in the Unit-
ed States. Our members are the California Farm Bureau, Western
Growers Association, Imperial Valley Vegetable Growers, and the
California Desert grapegrowers League, of which I am a president.


69

We are disturbed, however, by the measure before this committee today, H.R.
2795. Against the background of striking growth in agricultural exports, we are
faced today with a bill that could put many agricultural jobs and investments at
tisk.

This measure would change the definition of a “domestic industry” to include
the concept of a “seasonal industry” for the purpose of obtaining safeguard relief
under Section 201. It grows out of a case at the U.S. International Trade
Commission, which found, among other things, that the complaining Florida
growers were not large enough to be an “industry” and therefore could not seek
safeguard relief.

Out of the ITC decision has grown an effort to create a “seasonal industry”
in U.S. law—even though this nation has already agreed, in the WTO and the
NAFTA, to the definition of an “industry.” In other words, this is an effort to
unilaterally rewrite America’s international obligations. No discussions with other
nations. No negotiations. No new agreement. Just violating America’s word,
given in accords that were painstakingly negotiated over many years. Already 15
other countries have objected in Geneva and the 14-nation Cairns group has written
to this Committee with their concerns.

We strongly oppose this effort, especially since the United States has
launched high-profile initiatives to ensure that other countries abide by their trade
agreements. It would be sheer hypocrisy to adopt this measure, and it certainly
would not help the many American industries that have been fighting for years to
ensure other countries live up to international agreements. U.S. farm groups have
fought to open markets around the world. We have led the way in free and fair
trade. It would be ironic if the U.S. Congress were now to adopt a bill that would,
in fact, start an agricultural trade war, disrupting all of our recent gains.

Winter tomato imports are no serious threat to the American agricultural
community. H.R. 2795 is the threat.

That violation of America’s word and contradiction of our goals are just two
of the serious problems that would arise from enactment of HR. 2795. There
clearly are others:

+ Passage of this bill would surely encourage other countries to afford
their “seasonal industries" special safeguards. This is a danger for


24

TESTIMONY ON H.R. 2795
BEFORE THE TRADE SUBCOMMITTEE OF
THE WAYS AND MEANS COMMITTEE
PORTER GOSS (FL-14)

25 APRIL 1996

MR. CHATRMAN:

THANK YOU FOR HOLDING THIS HEARING. MOST OF THE PEOPLE YOU WILL
HEAR FROM TODAY ARE HERE BECAUSE THE FLORIDA DELEGATION, THE
ADMINISTRATION, AND THE GOVERNOR'S OFFICE HAVE ALL AGREED THAT THE
PASSAGE OF CONGRESSMAN SHAW'S LEGISLATION, H.R. 2795, IS A PRIORITY

AS A SUPPORTER OF NAFTA, I HAVE BEEN PLEASED TO SEE MY STATE
GENERALLY BENEFIT FROM THE IMPLEMENTATION PROCESS. HOWEVER, AS THE
REPRESENTATIVE OF THO OF THE MOST PROLIFIC WINTER VEGETABLE PRODUCING
COUNTIES IN THE STATE -- AND THE NUMBER ONE COUNTY IN WINTER TOMATO
PRODUCTION -- I ALSO KNOW THAT WE HAVE SOME PROBLEMS THAT NEED TO BE
ADDRESSED.

SINCE THE IMPLEMENTATION OF NAFTA BEGAN, OUR WINTER TOMATO
GROWERS HAVE SUFFERED THROUGH TWO FULL SEASONS OF STEADILY DECLINING
PRODUCT VALUE. FROM 1994 TO 1995, TOMATO IMPORTS FROM MEXICO WERE UP
57%. BY NOVEMBER OF LAST YEAR, MONTHLY SURGES OF IMPORTS WERE UP 214%
OVER THE SAME MONTH IN 1994. PEPPER PRODUCERS ARE FARING LITTLE BETTER.
AND PRODUCERS OF SQUASH, EGGPLANT, SWEET CORN, AND BEANS ARE ALSO
FEELING THE PINCH.

IN HUMAN TERMS, THIS MEANS LOST JOBS, LOST REVENUE, AND RISING
DEBT FOR THE PEOPLE INVOLVED IN THE PRODUCTION, PACKING, OR
TRANSPORTATION OF WINTER FRUITS AND VEGETABLES. REVENUES ARE DOWN 40%
FROM LAST YEAR IN BOTH PEPPERS AND TOMATOES, WITH DOLLAR LOSSES IN 1995
ESTIMATED TO BE $125 MILLION AND $30 MILLION RESPECTIVELY. THIS.
TRANSLATES INTO A 13% DECLINE IN EMPLOYMENT IN THESE INDUSTRIES.

ON 16 NOVEMBER 1993, THE PRESIDENT WROTE A LETTER TO THE MEMBERS
OF THE FLORIDA DELEGATION, ASSURING US THAT HE WAS COMMITTED TO TAKING
THE NECESSARY STEPS TO ENSURE APPROPRIATE ACTION WOULD BE TAKEN TO
PROTECT THE U.S. WINTER FRUIT AND VEGETABLE INDUSTRY SHOULD IT BE
REQUIRED. CONGRESS ALSO PREDICTED THE POSSIBLE NEED FOR ASSISTANCE BY
INCLUDING SECTION 316 IN THE IMPLEMENTING LEGISLATION. THIS PROVISION
SPECIFICALLY DIRECTS THE ITC TO CLOSELY MONITOR TOMATO AND BELL, PEPPER
IMPORTS AND IS DESIGNED TO ALLOW PRODUCERS OF THESE PRODUCTS TO SEEK
RELIEF UNDER THE GLOBAL SAFEGUARD REMEDY (SECTION 201-202).

UNFORTUNATELY, IT SEEMS THAT THE SAFEGUARDS IN NAFTA AND THE
IMPLEMENTING LANGUAGE HAVE NOT LIVED UP TO OUR HOPES. IN PART, THESE
SHORTCOMINGS CAN BE SOLVED WITH BETTER ENFORCEMENT OF EXISTING LAWS AND
REGULATIONS. HOWEVER, IN TERMS OF RELIEF PROVISIONS, WE FIND THAT WE
NEED CONGRESSIONAL ACTION TO ALLOW SEASONAL INDUSTRIES TO ACCESS THEM
THAT IS WHAT CONGRESSMAN SHAW’S LEGISLATION IS ABOUT.

TODAY, FLORIDA’ S WINTER GROWERS ARE SIMPLY ASKING THAT U.S. TRADE
LAWS ~~ WHICH EXIST FOR PRECISELY THIS TYPE OF CASE -- BE FULLY
ENFORCED. THE INTENTION OF THE SECTION 201 PROCESS IS NOT TO STOP
TRADE, SUT TO FACILITATE THE TRANSITION OF SPECIFIC INDUSTRIES TO A NEW
TRADE REGIME. THE TEMPORARY RELIEF ALLOWED FOR UNDER SECTION 201, IF
OUR WINTER GROWERS COULD ACCESS IT, WOULD ALLOW THEM THE BREATHING
SPACE THEY REQUIRE TO MEET THE COMPETITION. BEYOND FLORIDA, WE KNOW
THAT THERE ARE PRODUCERS OF PERISHABLE AGRICULTURAL PRODUCTS IN STATES
LIXE SOUTH CAROLINA, OHIO, VIRGINIA, AND CALIFORNIA WATCHING THIS ISSUE
‘CLOSELY.

‘THERE ARE A NUMBER OF POINTS THAT MERIT EMPHASIS. FIRST IS THE
FACT THAT SIMILAR LEGISLATION, INTRODUCED BY SENATOR GRAHAM OF FLORIDA,
HAS ALREADY BEEN PASSED UNANIMOUSLY IN THE SENATE. IT SHOULD ALSO BE
NOTED THAT THERE ARE PRECEDENTS IN U.S. CASE LAW, IN PREVIOUSLY PASSED
LEGISLATION, AND UNDER OTHER STANDING U.S. LAWS FOR RECOGNITION OF A
UNIQUE SEASONAL INDUSTRY. THE EXPERT PANELS TO FOLLOW WILL NO DOUBT
TOUCH ON THE PINER POINTS OF THESE PRECEDENTS. LET ME ALSO ADD, FOR
THOSE WHO ARGUE THAT THIS IS AN AFFRONT TO OUR INTERNATIONAL
OBLIGATIONS, THAT CONSULTATIONS WITH THE COMMITTEE STAFF, THE USTR, AND
THE ITC HAVE REVEALED THAT H.R. 2795 IS NOT INCONSISTENT WITH OUR GATT
AND NAFTA OBLIGATIONS.

I WOULD ALSO LIKE TO CLARIFY A POINT THAT HAS BEEN DISTORTED BY


STATE OF ARIZONA
EXECUTIVE OFFICE
April 23, 1996

The Honorable Philip M. Crane, UL
Chairman, Subcommittee on Trade
Committee on Ways and Means

1102 Longworth [louse Office Building
Washington, D.C. 20515-6448

Dear Phil
L write to reiterate my opposition to H.R. 2795, which will be heard by the Subcommittee on

Trade this coming Thursday. This legislation, if passed, will beucfit a narrow segment of the wit
produce industry at the expense of all other segments of that industry.

ILR. 2795 is a non-tariff trade barrier that would directly violate the intent and spirit of the
Notth American Fice Trade Agreement. I would result in increased casts and prices throughout the
industry, much to the detriment of producers, suppliers, distributors and ultimately the customer. ‘The
burden of protecting Florida's industry will be borne by consumers throughout North America, This
contradicls our commitments lo free market ideologies and policies. ‘This country was buill on the
foundations of fair trade and competition and our future depends on our ability to compete and trade
freely throughout the world. H.R. 2795 is a flawed attempt lo isolate a segment of America’s economy
from the global arena, which will result in loss of opportunities for the entire North American winter
produce industry.

I strongly urge the Subcommittee on Trade to reject HLR. 2795 on the basis that it will adversely
alfect the entire North American winter produce industry and jeopardize thousands of jobs in the
United States that are dependent on free trade

Thank you for carefully considering this matter.

Sincerely,

Fe

Fife Symington
GOVERNOR

¥S:ko

ce: Hon, Newt Gingrich, Speaker, US. House of Representatives
Hon. Uill Archer, Chairman, Committce on Ways and Means
Arizona Congressional Delegation
Keith Kelly, Director, Arizona Department of Agriculture
Border Trade Alliance
Fresh Produce Association of the Americas



10

Mr. SuHaw. I would also like to recognize Congresswoman Ileana
Ros-Lehtinen who has also joined us. Mr. Chairman, this particular
bill is cosponsored by the entire Florida delegation with the excep-
tion of one of its members. So it has a very strong backing. We rec-
ognize the need for this and I would certainly hope that the Com-
mittee would look favorably on what we are trying to do.

Lyield back.

Chairman CRANE. Ileana, do you have a statement you would
like to make?

STATEMENT OF HON. ILEANA ROS-LEHTINEN, A REPRESENTA-
TIVE IN CONGRESS FROM THE STATE OF FLORIDA

Ms. Ros-LEHTINEN. I have a statement, Mr. Chairman, that I
would make part of the record. There are a few of us from south
Florida who represent a great deal of this industry. All of us have
a little corner of south Dade and this industry is very important
to us. Not just in terms of jobs and livelihood, but also in terms
of the future growth for south Florida. We see this industry not as
a dying industry but as one that could really produce even better
jobs and a brighter future for our children. We do not want to see
this industry pack up and go away.

As Clay pointed out, it is far more beneficial now financially for
them not to even pick the crop because—it has just been a very dif-
ficult situation for us. After Hurricane Andrew devastated a great
number of these farms, now we have devastation that may be even
far wider in scope and more damaging in its effect.

[The prepared statement follows:]


141

Mr. SHaw. Mr. Thomas.

Mr. THomas. Thank you very much.

I apologize. I am trying to be in three places at once. This testi-
mony begins to round out and broaden the concern of seasonal agri-
culture, although it is clearly focused on the tomato crop, because
others have some good examples. For the life of me, I do not fully
understand some of the folk who are conjuring up international bo-
geymen to stop us from having a fair opportunity to redress unfair
trade practices.

I sometimes think, perhaps, that some folks have not spent ei-
ther enough time or they do not appreciate specialty agriculture
and seasonal agriculture. Everyone is, I think, pretty much aware
of how important wheat and corn is to this country, but for those
of us who are involved with products that somehow never equate
with corn and wheat—and I grow hundreds of them, at least people
in my district do—people, I think, fail to understand how much
money is attached to these products. Almonds alone are a quarter-
of-a-billion dollar industry.

You can go on and on with products that are grown not just in
one State but in particular counties within the State. For us, arti-
chokes and asparagus have very limited wing areas, grapes in
the central valley. When they are treated in this way, it is enor-
mously devastating to the economies in those areas.

What is not further appreciated is the fact that more and more,
we are dealing with high-tech operations in which there is a very
sophisticated agricultural espionage, because one of the things we
have been able to do is through genetic manipulation and selective
hybrids, develop new products for the marketplace which would
give us a competitive advantage, notwithstanding the head-on con-
flict, because our products are better and they get stolen and the
next season they are being grown in Mexico or somewhere else. I
wish I could have gotten the cooperation of the Federal Govern-
ment on how important stealing of these various products is, as
well.

So I appreciate the testimony that you folks have delivered.
Clearly, it is from the heart, because it is coming from the pocket-
book. Once again, all you want is a fair chance to plead your case
to seek relief.

Mr. Stewart, I have to agree with you. The argument that some-
how there will be this massive retaliation—frankly, if you look at
a number of countries and especially EU countries, they already
have placed increased tariffs on our products during their growing
seasons, and if, in fact, that occurs to us, that simply would be reci-
procity rather than some new bold move on the part of the United

tates.

So I appreciate all of you. I especially appreciate Mr. Bozick com-
ing all the way across the country. He is on the southern flank of
the growing season. He should be first to market, and when you
are first to market, you are supposed to get a fairly decent price
for your crop.

But when you find out that someone is already there with an in-
ferior product, undercutting you in a way that is not fair competi-
tion, you begin to want to say, I would like to have my day in court
or at least in front of the International Trade Commission. This


29

products. After all, political pressure is not unique to the
U.S. We certainly cannot expect our friends overseas to extend
free trade policies to us when the U.S. practices protectionism.

Mr. Chairman, the U.S. has worked hard to achieve free and open
access to foreign markets and thus far, these efforts have been
successful. United States agricultural exports are at an all
time high. But, we should not lose sight of the fact that the
U.S. is not the only source for agricultural products. Ina free
market, our trading partners can just as easily buy from other
countries if the U.S. does not extend favorable terms. We simply
cannot afford to alienate our trading partners by closing access
to our markets and trade doors. I hope that we do not risk the
gains we have made toward free trade by adopting a protectionist
bill like H.R. 2795.

Thank you, Mr. Chairman, for the opportunity to address this
sue.


166

On March 1, 1996, the Pro Trade Group (PTG) submitted comments to the
‘Trade Subcommittee on miscellaneous trade proposals. In that submission, in part, we
detailed the reasons for the opposition of the PTG to H.R. 2795, legislation designed to
amend U.S. safeguards law.

As part of the Subcommittee’s hearing today on this subject, one of the PTG
members, the National Association of Corn Growers, will be testifying in opposition to
this legislation. It will testify on behalf of a number of agriculture commodity
associations.

We believe that it is important for the Subcommittee to recognize that the policy
reasons for our opposition to this legislation transcend the interests of the agricultural
community. Accordingly, we enclose here, and submit for the record of this hearing, a
letter in opposition to this legislation which has been signed by, among others, a number
of non-agricultural trade associations.

The PTG is a broad coalition of U.S.-based companies and organizations that
represent U.S. exporters, importers and consumers, including manufacturing,
agricultural, wholesaling, retailing, service and civic interests, which actively seek to
develop competitive markets and promote trade. It was founded in 1986 and is
committed to expanding, not restricting, trade and promoting policies which achieve that
goal and resultant economic prosperity. We were actively involved in the development and
passage of the Omnibus Trade and Competitiveness Act of 1988 and played an equally
active role in the consideration and enactment of UR implementing legislation. We are
committed to helping develop and implement constructive, trade expanding policies, laws
and regulations. The positions of the PTG represent a consensus view although PTG
participants may have varying views on particular issues.

Further comments reflecting our views will be covered in a post-hearing
submission.

Respectfully submitted,

Elltermel. ff (ec zx

Edward J. Black

President, Computer & Communications
Industry Association,

Chair, Pro Trade Group


USMCOC BOARD MEMBERS & OFFICERS
Chairman
Duane H., Zobrist, Carlsmith Balt

President
Federico Sacasa, Bank of America

Executive Vice President/Secretary
‘Albert C. Zapanta

‘Treasurer

Robert J. Berry, NarionsBank

BOARD OF DIRECTORS
Ed Aguime, Aguirre International

Leo Kelmenson, Bozell, Jacobs, Kenyon & Ecthardt
Gabriel Amante, KPMG Cardenas Dosal

Hector Meza, Motorola

‘Thomas Bayley, Seguros Monterrey/Aema

Javier Morales, ITESM-DF

Willard Beeson, Universidad de las Américas-Puebla
Ronald Nicholas, Pilgrim's Pride

Floyd W. Boyd, Amoco Servicios Mexicanos

Manuel Petia-Mortos, The Chase Manhattan Bank
‘Alejandro Campitlo, Border Area Task Force-USMCOC
‘Carlos Perex. Deloitte & Touche

Chris Carrington, Coopers & Lybrand

Joel Amn Rea, Burson-Marsteler

Eugenio Clariond, Grupo IMSA

Leslie B. Rogers, Mobil Latin America & Caribbean
Fermin Cuza, Mattel

Ed Romero. Advanced Sciences Inc.

‘Thomas J. Donobive, American Trucking Associations
‘Antony J. Rucei, Sears Merchandise Group

David Esuello, Grupo Editorial Expansion

Carl Ruderman, Zravel Agent Magazine

Ken Feld, Ringling Brothers, Barnum & Bailey Circus

Roberto Sanchez, NationsBank
Donald E. Felsinger, San Diego Gas & Electric
Alfredo Santos, Opricas Lue

Ronald Fuller, RFK Intemational

Brad Lee Skinner, Transponacién Martima Mexicana
Juan Gallardo Thurlow, CEMAI

Jon M. Stephenson Jr, Jenkens & Gilchrist
Salvador Gomez, Source One Management

William V. Stephenson, Border Trade Alliance

Joe Gonrhlez, KPMG Peat Marwick

Steve Thomas, Boise Cascade Corporation

William Grayson, Vulcan Mazerals Inc.

Robert G. Thruston, Southem Pacific Transportation

Company

‘Ana Guevara, United Parcel Service
Javier Velez, Grama

Eric Gustafson, DUMAC

Hetb D. Vest, H.D. Vest Financial Services
Charles Hayes, Guilford Mils

Salvador Villa, California Commerce Bank

‘AI Kaplan, Tourism Task Force - USMCOC
Robert Weinganen, Whitehall Financia! Group

Juan F. Woodroffe, Commerce Development Administraion-

Puerto Rico


140

. SEAVICIO NACIO. =!
AA VICIO NACIONAL C|

menor cosecha de carze

incitié abruptamente
en incresentos de precios en los
productos fronterizos, y ei mer-
Gado tersinal dc Los Angeles,
Cal. EL precio del tomate bola
madurc, en caja de 20 Livras,
contenido 4x5, pasd de 0.94 US
Dis./Kg. en la primer semana de
marzo, a 2.20 y 2.67 US Dls./Kg.

en la segunda y tercera si
respectivarente. =

percusiores en el
dado para un prod:

ans.

ie tended re:
Volumen daman-
ra que es de

consuno— eneralizado los
E..A

No opsta:
Sa ia puesta en
a vayor entrada c3 portalizas

exicanas a los £.U.A. era algo
que se esperaba, aunque dabido a
los factores coyunturales ya men-
cionados, se ha penetrado. el mer-
cado estadounidense de manera an-
ticipada.

En la segunda parte de esta nota
se analizaré el conercio bilate
ral entre México y los E.U.A. del
pimiento, y los precios al mayo-
reo en algunos de les principal
mercados de aquel pais.

PUENTE: Elaborado por el SNIK con
informacién de:

sYegetables and specialties.
tuation and outlook
7ERS/USDA.
Agricultural outlook.
cMarket News Service.

six
Report.

JERS/USDA.
[aMS/USDA.

wean we
re gy

jo Gn siames CP 03600 Meee OF

saoatay



91

"Some people want this huge tomato which we don’t grow here, so we
buy out of Mexico," he said.

So, instead of changing their production practices to satisfy
U.S. consumers, they are spending $2 million on trade lawyers and
lobbyists to shield themselves from imports. As far as I'm
concerned that is a pretty poor way of conducting business - not to
mention that U.S. taxpayers are shouldering the costs of most of
these activities.

IV. Conclusion

Mr. Chairman, in conclusion, although to many this piece of
legislation is just another technical-sounding bill, to those of us
along the U.S.-Mexico border it is very simple -- it threatens the
very businesses that we have worked so hard to develop. To all
those in the United States whose jobs depend on trade, it threatens
the stable trading relationships upon which we rely.

Thank you, Mr. Chairman.


i

STATEMENT OF CONGRESSWOMAN ILEANA ROS-LEHTINEN
BEFORE THE HOUSE WAYS AND MEANS TRADE SUBCOMMITTEE
AT ITS HEARING ON H.R. 2795, SAFEGUARD
INVESTIGATIONS OF PERISHABLE AGRICULTURAL PRODUCTS

I am pleased to join with the other members of the Florida
Congressional Delegation in supporting the immediate approval of
H.R. 2795 which will greatly assist winter tomato producers (from
seven states including Florida) in their petition before the
International Trade Commission (ITC) asking for relief from the
recent surge of imported vegetables from Mexico. As the Senate
has already passed this bill, its timely passage by the House of
Representatives is extremely important.

This bill will allow the ITC to consider the seasonal nature
of agricultural produce when making a determination of harm or
injury to a domestic industry. It will eliminate a flaw in the
Trade Act of 1974 which prevents the ITC from considering this
important factor when determining the damage to seasonal
agricultural producers throughout the nation, including Florida's
tomato and bell pepper growers.

I am greatly concerned that domestic vegetable producers are
given fair access to the trade remedy process before the ITC. The
Florida Agriculture Commissioner reported recently that Florida
alone could lose $1 billion this year due to Mexican produce
being dumped below the cos roduction price on the U.S.
market. According to The Miami Herald, the number of Florida
tomato growers has dropped from 200 two years ago to about 100
today due to this unfair increase in competition.

Florida's tomato and bell pepper growers are an important
part of our nation's agricultural industry. Florida has almost
half of the 136,000 acres which are planted with tomatoes each
year throughout the U.S. It also provides over 40 per cent of
our domestic bell pepper industry.

I appreciate the consideration of the subcommittee for this
important legislation which will ensure fairness in the trade
remedy process for all domestic producers, including seasonal
industries.


97

Statement
before the Committee on Ways and Means
Trade Subcommittee
April 25, 1996
by Albert C. Zapanta
Executive Vice President
United States-Mexico Chamber of Commerce

‘Thank you very much for the opportunity to testify today. 1 would like to commend Chairman
Crane and the Subcommittee for holding this hearing. Given the importance and complexity of
the United States-Mexico trade relationship, it is certainly appropriate to examine U.S.
legislation that might affect domestic industries, as well as our trade relationship with Mexico
and throughout the world. Today, I want to tell you why the United States-Mexico Chamber of
Commerce -- which represents businesses, organizations and individuals from throughout North
America - believes measures in House Resolution 2795 that amend definitions of “domestic
industry” in safeguard investigations involving perishable agricultural products will not be
productive for the United States.

AAs you are all aware, the bill will provide protection against imports for U.S. producers of
tomatoes and other seasonal perishable products. The legislation is primarily an effort to protect
a limited portion of the tomato industry, a move that will work to the detriment of the United
States” robust, export-oriented agricultural sectors. By redefining who can qualify for protection
under section 201 of U.S. trade law, the United States is moving to shelter an industry that the
U.S. International Trade Commission found injured not by unfair imports but by unfortunate
climate conditions. In addition, the ITC determined Florida tomato growers were a relatively
small portion of the U.S. tomato industry, making them ineligible for protection as a domestic
industry; thus, the effort to redefine them as seasonal. Meanwhile, a much broader coalition of
private-sector interests could suffer retribution if the Congress seeks to protect one regional
industry. Oil seeds, wheat, rice, barley, corn, meats, feed and cotton fibers are among the top 50
U.S. exports to Mexico, our third-largest trading partner and a country where U.S. imports
account for more than 70 percent of all imports. U.S. producers also send grains, dairy products,
pork, poultry, apples, peaches and other agriculrural products to Mexico in substantial volumes.

Tt could well be for Mexico to determine which of these industries qualify as “seasonal” in
response to a protectionist piece of legislation. The United States is a world leader in

agricultural exports, we should not tailor legislation to protect narrow interests, legislation that
could be a mode! for other nations looking to protect themselves ftom competitive U.
agricultural goods.

The legislation is also counter to the United States” position as a world leader for open trade. As
the nation with the world’s largest economy and the most exports, it is imperative that the United
States first set an example for open trade; second, work to open foreign markets; and third, hold
‘other countries to trade commitments. This would be made increasingly difficult if the United
States does not maintain an open market on its own territory or honor its own commitments.

H.R. 2795 is certainly counter to the spirit of the North American Free Trade Agreement. In
addition to directly affecting U.S.-Mexico commercial relations, the legislation also sets a
precedent for other limited interest groups in the United States who look to protection rather

than competition as an engine for prosperity. The Fort Lauderdale Sun-Sentinel in April of this
year noted that much of the advantage for Mexican tomato growers comes from an investment in
technology and products imported from the United States ~ technology the Florida growers
passed up. An editorial concludes, *...Florida’s 80 tomato growers should begin finding their
‘own solutions. [...] Florida's farmers ... could take a classic free-enterprise approach. They could
concentrate on growing excellent tomatoes, trying to exceed the Mexican standard.” Also, it
should be noted that, while the Florida growers seek protection from Mexican competitors, many
of the workers they employ are from Mexico,

‘The United States, Mexico and Canada negotiated a fair agreement to boost economic activity in
North America, making competition an engine of economic growth. Too much effort went into
NAFTA to allow a special interests unravel a portion of the treaty -- a treaty that has clearly
benefited a wide coalition of exporters in the United States. Too many sectors of the United
States economy are vulnerable to legislation that mirrors H.R. 2795 .- many U.S. crops could be
‘considered “seasonal” in other nations. Definitional gerrymandering will not serve interests in
the United States, Mexico or elsewhere in the world. We respectfully urge the Trade
Subcommittee to vote “no” on H.R. 2795.


102

crops cannot wait for prices to improve. They must take the market
price at the time of harvest.

Clearly, some commodities produced by the winter Florida vege-
table industry have separate and distinguishable marketing sea-
sons from producers in other States.

There are many reasons why current trade law should be
changed. The tremendous increase in vegetable imports from Mex-
ico is due in large part to the devaluation of the peso, a policy
change resulting from U.S. help and encouragement.

This is mainly a fairness issue. The passage of this bill does not
automatically determine that farmers have been damaged or does
it give them relief. It does, however, give them the opportunity to
seek a hearing before the ITC if they think they have been harmed.
The ITC will then determine if there is evidence to justify a hear-
ing. In other words, it gives the growers their day in court. Thank
you, Mr. Chairman.

(The prepared statement and attachments follow:]


118

Scope of Relief.

The pending legislation would not provide for instant relief for
the seasonal perishable crop. All the requirements of the
existing law would have to be proved, in addition to meeting the
test that I described. We must prove that we have a workable
adjustment plan, and finally the President has to approve the

program

In the last twenty years, only one agricultural crop, canned
mushrooms, was successful in receiving Section 201 relief {and

canned mushrooms are not even considered a perishable crop).

The relief would give our seasonal perishable crops a period of a
few years to make adjustments in our cultural and marketing

practices
Mirror" Legislation

I have heard that some who are opposed to this legislation fear
that other nations will implement similar, or "mirror,"

legislation.

If a crop in another nation was faced with the same dilemma we

are facing, I would support giving the foreign producers a few


65

This surge is benefiting virtually all sectors of our farm and rural
economy. NAFTA and WTO are working for agriculture. Let us not
jeopardize this success.

Many benefit from agricultural trade—manufacturers and dis-
tributors of farm equipment, seed, fertilizer, and other supplies;
shippers, ports, and the financial world, just to name a few. Not
the least among the gainers is the American consumer because our
ability to more fully utilize our farm resources tend to keep food
prices at affordable levels.

Because of our successful export policies and projected growth,
American agriculture has embarked in a new direction in the 1996
farm bill. Congress has unshackled the American farmer from
years of production controls so that we can better supply our
consumer needs.

At the same time, the government’s safety net is being reduced
every year. We strongly supported all of these actions with the un-
derstanding that our export markets would continue to grow.

We are disturbed, however, by the measure before the Committee
today. Against a background of this striking growth in agricultural
exports, we are faced today with a bill that could put many agricul-
tural jobs and investments at risk.

This measure would change the definition of a domestic industry
to include the concept of a seasonal industry for the purposes of ob-
taining safeguard relief. It grows out of a case at the International
Trade Commission which had ruled against the Florida growers.
We are now faced with this effort to create a seasonal industry in
U.S. law, even though the United States has already agreed in the
WTO and NAFTA to the definition of an industry. In other words,
this is an effort to unilaterally rewrite America’s international obli-
gations—no discussions with other nations, no negotiations, no new
agreement, just changing our word given in accords that were
painstakingly negotiated over many years.

We also strongly oppose this effort because the United States has
launched high-profile initiatives to ensure that all nations abide by
their rules. U.S. farm groups have worked long and hard to open
markets around the world and it would be ironic if the U.S. Con-
gress would now adopt a bill that would, in fact, have the potential
to start an agricultural war, disrupting all of our recent gains.

That violation of America’s word and contradiction of our goals
are just two of the serious problems that would arise from the en-
actment of this bill. There are others. Passage of this bill would
surely encourage other countries to afford their seasonal industries
special safeguards. Passage of the bill would encourage other
groups within our own country to ask for special safeguards, as we
have heard today. And passage of this bill would invite immediate
trade retaliation from Mexico, because under the rules of inter-
national law, trade compensation is required.

But most significantly, this bill is not simply about Mexico but
our entire trading system. I can assure you that retaliation and/or
compensation claims would be initiated by other countries protect-
ing their special crops with strong constituents.


xa

AD HOC COALITION
OF COMMODITY AND OTHER GROUPS ON TRADE ISSUES
c/o Suite 304, 1000 Connecticut Avenue NW, Washington, DC 20036 (202) 296-4484

April 22, 1996

The Honorable Bill Archer
Chairman, Committee on Ways and Means
US House of Representatives
Washington, DC 20515

‘Dear Chairman Archer,

We are concemed about a bill pending before your committee that jeopardizes US exports
of many agricultural goods as well as other American products and services.

The measure, HR 2795, was created to protect a handful of Florida growers against
‘competition from Mexican winter tomatoes. It would do this by violating global trade
agreements, inviting other nations to retaliate against American products, and undermining
the critical US drive to hold other countries to their trade commitments. The result clearly
would be to imperil many more American jobs than the handful that might be protected by
this measure.

Specifically, the bill would change the definition of a “domestic industry” to include the
concept of a “seasonal industry” for the purpose of obtaining safeguard relief under
Section 201. In other words, Florida growers of winter tomatoes would suddenly be
eligible for protection, even though they represent a fraction of the US tomato industry.

The United States has already agreed to how an “industry” is defined for safeguard
purposes, both in the World Trade Organization (WTO) accord and the North American
Free Trade Agreement (NAFTA). The violation of these agreements, therefore, will have
serious consequences. For example:

1. The legislation would make affirmative Section 201 decisions more likely,
thereby requiring the US to compensate affected exporting nations by making
“concessions having substantially equivalent trade effects.” This instantly makes HR 2795
a no-win measure for American exporters

2. The bill would encourage other countries to employ the “seasonality”
principle to restrict US exports. Major American exporters--of goods ranging from apples


16

basis. This does nothing more than require that the economic reali-
ties of the market for perishable agricultural commodities be taken
into account.

Furthermore, H.R. 2795 will not abrogate any of our obligations
under GATT or NAFTA. The U.S. Trade Representative’s office has
carefully reviewed this bill and found it to be consistent with these
two trade agreements.

In conclusion, Mr. Chairman, H.R. 2795 is not anti-free trade. It
simply expands the investigative powers of the U.S. Government to
ensure that fair trade occurs. Imports of Mexican vegetables are up
dramatically compared to last year. Mexican growers have boosted
shipments of virtually every major Florida winter crop. Earlier in
this season, shipments of some commodities were up by more than
600 percent over the same period last year.

The impact on Florida vegetable producers has been devastating.
Due to the drastic collapse in prices, many Florida producers can-
not recover the cost of production. Hundreds of producers in Flor-
ida have already gone out of business and many more have indi-
cated that they cannot survive another season under similar condi-
tions. If this legislative initiative is not passed, the domestic pro-
ducers will face future growing seasons of continued unfair trade
practices by foreign producers while the Government of the United
States sits idly by.

Mr. Chairman, the measure before you today ensures that this
critical American industry has the opportunity to gain access to al-
ready existing trade relief. I urge you to expeditiously consider and
support this important measure.

I thank you, Mr. Chairman. I also want to thank my colleague
from Florida, Mr. Shaw, for his outstanding leadership on this
issue. I appreciate the opportunity to be with the Committee today
and I apologize for having to exit and to return to the Judiciary
Committee.

{The prepared statement follows:]}


160

3906 Witay Lane
rnd 21218

‘a sanree (ogee
diesoan oe
Gietasn pect

April 12, 1996

The Honorable Bill Archer, Chairman

‘Ways & Means Committee

Repre
‘Washington, D. C. 20515
Dear Chairman Archer:

‘The National Associstion of Perishable Agricultural Receivers
(NAPAR) represents about 90 of the premier produce business operators
in the United States (attached is a list of the member companies). Their
collective sales exceed $3.5 billion per year and they employ over
23,000 workers. They move 30% of our nation's perishable products.

On behalf of this important segment of the produce industry
NAPAR wishes to express its concerns about a bill pending before your
committee that promises to jeopardize U. $. exports of many agricultural
goods as well as other American products and services.

panmetie R. 2795 was created to protect a handful of
growers against competition from Mexican winter tomatoes. It

would dots by besking Arnerics* word given in lcbal wade
agreements, inviting other ations to retaliate against American products

undermining the critical U. S. drive to hold other countries to their
fads conononeas If implemented, this proposal would set a disturbing
trade policy precedent It could have serious implication for United
States agricultural exports; and would imperi] many more American jobs
than the handful that might be protected.

‘The measure also enhances the monopoly that Florida tomato
growers now enjoy at the detriment of the wholesale tomato handlers in
the United States. Granting the Florida tomato industry further trade
privileges will also adversely impact the American consumer. Tomatoes
sold for as high as $30 per box during the most recent Florida season.
Without Mexican better quality, better packaged tomatoes, the price
could have been $60 per box. Surely, Congress has a greater
responsibility to protect all Americans rather than a select and wealthy
few in Florida.

NATIONAL ASSOCIATION OF PERISHABLE AGRICULTURAL RECEIVERS


99

Mr. SHAW. Thank you.

I think a brief comment with regard to the price of tomatoes is
in order at this time. Mr. Monteverde stated that it was at an all-
time high. We know that this was back in the earlier part of the
season and was caused in part by a freeze. After the freeze, how-
ever, the Mexicans, in fact, held back on their tomatoes in order
to run the price up.

In that, I can tell you that the farm price for tomatoes fell as low
as 64 cents a pound, and at the same time, the average price of
the tomatoes in the grocery store in Florida was $2.50, which bears
little resemblance to the 64 cents a pound that became the farm
price, and that was on April 10.

We could see what would happen with the farm price back in
March when it got up to $1.20 on March 20, and this was caused
by the Mexicans really holding back on the tomatoes, and then
coming in and flooding the market with them.

I would like to also comment on the question of the longevity of
a tomato plant. I happen to know quite a bit about farming and
I know that the farmers do not leave their tomato plants in for
such a length of time because the productivity of the vine becomes
very marginal. If you are making use of good farm practices, you
would not be using your land to harvest tomatoes for that extended
period of time.

I would like to also mention to the corn producing people, Mr.
Heard, the question of, right now, the existing law recognizes a
seasonal perishable agricultural industry under 201 as it applies to
a region or geographical area. So I would ask you, where do you
see the difference in applying 201 to a seasonal industry as we are
asking, from the recognition of a regional or geographical industry,
which 201 presently does?

Mr. HEARD. Yes, sir. As representing the corngrowers and 13
other groups, we are concerned that once you start opening Pan-
dora’s box with this type legislation, then at what level is a geo-
graphic change? We just heard today about California. We would
have to possibly go into different laws addressing each county as
you go north in California as far as grapes, and the same could
happen with tomatoes. So, we are concerned that once you get into
this process of rewriting the law to adapt to a specific sector, then
we would have this happening all over the United States and all
over the world.

Mr. SHAW. Then I would be correct in saying that you do not sup-
port regional or geographic industries, either, is that correct?

Mr. HEARD. We would support what is in the law and what has
passed Congress, what passed NAFTA, what has passed the WTO.

Mr. SHAW. Mr. Houghton, do you have any questions?

Mr. Houcuton. No, I do not.

Mr. MONTEVERDE. Could I make a brief statement?

Mr. SHaw. Absolutely.

Mr. MONTEVERDE. My business, I am president of Fresh Produce
Association of the Americas, but I also run an importing firm of
Mexican tomatoes. That is how I make my livelihood. I would like
to know how I held back tomatoes, because you really confused me
on that one. You mentioned that Mexicans held back tomatoes. I
do not see how we held back tomatoes.


21

House Ways and Means
Subcommittee on Trade
USS. Senator Bob Graham's Written Statement for the Record
Hearing on H.R. 2795
April 25, 1996

‘When Congress approved the North American Free Trade Agreement (NAFTA) in
1993, its proponents heralded the agreement as the start of a new, open trade relationship that
would reap huge economic benefits for the countries of North America.

‘A majority of national legislators, including myself, supported NAFTA then, and many
of us continue to believe that free trade is vital to America’s competitive future in the global
marketplace of the 2st century

Free trade, however, must go hand in hand with fair trade, ‘The confidence in one
depends on the integrity of the other.

‘My support for NAFTA was contingent upon the agreement providing rules that help
‘ensure fairness in our trading system. These rules permit serious and damaging import surges
to be addressed in a manner consistent with the overall objectives of sustainable trade growth.

During the NAFTA negotiations, many of us raised concerns about the potential for
‘tomato and pepper import surges from Mexico. Section 316 of the NAFTA implementing
legislation acknowledges that unfair competition was likely to occur in the case of tomatoes
and peppers. Congress directed the International Trade Commission (ITC) to closely monitor
imports of tomatoes and peppers from Mexico so that they could act quickly if a safeguard
action was warranted. At the time, Congress believed that is was not necessary to change
Sections 201 and 202 of the Trade Act of 1974 to account for seasonal industries.

Last year, the ITC found that the Florida tomato industry did not constitute a domestic
industry as defined in Sections 201 and 202 of the Trade Act of 1974. This leads us to where
we are today, seeking a legislative change that will allow seasonal agricultural industries to
seek relief from unfair trade

Without prompt legislative reform, the domestic winter vegetable industry will soon
end another post-NAFTA growing season with unfair rules and hampered ability to redress
harm. In human terms, too many farm families have bankrupted, stopped production, and lost
confidence in their Government to assure fairness.

USS. fresh vegetable growers have united in an effort to level the playing field with
their Mexican counterparts. They are seeking relief from Mexican import surges under
Section 201 of the Trade Act of 1974. Mr. Chairman, 1 would like to enter for the record @
letter from Senator Dole supporting this bill. Senator Dole states "without this relief, jobs in
the perishable commodities industry will continue to be seriously at risk.

the implementation of NAFTA, for example, the value of Florida's tomato
production has consistently decreased: $607 million in 1993, $465 million in 1994, and $387
million in 1995. These numbers clearly show the deleterious impact on the U.S. vegetable
industry, but perhaps the best evidence comes from the many small growers whose livelihoods
are under siege.

Teena Borek is one of those growers. A widow with two children. she has dedicated
the past sixteen years to working her tomato farm. Already in 1996, she has lost thousands of
dollars in a market depressed by dumped Mexican tomatoes. She's not alone. Many other
farmers have suffered as a result of Mexican vegetables flooding the market.

Allowing unfair Mexican trade practices to go unchallenged could cost vegetable
growers millions of dollars and thousands of jobs. It could uproot proud families that have
‘worked the land for years. Worst of all, it could undermine the United States" ability to
negotiate and implement future agreements

In December, { sponsored S. 1463 -- which was later enacted by the Senate -- to make
sure that the safeguard provisions were enforced for seasonal fruit and vegetable growers.
Later in the House, a bipartisan group of Members from the State of Florida (Representatives
Shaw, Canady, McCollum, Thurman) introduced H.R. 2795, a similar bill to the one {
sponsored

This legislation pertains only to perishable agricultural products which have a history
in GATT, NAFTA, and our own safeguard laws. We consulted the Senate Legislative
Counsel, USTR, the ITC and the staff of the Ways and Means committee in an effort to make
sure the legislation is consistent with our GATT and NAFTA obligations. Furthermore, 1
‘want to highlight the fact that these trade agreements and taws all recognize the uniqueness of



50

posterchild. That is why 15 other nations have already objected to this measure in Geneva and

why the 14-member Caims group has written to this Committee about its concerns.

A vote by this committee against H.R. 2795 would not only be of great importance in and
of itself. It would also send vital signals to other nations and to others in the U.S. government

to protect the sanctity of our trade agreements.

1 am not the only state agricultural commissioner opposed to H.R. 2795. My views are
shared by commissioners from other large agricultural states. In a letter to your committee, we
stated that this bill “could significantly reduce the gains the agricultural sector has made in the

international marketplace.”

Thope that you will keep in mind how large those gains have been since enactment of the
NAFTA and the WTO accords and what H.R. 2795 would be imperiling, In just the past two
years, U.S. agricultural exports have jumped by a third—to $60 billion. Protecting American
agriculture’s ability to make such gains is obviously much more important than unfairly

protecting a single sector of our vast agriculture industry from fair competition.

There is little dovbt that H.R. 2795 would imperil those gains.


95

Mr. SHAW. Thank you.
Mr. Zapanta.

STATEMENT OF ALBERT C. ZAPANTA, EXECUTIVE VICE PRESI-
DENT, UNITED STATES-MEXICO CHAMBER OF COMMERCE

Mr. ZAPANTA. Thank you, Mr. Chairman. Thank you for the op-
portunity to testify today. I would also request that my statement.
be entered in for the record.

Mr. SHAW. Without objection.

Mr. ZAPANTA. The United States-Mexico Chamber of Commerce
is a binational, bilateral chamber of commerce, fully funded by the
private sector of both Mexico and the United States, representing
over 1,000 U.S. businesses and the like in Mexico.

What I would like to begin my statement with today, Mr. Chair-
man, is to commend the Chairman and the Subcommittee for hold-
ing this hearing. Given the importance and complexity of the Unit-
ed States-Mexico trade relationship, it is certainly appropriate to
examine U.S. legislation that might affect domestic industries, as
well as our trade relationship with Mexico and throughout the
world.

Today, I want to tell you why the United States-Mexico Chamber
of Commerce, which represents businesses, organizations, and indi-
viduals throughout North America, believes the measures in H.R.
2795 that amend definitions of domestic industry and safeguard in-
vestigations involving perishable agricultural products will not be
productive for the United States.

As you are all aware, the bill will provide protection against im-
ports for U.S. producers of tomatoes and other seasonal perishable
products. The legislation is primarily an effort to protect a limited
portion of the tomato industry, a move that will work to the det-
riment of the U.S. robust export-oriented agricultural sectors.

By redefining who can qualify for protection under section 201 of
the U.S. trade law, the United States is moving to shelter an in-
dustry that the U.S. International Trade Commission found injured
not by unfair imports but by unfortunate climate conditions. In ad-
dition, the ITC determined Florida tomatogrowers were a relatively
small portion of the U.S. tomato industry, making them ineligible
for protection as a domestic industry. Thus, the effort to redefine
them as seasonal.

Meanwhile, a much broader coalition of private sector interests
could suffer retribution if the Congress seeks to protect one re-
gional industry. Oilseeds, wheat, rice, barley, corn, meats, feed, and
cotton fibers are among the top 50 U.S. exports to Mexico, our third
largest trading partner and a country where U.S. imports account
for more than 70 percent of all imports.

U.S. producers are also sending grains, dairy products, pork,
poultry, apples, peaches, and other agricultural products to Mexico
in substantial volumes. It could well be for Mexico to determine
which of these industries qualify as seasonal in response to a pro-
tectionist piece of legislation.

The United States is a world leader in agricultural exports and
we should not tailor legislation to protect narrow interests, legisla-
tion that could be a model for other nations looking to protect
themselves from competitive U.S. agricultural goods.


33

nificant swing, totally dependent on what the Chinese do with their
product coming to the marketplace.

So, as we discuss this issue, frankly, from a Trade Subcommittee
Member point of view, I am going to be far more interested in the
testimony of people who have to defend what we do in this country
internationally, and I want to find out whether or not this con-
forms with the General Agreement on Tariffs and Trade. If it does,
T cannot imagine why anyone would be opposed to this unless they
wanted to perpetuate an unfair advantage.

Chairman CRANE. Thank you.

Mr. Shaw.

Mr. SHAW. Just very briefly, I would like to respond to what Mr.
Pastor said about the quality of the Florida tomato. I can have
within one-half hour a Florida-grown tomato which I know was
grown in Florida because it was grown in my yard in Florida and
is sitting here on the Chairman’s desk to show the quality is excel-
lent. It is a question of when you pick the tomato, and that is what
makes the difference. I am sure that by the time they get to Ari-
zona, that probably the tomato was probably picked a little on the
green side in Florida and sent to Arizona, whereas the Mexican to-
mato may have been picked as ripened.

There is an old saying in the South. There are two things that
money cannot buy, true love and homegrown, vine-ripened toma-
toes.

Thank you, Mr. Chairman.

Chairman CRANE. Mr. Houghton.

Mr. Houcuton. I do not know whether you know the details of
this. I do not, but I have heard that the Florida tomatogrowers
have filed a section 201 case with the ITC and they did not find
any abuse here. What was the background of that?

Mr. MILLER. The problem is that they took it as a total tomato
season for 12 months. They include New York tomatoes, they in-
clude the Michigan tomato season, and so it is a 12-month season.
So you just compare the seasonal Mexican season to the total U.S.
market, you are not going to find any dumping issues.

What we want to say is, let us compare apples to apples, toma-
toes to tomatoes and see if there is dumping. If there is no dump-
ing, then there would not be any action. We are just saying there
should be a way to be able to compare the Mexican season with our
season, which is a winter season. There is no way Mexican toma-
toes are going to hurt you in——

Mr. HouGuTon. So they have cut the season in half, right?

Mr. MILLER. Right.

Mr. HouGHTON. But have you refiled?

Mr. MILLER. No. That is what we are asking, to have the right
to be able to just have the season defined more as 3 months, if we
are going to talk about the winter season.

Mr. Houcuton. But have you refiled this case with the ITC?

Mr. MILLER. The State was talking about refiling, but we cannot
refile it on a seasonal basis. Maybe someone else can testify to
that. I think it may have been refiled by the State this year.

Mr. HoucuTon. I can ask it later.

Mr. MILLER. If we pass this legislation, then we can file compar-
ing our season with their season.


168

Recent political rhetoric in some circles has portrayed international trade agreements as
‘enemies of economic prosperity. Nothing could he further from the truth. Intemational trade
agreements (e.g, WTO, NAFTA) assure that we can sell into foreign markets. They open foreign
markets to U.S. exports and they give us levers to assure that these markets remain open. But if the
United States fails to live up to its trade commitments by passing H.R. 2795 or similar legislation,
wwe will do the reverse. In short, we will encourage others to renege on their commitments to us.

You have been a long-time champion of open trade, fully cognizant of the link between U.S.
trade performance and our adherence to international trade agreements. We look to you now for
leadership in assuring that H.R. 2795, o similar legislation, is not passed by the Congress.

Sincerely,
Association of International Automobile Manufacturers
Citizens for a Sound Economy
Computer & Communications Industry Association
Construction Industry Manufacturers Association
Consumers for World Trade
Intemational Trade Council
National Grain and Feed Association
North American Export Grain Association, Inc.
U.S.-Mexico Chamber of Commerce

ie)

ISBN 0-16-054196-4

0160"5419


133

Translation from El Debate, March 7, 1396, 9. 5-8

Tomato Exports Reduced
This month, Sinaloa farmers have refrained from shipping
approximately 400 thousand boxes - over two thousand tons - of tomatoes
to the United States, which means an 86 percent reduction in thetr normal
exports as of February 29, but CAADES argued that this 1s not a decline
in activity, but a measure implemented by the producers themselves, tn an

attempt to improve the price of the vegetable “which 1s reacting upwards.”


Good afternoon Mr. Chairman. I appreciate very much the opportunity
to appear before you and members of the Trade Subcommittee today to offer
my support for H.R. 2795. This legislation is designed to clarify the
definition under Section 202 of the Trade Act of 1974 of a "domestic
industry" with regard to trade investigations on perishable agricultural
commodities.

This is an issue of great importance to domestic growers and producers
not only in my district in Florida but all over the United States.

The domestic winter tomato industry initially sought relief from
Mexican import surges during the early part of 1995. However, the
International Trade Commission determined in April of 1995 that the growers
were not able to justify an investigation into import surges under the existing
law. Under current law, the "domestic industry" definition regards products
like perishable agricultural commodities as a whole industry and does not take
account of the fact that seasonal growers of a particular perishable
agricultural commodity, such as tomatoes, face drastically different market
conditions at different times during the year. The current law simply ignores
the realities of the market for perishable agricultural commodities.

This unrealistic whole industry approach to perishable agricultural
commodities makes it very difficult or impossible for growers who have
suffered from seasonal import surges to obtain any relief. This inadequacy in
the law demands the urgent attention of the Congress. And until the
Congress acts, American growers will continue to face devastatingly unfair
competition with no effective remedies available to them from their
government. ‘

H.R. 2795 corrects this inequity by providing that the market for fresh
produce and perishable commodities be defined on a seasonal basis. This

nothing more than require that the economic realities of the market for
perishable agricultural commodities be taken into account.

Furthermore, H.R. 2795 will not abrogate any of our obligations under
GATT or NAFTA. The United States Trade Representative’s office has


61

Mr. THOMAS. My belief is it does not violate GATT and the WTO.
Your concern is, notwithstanding it not violating it, it may put you
somewhat at jeopardy.

Ms. DoyLe. No, I have both concerns, and not that it would put
me in jeopardy.

Mr. Tuomas. Let us assume that it is GATT enforceable. It is
within the GATT Agreement. Then you are still concerned about it,
I understand from your testimony, because there may be safeguard
action taken in retaliation, is that correct?

Ms. DOYLE. Of course, yes. I probably-——

Mr. THomas. And that it may affect your products?

Ms. DOYLE. Yes.

Mr. Tuomas. Thank you very much.

Ms. DoyLe. Thank you.

Chairman Crane. Mr. Shaw.

Mr. SHaw. Thank you, Mr. Chairman.

That type of attitude really worries me, Ms. Doyle. We, during
the NAFTA discussions, we were very much concerned about this.

Ms. Doyte. I remember.

Mr. SHAW. And we talked to other people in other parts of the
country as to what the total effect of NAFTA would be. It is not
that I agree that this has anything to do with NAFTA but it has
a lot to do, I think, with the trading attitude in this country.

For somebody to look at a bill and say, well, it may be the right
thing to do but somebody is liable to retaliate against something
that I am doing and therefore we develop our trade policy around
that——

Ms. Dov Le. I did not say that it was the right thing to do.

Mr. Suaw. All right. Let me ask you a question. You fear retalia-
tion. Do you know of any other perishable, or can you make an ex-
ample of a perishable seasonal crop grown in the United States in
a similar situation in which there will be retaliation?

Ms. DoyYLE. I am afraid I do not understand the question.

Mr. SHAW. Then I will repeat it. Can you name or perhaps you
can enlighten me, other perishable crops that are exported from the
United States to other countries in which you would anticipate re-
taliation?

Ms. DoyLe. It is not the crop that I am fearing will cause the
retaliation, it is the passage of this bill.

Mr. SHAW. I guess you do not want to answer the question.

Ms. Dov e. If I understood it, but I do not understand the ques-
tion.

Mr. SHAW. I have expressed it clearly twice. Tell me, is there any
other crop, a perishable crop that is seasonal in this country that
we export to another country that you expect that country to retali-
ate against us by in some way restricting its importation into their
country?

Ms. DoyLe. Not if the trade agreement sanctity is protected. I
guess maybe we are on two different wavelengths here, but I am
not understanding the point that you are trying to make.

Mr. SHAW. I think that is very clear, that we are on two different
wavelengths.

Ms. DOYLE. I do not want you to-——


130

In the agricultural and horticultural arena, there are
many products which have distinct growing seasons in’particular
parts of the country. While such products may be “identical”
regardless of where grown, if the products are highly
perishable, growers in the different regions will essentially
not compete and not be capable of competing for significant
parts of the year. Since there is no meaningful competition
for large parts of the year by growers in such situations, the
issue has arisen as to how the Commission should treat imports
that effectively compete mainly with one of the regions of the
countries. The Commission in 1995 in a "provisional remedy
phase" determination under the U.S. escape clause decided that
U.S. law should be construed to tequire an examination of a
“national” industry in such situations despite the lack of
meaningful competition between the imports and domestically
grown product in areas other than Florida for much of the
year. Exesh Winter Tomatoes, Inv. No. TA-201-64 (Provisional
Relief Phase) (April 1995).

H.R. 2795 is an effort to clarity U.S. law to permit
an examination of injury and a definition of industry in
perishable products along lines that reflect commercial reality
in the marketplace. The bill should be adopted by the
Committee. The Committee report should reflect that the
provision is available to any agricultural or horticultural
product that is highly perishable in nature.

wv. D HLR. 2795 on Section 202 Imvestipati

H.R. 2795 would modify current law in two ways.
First, the bill would clarify the scope of the term *domestic
industry" as used in Section 202 investigations. Current law
allows the International Trade Commission to define the
domestic industry as a subset of all producers of a particuler
product when the producers, their production, and the imports
are concentrated in a geographic area.

The bill would provide another example of when the
domestic industry may be properly defined in terms of actual
competition. The bill would specifically authorize the
Commission to define the domestic industry according to those
producers who sell al] or almost all of their production in a
particular growing season. Last year, the International Trade
Commission made a decision as part of its provisional relief
phase determination in a Section 202 investigation of fresh
winter tomatoes that the geographic industry provisions
precluded finding the domestic industry limited to producers
during an identifiable growing season. The Commission reasoned
that if Congress intended alternative definitions of domestic
industry," the statute would have included those alternative
definitions.

Passage of the proposed legislation would clarify to
the Commission that the law permits seasonal industries to be
recognized under the law.

Second, H.R. 2795 would modify the product definition
for perishable agricultural producers who seli all or almost
all of their production in a particular growing season. Under
current law, the Commission must determine whether the imports
are a substantial cause of serious injury, or threat thereof,
to the domestic industry producing an article “like or directly
competitive" with the imported product. Although the terms
“like” or “directly competitive" are not defined in the
statute, the Commission has referred to the legislative history
for guidance. The legislative history indicates that "like"
products are those which are substantially identical in
inherent or intrinsic characteristics while “directly
competitive” products are substantially equivalent for
commercial purposes because they are adapted to the same uses
and are essentially interchangeable.


114

Before I begin with my statement, I want the committee and
members to know T am not a lawyer, nor an economist. I ama
grower of citrus and table grapes and have been growing these
crops for thirty (30) years. I know when I am faced with economic
conditions beyond my control, such as Mexico’s devaluation of its

peso

I urge you and your staff to read NASAT’S March 1996 statement.
It describes the necessity for the legislation you are
considering today, and why there is a lack of equal treatment
under the existing law for our perishable seasonal crops

compared to industrial articles.

When I use the term "equal treatment," I mean in the sense that
the Harley Davidson motorcycle company was able to receive
Section 202 assistance in the early 1980's. Today the company is

competing effectively in world markets.

Tam not here today to oppose the North American Free Trade

Agreement. NASAT believes if Mexico had not devalued its

currency, we would not have found it necessary to create our
organization. We hope history will not repeat itself as our

nation enters into future free trade agreements.


116

© The amendment will not make the proceedings easier for

and,

the seasonal perishable commodity petitione:

© The amendment will not permanently increase the tariff,

or impose a quota on, the imported produce

The legislation will require a seasonal perishable crop
experiencing an import surge to demonstrate to the International
Trade Commission all the safeguard requirements currently in the
law. In addition, the petitioner will have to show that all, or
a substantial percentage of, the crop is sold during the growing
season, and that the demand for the crop is not met to any
substantial degree by producers in a different growing region and

in a different season.

ishable Cri

Few people understand that our crops can be grown in only certain
locations. To be successful, the appropriate micro-climate, soil

and adequate water are needed

Seasonal perishable crops (like the federal program crops, such
as wheat and corn) mature as the growing seasons move north in
the U.S. However, the program crops have the option as they

harvest their crops, to market them immediately or to store the

crop.


4

Chairman CRANE. Welcome to this hearing of the Subcommittee
on Trade concerning H.R. 2795, legislation affecting safeguard in-
vestigations concerning perishable agricultural products. This hear-
ing will give us an opportunity to address whether it is necessary
to amend section 201 of the Trade Act of 1974 to explicitly permit
the International Trade Commission to consider seasonality in de-
termining whether a domestic industry is seriously injured by a
surge of imports by changing the definition of domestic industry
and like product.

Specifically, the legislation which was introduced by our col-
league, Mr. Shaw of Florida, would permit the ITC to assess the
impact of imports during a particular growing season on a domestic
industry limited to producers of a like or directly competitive per-
ishable agricultural product during that same growing season. The
ITC in the past has traditionally examined the impact of imports
on the domestic industry on a yearly, not seasonal basis. The legis-
lation would apply to any perishable agricultural industry.

I hope that this hearing will permit us to assess the impact of
this legislation on the U.S. industry seeking safeguard relief as
well as any consequences to U.S. agricultural exports and U.S. ef-
forts to open markets abroad. I also hope that we will address
whether the bill is consistent with our obligations under the
NAFTA and the WTO.

I now recognize our distinguished Junior Member on this Com-
mittee, Mr. Thomas, for any comments he may have to make.

Mr. THOMAS. Do you want me to sub for the Minority?

Chairman CRANE. Yes.

Mr. THomas. The Minority thinks this is an excellent piece of
legislation. [Laughter.]

I will defer any opening comments, Mr. Chairman, and would
prefer to address the Members.

Chairman CRANE. Very good. I would like to yield to Mr. Shaw
since he is the author of the legislation.

Mr. Suaw. Thank you, Mr. Chairman. Before we begin I would
like to express my thanks to the distinguished witnesses that are
here today, our Florida witnesses, Senator Graham, Congressman
Miller, Congressman Canady, Congressman Goss, ‘and Congress-
man Pastor, who I am sure I am going to express disagreement
with later. However, we certainly appreciate his joining in on the
process.

And also Martha Roberts who will be here on behalf of the Flor-
ida Commissioner of Agriculture, Bob Crawford, who is unavoid-
ably detained in Tallahassee. They are trying to finish up on their
conference reports on the budget and I understand that his neck
is on the line. We all know how that is, so he has to stay and pro-
tect the homefront. But he will be well represented by Ms. Roberts.

Hon. Jennifer Hillman, the representatives from the U.S. Trade
Representative, and all the other distinguished panelists who will
be joining us today on both sides of the issue, but particularly our
guests from my own home State of Florida.

I would also like to express my appreciation to you, Mr. Chair-
man, for having this hearing on H.R. 2795, a bill that will change
our trade laws so seasonal perishable agricultural industries can


93

growers (are) involved.”
‘Tomatoes and Politics

Yet the Clinton administration, which considers Florida essential
in the November election, is heeding the plea for special protection.
"It’s not that we/re afraid that the farmers won't vote for us-there
aren‘t enough tomato farmers down there," says one Clinton strategist.
“The fear is they’1l hit us with a negative advertising campaign.” $0
U.S. Trade Representative Mickey Kantor has endorsed a bill sponsored by
the Florida delegation that would make it easier to slap tariffs on
Mexican tomatoes

Meanwhile, Florida growers are pressing Congress to impose U.S.
packaging and iabeling standards on the Mexicans - a wily stratagem.
Hard, unripe Florida tomatoes are shipped in ordinary boxes; vine-ripened
Mexican tomatoes are hand-packed, tray upon tray, in cushiony ones that
resemble egg cartons. If Congress makes Florida-style boxes mandatory,
the Mexican say their riper tomatoes would be battered into puree. The
Floridians say the move would make it easier to inspect Mexican produce.
It also would "allow us to level the playing field," says Ray Gilmer,
with the Florida Fruit and Vegetable Association.

‘The tomato tussle illustrates how special interests can manipulate
voter concerns about free trade, particularly in an election year. But
there is a risk. Mexico or other trading partners could counter with
tariffs and other measures of their own.

‘We can’t say we will have free trade, except for when it doesn’t
suit us," says Russell Roberts, a business professor and trade expert at
Washington University in St.Louis. Without Mexican competition, he adds,
Florida growers would nearly monopolize the $650 million winter-tomato
market, giving shoppers higher prices and fewer choice.

For more than 20 years, Florida growers have competed against producers
in Sinaloa, In fact, ‘some of their fathers showed the Mexicans how to
get started long ago. The Floridians have usually kept most of the U.S.
market since, but that hasn’t stopped them from grousing. Says Willian
Patterson, a Department of Agriculture economist: "Almost every season,
with the exception of years when extremely bad weather wiped out the
Mexican crop, they've complained."

Lobbying the ITC

Last year, the Floridians tried to persuade the International Trade
Commission, the U.S. agency that arbitrates such disputes, that Mexican
imports were injuring their winter market. Though Floridians algo grow
tomatoes in the spring and fall, they argued their winter production
should be treated as a separate industry. That would highlight the
impact of Mexican imports and improve Floridians’ chances of getting more
protection. But the ITC refused, ruling that the overall U.S. tomato
industry hadn’t been burt. The agency said it didn’t make sense to
define Florida production as two industries - one competing with Mexican

toes “at certain times of the year" and the second competing
primarily with U.S. tomatoes at other ‘simes

Undaunted, Florida growers got their congressmen to back a bill
defining winter vegetables, including tomatoes, as a separate industry.
‘The bill cleared the Senate and is pending in the House. Last week, they
filed an antidumping suit with the Commerce Department, seeking increased
tariffs on Mexican tomatoes. "I have looked into the eyes of proud
farmers facing bankrupcy, choking back tears, as they tell of the plight
of their crops, employees and creditors, "wrote Sen. Bob Graham, a
Florida.democrate, in a letter to local newspapers. "Was this Nafta’
vision?’

Clearly, Mexican tomato imports are growing. According to the
Agriculture Department, imports increased from 17,547 truckloads during
the 1993-94 season (November to April) to 22,833 last season. As of the
mid-March this year, Mexico shipped 19,759 truckloads of tomatoes. The
Floridians have usually kept wore than half of the winter market, though
last year their share slipped to 37%.



38

improve collection and dissemination of price, production, and trade data; efforts
to ensure the effectiveness of the existing tariff-rate quota; a push to increase
domestic and foreign outlets for Florida tomatoes and other winter produce; and
an effort to foster greater dialogue between Mexican and Florida producers on
problems of mutual concern. We also support legislation which would apply to

Mexican tomatoes the same packaging requirements that prevail in Florida

Another important element of this package is the Administration’s support
for H.R. 2795. Last year, the Florida Tomato Exchange and its constituent
members sought relief under U.S. safeguard law. The WTO and NAFTA both
allow for safeguard procedures. Indeed, most of our major trading partners have

safeguard laws on the books.

‘Congress passed the safeguard law to provide a remedy, under certain
circumstances, for U.S. industries that are hurt by imports. Unfortunately, the
existing statute has not worked for the Florida tomato industry. The 1995 petition
failed, in part, because of the interpretation of the current law’s definition of a
“domestic industry.” The law was interpreted so that all U.S. growers of fresh
tomatoes were considered one industry. In fact, tomatoes are a seasonal product.
Different parts of the country produce at different times of the year. Florida
produces virtually all of the tomatoes grown in the United States for the fresh
market during the winter months. It competes directly with Mexican imports
during that season. Lumping the Florida industry together with the rest of the
country does not reflect the reality of the fresh tomato market. This interpretation

made it more difficult for Florida growers to demonstrate injury.


158

CALIFORNIA TOMATOES
Aas gy mo TE

CALIFORNIA
TOMATOES

MEYER TOMATOES 6« crowens © racks © shiprene

POBox 808 + KING CITY, EaLiFORNIA 9030
‘April 19, 1996 vernon ays aoey som aan
Mr. Phillip D. Mosely

Chief of Staff

‘Committee on Ways and Means

U.S. House of Representatives

1102 Longworth House Office

Washington, D.C. 20515

RE: HR 2795
Dear Mr, Mosely:

Due to prior scheduling, I regret that { will be unable to appear before the March 25, 1996
Subcommittee on Trade hearing concerning HR. 2795, a bill regarding safeguard
investigations of perishable agricultural products.

| would have liked the opportunity to explain to the Members why I and many others in

California oppose this legislation, and why it would strike a blow against those of us who
are working hard to develop an integrated North American market for fresh vegetables

that benefits producers and consumers alike in the three NAFTA countries,

‘My family has been in the tomato business in California for over 40 years and in Mexico
for over 25 years. Today, we are one of the largest grower-packer-shippers in California,
and now we are one of the largest distributors of vegetables and tomatoes from Mexico
into the United States and Canada. During the 1993-94 season we shipped into Mexico
‘over 800,000 boxes of tomatoes grown in California,

We, therefore, oppose legislation or any actions that would impede the flow of tomatoes
or other fresh vegetables within what has become for us an integrated North American
market

Why would this so called “seasonality” legislation impede commerce? It would do so


125

U.S. Fresh Fruit and Vegetable Protection in the NAFTA Agreement

Your Committee has received correspondence claiming that the
fresh fruit and vegetable industry received protection in the
NAPTA through tariff rate quotas and long tariff phase out
periods. This observation requires a response.

First, the exporting NAFTA producers received a huge trade
benefit through the currency devaluation that took place in
December 1994. To equate a five percent NAFTA tariff to a fifty
percent currency devaluation is not a "level playing field".

Second, the opponents to the legislation assume that all fresh
fruits and vegetables maintained a tariff. In contrast, numerous
United States crops had no tariff or an extremely low tariff.
One cannot claim that these crops had a reasonable time to adjust
to the sudden currency devaluation.

It is important to recognize that NASAT is not supporting the
legislation because of opposition to NAFTA. NASAT membership has
for many years recognized the import surge problem and in fact
supported the Committee’s fast track perishable legislation in
1988 as a temporary remedy for import surges from any country.

Bus: of

In the 100th Congress, the House Committee on Ways and Means
provided the needed relief for the seasonal perishable crops
Guring debate on legislation (H.R. 3, the primary provisions of
which became the Onnibus Trade and Competitiveness Act of 1988
(BL 100-418). Page 98 of the Committee report (House Report 100-
576) includes the following paragraph:

5. Seasonal Products. The bill adds a special provision
that, in cases involving imports of seasonal agricultural
products, the ITC may find serious injury or threat thereof
when the increased imports are largely entering during a
specific period or season of the year and are largely
nl ¢_domeatic pr

(emphasis
ee ening chic new provision, the Tic embuia
continue to examine historical trends in imports and
industry conditions, but should do so in the context of the
seasonal nature of the product

Clearly, the Committee intended to include those producers that
sold a perishable crop during a period of the year when the other
producers of the same crop were not harvesting and selling their
like crop. Unfortunately, this provision was dropped in a House-
Senate conference

Conclusion

As earlier stated, the application of the proposed legislation
would be narrow. |In order for a perishable seasonal crop to
receive relief from overwhelming foreign competition in the form
of new or increased import duties, tariff rate quotas or other
types of trade assistance, it would have to meet all the existing
statutory criteria in addition to the following proposed
legislative criteria:

- all or almost all of the production of the article is
sold during the growing season; and,

- the demand for the article is not supplied, to any
substantial degree, by producers of the article in a
different growing season.

‘This requirement means that the seasonal perishable crop will be
grown at a different time of the year than other domestic
production areas, and that the crop will have to be substantially
sold prior to the other grower season of the "like product".


100

Mr. SHAW. You did. I do not know how you did it——

Mr. MONTEVERDE. I do not know how.

Mr. SHAW. You just simply held them back off the market and
the price went up, and it went through the ceiling. You brought up
the point that they —

Mr. MONTEVERDE. Shipments in March and February were high-
er than January. How is this holding back production? Then the
other thing——

Mr. SHAw. I received the information from the secretary of agri-
culture of the State of Florida, Bob Crawford’s office.

Mr. MONTEVERDE. The other thing, the longevity of the vine, you
must understand, since you do know about tomatoes, that they are
perennial. But our vine is an indeterminate vine, not a determinate
short vine like Florida might use. So we can harvest from top to
bottom all the way up and even have them go over 6 feet and down
and keep harvesting. So the longevity of the varieties we use in
Mexico is quite something else.

Mr. SHAW. You do leave yours in for that long a season in Mex-
ico?

Mr. MONTEVERDE. It is the nature of the variety we use. Why
would we cut production out sooner if the plant is still giving us
fruit to market?

Mr. SHAw. If you have high productivity, certainly, but that is
certainly not the case in Florida.

Mr. MONTEVERDE. Because of different varieties, different——

Mr. SHAw. But you were applying that to Florida in your testi-
mony, if you recall.

Mr. MONTEVERDE. Pardon me?

Mr. SHaw. You were applying that to Florida in your testimony.

Mr. MONTEVERDE. I do not know——

Mr. SHAW. When you were trying to define a season, we were not
trying to define a season in Mexico. We are trying to define a sea-
son in Florida, and that is the point that I make.

Mr. MONTEVERDE. My testimony is that there are different to-
mato vines and so I can only comment on what I am familiar with.
I cannot comment about Florida, which I am sure you can appre-
ciate.

Mr. SHAw. I thought you were commenting about Florida, but we
will leave that where it is.

I thank all of you gentlemen for being with us here today.

Our next panel are a number of witnesses who are in support of
H.R. 2795, Carl Loop, the president of the Florida Farm Bureau
and vice chairman of the American Farm Bureau; Barrett
Lawrimore, executive director of the South Carolina Tomato Asso-
ciation; Mike Bozick of the National Alliance for Seasonal Agricul-
tural Trade; and Terence Stewart, who is managing partner of the
law firm of Stewart and Stewart.

Each of you have submitted your written testimony, which will
become a part of the entire record. We would encourage you to
summarize or proceed as you see fit.

Mr. Loop.


41

the percentage that an area represents when we try to determine
whether or not that is the industry for that particular time?

Ms. HILLMAN. I think what you are getting at is——

Mr. THOMAS. For example, if you were to determine that a 60-
percent penetration in the area was sufficient to have standing ver-
sus a 90-percent, your 60-percent position would be weaker than
the 90-percent?

Ms. HILLMAN. I think the way the bill reads is that it states that
the definition would be if the producers sell all or almost all of
their production of the article in that growing season and the de-
mand for the article is not supplied to any substantial degree by
other domestic producers of the article who produce the article in
a different growing season.

Mr. THoMas. And if we were the Europeans or the Mexicans or
someone else, we would define “nearly all” or “substantially” or
“most” to be probably 51 percent, which would make it a fairly per-
nicious law, in my opinion, and a very flexible tool to deny people
entrance into the market.

How do you think—and I know this is unfair, because you have
not made the determination because this is not law—what do you
think would be the ballpark percentage that would fulfill those
somewhat subjective words?

Ms. HILLMAN. I think, Mr. Thomas, I am a little reluctant to
stand in the shoes of the ITC. One of the reasons why we believe
this provision is both appropriate and not inconsistent with our
WTO obligations is that it leaves it up to the ITC to make the de-
termination on a case-by-case basis, looking at the facts presented
before them in a particular case.

Mr. THomas. And my guess is that—and I am able to go into
that thicket—that they are probably going to use something like a
90-percent standard so that they can have a very high comfort level
that this is, in fact, the market at that time. I think that under-
scores the problem that we have, because given the timeframe for
growing virtually 90 to 100 percent of the marketable product at
that time, if you do not get your product to market in that time-
frame, you are completely devastated. That is the point that we are
trying to make.

I do not think people realize how much perishable agricultural
commodities have become a niche product to a very great extent,
looking for a window in time to maximize their marketability. I
have talked to Israelis who are growing tomatoes and I met one fel-
low who made his entire yearly money supply off a 2-week window
in Toronto between Christmas and New Year's because nobody else
was—he fooled them in, and, of course, he got exorbitant prices for
beautiful large tomatoes, but he found his niche.

When particular farmers live in a particular area in which the
niche is given to them by the season, to argue that they then
should be determined to be damaged with people 1,000 miles away
in an entirely different growing season, I think is the reason we fi-
nally moved to this position, and I applaud the administration for
supporting this position.

Just let me finally say, Mr. Chairman, the idea that we are going
to be retaliated against by Mexico if we do something like this, and
I do not know if the General Counsel is aware of what is already