```

[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]

 
                  THE IMPORTANCE OF TRADE NEGOTIATIONS

=======================================================================

                                HEARING

                               before the

                         SUBCOMMITTEE ON TRADE

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 11, 1999

                               __________

                             Serial 106-61

                               __________

         Printed for the use of the Committee on Ways and Means

                     U.S. GOVERNMENT PRINTING OFFICE
66-817 CC                    WASHINGTON : 2000
_______________________________________________________________________
            For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 
                                 20402

                      COMMITTEE ON WAYS AND MEANS

                      BILL ARCHER, Texas, Chairman

PHILIP M. CRANE, Illinois            CHARLES B. RANGEL, New York
BILL THOMAS, California              FORTNEY PETE STARK, California
E. CLAY SHAW, Jr., Florida           ROBERT T. MATSUI, California
NANCY L. JOHNSON, Connecticut        WILLIAM J. COYNE, Pennsylvania
AMO HOUGHTON, New York               SANDER M. LEVIN, Michigan
WALLY HERGER, California             BENJAMIN L. CARDIN, Maryland
JIM McCRERY, Louisiana               JIM McDERMOTT, Washington
DAVE CAMP, Michigan                  GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota               JOHN LEWIS, Georgia
JIM NUSSLE, Iowa                     RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas                   MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington            WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia                 JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio                    XAVIER BECERRA, California
PHILIP S. ENGLISH, Pennsylvania      KAREN L. THURMAN, Florida
WES WATKINS, Oklahoma                LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida

                     A.L. Singleton, Chief of Staff

                  Janice Mays, Minority Chief Counsel

                                 ______

                         Subcommittee on Trade

                  PHILIP M. CRANE, Illinois, Chairman

BILL THOMAS, California              SANDER M. LEVIN, Michigan
E. CLAY SHAW, Jr., Florida           CHARLES B. RANGEL, New York
AMO HOUGHTON, New York               RICHARD E. NEAL, Massachusetts
DAVE CAMP, Michigan                  MICHAEL R. McNULTY, New York
JIM RAMSTAD, Minnesota               WILLIAM J. JEFFERSON, Louisiana
JENNIFER DUNN, Washington            XAVIER BECERRA, California
WALLY HERGER, California
JIM NUSSLE, Iowa

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
version. Because electronic submissions are used to prepare both 
printed and electronic versions of the hearing record, the process of 
converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.

                            C O N T E N T S

                               __________

                                                                   Page

Advisory of February 4, 1999, announcing the hearing.............     2

                                WITNESS

Office of the U.S. Trade Representative, Hon. Charlene Barshefsky     9

                                 ______

                       SUBMISSIONS FOR THE RECORD

American Textile Manufacturers Institute, statement..............    40
Kemet Electronics Corporation, Greenville, SC; and Vishay 
  Intertechnology, Inc., Malvern, PA, Leslie Alan Glick, 
  statement......................................................    42
National Airmotive Corporation, Oakland, CA, statement...........    43
Small Business Survival Committee, Raymond J. Keating, statement.    44

                  THE IMPORTANCE OF TRADE NEGOTIATIONS

                              ----------                              

                      THURSDAY, FEBRUARY 11, 1999

                  House of Representatives,
                       Committee on Ways and Means,
                                     Subcommittee on Trade,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to notice, at 1:05 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:]

ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

                         SUBCOMMITTEE ON TRADE

                                                CONTACT: (202) 225-6649
FOR IMMEDIATE RELEASE

February 4, 1999

No. TR-2

                 Crane Announces Hearing Series on the

                  Importance of Trade Negotiations in

                     Fighting Foreign Protectionism

    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 series of hearings on the importance of 
expanding trade and resisting protectionism through active United 
States involvement in trade negotiations. The first hearing will take 
place on Thursday, February 11, 1999, in B-318 Rayburn House Office 
Building, beginning at 1 p.m.
      
    Oral testimony at this hearing will be from invited witnesses only. 
The sole invited witness will be United States Trade Representative 
Charlene Barshefsky. However, any individual or organization not 
scheduled for an oral appearance may submit a written statement for 
consideration by the Committee and for inclusion in the printed record 
of the hearing.
      
    Other hearings in the series are expected to address: (1) the 
potential impact of ongoing trade negotiations on jobs, wages, economic 
opportunity and the future competitiveness of U.S. manufacturers and 
service providers; (2) implementation and compliance with existing 
trade agreements; (3) prospects for an agreement to establish a Free 
Trade Agreement of the Americas (FTAA); (4) trade talks under the 
auspices of the Asia Pacific Economic Cooperation Group (APEC); (5) 
negotiations on the so-called ``built-in'' agenda in the World Trade 
Organization (WTO); and (6) the possibility of further bilateral trade 
negotiations with Europe, Chile, New Zealand, Australia and other 
nations in the Pacific Rim region. Additional hearing dates and details 
will be released in subsequent announcements.
      

BACKGROUND:

      
    The United States currently participates in three major 
multilateral and regional trade negotiations. At the December 1994 
Summit of the Americas in Miami, leaders of 34 Western Hemisphere 
democracies agreed to establish a FTAA, in which barriers to trade and 
investment are progressively eliminated. They committed to begin the 
process immediately, make concrete progress by the year 2000, and 
conclude negotiations by no later than 2005. These negotiations were 
officially launched at the Second Summit of the Americas in Santiago, 
Chile, in April 1998.
      
    The APEC forum, an association of 21 economies bordering the 
Pacific Ocean, working cooperatively to reduce barriers to trade and 
investment, has declared its intention to establish free trade and 
investment in the region by the year 2010 for developed countries and 
by 2020 for others. In November of 1997, APEC members held a Joint 
Ministerial Meeting and Leaders Summit in Vancouver, where they 
identified 15 sectors in which they intended to cut tariffs and remove 
other barriers to trade. At the November 18, 1998, Ministers and 
Leaders Meeting in Malaysia, countries agreed to move work on the 
tariff portion of nine of these sectors into the WTO, with the aim of 
completing an agreement with participation beyond APEC countries by 
1999.
      
    The Uruguay Round was the eighth round or series of multilateral 
trade negotiations under the General Agreement on Tariffs and Trade 
(GATT). The agreements reached at the end of 1994 during the Uruguay 
Round were noteworthy in that they greatly expanded coverage of GATT 
rules beyond manufactured goods trade to include agricultural trade, 
services trade, trade-related investment measures, intellectual 
property rights, and textiles. The most visible accomplishment of this 
multilateral round was to establish the WTO to administer the GATT 
agreements and to settle disputes among WTO members, as well as other 
matters of interest to other WTO Members.
      
    The Uruguay Round agreement calls for the resumption of 
negotiations by the year 2000 to further liberalize trade in 
agriculture and services, as well as on government procurement 
practices and enforcement of intellectual property rights. The next WTO 
Ministerial conference, which will be hosted by the United States 
November 30-December 3, 1999, is slated to consider the procedures and 
substance of the so-called ``built-in'' WTO agenda.
      
    In announcing the hearings, Chairman Crane stated, ``With this 
broad set of hearings, where we will hear from Americans in many walks 
of life, I intend to review prospects for success in each of the major 
trade negotiations in which the U.S. currently participates. At a 
difficult time in the World economy, as countries face pressures to 
increase protectionism, trade negotiations provide us the opportunity 
to prevail on them to adopt market-opening measures. Active U.S. 
involvement is essential. The country can no longer afford to keep our 
seat warm at the WTO, and in the FTAA and APEC trade talks, while the 
attention and energy of our government is focused elsewhere. Our trade 
negotiators lack the tools they need to achieve concrete results.''
      

FOCUS OF THE HEARING:

      
    The focus of the hearing on February 11th will be to examine and 
assess the President's trade policy agenda and negotiating priorities 
for the remaining two years of this Administration.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Any person or organization wishing to submit a written statement 
for the printed record of the hearing should submit six (6) single-
spaced copies of their statement, along with an IBM compatible 3.5-inch 
diskette in WordPerfect 5.1 format, with their name, address, and 
hearing date noted on a label, by the close of business, Thursday, 
February 25, 1999, to A.L. Singleton, 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 at the hearing, they may deliver 200 additional copies for this 
purpose to the Subcommittee on Trade office, room 1104 Longworth House 
Office Building, by close of business the day before the hearing.
      

FORMATTING REQUIREMENTS:

      
    Each statement presented for printing to the Committee by a 
witness, any written statement or exhibit submitted for the printed 
record or any written comments in response to a request for written 
comments must conform to the guidelines listed below. Any statement or 
exhibit not in compliance with these guidelines will not be printed, 
but will be maintained in the Committee files for review and use by the 
Committee.
      
    1. All statements and any accompanying exhibits for printing must 
be submitted on an IBM compatible 3.5-inch diskette in WordPerfect 5.1 
format, typed in single space and may not exceed a total of 10 pages 
including attachments. Witnesses are advised that the Committee will 
rely on electronic submissions for printing the official hearing 
record.
      
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.
      
    3. A witness appearing at a public hearing, or submitting a 
statement for the record of a public hearing, or submitting written 
comments in response to a published request for comments by the 
Committee, must include on his statement or submission a list of all 
clients, persons, or organizations on whose behalf the witness appears.
      
    4. A supplemental sheet must accompany each statement listing the 
name, company, address, telephone and fax numbers where the witness or 
the designated representative may be reached. This supplemental sheet 
will not be included in the printed record.
      
    The above restrictions and limitations apply only to material being 
submitted for printing. Statements and exhibits or supplementary 
material submitted solely for distribution to the Members, the press, 
and the public during the course of a public hearing may be submitted 
in other forms.
      

    Note: All Committee advisories and news releases are available on 
the World Wide Web at `HTTP://WWW.HOUSE.GOV/WAYS__MEANS/'.
      

    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
business days notice is requested). Questions with regard to special 
accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.

                                

    Chairman Crane. The Subcommittee will come to order.
    Good afternoon to one and all. We are going to be 
interrupted, Charlene--in a few minutes is the projection--with 
a vote on the floor. But I think getting started, since you are 
under tight time constraints, we don't want to waste any 
minutes.
    This is the first in a series of hearings of the Ways and 
Means Subcommittee on Trade to consider the importance of 
expanding trade and resisting protectionism through active U.S. 
involvement in trade negotiations.
    I want to welcome our Ambassador, who will address the 
President's trade agenda for the remaining 2 years of his 
Administration.
    To achieve the urgent goal of jump-starting economic growth 
in U.S. export markets, it is important that we take a thorough 
look at the prospects for success in each of the major trade 
negotiations. My own personal view is that U.S. objectives are 
repeatedly being compromised as trade liberalization continues 
to take a back seat in the President's overall priorities. As 
opportunities are slowly squandered, just saying you support 
expanded trade and renewed negotiating authority is not 
sufficient.
    This country can't afford to simply keep our seat warm at 
the WTO, and in the Free Trade Agreement of the Americans and 
APEC trade talks while the attention and energy of our 
Government are focused elsewhere.
    With this broad set of hearings, where we will hear from 
Americans in many walks of life, I believe we will continue to 
build the case for active and committed U.S. involvement in 
efforts to bring down foreign barriers to our exports. At a 
difficult time in the world economy, as countries, including 
our own, face pressures to increase protectionism, trade 
negotiations provide us with the opportunity to prevail on them 
to adopt market-opening measures, but only if USTR's team is 
actively involved, armed with adequate tools and the commitment 
at the highest levels of the Administration to achieve concrete 
and meaningful results.
    Because future trade agreements offer the best opportunity 
we have to expand and ensure the success of U.S. businesses and 
workers in the marketplace of the 21st century, we must do all 
we can to quickly pass fast-track legislation. Administration 
officials and others have spoken generally about renewing the 
consensus on trade. And now I am prepared to discuss with the 
Administration any specific ways in which it believes that my 
fast-track bill, which the Administration agreed to in 1997, is 
somehow deficient. I hope that opponents of fast-track will not 
try to kill our efforts by making vague, unspecified references 
to the need for improvements in the bill. I call today on any 
critics to show me precisely where they believe my bill falls 
short, and to offer constructive and specific proposals that 
can garner bipartisan support.
    I now would like to recognize the newly installed Ranking 
Member of the Trade Subcommittee, our colleague, Sandy Levin 
for any statement he might like to make.
    Mr. Levin. Thank you, Mr. Chairman. As you have said, this 
is the first in a series of important hearings on U.S. trade 
policy. It comes at a key time. We face immediate challenges 
such as how to respond to the unprecedented surge of steel 
imports into the United States that followed the Asian economic 
crisis and the severe harm those imports have done to workers 
and firms in this vital sector of our economy.
    At the same time, with the Seattle Ministerial meeting only 
a few months away, we in Congress face the opportunity and the 
challenge of working together and with the Administration to 
develop U.S. trade strategies and objectives for the next major 
round of WTO negotiations that will address effectively the 
constantly changing dynamics of global trade.
    We cannot afford to squander that opportunity because, as 
in the past, the U.S. agenda will drive much of the world's 
agenda in the next Round. Our agenda must effectively address 
important new dynamics in global trading, including the 
increasingly important role that developing counties and 
transitional market economics such as China, Indian, Brazil, 
Mexico, and Russia play in setting the terms of trade, and the 
increasingly significant role that informal trade barriers and 
government-generated barriers in areas such as distribution are 
playing in preventing U.S. firms and workers from realizing the 
full benefits from trade to which the United States is 
entitled.
    It is important to recognize that these problems are, in 
part, a testament to the success we have had in negotiating 
away other impediments to trade, such as tariffs and other 
traditional border measures. As we have peeled away these 
layers, we find ourselves in an environment in which any type 
of distortion in the operation of competitive markets can have 
a profound impact on the terms of trade. These distortions have 
helped to create the current steel import crisis and are 
central to understanding the barriers that must be targeted for 
elimination in the next round of negotiations.
    Given the constantly changing dynamics of competition in 
the global marketplace, we must be prepared at all times to 
take a fresh look at the new problems that arise and we must be 
ready to discuss openly and candidly the best policies to 
address those problems. In that regard, I want to commend the 
effort by the Finance Committee in the Senate earlier this 
month to examine and open a dialog on many of the more 
contentious issues in U.S. trade policy, and express the hope 
that we in the House can carry that dialog forward today and in 
the hearings that follow.
    I have the impression that there is a willingness in many 
circles to take a fresh look at problems that we have been 
debating increasingly in the trade area over the last 4 or 5 
years. Clearly, one area that must be addressed is the role of 
labor markets in trade relations.
    In previous decades there was little focus on or 
controversy about labor market issues. The interest in labor 
rights was more in the context of a human rights agenda. 
However, with the increased role in economic globalization of 
trade with and competition from nations with very different 
economies and economic structures than ours, there occurred a 
parallel growth in concern about the impact of these vastly 
different labor markets on economic conditions and the standard 
of living in our own Nation. Controversy grew as to whether 
international and bilateral rules of trade should address in 
any manner these differences.
    The President and our colleagues on the Senate Finance 
Committee have signaled that it is time to change our approach 
on this subject and have started to open a dialog.
    First and foremost, I think we have to be clear about why 
we need some agreement in the trade context on operation of 
labor markets. Simply put, distortions in foreign labor markets 
can have an impact on economic conditions of competition in 
markets around the world, including in the U.S. control of 
labor markets, whether through actual regulation or failure to 
enforce basic labor standards, can create such distortions.
    Once we move beyond answering the question of why the 
operation of labor markets is relevant to trade, we still must 
answer the second, and perhaps the more difficult question: How 
do we address issues in the operation of labor markets 
effectively in a way that also promotes continued growth in 
opportunities for trade? Clearly, there are no easy answers. 
Some have suggested as a starting point in trade negotiations 
that we require our trading partners to respect and enforce the 
basic labor principles that many of them, including virtually 
all WTO members, have already endorsed in the ILO context; 
namely, the right to associate and bargain collectively, 
abolition of compulsory labor, abolition of child labor, 
elimination of employment discrimination, and adherence to 
acceptable conditions of work.
    Under any circumstances, the objective in addressing this 
important issue must be, as the President has said, to ensure 
that the globalization of trade involves a leveling up, not a 
leveling down. The objective is not to destroy legitimate 
comparative advantages of developing countries or to use the 
valid issue of operation of labor markets to create invalid 
obstacles to trade. To the contrary, our common goal must be 
greater integration of global markets in ways that promote 
growth and opportunity for our workers and farmers and 
businesses, while also promoting a trading system in which all 
countries gain.
    I hope that all my colleagues will join in this important 
dialog so that we can move forward together.
    Ambassador, as always, it is a great pleasure for us to 
have you here, and I look forward to hearing your thoughts on 
this and other important subjects in this vital area of 
international trade.
    [The opening statement follows:]

Statement of Hon. Sander M. Levin, a Representative in Congress from 
the State of Michigan

    This is the first in a series of important hearings on U.S. trade 
policy. This set of hearings comes at a key time. We face immediate 
challenges such as how to respond to the unprecedented surge of steel 
imports into the United States that followed the Asian economic crisis 
and the severe harm those imports have done to workers and firms in 
this vital sector of our economy.
    At the same time, with the Seattle Ministerial only a few months 
away, we in Congress face the opportunity and challenge of working 
together and with the Administration to develop U.S. trade strategies 
and objectives for the next major round of WTO negotiations that will 
address effectively the constantly changing dynamics of global trade.
    We cannot afford to squander that opportunity, because, as in the 
past, the U.S. agenda will drive much of the world's agenda in the next 
Round. Our agenda must effectively address important new dynamics in 
global trade, including: the increasingly important role that 
developing countries and transitional market economies such as China, 
India, Brazil, Mexico, and Russia play in setting the terms of trade; 
and the increasingly significant role that informal trade barriers and 
government-generated barriers in areas such as distribution are playing 
in preventing U.S. firms and workers from realizing the full benefits 
from trade to which the United States is entitled.
    It is important to recognize that these problems are, in part, a 
testament to the success we have had in negotiating away other 
impediments to trade, such as tariffs and other traditional border 
measures. As we have peeled away these layers, we find ourselves in an 
environment in which any type of distortion in the operation of 
competitive markets can have a profound impact on the terms of trade. 
These distortions have helped to create the current steel import crisis 
and are central to understanding the barriers that must be targeted for 
elimination in the next Round of negotiations.
    Given the constantly changing dynamics of competition in the global 
marketplace, we must be prepared at all times to take a fresh look at 
the new problems that arise and we must be ready to discuss openly and 
candidly the best policies to address those problems. In that regard, I 
want to commend the effort by the Finance Committee earlier this month 
to examine and open a dialog on many of the more contentious issues in 
U.S. trade policy, and express the hope that we in the House can carry 
that dialog forward today and in the hearings that follow.
    I have the impression that there is a willingness in many circles 
to take a fresh look at problems that we have been debating 
increasingly in the trade area over the last 4 or 5 years. Clearly, one 
area that must be addressed is the role of labor markets in trade 
relations.
    In previous decades there was little focus on or controversy about 
labor market issues. The interest in ``labor rights'' was more in the 
context of a human rights agenda. However, with the increased role in 
economic globalization of trade with and competition from nations with 
very different economic structures than ours, there occurred a parallel 
growth in concern about the impact of these vastly different labor 
markets on economic conditions and the standard of living in our 
nation. Controversy grew as to whether international and bi-lateral 
rules of trade should address in any manner these differences.
    The President and our colleagues on the Senate Finance Committee 
have signaled that it is time to change our approach on this issue, and 
have started to open a dialog on this subject.
    First and foremost, I think we have to be clear about why we need 
some agreement in the trade context on operation of labor markets. 
Simply put, distortions in foreign labor markets can have an impact on 
economic conditions of competition in markets around the world, 
including in the United States. Control of labor markets, whether 
through actual regulation or failure to enforce basic labor standards 
can create such distortions.
    Once we move beyond answering the question of why the operation of 
labor markets is relevant to trade, we still must answer the second, 
and what is perhaps the more difficult question: How do we address 
issues in the operation of labor markets effectively in a way that also 
promotes continued growth in opportunities for trade? Clearly, there 
are no easy answers. Some have suggested as a starting point in trade 
negotiations that we require our trading partners to respect and 
enforce the basic labor principles that many of them, including 
virtually all WTO Members, have already endorsed in the ILO context; 
namely, the rights to associate and bargain collectively; abolition of 
compulsory labor; abolition of child labor; elimination of employment 
discrimination; and adherence to acceptable conditions of work.
    Under any circumstances, the objective in addressing this important 
issue must be, as the President has said, to ensure that in the 
globalization of trade there is a ``leveling up, not leveling down.'' 
The objective is not to destroy legitimate comparative advantages of 
developing countries or to use the valid issue of the operation of 
labor markets to create invalid obstacles to trade. To the contrary, 
our common goal must be greater integration of global markets in ways 
that promote growth and opportunity for our workers and farmers and 
businesses, while also promoting a trading system in which all 
countries can gain.
    I hope that all my colleagues will join in this important dialog so 
that we can move forward together.
    Ambassador Barshefsky, as always, it is a great pleasure, and I 
look forward to hearing your thoughts on this and other important 
subjects in this vital area of international trade.

                                

    [The opening statement of Hon. Jim Ramstad, follows:]

Statement of Hon. Jim Ramstad, a Representative in Congress from the 
State of Minnesota

    Mr. Chairman, thank you for calling this important hearing today to 
discuss the importance of trade negotiations and fighting protectionism 
in the trade arena.
    The U.S. has the most open market in the world. There is nothing 
more important for our country than to break down tariff and non-tariff 
barriers to free trade in other countries. I have worked with 
colleagues on both sides of the aisle, and the Administration, when the 
U.S. has had to fight unfair trade practices and protectionism against 
U.S. products, and I will certainly continue to do so.
    Sadly, however, I have also had to confront some of my own 
colleagues when our own protectionist sides have shown themselves. Just 
last year, we fought that battle, and unfortunately, we lost. Fast 
Track negotiating authority was not renewed, CBI parity was defeated 
and the African Growth and Opportunity Act was not enacted.
    But, being an optimist, I hope this year will be different. We are 
off to a good start, having passed the Miscellaneous Trade and 
Technical Corrections Act in the House on Tuesday and marked up the 
African Growth and Opportunity Act in this Subcommittee last week. The 
President also made a strong pitch in favor of trade in his State of 
the Union Address.
    Mr. Chairman, it is imperative that we renew Fast Track Authority 
for the President this year--especially before the WTO Ministerial 
meeting, which will be held in Washington State in November. The 
Administration must have this authority if our country is to be taken 
seriously at those meetings as we try to knock down barriers to U.S. 
goods and fight protectionism against free trade in general.
    Mr. Chairman, thanks again for calling this hearing. I look forward 
to hearing from our distinguished U.S. Trade Representative about the 
President's agenda for the year. I also hope to learn how she thinks we 
can work together to enact Fast Track Authorizing legislation as soon 
as possible.
      

                                

    Chairman Crane. Thank you, Sandy.
    We shall now proceed with the Honorable Charlene 
Barshefsky. But Charlene, let me just warn you, I got word that 
the vote may start in a minute. I am trying to figure out what 
is the best thing to do.
    Do you guys think we ought to run over there right now 
rather than interrupt her?
    Mr. Levin. You never know, it could be an hour. Why don't 
we start.
    Chairman Crane. All right. Then we will proceed.

  STATEMENT OF HON. CHARLENE BARSHEFSKY, UNITED STATES TRADE 
                         REPRESENTATIVE

    Ambassador Barshefsky. Thank you, Mr. Chairman and Members 
of the Committee. Let me begin by thanking you and the 
Subcommittee for holding this hearing. Our hope is that this 
will be a first step toward realizing the President's goal of 
finding common ground in a bipartisan consensus on trade issues 
as we open a new trade agenda for a new century. So I am very 
pleased to be here to review our agenda and to take advantage 
of your thoughts and advice.
    In his State of the Union, the President set out a bold and 
ambitious trade agenda, including the launch of the new round 
of global trade negotiations. We are committed to lead in 
removing trade barriers, creating fair and open markets, and 
expanding trade, while ensuring that ordinary citizens continue 
to benefit from the trading system in the next century.
    This agenda builds on a long tradition of bipartisan 
commitment to fair and open markets, a commitment which has 
borne fruit in helping us create a dynamic, creative, 
competitive economy which is the envy of the world. Since 1992, 
we have had uninterrupted growth; as of last month, the longest 
peace time expansion in our history. We have created nearly 18 
million new jobs. The unemployment rate has fallen from 7.4 
percent to 4.3 percent, the lowest rate since 1970. We have 
raised wages, home ownership, and family living standards.
    The reasons for this are many, but trade and participation 
in the world economy have played an irreplaceable role. Since 
1992, we have negotiated 270 separate trade agreements which 
have helped open markets and create opportunity for Americans. 
These include five of historic importance--the North American 
Free Trade Agreement, NAFTA, which cemented our strategic 
relations with our immediate neighbors; the Uruguay Round 
Agreements, which created the World Trade Organization; and 
three new multilateral agreements on information technology, 
financial services, and basic telecommunications which, 
together with intellectual property protection, are the 
foundation of the twenty-first century economy.
    As a result, America's trade has flourished. Last year we 
exported close to a trillion dollars in goods and services, a 
51 percent increase from the 1992 level, despite a slowing of 
our export growth due to the Asian financial crisis. We now 
have an opportunity, though, and a responsibility to take the 
next step.
    As host and chair of the WTO's Third Ministerial Conference 
to be held in Seattle at the end of this year, we will be able 
to shape the global trade agenda as we enter a new century. As 
we approach this event and the accelerated negotiating round it 
will inaugurate, we are developing an agenda that extends well 
beyond traditional market-opening initiatives to ensure that 
the world trading system responds to the pace of change, to 
diverse constituencies, and to the challenge of the global 
economy.
    We envision a new type of round with three separate 
dimensions to proceed simultaneously. First, expedited 
negotiations in a wide range of areas. They would include, for 
example, sharp reduction or elimination of industrial tariffs 
and non-tariff barriers; market access and liberalization for 
services industries, including audio-visual, express delivery, 
financial services, the professions, telecom, distribution, 
travel, tourism, and other others; agriculture, including State 
trading enterprises, tariffs, the elimination of export 
subsidies, the addressing of Europe's common agricultural 
policy, biotechnology, and other topics; intellectual property, 
beginning with the full implementation of Uruguay Round 
commitments and extension to new technologies; government 
procurement, exploration of how the WTO can help create an 
international pro-competitive regulatory climate, particularly 
in services as well as to advance investment, and further our 
efforts against bribery and corruption. These negotiations 
would have clearly defined timetables and expectations. 
Statements by the EU and Japan in support of a 3-year 
negotiating timetable are encouraging.
    The second dimension, to proceed simultaneously with the 
first, has to do with institution-building. A new round should 
include a commitment to both institution-building and reform of 
the WTO itself. This would include, for example, capacity 
building in developing countries to help them implement what 
they agree to do; trade facilitation, particularly in the 
customs area; and more effective coordination between the WTO, 
on the one hand, and the International Labor Organization, the 
IMF, and the World Bank, as well as environmental bodies, on 
the other. And it would include a greater commitment to greater 
transparency in the WTO itself particularly in dispute 
settlement, as well as accessibility to and responsiveness to 
citizens.
    And third, the third dimension also to proceed 
simultaneously, is that a new round must accommodate ongoing 
results. For example, as we develop the agenda this year, we 
will also work toward completion of the ITA-II, the extension 
of the information technology agreement, transparency in 
government procurement, a consensus on the nine APEC sectors, 
improvements in dispute settlement, and in electronic commerce 
extension of the moratorium on tariffs applied to electronic 
transmissions.
    Our trade agenda beyond the very ambitious we foresee for 
the next round is equally broad. We are, as you know, enforcing 
WTO commitments and bilateral agreements with all of our 
trading partners through over 80 separate enforcement actions 
since 1993, including 42 at the WTO. And we are carrying on 
sectoral, regional, and bilateral negotiations covering every 
part of the world. My prepared testimony addresses this agenda 
in detail, but I would like to take a minute to cite just a few 
examples.
    In the Western Hemisphere, the talks toward a free trade 
area of the Americas are proceeding well, including the 
achieving of concrete progress this year as well as bilateral 
efforts to open markets in each of our hemispheric partners. In 
Europe, we are working to remove barriers and strengthen trade 
relations with the EU through the Transatlantic Economic 
Partnership. This includes negotiations on technical trade 
barriers, agriculture, and, in particular, biotechnology and 
food safety, intellectual property, government procurement, 
services, electronic commerce, and advancing shared values such 
as transparency and the participation of civil society. At the 
same time, we are enforcing strictly European compliance with 
dispute settlement decisions, such as those on bananas and 
beef, and we will address problems in our trade relations both 
bilaterally and through the new negotiating round that the 
President has proposed.
    In Africa, we are implementing the President's initiative 
to improve trade relations and ensure Africa's full integration 
into the multilateral system. For the past 5 years, Mr. 
Chairman, it is the Ways and Means Committee that has led the 
effort to develop a more effective Africa trade policy for the 
next century. And let me applaud you, Mr. Chairman, Congressman 
Rangel, and Mr. McDermott, as sponsors of the Africa Growth and 
Opportunity Act, in particular, and thank the entire 
Subcommittee for your decision to markup a bill early in this 
session. We look forward to its rapid passage by the House.
    In Japan, we will continue our intense and sustained effort 
to further open and deregulate the Japanese market. We have 
concluded 35 bilateral trade agreements with Japan since 1993 
and we will monitor their implementation closely. We will also 
address continuing sectoral issues such as glass, steel, autos, 
insurance, and other topics. And we are pursuing an ambitious 
set of goals under our Enhanced Deregulation Initiative with 
Japan which covers a number of key sectors for American 
exporters, including telecom, pharmaceuticals, housing, 
financial services, and medical equipment. At the same time, as 
you know, we are addressing the very large and rapid increase 
in steel imports from Japan.
    In China, we will continue to monitor and strictly enforce 
our agreements on intellectual property rights, textiles, and 
market access in goods and agriculture, and address bilateral 
trade problems. At the same time, we will continue to seek 
broad market opening through our negotiations toward China's 
accession to the WTO. In this regard, membership in the WTO for 
China on commercially meaningful grounds is in our interest and 
it is in China's interest. Broadly speaking, WTO principles 
such as transparency, openness, and public and enforceable 
commitments will help strengthen the rule of law in China and 
create sustainable long term growth. And the specific market 
access and other reforms WTO accession requires from China are 
no more onerous than what other WTO members have already done. 
Premier Zhu Rongji's proposed visit to the United States this 
spring gives China and the United States a chance to advance 
this goal. As this approaches, China has an opportunity, 
perhaps the last for some time to come, to resolve the 
remaining issues. We hope China will take it. We also recognize 
that China may again decide it is not ready for the 
commercially meaningful steps WTO membership requires and thus 
WTO membership may not come for some time. But delay in trade 
reform is not an option. We will not hesitate to make sure that 
we are treated fairly, and we will continue to urge China to 
move toward acceptance of international norms, economic and 
otherwise, which are so important to us, to China's neighbors, 
and to China itself.
    Apart from Japan and China, more generally in Asia we are 
continuing our APEC sector liberalization effort and are 
working to build consensus on WTO-related issues before the 
1999 Ministerial.
    In the Middle East, we are promoting regional integration 
on the foundation of our free trade agreement with Israel and 
with the creation of new Israeli-Jordanian industrial zones 
whose products will receive preferential access to the United 
States, and we have in mind similar projects with Egypt and the 
Palestinian authority.
    In each of these regions and in the multilateral agenda as 
well as bilaterally, we are, of course, committed to the full 
enforcement of the agreements we reach. We are the most active 
user of WTO dispute settlement, and of course our own trade 
laws are vital.
    We are also committed to ensuring that as trade expands 
environmental standards rise and respect for internationally 
recognized core labor standards grows. With respect to the 
environment next month, our work includes both finding ways to 
liberalize trade while strengthening environmental protection, 
as an APEC initiative to liberalize trade in environmental 
goods and services will do, and, at the same time, to avoid 
potential conflict between trade agreements and environmental 
objectives. The WTO, with our support, is convening a high 
level meeting on trade and the environment this spring to more 
fully address these questions. This marks a new level of 
awareness and interest in the world trading community on trade 
and environmental issues. And as to internationally recognized 
core labor standards, we are working on several fronts. First, 
we are working to improve the collaborative relationship 
between the WTO and ILO. Second, we are strengthening the ILO 
itself by adding funding for ILO child labor programs in 
addition to those we already support in Bangladesh, Thailand, 
the Philippines, Africa, and Brazil. And we are finding ways to 
address core labor standards as we advance our trade policy 
goals. The North American Agreement on Labor Cooperation is one 
example. Another is our most recent trade agreement, a textile 
agreement with Cambodia in which Cambodia is required to 
improve the enforcement of its labor laws in the garment sector 
in exchange for additional market access benefits.
    This, Mr. Chairman, is a broad and ambitious agenda. We 
hope to pursue it based on a strong bipartisan consensus which 
includes renewal of trade negotiating authority for certain 
agreements. Negotiating authority imparts greater credibility 
and effectiveness on behalf of American economic interests, 
helps ensure the successful implementation of important trade 
agreements, and thus contributes to our goal of opening 
markets, increasing growth, and raising living standards. We 
intend to approach its renewal in a spirit of finding common 
ground and strong bipartisan consensus. This will, however, 
require flexibility on all sides. In addition, let me stress 
our strong support for legislation to enhance the Caribbean 
Basin Initiative, renew the GSP program, pass the OECD 
shipbuilding agreement, and renew trade adjustment assistance, 
and of course, as I mentioned earlier, we place great 
importance on passage of the Africa legislation.
    In summary, the U.S. economy and the living standards of 
our citizens have benefited immensely from the work of this 
Congress, this Administration and previous Administrations that 
we have done together. As we open a new century and prepare to 
shape the trading world of the next generation, we plan to work 
with this Committee and others in Congress as well as 
stakeholders in the system to shape an agenda that, as the 
President said, will allow us to tear down barriers, open 
markets, expand trade, and ensure that ordinary citizens in 
America and in all countries benefit. Thank you, Mr. Chairman.
    [The prepared statement follows:]

Statement of the Hon. Charlene Barshefsky, U.S. Trade Representative

    Thank you, Mr. Chairman, for inviting my testimony on the role of 
trade in our economy, and the state of American trade policy today. I 
am grateful to you and to the Subcommittee as a whole for offering us 
this opportunity to discuss our trade policy record and agenda for the 
future, and I look forward to continuing the close working relationship 
we have had with the Subcommittee. And let me say that you have called 
this hearing at an opportune time, because we are opening a year in 
which every part of our trade agenda will be ambitious and will hold 
great promise for our country.
    Three weeks ago, President Clinton called for the initiation of a 
new multilateral negotiating Roundtable to meet the demands of the 21st 
century. This will begin at the World Trade Organization's Third 
Ministerial Conference, chaired by the United States--and the largest 
trade event ever held in the United States--and it will shape world 
trade in the next century. Our multilateral agenda will be accompanied 
by the regional, bilateral and sectoral negotiations we have underway 
in each part of the world; and by enforcement of our rights under WTO 
dispute settlement, the North American Free Trade Agreement and through 
our domestic trade laws.
    We hope and expect to carry out this agenda in the tradition of 
bipartisanship and close consultation between the Executive and 
Legislative branches which have characterized many years of American 
trade policy. My testimony will touch on each of these points, 
including trade negotiating authority, which we believe will help us 
achieve our goals. But let me begin by discussing the context in which 
we develop and execute our policy agenda.

                        Trade Policy Principles

    Trade policy forms part of both our national economic policy and 
our approach to the world beyond our borders.
    At home, engagement in world trade, based on fair rules and the 
rule of law, offers American firms, agricultural producers and workers 
larger markets. Almost 80% of world economic consumption takes place 
outside the U.S., and if America is to continue to grow and remain 
competitive in the future, trade policy must ensure that Americans have 
fair access to these markets. Trade also offers American consumers a 
greater choice of products at competitive prices and higher quality.
    Overseas, trade helps increase world prosperity, advances the rule 
of law, and helps to strengthen international peace. As President 
Franklin Roosevelt said in 1944:

          ``A basic essential to peace, permanent peace, is a decent 
        standard of living for all individual men and women and 
        children in all nations. Freedom from fear is eternally linked 
        with freedom from want. [And] it has been shown time and time 
        again that if the standard of living in any country goes up, so 
        does its purchasing power--and that such a rise encourages a 
        better standard of living in neighboring countries with whom it 
        trades.''

    These principles have formed the basis of American trade policy 
since the end of World War II. We have advanced them on a bipartisan 
basis through a strong working partnership between the Executive Branch 
and Congress through ten Administrations, ever since the creation of 
the General Agreement on Tariffs and Trade in 1948. The Clinton 
administration's trade policy, we believe, is firmly in this tradition: 
such advances as the passage of the North American Free Trade 
Agreement, the Uruguay Round, our 35 bilateral trade agreements with 
Japan--a total of 270 trade agreements--would not have happened without 
the advice, support and contribution of the Trade Subcommittee and 
Congress as a whole.

                       Trade and the U.S. Economy

    The results of these policies have contributed immeasurably to the 
peace and prosperity America now enjoys. We have the most dynamic, 
creative and competitive economy in the world, and are ideally placed 
to succeed in the next century.
    Since 1992, we have had uninterrupted growth--our economy has 
expanded from $7.1 trillion to $8.5 trillion in real terms (1998 
dollars) and last month, the present economic expansion became 
America's longest in history.
    We have created jobs. Employment in America has risen from 109.5 to 
127.2 million jobs, a net gain of nearly 18 million, as unemployment 
rates fell from 7.4% to 4.3%.
    And we have raised wages. Since 1992, average wages have reversed a 
twenty-year decline and have grown by 6.0% in real terms, to $449 a 
week on average. This family prosperity is reflected, for example, in 
record rates of home ownership.
    Altogether, we have achieved an historic combination of high 
growth, low unemployment, low inflation, low interest rates and rising 
wages unmatched in decades. The reasons for this are many. They include 
improved support for education and job training and an uninterrupted 
reduction in the federal deficit beginning in 1993 and culminating with 
the budget surpluses we now enjoy. But trade and participation in the 
world economy have played an irreplaceable role.
    And overseas, as trade has grown and international trade rules have 
strengthened, the hopes of the wartime generation have been in many 
ways realized.
    Peace among the world's great nations has grown more secure.
    Prosperity has blossomed--as world exports have grown from $60 
billion to $6.5 trillion in constant dollars since 1960, world economic 
production has quadrupled and real per capita income has more than 
doubled, from under $3100 to over $6300 last year.
    As a consequence, people have better lives. In 1955, the world 
average life expectancy at birth was 48 years; now it is 65. Where the 
worldwide infant mortality rate was 148 per thousand, today it is 59.
    And faith in markets under the rule of law has been vindicated: 
those nations which shut off the free flow of goods, services and 
information have tended to stagnate while those which remained open to 
the world have tended to prosper. One need only examine the ghastly 
experiment which has taken place on the Korean peninsula--as South 
Korea has risen to become one of the world's leading industrial powers, 
while North Korea is afflicted by chronic hunger--to show how stark is 
the contrast. And there is no stronger vindication of our work than the 
fact that Russia, China and 16 other economies have abandoned central 
planning and seek WTO membership.
    Our Administration has had the good fortune to build upon this 
foundation. Since 1992, we have negotiated 270 separate trade 
agreements which have helped open markets and create opportunity for 
Americans. These include five which have fundamentally transformed 
world trade: the North American Free Trade Agreement, which cemented 
our strategic trade relationship with our immediate neighbors; the 
Uruguay Round, which created the World Trade Organization with a 
binding dispute settlement mechanism and extended international trade 
rules to new areas through agreements on agriculture, services, 
intellectual property; and three multilateral agreements on information 
technology, financial services and basic telecommunications.

                            U.S. Trade Today

    As a result, America's trade has flourished. Last year we exported 
$932 billion in goods and services--a 51% increase from the 1992 level 
of $617 billion, despite a slowing in export growth due to the 
financial crisis. Our goods exports were very evenly divided among four 
major markets, meaning that we have critical trade interests in each 
part of the world:

------------------------------------------------------------------------
      Canada          Asia-Pacific      Latin America    European Union
------------------------------------------------------------------------
  $156 billion       $166 billion      $143 billion      $150 billion
------------------------------------------------------------------------

    Measured by country, our largest five goods export markets were 
Canada at $156 billion, followed by Mexico at $71 billion, Japan at $57 
billion, the United Kingdom at $40 billion and Germany at $25 billion.
    Service export figures are only partially available for 1998. Our 
full-year 1997 service exports, divided regionally, were more heavily 
weighted to Asia and Europe but still indicate critical interests in 
each region:

------------------------------------------------------------------------
      Canada          Asia-Pacific      Latin America    European Union
------------------------------------------------------------------------
 $20.5 billion      $73.6 billion     $34.2 billion     $74.8 billion
------------------------------------------------------------------------

    In 1997, our six largest service export markets were Japan with $34 
billion, the United Kingdom with $23.7 billion, Canada at $20.5 
billion, Germany at $13.5 billion, France at $9.4 billion and Mexico at 
$9.3 billion.
    Altogether, the United States was the world's largest exporter in 
1998. We were also the largest exporter of the goods and services 
supporting the highest-wage jobs: agricultural products, advanced 
technology products and capital goods. Our goods exports now support 
11.6 million American jobs.
    The United States was also the world's largest importer, at $1.1 
trillion in goods and services imports in 1998. Imports play an 
important role in our economy, by raising living standards for 
consumers (especially lower-income Americans), dampening inflation, 
ensuring the widest possible choice of products at the best prices, and 
providing essential inputs for U.S. industries, many of which then 
export their goods at competitive prices. However, open markets depend 
on fair trade rules, and we are and will be vigilant in enforcing our 
laws against import surges, subsidies, dumping, or other measures 
intended to artificially boost exports or protect foreign markets.

                          Trade Agenda in 1999

    This brings me to our agenda for the years to come. As in the past, 
we hope to base our work on the foundation of a bipartisan consensus 
and a strong working relationship between the Administration and 
Congress. Generally speaking, our trade policy seeks the following 
goals.
     Address the trade effects of the financial crisis which 
now directly affects nearly 40% of the world.
     Continue our progress toward open and fair world markets 
through a new negotiating Round, as well as our role as host and Chair 
of the WTO's Third Ministerial Conference, regional negotiations and 
bilateral talks.
     Advance the rule of law and defend U.S. rights by ensuring 
full compliance with trade agreements and strongly enforcing our trade 
laws.
     Encourage the full participation of all economies, 
including economies in transition and developing nations, in the world 
trading system on a commercially meaningful basis;
     Ensure that the trading system helps lay the foundation 
for the 21st-century economy by offering maximum incentives for 
scientific and technological progress.
     Ensure that trade policy complements our efforts to 
protect the world environment and promote core labor standards 
overseas; and
     Advance basic American values including transparency and 
accessibility to citizens and involvement of civil society in the 
institutions of international trade.

                      Trade Negotiating Authority

    As we pursue this agenda, the Administration will consult with the 
Subcommittee and Congress on the renewal of traditional trade 
negotiating authority. The President, in his State of the Union 
address, called for a new consensus on trade. He said we must find the 
common ground on which business, workers, farmers, environmentalists 
and government can stand together. This commitment to common ground has 
been a hallmark of the Subcommittee's approach to trade policy over the 
years. I want to personally thank you, Mr. Chairman, along with each 
member of the Subcommittee, for your commitment and hard work toward 
this goal in the last Congress.
    Consistent with that approach, we believe negotiating authority 
should bolster the traditional bipartisan support for trade policy and 
allow us to pursue an agenda that reflects consensus goals. It is a 
tool which can help us negotiate with greater credibility and 
effectiveness on behalf of American economic interests, and thus 
contribute to our goal of opening markets, increasing growth and 
raising living standards.

                   Trade Effects of Financial Crisis

    Let me now address our agenda in detail. I will begin with the 
trade effects of the financial crisis affecting Asia, Russia and parts 
of Latin America.
    This crisis has now lasted a year and a half, and its effects on 
our trade interests have been severe. Countries which have implemented 
IMF reform programs have seen a number of good results, including 
currency stability and returning investor confidence. However, real 
economies continue to suffer. Six major economies--Hong Kong, 
Indonesia, Malaysia, South Korea, Russia and Thailand--are likely to 
have contracted by 6% or more last year.
    As a result of this crisis, the American trade imbalance has 
widened. This reflects largely a sharp drop of about $30 billion in 
American exports to the Pacific Rim, and a consequent break with the 
pattern of rapid U.S. export growth of the past few years. Our overall 
import growth last year (with the principal exception of the steel 
sector, in which imports rose very rapidly in the second half of 1998, 
affecting thousands of jobs) remained consistent with growth rates in 
previous years. Thus the larger deficit largely reflects predictable 
macroeconomic factors.
    Our trade policy response begins by ensuring that our trading 
partners continue to live by commitments at the WTO and in our regional 
and bilateral agreements. The strength of the trading system is an 
enormous advantage here--despite the worst financial crisis in fifty 
years, the world has resisted the temptation to relapse into 
protectionism. This has greatly reduced the potential damage to our 
economy, and particularly to American manufacturing exporters and 
agricultural producers. In addition, other markets--particularly our 
NAFTA partners Canada and Mexico, to whom U.S. goods exports grew by 
$13 billion last year--have in part compensated, thanks to the more 
open North American market NAFTA has created, for some but not all of 
these lost exports. An ambitious trade agenda will further strengthen 
our effort to ensure that the crisis does not cause the world to move 
backward.
    We continue with a policy response covering several areas:
    IMF Recovery Packages--We have supported reform packages with the 
IMF at the center in affected countries. Several of these contain trade 
conditionalities which we vigorously monitor.
    Restored Growth in Japan--A return to growth in Japan, Asia's 
largest economy, is essential for the economic health of the region. 
The Administration's view is that this will require fiscal stimulus 
that continues until solid growth is restored, financial reform, and 
deregulation and market-opening. USTR's responsibilities lie in this 
last area. In addition to an aggressive bilateral agenda, the agreement 
we reached in Japan last May sets out concrete deregulatory measures in 
telecommunications, housing, medical devices, pharmaceuticals and 
financial services sectors, and measures to strengthen competition 
policy enforcement and transparency. When fully implemented, these will 
create opportunities for exporters and workers in America, other 
Pacific economies and Japan. We are now discussing new measures in 
these sectors and energy as well.
    Steel--The President's January 7 Steel Report to the Congress lays 
out a seven point action plan on the steel import surge. Among other 
points, the plan projects a roll-back of imports from Japan--the key 
cause of the import surge--to pre-crisis levels, and states that the 
Administration is prepared, if necessary, to self-initiate trade cases 
to ensure that this roll-back takes place. The plan also outlines 
actions taken by the Commerce Department to expedite ongoing dumping 
investigations and apply any dumping margins retroactively. In 
addition, the Administration expresses strong support for an effective 
safeguards mechanism; and commits us to continue to assess the 
effectiveness of steps taken to date, and working closely with the 
industry, labor, and members of Congress, to assess additional steps. 
To assist in this ongoing review, we also announced that preliminary 
steel import data will be released, thus enabling the industry's 
business planners to react to imports on a more timely basis.

                 I. Growth and Higher Living Standards

    Let me now turn to our negotiating agenda. In this agenda, we seek 
enduring goals--growth, higher living standards, the rule of law, a 
rising quality of life, better protection of health, safety and the 
environment, and the advance of basic values. As President Clinton said 
in the State of the Union address, we need to find new methods of 
negotiating and address a broader array of issues to secure these goals 
in the next century.
1. New Round and WTO Ministerial Conference

    This is the basis of President Clinton's call for a new, 
accelerated negotiating Round for the 21st century. The Round would 
begin at the WTO's Third Ministerial Conference, which I will chair and 
which will be held in Seattle from November 30th to December 3rd. This 
will be the largest trade event ever held in America, bringing 
government leaders, Trade Ministers, business leaders, non-governmental 
organizations and others interested in trade policy from around the 
world. It is an extraordinary opportunity for us to shape at least the 
next decade of multilateral trade negotiations and to highlight our 
economic dynamism to the world.
    The Round President Clinton has called for would be somewhat 
different from previous Rounds, in that we should be able to pursue 
three dimensions simultaneously: first, a negotiating agenda to be 
completed on an accelerated timetable; second, institutional reforms 
and capacity-building at the WTO; and third, ongoing results in 
priority areas.
    To begin with, we would hope to advance a number of important 
initiatives in the months leading up to the Ministerial Conference and 
at the event itself. They include:
     An ``Information Technology Agreement II'' adding new 
products to the sectors already covered by the first ITA.
     Extension of last May's multilateral declaration not to 
assess customs duties on electronic commerce, to make sure that the 
Internet remains an electronic duty-free zone.
     An agreement on transparency in procurement to create more 
predictable and competitive bidding, reducing the opportunity for 
bribery and corruption and helping ensure more effective allocation of 
resources.
     Build consensus on the sectoral liberalization initiative 
begun in the Asia-Pacific Economic Cooperation forum. This would 
eliminate tariffs and in some cases liberalize services in chemicals; 
energy equipment and services; environmental goods and services; fish 
and fishery products; gems and jewelry; medical and scientific 
instruments; toys; and forest products. Meaningful participation by 
Japan in the fishery and forest products sectors would be essential to 
success.
    The second dimension of institutional reform would promote 
transparency, allow the WTO to facilitate trade and participation for 
less developed nations, help it coordinate more effectively with 
international bodies in other fields, and continue to strengthen public 
confidence in the WTO as an institution. Here we would hope to take up 
such issues as:
     Trade facilitation: Most of the world's regional trading 
arrangements--ASEAN, APEC, the European Union, Mercosur, NAFTA, the 
proposed FTAA--contain a critical element of trade facilitation, often 
beginning with customs reform to reduce transaction costs and make 
trade more efficient. The WTO can help accomplish this on a much 
broader scale.
     Capacity-building: We need to narrow the growing disparity 
between the rich countries and the poor countries. We have to ensure 
that the WTO can work effectively with member economies and other 
international institutions, particularly with respect to the least 
developed nations, to ensure that they have both access to markets and 
technical assistance to meet the kinds of obligations that will help 
them grow. This and other issues will be addressed at a High-Level 
Meeting on Trade and Development this March.
     Addressing the intersection between trade and 
environmental policies: As trade promotes growth overseas, we must at 
the same time ensure clean air, clean water and protection of our 
natural heritage, as well as effective approaches to broader questions 
like biodiversity and climate change. We have already scheduled a High-
Level Meeting of trade and environment experts in March, which we 
anticipate will provide fresh and valuable input to our work in this 
area and help frame a vision for future work.
     Addressing the intersection between trade and labor: 
Again, as in our domestic economy, growth can and should be accompanied 
by safer workplaces, elimination of exploitive child labor and respect 
for core labor standards. The WTO in particular can work in more 
coordination with the International Labor Organization on some of these 
issues. As the President has announced, the US will provide funds for a 
new multilateral program in the ILO to provide technical assistance for 
international labor rights initiatives, and through our own Department 
of Labor will help our trading partners strengthen labor law 
enforcement. These and other such efforts should be a focus of renewed 
cooperation with the ILO.
     Coordination with the international financial 
institutions, in a world where the separation of trade from financial 
policy has become entirely artificial: The WTO must work more 
effectively with the IMF and World Bank to achieve their common goals 
of a more stable, predictable and prosperous world.
     Transparency: We will also seek reform, openness and 
accountability in the WTO itself. Dispute settlement must be 
transparent and open to the public. Citizens must have access to panel 
reports and documents. Civil society must be able to contribute to the 
work of the WTO, to ensure both that the WTO can hear from many points 
of view including labor, environmental, consumer and other groups, and 
that its work will rest on the broadest possible consensus.
    With respect to the expedited negotiating agenda of this Round, we 
are now consulting with Congress, industry, and other interested 
parties on a detailed negotiating agenda for talks which would begin 
after the Ministerial. While the final scope of the agenda is yet to be 
determined, we believe that at a minimum they should include such 
issues as:
     Agriculture, where we envision broad reductions in 
tariffs, the elimination of export subsidies, and further reductions in 
trade-distorting domestic supports linked to production. We must seek 
transparency and improved disciplines on state trading enterprises, 
seek reform of the EU's Common Agricultural Policy, and ensure that the 
world's agricultural producers can use safe, scientifically proven 
biotechnology techniques without fear of trade discrimination.
     Services, in which we hope to see specific commitments for 
broad liberalization and market access in a range of sectors, including 
but not limited to audiovisual services, construction, express 
delivery, financial services, professional services, 
telecommunications, travel and tourism, and others.
     Government procurement, in which purchases are over $3.1 
trillion per year, much of it in sectors where America sets the world 
standard: high technology, telecommunications, construction, 
engineering, aerospace and so forth. At present, only 26 of the 133 WTO 
Members belong to the plurilateral WTO Government Procurement 
Agreement. We thus look to bring more countries under existing 
disciplines.
     Intellectual property, where our efforts to ensure full 
compliance with the existing provisions of the Uruguay Round will be 
combined with campaigns against piracy in newly developed optical media 
technologies such as CDs, CD-ROMs, digital video discs and others; and 
end-user piracy of software.
     Industrial tariff and non-tariff barriers, where we will 
seek to continue our progress in reducing bound and applied tariff 
levels, and continue to address non-tariff measures in industrials 
sectors.
     A forward work-program on newer issues for the 
multilateral system to consider, including considering how competition 
and investment policies meet the test of assuring fair and open trade 
and how the WTO can help to create an international pro-competitive 
regulatory climate, particularly in services, and further advance our 
efforts against bribery and corruption.
    Outside the context of the Round, we are pursuing the accession of 
31 economies to the World Trade Organization: Latvia, whose accession 
is complete and awaiting ratification; and Albania, Algeria, Andorra, 
Armenia, Azerbaijan, Belarus, Cambodia, China, Croatia, Estonia, FYR of 
Macedonia, Georgia, Jordan, Kazakstan, Laos, Lithuania, Moldova, Nepal, 
Oman, Russia, Samoa, Saudi Arabia, Seychelles, Sudan, Taiwan, Tonga, 
Ukraine, Uzbekistan, Vanuatu and Vietnam. In all cases we seek a 
commercially meaningful accession with the greatest possible 
commitments to all WTO agreements, including the most recent ones.
    We are also exploring ways to more fully integrate the least 
developed countries, particularly in Africa, into the system. This 
includes both seeking deeper commitments, and technical assistance in 
fulfilling those commitments, and legislation to improve trade 
relations with Africa.
    Finally, we will shortly be deciding on entry into force of the 
1997 WTO financial services negotiations. As you may recall, these 
extended negotiations concluded on an interim basis in 1995 because we 
were dissatisfied with offers from important trading partners, 
especially in developing and emerging markets. In contrast, in the 
negotiations that concluded in December 1997, we obtained broader and 
deeper commitments, in banking, insurance, and securities, from a wide 
range of developed and developing countries, including the key emerging 
markets of primary interest to U.S. industry. These countries had until 
January 29, 1999, to complete any necessary domestic procedures and 
formally notify the WTO of their acceptance of the protocol for 
bringing their commitments into force. Fifty-three countries, including 
the United States, met the deadline, and these 53 are now empowered to 
decide whether to allow their commitments to enter into force, on an 
MFN basis, from March 1. We have been consulting with your staff, staff 
of other relevant committees, and the U.S. private sector to determine 
a strategy that is in the best commercial interest of the United States 
and that will demonstrate our view that all WTO Members must live up to 
their commitments.

2. Regional Trade Agenda

    At the same time, we are pursuing an active agenda in each region 
of the world. A brief review is as follows:
    Canada--With Canada, our largest trade partner, we have serious 
concerns on a range of agriculture matters. We took an important step 
on these last December by concluding a market access package opening 
opportunities for American grain farmers, cattle ranchers and other 
agricultural producers. We will continue our work in these areas this 
year. We will also address major market access impediments to our 
magazine publishers (as I note in the section on enforcement) and other 
media and entertainment industries. We will also continue to enforce 
our bilateral sectoral agreements. At the same time, we intend to work 
with Canada on bilateral issues of mutual interest, and on negotiations 
toward the Free Trade Area of the Americas and at the WTO where we 
share many goals.
    Mexico--Trade with Mexico has expanded very rapidly since passage 
of the North American Free Trade Agreement. Last year, Mexico passed 
Japan as both our second largest goods exports market and our second 
largest overall goods trade partner. We will continue to monitor 
implementation of Mexico's NAFTA commitments, scheduled to be complete 
by 2008, and address bilateral issues including land transportation, 
corn syrup and sugar, and telecommunications barriers as well as piracy 
in intellectual property rights. We have also stepped up our efforts in 
the trilateral work program now underway in more than 25 Committees and 
Working Groups, with the intention of maximizing our gains under the 
NAFTA.
    Western Hemisphere--The Miami and Santiago Summits of the Americas 
have called on us to complete work on a Free Trade Area of the Americas 
no later than the year 2005. This year, in accordance with Summit 
directions, we intend to achieve ``concrete progress'' toward the FTAA 
in our nine Negotiating Groups and through business facilitation and 
other measures. At the same time, we will seek approval from Congress 
of an expanded and improved Caribbean Basin Initiative with benefits 
similar to those now accorded Mexico and Canada.
    Europe--We are working to remove barriers and strengthen trade 
relations with the EU through the Transatlantic Economic Partnership 
begun last year. This includes negotiations on seven separate agenda 
items: technical trade barriers, agriculture (including biotechnology 
and food safety), intellectual property, government procurement, 
services, electronic commerce and advancing shared values such as 
transparency and participation for civil society. We are also working 
to ensure the protection of American interests as the EU expands to 
include Central and Eastern European nations. At the same time, we are 
enforcing European compliance with dispute settlement decisions and 
will address problems in our trade relations both bilaterally and 
through the new negotiating Round President Clinton has proposed.
    Asia--Under the Asia-Pacific Economic Cooperation (APEC) forum we 
are looking long-term toward free and open trade in the region. This 
year, as I noted earlier, we will seek WTO consensus on the nine-sector 
liberalization package begun in APEC, and begin work on six additional 
sectors. We will also address bilateral issues with Korea, the ASEAN 
nations and other Asian trade partners. This will include seeking 
Normal Trade Relations with Kyrgyzstan, Mongolia and Laos, and 
negotiating a broad trade and commercial agreement with Vietnam.
    Japan--In trade relations with Japan, our largest overseas trade 
partner, we will continue our intense and sustained effort to open and 
deregulate the Japanese market. We have concluded 35 bilateral trade 
agreements with Japan since 1993; we will monitor their implementation 
closely and enforce them vigorously. We will also address sectoral 
issues including rice, steel, insurance, glass, film and other topics. 
And as I noted earlier, we are pursuing an ambitious set of goals under 
the Enhanced Initiative on Deregulation and Competition Policy, both in 
individual sectors and in broader structural issues. We hope to see 
substantial progress on these issues as Prime Minister Obuchi's spring 
visit approaches.
    China--We will monitor and strictly enforce our agreements on 
intellectual property and market access with China, and address 
bilateral trade problems in agriculture, direct marketing and other 
areas. At the same time, we will continue to seek broad market-opening 
through our negotiations toward China's accession to the World Trade 
Organization, which I address more fully below.
    Africa--USTR is implementing the President's Partnership for 
Economic Growth and Opportunity in Africa, which owes a great deal to 
the work of the Trade Subcommittee, by supporting economic reform, 
promoting expanded trade and investment ties, and encouraging Africa's 
full integration into the world trading system by negotiating bilateral 
agreements, technical assistance and other measures.
    A sound policy framework in African countries that opens economies 
to private sector trade and investment offers the greatest potential 
for growth and poverty alleviation as well as trade opportunities for 
the U.S. Last month, for example, we signed a Bilateral investment 
Treaty with Mozambique and over the next few months we expect to sign 
Trade and Investment Framework Agreements, or TIFAs, with South Africa, 
Ghana, and the West African Economic and Monetary Union. We also place 
a very high priority on Congressional approval of the African Growth 
and Opportunity Act. I want to state my personal appreciation for the 
work of Chairman Crane, Congressman Rangel and Congressman McDermott to 
secure its early passage in this Congress.
    Broader efforts to encourage full integration of developing 
countries into the trading system will also bolster our Africa policy. 
In this regard, we will seek renewal of the Generalized System of 
Preferences.
    Middle East--Building upon our Free Trade Agreement with Israel, we 
have inaugurated a program that aims to bolster the peace process, 
while advancing American interests. Starting with a framework of 
bilateral trade and investment consultations in the region and a newly 
inaugurated industrial zones program, we will help the Middle Eastern 
countries work toward a shared goal of increased intra-regional trade.
    OECD--We strongly support passage of the OECD Convention on 
Shipbuilding Subsidies and will work with you to ensure its success.

                     II. Enforcing the Rule of Law

    Second, US trade policy will support and advance the rule of law 
internationally by ensuring the enforcement of trade agreements and 
U.S. rights in the trading system.
    Much of our enforcement work takes place at the World Trade 
Organization. We have filed more complaints in the WTO--41 cases to 
date--than any other WTO member, and our record of success is strong. 
We have prevailed on 19 of the 21 American complaints acted upon so 
far, either by successful settlement or panel victory. In almost all 
cases, the losing parties have acted rapidly to address the problems. 
We will insist that this remain the case in all our disputes, including 
those with the European Union on beef hormones and bananas, and with 
Canada on magazines. At the same time, the U.S. has complied fully with 
all panel rulings it has lost, although these are few in number. And we 
will, of course, use our rights under the NAFTA to ensure open markets 
to our goods and services in Canada and Mexico.
    We are also monitoring implementation of WTO commitments. All WTO 
developing country members are scheduled to fully implement their 
intellectual property commitments, and all members are required to 
implement customs valuation commitments by January 1, 2000. We will 
insist on strict compliance with these deadlines.
    Likewise, we are vigilant to ensure enforcement of textile quotas 
and implementation of textile market access requirements overseas. A 
number of our trading partners clearly have further work to do in 
market access, including some of our largest and fastest growing 
textile suppliers. We have and will continue to aggressively pursue our 
rights, whether through the consultation process or ultimately through 
the WTO dispute settlement regime.
    U.S. trade laws are also a vitally important means of ensuring 
respect for U.S. rights and interests in trade. We will continue to 
challenge aggressively market access barriers abroad using laws such as 
Section 301, ``Special 301'' and Section 1377, to open foreign markets 
and ensure fair treatment for our goods and services, ensure 
nondiscrimination in foreign government procurement and ensure 
compliance with telecommunications agreements.
    To ensure that we have the maximum advantage of domestic trade 
laws, the Administration will reauthorize by Executive Order two laws 
for which authority has lapsed: ``Super 301'' and Title VII. We wish to 
work with the Subcommittee to include these laws in your legislative 
agenda.
    The Administration is also, of course, committed to full and 
vigorous enforcement of our laws addressing dumping and subsidies, and 
on injurious import surges.

                 III. Integrating Transition Economies

    Third, our trade policy will continue our progress toward 
integrating China, Russia and other economies in transition into the 
trading system. This will both advance specific American trade 
interests, and contribute to our larger goal of a more secure peace in 
the next century.
    This task is the last great step in the process which began with 
the formation of the GATT and continued with the admission of Germany 
and Japan: the integration of China, Russia and sixteen other economies 
in transition from communist planning into the trading system. These 
economies and a number of Middle Eastern nations are the two largest 
groups remaining outside the trading system. Their entry will make 
membership in the trading system nearly universal; and the accession of 
the transition economies will be a fundamentally important step in 
their domestic reforms as well. This would remove large distortions in 
world markets, dramatically enhance market access for American 
producers, and bolster international stability by giving these nations 
a greater stake in world prosperity beyond their borders
    To support rather than undermine both domestic reform in these 
economies and the rules of the trading system, these countries must be 
brought into the WTO on commercially meaningful terms. The result must 
be enforceable commitments to open markets in goods, services and 
agricultural products; transparent, non-discriminatory regulatory 
systems; and effective national treatment at the border and in the 
domestic economy.
    This is an ambitious task, but not an impossible task. Central 
European countries like Poland, Hungary and the Czech Republic have 
succeeded, and their experience shows that WTO membership has assisted 
their domestic economic reform policies. The most recent successful WTO 
applications, Latvia and Kyrgyzstan, have had the same experience.
    In the months to come, we will negotiate intensely with all 
acceding economies, including China--the largest prospective WTO 
member. We have made important progress with China in the past two 
years, and the visit of Premier Zhu Rongji in April offers China a 
chance to make a decisive advance. We will consult closely with the 
Subcommittee and with other members of Congress as negotiations 
proceed.
    Likewise, at the most recent summit with Russia (September 1998), 
President Yeltsin agreed to work to intensify Russia's WTO accession 
efforts. Russia's current economic difficulties clearly present 
challenges and Russian Cabinet reshuffling has slowed the process, but 
we will continue to consult with the Russians toward a commercially 
viable accession package.

                      IV. The 21st-Century Economy

    Fourth, trade policy will help lay the foundation for the 21st-
century economy by ensuring that the trading system is compatible with 
rapid advances in civilian science and technology.
    In medicine, environmental protection, agriculture, entertainment, 
transportation, materials science, information and more, science is 
advancing at extraordinary speed. This offers the world tremendous 
potential to increase wealth, raise productivity, improve health care, 
reduce hunger, protect the environment and promote education. These are 
also areas in which the United States has a significant comparative 
advantage.
    Under President Clinton, our trade policy has made high technology 
a strategic priority. Consistent with national security, we have aimed 
to ease the development and commercialization of new technologies, and 
ensure strong incentives for scientific and technological progress. We 
have negotiated far-reaching new agreements in sectors like computers, 
semiconductors, information technologies and many other areas. This 
work continues in multilateral, sectoral and regional negotiations.
    In the multilateral system, the rapid advance of technology 
requires us to improve the trading system's institutions and 
negotiating methods. In a world where successive generations of new 
products arise in a matter of months, and both information and money 
move instantaneously, we can no longer take seven years to finish a 
negotiating Round, or let decades pass between identifying and acting 
on trade barriers. We will have to move faster and more efficiently, 
which is a significant reason for the President's call for an 
accelerated Round.
    We must also ensure that trade policy, both in the WTO and in our 
regional and bilateral negotiations, helps ensure that we can take 
advantage of our comparative advantage in knowledge industries and 
other new technologies. Three broad issues cut across many sectors:
    Intellectual Property Rights--Our success in this field over the 
past decade owes a great deal to the work of Congress, both in the 
Trade Act of 1988 with its creation of ``Special 301,'' and on the 
Uruguay Round. Today, the vast majority of our trading partners have 
passed modern intellectual property laws and are improving levels of 
enforcement. In this area, we will spend a great deal of time ensuring 
that all WTO members comply with their obligation to introduce full 
intellectual property protection by January 1, 2000. (For countries, 
like China, which are not WTO members, we will vigorously monitor 
compliance with bilateral agreements.)
    We have also launched campaigns against worldwide piracy of new 
optical media technologies, and against end-user piracy of software. 
These issues are integral parts of our regional negotiating agenda in 
Asia, Latin America, Europe, Africa and the Middle East. Looking ahead, 
we must extend protection of intellectual property rights beyond basic 
laws and enforcement to protect new technologies like genetically 
engineered plant varieties.
    Global Electronic Commerce--In accordance with the President's 
Global Electronic Commerce initiative, USTR seeks to preserve 
electronic trade over the Internet as duty-free. At the last WTO 
Ministerial Conference, in May of 1998, we won agreement to a 
``standstill'' for tariffs on electronic transmissions. As I noted 
earlier, we will seek to extend that agreement this year. Likewise, in 
our negotiations toward the Free Trade Area of the Americas, at APEC 
and in the Transatlantic Economic Partnership, we have created special 
committees to advise us on ways to ensure all participants can take 
maximum advantage of electronic commerce.
    Biotechnology--A third top priority for us in this area is 
biotechnology. Among the chief sources of innovation in this field are 
American agriculture and medicine. USTR will seek to ensure that 
pharmaceutical companies, farmers and ranchers can use safe, 
scientifically proven techniques like biotechnology to make agriculture 
both more productive and friendly to the environment, without fear of 
encountering trade discrimination. This is a priority for us in the 
Transatlantic Economic Partnership negotiations and in developing our 
agenda for future WTO negotiations.
    We also have an active sectoral high-tech agenda. This includes, 
for example, the ITA II agreement I discussed earlier. We are also 
working closely with our civil aircraft industry to ensure its future 
and combat foreign, particularly European, subsidies and other unfair 
practices. This work extends into many other fields.

                       V. Rising Quality of Life

    Fifth, US trade policy seeks to ensure that worldwide as in the 
United States, trade and growth go together with a rising quality of 
life, including setting high standards of environmental protection, the 
observance of core labor standards, and high levels of consumer 
protection.
    As in our domestic economy, we regard environmental quality and 
protections for workers as essential parts of economic policy. Trade 
policy has an important role to play, in coordination with our efforts 
in other fora, to ensure growing respect for internationally recognized 
core labor standards and sustainable development worldwide.

1. Trade and the Environment

    Our Administration believes that prosperity through open trade and 
the protection of health, safety and the environment need not conflict, 
and should be mutually supportive. This is the case in our domestic 
economy, where in the past three decades our GDP has risen in real 
terms from $3.7 to $8.5 trillion--while our percentage of fishable and 
swimmable rivers and streams doubled, the number of citizens living in 
cities with unhealthy air fell by half, and many endangered or 
threatened species, including the bald eagle, are recovering.
    The Preamble of the WTO recognizes this in the international 
setting, stating that sustainable development is a central objective of 
its work. Where there are potential conflicts, we should strengthen our 
ability to resolve them in a manner that protects the environment, 
health and safety and does not undermine the trading system. This 
includes working to ensure that the proper expertise is brought to bear 
on complex technical and scientific issues, particularly those with 
environmental, health and safety dimensions.
    In many cases elimination of trade barriers will also contribute to 
a cleaner environment and the conservation of natural resources. For 
example, this can help countries gain access to cost-effective 
equipment and technology. APEC's work toward an agreement to liberalize 
trade in environmental goods and services, part of which has now moved 
to the WTO, can help countries monitor, clean up and prevent pollution, 
and ensure clean air and water. Likewise, the APEC initiative on energy 
equipment and services can promote rapid dissemination of efficient 
power technologies, thus allowing production of power with reduced 
carbon emissions and contributing to international efforts to address 
climate change.
    At the same time, as the trading system ensures that members avoid 
using environmental standards as disguised trade barriers, in 
eliminating barriers to trade we must not compromise on the achievement 
and maintenance of high levels of environmental, health and safety 
protection. And the system must work together with multilateral 
environmental institutions.
    At our suggestion, the WTO is convening a High-Level Meeting on 
trade and the environment this spring to more fully address these 
questions. This marks a new level of awareness and interest in the 
world trading community on trade and environmental issues. We 
anticipate that it will provide fresh and valuable input to our work in 
this area and help frame a vision for future work.
    We will also continue to support the effective implementation of 
the North American Agreement on Environmental Cooperation in 
conjunction with the NAFTA. Cooperative activities that have occurred 
as a result of this agreement have improved environmental protection in 
a number of different areas--for example, an agreement on the 
conservation of North American birds; the creation of a North American 
Pollutant Release Inventory; an agreement on regional action plans for 
the phase-out or sound management of toxic substances, including DDT, 
chlordane, PCBs and mercury; and the creation of a trilateral working 
group that has improved the enforcement of environmental protection 
laws. Benefits have also resulted from the implementation of the Border 
Environment Cooperative Commission (BECC) which was also entered into 
in conjunction with the NAFTA. The BECC has fifteen environmental 
infrastructure projects under construction today, funded in part by the 
North American Development Bank, including the first wastewater 
treatment plants in Juarez.

2. Trade and Core Labor Standards

    Likewise, the trade system must help to assure the dignity and 
safety of workers. Here again, we can draw lessons from our experience 
at home, where since 1970, as manufacturing production doubled, the 
number of workplace deaths fell 60%. Our efforts here include seeking 
closer cooperation between the WTO and the International Labor 
Organization, bolstering ILO capabilities to address exploitative child 
labor and other violations of internationally recognized labor rights 
as well as ensuring safe and healthy workplaces, and working with 
individual trade partners to advance our goals.
    At the Singapore WTO Ministerial Conference in 1996, the WTO for 
the first time recognized the importance of labor standards and 
cooperative work with the International Labor Organization, while 
clearly separating advocacy of labor rights from protectionist trade 
policies. We wish to build on this to ensure that the trading system 
works more effectively with the International Labor Organization, with 
businesses and with citizen activists to ensure observance of 
internationally agreed core labor standards--banning forced labor and 
exploitive child labor, guaranteeing the freedom to associate and 
bargain collectively and eliminating discrimination in the workplace.
    We have thus proposed in Geneva that the WTO establish a forward 
work-program to address trade issues (e.g., abusive child labor, the 
operation of export processing zones) related to labor. We also have 
raised labor standards in country policy reviews under the Trade Policy 
Review Mechanism. In these reviews each WTO member's trade regime is 
examined, and other members are provided an opportunity to raise 
questions. We have used this opportunity, for example in the recent 
Swaziland review, to seek clarifications about labor practices that we 
believe are inadequate.
    To bolster these efforts, the President recently announced a $25 
million program to help the ILO work with developing countries to put 
in place basic labor protections, safe workplaces and guarantee worker 
rights and enforce their own laws so that workers everywhere can enjoy 
the benefits of a strong social safety net. (The US has already funded 
ILO child labor programs in Bangladesh, Thailand, the Philippines, 
Africa, and Brazil.) These are fundamental human rights and common 
concerns, and trade policy has a place in addressing them..
    We are also taking steps in a number of other areas directly 
related to trade policy. The Administration has directed the Customs 
Service to step up its efforts to ensure that items made by forced or 
indentured child labor are not imported into the United States. USTR is 
enforcing provisions of existing law that impose penalties for clear 
violations of worker rights. For example, we partially removed GSP 
trade preferences from Pakistan over child labor concerns. At the same 
time, however, the Administration has worked through the Labor 
Department to develop long-term solutions to the problem, by addressing 
specific Pakistani industries. As a result, 7,000 children have been 
removed from jobs stitching soccer balls and 30,000 children from jobs 
knotting carpets.
    Likewise, we are finding ways to address core labor standards as we 
advance our trade policy goals. The North American Agreement on Labor 
Cooperation under NAFTA is one example. Another is our most recent 
trade agreement--the textile agreement with Cambodia--which includes 
provisions requiring Cambodia to improve the enforcement of its labor 
laws in the garments sector.

                     VI. Advancing American Values

    Sixth, in 1999 we will seek to advance basic American values and 
concepts of good governance, by making the institutions of trade more 
transparent, accessible and responsive to citizens.
    As the President has said, as trade grows, the rules of trade do 
more to ensure that markets are open to our goods and services, and the 
trading system coordinates more fully with environmental, labor and 
financial institutions, the need for transparency, accessibility and 
responsiveness grow. This is natural and a development which we both 
support and are working to realize.
    One principal forum here is the WTO, where we are seeking 
agreements on more rapid release of documents, ensuring that citizens 
and citizen organizations can file amicus briefs in dispute settlement 
proceedings, and that dispute settlement proceedings be open to public 
observers. In the interim, President Clinton has made a standing offer 
to open any dispute panel involving the United States to the public, if 
our dispute partner agrees.
    A second forum is the FTAA negotiations, in which--for the first 
time in any trade negotiation--we have created a Civil Society 
Committee to give business associations, labor unions, environmental 
groups, student associations, consumer representatives and others a 
formal means of conveying concerns and ideas to all of the governments 
involved in the talks.
    A third is our encouragement of new Transatlantic Dialogues with 
the European Union for consumers, labor and environment as part of the 
Transatlantic Economic Partnership. Through this effort we are 
promoting our shared values with Europe in the activities and 
negotiations we are undertaking as part of the TEP and multilaterally.

                               Conclusion

    This is an ambitious and far-reaching agenda. We plan to work 
closely with the Subcommittee and Congress as a whole to realize it, 
and look forward to the benefit of your thoughts and advice at this 
hearing and in the months ahead. This includes the renewed negotiating 
authority that will help us bring our negotiations to a successful 
conclusion.
    In conclusion, Mr. Chairman, much has changed in the international 
economy in the fifty-one years since the United States led 23 countries 
in creation of the GATT. Our national interest in economic events 
beyond our borders has grown, our people have found new opportunities 
and new challenges in trade, and many new nations have become active in 
trade.
    These developments in many ways are the result of America's 
commitment to a vision of open and fair trade under the rule of law, 
and to the bipartisan policies we have pursued for many years to 
realize it. As a result of this success, we now face some new and 
complex challenges. The President's State of the Union Address outlined 
these challenges and the need for a new consensus to meet them.
    But as deeply changed as today's world may be, the vision President 
Roosevelt laid out in one of the darkest moment of human history--an 
open world, prosperous and governed by the rule of law--remains valid 
in a world more prosperous, healthy and hopeful than ever before. And 
the necessity for a bipartisan consensus on our goals, and a strong 
partnership between the Executive and Legislative branches of 
government, remain essential to achieve this vision. With your advice 
and your help, as we open a new Round of negotiations and embark on a 
highly ambitious agenda for the next century, we hope to bring it 
closer to realization than ever.
    Thank you very much, Mr. Chairman and Members of the Subcommittee.

                                

    Chairman Crane. Thank you, Charlene. We will be back as 
quickly as possible.
    The Committee stands in recess subject to the call of the 
Chair.
    [Recess.]
    Chairman Crane. If everyone will please take seats, the 
Committee will reconvene.
    We apologize again for the interruption, Charlene, but you 
know how this place works.
    At any rate, I would like to ask our colleagues please to 
try and keep their questioning of our distinguished witness to 
5 minutes so as many as possible might be able to question her. 
I say that because I know that Charlene's schedule requires 
that she be out of here in 40 minutes, sharp.
    So I will start. By my count, Charlene, you mentioned that 
the President's trade agenda includes five legislative 
priorities. On trade negotiating authority, there has been a 
lot of discussion as to rebuilding a consensus on trade. And if 
this is the way to move ahead, it is essential that the 
Administration quickly present to us some specifics as to where 
it believes our fast-track bill, which the Administration 
agreed to in 1997, is now deficient. We will be hearing from 
you soon I trust.
    Ambassador Barshefsky. Mr. Chairman, we are always happy to 
work with the Committee. You are quite right, the President has 
urged a rebuilding of the bipartisan consensus. Obviously, the 
Administration wants to assist in that rebuilding of the 
bipartisan consensus on trade, including on trade negotiating 
authority. So we are very pleased, yes, to work with the 
Committee.
    Chairman Crane. Thank you. The WTO Ministerial meeting that 
is going to be held in Seattle at the end of November, I guess 
it is, isn't it, end of November, early December----
    Ambassador Barshefsky. Yes.
    Chairman Crane. Will be a key event in building support in 
the United States for this valuable institution. It seems to me 
it will be important for U.S. negotiators to demonstrate 
concrete results that will have commercial benefits for U.S. 
workers and industries. What is your timing in identifying U.S. 
priorities for the agenda?
    Ambassador Barshefsky. Mr. Chairman, we have, first off, 
issued Federal Register notices and have received back a number 
of comments from industry as well as interested groups on what 
our priorities should be. We will also be conducting some 
individual hearings around the country in particular areas, for 
example, agriculture, so that we have a full sense of 
priorities. In addition, we will be working very closely with 
Ways and Means Committee as well as with other committees of 
Congress that have specific substantive jurisdiction over the 
areas to ensure that on a bipartisan basis we have consensus on 
the way in which we should move forward. And last, I will be 
requesting the House leadership and the Senate leadership to 
put together a special bipartisan group which we would hope 
would include a number of Committee Chairs and Ranking Members 
to assist us in prioritizing the particulars of what we wish to 
negotiate as well as the areas where negotiation may not be 
advisable at this juncture but could form the basis for a 
forward work plan.
    So we have a variety of mechanisms designed to ensure that 
we get the broadest possible input from Congress, from the 
private sector, from other affected constituencies because it 
is critical that we speak with one voice.
    Chairman Crane. Setting aside legislation to implement the 
Uruguay Round and NAFTA trade agreements for a moment, looking 
ahead, what do you expect will be the major trade policy 
accomplishments of this Administration?
    Ambassador Barshefsky. I think there are a number. I think, 
first of all, the moving of a global agenda toward the twenty-
first century economy through agreements as we have concluded 
in telecommunications, financial services, information 
technology, the extension of those to ITA-II, to global 
electronic commerce. I think all of these areas coupled with 
our very vast program on intellectual property rights 
protections is the first concerted effort by an Administration 
to move trade policy into those areas where the United States 
is the world's leader, the most competitive, and which forms 
the basis for the twenty-first century economy.
    I think, second, the focusing in on market access issues to 
the extent that we have--270 trade agreements is a lot of 
agreements covering every area of the world, covering virtually 
every major sector of economic activity. Pushing that agenda as 
we have been so aggressively and consistently I think is 
another important feature of the President's trade policy.
    Third, we have been more aggressive than I believe any 
previous Administration on enforcement of our trade agreements. 
Over 80 enforcement actions since 1993, 42 in the WTO. We are 
the largest user of WTO dispute settlement. I know that we 
still have enforcement problems and I intend to work hard to 
see that those are corrected. But I think our enforcement 
efforts have been very substantial and very sustained.
    And I think, last, expanding the dialog to encompass other 
affected interest groups, whether it is environmental concerns, 
labor concerns, the concerns of consumers, is another I think 
very important feature of the Administration's policy; that is, 
to ensure that as trade moves forward, as economic growth 
continues, that growth is consistent with protection of the 
environment, increases in worker standards in the world, and 
keeping an eye on the consumer interest. And I think expanding 
the dialog to include those affected by trade policies is 
another important feature of the Administration's trade agenda.
    Chairman Crane. Thank you. My time has expired, but I would 
like to correct for the record one component of your response 
when you were attributing to the Clinton administration the 
information technology agreement. We all know that was yours.
    Ambassador Barshefsky. You are very kind.
    Chairman Crane. No sleep for a week.
    I now yield to Mr. Levin.
    Mr. Levin. Thank you. We are glad you are here and that we 
are continuing this dialog. In fact, I think your testimony and 
your responses to Mr. Crane should help intensify the dialog. 
We clearly need to do it. If we simply march along the ruts of 
last year, I think we will end up the same place as we did last 
year. We need to intensify our discussions to seek common 
ground.
    The Chairman has asked for specifics from the 
Administration. Well and good. I think it is important, though, 
that all of us pay attention to some of the general outlines 
that you have mentioned, that the President clearly mentioned 
in his State of the Union Address as well as in his speech at 
the Economic Club where he made it clear that he envisaged 
authority, including ability, to work on a broad range of 
trade-related items, including those on the environment and 
labor market issues that I tried to spell out in my opening 
remarks and the reasons for it. He not only specifically 
referred to those areas in Detroit, but before a group mainly 
of business people said that it was important that in our 
negotiations the whole world be leveled up and not leveled down 
economically, and that trade must not be a race to the bottom. 
And if we will take those words seriously, I think it will be a 
step toward moving ahead and seeing if we can find some common 
ground.
    Let me ask you a bit more about China because, in terms of 
our relations with evolving economies, this may be the most 
important set of negotiations. It is pretty clear since 
permanent MFN or NTR has to be granted by Congress that we are 
going to have to play a role. There will not be WTO accession 
for China unless there is involvement of this institution. So 
if you would for the record, we have had some informal 
bipartisan discussions on this as recently as yesterday, why 
don't you for the record spell out where you think matters are 
with the largest evolving economy. It, in spades, is what I 
tried to describe in my opening remarks. There is talk about 
the definition, the standard of ``commercially meaningful,'' 
but with the size and the different nature of the Chinese 
economy both in capital markets, labor markets, every market, 
how do you see the negotiations going? Where are they now and 
where do you think they might be going?
    Ambassador Barshefsky. As I said in my remarks, and I have 
said to the Committee before, China's accession to the WTO is 
terribly important, not just for the United States, but for 
China itself. And it is very much in our interest to see China 
in the WTO in as much as WTO accession will promote the rule of 
law in China, will subject China to multilateral scrutiny on 
economic issues which does not occur now, and will compel China 
to make public commitments which are fully enforceable through 
dispute settlement in the WTO. So this is a very vital goal.
    But our view has been, and continues to be that China's 
accession must be on terms fully compatible with the accession 
of WTO members. That is to say, this is not a political 
accession, it is not a political deal, there is no political 
deal that will get China into the WTO, this is a commercial 
matter. That means that China's offers must cover the broad 
spectrum of areas in the WTO, whether tariffs, non-tariff 
barriers, agriculture, services, the full range of WTO rules. 
And this is a very complex, huge undertaking. But China's 
offers must cover all of these areas and must be commercially 
meaningful, particularly to the United States but, of course, 
globally as well.
    An accession for China on terms different from WTO members 
would weaken the WTO, would subject other developing countries 
to an extraordinary competitive challenge by China, would 
potentially lessen the commitments of other countries who feel 
why should they do more than what China would be required to 
do, and could set an unacceptably low standard for the 
accession of other countries, including Russia, which are not 
as far along in their accession claims as is China. So 
accession on weak terms is simply not in the cards. It is not 
possible.
    On the other hand, obviously, China cannot do everything in 
1 day. Of course, it will need in many areas transition periods 
or phase-ins, as we do for all members who accede to the WTO, 
in a manner that is not destabilizing to the Chinese economy 
but that, in fact, opens that economy on the kind of broad 
basis envisioned by WTO rules and market access commitments. I 
think that China has continued to show a willingness to 
negotiate. We have been at this for a long time; in this 
Administration, 6 years, in the Bush administration, 4 before 
that, in the Reagan administration, several before that. I 
think in particular we have made some important progress in the 
last 2 years in China, and we continue to talk on a very 
intensive basis with the hope that an agreement can be reached. 
But it will only be reached if China's offers are commercially 
meaningful.
    Mr. Levin. Thank you.
    Chairman Crane. Thank you. The gentleman's time has 
expired.
    Mr. Houghton.
    Mr. Houghton. Thank you. Madam Ambassador, good to see you.
    Ambassador Barshefsky. Good to see you.
    Mr. Houghton. I would just like to step back a little bit. 
There are a lot of technical questions I would like to ask you 
about Eastman and steel and China and things like that, but if 
you assume that fast-track, which we hope will not happen, is 
on ice for a while, do we have the basic working structure in 
the world to create fairness in the back-and-forth trading of 
our goods and services?
    Ambassador Barshefsky. I think we do. I think it goes 
without saying that this President, and any president, should 
have at his disposal or her disposal all of the tools possible 
and available to open markets, to make sure that trade is 
fairly conducted. Trade negotiating authority is one aspect, 
our trade laws is one aspect, effective WTO dispute settlement 
is one aspect, aggressive market-opening agreements that are 
enforceable is another aspect, and so on.
    I think we do have, other than trade negotiating authority, 
I think we do have effective tools for leveling the playing 
field and ensuring fairness in trade. Our unfair trade laws are 
strong. They are in this Administration and in previous 
Administrations rigorously enforced. I think that's one 
element. We have pursued very aggressively dispute settlements 
in the WTO, bringing 42 cases, and that is, by far, more than 
any other single country because we are serious about enforcing 
commitments and ensuring that trade is fairly conducted. And, 
of course, the agreements that we negotiate are based on the 
barriers that have been identified. They are also to ensure 
that trade is conducted on a fairer basis.
    None of these mechanisms works perfectly, and I think we 
see that currently to some extent, but all of these elements I 
think do work together to help level the playing field. And if 
you look at our export performance the last 6 years, a 51 
percent increase in our exports, I think that it is fair to say 
that through those mechanisms and, of course, many other 
mechanisms, we are making important progress.
    Mr. Houghton. I guess the thing that I worry about most is 
not necessarily our trade laws, but, of course, the enforcement 
of our trade laws, or the trade laws of other countries, or the 
World Trade Organization, or the dispute settlement process. It 
seems in the final analysis that a country doesn't have control 
over is market access. That's when you get into private cabals, 
the choking off of the distribution system. That really could 
be the worst of all worlds; we had all the conditions right, 
all the legalistic formulas there all lined up and yet those 
things kept us out. I don't know what you can do, but I would 
appreciate your comments.
    Ambassador Barshefsky. We have, as you know, under our 
section 301 a provision that allows us to go after anti-
competitive practices that are tolerated by foreign 
governments; that is, foreign government toleration of cartel-
like activity or other anti-competitive practices that impede 
market access. And I agree with you that this is a very 
important area. We see this most acutely in the case of Japan 
but we see this also in other countries, and that is government 
barriers that are erected not in the traditional trade sense, 
but by simply making it much more difficult, raising the 
barriers to entry for foreign products, rendering them less 
competitive in the market through anti-competitive practices, 
practices that we might address under our anti-trust laws, for 
example.
    Mr. Houghton. Well, I just wondered, and we have talked 
about this before, and this will be my last question, Mr. 
Chairman, is that sometimes whether it is the Chamber of 
Commerce, or the NAM, or the Keidanran, or whatever it is, 
those sort of quasi-national but really private agencies can be 
of help. Are you using them at all?
    Ambassador Barshefsky. We do use them and they are 
sometimes of help. Keidanran has been particularly helpful in 
the case of deregulation in Japan where Keidanran has backed a 
number of the U.S. proposals for deregulation, and that has 
been very helpful. So we do routinely use organizations like 
that. At the same time, we always keep an eye out, and this was 
pointed out in the film case brought by Kodak, we always keep 
an eye out for whether organizations, not Keidanran but other 
organizations that are business-related, engage in anti-
competitive conduct, and we always have to keep an eye out for 
that as well.
    Mr. Houghton. Thank you very much.
    Chairman Crane. Thank you.
    Our next panelist, Mr. Ramstad.
    Mr. Ramstad. Thank you, Mr. Chairman.
    Madam Ambassador, always a pleasure to see you and to work 
with someone of your calibre. You are doing an outstanding job.
    Ambassador Barshefsky. Thank you.
    Mr. Ramstad. I, as you know, represent the wonderful State 
of Minnesota. We have 300 of the best medical device, medical 
equipment companies in the Nation, comprising our medical 
alley. Those companies comprising the medical technology sector 
are very concerned about the declining trade balance with Japan 
in this area, in the medical technology sector. Every year for 
decades, as long as I can remember, our trade surplus with 
Japan in medical devices and equipment has been growing 
steadily, but it decreased by nearly $220 million last year. 
How is USTR responding to this situation for one of the few 
sectors in which we currently maintain a positive trade balance 
with Japan?
    Ambassador Barshefsky. You are quite right, this is a 
sector where we have been very, very successful in Japan. The 
U.S. medical device sector still has about a 40 percent market 
share in Japan. It has a very, very high import penetration 
rate into Japan. Part of the reason we see such a substantial 
downturn in revenue, however, has as much to do with Japan's 
recession as it does with any increases in market access 
barriers. That is to say, our import penetration rate keeps 
growing although net revenue received is going down. That is 
largely the function of Japan's recession.
    Having said that, Japan has two and perhaps three 
supplemental budgets related to public procurement. The area of 
medical devices and medical technology is an area that is 
typically procured by government-public entities in Japan. And 
in my last trip to Japan, which wasn't too long ago, and then 
in subsequent trips by my staff, including my deputy Richard 
Fisher just last week, we have underscored to Japan that we are 
going to watch very carefully procurement procedures under the 
supplemental budgets in four sectors, one of which is in the 
medical equipment and technology and medical device sector, to 
ensure that we receive our fair share of that procurement 
budget.
    Mr. Ramstad. So, similar to the prominent attention that we 
have given in trade talks in the media, steel, pharmaceuticals, 
and insurance, we will give medical technology the same 
visibility and profile?
    Ambassador Barshefsky. Yes. And the Japanese government is 
well aware of that. This is very, very high on the list. Very 
high.
    Mr. Ramstad. Actually, I think you mentioned 40 percent 
market share in Japan for U.S. companies, I just called 
yesterday and got the latest and it is closer to 30 percent 
now. And as you know, the U.S. industry average is 50 percent 
market share overseas. So I share your concern and I appreciate 
hearing that the medical technology sector will be so elevated 
in terms of attention for high level trade talks as well as in 
the media.
    Let me ask you finally in this area, because it is so 
important, as you know, Japan has made specific commitments to 
USTR under the Enhanced Initiative on Deregulation and 
Competition Policy to reform its pricing system for medical 
technology and to expedite product safety and reimbursement 
approvals.
    Ambassador Barshefsky. Yes.
    Mr. Ramstad. Has there been progress on this? And how do 
you intend to secure full implementation of these commitments?
    Ambassador Barshefsky. We have made progress. This is an 
area that we and Commerce jointly work at. Japan has threatened 
various alterations to its pricing mechanism for medical 
devices and for pharmaceuticals which we have thus far 
successfully fought off. But the threat always remains. The 
reimbursement policies generally remain a problem. It is one I 
think on which we have made some progress. Certainly, 
regulations that would have made the situation more onerous 
have been avoided. But we still have quite a ways to go.
    Mr. Ramstad. Thank you again, Ambassador.
    Ambassador Barshefsky. Thank you.
    Mr. Ramstad. Mr. Chairman, I yield back.
    Chairman Crane. Thank you.
    Ms. Dunn.
    Ms. Dunn. Thank you very much, Mr. Chairman.
    Welcome, Madam Ambassador. It is good to hear you again. I 
want to thank you officially, I think it is the first official 
time I have had a chance to thank you for making that decision 
about putting that WTO Ministerial in Seattle this fall. 
Everybody is looking forward to it. I do hope, Mr. Chairman, 
that we can have some sort of a delegation there present in 
Seattle because we are going to go all out to make sure that it 
is successful from the point of view----
    Chairman Crane. If the gentlelady would yield. I hope that 
we might have the Trade Subcommittee out there at least, and 
use that as a launching pad to go on over to the Far East.
    Ms. Dunn. Great.
    First of all, I wanted to refer you to the APEC talks. You 
know how important they are especially to my part of the 
country, but certainly in the region. As we took our Ways and 
Means Trade Subcommittee trip to Australia and New Zealand in 
December, we were asked all over both of those countries 
whether there still was the energy and the interest in APEC 
talks. There has been some sense from them that that interest 
has subsided. And I must say that I am a bit disappointed that 
so much of what they attempted to do at the last APEC meeting 
was kicked over to the WTO meeting. I am wondering if you 
believe those talks could be reenergized if you had trade 
negotiating authority.
    Ambassador Barshefsky. I think the issue there was not the 
absence of trade negotiating authority. The issue at APEC was 
Japan, that is that all of the APEC economies with the 
exception of Japan agreed to liberalize trade in nine product 
sectors and in most of those to go to zero tariffs, which Asia 
had never before committed to do. Significant about that is the 
fact that Korea and the ASEAN countries, countries like 
Indonesia, Thailand, Malaysia, the hardest hit in the Asian 
financial crisis, agreed to go forward with this proposal. It 
was really quite extraordinary. Only Japan said that it could 
not go along with the proposal in full but would have to 
exclude two key sectors which were of vital importance to the 
ASEAN countries. That was a very disappointing result, we 
though, in fact, irresponsible.
    The initiative is now with the WTO. The APEC countries 
including Japan committed to work toward agreement in these 
nine sectors and we will hold Japan to that. And so I think 
that the way this initiative can be reenergized is by moving it 
forward in the WTO to acquire a critical mass of countries to 
allow these kinds of very dramatic tariff cuts to be 
implemented.
    Ms. Dunn. That's good. And just as a follow-up, 
particularly important in my area of the world are the wood and 
paper product tariffs.
    Ambassador Barshefsky. Yes, of course.
    Ms. Dunn. We had such a hard time, although we had some 
heroes there at APEC in the New Zealand folks who stood up for 
us. Is there a plan between now and then to make sure that 
these talks move ahead, and what would that plan be?
    Ambassador Barshefsky. We are working closely with New 
Zealand, which is in the APEC chair now, as well as a number of 
the other APEC countries in the WTO to move the initiative 
forward. Wood and paper is one of the sectors that Japan 
refused to participate in. So we will continue that drive very, 
very aggressively in the hopes of achieving consensus in the 
WTO.
    Ms. Dunn. Thank you. Thanks, Mr. Chairman.
    Chairman Crane. Thank you.
    Mr. Neal.
    Mr. Neal. Thank you, Mr. Chairman.
    Madam Ambassador, while we all want to be supportive of the 
dispute resolution process at WTO, there are those who lose a 
case and then afterwards refuse to comply with the agreement. 
It is almost like watching a game and your team loses, but you 
say they really didn't lose, and you either want to play 
another game or you want to try another strategy to prevail. I 
know we all subscribe to the notion of a settlement process, at 
least in general, and wish to support it, but what do we do 
with those that decide that after the game has been played, 
they don't like the outcome?
    Ambassador Barshefsky. I think, in general, WTO dispute 
settlement has worked actually quite well. I say that not just 
because our record happens to be very good, 19 wins out of 21 
cases isn't too bad, but because in general we have found the 
process to be fairly conducted, the panelists of a high 
calibre, and in general we have been pleased with the way that 
system has functioned. We think it is quite protective of U.S. 
rights, but also the rights of other countries.
    Having said that, there are certain improvements we would 
like to see and we will be discussing those with the Committee 
as we formulate a WTO agenda. Our view is that compliance is 
critical to the credibility of a global dispute settlement 
mechanism. If you lose a case, if you need to find the means by 
which to comply, there are various ways within international 
rules that a country can comply, including, for example, by 
providing compensation to the winning party to the extent the 
losing party's practices for whatever reason cannot be changed.
    We are in a situation now with Europe in both bananas and 
in beef, two agricultural cases, and Europe's first two losses 
under the system, in which Europe basically refuses to comply 
with clear WTO rulings. The bananas case is particularly 
egregious since Europe has lost four times in international 
dispute settlement over its banana regime; twice under GATT 
rules, once at a panel before the WTO, and once in an appellate 
body at the WTO, all of whom found Europe's regime to be 
internationally inconsistent. But over the course of 6 years, 
Europe has changed it precious little, and to the extent it has 
changed it, it is more discriminatory than it was before it 
made the change. Under those circumstances, the United States 
will exercise its rights to retaliate under WTO rules where 
there is a failure of compliance. We have urged Europe for the 
past 18 months to settle the underlying banana dispute with us. 
And over the past 18 months, we have provided Europe with an 
array of settlement options and we have invited them to provide 
us with options. They have persistently refused. They must bear 
the consequence of that refusal and that failure to comply.
    Mr. Neal. And Canada and foreign magazines?
    Ambassador Barshefsky. We have a similar situation in 
Canada and foreign magazines. Canada has altered its magazine 
regime in a manner that renders it even more discriminatory 
against so-called split-run editions of magazines. This is not 
a cultural issue in Canada, this is the protection by the 
Canadian government of two particular publishing interests in 
Canada, a far cry from notions of a sovereign protecting the 
inherent culture of its people. This has to do with money not 
culture.
    As such, Canada is positioned to alter its regime. It 
refuses to do so. Here again, we have urged Canada to settle 
the underlying dispute with us. We don't wish to take 
retaliatory action but we absolutely will, including against 
Canada, under our NAFTA rights to the extent Canada fails to 
comply.
    Mr. Neal. Fair enough. Thank you, Madam Ambassador.
    Chairman Crane. Mr. Becerra.
    Mr. Becerra. Thank you, Mr. Chairman.
    Madam Ambassador, welcome again. It is a pleasure to see 
you here. Let me ask a couple of questions, if I may, on the 
matter of intellectual property. I happen to be one of several 
Los Angeles Representatives who, obviously, are very concerned 
with the growing piracy that we see with intellectual property. 
It is just such a growing market out there. If we could just 
capture some of that lost profit, I think a lot of us would be 
doing better. We would have probably a lot larger budget 
surplus even in this country.
    There is talk that some of the countries that signed the 
agreement on trade-related aspects of intellectual property 
rights won't be prepared to meet their obligations once they 
kick in for some of the developing countries in the year 2000. 
Also, there is concern that we may not take a strong approach 
with some of these countries, which will cause us to lose 
credibility in trying to enforce other aspects of it into the 
future.
    I was wondering if you would give me your prognosis, in a 
sense, of our ability to enforce the TRIPS Agreement, and also 
the likelihood that a number of these countries that will now 
fall within the TRIPS Agreement in the year 2000 will actually 
be in compliance.
    Ambassador Barshefsky. I think that we have made some very 
important progress on intellectual property rights protection 
over recent years. We see the incidents of piracy particularly 
in traditional areas, for example, CD, to some extent CD-ROM, 
going down. We have an emerging concern about piracy in newer 
technologies, DVD, for example, as well as with piracy 
particularly by government ministries of software. And we have 
special programs designed to deal with those emerging problems.
    With respect to TRIPS implementation, we have already 
brought a number of WTO cases against developed countries who 
are already subject to the TRIPS rules to ensure compliance by 
a number of countries, the various member states of the Europe 
Union, against Japan, and others including in Latin America. 
With respect to the developing countries, you are right, many 
of their obligations kick in January 1, 2000. We have already 
embarked on a very large program to work with developing 
countries bilaterally as well as within the WTO framework to 
ensure that those countries come into compliance at January 1, 
2000. We have been very up-front in telling a number of 
countries about which we have some concern that we will file 
cases beginning January 1, 2000, to the extent their compliance 
is not in accord with the TRIPS Agreement.
    I am I think reasonably optimistic that most countries will 
come into compliance. I do think among some of the developing 
world we have a capacity problem; that is that many of these 
countries, or some, don't really have the institutional 
structures or capacity to implement fully. And for these 
countries we have indicated we would be pleased to provide 
technical assistance, whether through USTR or the Commerce 
Department or our Customs Service, in assisting countries in 
setting up mechanisms by which they can comply.
    Mr. Becerra. Are you comfortable that most of these 
developing countries have the laws at least in place, they may 
not have the infrastructure, but do they at least have the laws 
in place?
    Ambassador Barshefsky. Many have the laws in place or are 
working on the laws this year. I, of course, am very 
sympathetic when they tell me that they have from time to time 
difficulty in working with their legislatures. But other than 
that, we are not really detecting any bad faith, per se, on the 
part of countries. For some, the laws are harder to pass than 
they thought; for others, the laws are in place but they are 
concerned about the institutional capacity to enforce. But I 
don't think it would be fair to say that we see instances of 
outright bad faith.
    Mr. Becerra. What about the whole issue of the WIPO 
Agreement, the copyright and neighboring rights agreements that 
were reached. I am being told that there are some 5 or 6 
countries who have signed on so far to some of these agreements 
and we need 30 of them before these treaties can take effect. 
Are we doing anything to try to move forward in getting some of 
these countries to sign on so these treaties can take effect, 
and further, in a more collateral way, also help us with the 
problem of online piracy of U.S. intellectual property?
    Ambassador Barshefsky. This is most particularly something 
that the PTO, the Patent and Trademark Office under the 
Commerce Department has been working on, and that is to work 
with countries to ensure they can ratify their WIPO 
commitments. That program will continue. And there again I 
think perhaps we need a little extra time, but I think, again, 
countries do want to come on board, there is just sometimes a 
glitch in allowing them to do so.
    Chairman Crane. The time of the gentleman has expired.
    We are about to lose our distinguished guest. But 
beforehand, Mr. Watkins.
    Mr. Watkins. Mr. Chairman and Members of the Committee, I 
appreciate the Committee letting me be here.
    Madam Ambassador, I appreciate your comments. You were 
probably alluding to this yesterday when we were talking about 
the beef hormone ban.
    Ambassador Barshefsky. Yes.
    Mr. Watkins. I get more upset every day and am losing 
patience more every day because this morning in the National 
Journal and Congressional Daily it says your opinion is they 
will not be able to meet their May 13 deadline, and from their 
research studies that they are going to have to have more time, 
and they have offered us some options about what to do.
    For 10 years, for 10 years--and they even say that 
scientific studies will probably prove it is A-OK--but for 10 
years-plus now they have been dragging their feet. If they are 
not going to do it by May 13, when are they? I have about three 
questions along that line. When? How long is it going to be? 
And we talk about, well, maybe we could have some option of 
some penalties that they would pay. I would say, how much? 
Because after 10 years-plus, this is jeopardizing WTO.
    We were talking a while ago, why cannot we pass fast-track? 
I think you know why, I think we know why--the White House is 
why. If we cannot pass fast-track, we may not be able to get 
the agreement to stay in the WTO if we don't get something. I 
know we have got a good track record, 19 out of 21, but bananas 
in our area. You don't want to be protectionist, but when they 
rule in your favor, and the scientific studies, and they still 
continue to drag feet.
    So could you answer two or three of those questions there 
for me.
    Ambassador Barshefsky. Sure. May 13 is a fixed deadline. It 
is a date by which Europe has to comply with the panel and 
appellate body rulings on the beef hormone case. And those 
ruling made clear that Europe's import ban on hormone-treated 
beef is not consistent with Europe's international obligations. 
There is no question about that. So May 13 is a fixed deadline.
    Europe has available to it several options under the rules. 
One is it can, and should, lift its import ban. And we have 
said, and Dan Glickman, our Secretary of Agriculture, and I 
wrote to our counterparts last night indicating that, of 
course, it is clear the ban should be lifted. Having said that, 
we have also suggested to Europe that we sit down and talk 
through how that happens and to talk through whether there is a 
means to lift the ban but yet leave European consumers 
comfortable with the influx of U.S. beef. We have some ideas 
along those lines which we have been working on with our 
industry in this regard and we will present those to the 
European Union.
    The alternative to Europe is that under the rules Europe 
can compensate the United States for its failure to comply. How 
much is typically determined by arbitration. From our point of 
view, the rule is clear. They need to lift the ban. We are 
happy to work with them in a means to do that, but May 13 is 
the deadline.
    Mr. Watkins. I think we need to put pressure there and say 
not under any conditions, lift the ban without conditions, 
because they keep trying to put some type of conditions there 
every time we turn around.
    Ambassador Barshefsky. Yes.
    Mr. Watkins. I would be very interested in what kind of 
penalty.
    Mr. Chairman, I think if there ends up being some penalty, 
I think we need to put that penalty, that money right back into 
the European Union advertising U.S. beef and make sure that we 
can capture some of those markets that way. I plan to try to go 
to WTO in the next couple of months to try to sit down and talk 
to some of the people.
    But I hope that you and Peter will drive a hard bargain on 
this thing, because it seems like they are just wiggling every 
time they turn around.
    Ambassador Barshefsky. Yes. What Europe is doing is very, 
very destructive. Extremely destructive. First off, because 
they are not complying. Second, because they are not complying 
in agricultural cases. This is the area under the old GATT 
system where Europe persistently refused to comply. And they 
have taken their old attitude in the GATT system of 
noncompliance and simply transferred it to the WTO which is not 
meant to accommodate issues of noncompliance. The reason that 
we changed the dispute settlement system was to ensure that 
compliance could be mandated, if not directly, then through 
retaliation, but to ensure that compliance would be mandated. 
So what Europe is doing here in not complying with the first 
two cases out of the box is extremely, extremely destructive.
    This is why we have urged Europe to comply. While we have 
gone the extra step in both bananas and beef, we have urged 
Europe to come to a negotiated settlement with us. And the fact 
that Europe refuses to take these very basic steps, steps that 
every other losing country has taken, including the United 
States, every other country has taken steps to comply or to 
negotiate compliance, the fact that Europe refuses is 
irresponsible in the extreme.
    Mr. Watkins. Madam Ambassador, if I could ask just this one 
question, Mr. Chairman, would you mind providing the minutes of 
those negotiations. I want to see if Peter is getting tough 
over there with this or not.
    Ambassador Barshefsky. Peter is tough. I will send Peter 
over to see you.
    Mr. Watkins. I am skeptical. Mr. Chairman, some of us who 
have been fast-track on this, we get concerned.
    Chairman Crane. OK.
    Our final panelist is Mr. Portman.
    Mr. Portman. Thank you, Mr. Chairman.
    I have got to say I am very pleased by your responses to 
Mr. Neal's question and now your responses to Mr. Watkins' 
questions. I wish you great luck at the Seattle Ministerial. I 
know it is the Barshefsky-Dunn Ministerial right now. Ms. Dunn 
is offering great hospitality there.
    But, honestly, it is wonderful that we are going to have 
this largest trade meeting ever in the United States. There's 
all kinds of additional work to be done and agreements and so 
on. But it really is for naught if WTO doesn't work.
    I look at your testimony, on page 12 you reference the beef 
and banana issue, you reference the fact that in every single 
instance where we have lost in the WTO we have fully complied.
    Ambassador Barshefsky. Right.
    Mr. Portman. And Mr. Neal was right on target. If the WTO 
cannot be enforced, despite what those of us who voted for it 
did in December 1994 when we stood up in front of our 
colleagues and said, ``Listen, we are free traders and you have 
got to go along with us on this change from the GATT system,'' 
which was not one where you had teeth in it, where you didn't 
have the kind of dispute resolution, and go with us in this 
WTO. We will ensure that there, indeed, will be resolution to 
these problems and the United States, which is the country most 
open to trade, will benefit from that. And as you have said, we 
have used it 41 or 42 times in terms of compliance. That's 
great.
    But if it doesn't work, I think there are two immediate 
effects. One is, again, you can forget what comes out of 
Seattle, you can forget fast-track this year, you can forget 
those of us who are adamant free traders being able to sell the 
benefits of free trade because it won't be viewed as fair trade 
because the agreements we have are not being enforced. Second, 
I think there is a very real possibility that the world trading 
system is then threatened, because why should other countries 
like the United States fully comply every time when, as you 
say, after four instances of the Europeans found to be clearly 
in violation, as I understand it, in the last one, which was 
the WTO one, it was the most trade violations of any case ever.
    Ambassador Barshefsky. Right.
    Mr. Portman. On the little issue of a banana regime which 
can be resolved if the Europeans simply have the will to do it. 
And I can't believe they are going to crash down the world 
trading system and all the liberalization that so many of us 
believe in and that they have fought for, we have fought for 
over this one issue.
    So I guess I would say two things today. One is, thank you 
very much for your continued emphasis on that. What you and 
Ambassador Scher have done in Geneva even in the last month is 
commendable.
    But I just am amazed by the response to the Europeans. We 
have this commitment the President has made through the Bowles 
letter to retaliate either on February 1 or on March 3. We are 
now into February, and so I feel compelled to ask you a couple 
of questions. One is, if the damages panel that we have now set 
up, because the Europeans insist on it after irresponsibly 
blocking through procedural mechanisms the authorization, if 
this panel that we now have set up on damages fails to issue a 
finding by March 2, which is really the critical date now, or 
issues a finding that they cannot determine damages because the 
EC measures have not yet been litigated, which is the endless 
loop we have all talked about, will the United States 
nonetheless retaliate on March 3 in the amount that we already 
have established, which was $520 million?
    Ambassador Barshefsky. Let me say, we have the matter in 
litigation now before the panel in terms of arbitration. I 
would reserve my response until I see what the panel does. I 
don't think it is productive for the United States while a case 
is before the panel to get ahead of ourselves. We have a high 
degree of confidence that the panel will come forward in the 
arbitration with an amount. That is what our focus is on now 
and I would leave it at that at this juncture. I am obviously 
happy to come talk to you, but I think for the present time I 
would leave my answer just where it is.
    Mr. Portman. Well, again, my concern is simply one of 
resolve. That if the Europeans don't think, Mr. Chairman, that 
we have the resolve to retaliate, they will never come to the 
table. We spent 6 years on this. Wes just talked about 10 years 
on the beef hormone case. We are talking about something the 
implications of which are much larger than beef hormones or 
bananas or magazines in Canada. This has to do really with the 
trading system itself having integrity. And if we don't show 
that kind of resolve--and I understand your answer really is we 
need to be sure that the cost is accurate, in other words, that 
the $520 million is an accurate figure. We believe it is, and I 
think you are confident of that. If that is the case, I 
certainly hope we do have the resolve to say we will, indeed, 
go ahead and retaliate as scheduled.
    Second question, just quickly, Mr. Chairman, the EU has 
used all kinds of procedural tactics to try to block 
authorization. Nonetheless, through your persistence, 
Ambassador, you were able to prevail. And yet a lot of issues 
just weren't resolved. I guess I would ask you what assurances 
did we, as the United States, receive and our Latin American 
partners--and remember, this is not just about us, it is about 
them, too--from the WTO, from the EC that would indicate that 
come March 2 the United States would not find itself in the 
very same position where again these same issues would get 
raised again and again?
    Ambassador Barshefsky. Right. Our sense is that since the 
arbitration panel has been formed that come March 2 we will be 
through with the matter in the WTO. That is certainly our 
attitude and our view, and that is where we are now. Whatever 
else the EU might do other than come to the table, as they 
should have done 18 months ago, whatever else the EU does will 
be largely irrelevant to the exercise by the United States of 
its rights in the WTO.
    Mr. Portman. So you did not necessarily receive assurances, 
but you don't think those assurances were necessary to have 
been received?
    Ambassador Barshefsky. Correct.
    Mr. Portman. Thank you. Again, I appreciate the work that 
you and Ambassador Scher have done to keep up this effort 
because it is bigger than all these----
    Ambassador Barshefsky. Right.
    Mr. Chairman, may I make one comment?
    Chairman Crane. Absolutely.
    Ambassador Barshefsky. If I may, just in response to 
something Mr. Portman said, because I would like to be sure 
that the U.S. view on this important matter of dispute 
settlement is well understood.
    The United States believes that the dispute settlement 
system actually works well. We, obviously, have a problem with 
European compliance in agricultural cases. This is a 
traditional problem. I don't use that word to by any means 
excuse it, but simply to say that European refusal to comply on 
international rules regarding agriculture should not be used to 
impugn the integrity of a dispute settlement process which is 
used round the world and which for the United States and 
virtually every other country has worked to produce fair 
results. And I say that even though we have lost some cases we 
didn't really want to lose. As in any litigation, you win some 
you shouldn't have won, and you lose some you feel you 
shouldn't have lost.
    But our view is that this is a system that is vital to 
American interests. It has worked well other than in the case 
of Europe, and it is a system to which we are very committed. 
There are some improvements we would like to see, some arising 
from the banana situation, to ensure an end to the endless loop 
of litigation, which, of course, raised the question how many 
times do you have to win. In our view, you have to win once, 
not four times before your rights are secured.
    As to the problem in the system which is not so much a 
systemic problem as it is an attitudinal problem on the part of 
Europe, we urge Europe, particularly the European Commission to 
come forward to recognize its responsibilities to uphold this 
system that, above all else, we and Europe were principal in 
creating, to comply even if it is not politically comfortable 
to comply, as we have complied even though in several cases it 
was not politically comfortable to comply, and to meet its 
international obligations as we and as all of our collective 
trading partners have done. The fact that Europe has not chosen 
to do that, however, should not impugn the integrity of the 
system at large.
    Chairman Crane. Madam Ambassador, we can't tell you how 
much we appreciate your appearance today and always, and we 
apologize for extending you a little beyond your deadline, and 
look forward to your reappearance before the month is out, 
hopefully, for our hearing on steel.
    Ambassador Barshefsky. Good. Thank you very much, Mr. 
Chairman.
    Chairman Crane. Thank you, Charlene.
    Ambassador Barshefsky. Thank you.
    Chairman Crane. The Subcommittee stands adjourned.
    [Whereupon, at 2:43 p.m., the hearing adjourned, to 
reconvene at the call of the Chair.]
    [Questions for Ambassador Barshefsky from Chairman Crane 
and Mr. Shaw, and her respective answers, follow:]

Response from Hon. Charlene Barshefsky to Question from Chairman Crane

    Question 1. On December 19, 1998, you joined Secretary of State 
Albright, Secretary of Commerce Daley and FCC Chairman Kennard in a 
letter to European Commissioner Martin Bangemann expressing U.S. 
concerns over the E.U.'s policies relating to 3G standards for wireless 
equipment and services. In his return correspondence, Commissioner 
Bangemann denied that the E.U. was deliberately excluding competition 
from it's markets. In the same letter, Commissioner Bangemann 
characterizes the ETSI decision-making process as open, fair and fully 
transparent with industry players from both within and outside Europe 
participating in it. However, there continues to be a concern among 
U.S. industry that the E.U. will mandate the rise of a wireless 
standard that excludes American third generation wireless equipment 
from European markets. What steps is the U.S. government taking to 
ensure that the E.U. market is open to competing wireless equipment and 
services?
    Answer. I have been personally involved in resolving this issue, 
because I believe that third-generation wireless technologies offer 
great promise for U.S. consumers and businesses. This is why USTR has 
made every effort to assure that foreign markets are open to U.S. 
manufacturers and service suppliers. Our work is based on the fact that 
the development of third-generation wireless standards is a crucial 
issue for U.S. telecommunications equipment and service suppliers in 
wireless markets, the fastest-growing segment of the telecommunications 
industry worldwide.
    As you know, EU Commissioner for Telecommunications Martin 
Bangemann recently responded to a letter that I and my Cabinet 
colleagues sent him on this issue. In his response, the Commissioner 
committed to using forthcoming ITU recommendations as the basis for 
European standardization of third-generation wireless services. USTR 
will closely monitor whether the European Community and its Member 
States honor these assurances. In particular, we will pay close 
attention to the processes used to license third-generation equipment 
and services, with a view to making sure they accommodate any 
standard(s), including any converged standards, agreed to by industry 
and recommended by the ITU. Moreover, in the preparation of this year's 
National Trade Estimates Report and the annual review of 
telecommunications trade agreements, USTR will work closely with 
participants in the ITU standards-making and European third-generation 
licensing processes to ensure that European governments permit open and 
unfettered competition in Europe that reciprocates the access enjoyed 
by European firms in the United States. Our goal will be to assure that 
industrial policy concerns of governments do not impede the industry-
led effort to develop 3G systems, and thereby the ability of American 
high technology workers to access global markets.

Response from Hon. Charlene Barshefsky to Question from Hon. E. Clay 
Shaw

    Question 1. Saudi Arabia has a pending application for accession to 
the World Trade Organization. The working party is presently 
considering that application and bilateral negotiations may begin soon.
    A United States citizen, Fawaz Arafat, has invested in Arab 
Membrane, a company organized in Saudi Arabia. This company has been 
illegally taken over and had its assets, including its intellectual 
property, expropriated by a competitor. Despite Mr. Fawaz's complaints 
through the normal judicial processes of the Saudi Kingdom, and to the 
United States Ambassador in Riyadh, Wyche Fowler, Mr. Fawaz continues 
to be denied the basic rights Saudi law grants all investors.
    Madam Ambassador, are you prepared to investigate this case, as it 
may be indicative of a serious deficiency in the consistent application 
of Saudi law to foreign investors. Moreover, would you raise this issue 
with Saudi Arabian officials at the next meeting of the Saudi Arabian 
Working Party of the WTO and any other appropriate venue? Can you give 
assurances that Saudi Arabia's application for accession to the WTO 
will not be approved until situations such as that of Fawaz Arafat are 
resolved?
    Answer. We, along with the American Embassy in Riyadh, will raise 
Mr. Fawaz's case with the Saudi government. Our Embassy, however, is 
still awaiting additional background documentation, requested from Mr. 
Fawaz's lawyer, in order to pursue this matter further.
    While the Administration supports Saudi Arabia's accession to the 
WTO, we have made clear to the Saudi government that it must be on 
commercially meaningful terms that guarantee and protect market access 
for U.S. goods, services and agricultural products. In this respect, 
Saudi Arabia's application for accession to the WTO will depend on its 
adoption of WTO rules and disciplines that should provide greater 
transparency and consistency in the Saudi trading regime and benefit 
U.S. investors such as Mr. Fawaz.

                                

    [Submissions for the record follow:]

Statement of American Textile Manufacturers Institute

    This statement is submitted by the American Textile Manufacturers 
Institute (ATMI), the national association of the domestic textile mill 
products industry.
    ATMI is pleased to provide the Subcommittee on Trade with its views 
on fighting foreign protectionism and commends the Subcommittee for 
undertaking its inquiry at this most auspicious time. It is auspicious 
because while plans are being made to conduct an ambitious series of 
future trade negotiations, scant attention has been paid to what has 
evolved in the wake of the last multilateral trade negotiation: the 
Uruguay Round. With respect to trade in textiles and apparel, the 
results are rather dismal.
    The Uruguay Round Agreement on Textiles and Clothing (ATC) calls 
for the abolition, over a ten-year ``transition period,'' of the 
mechanisms used to control textile and apparel trade embodied in the 
Multifiber Arrangement. This concession by the textile importing 
nations--the United States, Canada, the European Union, etc.--is worth 
tens of billions of dollars annually to the textile and apparel 
exporting nations. But they are required to make concessions as well. 
Article 7 of the ATC clearly states:

          ``Members shall (emphasis added) take such actions as may be 
        necessary to abide by GATT 1994 rules and disciplines so as to:
          (a) achieve improved access to markets for textiles and 
        clothing products through such measures as tariff reductions 
        and bindings, reduction or elimination of non-tariff barriers, 
        and facilitation of customs, administration and licensing 
        formalities.''

    All signatories to the Uruguay Round Agreements bound themselves to 
commit to these undertakings. But many major exporting countries have 
done little or nothing to increase access for U.S. textile and apparel 
products. Among these are the so-called ``big emerging markets'' of 
Argentina, Brazil, India, South Africa and the ASEAN bloc nations which 
remain, unfortunately, mostly ``big closed markets'' when it comes to 
the export of U.S. textile products.
    There should be no mistake--these are big markets we are losing out 
on. India alone contains a middle class larger by some estimates than 
the population of the United States. Brazil used to be one of our 
fastest growing textile export markets before its government started 
raising barriers. All told, these countries, in particular, represent 
billions of dollars in potential exports for U.S. textile 
manufacturers. They represent thousands of new U.S. jobs. But none of 
this will happen if these countries are allowed to continue to ignore 
their obligations under Article 7 or to impose the kinds of barriers 
that are described below.
    The ATC ``transition period'' (1995-2004) had hardly begun when, 
instead of liberalizing its textile/apparel import regime, Brazil 
raised its import tariffs on a wide range of textile products to rates 
which far exceed those which it had notified (``bound'') to the World 
Trade Organization. In addition, Brazil imposed onerous payment 
requirements for importers to finance their purchases. As if that 
weren't enough, Brazil reverted to its long-standing practice of 
imposing additional imposts and fees on imports, measures which have 
the effect of raising the tariff to astronomical levels. Thus, it is no 
surprise that U.S. exports of textiles and apparel to Brazil, the 
largest market in the Western Hemisphere after the United States, fell 
28 percent from 1997 to 1998.
    Argentina has perhaps been even more heavy-handed. After having 
bound ad valorem tariffs on textiles/apparel imports to the WTO, 
Argentina introduced an abundance of specific tariffs, calculated in 
dollars per kilogram, on textile/apparel imports. These tariffs had the 
effect, in many cases, of raising the tariffs to levels which exceeded 
the ad valorem rates which Argentina had bound to the WTO.
    In response, the United States lodged a formal complaint with the 
WTO, which after proper review, determined that Argentina had violated 
its Uruguay Round commitments and so notified Argentina. To this day, 
Argentina has done nothing in response to the WTO's finding and the 
United States has not retaliated. We urge it to do so.
    For a half century, Pakistan has been one of the most resolutely 
protectionist countries in the world with respect to trade in textiles 
and apparel. While building one of the largest textile export 
industries on the planet, Pakistan has sheltered its domestic market 
from foreign competition with high tariffs and, as an extra measure of 
protection, outright bans on the importation of most textile products 
and all apparel.
    With respect to tariffs, Pakistan did indeed commit to significant 
reductions, over a ten-year period, of some of its textile and apparel 
import tariffs, meaning that they will be reduced from stratospheric 
levels to the merely excessive. There is still no effective, meaningful 
access to the Pakistani market for U.S. producers nor will there be.
    None, however, can match India for blatant disregard of the ATC and 
its determination to keep trade in textiles and apparel a one-way 
street. India, like Pakistan, has kept its market closed for fifty 
years through a combination of excessive tariffs and bans on the import 
of most textiles and all apparel and claimed its actions justifiable 
for balance of payments reasons. The World Trade Organization has 
notified India, in no uncertain terms, that its import regime is no 
longer justifiable for balance of payment reasons. But India has 
ignored the WTO's admonition.
    India has completely abrogated its Uruguay Round tariff commitments 
by introducing new special taxes and duties which result in an ad 
valorem equivalent tariff on textiles and apparel reaching as high as 
89 percent. It maintains a ``negative restricted list'' covering many 
textile products and nearly all apparel. Inclusion on the list means 
that the product cannot be imported. For textiles not on the negative 
restricted list, import licenses are required. These may be obtained 
only by entities which will use the imported goods to produce something 
for export.
    And, as if the forgoing were not enough, administrative delays in 
obtaining import licenses and clearing imports have the effect of 
raising the price of the import significantly or incurring confiscatory 
demurrage changes.
    India is clearly in violation of its Uruguay Round commitments and 
more than deserving of a response by the United States. That response 
should be the withdrawal of India's GSP privileges and enhanced 
textile/apparel quota growth, as set out in Article 2 of the ATC. The 
United States has the right to take these actions and it should do so.
    In short, as the United States continues to increase access for 
textile and apparel products from these and other countries, it is only 
fair that U.S. textile and apparel manufacturers should get the same 
reciprocal access for its products as well. This was the promise and 
the intent of the Uruguay Round agreements.
    Unfortunately, as we have noted, this promise has not been 
fulfilled. Not only is the playing field not level, the other team is 
not playing by the rules. The United States must insist that all WTO 
members live up to the spirit and the letter of the ATC and provide 
effective market access. When they do not, the United States should 
take the strongest possible actions. ATMI is hopeful that Congress will 
take a leadership role in bringing this to fruition.

                                

Statement of Leslie Alan Glick, Esq., Porter, Wright, Morris and 
Arthur, on behalf of Kemet Electronics Corporation and Greenville, 
South Carolina, Vishay Intertechnology, Inc., Malvern, Pennsylvania

    Mr. Chairman and Members of the Subcommittee on Trade, this 
statement is submitted by Kemet Electronics Corp and Vishay 
Intertechnology, Inc. in response to the notice issued by this 
Committee on February 4, 1999 (TR-2) announcing a series of hearings 
``on the importance of expanding trade and resisting protectionism 
through active United States Involvement in Trade Negotiations.'' 
Hearings were scheduled for February 11, 1999 and written comments for 
the record were invited until February 25, 1999.
    Kemet is a leading producer of capacitors headquarter in 
Greenville, South Carolina. Kemet also has facilities in other 
locations in South Carolina , North Carolina, Texas, as well as in 
Mexico. Kemet produces Tantalum and Ceramic capacitors that are an 
important component in most electronic devices produced in the United 
States and abroad. Vishay Intertechnology, Inc. is headquartered in 
Malvern, Pennsylvania, with production facilities in Connecticut, 
Nebraska, Maine, New Hampshire, Florida, Virginia, North Carolina, as 
well as overseas. Vishay is a leading producer of ceramic and tantalum 
capacitors as well as resistors used in electronics products produced 
in the United States and abroad.
    Although Kemet and Vishay are recognized leaders in the field and 
produce high quality state-of-the-art products, they have been unable 
to penetrate the Japanese market. Since Japan is a leading producer of 
electronics products that utilize capacitors and resistors, Kemet and 
Vishay have been virtually eliminated from one of the world's largest 
markets for its products. At the same time, Japanese companies have 
free and open access to the United States market and are a fierce 
competitor here. Japanese penetration of the U.S. market was made 
easier by actions of the Administration in negotiating the Information 
Technology Agreement that included capacitors and resistors as products 
subject to duty reduction and removal, over the strong objections Kemet 
and Vishay and other producers of these products. These companies under 
the name Passive Electronics Coalition testified before this Committee 
in opposition to the Information Technology Agreement on February 27, 
1998. Nevertheless, the agreement was approved by the United States and 
resulted in a lowering of the import duties on capacitors and resistors 
from Japan in stages. This action greatly hurt Kemet and Vishay by 
enabling the Japanese competitors to lower their prices in the U.S. 
Market. The agreement gave no benefits to Kemet and Vishay because 
prior to the Information Technology Agreement, the major markets for 
their products, Europe and Japan already had either very low duties or 
no duties at all. Thus, the U.S. gave up a very high tariff and allowed 
Japanese companies to import more into the U.S. market at lower prices, 
without giving anything in return to the U.S. capacitor and resistor 
industry that was injured by Japanese imports. The Agreement did not 
address non-tariff barriers which are the real problem in access to the 
Japanese market.
    The problem of Japanese non-tariff barriers to electronics products 
and information technology products (which includes capacitors and 
resistors although Kemet and Vishay did not consider these truly 
``information'' products since they do not store or transmit 
information--however, they were included as part of the ITA) is well 
documented by the U.S. International Trade Commission that has studied 
this matter. The U.S. I.T.C. has found as follows:

          Some IT industry representatives assert that the benefits of 
        duty elimination as a result of the ITA could be reduced by 
        non-tariff barriers. For instance U.S. telecommunications 
        equipment producers have pointed out that while the ITA was 
        designed to deal with tariff barriers, ``many of the barriers 
        to exports are not tariffs but non-tariff barriers.'' For 
        instance, some of the largest potential export markets, such as 
        Japan, have zero tariffs on IT products but market penetration 
        by foreign producers remains low. Among the non-tariff measures 
        cited by IT industry representatives are, (1) discriminatory 
        certification, testing, conformity assessment and other 
        standards-related measures, (2) unfair marking and labeling 
        requirements, and (3) proliferation of quality system 
        registration requirements.\1\
---------------------------------------------------------------------------
    \1\ United States International Trade Commission Staff Research 
Study 23, ``Global Assessment of Standards Barriers to Trade in the 
Information Technology Industry,'' November 1998, Pub. No. 3141 at 2-4 
(Footnotes omitted)(emphasis added).

    In an earlier report specifically on the proposed modifications to 
the information technology agreement, the ITC found that, ``U.S. 
capacitor and resistor industry face strong international competitions. 
Passive components are mature products, largely interchangeable and are 
extremely price sensitive.'' The ITC noted that U.S. producers have a 
``disadvantage vis-a-vis foreign competitors which are often vertically 
integrated firms producing broad lines of components and end products . 
. .'' In regard to Japan the ITC noted that ``Japan is the world's 
dominant producer of capacitors and resistors . . . Japanese producers 
are often much larger than their U.S. competitors and often manufacture 
a wide variety of other electronic products . . . Japanese capacitor 
and resistor producers are usually closely integrated with Japanese 
manufacturers of consumer electronics, computers and communications 
equipment and as a result there is a high degree of captive 
consumption.''\2\
---------------------------------------------------------------------------
    \2\ United States International Trade Commission, ``Advice 
Concerning the Proposed Modification of Duties on Certain Information 
Technology Products and Distilled Spirits,'' April 30, 1997, USITC Pub. 
No. 3031 (Final) at 5-36, 5-38.
---------------------------------------------------------------------------
    This Committee is aware of the barriers that exist to U.S. exports 
in Japan that have been cataloged by other industries such as 
automobiles, auto parts and semiconductors. The U.S. government has 
responded aggressively to such problems by negotiating market access 
agreements with Japan that in some cases established actual 
quantitative goals for Japanese imports of these U.S. products. No such 
efforts have been provided on behalf of the U.S. producers of 
capacitors and resistors. As a result, both Kemet and Vishay have 
experienced a negative economic impact during the past year that has 
lead to downsizing, terminations of workers and transfer of production 
to offshore facilities. All of this has had a severe impact on these 
companies, their workers and communities.
    Kemet and Vishay respectfully ask this committee to advise and 
instruct U.S. trade negotiators, either as part of any authorizing 
legislation or legislative history or by direct communication from this 
Committee, in future rounds of trade negotiations either bi-laterally 
with Japan or in the content of multilateral agreements such as APEC 
and the WTO, as well as in any future negotiations relating to the 
Information Technology Agreement to specifically raise the issue of 
market access of U.S. capacitors and resistors in the Japanese market 
and to negotiate agreements with Japan to increase their imports and 
consumption of U.S. capacitors and resistors similar to what has been 
done for other U.S. industries facing similar problems.

                                

Statement of National Airmotive Corporation, Oakland, California

  Why Are American Companies Being Excluded from the Canadian Defense 
                                Market?

    National Airmotive Corporation (``NAC''), located in Oakland, 
California, is a leader in the aviation industry and qualifies as a 
small business under the SBA. NAC specializes in the repair, overhaul, 
and modification of aircraft turbine engines, particularly T-56 Allison 
gas turbine engines. These engines are used in helicopters and 
airplanes for border patrol, surveillance, and military purposes.
    In 1995, NAC sought to bid on contracts with the Canadian 
Government for the repair and overhaul of T-56 engines. NAC was 
notified by the Canadian Department of Defence (``DND'') that it was 
not permitted to bid on solicitations relating to Allison turbine 
engines based on Canadian exemptions from the NAFTA agreement. Since 
that time, NAC has regularly responded to DND's assertions, arguing 
that the NAFTA exceptions do not apply to NAC's activities and that 
NAFTA Chapter 10 requires DND to allow NAC to bid. Canada, on the other 
hand, has promulgated many unsubstantiated theories on why NAC cannot 
bid on T-56 procurements.
    A number of United States agencies have intervened on NAC's behalf. 
For instance, the United States Trade Representative's office has 
repeatedly approached Canada regarding this issue. In fact, on July 24, 
1996, Ambassador Ira Shapiro, Senior Counsel and Negotiator for USTR, 
sent a letter to Robert Wright, Deputy Minister of the Canadian 
Department of Foreign Affairs and International Trade, arguing that 
NAC's activities are covered under the NAFTA agreement. Additionally, 
the United States Department of State delivered a demarche to the 
Canadian government in 1996, demanding that Canada provide the United 
States with a definitive written explanation of why Canada had not 
permitted NAC to bid on Canadian T-56 contracts. Also, since 1996, the 
Office of Foreign Procurement at the United States Department of 
Defense has consistently pressed the Canadians for a resolution of this 
issue. Unfortunately, in every instance, the Canadians have sent back 
United States officials empty-handed. After nearly four years of 
interaction, no definitive response has yet come from DND.
    Meanwhile, the effect of Canada's actions has been to 
systematically exclude NAC from the Canadian T-56 work. At the same 
time, Standard Aero, Ltd., NAC's principal Canadian competitor, has 
been allowed to freely bid on United States Department of Defense 
contracts for similar work on Allison turbine engines, and has been 
awarded United States contracts on a number of occasions. As a result, 
NAC's Canadian competitor is able to obtain high prices in its 
protected Canadian market (where it has been the ``sole source'' since 
1960 and where NAC is not allowed to bid), and then undercuts NAC in 
the United States on bids with the Defense Department.
    The United States has noted for some time that Canada employs 
discriminatory procurement practices and it is an area of ongoing 
United States concern. For instance, Canadian discriminatory 
procurement policies have been cited in the 1995, 1996, and 1997 
National Trade Estimate Reports. Currently, the Bureau of Export 
Administration, Office of Strategic Industries and Economic Security, 
is compiling data on Canadian procurement discrimination and will be 
presenting its report to Congress later this year. NAC's difficulties 
have been specifically addressed in the President's most recent Title 
VII report and the United States International Trade Commission's 1997 
report on the Impact of the NAFTA on the U.S. Economy and Industries.
    Based on past experience, NAC believes that Canada will continue to 
stall on these issues and has no interest in reaching a solution. This 
is understandable since NAC's Canadian competitor currently has access 
to United States Department of Defense contracts and NAC is completely 
excluded from participating in DND procurements. Simply stated, the 
United States has given Canada no incentive to compromise. However, the 
longer Canada forestalls a solution to this problem, the more NAC 
suffers financially because it must compete in an unfair trading 
regime.
    Consequently, the protracted and blatant nature of Canada's 
international treaty violations justify forceful United States action. 
The United States government can no longer allow Canada to take 
advantage of its preferred status under NAFTA and the WTO Government 
Procurement Agreement to the detriment of American producers. If the 
United States is going to enter into bilateral and multilateral 
agreements, it must ensure that reciprocity is observed. In NAC's case, 
such agreements have failed to open up foreign markets and have instead 
harmed domestic producers. It is ironic to note that Canada can rely on 
NAFTA to keep Standard Aero in the United States market while at the 
same time using NAFTA to keep NAC out of Canada.
    The United States must not continue rewarding Canada for breaching 
international law. Instead, the United States must take all possible 
steps to ensure that Canada lives up to its international obligations, 
and that the United States receives its full benefits under 
international agreements. NAC believes that the time for negotiations 
has passed and that a NAFTA dispute resolution panel may be the only 
way to permanently resolve this issue. At the very least, the United 
States should disqualify Canadian firms such as Standard Aero from 
bidding on United States contracts until Canada agrees to level the 
playing field. In fact, why are we closing bases and putting Americans 
out of work, while sending work to Canada, where American companies are 
not even allowed to bid?

                                

Statement of Raymond J. Keating, Chief Economist, Small Business 
Survival Committee

    On behalf of the Small Business Survival Committee (SBSC) and its 
more than 50,000 members across the nation, I appreciate this 
opportunity to submit written testimony to the Subcommittee on Trade 
regarding U.S. trade policy and its importance to the entrepreneurial 
sector of our economy.
    The prevailing view that only so-called ``big business'' cares 
about free trade and open international markets could not be further 
from the truth. Entrepreneurs and small businesses, in several ways, 
dominate U.S. participation in global markets, and certainly will 
continue to do so in the next century. The biggest obstacle to 
fulfillment of our destiny in international trade is, of course, 
protectionist measures imposed by government.
    In its most obvious effect, protectionist measures (such as high 
tariffs and quotas) increase prices for consumers. However, the ill 
effects do not stop at that point. For example, the resulting reduction 
in competition means diminished quality, and less creativity and 
entrepreneurship. Jobs are lost in import industries, and protectionist 
responses by other nations devastate export firms and their employees. 
And while protectionism is bad economic policy in and of itself, it can 
facilitate other equally dismal policies, as economist Paul Craig 
Roberts has explained (``Tariffs Protect Big Government,'' The 
Washington Times, October 13, 1997): ``In fact, tariffs protect ill-
considered government policies, such as costly regulations and high 
taxes on labor and capital, that make our goods uncompetitive in 
international markets. Tariffs also protect coercive and self-serving 
union policies, and they protect fat corporate bureaucracies.''
    Indeed, free trade is one of those rare issues whereby almost all 
economists are in agreement. Let's take a quick look at why and how 
free trade works and generates widespread benefits.
    Comparative Advantage: Comparative advantage--a law of economics 
offered by David Ricardo in the early 19th century--merely shows that 
countries, businesses and individuals boost economic prosperity by 
producing the goods and services they are most efficient at producing, 
and then trading to acquire the other goods and services they need and 
want. Even if one holds an absolute advantage in a variety of areas, 
focusing on the endeavor where comparative advantage exists (i.e., 
where efficiency is maximized) and then trading with others creates a 
scenario where all prosper.
    An example always helps, and economist Robert Eisner provided two 
in one eloquent paragraph recently in The Wall Street Journal (``A Free 
Trade Primer,'' October 13, 1997):

          ``Consider a couple of modern applications of Ricardo's 
        wisdom: Michael Jordan may be able to mow a lawn faster than 
        any gardener, but it is best for him to pass up lawn care and 
        stick to basketball. Similarly, the U.S. may well be more 
        productive than other countries in textiles as well as aircraft 
        production, but it would do better to import those cheap shirts 
        from China and ease the way for Boeing to export its planes all 
        over the world.''

     Competition: Increased competition due to lower trade 
barriers obviously means big benefits for consumers--higher quality 
products and services, greater consumer choices, and lower prices. Such 
benefits have salutary effects throughout the economy by freeing up 
resources for other investments and purchases.
     Innovation and Entrepreneurship: Increased rivalry in the 
domestic market and expanded opportunities internationally provide 
considerable incentives for increased innovation and entrepreneurship. 
In fact, lowering trade barriers should disproportionately benefit 
small, entrepreneurial firms who cannot afford to set up shops in 
foreign nations. Reducing governmental hurdles levels the playing field 
for such businesses.
     Trade and Growth: Obviously, a more efficient allocation 
of resources, opening of new markets, increased competition, lower 
prices, and enhanced innovation and entrepreneurship resulting from 
free trade boost economic growth and job creation.
    In the end, free trade is about individual freedom. It means 
allowing consumers to trade with whomever they choose. It means 
allowing entrepreneurs and businesses of all sizes to pursue 
opportunities around the globe. Expanding trade means gains and 
increased prosperity for all.
    The question to be answered now is: Do theory and reality coincide 
when it comes to trade? The following facts reveal the importance of 
trade to the U.S. economy, and the significant participation by small- 
and mid-sized businesses:
     Expanding U.S. Trade Boosting Growth: Trade has become 
increasingly important to the U.S. economy. As late as 1960, U.S. 
exports and imports as a share of the total U.S. economy registered 9 
percent, same as in 1940. By 1997, that percentage had risen to 25 
percent.
    Trade's impact on the U.S. economy becomes even more astounding 
when you look at real GDP growth thus far in the 1990s. In real 1992 
dollars, U.S. GDP expanded from $6,136.3 billion in 1990 to $7,188.8 
billion in 1997, an increase of $1,052.5 billion or 17 percent. 
Meanwhile, real U.S. exports rose from $564.4 billion in 1990 to $962.7 
billion in 1997, an increase of $398.3 billion or 71 percent. Real 
imports jumped from $626.3 billion in 1990 to $1,109.2 billion in 1997, 
an increase of $482.9 billion or 77 percent. Taking exports and imports 
together, a stunning 84 percent of U.S. economic growth in the 1990s is 
tied directly to international trade.
     High-Paying Jobs: According to the Heritage Foundation's 
Issues '98, export-related jobs pay 12.5 percent to 18 percent more 
than non-export jobs.
     Small Business Share of Export Value: According to the 
U.S. Department of Commerce (August 1997), companies with fewer than 
500 employees accounted for almost 30 percent of export value in 1992.
     Export Firms Overwhelmingly Small Businesses: According to 
the U.S. Department of Commerce (August 1997), 96 percent of exporters 
were small- or medium-sized businesses with fewer than 500 employees in 
1992. Firms with fewer than 20 employees accounted for 59 percent of 
all exporters. Companies with fewer than 20 employees accounted for 
about one-third of exporting manufacturers, 75 percent of wholesalers, 
and 72 percent falling under the category ``other companies.''
     Small Manufacturers Expanding Internationally: In early 
1997 (February 26, 1997, ``Small Firms Go International''), Investor's 
Business Daily reported that while 1 in 10 manufacturers with fewer 
than 100 employees exported in 1987, that number leaped to about 1 in 5 
by 1992. In addition, the share of small- and mid-sized firms getting 
10 percent or more of their sales from exports increased from 27 
percent to 51 percent in the short span from 1994 to 1996.
     Small Business Dominating International Trade: In The 
State of Small Business 1995, the U.S. Small Business Administration 
reported that 86 percent of U.S. businesses involved in international 
trade are wholesalers and other intermediaries, and that these 
businesses are typically small.
     The Advantage of Entrepreneurial Skills: In a January 1998 
article (``Internationalization of Small- and Medium-Sized Technology-
Based Firms: An Exploratory Study'') in the Journal of Small Business 
Management, Professors Necmi Karagozoglu and Martin Lindell note that 
small- and medium-sized technology firms have certain advantages and 
disadvantages operating internationally compared with large businesses. 
The authors note that a clear advantage is ``flexibility, speed, and 
advantage-seeking behavior.'' These are the hallmarks of the high-
growth, entrepreneurial business.
     Women and Trade: According to the U.S. Department of 
Commerce, women-owned businesses participated in the global marketplace 
at the same rate as U.S. businesses overall--i.e., 13 percent--in 1992.
    In a March 1995 study, the National Foundation for Women Business 
Owners found:
     57% of women-owned businesses in the global marketplace 
developed a new product or service during 1992 compared to 44% of those 
not doing business globally.
    52 % of women-owned businesses involved in international 
trade expanded domestically versus 23% of those not exporting or 
importing.
     Growth in U.S. Manufacturing: Most protectionists like to 
point to a decline or stagnation in U.S. manufacturing jobs as dire 
fallout from free trade. This supposedly shows that the U.S. is losing 
its manufacturing capabilities and cannot compete internationally. A 
look at U.S. manufacturing numbers, however, tells quite a different 
tale.
    It turns out that U.S manufacturing production has been steadily 
rising for decades. In addition, if you look at new manufacturing 
orders, while clearly being walloped by the stagflation of the late 
1970s and early 1980s, as well as the recession of the early 1990s, the 
overall trend is positive.
    The fact that U.S. manufacturing generally has been humming along, 
while manufacturing employment is stagnating or slightly declining (for 
example, 19.4 million manufacturing jobs in 1967, 19.7 million in 1977, 
19 million in 1987, and 18.5 million in 1997), speaks not to our 
manufacturing weakness globally but to our strength. The U.S. has been 
investing, modernizing and vastly increasing productivity in 
manufacturing. We are producing more with fewer workers. We are 
becoming more competitive.
    In the end, theory and real life come together quite clearly when 
it comes to trade. Free trade works.
    Then what policies should U.S. elected officials be following to 
prepare us for the increasingly competitive and global economy of the 
21st century?
     Unilaterally reducing U.S. trade barriers makes sense for 
consumers and the economy in general, but politically this is a non-
starter.
     The next best scenario is to be negotiating with other 
nations, groups of nations, and international bodies to lower their 
barriers to trade as we do the same with our own. The options seem 
endless, for example, a Pacific Rim free trade zone, an open market 
from Canada to the tip of South America, further reducing trade 
obstacles through the WTO, pacts with individual nations, and so on.
    However, when negotiating trade agreements, the President of the 
United States needs to be fully empowered with fast-track authority. 
Fast track allows the President to negotiate trade accords, with 
Congress limiting itself to a ``yes'' or ``no'' vote--avoiding the big 
temptation of adding special-interest amendments.
    Throughout history, the main obstacle to reaping the full benefits 
of free Trade--including the complete unleashing of U.S. 
entrepreneurship in the global marketplace--has been special-interest 
influence, that is, the few seeking protection at the expense of the 
many and the economy in general. Politicians too often succumb to such 
petty special interests. Indeed, this is unfortunate as the trade issue 
generally has been a bipartisan one since the end of World War II, 
often rising above the fray of special-interest threats.
    Fast track is a positive policy innovation to counter such 
selfishness. Of course, Congress still has its say under fast-track 
negotiating authority--if they do not like the trade agreement before 
them, they can vote it down, and tell the President to go start over 
again. But if the President presents a positive, pro-growth, pro-
entrepreneur trade accord, the vote should be a resounding ``yes.''
    Fast-track authority makes particular sense for innovative 
entrepreneurs and growing small businesses, who dominate much of U.S. 
international trade and need to be able to gain access to international 
markets unencumbered by high tariffs and other protectionist barriers. 
We are increasingly concerned that the United States is becoming a 
bystander as other nations negotiate favorable agreements that could be 
potentially damaging to U.S. business interests. Fast-track authority 
is critical to U.S. competitiveness and the overall well-being of the 
U.S. economy into the 21st century.
    Once again, thank you very much for this opportunity to present my 
written perspective on behalf of the Small Business Survival Committee.
  

                                
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