Copyright 2000 Federal News Service, Inc.
Federal News Service
February 8, 2000, Tuesday
SECTION: CAPITOL HILL HEARING
LENGTH: 23829 words
HEADLINE:
PANEL I AND PANEL II OF A HEARING OF THE TRADE SUBCOMMITTEE OF THE
HOUSE COMMITTEE ON WAYS AND MEANS
SUBJECT: WORLD
TRADE ORGANIZATION
CHAIRED BY: REPRESENTATIVE PHIL CRANE (R-IL)
PANEL I LOCATION: 1100 LONGWORTH HOUSE OFFICE
BUILDING, WASHINGTON, D.C.
TIME: 1:09 P.M., EST DATE: TUESDAY,
FEBRUARY 8, 2000
WITNESSES: REPRESENTATIVE JOHN LEWIS
(D-GA) REPRESENTATIVE JERRY WELLER (R-IL) REPRESENTATIVE MAXINE WATER (D-CA)
PANEL II WITNESS: AMBASSADOR CHARLENE BARSHEFSKY, U.S. TRADE
REPRESENTATIVE
BODY:
REP.
CRANE: Good afternoon. This is a meeting of the Ways and Means Trade
Subcommittee to evaluate American trade policy and our role in the world trading
systems after the failed WTO Ministerial Meeting in Seattle. Our focus here
today is to steer a course for returning America back to its historic position
of strong influence and leadership in the trading system. Clearly, the train has
jumped the track and must be repaired and redirected if we are to preserve our
prosperity and unbeatable success in international markets. The WTO system has
borne huge benefits for U.S. firms, workers, farmers, ranchers, and for all of
us as consumers. The breakdown in Seattle represents a direct threat to the WTO
system of trade rules. Constructed over 50 years by presidents from both
parties, in close consultation with Congress, the WTO system is fundamentally
American-based rules of the road for commerce. Because of the force of U.S.
leadership, our trading partners have been willing to accept this structure of
fair trade rules. There is absolutely no better strategy for improving living
standards than to pry away trade barriers and grow foreign markets for U.S.
products. To tear it down or stand by it as slashed and slandered is to put our
prosperity at risk. A compact among 135 government can always be improved, but
to unravel the WTO rules of the road for world trade with no alternative system
in mind invites chaos, commercial conflicts and growing poverty in poor
countries.
There are, of course, many causes of the problems we faced in
Seattle. These include a lack of agreement on a declaration prior to Seattle,
recalcitrance on the part of the European Union to agree to the elimination of
agricultural subsidies, Japanese foot-dragging on the ATL initiative, and the
U.S. inflexibility on anti-dumping, to name just a few.
With that, I
would like to yield for any opening remarks to the ranking member of our
committee for his opening remarks, Congressman Sandy Levin.
REP. LEVIN:
Mr. Chairman, we were just discussing here, we were going to give our full
length statement after these witnesses, our colleagues, so that they could go on
to other things. So, I withhold my opening statement so that our three
distinguished colleagues can give their statements and I understand then
Ambassador Barshefsky will be here, and I will present my opening statement
before her testimony.
REP. CRANE: Very good. And with that, then, we
shall yield to our first witness panel, and please try and keep your oral
testimony to five minutes or less. All written statements will be made a part of
the permanent record. And with that, I yield to the Honorable John Lewis, our
colleague from Georgia.
REP. JOHN LEWIS: Well, thank you, Chairman
Crane, and Ranking Member Levin, and other members of the committee for the
opportunity to address this committee this afternoon.
For a long time I
have been saying that people have a right to know. They have a right to know
what's in the food they eat, the air they breathe, and the water they drink.
They also have a right to know how their tax dollars are spent and what issues
come before this committee and the Congress. The people have a right to know. I
think most of us would agree that as members of Congress, we have a sacred duty
to protect this right. We have a duty to make sure that we are in fact a
government of the people, by the people, and for the people. And that is what I
am here to talk about today -- government in the sunshine, shining a little
light on trade.
International trade is filled with complex and often
divisive issues. This is understandable. When jobs and the economy are at stake,
passion and partisanship can sometimes overwhelm the base between reasonable
people with earnest differences.
Mr. Chairman, we can bridge the divide
on trade, but to do so we must build trust, bring people together, and seek
common ground. Mr. Chairman, I believe that letting the sunshine in on trade is
the best way to begin.
I would like to share an example of how we can
improve the process. On the chapter 11 of the North American Free Trade
Agreement, if Canadian or Mexican companies believe that the United States, or
state or local government, has unfairly expropriated or taken its investment,
that company is entitled to request compensation for its loss from the state or
federal government.
If a dispute arises over compensation, the company
can submit a case to an arbitration panel. NAFTA requires that before a case
begins, a company must file a notice of intent to arbitrate a dispute. This
notice gives the disputing country basic information about the case, including
the basis for the claims, and appropriate damages sought by the company. The
issues that come before NAFTA for arbitration are important. They are important
to many people, both inside and outside of government. Despite this fact,
current law does not require that the notice or intent to arbitrate or other
basic information on these cases be made public. The idea that things may be
going on behind closed doors creates mistrust and hurts the process. We should
open the doors, open those doors, and give the American people a view of what is
going on on the inside.
I propose to accomplish this goal by requiring
the United States government to publish in the Federal Register the content of
any notice of intent to arbitrate that is filed against the United States. This
will let interested people know that a case may be forthcoming. I also believe
that it is important to give people an opportunity to share their views on
trade. We need a process, Mr. Chairman, whereby people and organizations can
submit their comments on NAFTA arbitration cases to the government. At the same
time, we need an approach that includes people without encroaching on NAFTA.
Finally, a credible process requires that those in power have the trust
of the people. We need -- (inaudible) -- requirements, a guarantee that
arbitrators in NAFTA cases are fair and impartial. Again, my approach is a
simple one, but in its simplicity lies the seeds of progress. As I said at the
beginning of my statement, our democracy is built on the idea that regular
people can and should be part of the governing process. I believe that we owe it
to all Americans, indeed we owe it to all citizens of all nations, to
demonstrate that democracy works, and that regular people can and should
participate.
Thank you, Mr. Chairman, and members of the committee.
REP. CRANE: Thank you, Congressman Lewis. And our next witness, the
Honorable Jerry Weller from Illinois.
REP. WELLER: Thank you, Mr.
Chairman, and members of the subcommittee. I thank you for the opportunity to
testify today. My purpose of being here today is to reintroduce to the Trade
Subcommittee an issue that was brought before the subcommittee and the full
committee this past year, and that's the issue of the loss of 20,000 film and
television industry jobs last year from runaway film production. I want to raise
this issue again to urge that our domestic film and television industry be given
a seat at the table in any future WTO discussions to address the cultural
content issue and its relationship to runaway film production. Some might say
that runaway film production is just a Hollywood issue, but it's actually a
growing national issue which directly impacts thousands of working Americans
from New York to Florida, Washington to California, Illinois to Texas.
During last year's committee discussion on the Financial Freedom Act, we
discussed an amendment that I offered to essentially level the playing field
and, of course, counter the loss of film and television production jobs to
Canada. Well, remember the film "Coming to America?" Unfortunately, it seems
that film-making jobs are now running from America. In fact, at one time
presidential candidates once referred to the giant sucking sounds of jobs
heading south. Well, today that giant sucking sound is really the sound of
20,000 film jobs which headed north this past year to Canada.
A recent
study commissioned by the Directors Guild of America and the Screen Actors Guild
shows that in 1998, over $10 billion in economic activity was
lost to runaway economic film and television production. This is more than
five-fold since the beginning of this past decade. In the last four years, Texas
has seen a 31 percent decrease in direct production revenues, while my home
state of Illinois is down nearly 20 percent. This has resulted in a loss of
20,000 jobs nationwide last year alone.
Looking at the small businesses
and jobs lost by this, by runaway production, we are not just talking about
directors and actors. Rather, we're talking about the small businesses that
support the film industry and make America great. Let's also remember that the
average film industry worker makes around $26,000 a year. They
include caterers, hotel and motel operators, restaurants and bars, rental
equipment businesses, electricians, set construction workers and many others
involved in this important activity. And over the years, film and television
production has been a leading exporter and a major contributor to the American
economy.
Mr. Chairman, this is a constituent issue which we
should take seriously. It's a constituent issue for you as well as other members
of the committee. I come from a district which includes Joliet, Elwood, and
Calumet City, the home of Joliet Jake and Elwood Blues. And I often refer to the
district I have the privilege of representing as the "Blues Brothers District.
Last year, my constituents and I were stunned when they decided to make the film
Blues Brothers 2000 -- they chose to film it in Toronto rather than Chicago. And
even more embarrassing was the fact that Canadian film makers are calling the
Chicago Film Commission to ask them for best advice on how to make Toronto more
Chicago-like.
With my statement I have included a copy of the Directors
Guild and the Screen Actors Guild study that they completed last year explaining
many of the reasons why film and television production is leaving the United
States. And they've concluded that one of the main reasons is the generous tax
incentives and subsidies offered in countries such as Canada, Australia and the
United Kingdom, which we do not have here in the United States. Canada alone
offers federal and provincial tax credits of between 22 and 46 percent of labor
costs. These incentives are enough to make any business consider relocating,
particularly when savings from filming in Canada can mean a 25 to 30 percent
savings overall.
The United States should not be put at a competitive
disadvantage by tax incentives offered abroad. Rather, we need to level the
playing field if we're going to keep this important industry in America.
Related to this is, of course, the issue of Canadian cultural content.
The Canadian government has given certain cultural industries special treatment,
and this policy has been implemented in large part through legislation as well
as some trade barriers. And these cultural content requirements discriminate
against our American film production. Canada uses cultural content more as an
industrial policy regarding jobs. Under their definition of cultural content,
the film "Bad as I want to Be: The Dennis Rodman Story" is defined as Canadian
culture, not because it's Canadian culture, but because it was filmed in Canada
using Canadian workers. Clearly this is unfair.
As you know, towards the
end of the WTO round in Seattle, the Canadians and Europeans raised the
possibility of further cultural exceptions to future trading agreements,
including new technologies. I believe that this would go against what many of us
are fighting for, which is to keep e-commerce barrier free.
Cultural
content and cultural exceptions trade agreements must be addressed in future WTO
talks, with the backdrop of the issue of the runaway film production. We have a
situation in which thousands of U.S. jobs are being lured to Canada and other
countries through favorable tax treatment and subsidies, while at the same time
cultural policies established by the Canadians and others discriminate against
United States film interests, thereby creating a double hit to industries such
as domestic film production.
It's an important issue that affects real
Americans, Mr. Chairman. I ask this trade subcommittee's interest as well as we
make this a priority in future trade negotiations.
Thank you, Mr.
Chairman.
REP. CRANE: Thank you, Mr. Weller. And our next witness, the
Honorable Maxine Waters from the state of California.
REP. WATERS: Thank
you very much, Mr. Chairman. I attended the WTO meeting in Seattle, and I'm
really honored to have the opportunity to come before you today and discuss the
results of this watershed event. I was there really as the ranking member of the
Subcommittee of Domestic and International Monetary Policy of the Banking and
Financial Services Committee. I went there focused on Jubilee 2000, the
wonderful debt release success accomplished by a combination of our government
working with other governments and non-government organizations, especially the
faith-based communities. While it did not get a lot of coverage in the press, we
had wonderful ecumenical services all around the idea that we could help
developing countries and poor nations get rid of their debt and be able to feed
their citizens.
As you know, thousands of people went to Seattle to
protest the WTO and its policies. These protestors were as diverse as they were
numerous. They included young people, labor union members, environmentalists,
church leaders, small farmers, consumer advocates, and human rights activists.
They came from all over the United States and the world. They went to Seattle to
express their concerns about the WTO and the impact of its decisions on the
world's people. It seems that the size of these protests and the intensity of
the backlash against the WTO took everyone by surprise.
Mr. Chairman,
they did not take me by surprise at all. For the last four years, I have been
working on the problem created when the United States took the case of the
European banana regime to the WTO. The European banana regime provides access to
the European market for bananas that are produced in Europe's former colonies.
This regime is essential to ensure that small Caribbean family farmers have
access to the European market to export their bananas.
The countries of
the Caribbean community are predominantly small island democracies, many of
which are completely dependent on banana production. In the Windward Islands,
which include St. Vincent, St. Lucia, Grenada and Dominica, along with Eastern
Jamaica, the banana industry employs one-third of the labor force, provides over
80 percent of the total agricultural exports and contributes over 12 percent of
the gross domestic product.
Bananas are ideally suited for the
agricultural conditions of the Caribbean. Even after a hurricane, the banana
crops are replanted and grow back within approximately six months.
Bananas are essential to the stability and prosperity of these
island-democracies. Banana production in the Caribbean takes place on small,
family-owned farms. These family farmers work hard to grow their bananas and
support their families. The people of these countries are very proud people.
They do not want foreign aid, they want to support themselves.
And the banana industry allows them to do so.
The banana case,
interestingly enough, was the very first case that the United States took before
the WTO, despite the fact the United States does not grow or export bananas.
Only one company, Chiquita Bananas -- Chiquita Brands -- claims to have been
harmed by the banana regime. It is obvious to me that Carl Lindner, the CEO of
Chiquita and a major contributor to both Republican and Democratic campaigns
used his political influence and connections to convince the United States to
bring this case before the WTO.
The February 7th, 2000 issue of Time
Magazine features an in- depth cover story on the influence of large campaign
contributions in this WTO case.
Unfortunately, the WTO ruled in favor of
Chiquita and against the Caribbean family farmers. Furthermore, WTO authorized
the United States to impose $191 million in sanctions on a
variety of European imports. The sanctions imposed by the United States have
also caused irreparable harm to many small businesses in the United States which
import European products affected by the sanctions.
It is ironic that
these sanctions and the damage they cause to Caribbean farmers, European
producers and American small businesses alike are the direct result of a WTO
decision. The Chiquita banana case has proven that WTO does not prevent trade
wars -- it authorizes them. As the Time Magazine article says -- and I have it
here -- big article: "When a fruit baron wanted to conquer more of the European
market, he got Washington to launch a trade war for him. The victims of the
crossfire? A bunch of ordinary Americans who never saw it coming."
The
Trade-Related Intellectual Property Rights, known as TRIPs agreement, provides
another example of a WTO policy that benefits wealthy and powerful interests.
The TRIPs agreement gives patent rights over plants and medicines to wealthy
corporations. Corporations use their patent rights to force developing countries
to pay for the use of plants and medicines.
Now mind you, many of these
plants and animals are the indigenous plants and animals of these countries. Yet
these big corporations go in and get patent rights on them, and then force the
people of those countries to have to pay for the products that they develop from
these plants and animals from their own countries, and it's protected right in
the WTO.
As the restful of the TRIPs agreement, many people in
developing countries have been denied life-saving medicines, because they cannot
afford to pay for them. In 1997, the South African government proposed new
legislation to require compulsory licensing of
HIV/AIDS drugs, which would allow the drugs to be sold at a
fraction of the cost. Unfortunately, the U.S. pharmaceutical industry, with the
support of the United States government, is trying to prevent this proposal from
being implemented.
In closing, these are precisely the kinds of WTO
policies and decisions that outrage both developing countries and non-
governmental organizations worldwide. It should not surprise anyone that the WTO
met with such strong opposition in Seattle, both inside and outside the meeting
room. The WTO promotes market access and investment opportunities for
muiltinational corporations without regard to the rights of workers and farmers,
the protection of the environment, or the health and safety of people in the
United States and throughout the world.
The WTO has developed into an
invisible government that makes its decisions in secret for the benefit of a
small number of extremely wealthy people. It's time for the WTO to begin
listening to the concerns of developing countries, family farmers, union
leaders, church leaders, environmentalists, consumer advocates and human right
activists from around the world.
We do not need a new round of
negotiations that will give even more power to wealthy corporations like
Chiquita. What we need is a reevaluation of the existing WTO rules. I urge this
subcommittee to critically examine the impact of the WTO and its decisions on
working families in America and throughout the world. Thank you, Mr. Chairman.
REP. CRANE: Thank you, Ms. Waters. (Applause and cheers from audience.)
(Rep. Crane bangs gavel to restore order.) Order in the chamber, order in the
chamber. If you want to make any demonstrations, get out of here. (Applause
continues.) (Rep. Crane bangs gavel again.)
The committee will be in
order, and this is a warning. (Applause continues.) Let me remind --
REP. WATERS: Mr. Chairman, let me just say that while I appreciate their
enthusiasm, this was not orchestrated. I did not know such enthusiasm was in the
room. So I don't want you to think that I in some way orchestrated this.
REP. MCDERMOTT (?): Welcome to Seattle.
REP. WATERS: Thank you.
(Laughter.)
REP. CRANE: But Ms. Waters, how come they're all from
California?
REP. WATERS: I beg your pardon?
REP. CRANE: I said
how come they're all from California.
REP. WATERS: I don't know. I'm
proud of Californians, wherever they show up. And if they happen to be from
California, that's a plus, but I did not orchestrate it, okay?
REP.
CRANE: Yes, we realize that. Now I yield to our distinguished colleague from
California, Mr. Thomas.
REP. BILL THOMAS (R-CA): Ms. Waters, you
described a situation in terms of agriculture in general and specifically on the
subject of bananas, and painted what amounts to a conspiracy theory for
producing the current impasse.
You are aware that there was a Dispute
Resolution Panel which decided against the EU and the EU has refused to follow
the dispute panel decision. Are you aware of that?
REP. WATERS: I'm very
much aware. I know it in detail, Mr. Thomas.
REP. THOMAS: Do you believe
there's also a conspiracy associated with the beef hormone question and the
failure of the EU to move forward on that?
REP. WATERS: Well, just a
moment, because you have concluded, Mr. Thomas, that you believe it's a
conspiracy. I don't believe it's a conspiracy. I believe that Chiquita bought
its way into the WTO and used us to advance its cause.
REP. THOMAS: Do
you believe the Cattlemen's Association and the U.S. beef industry has "bought
itself" into the beef hormone --
REP. WATERS: No, I do not, and I did
not testify on that. I testified on bananas, because I know it so well.
REP. THOMAS: Do you believe that the canned fruit industry is also a
conspiracy or they bought their way into the EU dispute, because in that
instance as well the European Union had a Dispute Resolution Panel rule against
it, and the European Union has refused to follow that agreement. And that has
produced exactly a similar problem for the United States as bananas.
REP. WATERS: Mr. Thomas, let me say again, it's you who refers what is
happening as "conspiracies." I do not.
REP. THOMAS: No, you said he
"bought his way into it.
REP. WATERS: Yes, he did.
REP. THOMAS:
So I'm wondering if you believe the canned fruit industry bought themselves --
REP. WATERS: No.
REP., THOMAS: -- into the same situation.
REP. WATERS: I cannot --
REP. THOMAS: Because it's exactly the
same decision which produced that result.
REP. WATERS: I cannot testify
on anything else but bananas. I've spent four years on this. And I agree with
the Time Magazine article about Mr. Lindner and the fact that he bought his way
into the WTO and used the United States to start this trade war. I believe that,
Mr. Thomas.
REP. THOMAS: Then I think you might spend some time
with other Californians who produce specialty agriculture crops: Peaches, pears,
canned fruit. And meet with them in an unplanned, unorganized meeting so that
you can listen to their concerns about the United States not backing up our
people when the World Trade Organization and formerly the General Agreement on
Tariffs and Trade has a Dispute Resolution Panel, rules against the European
Union, and the European Union refuses to follow the agreement.
That's a
group of Californians you probably should spend a little bit of time with as
well, so that you can fully appreciate the problems that have led to us both in
bananas and in canned fruit.
REP. WATERS: I think we would have a lot
more credibility, Mr. Thomas, if the United States had led with a legitimate
case. They did not lead -- the very first case that was taken to the WTO was Mr.
Carl Lindner's (ph) banana case, and we do not grow bananas or export bananas in
the United States. And as a result of what has happened, now these little
countries are reverting to producing drugs -- marijuana -- that will find their
way into the United States.
REP. THOMAS: And one of the last cases under
the General Agreements (sic) on Tariff and Trade was the canned fruit. There was
an attempt to move forward based upon exactly the same arguments that you're
presenting.
If in fact you can't be first or you can't be last, and the
first and the last failure are exactly the same, then in one sense, I'll join
with you. The WTO is not much progress than we had before. So in that sense,
maybe we can join together and decide that it really isn't a conspiracy, nor is
it an attempt to buy your way into the structure.
But it is the European
Union that has an absolute phalanx against changing and against having its
worldview mitigated by everybody else. If we can sit down and talk about that --
I think you really need to spend four years on the canned fruit controversy, so
that you can fully appreciate that this one case doesn't stand out.
There are a series of cases. And they all are based on the fact that the
European Union refuses to budge from any of its current practices -- any of its
current practices, whether it be --
REP. WATERS: I understand that.
REP. THOMAS: -- whether it be banana, whether it be beef hormone, or
whether it be canned fruit, or a host of other subsidized structures. This is
not a unique situation.
REP. WATERS: I appreciate that, Mr. Thomas, but
you also need to focus on the role that money and campaign contributions play
with the WTO, and who the decision-makers are, how they make their decisions and
who is influencing what.
REP. THOMAS: And take a look at the canned
fruit industry, in terms of how small it is and how much it's been maltreated,
and how the United States has failed to help the downtrodden. So perhaps we can
agree that it isn't an influential individual with a lot of money, but maybe
it's the system that is at fault.
And if you look at canned fruit and
the bananas -- look at canned fruit and the bananas -- in fact, it would be an
interesting cocktail salad -- you could really appreciate the structural flaws
which perhaps you've overlooked because you are so enamored with the conspiracy
theory. Thank you, Mr. Chairman.
REP. WATERS: I have no conspiracy. This
is fact.
REP. CRANE: Mr. Levin.
REP. SANDER LEVIN (D-MI):
Welcome. I think I'll refrain from asking questions about the banana dispute.
(Ms. Waters laughs.) Ambassador Barshefsky's going to be testifying in a few
minutes, and she may or may not want to comment on it.
As I understand
it, there is now a proposal pending before all the parties to resolve this
issue, and to do so to the satisfaction of the countries in the Caribbean plus
the countries in other parts of Latin America which have a stake in this. That's
pending, I think, and so let's see if the ambassador wants to comment on that.
And let me just say a quick word about the reference to the battle
against AIDS. All of us have some deep feelings about this, and
surely I do. And we have talked with the administration, as you know, about this
matter. And I am hopeful that the administration is going to be able to take
some important steps to make certain that the drugs that are badly needed are
made available.
It's not a very simple issue. But it's a crucial one.
And I think our challenge on this issue and a lot of other issues, is to realize
that crucial issues can be somewhat complex. If we don't recognize that, we
don't resolve them. And in this case, it seems to me, this instance as well as
others, we must take steps to resolve the problem and to meet the need. And I
won't go in at length. Over the weekend, two of you, my distinguished Democratic
colleagues and a number of others of us in the Democratic ranks, talked about
this at length. And I know there's concern across the aisle. And I'm very
hopeful that we can find an answer. My own judgment is that meeting the issue
head-on will be more effective than a lot of finger- pointing.
So, Ms.
Waters, you've been, Representative Waters, active, as your other colleague from
Georgia and a lot of us on this issue, and I think we're determined to persevere
until there's an answer.
REP. CRANE: Yes. Mr. Watkins.
REP. WES
WATKINS (R-OK): Thank you, Mr. Chairman. I know this exchange -- I want just to
make a comment, because I'm quite concerned. And let me say, I hope all my
colleagues keep a very open mind, because this is serious, serious business.
I'm a believer in the WTO or some organization that's got to come about.
Ms. Waters, we've got to have some organization in this global world that we're
in. It's built-in controversy. If you stop and just reflect on it and think
about it, it's just built-in because you're trying to resolve differences. And
it's going to be a tug of war and it's going to be gnashing of teeth, but it
cannot continue like it is.
Now, I've been a supporter of WTO, but I
feel strongly that there's got to be some changes and there needs to be some
movement before that approval resolution comes before Congress, which is up or
down on our participation in the WTO. Now, my problem is I've been working on
something for 10 years, and that's the beef hormone. They knew overall that by
declaring, say, beef hormone, they're not going to allow beef to be imported
into the European Union, because 95 percent or more of our beef in the United
States uses beef hormone. Every steak that we eat uses beef hormone. It's good
quality, the highest quality beef; FDA.
The European Union doesn't have
an FDA or anything equivalent to it. But they're sitting with the standard
saying, "We're not going to allow you to ship beef into Europe." And they're
even going to not allow non-hormone beef to go into Europe now. It is an unfair
trade barrier. I've been working on it 10 years. That's when they started
saying, "We're not going to allow United States of America beef in that
country." It's totally wrong, and they must change.
Now, with that, over
that 10 years, we finally -- and I came here pounding that table three years ago
again -- they finally ruled in our favor. Now, Ms. Waters, about 31 or so cases
out of about 33 presented before the WTO, they ruled in our favor. There's been
a couple of things. And as Mr. Portman knows, yes, bananas and beef were two of
those first ones out there.
Now, we have a situation, though, that
finally the WTO ruled in our favor. We -- the United States trade representative
came up with the fact that after looking at everything, that our penalty was
going to be -- and we put on the table about $250 million
worth. Well, let me assure you, it's a lot higher than that. But it started out
looking like $900 million; they come down to
$250. They finally settled, though, for about
$116 million.
And I'm beginning to feel a little
concerned about our United States trade representative and just where we are.
Are we willing to stand up and gut it out and fight it out for some of our
enterprises in this country and not put, like, beef and bananas on the back of
the shelf, if we are right? And we're right in beef. I know that factually.
Now, I'm concerned about trying to make sure that this loop, as my
friend, Mr. Thomas from California, said, is drawn out over all these many
years. And he's correct; we have an endlessly -- and some of us are talking
about a carousel, Mr. Portman and I very much. And I'm going to be pushing that
with my colleague full force, and we need your help and other people's help on a
carousel on those penalties.
We cannot continue like we've been going or
we're not going to have an effective trade policy in this country. And I'm one
that knows full well we've got to have global trade. It's part of our great
economic expansion; yes, information technology. But we're opening up markets
around the world. So I ask you to join in a constructive way of trying to make
sure our United States trade representatives put some teeth in these things and
not back off and we stand up for the beef cattle people and bananas and others
if we're going to have an effective, respected trade policy for this country.
And I ask that of all my colleagues.
Thank you, Mr. Chairman.
REP. WATERS: Well, let me, if I may, just say that I am not opposed to
global trade, and I believe in fair trade. You say you're concerned about Ms.
Barshefsky. I am, too, and I have been for a long time. I believe that the
decisions of the WTO --
REP. WATKINS: Excuse me, Ms. Waters. I didn't
use a name. I said I'm concerned about the U.S. trade representative's office.
REP. WATERS: Well, I'm using a name --
REP. WATKINS: All right.
REP. WATERS: -- Charlene Barshefsky. That's who I'm concerned about now.
And I was concerned about my friend, Mr. Mickey Kantor, before her because of
this issue that I've spent so many hours on, understanding how this issue got to
the WTO and how the decisions were made.
I think you and I are saying
the same thing. If we are to have trade mediated, negotiated, that there must be
a fair way of doing it, that we must know who the people are, how they operate,
and we must have a fair opportunity to be heard. As long as you have organized
labor and human rights activists and small developing countries tearing away at
these decisions, we aren't going to get anywhere. I think we're smart enough to
include the voices of many who do not mind fair trade but will not have trade at
any cost involved in ways that we can resolve the disputes to the interest of
this country and other countries. And I am committed to working with that.
What I'm not committed to doing is supporting the WTO even if every
decision was in favor of the USA, if, in fact, those decisions --
REP.
WATKINS: Ms. Waters --
REP. WATERS: -- are driven by money and power.
REP. WATKINS: Ms. Waters, we cannot have free trade unless it's fair
trade.
REP. WATERS: We must have fair trade.
REP. WATKINS: And I
yield back the balance of my time, Mr. Chairman.
REP. CRANE: I thank the
gentleman for yielding. And I thank our panelists for their presentations and
would simply suggest, Ms. Waters, that our next witness that I will call to the
dais is the honorable Charlene Barshefsky, our United States trade
representative. And if you want to hang in here after she has made her
presentation, you might have questions you want to ask. So feel free.
And with that, I welcome to the dais the honorable Charlene Barshefsky,
our United States trade representative.
(Change of panels.)
REP.
CRANE: Let me welcome the Honorable Charlene Barshefsky, our outstanding U.S.
Trade Representative, to the committee again. And I had delivered some opening
remarks, and some of this I may say is somewhat repetitive. But one of the
concerns, Madam Barshefsky, that we experienced coming out of the Seattle
ministerial meeting was the recognition that there was lack of agreement on a
declaration prior to Seattle, and also the EU's failure to agree to the
elimination of ag subsidies, and Japanese foot-dragging that I touched upon
before, and the U.S. inflexibility on antidumping to name just a few.
I
do, however, want to express my deep regret over the president's comments
linking labor standards to trade sanctions imposed by the WTO. And this
statement received liked a torpedo in the developing world, and was taken as bad
faith. It undermined our chances of reaching an agreement. And whatever his
motivations, I believe the president's comments were off-base given the lack of
consensus that exists in this country for such an approach. This objective has
no chance of becoming American law, and the cost of injecting our domestic
controversies over trade policy into an international effort to launch
negotiations will be deep.
For many years the United States has
possessed the remarkable ability to design world trade rules. By exposing the
political divisions in this country on the international stage, the president
emboldened new constituencies in this country and abroad who will now fight
against our economic success and trade. Don't think for a moment that our
foreign competitors won't use these divisions against us. And as we speak,
progress on the U.S. trade agenda in Geneva is in serious question.
The
president's actions in Seattle, as well as his legacy of avoiding the consensus
forging debate needed to pass trade negotiations authority, have had serious
consequences. If he retreats into retirement, it is this committee and a new
president which must pick up the pieces and shoulder the burden of the repair
work. Fortunately there are key steps that can be taken this year to get us back
on track, including early passage of the CBI Africa legislation
with meaningful trade benefits for these developing regions, and permanent
normal trade relations for China, which will pour some precedented reforms on
that vast country.
In addition, we should pursue regional trade
initiatives, including Chile, the FTAA and the Pacific region. Before us also
lies a path of dangerous and destabilizing conflict with our largest trade and
investment partner, the European Union, including a confrontation over a threat
to fundamental elements of the U.S. tax system embodied in the Foreign Sales
Corporation. This occurs against a background of flagrant non-compliance by the
Europeans on the panel reports against them regarding bananas and beef, and a
push in Congress to ramp up retaliation.
As to FSC, I would like to
schedule a meeting with you, Madam Ambassador, to consult about the
administration's strategy.
Ambassador Barshefsky, we have had our work
cut out for us this year, by working to find a way to come together on trade
matters. I think that we can turn the picture of Seattle around, and I don't
want to detract from your personal record of hard work and service as you took
us into Seattle. Yet it's important for us to recognize that our priorities and
strategy for the WTO need to be retooled.
And let me conclude my remarks
with just a major salute to you for all of the time and energy and work and
professionalism you have invested in our common national interests. And you have
done an outstanding job as our U.S. Trade Representative. And with that I yield
to the ranking member of the subcommittee for his opening remarks, Mr. Levin.
REP. LEVIN: Thank you, Mr. Chairman. And I hope, ambassador, you'll use
that professional talent to set the record straight as to what the
administration was trying to accomplish at Seattle, including on matters of
labor and the environment.
In retrospect it seems clear there was
inadequate preparation and time to resolve the issues that loomed large at the
WTO meeting in Seattle. Drafting of an agenda for a new round of trade
negotiations was very rough going into the ministerial, with text on key issues
still in brackets. Ministers were confronted with the challenge of both moving
forward in traditional areas of trade negotiation, such as agriculture, and
developing approaches to newer areas. Such is the relationship between trade and
core labor standards, the relationship between trade and the environment, and
making WTO institutions more open to public view and to public input.
WTO members faced an uphill battle on both the new and the old. Not
surprisingly, vocal resistance to particular agenda items came from various
corners. The imperative now is to learn from Seattle and to move ahead. The
president undertook just that in his remarks at the Davos World Economic Forum
last month. In the first half of his Davos remarks the president vividly
described the important role of trade in an area when globalization is on the
march. He described what I believe to be true, and what I saw in my recent
intensive 10 days in China: globalization is here to stay. The question is
whether and how to shape it.
In the second half of his Davos remarks the
president addressed that very question. He stated that we must try to shape
globalization, including by tackling the new issues. The president said, and I
quote, "The consequences of opening up a dialogue in dealing honestly with these
issues will show that in the new economy we can have more growth and more trade
with better treatment for people in the workplace, and more sensible
environmental policies," end of quote.
As I see it -- and I am convinced
that many, many of my colleagues believe this -- our challenge is how to piece
together the two halves of the president's Davos remarks. To focus on just one
or the other, to adopt either a "just say yes" or a "just say no" approach to
issues of expanded trade in the year 2000 does not meet the challenge. As the
president put it at Davos, and again I quote, "Those who heard a wake-up call on
the streets of Seattle got the right message. But those who say we should freeze
or disband the WTO are dead wrong." What is needed I believe is a plan of action
for helping to shape globalization.
Today's hearing on the WTO after
Seattle, and next week's full Ways and Means Committee hearing on China's
potential accession to the WTO, are opportunities to consider components of such
a plan of action. Today I will focus on six components of such a plan that apply
generally to reforming the WTO and moving it forward. I leave for next week's
hearing a discussion of components relating specifically to China's potential
accession to the WTO.
First, we should open up the WTO to public view
and public input, and that's already been discussed here today. The U.S. should
press for reforms of the WTO, including prompt public release of documents,
public meetings of panels, acceptance of amicus briefs, and more effective
coordination with non-governmental organization, labor and business.
Second, we must continue efforts to bring labor market issues into trade
policy making. Our goals must be to promote greater understanding of the links
between trade and labor markets issues, and ensure the more consistent
enforcement of core labor standards as competition grows between evolving
economies and largely developed economies. These goals should be pursued at both
the multilateral level through the establishment of a WTO working group on trade
and labor, and the bilateral and regional levels through implementation of
adherence to core labor standards as a condition for receipt of trade benefits.
It should be made clear that our aim is not to eliminate the comparative
advantage of evolving economies, but rather to avoid distortions that result
when workers are denied core rights and thus denied the benefits of trade.
Three, we should move forward on environmental issues in trade
discussions. We should commit resources to the performance of environmental
impact assessments in advance of agreement to trade liberalization measures, and
seek an enhanced role for the WTO's committee on trade and the environment.
Fourth, we should pursue the built-in agenda vigorously. I understand --
and this relates to agriculture and services -- that the WTO general counsel
reached agreement yesterday on a framework for negotiations in those areas.
Fifth, we should apply a consistent policy of implementing the other
major Uruguay Round agreements and not renegotiating them. They include TRIPS
and TRIMS and others, and the antidumping agreement and the subsidies agreement.
They were thoroughly negotiated during the Uruguay Round. These agreements
provide vital safeguards and benefits in foreign markets for the United States.
Unlike agriculture and services, none of these agreements provides for follow-on
negotiations, and the U.S. should continue to resist attempts to extend
deadlines across the board, or otherwise weaken these agreements through a
renegotiation.
Sixth, but importantly, we should work to make developing
countries our partners rather than opponents as we work to make the WTO more
open and to bring new subjects in its purview. We need to do so within a
framework that fosters greater understanding and partnership with developing
countries. This means including them in key agenda-setting and negotiating
processes, rather than presenting them with done deals. It also means
recognizing that neither aid nor a policy of "trade, not
aid" is an adequate means of helping developing countries. We
need to pursue a coherent policy of aid and trade by relieving
the least-developed countries of overbearing debt as we began to do last
session, and providing technical assistance and others that will enable an
increase in living standards.
Some may ask -- and I close with these
thoughts -- why the trade agenda has become more complicated. The answer is over
the last 15 years globalization has truly gone global. It used to be in this
committee just a decade ago when we talked about trade policy we were referring
mainly to relations among the developed nations and to the reductions of tariffs
and the dismantling of the more glaring non- tariff barriers. That way of
thinking plainly is outmoded today. There has been a dramatic increase in trade
and competition between our economy and evolving economies. And the barriers to
trade are increasingly complex and decreasingly transparent. And I make this
plea to all of us: these new trends demand new ways of thinking.
Mr.
Chairman, I do not expect for us to agree on everything as evidenced in our
opening statements, but we must face up to these issues, and it is vital that we
start now. As the changing nature of the world economy brings new challenges, we
must be open to implementing new ideas so that we can move beyond the stalemate
of the last five years. And I am ready, with I think most of my colleagues, to
work together to meet the challenges before us. Thank you.
REP. CRANE:
Thank you. And now we welcome you, Madam Ambassador. And any remarks beyond your
oral presentation will be made a part of the permanent record. Proceed when
ready, Charlene.
AMB. BARSHEFSKY: Thank you very much, Mr. Chairman,
Congressman Levin, and members of the subcommittee. It's of course a great
pleasure to be here again, and I know I will see you again next week on the
China question. But today we are talking about our agenda at the World Trade
Organization for this year, and talking a bit about Seattle.
Let me
begin with the most immediate point, and that is that the global trading system
is fundamentally sound, and participation in it is profoundly in America's
interest. While the ministerial conference in December in Seattle did not agree
on a new negotiating round, and while legitimate criticisms of the trading
system deserve a respectful hearing and repair, the WTO is fulfilling its
central mission, and its central mission is critical. That is, it is opening new
markets and new opportunities for Americans across the spectrum; it promotes
sustainable economic development, raising living standards as 50 years of the
global system has demonstrated; and strengthening peace as countries realize
they have a stake in peace and stability beyond their own borders.
And
our continuing leadership in the WTO is of critical importance to Americans and
to the world. This is clear in the historic record. Over five decades, our
development of the trading system has helped to foster what amounts to a 50-year
economic boom. Since the 1950s, the world economy has grown sixfold, per capita
income nearly tripled, and hundreds of millions of families around the world
have escaped from poverty. The completion of the Uruguay Round in 1994 took us
further, addressing for the first time agriculture as well as services,
protecting intellectual property rights, and strengthening our ability to
enforce agreements covered by the WTO. And of course those negotiations enabled
us further to conclude more recent sectoral multilateral agreements on
information technology, basic telecommunications and financial services.
Worldwide, the WTO and its forerunner, the GATT system, has strengthened
the rule of law, opened markets, and during the Asian financial crisis helped
countries avoid a cycle of protection and retaliation similar to that which
deepened the Depression in the 1930s, and exacerbated tensions among the major
world powers.
At home since 1992 the global trading system has helped
America's goods and services exports to have expanded 55 percent. This export
growth is particularly important, because export-related jobs in the U.S.
typically pay between 12 and 15 percent above the national average wage.
Likewise, our own economy's growing openness and receptivity of imports has
helped to promote competition, keep inflation low, and raising living standards,
especially for our poorest families. And together with fiscal discipline and
increased investment in education, the trading system has made a remarkable
contribution to America's record of growth, job creation, technological progress
and rising living standards.
As the record indicates, development of the
trading system over 50 years has been a work of profound importance, and because
of that it has always been difficult. Just as we saw in Seattle, nations always
have entrenched interests which benefit from the status quo. And at each point
along the road governments over the last 50 years have had to make politically
difficult choices to serve the greater good.
So at times we meet
deadlock. The founding of the GATT in 1948 was built on a failure to set up an
international trade organization in 1947. The creation of the WTO five years ago
followed a failed attempt to launch the Uruguay Round in 1982, a mid-term
breakdown in 1988, a failure to conclude the round in 1990, a failure to
conclude the round in 1993. More recent negotiations on financial services and
telecom also broke down in 1996, in 1997. And in all cases success followed.
The experience in Seattle was similar to many of these deadlocks. While
broadly supportive of a new round, a number of WTO members were reluctant to
commit themselves to a negotiating agenda covering difficult issues. The reform
of agriculture trade poses an especial challenge to the European Union and
Japan. Developing countries also have diverse interests, which a round must take
into account. And we in the U.S. have sensitivities as well. All of us -- every
country -- must be willing to look hard at our agendas and consider ways to
accommodate a number of the concerns of our trading partners if we are to move
forward.
Of course the core elements of the negotiating agenda are
before us. Yesterday it was agreed in the WTO that negotiations on agriculture
and services, as required under the Uruguay Round agreement, would commence.
These were of tremendous importance to American farmers, ranchers and services
providers. I am pleased to report that through our efforts and those of others
these negotiations will proceed as confirmed. The Council on Trade and Services
will meet in special session later this month to formally initiate the
negotiating process. And the Committee on Agriculture will do the same in March.
We are preparing a Federal Register notice seeking public comment on the full
range of negotiating proposals in agriculture and services, and we will consult
closely with the committee as we move forward.
Beyond these mandated
negotiations in agriculture and services, we have additional pressing needs,
particularly in relation to market access, whether on industrial tariffs and
non-tariff barriers, electronic commerce, or trade facilitation. There are a
number of market-access areas that will need to be addressed quite apart from
the built-in agenda. And while there are a variety of different options for
proceeding with this, of course at the same time, as the president said, we will
continue to work toward consensus for a new round.
This will not be
simple, but the outlines can be drawn if WTO members are willing to rethink some
of the positions they brought to Seattle, focus more fully on the shared
benefits of success, and find the balance that allows us to move ahead. As the
president has said, we will keep working toward consensus, but success requires
flexibility and shared responsibility from all WTO members.
Apart from
these negotiations of course we have a broad and ongoing agenda at the WTO this
year. My written testimony lays these out in detail, but let me just raise a
few. First, the implementation of a set of WTO agreements covering intellectual
property, trade- related investment, customs valuation and other issues. These
come into force this year when a number of transitions expire. It is crucial
that these agreements be implemented smoothly.
Second, we have action to
address the problems and concerns, particularly of the least-developed
countries. This includes both market access on which we are prepared to proceed
unilaterally, as the president stressed in his State of the Union, by securing
passage this year of legislation to further open U.S. markets to goods from
Africa and the Caribbean, as well as improved technical
assistance and capacity-building to ensure that the least-developed countries
can fully exert their rights and interests at the WTO.
And, third, the
WTO is considering the accession of 31 new economies. With a number of these
negotiations well advanced, we expect Jordan and Georgia to enter in the very
near future. We have completed our bilateral negotiations with China, Taiwan,
Albania and Croatia. We have made significant progress with a number of other
countries.
As I mentioned earlier, I will be before the committee next
week on China's accession, but let me just say one word on that. China's
accession to the WTO has the potential to support reform in China, create
opportunities for the United States and China's other trading partners, and
ultimately help to further stabilize peace in the Pacific. As part of this
process, as you know, the United States must grant China permanent NTR or risk
losing the full benefits of the agreement we negotiated.
Finally, let me
turn to the question of WTO reform. The protests and criticisms of the WTO were
not at the heart of the negotiating impasse in Seattle. But they raise issues
that require a response. Only through openness and a willingness to listen to
its critics will the trading system retain the broad support of the public and
member governments over time. This does not mean that all criticisms are valid.
And indeed part of the response must be a rejection of unsubstantiated and more
radical criticisms. The core vision of the trading system is ripe. Opening
markets in the past decades has sparked growth, reduced poverty, and
strengthened peace. To begin reversing that work would be irresponsible and
damaging in the extreme, including lowering living standards, including putting
brakes on the hope of increasing labor and environmental standards and broader
prospects for political stability. But -- but -- the WTO must also be willing to
listen to and act upon legitimate criticisms, and the WTO must be willing to
incorporate new ideas. It can do more to promote environmental protection. It
can do more to advance internationally recognized core labor standards. And let
me stop on these two issues just for a moment if I may.
I appreciate
Congressman Levin's review of the president's speech in Davos, which was very
well received I think by all parties to the debate by and large. I think the
president's fundamental point is this: that in an era of globalization it is not
possible any longer to claim that areas of concern in the trading regime should
not also be integrated. If this is an era of globalization in which trade
impacts a series of issues and a series of issues impacts trade, then let's at
least take a careful and close look at the full array of issues and attempt to
find means to start dialogue about them, and to see if we can't make a series of
competing interests mutually compatible instead of mutually destructive. This
will require a step- by-step approach. There is deep suspicion among many
nations of the world, in particular in developing countries, of developed
country motives in regard to environmental protection and the observance of core
labor standards. There are many reasons for this distrust and for the suspicion
that the developing countries have on this, including perhaps 30 years of
rhetoric on the North-South divide that has in large part helped to poison the
atmosphere, and as to which all parties are equally responsible.
The
question is how do we piece together what some view as competing interests of
these issues and an open trading regime, but which I believe need not be
competing at all, but instead can be rather complementary. And the first step,
and what the U.S. is first trying to initiate in the WTO, is discussion --
discussion of these issues and acknowledgement that many in the developed world
-- many in the U.S., many in the European Union, in Canada, Norway, other
developed countries, feel quite strongly about these issues. And while there may
not be unanimity of view in our own country or within Europe or elsewhere,
nonetheless the trading system should begin to listen to the concerns and to
attempt to see whether solutions can be provided and are appropriate in the
context of the WTO. It is I think vitally important that we try to come together
on these issues. Divisiveness does not serve the interests of the global trading
regime. Nor does it serve the interests of those who would wish to see the
regime become somewhat more modern and somewhat more in acknowledgement of the
reality of globalization and the fact that many of these issues are now
integrated, one with another, even if it is not often easy to accept that
challenge.
Let me also say the global system must address concerns about
transparency. These are valid, and they can be easily remedied. This is
especially important in dispute settlement where the current practice is, for
example, to close arguments to the public. If this remains unchanged, public
confidence in the system will erode.
As a first step in our U.S.-EU
summit in December, which followed Seattle, we proposed that we and the EU, as
the largest users of dispute settlement, immediately agree to open the arguments
in our transatlantic disputes in the WTO. Thus far, to our very deep regret and
surprise, the EU has refused. But it is quite clear that this issue of
transparency, not only with respect to open hearings but a number of other
issues -- amicus briefs for example -- must be addressed sooner rather than
later.
Likewise, the WTO's internal processes can be improved and
updated given the gross and greater diversity of its membership. Director
General Moore has begun consultations with WTO members towards this end. But as
we address this issue we must be careful not to alter the principle of consensus
for decision-making in the WTO, and ensure that such procedural discussions do
not distract us from taking immediate action on core policy issues.
In
summary, Mr. Chairman, the WTO faces a number of challenges but also
opportunities in the coming year, from its newly-inaugurated negotiations on
agriculture and services to implementing prior agreements, bringing in new
members, integrating better the least- developed countries, internal reform,
work toward a new round, and embark upon a serious dialogue with respect to a
range of issues not traditionally thought of as trade, but which have direct
impacts. None of these tasks will be easy or simple, but generations before us
have shouldered equally difficult tasks in the past. And I believe that the
record of the last 50 years should give us a great deal of confidence. The
promotion of the rule of law, creating new opportunities worldwide for economic
growth, creating opportunities for Americans and for our trading partners, it
seems to me this amply justifies the decision Congress took five years ago to
support creation of the WTO as a successor to the GATT. And it should remind us
of how significant will be the rewards of success as we take up the challenges
of this new century. Thank you very much.
REP. CRANE: Thank you, Madam
Ambassador. When that Seattle meeting became deadlocked, did you consider
offering a fall-back position in the form of a ministerial declaration that
would have identified a few areas of common ground and commitment to keep the
talk going?
AMB. BARSHEFSKY: No. And the reason is several fold.
Countries -- and most countries did -- that expressed flexibility before Seattle
became increasingly inflexible at Seattle, and were not willing to take the
political leap necessary. This was first apparent and most radically apparent
actually in the agriculture negotiations, where after six and a half hours of
word-by-word negotiations on a text, the European Union, Japan and Korea said at
the end of that they could not accept the text and would reserve their rights
not to accept the text. This was a startling development, and ultimately there
was no agriculture text agreed upon.
As far as a smaller declaration
went, that was really not in the cards. I felt it most prudent at that point
that rather than countries feel they would need to yet further harden their
negotiating positions, that countries instead take a pause, a time-out, regroup,
rethink where they were, what their positions were, in the hopes of coming back
to the table at an appropriate time. And we of course would hope that
appropriate time would be sooner rather than later. But it will require further
flexibility on the part of all countries. An abbreviated declaration or a
partial declaration was never in the cards, would not have been accepted by the
trading partners, but I think would have had the effect of a further hardening
of positions, making it impossible to reach consensus even after a pause. And we
wanted to avoid that further hardening of positions.
REP. CRANE: I
gather that you do favor launching a new round?
AMB. BARSHEFSKY: Yes,
very much so.
REP. CRANE: But when do you think it's likely to occur?
AMB. BARSHEFSKY: I think it depends very much on a review by all
countries of the positions taken in Seattle. I think that will also require a
review by the United States of positions taken in Seattle to see if each country
could move a little bit. And if each country could move a little bit, we may
well be able to get there. There are a number of international remarks to the
effect that countries would like to see the launch of a round this year. I think
many countries see a substantial danger in waiting, particularly in the run-up
to French elections, where Europe's agricultural position will harden even
further. But the rhetoric has to be matched by reality, and if countries in fact
are not willing to move some, then there will be no round, whether this year or
in the future. Countries -- all countries -- will need to take a careful
evaluation and careful stock of their positions, and determine whether in light
of the Seattle activities and negotiations and discussions that took place, they
can move forward.
REP. CRANE: What in your estimation are the prospects
for real progress, especially given the EU's reluctance to further liberalize
agriculture without a comprehensive round?
AMB. BARSHEFSKY: I do think
certainly in the early stages moving forward now on agriculture and services
negotiations will be very productive, because in any negotiation, even in the
context of a round, there's quite a bit of underbrush that needs to be cleared
away before you get to the array of political decisions that will have to be
taken. And I do think at a minimum over the course of this year we will be
well-positioned in the process in Geneva in agriculture and services to begin to
clear away a lot of that underbrush, so that at the point at which a round is
launched a substantial amount of work has already been done, particularly at the
technical level.
REP. CRANE: One of the concerns I heard while we were
out at Seattle with you is the feeling on the part of many of the less-
developed countries, that they were being excluded from the process. And I know
135 countries can't participate all at once in negotiations. But is there a
better way that we could keep the member countries informed of key developments
as they are proceeding?
AMB. BARSHEFSKY: I think that the process
involved in Seattle or used in Seattle was actually much more inclusive than
anything that had been previously utilized. Four working groups were created,
all countries could participate in all groups. Those groups were each a series
of negotiating sessions in which all countries participated. Where I think the
criticism comes into play is the fact that in the last day and a half or so
negotiations were narrowed further to a smaller group of countries, and that is
the product of a realization that 135 countries can't all be in the room at
once.
I think that there does have to be a better means for the director
general of the WTO to inform the body as a whole of developments as they
proceed. But there is also a responsibility on the part of countries that are
regional and subregional leaders to keep their neighbors informed of progress.
And there were many participants in these sessions who claimed to be
representatives of a group of nations, but who then did not report back to those
nations as they should have done with respect to progress.
So I think
both the overall process needs to be looked at, particularly as one gets to the
end point of a negotiation, as well as the role of countries that claim to be
regional or subregional representatives of a variety of countries, and their
responsibilities to those countries to the extent a report of progress is
appropriate.
We have asked Mike Moore, the director general of the WTO,
to look at this full range of issues on internal reform, and he will be doing
that hopefully to report back to the body as a whole in the coming months.
REP. CRANE: If Congress approves a more generous CBI
Africa trade bill, will this help build political support for
expanding the trade system among developing countries in your estimation?
AMB. BARSHEFSKY: I think that the Africa and CBI bills
are absolutely critical. They have been pending for a long time. This is a very
opportune moment for those bills to pass -- not only because they have been
pending a long time and because they are both very important to the further
development of the Caribbean region and to the sub-Saharan African region, but
also because I think it will send a signal to our trading partners that the
United States intends to remain fully engaged.
I do believe -- and many
countries have said this to me -- that our completion of the bilateral agreement
with China was an extremely important marker for many countries with respect to
U.S. leadership and U.S. engagement. But I think the CBI and
Africa pieces of legislation ought to be passed by the Congress
in whatever form the House and Senate can agree upon, and we ought to get
programs expanded for these two critical regions of the world, which is what
each of the bills would do.
REP. CRANE: I couldn't agree with you more.
And as you are well aware, the EU has gone forward on a free-trade agreement
with Mexico --
AMB. BARSHEFSKY: Yes.
REP. CRANE: -- and
negotiating with Mercosur countries and Chile. And we can't be caught in the
wings.
And with that I yield to our distinguished ranking minority
member, Mr. Levin.
REP. LEVIN: Thank you. Thank you, Mr. Crane.
Well, I was going to ask you, ambassador to, as I said in my opening
statement, to put in perspective the president's comments at Seattle. But I
think you've already done that. And you did so in part by referring to his
speech at Davos, and we were both privileged to be there for his speech. I
wasn't there before or after, except for the reception where there were
interesting comments by ministers and people in the business world, and Mr.
Sweeney, about his speech, which essentially said trade needed to be expanded,
and so did our perspectives on what trade is. And it seems to me that that sums
up the challenge. And I think especially your extemporaneous remarks about labor
market issues and environmental issues should give everybody here some thought.
We have been stalemated for five years on trade legislation in this
institution, in good measure because of disagreement over the role of labor
market and environmental issues in the trade equation. And no one would say in
the domestic economic equation that labor market and environmental issues are
irrelevant. But we fight over them all the time in part because they are
relevant to the economics of the whole country and of one section or another.
So I don't think it should surprise us that these issues, as competition
grows between different structures, economic structures, that these would become
relevant and contentious. And so I think we need to all of us work on it. And as
I have said to the administration, have everybody in the administration take the
talk of the president and talk that talk and try to walk the walk, and actually
implement both parts of his speech.
Let me just say a word about
transparency, from my experience at Seattle. We met, several of us, with the
Mexican trade minister. And he was opposed to any opening up of the processes
within the WTO. And we asked him whether, within his country, they would
tolerate the same processes used in a civil or criminal trial that are utilized
in the WTO, which isn't exactly the same, but it's a quasi-judicial process. And
you don't know what documents are going in, which ones are the base of decision,
and what exactly comes out of it. And if there's going to be finality -- and I
voted for it in the Uruguay Round -- there has to be transparency.
And
so I think it's a step forward to see you as passionate about the new issues as
the old issues, because if we don't resolve or confront both of them, I think
we're going to continue to be stalemated here. And as you know, I urged the same
in terms of issues like core labor standards in the CBI agreement.
So I
guess I don't really have a question to ask you. I just want to express my
belief that your presentation here gives some indication that the ball is moving
forward. And I think you've answered the chairman's comments about the president
at Seattle by referring to what the president said at Davos. This is not mainly
a politically motivated issue within this country. It's an issue that has been
coming to the surface now for five years, these new issues. And if we're not
passionate in pursuing them, we're going to have deep divisions abroad and deep
divisions here at home.
AMB. BARSHEFSKY: If I might -- I know that
wasn't a question, but if I might respond to a couple of points.
REP.
LEVIN: Please.
AMB. BARSHEFSKY: First of all, on transparency, I think a
lot of countries' hesitations on opening up the dispute settlement process
really stems from an earlier era under the old GATT system, where dispute
settlement was largely a form in which one might negotiate a settlement but was
never genuinely a litigation forum, as it were.
Under the new system,
this is very much a litigation forum. You make formal submissions on the record.
You have oral arguments before the panel. A record is maintained. There is an
appellate body to which you can appeal again, based on a record, based on formal
submissions and oral argument, as well as additional submissions.
This
takes on the character of more traditional administrative litigation, as in the
United States, in Europe and elsewhere. And just as those kinds of proceedings
are, in most countries, open at least to some degree, and in the developed world
virtually entirely open, as to submissions, the availability to sit in the back
of the room and watch an oral argument, the ability to know who the parties are,
what the record of the proceeding is, and so on, so, too, these same steps and
processes should be available now in dispute settlement, given its
litigation-oriented nature.
And hopefully, over time, some attitudes
will change, but it has been somewhat surprising to us how entrenched the
attitudes are on the question of opening up dispute settlement, including by
Europe, for example, which does not want to see panel proceedings open to the
public. I find this shocking.
REP. LEVIN: Inexcusable.
AMB.
BARSHEFSKY: Second, with respect to the issue of core labor standards, I'd make
only one observation. I think we have paid too little attention to very genuine
sensitivities of the developing world on this issue. And by that I mean I don't
think that our rhetoric is perhaps calibrated in the most effective way
internationally, because many developing countries take a U.S. or European focus
on core labor standards as harboring an implied rebuke to the way in which
they've conducted their economy or the way in which they treat their workers,
and many of these countries come to us and say, "Do you think we don't want to
see living standards increase? Do you think we don't want to see our workers
move to higher value-added occupations?"
They look at remarks made by
developed countries as containing an implied rebuke of their handling of the
economy. And certainly the comments are not intended in that way. And I think we
have to think through carefully how better to get across the point that these
are issues in which both developing and developed countries have a common stake
and that these are issues that one needs to discuss to work through, to think
through jointly, so that we are sure the benefits of a global trading regime can
be more evenly shared and can lead to the goals that both developing countries
and developed countries want to see for their own people.
I feel that
our -- we've never really gotten our own rhetoric quite right in this area,
which has helped to fuel a kind of suspicion and a resistance, a very deep
resistance, on the part of many countries to even discussing or embarking upon a
discussion of these issues. And I think as we proceed into this year, we'll want
to work with the committee, because we do want to get the message out in the
most effective way possible, because at the end of the day, trade, labor issues,
environmental issues, should be mutually supportive.
One can easily see
ways in which they would be mutually supportive and mutually constructive in
increasing trade while you increase environmental protection, as we have in this
country, increasing trade while you increase labor standards, as we've done in
this country, and, at the same time, as the president points out, not in any way
detract from economic growth overall.
So there are lots of ways in which
these issues should be able to be fit together in a very mutually supportive
way, but the first step, which may be the hardest, is persuading countries to
entertain a dialogue on these issues in the WTO. And in that regard, I feel that
we, Europe, the other developed countries, need to work on a more effective
means of communicating the aims, the goals of these discussions, lest the
developing countries especially believe this is simply a guise for increased
protectionism, but only, instead of using tariffs as the basis, using labor and
environment as the excuse.
REP. LEVIN: Well, thank you.
AMB.
BARSHEFSKY: And that is surely not the intention.
REP. LEVIN: It isn't.
And when we talk about core labor standards -- and I'll close -- we're talking
about core labor standards, that almost all of them have --
AMB.
BARSHEFSKY: In the ILO, right.
REP. LEVIN: -- (inaudible) -- in ILO
documents, and talking about embedding them within trade agreements. Thanks very
much.
AMB. BARSHEFSKY: Thank you.
REP. CRANE: Thank you. Mr.
Thomas.
REP. THOMAS: Thank you very much, Mr. Chairman. Thank you,
Charlene. Nice to have you with us. I assume we're going to have some repeat
engagements. In listening to your opening statement, I've been on the Trade
Subcommittee now for more than a decade, and I was in Seattle, but I'll
certainly defer to your more detailed knowledge of world trade history when you
indicated that Seattle was similar to earlier breakdowns. Which of those earlier
breakdowns provided a video war of pitched battles that produced a victory for
anti-trade forces?
AMB. BARSHEFSKY: Certainly Seattle was characterized
by protests; no question about that. And certainly there was substantial
coverage of it. And certainly, as the president said, there is something of a
wake-up call at work here. But, but, that is not what led to a negotiating
impact. If you look at earlier impacts, they --
REP. THOMAS: No, I
understand that, and I have a question on that. But I just think we have to
realize that the context, where it occurred, how it occurred, and the new format
of visibility produced, I think, a result that was far more disastrous than
earlier breakdowns, which were in closed rooms and back-room restaurants in
Geneva and in other areas of the world. I mean, if you'll concede that, we can
--
AMB. BARSHEFSKY: I don't think I would concede that it was disastrous
in the same way. I look at it actually rather differently; that is to say, I
reject much of the radical criticism made of the global trading system. But,
but, I do accept that there are ways in which the trading regime can and should
be updated. And to the extent the protests went to that --
REP. THOMAS:
Then let me ask the question a different way so I can understand and focus it.
AMB. BARSHEFSKY: Sure.
REP. THOMAS: Did the events in Seattle
further the Clinton administration's trade policies?
AMB. BARSHEFSKY: I
think any breakdown of a round does not. In other words, clearly we would have
preferred a round to be launched. Clearly also it was not going to be launched
without the key litmus test being passed, and that's on agriculture. And that
was not passed. So did it further the trade regime or the trade record?
Certainly not. That's obvious.
REP. THOMAS: Then with hindsight, with
the failure of the governments to narrow their differences, with a total lack of
prior agreement on most elements of a text for the declaration, especially
agriculture, in your opinion, would it have been better to postpone the Seattle
ministerial rather than take the consequences that occurred?
AMB.
BARSHEFSKY: Well, I think most countries felt, going into Seattle, it might be
possible to construct around. And most countries with whom we have dealt
bilaterally -- that is, one on one -- gave us certainly every indication that
that result would be achievable at Seattle. But what happened there happened in
'82, in '89, '90 and '93, and it is this. You never know for sure, before you go
in the room, whether the deal is going to be there or not. If I had taken that
approach on China, I never would have returned to China.
REP.
THOMAS: I have a very short period of time, and you once again alluded to the
similarity between the Seattle breakdown and, for example, '82, when, in fact,
in '82, because it didn't have that visual and dramatic and physical disruption,
we were actually able to come back and salvage it fairly quickly. But we'll
discuss the similarities or differences in the history of this particular event.
I happen to think that in hindsight, based upon our failure to have a clear
understanding of where we were going, that we probably damaged ourselves more
significantly than we thought we were going to, but that since we didn't have a
wedge that we could deliver, that down side outweighed any potential up side.
And then, of course, in my opinion, and of, I think, many other
observers, the fact that the president came in and made the presentation that he
did pretty well guaranteed, given your description of the concern and fear and
miscommunication of various phrases -- and I do think sanctions is one that can
create fear, perhaps produced some miscommunication, but which is a word that,
in the international trade community, is clearly understood. So my question is
this: What's the administration's current position on labor issues? Are you
still saying that you'd accept a study group to examine labor issues in the
context of expanded trade? Or is there now some commitment to sanctions?
AMB. BARSHEFSKY: No, the proposal we've made in the WTO is very clear.
This is a working group to review the intersection between trade and labor
policies. That is what it is intended to do, with participation by the ILO, the
Bank, the Fund and so on.
Can I make one other point, though, since
you've raised the president in this, as did Mr. Crane? First off, the president
has talked about this issue since he began campaigning for president in 1991.
Second of all, I think his Davos speech articulated really quite beautifully his
own views on this subject; that is to say that these issues have to be made to
be mutually supportive.
Third, his statements in Seattle, which were
rather off-the-cuff, didn't alter any country's position on this issue. There's
no country on the fence on these issues. Those that believe labor and
environmental issues should be considered in the context of the WTO believed it
before the president spoke and believed it after. And those that believed they
have no place in the WTO took that position before he spoke and took that
position after.
REP. THOMAS: Let me just tell you, ma'am, that very
often perception is reality. And there were a number of forces of those who
stood up here -- and unfortunately, a number of them left prior to engaging in
what I consider to be an educational dialogue, but they were here for a
different reason than education -- Republicans offered policies on labor and the
environment in the fast-track discussions, on paper, concrete.
I think
it might be useful if we begin talking about what the Clinton administration's
positions are on labor and the environment, on paper, concrete, so that, as
you're reaching out to try to build a consensus across countries and across the
equator, that we could work together, since I think it's in our mutual interest
to come up with a policy that, as we do with fast track, is somewhat
pre-approval a condition.
Here's a quote from Director General Mike
Moore. "We need to hear more of the 'F' word -- flexibility" --
AMB.
BARSHEFSKY: (Laughs.)
REP. THOMAS: -- "before I can say with any great
confidence there has been enough movement from all sides." Now, flexibility is
important, but in response to a question to the chairman about the difficulty in
launching a new round, you brought up the argument that the Europeans will
harden fast because of the French elections. What time this year are the French
elections?
AMB. BARSHEFSKY: The French elections will be toward the end
of next year.
REP. THOMAS: Oh, so they're not even this year, in 2000?
AMB. BARSHEFSKY: No, but the French --
REP. THOMAS: They're in
2001.
AMB. BARSHEFSKY: But the French view prevails among the member
states in Seattle now.
REP. THOMAS: Do you think that there's any
possibility that elections that are going to be occurring this year, not next
year, might be a reason for a reluctance to launch a new round, i.e., the U.S.
elections?
AMB. BARSHEFSKY: I don't think so, because if you look at the
areas of U.S. sensitivity -- and you all know what they are; they're dumping and
textiles -- those are 30-year issues. Those are issues on which most members
have very distinct views --
REP. THOMAS: No, I think, ma'am, that what
happened in Seattle was the core arguments. Those who were wearing the circle
with the stripe across the WTO are looking at labor and the environment. And I
would submit to you that the elections that are going to occur this year are not
a climate which this administration or candidates running for president want to
engage in a responsible discussion of labor and the environment in the context
of world trade. Last question --
AMB. BARSHEFSKY: I obviously disagree
with that conclusion.
REP. THOMAS: In the interest of getting a new
round launched, what's your reaction to the U.S. being a bit more flexible on
some of our issues? I mean, if we pull our sensitive issues off the table and
then require other folk to talk about their sensitive issues, that might also
heighten the concern about motives. Where are we? And if you don't want to talk
about it, I understand that.
I'm going to give you a list of written
questions, as I used to do, so I can have you respond to me. But can't we maybe
talk about investment, competition policy, anti-dumping policy, even someone
like me, accelerated phase-out of textile quotas, just to kind of show good
faith and trust our people such as you and our negotiating capabilities and not
create a front-loaded barrier to discussing issues that are sensitive to others,
if we were to discuss issues that were sensitive to us as well?
AMB.
BARSHEFSKY: Right. I don't think that we created front- loaded barriers. On
investment in competition, for example, we offered the EU a variety of
approaches on those issues, which I believe the EU should have accepted. They
did not. But that showed flexibility on our part. We did that because, to be
frank, these two issues are very important for the global trading system. And in
the longer run, we're going to need to also find ways of dealing with them.
With respect to the issue of textile quotas, there was very little
raised by developing countries on textile quotas. Think about it from their
point of view. They're phased out four years from now in any event. Why would
they pay in a negotiation to get a phase-out, what, six months earlier, by the
time the next round ended? There's very little discussion at all about textile
quotas. And with respect to anti-dumping, as with our trade laws, certainly I
don't think Congress would want to see us weaken our trade laws in a
negotiation.
On the other hand, we also have to recognize other
countries are using these laws more and more in a rather abusive fashion. So
there will need to be some dialogue on them. But certainly I think we must
reject any dialogue that would lead to a weakening of our trade laws, and my
guess is that's probably the congressional view as well.
REP. THOMAS:
And perhaps we ought to ask our trading partners if they view your analysis of
their position to be their position. And that may be one of the problems that
you indicated in terms of our ability to listen and understand. I think the
integration of some of those issues is a real concern and that perhaps we ought
not to dismiss them out of hand by placing ourselves in their conceptual
framework and providing the answer we believe they would have provided instead
of having them provide it in the first place.
And, Mr. Chairman, I'd ask
that I could submit these questions. They're wide-ranging, and obviously we
didn't spend any time on agriculture. And I'm very concerned about the continued
subsidies of agriculture in Europe; in fact, the concentration of certain of
them in areas that I think are very detrimental to the United States, and look
forward once again to your very thoughtful answers, as you've done in the past.
And, Mr. Chairman, thank you very much for the liberal use of the
five-minute rule.
REP. CRANE: Without objection. Mr. Houghton.
REP. AMO HOUGHTON (R-NY): Thank you, Mr. Chairman. Madam Ambassador,
it's great to have you here. I always thought your job was difficult. Now, after
Seattle, I know it's difficult.
AMB. BARSHEFSKY: (Laughs.)
REP.
HOUGHTON: But I just wanted to say also that Representative Maxine Waters is
here and was part of another panel and is listening in on this whole procedure.
Look, I just have four basic questions. The first is about anti-dumping. And I
really applaud you for standing up tall on this thing. I remember being part of
an industry that almost went on its knees after 150 years in business because of
the unfair labor and unfair dumping laws that took place. And I hope you're
going to stick with that.
Point number two is on the FISC (sp). I go
back so far, I remember the (DISC?). And I thought that was all solved. I
thought that everyone thought that was a great idea. And now this thing rears
its ugly head, and I just have a feeling that it could lead to some really
unfortunate consequences, maybe an international trade war, which is wrong.
But I think that maybe the two most important things I want to talk
about is this. You know, you mentioned transparency. But if I understand it, in
terms of the dispute settlement panel which you're opening up, that the
Europeans don't want it. I mean, here you're offering something. It obviously
came out of Seattle that we ought to have a more transparent situation. And the
very people who it would help are against it. And I really don't understand
that.
And the last issue -- and you may want to comment -- is sort of
the issue of the green room, that obviously things can't be solved by everybody
in a huge open forum. But sometimes I think that, in taking a look at the
procedures, we get involved in that rather than the substance, in what's
happening. And you may want to make a comment on those.
AMB. BARSHEFSKY:
Sure. I think with respect to transparency in Europe, I have never understood
the European position on transparency in terms of opening up dispute settlement
panels to public observation or the filing of amicus briefs, which the EU has
also opposed. I don't understand it. It is so contrary to an extraordinary legal
tradition in the EU, the tradition that we've adopted from Europe over the
course of 200 years. And so this has always been something of a mystery.
Generally, when the EU speaks about the issue, they raise a concern
about the government-to-government nature of proceedings, and they are
government-to-government, and the fact that opening these processes up would
detract from the government-to-government character of the proceedings. But that
certainly isn't the EU's position in, for example, the International Court of
Justice, which are government- to-government proceedings. So I've never quite
understood the argument that's raised.
I would hope we could continue to
work with Europe to get progress on transparency. They have been quite
forthcoming in some areas, like the further derestriction of documents, making
many more documents presumptively open to the public rather than the reverse
presumption which pertains now, and in some other key transparency areas where
the EU has been forthcoming. But in this area of dispute settlement, they have
not been. And, of course, this hurts us with other countries, because if the EU,
with its legal tradition, doesn't want to move in this direction, other
countries take note and decide they don't have to move either. So we have
something of a bit of a vicious cycle there.
With respect to the green
room and process, I think ultimately there should be ways of better
accommodating the needs of all 135 members. We have a quite different situation
now than at the start of the Uruguay Round. The WTO membership now is 50 percent
larger than it was at the start of the Uruguay Round, and even the start of the
Uruguay Round was hampered in '82 by countries claiming they weren't involved.
They weren't involved, and now you have a membership that's 50 percent greater
in size. So there ought to be ways of reconciling how to deal with the bigger
group, but how to also get the work done.
One of the things we've asked
Mike Moore is to consult with a variety of countries on this issue. The British
have put in a suggestion on convening an eminent persons group to look at the
internal issues with respect to the WTO, make recommendations. And we're looking
at the British proposal now. There may be many other ways of proceeding, but I
think it's critical that the WTO take a careful look at its internal procedures
to avoid the kinds of problems that have plagued us in the past and at Seattle.
REP. HOUGHTON: Yeah, but at the same time, not getting in the way of
some of the substantive things that we have to do --
AMB. BARSHEFSKY:
Absolutely.
REP. HOUGHTON: -- because it's always easier talking about
the mechanics --
AMB. BARSHEFSKY: Absolutely.
REP. HOUGHTON: --
than it is the gut issues.
AMB. BARSHEFSKY: We've made it very clear in
Geneva that we view the issue of internal reform as one to be handled in
parallel with, not sequentially, but in parallel with the ongoing work of the
WTO, including moving on the built-in agenda, as we are going to do.
REP. HOUGHTON: Thanks very much.
REP. CRANE: Mr. McDermott.
REP. MCDERMOTT: Thank you, Mr. Chairman, for letting me ask questions. I
-- I --
REP. CRANE: Well, first, Mr. McDermott, if you'll yield, we want
to thank you for all that gracious hospitality in Seattle. (Laughter.)
REP. MCDERMOTT: Well, it's about that that I wanted to raise an issue
with the ambassador. It seems to me, after our experience in Seattle, I think
the Congress has to rethink something, and I'd like your comments on it.
When the State Department -- or when the United States government
decided they wanted to have this meeting in the United States, cities began to
compete for it. Denver, Detroit, San Diego, Seattle and Honolulu and many others
were eliminated in the first round and wound up with five. And Seattle won the
prize. (Laughter.) I was in San Diego and saw a newspaper that said "Thank God
we didn't win."
So -- and I sat in from the very start on the planning
for this meeting, on the Seattle host organization meetings and was there.
Jennifer Dunn had representatives and our Senators did and so forth. We were
there a year almost in advance trying to put it together and so forth.
It now -- it's become clear to me after seeing what happened that the
funding of these kinds of meetings needs to be rethought. That saying that a
city can go out and raise the money for a meeting like this, and that somehow
the federal government gets the benefit of having the meeting in the United
States in some city, without footing a very significant part of the bill, is
going to be unacceptable to any city in this United States if they anticipate
anything close to what happened at the Seattle meeting.
The biggest
problem was that the business community went out and started trying to solicit
money from their confreres around the country. And of course when you offer the
opportunity to contribute, people wonder what they're getting for contributing.
Some people saw the attendance at meetings and other things as selling
influence. And such an uproar developed over that that they couldn't raise
money. That was one of the big problems -- was raising money.
The second
thing that happened was we put a specific appropriation into the State
Department for security and other things, much of which has not yet been
released to Seattle. And I -- and I'd like to hear your comments about the
likelihood of having another meeting that comes to the United States in this
way.
And I say that because I was in Germany in January and the Germans
-- a German banker said to us :If there was a meeting in Europe, we would have
had the same thing that you had in Seattle, don't feel bad."
MS.
BARSHEFSKY: Yes.
REP. MCDERMOTT: "Because we would have had 100,000
people there, about beef hormones and genetically modified" -- so forth. And it
was just -- it was our chance to be in the sun, it turned out the sun was a
little hotter than we had anticipated. But I think I'd like to hear your
thoughts about how you have a meeting like this and have it successfully carried
off.
MS. BARSHEFSKY: Well, I think you raise an issue that I'd probably
have to give quite a bit of thought to. Certainly the protocol, if you will,
used for the Seattle meeting is that followed by the U.S. government in meetings
of this sort over many, many years, where you have a host organization, you have
some funding by the federal government, and some funding by the state or city,
and so on and so forth.
And you may be right that that whole model needs
to be reviewed in light of what happened in Seattle. I know that the city is now
in discussions with the State Department on the question of certain funds. And
we're not a party to those negotiations, but I do know that they are going on at
the present time.
I think though you raise -- you certainly raise a
critical issue, and I think that this is an issue in general the administration
ought to look at, because it may be that the way in which these conferences have
been put together in the past simply won't suffice for the future.
REP.
MCDERMOTT: I mean, the question really is: if you were to say let's have another
meeting of the World Trade Organization in the United States in the next two
years, what city would put their name up there wanting it?
MS.
BARSHEFSKY: Right.
REP. MCDERMOTT: And on what basis would they want it,
because I think -- it's the old Machiavellian business of you hang somebody in
the square and everybody walks by and says "Thank God it isn't me."
MS.
BARSHEFSKY: Right.
REP. MCDERMOTT: But the next time you have a meeting,
you're going to run into I think some real serious problems around this whole
issue.
May I just ask one other question, and that is I understand the
president put $25 million in his budget -- additional money for
the -- to monitor and enforce trade agreements. Tell me how you anticipate using
that money?
MS. BARSHEFSKY: Much of that money will be divided -- is
contemplated being divided USDA, USTR, some other agencies, although I think our
portion of that will be relatively small. I think a good part of the funding
will go out to Commerce Department field offices, which can be extremely helpful
on enforcement issues but don't at this point have the capability at the local
levels at which they operate -- don't have the resources to be of as much help
as they could be.
I mean, these are people who are on the ground,
whether in relevant cities or overseas, that can really help us on enforcement
issues. So much of the funding is directed toward that. Some toward USDA
enforcement, some toward USTR enforcement, since we do hold litigation on WTO
dispute settlement as well as much of the monitoring of trade agreements, as
well as some other agencies. And I'd be happy if you like to get a dollar
breakdown of that, if that would be helpful to you.
REP. MCDERMOTT: I
asked that question really because it strikes me that there was a good deal of I
guess surprise around here about what happened in steel. And it's hard for me
not to think that we had -- we could have had the capability of knowing that was
happening long before the wave got to the level that it did to require us to be
out here passing resolutions on the floor.
MS. BARSHEFSKY: Well I think
on -- steel was an issue that also to some extent took the American producers by
surprise. That is, they I think did not anticipate this crushing wave of imports
from Japan, Russia, Korea and elsewhere as came in so rapidly, so very rapidly.
And certainly the U.S. government did not anticipate it. And I confess to that
fully. I don't think there was anyone who fully appreciated what was headed
toward the United States in such a concentrated period of time toward the end of
'97 and through 1998.
And I think if we had more folks on the ground, it
may well be -- and you're right, it may well be that this would have been known
more in advance, and perhaps there would have been some preventive action, a
precautionary action that could have been taken.
At a minimum -- at a
minimum -- being able to engage our trading partners who were sending us this
stuff at a much earlier point in time than we actually did. And that would have
been very much to the U.S. advantage to have had those resources in place at the
time to be able to handle an issue before it became so huge and so destructive
of U.S. steel producers that we really had quite a job on our hands.
REP. : Would the gentleman yield for 10 seconds?
REP. MCDERMOTT:
Surely.
REP. : I very much favor the added enforcement effort, but in
the steel case, there actually were warnings quite a few months before and I
think we also need to take a look at Section 201, because it has certain
barriers to prompt action, even when the data are very clear.
REP.
MCDERMOTT: Thank you, Mr. Chairman, for your indulgence.
REP. CRANE:
Well one thing in response to a question that you raised about what city would
want to serve as host next time, I have heard that since you've gotten through
your practice game out there in Seattle that you're ready now for the real
affair -- that you're number one.
REP. MCDERMOTT: I heard Chicago was --
REP. CRANE: Well, Chicago remembers '68, still. We've got long memories.
(Ms. Barshefsky laughs.)
REP. CRANE: But Congressman Camp would like to
I think --
REP. CAMP: Thank you, Mr. Chairman. Ambassador Barshefsky --
REP. CRANE: -- ask a question.
REP. CAMP: I just want to shift
gears and make a brief statement. I realize this is not directly on the WTO in
Seattle, but regarding NAFTA and our trade policy with Mexico, particularly with
regard to the dried bean industry and the problems we had last year with the
permitting process. And the delay and lack of announcement by the Mexican
government for the 1999 auction period and the devastating effect that had on
markets -- the uncertainty that the Mexican government created caused our
markets to plunge.
And secondly, the cost of the permits themselves.
Since the implementation of NAFTA, the imports of dried beans to Mexico have
been subject to many changes in the auction rate. And I would just at some point
like you to comment on what the administration's doing to ensure that Mexico
changes that permit system. And I realize this is not something you're prepared
to testify about today.
But regarding today's testimony, we're about two
weeks away from a ruling on WTO regarding the FISC (sp) issue. And I wondered
what the administration strategy was for dealing with the EU on this issue
should the findings of the appellate body go against us. And particularly to
ensure -- what steps the administration has taken to ensure that the United
States and our employers are not put at a competitive disadvantage regarding the
European competition with regard to tax treatment of foreign source income and
especially with regard to export transactions.
MS. BARSHEFSKY: If I
could respond, in the case of dried beans, we are working with the Mexican
government to fix it. You're quite right-- what they did on the permitting
process, in terms of the auction period, was very disruptive. The cost of the
permits is an additional problem. I'm happy to provide you with more detail on
that.
REP. CAMP: Thank you.
MS. BARSHEFSKY: On the question of
Fisk, as you know, this case is in litigation. We did not prevail at the panel
stage, but the case is on appeal. Oral argument was held I guess about two weeks
ago or so. The panel will issue a decision -- the appellate body, rather --
should issue a decision sometime I would say end of this month or early March.
But the (policy ?) appellate body is actively considering the panel
report which we believe to be substantively and factually incorrect and
unsupportable. I don't think it's appropriate for me to comment further on U.S.
plans. Our plan is to do everything we can to get the panel report overturned.
REP. CRANE: And now our (cup ?) -- goes to the exciting Seattle
Ministerial, Ms. Jennifer Dunn.
REP. DUNN: Oh heck, I'll give all the
credit to Mr. McDermott. (Laughter.) It's good to see you, ambassador, still in
one piece, and we're sorry we didn't give you a better welcome in Seattle, but
you certainly did --
MS BARSHEFSKY: Well, it's a great city.
REP. DUNN: Yes, it is. And I would like to see it glow once again, not
with the fires that we saw while we were there but with the natural beauty that
our lovely city does show off most of the time. I wanted to add my interest to
that of Mr. Camp and Mr. Houghton on the Fisk (ph) situation.
MS.
BARSHEFSKY: Yes.
REP. DUNN: I think, in the long run, it's in our best
interest to be looking for a settlement with the European Union. I'm very
concerned about what's going to happen otherwise. I don't want to see trade wars
breaking out, or anything like that. So -- but that I hope that you and the rest
of the folks on the negotiating team are proactively working with the European
Union on the Fisk (ph) issue. That's just a statement, not a question.
I
am concerned about some things I'm beginning to hear. We've always realized that
on the NTR vote, the Permanent NTR vote with China that we would be able to move
into that as soon as the other bilaterals are completed. And now we're beginning
to hear some of the advocacy groups say that it's not necessary for us to enjoy
the relationship with China under the WTO for us to have a vote on Permanent
NTR.
You mentioned this in your opening statement. And I'm wondering if
you could go into that a little bit more thoroughly. We'd like to know what's
ahead. And we'd like to do it without that vicious debate that takes place every
single year.
MS. BARSHEFSKY: Right. The view of the administration
obviously is that the benefits of the agreement we negotiated will be put at
risk if the Congress does not pass Permanent NTR for China. That is to say,
there's a substantial risk that our bilateral agreement will have opened up the
Chinese economy to the rest of the world, but not for us, which would be a
remarkable irony indeed.
And that risk comes about to the extent
Congress does not pass Permanent NTR. So as you know, the administration,
president are very committed to achieving Permanent NTR for China this year, at
such point as the contours of the final package become known. That is to say
there are other countries that need to close out bilaterally with China, most
notably the European Union, but there are others beyond the European Union.
And in addition, there will be an additional rules negotiation in
Geneva, which will also have to be completed or largely completed so that the
final contours of the entire WTO accession for China will be fully known. And at
that point, of course, the administration would want to proceed to a very rapid
vote.
MS. DUNN: Do you have any sense now of the timing of all of that?
MS. BARSHEFSKY: It's a little hard to gauge but I do think we're hopeful
for a vote in spring.
MS. DUNN: Spring. And I was delighted to hear the
president's speech in Davos too. I mean, it was a good speech and his effort to
put his shoulder to the wheel on that Permanent NTR vote is very welcomed by
those of us who have been working to make this happen.
MS. BARSHEFSKY:
On the -- excuse me. If I might say, I think that the timing on NTR is a little
bit uncertain because of course it depends on how quickly our trading partners
move.
REP. DUNN: Okay.
MS. BARSHEFSKY: And that's obviously an
area over which we have very little control. But I think we do hope to see that
process proceed apace, and if it does, then a vote sometime in the spring or
late spring should be doable.
REP. DUNN: Good, that's good. That's very
hopeful. Let me ask you a question on TRIP. You mentioned that you believe
sticking to these agreements is crucial to upholding the lines that we laid down
under the Uruguay Round.
Could you bring us up to date on what's
happening with TRIP? How are the WTO countries doing on compliance? Are the --
are the least- developed countries -- are they still pressing for an extension
of the deadline? Are you planning to bring action against any country that
doesn't meet the deadline?
What is happening on TRIP?
MS.
BARSHEFSKY: Well, in December of last year, I ordered my staff to undertake a
review of compliance by all of the developing countries -- that is to say, by
any country whose transition expires January 1, 2000. And that review is
underway now, so I don't want to talk about any one particular case.
But
by and large, we see, generally speaking, either compliance with the
requirements or countries having put themselves in a position into comply, or
countries that are desperately trying to comply but need some additional
technical and we're pleased to work with them on that.
And thus far,
we've seen some but relatively few countries that simply appear to have no
intention whatever to comply.
And those are obviously the ones on which
I think we need to focus first, because these are countries for whom issues of
technical assistance are not pertinent, but who simply regret the commitment
they made in the Uruguay Round and don't intend to comply. And that, I think,
then, merits a fairly strong response by the United States.
For those
countries that have tried to comply, we've been working with now for a number of
years, that need a little more technical assistance, a little more help --
sometimes able to be provided, frankly, by our industry -- those countries,
obviously, we want to work with. The object is not litigation; it's compliance.
And if we can work out a timely compliance plan, which we do for many, many
countries, including developed countries around the world, that probably brings
us to where we'll want to be over the coming months.
And then, of
course, for those countries that have undertaken very substantial and successful
efforts to ready themselves for compliance, we see a very good effort having
been made and we feel fairly comfortable about that group, that compliance
problems won't be a particular issue.
REP. DUNN: Thank you very much,
Madame Ambassador. Mr. Chairman, I think it might be very useful to us, since
the report of the bilateral agreement between the United States and China is
classified, that we should have an executive session with the ambassador, maybe
even between now and our hearing next week.
REP. CRANE: I agree with
you; I think it would be very valuable.
AMB. BARSHEFSKY: I'd be
delighted.
REP. CRANE: We'll try and work on it. Mr. Nussle?
REP. JIM NUSSLE (R-IA): Thank you, Mr. Chairman. Madame Ambassador, can
you tell us how many products have been held up in the European Union approval
process for political reasons or, in other words, because products that have
passed scientific reviews have failed to gain approval from the EU council? Can
you tell us about how many products are currently --
AMB. BARSHEFSKY: I
can't give you the number, except to tell you that the EU has not approved a GMO
variety since April, 1998.
REP. NUSSLE: And this is after it has passed
scientific review from the -- AMB. BARSHEFSKY: Yes. In other words, the issue in
Europe has never been scientific review of those products for which GMO approval
has been requested, whether corn varieties or (additional ?) soy bean varieties,
some other more specialized varieties that are on tap now. The issue has never
been scientific review, because the European scientists are generally in accord
with our scientists that these foods provide no health risk.
The issue
has been a political issue in Europe.
REP. NUSSLE: Could you give us a
brief description on your strategy, the administration's strategy for dealing
with this approval problem before the coming planting season?
AMB.
BARSHEFSKY: We have for a number of months now engaged the Europeans on this.
President Clinton and President Prodi have agreed to set up a high-level group
on the issue of crops approval, that group has met once already, and with the
hope that the EU can get its approval process back on track and functioning,
that we can have greater assurance for our farmers that the EU process will, in
fact, approve the varieties that have passed scientific scrutiny.
REP.
NUSSLE: Will those assurances be ready before the planting season?
AMB.
BARSHEFSKY: We're pushing very, very hard at this juncture. The EU is aware of
the concern about the planting season and the disruptive impact that their
failed approval process has had on U.S. farmers. We will continue to push them
very, very hard, both in the context of this high-level group as well as in the
context of an additional bio-tech working group that we have. We also have in
the U.S. an interagency process that involves all of our relevant agencies,
including the science-based agencies -- for example, FDA -- as a means further
to make sure the U.S. government approach and position is well-coordinated on
these issues. So we are pushing very, very hard, particularly on the varieties
that are pending now, for clearance by the EU.
REP. NUSSLE: If that
can't be accomplished in the next few months, is a WTO case being contemplated?
AMB. BARSHEFSKY: We will look at all of our options. The issue here is
access on the basis of sound science, and approvals on the basis of sound
science. We believe that test has been met. European scientists believe that
test has been met. The U.K. just issued a report, as you may know, in the case
of beef hormones, for example, but also with respect to GMOs. The science is not
an issue here. This is political. And so we will undertake a full review of all
of our options and, hopefully, choose that option that will be most effective to
get this process back on track.
REP. NUSSLE: I will tell you that -- and
I will let the farm organizations speak for themselves because they obviously
represent a diverse number of farmers and producers across the country. I will
just speak for the folks that I have spoken to in my district.
If this
can't be resolved, this is big.
AMB. BARSHEFSKY: Yeah, I understand that
fully.
REP. NUSSLE: But -- no I want you to understand even more than
what you may understand, and that is this is going to erode, totally and
completely erode, in my opinion, my very humble opinion, from one district in
Iowa, the agricultural support that we need in order to maintain the support in
Congress and across this country for fair trade and free trade in this world.
I don't know how I can say it any stronger than I've just said it. And
if in fact a resolution on this matter cannot be achieved prior to planting,
we're in trouble.
And we were just talking about the president on NTR
with China. I mean, "Katie, bar the door" when it comes to trade legislation, if
in fact there is erosion on the part of agriculture. And it won't just be the
guys in the ties that represent the organizations out here in Washington, it's
going to be the guys on the combines that are going to be making that decision,
and right now their support is a mile wide and an inch deep; it's not very
strong.
Finally, I would just give you the opportunity to respond to an
accusation made here today by a very senior Democrat within the House of
Representatives, basically accusing you and the administration of pursuing the
Chiquita banana case in the WTO because of an exchange of campaign
contributions. If it had been made by a protestor at the WTO, I would have maybe
taken it a little bit differently than I would if it was a senior policy-maker
in this House of Representatives. The fact that it's from the party that the
administration represents is even more surprising. But it was a very direct, and
appeared to be somewhat factual accusation, and I'd just give you the
opportunity to respond.
AMB. BARSHEFSKY: I don't know what the
accusation was. But I will tell you from --
REP. NUSSLE: Well, the
accusation -- just so I can -- I mean, the accusation was we're pursuing the
Chiquita banana case because the administration took campaign contributions.
Period.
AMB. BARSHEFSKY: The Chiquita banana case arises from a 301
petition filed by Chiquita, supported by Dole and the Hawaiian banana growers.
We take 90 percent of the 301 petitions filed; that is to say, we turn away very
few, and only on the basis that the petitions didn't meet the requirements of
the statute or of the regulations, or that the petition itself was so
ill-conceived, it would surely lead to a loss at the end of the day.
And
we give people an opportunity to withdraw their petitions when they realize that
the petitions are completely inadequate, for whatever reason. But other than
that, USTR's history is, we take about 90 percent or a little over 90 percent of
all the petitions filed.
Chiquita's petition was in good shape. It
followed on two refusals by Europe to comply with two previous panel rulings,
which found their regime illegal under international standards. Now if we aren't
taking that case, if we're not taking that case, what case is it that we're
taking?
So this is a substantive issue, as the panel recognized in the
appellate body, where we won again -- two more times. How many times do we have
to win this case again and again and again?
As the panel in the
appellate body found, the European Union's policies were discriminatory, they
violated Europe's WTO obligations, they violated international norms, and that
is certainly proof positive that this was a case fought on the basis of the
merits, and obviously by the panels -- now all four of them -- decided on the
basis of the merits.
REP. NUSSLE: That was a -- thank you. That was a
very good response. I appreciate that. I wanted to give you that opportunity
because I have heard you give that response before, and I happen to agree with
it. I'm not aware of what campaign contributions she may be speaking of, but
I'll take that for whatever it's worth.
Finally, I would just suggest
that this may be indicative of what we're up against, that the opponents of
trade will use both legitimate and illegitimate ways to try and forward their
case.
But I will suggest that there are some legitimate concerns, as
you've outlined them today, and I only wanted to make you aware of the concerns
of my constituents in Iowa about agriculture, in particular the foods enhanced
through biotechnology. And I appreciate your response.
Thank you, Mr.
Chairman.
REP. CRANE: Thank you.
Mr. Becerra?
REP.
XAVIER BECERRA (D-CA): Thank you, Mr. Chairman.
Ambassador, it's a
pleasure to have you here. And thank you for being so patient in answering all
the questions.
If I could, before asking a question, just say that I
appreciate your response that was made to some of the comments made by my
colleague Mr. Levin earlier with regard to core labor standards and the
environmental issues that you confront. I too believe that there is a way to try
to resolve this, if people talk. And I think you made a very valid point about
using the right language. Sometimes we do send messages that hurt more than
help. And I think the developing countries, in a sense, do have some claim for
concern, but ultimately I think we all want to do the right thing, and they
understand it as well, that we're not trying to impose on them some type of
condition that makes it difficult for them to compete.
AMB. BARSHEFSKY:
Right.
REP. BECERRA: Let me ask you a little bit about FISC (sp). And I
know you said that the case is pending. You expect to hear fairly soon what the
appellate body will rule, how it will rule.
And to the degree that you
can comment, because I know you said you are restricted in what you can say,
give us a sense, if the appellate body of the WTO does rule erroneously, as I
believe you are correct that it was an erroneous decision; if they uphold that
erroneous decision, if in fact that's the case and if indeed you are not able to
resolve this through some type of settlement with the EU, anytime between now
and then, what's in the offing?
Won't this lead to a general
deterioration of our trade relations with the EU? And won't this make Congress
somewhat suspicious of the WTO and how we proceed forward with it? I have a
difficult time seeing how something as big and as important as FISC (sp) is to
us, can be allowed to just fester?
AMB. BARSHEFSKY: Let me say, as a
general matter, that because the appellate body is considering the case now, I
am very reluctant to suppose, or assume even hypothetically so, that we might
lose. We should win this case. That doesn't necessarily mean we will or we
won't. But we should win the case on the basis that we believe firmly that the
panel below erred, both substantively and with respect to the background and the
facts of the case. So let me just start by saying that.
Certainly, we
have engaged the European Union on this case -- we have from the beginning --
because it is a large and important case. We take the view that the U.S. must
comply with panel rulings. We have done so in all cases, even those that are
politically sensitive. But recognizing how large this case is, we engaged the EU
early on it, by way of general discussion. And we have continued to do that,
really all through the pendency of the action.
I think certainly Europe
is waiting for the appellate body ruling in the hopes that the panel will be
affirmed. We are waiting for the appellate ruling in the hope that the panel
below will be reversed. And that is really the current status right now.
REP. BECERRA: I see the temperature rising on bananas, on beef.
AMB. BARSHEFSKY: Oh, this would dwarf that; there is no question about
it.
REP. BECERRA: And -- yes, it would -- and for that reason, it would
put us at an even more disadvantage competitively, to some of our European
counterparts in the corporate community.
And if something isn't
done quickly, one, I think you're going to see a deterioration of support for
WTO in Congress. And secondly, I think you're going to find that it's going to
be very difficult to deal in the future with the European Union.
Is
there something that you can tell us that leads you to believe that the
Europeans are going to try to help us resolve this? Given the fact they must
have accepted it back when -- in 1981, '82 the changes were made, they gave us
FISC (sp), and it seemed that for the longest time they were accepting of it.
Now I guess maybe because they lost some bananas and beef they're saying, "We'll
give you one back."
AMB. BARSHEFSKY: Well, certainly I think Europe
needs to be cautious, because depending on the ruling and the range of the
ruling, many of Europe's own tax programs will be directly at risk. I don't
think Europe necessarily thought this throughout as carefully as they should
have before this action was brought.
In addition, as you know, FISC (sp)
arose from a settlement of the DISC (sp) dispute, a settlement which existed for
15 years. And so Europe having brought this action, we felt was largely not just
unexpected, but one had to question the motives and whether this was an attempt
to try and balance the litigation score card.
REP. BECERRA: It seems
almost --
AMB. BARSHEFSKY: I obviously have no way of knowing. And, of
course, there are many European companies that benefit directly from the FISC
(sp) as well.
REP. BECERRA: It almost seems an abrogation of the
agreement we had when we went from DISC (sp) to FISC (sp) because they were
party to that.
AMB. BARSHEFSKY: Well -- yeah, certainly, certainly part
of the argumentation before the panel and the appellate bodies, that this was a
settlement entered into and essentially brought into the Uruguay Round, and that
as a settlement of a prior dispute, agreed to by the parties of that dispute,
FISC (sp) does not constitute a subsidy that's prohibited under the rules, or
any other action that would be proscribed by WTO rules. And that's certainly one
of the basic arguments that we made to the panel and that we have reaffirmed
with the appellate body.
And as I said, we'll continue to talk to the
Europeans on this issue. As you may know, following a dispute settlement case,
the party that loses, which could be Europe in this case, or the U.S., does have
time within which to think about it. In the case of a losing party, one has a
number of months in which to consider options related to compliance or
settlement or some other means. And so this will not be a decision that comes
into effect immediately in any event.
But as I said, we're very focused
on doing everything we can to see that the panel ruling below is overturned as
we believe it should be.
REP. BECERRA: But we urge a vigorous defense --
AMB. BARSHEFSKY: Extremely vigorous defense, yeah.
REP. BECERRA:
-- and a vigorous search for any solution outside of that as well, because I
think all of us are concerned about where this may lead.
Thank you, Mr.
Chairman, and thank you, ambassador.
REP. CRANE: Thank you.
Mr.
English.
REP. PHIL ENGLISH (R-PA): Thank you, Mr. Chairman. And Mr.
Chairman, I want to thank you for the opportunity to participate in today's
hearing.
Welcome, ambassador, and I want to congratulate you as a
participant in Seattle on what the chairman felicitously referred to as the U.S.
Inflexibility on Antidumping Negotiations. I believe that our delegation took
the right position. I believe that strong antidumping laws are essential to
police our market in a way that allows Americans to support open trading laws.
And I believe this has been a settled issue negotiated and with concessions in
the past in the WTO, and I want to congratulate you for resisting the drive by
some of our trading partners, particularly the Japanese, to use this negotiation
to weaken our trading laws.
I was privy to a recent meeting which
included Commissioner Lami, and in it the argument was advanced that reopening
the antidumping code was necessary as a concession to the developing countries
to get them to play in the WTO negotiations. It has been my impression that the
narrow, disciplined agenda that we put forward in Seattle included many things
that were attractive to the developing world. And would you care to comment on
whether reopening the antidumping code is really necessary to get those
countries to join us?
AMB. BARSHEFSKY: I think for most developing
countries the issue is not U.S. antidumping laws, the issue is agricultural
market opening, where many of these countries believe they have or can achieve
comparative advantage in agricultural production but can't possibly compete
globally with heavy EU export subsidies on the very products they wish to grow
or have grown but then cannot sell in world markets. This is the issue for most
developing countries, and most rank that as by far and away their top priority,
absolutely their top priority.
Certainly, on the question of dumping, we
have some concerns, and we do need to find a means of dialogue with the way in
which dumping laws are being handled in many other countries which do not have
the procedural requirements we have or due process requirements.
But the
notion that we would in any way undertake any action could weaken our trade
laws, I think, is well understood around the world to be completely impossible,
particularly as one looks at the relative openness of this market and the fact
that, as the WTO concluded, we take in about 22 percent of the world's goods.
Europe, which is 15 countries, takes in about 19 or 20 percent. Japan takes in 6
(percent). Now, of course, the Japanese have focused on this issue and have
demanded, in the past, a very extensive negotiation on dumping. Largely, we
believe at the behest of their steel industry, I would suggest to Japan that
restructuring their steel industry might be more in order than claiming that
U.S. trade laws has in any way created a real problem for their industrial base.
REP. ENGLISH: Yeah, and my understanding is the implementation of the
WTO anti-dumping code still allows us to have discussions with some of our
trading partners that might lead to some refinements. In other words, don't we
still have some wiggle room on that point?
AMB. BARSHEFSKY: Yeah,
certainly, and certainly we want that kind of room. There are concerns on the
part of some countries with respect to our implementation. We have to be willing
to discuss that and address it. We have a range of concerns with respect to
other country implementation, and we would hope they would listen to our
concerns and attempt to address those concerns. So in that regard, certainly a
give-and-take can proceed, I think, hopefully, very productively so. And we made
clear to our trading partners that we would not only be amendable to, but
indeed, we would be very interested in such a give-and-take, because there are
an array of implementation problems we have faced and, of course, in that spirit
we need also to take a look at implementation problems called to our attention.
REP. ENGLISH: Madame Ambassador, briefly, because my time is running
out, I have a three-part question with regard to China's accession to the WTO.
In the first part, does the administration anticipate that the accession of
Taiwan to the WTO will move forward expeditiously regardless of any bumps that
might be hit with China's accession? Second of all, are the concessions which
you negotiated with China -- at great length, I know -- enforceable within a WTO
context, and can we reassure American producers and consumers on that point? And
finally, is it possible for us to consider extending our countervailing duty
laws to non-market economies in light of our agreement with China?
As you know, this is one of the holes in our anti-dumping laws.
We cannot impose countervailing duties on non-market economies because of a
legal interpretation.
AMB. BARSHEFSKY: Yes.
REP. ENGLISH: Can
that be closed in the -- and not put us at cross-purposes with our agreement
with China?
AMB. BARSHEFSKY: With respect to Taiwan, the only issue with
respect to Taiwan's accession really is one that pertains to timing. That is, if
there is a tacit understanding, if you will, among WTO members in general -- but
also, frankly, between China and Taiwan -- that China would enter first and
China would not block in any way Taiwan's accession thereafter, and that might
be immediately thereafter or within days or hours or seconds or weeks, I think
that is something that the WTO would work out.
We have handled Taiwan's
accession on the basis of the merits. We've closed out bilaterally with Taiwan
well over a year ago, almost two years ago now, on a very, very good agreement
which has yet to be fully implemented because they're not yet a member of the
WTO. There is still some market access work being done in Geneva on Taiwan's
accession. Their protocol is largely complete but is being also reviewed by the
participants in the Taiwan working party on its accession.
And thus far,
Taiwan has indicated they wish to be a part of the WTO, this is very, very
critical, but have not moved as expeditiously as one might expect, I think
because Taiwan is also waiting to see if China's accession will move forward
promptly. But upon China's accession, we do not see or envision or anticipate
any problem with respect to Taiwan's accession.
With respect to
enforcement, this agreement has more enforcement mechanisms in it than any other
agreement we've ever done, including at least one mechanism not even available
under U.S. law but will become available under U.S. law. That is to say, you
have first off WTO dispute settlement; second, the full use of U.S. trade laws,
none of which are in any way compromised; third, enhanced U.S. monitoring, which
will be assisted by the additional funds the president has requested; fourth,
multilateral monitoring, which will be a separate surveillance -- which would
have its own separate surveillance capability, if you will; next, the fact that
we have assured the use of our non-market economy anti-dumping methodology for
15 years following accession; and last, a special anti-import surge mechanism to
be used for 12 years after accession, as I say, all bounded again by the overall
use of our trade laws at any point in time.
So this is an agreement with
a remarkable array of monitoring and enforcement mechanisms designed to ensure
that China comes into compliance with its obligation, and designed also to
ensure that even though we don't change our trade regime in any way -- these are
all one-way concessions by China -- but nonetheless to shore up, in our own law,
something that's missing, which is a country-specific ability to block imports
if those are surging in a manner that causes market disruption here.
With respect to the countervailing duty laws, countervail laws don't
apply, as you rightly point out, because of a court case -- this is a very old
and rather firm position of the courts -- that in a non- market economy, one
can't possibly discern a subsidy from what's not a subsidy, because these are
all command and control economies, and therefore it makes no sense to apply
those laws.
The U.S. has always used essentially as a substitute
non-market economy dumping laws, at least insofar as the injurious impact of the
imports can be taken care of through non-market economy dumping.
We
don't have any obligation, with respect to our countervail or dumping laws in
the case of China, different from our obligations with respect to any other
trading partner, except that in the case of China, China has an additional
obligation, which is that it cannot challenge our use of non-market economy
dumping for 15 years after accession.
So whether or not the countervail
law can ultimately be made to -- be made available in the case of non-market
economy countries is really one I think Commerce would have to look at, but also
particularly in light of the court cases that would stand in the way of that.
REP. ENGLISH: Sure.
AMB. BARSHEFSKY: And in the meantime, I
think it's critical that we preserve our non-market economy dumping law in the
case of China, and we have done just that.
REP. ENGLISH: Thank you,
Madame Ambassador. This was wonderful testimony.
And Mr. Chairman, I
realize you're rarely accused of being a liberal, but I appreciate your being
liberal with my time today. Thanks. (Laughter.) REP. CRANE: Mr. Watkins?
REP. WES WATKINS (R-OK): Thank you, Mr. Chairman.
Madame
Ambassador and Chairman, members of the panel, I apologize having to be gone and
missing most of your testimony, but I had the honor and responsibility of
introducing a resolution concerning the death of my predecessor Speaker Carl
Albert. And that's where I've been. And I'm glad to be back. And this is a
little bit about something that's, as you would know, dear to my heart.
But first I want to commend you for, one, having the ability and
credibility that we look for long and hard. I think probably one of your finest
hours was your address to the high-tech industry in Seattle. I was in the
audience there at that hour, and I marveled at the way you -- I know you were
tired, I know you'd been going through a lot of long hours of negotiation --
AMB. BARSHEFSKY: (Laughs.)
REP. WATKINS: -- but I just wanted to
salute you for a job well done at that event. And I thought: Boy, if she'd just
do that for at -- for beef hormone ban, I'd be all right. (Laughter.)
But let me say I know the importance of a WTO or some organization like
that. We have got to have an organization that mediates controversy. You know, I
looked and realized, you know, this -- it's going to be filled with controversy
all the time -- that's what I was talking to the leader of the WTO about this,
Mr. Moore. He has got a tough job. And let me say we are not there just to try
to make it easy on him. We are there to try to make sure our point's across. And
I know, overall, Madame Ambassador, we have done a great deal in those areas.
But I am still concerned if this is going to work. I mean, I want to be
constructive, and I want to be supportive. But after 10 years, since the ban of
beef hormones -- of the beef -- (inaudible) -- beef hormones in Europe, I don't
think we are getting anywhere. In fact, we are losing ground. They have now
banned non-hormone beef.
Now, they are willing to play hardball, and I
think we must play hardball. We have a resolution coming before this Congress,
and I want to be supportive. But I am searching for a way that I can.
Now, we know that we are in a global world and we're in a global
competitive economy and we are not going back. Ninety-six percent of the people
live out there. As I tell my people, throughout my district, we must, for our
children's sake and our grandchildren's sake, be involved and engaged in the
international trade. We cannot leave a void for the countries around the world
to fill it, or we become a second-rate economy over a period of time. And I
didn't come to Congress to leave a void for my children and my grandchildren and
the future generations.
But I did come to Congress to think we'd make
and shape a global competitive economy that would give him the tools -- and for
us to have the tools to compete. And I find that, you know, yeah, we've had the
endless loop. We have gone through -- coming down with some penalties. The
European Union -- not only the subsidies, but they continue to have an unfair
trade barrier against our beef, the world's greatest quality beef that we all
eat every day; the FDA's -- our scientific communities all agree to.
But
we still cannot penetrate that. Or maybe I need to ask you what you know about
that, where we are. But let me say, we have the opportunity to use every piece
of ammunition we have in our arsenal and I want us to use it.
And then
second, you know, we can do the carousel on a volunteer basis. If not, I mean,
I'm for doing it legislatively if we have to. But we've got to see from your
office, your people in your office, that we're there to mean business. And I
built an international trade center in Oklahoma in 1982, because I could see --
I felt the globalization and what was happening, and we needed to do that.
But Madame Ambassador, give me some good news! Tell me what you're doing
and how we're going to get to leverage this. If not, I've got to try to take
some action that I don't want to be doing.
AMB. BARSHEFSKY: Let me,
first of all, say that I share your complete frustration with Europe's failure
to comply with the beef and banana rulings. We can't force another country to
comply, just as we would not want another country to force us to comply. But the
fact that Europe is the only country -- the only country -- that has failed to
comply with dispute settlement rulings is of great concern, because they're a
leading power, economically, obviously. And in the agriculture sector, this is
particularly of concern, frustration, annoyance, anger, because you look at
Korea or Japan or Australia or Canada, all of which have complied with rulings
in the agricultural sector; none of which have failed to comply with those
rulings. Only Europe. Only Europe has refused to comply with both the banana
issue and beef.
On bananas, we have provided innumerable settlement
suggestions. The Caribbean came forward with a proposal which we indicated to
Europe we would support. Europe said no. And those discussions are continuing,
but so far there has been no agreement.
On the beef side, we've proposed
a temporary compensation package, if you will, that is that the EU would have to
allow imports of beef. But in the meantime we would be willing to label and in
exchange for the EU opening up its quota on non-hormone-treated beef,
recognizing, however, that at the end of the day as soon as new implementing
regulations were put in on hormone-treated beef they'd have to open their
markets for hormone-treated beef.
Europe then found with respect to
non-hormone-treated beef that there was a U.S. residue testing problem, which I
believe USDA is in the process of curing. But the bottom line is --
REP.
WATKINS: Madame Ambassador, the term I saw was -- the term I saw that they said
when full scientific, you know, reliability. You know, that's like taking that
Nth degree in water or anything else, and you cannot get to an Nth degree if the
-- out there. So they're using it against us.
AMB. BARSHEFSKY: Right.
Right. No -- yeah. No, I agree with that. The bottom line on beef is we are
still, again, as in bananas, in discussions with Europe. I think we're making a
little bit of progress. But I wouldn't call it good news to report to you today.
I think certainly Europe's actions undermine the system. I understand
that they undermine credibility in the system and in fairness in trade. And for
Europe especially as such a great power, it is extremely damaging and dangerous.
With respect to the issue of Carousel (sp) as I told you, I would look
at this after Seattle, I think there are two questions. We have an interagency
group that's working on this now. And, indeed, they met yesterday. And they'll
meet again shortly. I think there are two basic questions that they need to look
at. One is will changing the retaliation list in these cases affect the
negotiations in a positive way or in a negative way? And that's an issue that
this interagency team is looking at. Second, what would the impact of change be
on U.S. businesses, U.S. consumers, and uncertainty in the marketplace here? And
in that regard, obviously, this interagency group would look at what potentially
could be changed on these lists that might make a difference.
So this
group has been charged looking at these two issues, including what potentially
could be changed on the list that might make a difference, and I've asked the
interagency group to look at both these issues as quickly as possible. I
indicated I wanted a timely response, as my office knows, in working with this
interagency group, and we'll proceed from there. And obviously, we're going to
want to consult with you as this process unfolds.
REP. WATKINS: I
appreciate it.
Mr. Chairman, I would just say that, you know, we need to
move rapidly because I know this priority resolution is going to come on the
floor.
MS. BARSHEFSKY: Yes.
REP. WATKINS: And a lot of my people
feel like that a lot of foreign countries are being treated a lot better than
they are, especially a lot of my cattle people. And I want you to know I want to
invite you to come to Oklahoma one of these days. I think you might could make a
favorable impression on some of them that you are really working out there to
try to do something about this unfairness in this unfair trade barrier there.
So Mr. Chairman, I appreciate the time and allowing me to be here and be
able to express this on behalf of all my constituents.
REP. CRANE: Well,
thank you, Madame Ambassador. And one quick question before you leave. The
Interagency Council, when do you anticipate it will have completed its work?
AMB. BARSHEFSKY: I don't want to put a date on it. I've just told my
people that their instruction in this meeting is to get this process moving
quickly and to come back to me in a rapid manner with specific recommendations.
REP. CRANE: All righty.
Well, we thank you always for your
participation, and we look forward later in the week to participating further
with you.
AMB. BARSHEFSKY: Thank you. Good. Thanks so much, Mr.
Chairman.
REP. CRANE: You're more than welcome.
END
LOAD-DATE: February 9, 2000 
