Hearing of the House Ways and Means Committee on President Bush's Trade Agenda

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Federal News Service

HEADLINE: HEARING OF THE HOUSE WAYS AND MEANS COMMITTEE

SUBJECT: PRESIDENT BUSH'S TRADE AGENDA

CHAIRED BY: REPRESENTATIVE WILLIAM M. THOMAS (R-CA) WITNESS: ROBERT B. ZOELLICK, UNITED STATES TRADE REPRESENTATIVE LOCATION: 1100 LONGWORTH HOUSE OFFICE BUILDING, WASHINGTON, D.C.

BODY:

REP. WILLIAM M. THOMAS (R-CA): Good morning. Today's hearing is about the United States trade agenda for 2004. Ambassador Zoellick, it's a pleasure to have you here with us again to discuss your efforts, especially some very positive recent efforts to expand international trade, create job opportunities for American workers, farmers and businesses.

Since the president signed into law the Trade Promotion Authority two years ago now, the United States has been engaged in multiple trade negotiations. Most importantly, the president and the United States Trade Representative is pursuing multilateral negotiations in the WTO to expand U.S. export opportunities in agriculture, industrial goods, services, while protecting international property rights.

Recent efforts which will focus on especially a letter sent by the United States Trade Representative to a broad number of folks at the beginning of this year to attempt to build some momentum on the reinvigoration of the Doha round, I'm anxious to hear whether or not that has borne the kind of fruit that we hoped for. Basically I think that it entails everyone reassessing pre-Cancun versus post-Cancun and whether or not positions that produced post-Cancun should be reviewed and moved forward. But at the same time the United States is engaging its trading partners on a bilateral and a regional basis. These agreements, when negotiated in a comprehensive and ambitious manner, create an environment of competitive liberalization and lead momentum to successful WTO negotiations, in my opinion.

For example, last summer Congress employed TPA and the administration moved free trade agreements with Chile and Singapore. They set very high standards in goods, services, intellectual property rights, investment, labor and the environment. The administration has recently concluded free trade agreements with Australia, Morocco, five Central American countries. These agreements made remarkable strides in opening markets to our goods and services.

However, not every free trade agreement can achieve the highest marks. Sometimes you have to settle for what you are able to achieve. And there were some sectors that were excluded from coverage and our concern is that these not become precedent setting. In any event, the committee is currently examining these agreements to determine the best timing for congressional consideration.

Also the United States Trade Representative's office, notwithstanding the fact we focus primarily on the big picture trade agreements, has been actively involved in aggressively enforcing U.S. positions. They've successfully defended against challenges from Canada on lumber, India on textile rules of origin, Japan on sunset reviews and obviously we need to have that very close nexus between opening up trade and defending and pursuing our rights in trade. Ambassador, I look forward to your comments.

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REP. THOMAS: The gentleman from California, Mr. Herger, wish to inquire?

REP. : I moved it along here for you guys.

REP. WALLY HERGER (R-CA): Thank you very much.

Ambassador Zoellick, I want to thank you for your very strong efforts in bringing down the overwhelmingly high tariffs that so many of our other countries, our trading partners have that would allow us-particularly the agricultural products that are grown in my Northern California district, of which we export approaching 50 percent of, so allowing us to open up those markets. As you know, there's been interest from the agricultural community in negotiating trade deals with nations that are viewed as large export markets. Some have mentioned South Korea, Taiwan, for example. Could you tell me what countries come to mind as promising export markets for our agricultural products, and particularly some of the specialty crops that are grown in my area: rice, peaches, walnuts, almonds to name a few? And is the U.S. considering trade talks with any of these nations?

MR. ZOELLICK: Well, I want to start by thanking you, Mr. Herger. I think-when I was making my opening statement I wasn't sure if you were here. I know we've worked with some sensitive items for you and I appreciate your support for openness with those sensitivities. And with the chairman's leadership, we've obviously put some real attention on some of the crops in California that don't get subsidized, don't have any particular benefits, and I'm pleased there's some benefits for walnuts and nuts in the Australia agreement too. It's sort of a soups to nuts agreement because we have processed soups there as well.

I think the two biggest ones on the agenda that have good potential are Columbia and Thailand, where there is strong interest in the agricultural community. Their barriers are relatively high. Thailand has been buying a lot of agricultural products, but we think we can improve that a lot. With Korea the challenge is I don't think they're willing to negotiate a free trade agreement with us, and part of our problem is-people mentioned some economies that I'd love to have a shot at, Japan, Korea, but they won't open up their ag markets and, frankly, we don't feel it's appropriate to just do an agreement that does manufacturing or services and doesn't include agriculture.

In Taiwan we've been trying to work with them on their WTO implementation, and this is another item I know we've worked together because we've had some problems on some of the rice issues as well as telecommunications and IPR issues. So we want to, frankly, get them to follow through on their WTO obligations before considering sort of additional steps.

But what I want to emphasize again is that if you look across some of these potential markets in Latin America and Asia, you're also talking about rising incomes. And so some of these-I think particularly for some of the crops from your district-offer some good opportunities, but we not only have to open the markets, we have to deal with the sanitary and phytosanitary issues that sometimes arise too.

REP. HERGER: Thank you. While in India recently you expressed your concern to the Indian government regarding new regulations requiring that California almond exports to India be fumigated with methyl bromide, a chemical being phased out in California. I want to thank you for taking this necessary step. As you know, more than 60 percent of California almonds are exported, and India is a major market. What is the status of this issue, and are you optimistic that the Indian government will change these misguided regulations?

MR. ZOELLICK: Well, I want to start by making a point that, you know, you hear a lot of complaints from India these days about actions in the United States. The point that I have tried to emphasize to the Indians is that if they want to be able to keep our markets open, for example, in some of the services connections, they can't play these sort of games on almonds. I learned about this right before I was in India. I was there as part of the WTO negotiations.

And as I think I mentioned a little earlier, I think the Agriculture Ministry took this action without even informing the Commerce Ministry. They are supposed to notify people because we believe, as you know, that there are alternative methods to be able to deal with fumigation and we now have a USDA team that's on the way to India to try to see if we can resolve this issue. I also made a point before leaving-we have a new ambassador, David Mulford, who's been in the economic and treasury world, and emphasized how together we need to keep following up on this issue because almonds are our second largest agricultural export to India. It's about $70 million a year. Now, that tells me two things, Mr. Herger. One is they should be opening up a lot of other agricultural products, and then in addition they shouldn't be playing games with one of the few things they're buying.

REP. HERGER: Thank you very much, Mr. Chairman.