billion to dc the job effectively. Whatever the figure,
this expense must be added into the equation of the
cverall success of NAFTA.
Si. conclusions and considerations for the tc?e
A. The NAFTA must be GATT compatible in all respects.
This means that when you are reviewing or voting on the
NAFTA you are voting on the uncompleted GATT treaty in its
entirety.
B. The NAFTA is on the "fast track" approval policy.
Unless changed by Congress (and there are bills in both
the House and the Senate to do that) the treaty must be
voted up or down, without change, within 90 legislative
days from the date the President signed the treaty. That
means late May or early June, 1993.
C. The Administration asserts, and many members of
Congress agree, that this agreement will be good for corn
and corn feeding.
D. It is interesting to note, that cf the 00CC plus
pages, over 700 pages deal with U.S. financial and banking
matters .
114
E. There are numerous gaps in the treaty which will
require separate legislation, most notably the
phytosanitary and food safety measures.
F. The "Rules of Origin" provisions are unclear, and the
numerous exceptions must be explained, especially as to
corn and sugar.
G. The NAFTA agreement is a double attack on the U.S.
sugar program, both because it stimulates greater sugar
production in Mexico and rewards them when they become a
sugar exporting country, and because the NAFTA is
dependent on the U.S. Administration's position in GATT on
elimination cf Section 12.
K. While there is a difference of opinion, NAFTA clearly
will cause ]cfc dislocations on both sides cf the border,
and agriculture will be strongly affected.
I. There are over 100 pages of "exceptions " to the
general treaty provisions. Mcs* of those ire for the
Canadians, perhaps because of their bad experience with
the U. S . -Canadian agreement, and the rest are for the
Mexicans. The U.S. has only a handful of exceptions.
115
STATEMENT OF THE AMERICAN FARM BUREAU FEDERATION
TO THE HOUSE WAYS AND MEANS SUBCOMMITTEE ON TRADE
REGARDING "FAST-TRACK" RENEWAL
April 27, 1993
The American Farm Bureau Federation, the nation's largest organization of
farmers and ranchers, appreciates this opportunity to comment on the
administration's decision to seek a renewal of "fast-track" negotiating authority to
conclude the Uruguay Round by December 15, 1993.
We support the extension of the president's trade negotiating authority
under fast-track. This support is contingent on assurances that agriculture will
remain a top U.S. priority.
Farm Bureau has been actively involved in these negotiations since their
inception in 1986. Farm Bureau leaders serve on many of the private sector
advisory committees and make regular visits to Geneva and foreign capitals to
press for meaningful Uruguay Round results in agriculture. We are extremely
frustrated by the failure to achieve a successful conclusion to the negotiations
before now.
As we have said on numerous occasions, we believe that no agreement
would be better than a bad agreement in agriculture. We have too much
experience with the results of bad agricultural trade deals or with deals where
agriculture has simply been ignored.
Farmers and ranchers remain concerned that, as a matter of expediency,
agriculture could once again be traded off simply to complete the trade round by a
given date.
Farm Bureau's objectives for the Uruguay Round are essentially those
outlined by Congress in the 1988 trade act: to expand markets, to reduce trade-
distorting subsidies and to end the practice of using unjustifiable health and
sanitary restrictions as disguised trade barriers.
We were disappointed that the talks could not be concluded last year,
despite the progress made in agriculture between the United States and the
European Community at the Blair House in November. That accord should not be
re-opened, because to do so would most likely result in efforts to backtrack from
commitments on export subsidies and on oilseeds.
We are particularly troubled by the attitude of some nations in the market-
access discussions, notably the European Community, Japan and Korea. Offers
put forward would, in some cases, actually increase the level of import protection,
116
- 2-
not reduce it. As we have made clear to the administration on two occasions,
Farm Bureau is concerned that the clear benefits to U.S. agriculture from
worldwide reductions in subsidized exports could be overshadowed by a potentially
indefensible agreement on market access.
Furthermore, an agreement that fails to open or expand foreign markets to
competitive U.S. exports must, in our view, lead to formal unfair trade complaints
in such cases under the dispute settlement mechanisms of the General Agreement
on Tariffs and Trade. Import barriers on rice in a number of countries represent a
clear, but not isolated, example of the need for a well-articulated response to an
unsatisfactory Uruguay Round result.
We look forward to working with Congress and the administration in the
coming months as we enter what we all hope will be the final leg of the Uruguay
Round negotiations.
117
AMERICAN FARM BUREAU FEDERATION
225 TOUHY AVENUE • PARK RIDGE ■ILLINOIS • 60068 • (312) 399-5700 ■FAX (312} 399-5896
600 MARYLAND AVENUE S W ■SUITE 800 ■WASHINGTON. DC • 20024 ■(202) 484-3600 ■FAX (202) 484-3604
May 3, 1993
The Honorable Dan Rostenkowski, Chairman
House Ways and Means Committee
1102 Longworth House Office Building
Washington, DC 20515
Dear Mr. Chairman:
The American Farm Bureau Federation has longstanding objections to the
Generalized System of Preferences (GSP), and we oppose its extension beyond the
current termination date of July 4, 1993.
Farm Bureau strongly supports the most-favored nation principle (MFN) in
the General Agreement on Tariffs and Trade. This principle holds that no country
should be treated more or less favorably than a nation's "most-favored" trading
partner. GSP clearly provides more favorable tariff treatment to certain countries
than to others, and this is contrary to MFN.
We urge, therefore, that GSP not be extended beyond July 4.
Sincerely,
Dean R. Kleckner
President
DRK/jb
118
4ft* 1
tine.
6101 Var >el Avenue
PO Box 4183
Woodland Hills. CA 91365-4183
(818)992-6000
March 30, 1993
The Honorable Sam M. Gibbons
United States House of Representatives
Washington, D.C. 205 15
Dear Representative Gibbons:
I ant writing on behalf of Applause , Inc. to urge you to support the continuation of the
Generalized System of Preferences (GSP) program and seek the immediate extension of the
GSP program before its expiration on July 4, 1993.
The GSP program, which provides duty free access for goods from developing countries is
based on the premise that trade, not aid, is the most effective means for promoting the
economic growth and industrialization of these countries. Even so, GSP is not a give away
program. The tariff concessions are not provided for "import sensitive'' products, and many
U.S. manufacturers rely on GSP duty preferences to remain competitive.
But most important, from Applause 's point of view, the duty-free program permits us to
import stuffed plush, dolls and ceramic giftware from Indonesia, Thailand and the Philippines.
Duty free status allows to "save" approximately $800,000 annually, a savings that we use to
purchase more product and employ 1 ,000 people in the United States. The sudden loss of GSP
benefits this summer will have a significant impact on our prices. An $800,000 increase will
cause monetary and profitability losses. Due to contractual restraint, we cannot make up
losses by increasing customers' prices. Therefore, the inevitable result will be a downsizing
and reduction of personnel in the U.S., a potential toss of 200 jobs or 20% of our work force.
As a member of the Ways and Means Committee I urge you to quickly approve an extension
of the GSP program before it expires.
Sincerely,
APPLAUSE, INC.
JvJJiL
Barbara S. Willey j I
Senior Manager, Import/Expor/
/bkc
119
TESTIMONY OF ROBERT F. KELLEY
ARTHUR ANDERSEN & CO., S.C.
Mr. Chairman and distinguished members of the Committee.
Thank you for the opportunity to present this testimony in support of extension of the fast
track trade agreement consideration process to allow for the completion of the Uruguay
Round of the General Agreement on Tariffs and Trade (GATT). Of particular interest in
this round is the General Agreement on Trade in Services (GATS). My name is Robert F.
Kelley. I am Managing Partner-Governmental Affairs for Arthur Andersen & Co., S.C.
Our Firm
The Arthur Andersen Worldwide Organization (Andersen) is a global professional services
partnership with 2,500 equity partners in 3 1 8 locations in 72 countries. Last year
Andersen earned over $5.5 billion in revenue. Client services are provided through two
business units: Arthur Andersen for audit and business advisory services, tax services, and
corporate specialty services; and Andersen Consulting for strategic services, integration
services (systems integration and management), information technology consulting and
change management services. Lawrence Weinbach serves as Managing Partner-Chief
Executive of Arthur Andersen & Co., S.C, the worldwide organization's coordinating
entity.
Overall Support for the GATT
For global businesses such as Andersen, there is no efficient alternative to an effective
rules-based global trading system, such as the type envisioned in the GATT. "Go-it-
alone" policies contradict the reality of economic interdependence and would reduce
international businesses to pawns in a "beggar-thy-neighbor" game. Preferential trading
arrangements and regional trading blocs cannot effectively meet the changing needs of
markets and firms that span regions. Such a trading environment creates an inefficient
patchwork of regulation and protection that impairs the economic development upon
which both nations and businesses are dependent
A successful Uruguay Round will:
• conclude agreements in all negotiating groups, providing maximum scope for all
participating countries to be "winners";
• achieve real liberalization of trade, fair treatment for all participants, and speedy,
effective dispute resolution and enforcement of trading rights; and
• encourage developing economies, newly industrialized economies and the newly
market-oriented economies of the former Soviet bloc to become full participants in the
growth of global trading.
The Services Sector
A comprehensive and effective services agreement is an integral part of a successful
Uruguay Round, and the potential of a more efficient allocation of resources resulting
from the liberalization of services trade is enormous. Consider the following:
• services account for over 50 percent of the world's economic output;
• services trade, notoriously underestimated, exceeds world agricultural trade by 70
percent; and
• service industries account for 40 percent of the world's stock for foreign direct
investment
The potential spin-off effects are awe inspiring as well: just think of the efficiencies in
manufacturing resulting from reduced costs for accounting, advertising, engineering,
distribution, transportation, insurance, finance and all the other services that help make
products available to consumers. Trade liberalization will make the service sector an even
more powerful engine of worldwide growth and job creation.
120
Services in the Draft Final Act
The standard for judging the Uruguay Round services agreement remains the degree to
which it assures that markets will be open for service providers to compete on a fair and
equitable basis. Where markets are already open, we want assurances that they will
remain open; where market obstacles and discrimination exist, we want them removed.
In this light, it is crucial to keep in mind that the Dunkel text is only part of the final
services package. It provides a set of trade and investment rules, most of which only take
effect with respect to specific sectors and commitments listed in each participating
country's schedule. Thus, until negotiations on these schedules are completed, it is
virtually impossible to determine the commercial value of the agreement Without an
extension of fast track, these negotiations will never take place and a great opportunity
will be lost
Framework of Rules
While imperfect the framework of rules set out in the Dunkel text is a significant step in
liberalizing services trade. We had originally advocated that the agreement embody a set
of binding across-the-board obligations; exceptions from which would have to be carefully
justified and negotiated. As it is, the proposed agreement limits these general obligations
to transparency and the way in which governments recognize other countries' licenses and
certification of service providers. In addition, the MFN obligation would apply across-
the-board, except for a one-time option to exempt specific measures, and the dispute
settlement and enforcement provisions would apply.
The obligations the agreement imposes with respect to commitments scheduled by
contracting parties are now the substance of the services framework. These obligations
include market access and national treatment as well as rules on domestic regulation,
monopolies, and payments and transfers.
Among these rules applicable only to scheduled services, of particular importance to
Andersen are those on market access, national treatments and payments and transfers.
1. Market access: we believe service providers should be permitted to service all markets
through cross-border transactions or through a commercial presence in the
marketplace.
2. National treatment: we believe foreign service providers should receive the same
treatment as domestic providers with respect to government regulation and their legal
rights.
3. Payments and transfers: we believe it is critical to the functioning of a service firm to
be paid for services rendered, to make investments, to repatriate earnings and to
contribute to joint costs.
Initial Service Commitments
The pace of the negotiations of services to be scheduled (and thereby subject to the above
rules) has been disappointing. Despite the hard work of US negotiators, many of our
trading partners have been reluctant to discuss seriously their services commitments.
Fewer than half of the G ATT member countries have even bothered to table their first
offer on services. For the most part, the offers that are on the table are grossly
inadequate: including few services of economic importance and seldom offering more
than retention of existing barriers. It should be noted that the US offer, while relatively
comprehensive, includes utile in the way of rollback of barriers.
Part of this reluctance has been understandable. As a whole, the Uruguay Round has been
stalled over issues such as agriculture and merchandise tariff reduction, generating little
enthusiasm for negotiation in other areas. For example, an agriculture-exporting nation
has little incentive to give the US its "bottom line" in services until it knows how the
agreement will help its farm exports.
121
Fast Track Extension
The example above demonstrates why an extension of fast track to December 15 is crucial
to completion of the Round. First of all, those eight months are needed to do the job
necessary to negotiate good services commitments from each of our trading partners.
Remember, there are over 100 nations involved in these talks and only 45 or so have even
tabled offers. There is a lot of work to be done, and this extension will allow that work to
be done unhurriedly.
Secondly, the impasse in the areas of agriculture and tariffs must be broken. Setting the
December 1 5 deadline and forswearing further extensions will give the Round the jump-
start it needs. Our trading partners need to know we will take the time necessary to bring
home a good agreement, but our patience has a limit
An Accounting Annex
During this Round, Andersen has worked to include in the final agreement an annex
covering accounting services. The proposed annex has three goals:
1 . promotion of more open markets for accounting services by committing all countries
to include accounting and related sectors in their schedules,
2. facilitation of cross-border provision of professional accounting services by setting out
guidelines and procedures for negotiation of agreements for mutual recognition of
professional qualifications and competence, and
3. encouraging the wider use of international accounting standards as the basis of a
common language for financial reporting.
The first element of the annex is designed to eliminate restrictions on competition and
practice that serve no public interest, only needlessly increase the costs, and limit the
choices of accounting services. The second element will increase choice quality of
accounting services by facilitating movement of providers, while respecting the right of
each nation to ensure the quality of service. The final element would an important step in
establishing a global financial language, cutting the cost of raising capital around the
world, and improving the ability of regulators and others to compare financial information
of complex global enterprises.
Summary
The Uruguay Round of the GATT has been an ambitious undertaking since its inception in
1986 and its importance to the US and world economies has been well-documented.
Despite the frustrations of the past few years, the progress on an agreement including the
new areas of services, agriculture, intellectual property and others truly has been
remarkable. A good agreement is within our grasp, but can only occur if fast track is
extended.
122
[BY PERMISSION OF THE CHAIRMAN]
REPUBLIC OF THE PHILIPPINES
KAGAWARAN NG KALAKALAN AT INDUSTRIYA
(Department of Trade and Industry)
Trade and Industry Building
361 (Buendia) Sen. Gil J. Puyat Avenue
Makati, Metro Manila, Philippines 3117
Cbl. Addreea MT1 TeL No. 818-57-08 te 88
Telex 14830 MTT PS p ° Bo1 2303, Makati Commercial Canter
45466 MOT PS
45467 MOT PS
26 April, 1993
Representative Sam M. Gibbons
Chairman, Sub-committee on Trade
Committee on Ways and Means
Washington, DC, 20515-0907
Dear Congressman Gibbons:
On behalf of the ASEAN Economic Ministers, I would like to convey to you our
request for your support in extending the U.S. Generalized System of Preferences (GSP)
beyond 4 Jury, 1993.
The continuation of the US-GSP Program comes in the midst of drastic changes in
the political and economic environment, including global trade liberalization and regional
economic integration. For their part, the ASEAN countries have pursued policies to open
their markets for goods and for investment opportunities. However, the sustainability of the
above would need, among others, the maintenance of the market access of ASEAN products
to the U.S. A more dynamic ASEAN with a population of 360 million provides the US with
its third largest export market next to the EC and Japan. Therefore, it would serve U.S.
and ASEAN interests that the GSP is continued.
The elimination of GSP duty-free treatment would adversely affect the
competitiveness of ASEAN GSP products which amounted to US$ 6.1 billion in 1992.
Moreover, if the most-favoured nation (MFN) tariffs were to be reimposed, landed costs
of ASEAN products would increase thereby resulting to a reduction of demand. This would
affect the ability of the ASEAN countries to buy U.S. products which in 1992 amounted to
US$ 23.98 Billion.
In recognition of the key role of GSP in increasing exports of developing countries,
Japan and other GSP donor countries have extended their schemes for at least 10 years.
Can we in ASEAN be assured of your support to renew the US-GSP Program?
JNO S. NAVARRO
Secretary
(Chairman, ASEAN Economic Ministers)
123
AtlAS
wading comp;
irading company inc.)
April 5, 1993
The Honorable Sam M. Gibbons
U.S. House of Representatives
Washington, DC. 20515
Dear Representative Gibbons,
As an owner and manager of an international trading company, we engage in a number of
activities that promote the welfare of a variety of American companies, including our own.
Those products we export go to lower the trade deficits (especially in Asia where most of
our business is). Those products we import serve to make our American buyers more
competitive in the marketplace, both for domestic and export sales.
We are particularly concerned about the possible loss of GSP status for some of our vendor
countries. The following example is just one way this loss can and will personally affect me
and my staff:
We currently purchase a large number of commercial supply style rubber mats from
Thailand, a GSP country. In doing so, our cusomer avoids a 5.3% import duty. This
advantage has been used to secure a long term deal with several warehouse/club type
operations. Due to the high volume nature of this business, everybody involved works on
commissions of not more than 8% to 1 0%. If the cost is raised by 5.3% the entire deal may
have to be scrapped, resulting in the loss of over S 1 million in sales in just this one product.
I have three U.S. staff members whose jobs are linked to this account. One would be laid
off immediately, the other two within six months unless an acceptable substitute was found.
In turn, our manufacturer in Thailand, who has plans for expansion and relies on U.S.
bankers and technicians for consulting, would have to put these ideas on hold if his other
U.S. customers reacted similarly to the loss of GSP status. We are in a truly global
economy. It hurts Americans just as much as it hurts our Thai counterparts to lose this
special privelege.
I therefore urge you to quickly do whatever is in your power to obtain approval for an
extension of the GSP program before it expires in July. Thank you for your consideration.
EprfcLRblhenberg
Sales Manager
U.S.A. • 433 N Camden Or . Suite 600 • Beverly Hills. CA 90035 • Tel 310-288-1870 • Fax 310-288-0791
Taiwan • Thailand • Hong Kong
124
bTa
BORDER TRADE ALLIANCE
April 23, 1993
Committee on Ways and Means
HOUSE OF REPRESENTATIVES
1102 Longworth House Office Building
Washington, D.C. 20515
On March 2, 1993, the Border Trade Alliance's San Diego
chapter held a meeting of its Customs Committee. One of the
issues addressed was the July 4, 1993, expiration of the
Generalized System of Preferences (GSP) program. The San
Diego Customs Committee members unanimously supported
renewal of the GSP program.
On behalf of the committee members, I would like to ask for
your supporting the quick renewal of the GSP program, which
provides duty free access for goods from developing
countries, is correctly based on the premise that trade, not
aid, its the most effective means for promoting the economic
growth and industrialization of these countries. Since its
inception in 1974, the GSP program has served as a valuable
trade policy tool for encouraging beneficiary countries to
make progress toward conforming to internationally
recognized standards such as the protection of intellectual
property rights and worker rights. The duty-free program
also permits U.S. companies to offer American consumers
affordable quality merchandise.
Many BTA members experience the GSP program's impact, since
Mexico is one of the largest beneficiaries of the program.
The GSP's duty savings are an important factor lending to
the competitiveness of U.S. business manufacturing in
Mexico.
It is understood that Mexico may cease to be a GSP
beneficiary country under the terms of the North American
Free Trade Agreement (NAFTA). Yet NAFTA will not become
effective until 1994, leaving a minimum six-month lag from
expiration of the GSP program until implementation of NAFTA.
Thus, we additionally recommend that the renewal of Mexico's
GSP status be made retroactive to July 4, 1993, should the
renewal of the GSP program occur after the July 4, 19993
expiration date. .
The expeditious renewal of the GSP program is of paramount
importance to the Border Trade Alliance. Thank you for your
attention in this matter.
Sincerely,
^hyjuuj^^^-'
t&^JUL
Mary Alice Acevedo
Chair, San Diego Chapter
125
THE DAIRY TRADE COALITION
1258 27th Street. H.U.
Washington, D.C. 20007
Telephone: 202/342-5530 Fax: 202/342-5532
FAX CORRECT I ON