Thank you very much. We appreciate hearing from you. I'd like to have members of Panel Number 2 approach the bench. If possible, I'd like to you have sit in the order in which you are presenting from left, your left to right.

Thank you. Our first speaker will be Tom Avinelis from the California Olive Association.

MR. AVINELIS: Thank you very much. My name is Tom Avinelis. I'm a California olive grower and here today representing the California Olive Association.

Our association is made up of both growers and processors. We handle approximately 85,000 to 160,000 tons of olives per year. Over 85 percent of our production goes into the producing of black ripe olives. We have approximately 1,200 growers in range of size from five to a thousand acres.

Our production alternates from year to year, but with our proper marketing management we're able to supply our industry with a consistent product for the retail consumer. And, however, our suppliers for food service agencies have been disrupted recently due to increased imports of smaller black ripe olives at prices that cannot be matched by our domestic industry.

Almost all of these olives, black style, are imported into this country from European Union, primarily from Spain. In fact, these imports now have about 50 percent of the food service business. There's five key issues I'd like to cover today that greatly affect our industry.

First, I feel that no U.S. tariff reductions should go into place until the EU subsidies are eliminated. In 1997 $2.5 billion of subsidies went to the olive industry in Spain. An additional $2.5 billion of subsidies went to the vegetable and fruit producers, a portion of which also went to the olive industry.

Further, last July, the EU also approved a new subsidy program for the olive sector which went into effect for the next three marketing years. Our industry was astonished to learn about this program. We believe at the Uruguay Round that there was going to be a reduction in subsidies, and our members do not understand how this could happen. It appears negotiations and negotiators allowed Europe to reduce tariffs, but create new subsidies where there'd been none before.

Under this new subsidy program, Spain will receive, in the 1998/99 marketing year, approximately seven and a half cents per pound on 238,000 pounds or $37.4 million. This is equivalent to about $150 a ton, equivalent in the United States.

The U.S. olive industry is small but we've made major gains in the last decade for efficiency. However, in the face of this tremendous competition, it's curtailed our ability to be able to compete.

Tariffs must be more symmetrical. There is an enormous differentiation between U.S. Tariffs and other WTO tariffs. And this issue of transparency is greatly affecting our industry also. The domestic olive industry is not fully certain how many of these programs are currently being implemented in the UA, but there are subsidies that go directly to growers, there are subsidies on an export per kilo or 30 pesetas per kilo program that go to exporters and a new program going into place that will be a direct per tree subsidy for all growers within Spain. Regardless what tariff factors are, we cannot compete against this kind of subsidy factor.

Also, we believe that the FTAA holds great promise for the California olive industry in reducing all tariffs and allowing free marketing into all of the Americas. Yet, as long as subsidies continue to remain in Spain, we still will not have a competitive edge. We already are at a great detriment with our labor factors, which is anywhere from two and half times greater than that in Europe, to as much as ten times greater than that in Mexico, with the environmental restraints at our processors and that our industry has placed upon itself to be able to be sure that we can produce the safest food in the world.

But we feel that we're up to this challenge as long as we can play on a more even playing field.

Fair trade is the key.

ACTING CO-MODERATOR VILLARREAL: Thank you, Mr. Avinelis.

MR. AVINELIS: Thank you very much.