Sheldon.

CO-MODERATOR JONES: Thank you, Mr. Secretary. I want to join my colleagues in thanking you and your staff for the great job you've done and also the Speaker this morning for the breakfast. On behalf of Governor Jane Dee Hull, Governor of Arizona and the State of Arizona, the Department of Agriculture. From Arizona and our $6.3 billion agricultural industries, I wish to thank US Secretary of Ag, Dan Glickman and U.S. Trade Representative Charlene Barshefsky for scheduling this series of listening sessions.

I commend your effort to learn of the recommendations of the ag community on what the trade objectives of the United States should be in the next round of negotiations for the Seattle Ministerial and the free trade area of the Americas.

Recently, the Arizona Department of Agriculture had the opportunity to participate in the formation of a coalition, the coalition that we know as NFACT, with the Departments of Agriculture from New Mexico, Florida, California and Texas. NFACT represents over 23 percent of total U.S. agriculture cash receipts as well as 25 percent of the entire U.S. delegation.

Agricultural exports from the states represented by NFACT in 1997 were estimated to be over $5 billion. Among the positions of these five states, we have gained consensus. And one of those issues is the issue of international trade. While we represent varied constituencies, our concerns with the fundamental agricultural trade issues are very similar. Our concerns with fundamental agricultural trade -- wait, I just said that didn't I?

My comments today will reflect many of the concerns that the NFACT coalition has expressed to the U.S. Department of Agriculture, the Office of the U.S. Trade Representative and Members of Congress in our recent visits.

The World Trade Organization today is a result of 50 years of American leadership in the creation of an international trading system. This system was designed with the primary goal of tearing down foreign trade barriers and promoting a singular rule of law in the arena of international trade.

The WTO has worked to cut tariffs and quotas on farm and ranch products worldwide. However, many will agree there's much more to be accomplished. Today, I will touch on five issues which the State of Arizona views as critical to the success of any international trade system for agricultural products.

Those issues are reduction of foreign subsidies and tariffs, implementation of rules for perishable and seasonal commodities, dispute resolution mechanisms, adherence to sanitary and phytosanitary agreements, and transparent market access for genetically modified organisms.

The Arizona Department of Agriculture supports the unilateral reduction of foreign subsidies and tariffs on all agricultural products. Ample time has passed since the WTO initiated agricultural trade reform. And it should not be unrealistic to expect the WTO member countries to have significantly reduced agricultural dependence on governmental support.

The 1996 Farm Bill clearly established the expectation that U.S. agricultural industries will learn to compete internationally without subsidization or face going out of business.

The days of heavy governmental assistance for farming and ranching in this country are over. This, as we all know, just isn't the case throughout the rest of the world. Without the elimination of the governmental subsidies of WTO member countries, Arizona's and the United States' agricultural industries are at a substantial disadvantage.

Equally important is the issue of tariffs placed on ag products. The Arizona Department of Agriculture supports the reciprocal reduction of tariffs with WTO member countries on U.S. agricultural products. The tariffs on fruits and vegetables entering the United States, for example, are among the lowest in the world. Legitimately, the agricultural producers of Arizona believe that reciprocity should be granted on all such tariffs and WTO member countries be uniformly reduced. It also warrants clarification that true reductions in tariffs should be thorough in nature. That is, not only should the boundary be addressed when reductions are made, but rather the currently applied rate should be addressed simultaneously.

If the applied rated is not addressed, oftentimes the tariff reductions are meaningless. The Arizona Department of Agriculture supports the implementation of rules for the trade of perishable and seasonal commodities. In fiscal year 1997, Arizona agricultural operations raised everything from artichokes, cotton and corn to honey, tomatoes and watermelons, generating nearly $2.2 billion in cash receipts for marketing needs.

While Arizona produces a variety of crops, second only to the State of California in diversification, a great number of commodities produced in my state are seasonal and perishable in nature. Presently, no specific rules exist to deal with the trade of perishable and seasonal commodities. When asked if specific rules for perishable commodities were needed at the ag forum, immediately preceding the free-trade area of the America's Business Forum and the former head of the Uruguay Round agriculture negotiating team, agreed that specific rules would be both helpful and advisable.

Because we produce a tremendous number of fruits and vegetables, as well as live animal agriculture, the Arizona Department of agriculture calls for the development of trade rules for these perishable and seasonal commodities. The Department also supports the implementation of a workable and meaningful dispute resolution mechanism. Presently, Arizona believes that the avenues for dispute resolution within the WTO inadequately suit the needs of perishable or seasonal commodities. By their very nature, these commodities require timely solutions to ensure that perishable shipments are not lost to bureaucratic or political mechanisms.

In the new round of negotiations, Arizona recommends that the U.S. solicit clarification of the dispute settlement process with strong enforcement mechanisms, limited settlement appeals and strict compliance deadlines.

The Department supports the Uruguay Round agreement on sanitary and phytosanitary measures. Despite the adoption of the Uruguay Round Agreement on sanitary and phytosanitary measures, also known as SPS, a number of WTO member countries continue to impose sanitary and phytosanitary measures, which are questionable in nature and lack a basis in sound science.

These SPS measures create tremendous barriers to market access abroad for U.S. agricultural products. While the WTO member countries wish to reopen the SPS agreement for amendment, the Arizona Department of Agriculture believes the WTO's strict enforcement of the SPS agreement and the adherence to these standards by all member countries is essential to the success of any international trade system.

While increasing international trade, Arizona and its border state counterparts have experienced significant increased detections of plant and animal pests and diseases at our borders. These detections have devastating economic impacts to Arizona's ag producers if left unmanaged by the U.S. and trade alliances like the WTO.

Unfortunately, U.S. Customs, USDA, the U.S. Food and Drug Administration have not been able to provide adequate border inspections and surveillance efforts due to budgetary and staffing constraints. Focus must be made on the enforcement of legitimate science based sanitary and phytosanitary measures and not the non-tariff trade barriers promulgated by other nations.

The Department of Agriculture supports transparency to generically modified organisms, approval process and market access for GMO's. I understand the Administration is presently working on a position for the U.S. to take at the Seattle Ministerial regarding the issue of biotechnology.

As a representative of the $6.3 billion ag I am tremendously concerned that the European Union's approval system for biotechnology products appears to be less than transparent. The Department of Agriculture continues to advocate a global market access for GMOs in all WTO countries.

Further, we believe it is imperative that any process developed for the approval of GMOs is fully transparent to all parties.

In summary, the Arizona Department of Agriculture advocates and urges you to support the unilateral reduction of foreign subsidies and tariff, implementation of rules for perishable and seasonal commodities, dispute resolution mechanisms, adherence to the Uruguay Round Agreement on SPS issues and transparent market access for GMO's.

On behalf of the State of Arizona, the Department of Ag and the Governor and the industries that we support, I want to thank you for providing our local government the opportunity to comment and participate in today's discussions. If there's any questions, I'd be happy to take them.