Mr. Neenan.

MR. NEENAN: Good afternoon. Is this on?

CO-MODERATOR LYONS: It's on now.

MR. NEENAN: Good afternoon. My name is Rob Neenan. I'm director of Technical and Transportation Services at the California Grape and Tree Fruit League. I'd like to thank you for the opportunity to appear today to discuss an issue that is of considerable importance to our industry and one that we think should be a major priority of the U.S. negotiators in the upcoming Seattle Ministerial negotiations, and that is maintaining the integrity and the enforcement of the sanitary and phytosanitary agreement.

To illustrate the importance of the current SPS agreement, I would like to provide an example of how problematic it can be to deal with countries not bound by WTO rules. The example I will use is Taiwan, a country seeking membership in the World Trade Organization, but is currently operating outside WTO rules and procedures.

As you may know, in early March, the Government of Taiwan announced that it would begin enforcing its own chemical residue standards. As of July 1, two days from today, Taiwan may begin enforcing new and restrictive chemical residue regulations on imported fresh fruits and vegetables.

While it is certainly within a country's right to protect the health of its citizens, a number of Taiwan's actions appear to be arbitrary and are likely to be extremely restrictive and constitute violations of the WTO SPS agreement.

First, Taiwan has stated that it has its own chemical residue standards. These standards are frequently stricter than international Codex levels. In some cases, Taiwan has outright bans on chemicals that have acceptable tolerances in the Codex. As you may know, countries in the WTO are indeed allowed to have maximum residue levels that diverge from Codex levels.

In fact, U.S. standards sometime differ from Codex, but in this case and other countries must always provide scientific evidence to justify any diversions from Codex. To our knowledge, Taiwan has not offered any such evidence.

Second, it's our perception that Taiwan's actions have a trade-restrictive nature. The SPS agreement establishes national treatment standards and imported products must be treated the same as domestic products. Again, Taiwan's actions are not consistent with the WTO rules. Taiwan has claimed that it will test one in 20 shipments coming into Taiwan, but it has not said if it will test domestic food shipments at the same rate.

When countries are allowed to hold foreign commodities to a different standard than domestic commodities, it opens the door for protectionism through non-tariff barriers. The SPS agreement was created so that such barriers would be eliminated.

Finally, although Taiwan initially gave notice that it was planning to change its chemical residue policy as the SPS agreement requires, it has made a number of subsequent decisions that have affected produce that is currently en route to Taiwan.

Most notably at our WTO meeting in Geneva in May, Taiwan made a verbal agreement with the U.S. that it would delay the implementation of its new chemical residue testing until January 1, 2000, because of concerns that the standards would hinder trade. However, on June 16th, just a few days ago, to the surprise of U.S. officials, Taiwan announced that it would go ahead and implement its new standards on July 1.

This gave the world exactly 15 days to prepare for such major changes. As it currently stands, dozens of ocean shipping containers of California food are currently on the water headed for Taiwan and may have to be rejected or destroyed on arrival if they do not meet the new standards.

As I stated earlier, maintaining a strong SPS agreement and ensuring that the SPS rules are followed should be a top priority during the Seattle round. Actions outside these rules, such as those taken by Taiwan over the last few months, demonstrate the harmful effects of a weakened agreement.

The SPS agreement must be protected in upcoming Seattle round negotiations. Further, Taiwan's accession into the WTO must be prohibited until their restrictive chemical residue regime is brought in line with international standards and until their government can demonstrate its ability to operate within the established rules of international trade.

In conclusion, I know you heard about this issue earlier today, but we wanted to emphasize the importance of it, because it potentially affects millions of dollars of California trade.

So I'd like to thank you very much for your consideration of our comments.