Mr. Quarles.

MR. QUARLES: I'm William Quarles, vice president of Corporate Relations for Sunkist Growers.

We appreciate this extra effort by your Departments and offices to listen to agricultural producers around the country to help set the priorities for the U.S. negotiating agenda in the next WTO round. This will summarize my prepared statement, which I understand will be included in the word.

Sunkist is a not-for-profit agricultural cooperative owned by 6,500 citrus growers in Arizona and California. We produce 65 percent of the citrus fruit in the two states.

International trade is of vital importance to Sunkist as we export over one-third of our production, from which we derive about 45 percent of our members fresh fruit revenue. No dumping here.

We advocate our members' interests on trade issues. Let the record show, we have delegated that responsibility to no other individual or organization on trade or any other issue. We appreciate the fact that these negotiations will define the terms and conditions of international trade and agricultural commerce for the next decade and beyond. These will be the new groundrules that we will have to live by.

But first, we wish to take this opportunity to commend the Clinton Administration, USDA, USTR and the State for the significant Market Access Agreement with China that will prove over the years to be an outstanding export market for the U.S. citrus industry.

This has come on the heals of other significant market access achievements on behalf of the U.S. citrus industry the past couple of decades, India, Japan, Taiwan, Korea, Thailand and many others. I know some of you, particularly Secretary Rominger and Dr. Murphy, have had significant personal involvement in these activities over the years, along with a couple of other of your colleagues here today, Jessica Wasserman and Pat. We're greatly appreciative.

With the recently achieved access to China and India, the U.S. Citrus industry is in the enviable position of now being able to focus almost exclusively on development of those world markets. The Uruguay Round resulted in a great deal of progress toward freeing world trade and agriculture. We request that the next round build upon that progress.

With that as background, there are three priority issues that confront our industry as we move toward market and development, which we urge be dealt with during the next WTO round.

First, tariffs. As is usually the case, once market access is achieved, the next hurdle is overcoming significant tariff barriers. Today, we face a 74.5 percent out-of-quota duty on oranges into Korea and a 50 percent in-quota tariff under the current tariff rate quota system, which I will speak to later.

Additionally, we're charged a 42 percent duty on lemons and grapefruit in Korea, 38 percent duty on oranges into Japan during the winter months and a 19 percent tariff during the summer months, 40 percent duty into Taiwan, 51 percent duty on oranges into Thailand and a 56 percent tariff for lemons and grapefruit and a 51 percent tariff on our citrus fruit into India.

And then on top of that, an issue that Dr. Murphy is familiar with, the European Union's discriminatory tariff preference scheme that is still in place. Meanwhile, citrus from these countries enjoyed almost duty-free entry into the United States. Korean citrus, for example, is assessed one cent per pound, less than one percent on an add valorem equivalency basis for entry into the U.S. We urge our negotiators to press for harmonization of citrus tariffs imposed by our trading partners at the United States at the U.S. level.

Second, tariff rate quotas. Currently, our oranges are imported into Korea under a tariff rate quota system. Under that system, the entire import license is granted by the Korean government to the Korean Citrus Growers Association, our in-country competition.

They import the quota volumes on a low-bid basis for closing organizations such as Sunkist from developing that market through the use of advertising and promotion. The tariff rate quota system should be eliminated or reformed.

Thirdly, SPS. We must maintain and enforce strong science-based sanitary and phytosanitary policies. This would include resisting every effort by some of our trading partners to open up the SPS agreement to modify it by substituting political science for sound physical science.

Finally, a matter that will not be addressed in the next round, but is a major restraint of trade, nonetheless. All of the aforementioned, the significant market access successes achieved over the past couple of decades by the Clinton Administration and its predecessors along with tariff harmonization and the elimination of tariff rate quotas will be meaningless to our industry if our government does not act effectively to prevent production areas in California and Arizona from being overrun by exotic pests and diseases.

Given our past progress in eliminating trade barriers, the most significant future restraint of trade is and will be pest and disease quarantines of agriculture production in the United States. Quarantines by key trading partners of our fruit lying in infestation areas is more devastating to our ability to export than the highest of tariffs. These infestations are occurring with greater frequency.

Last year, we suffered 26 exotic pest infestations in California with several key trading partners imposing quarantines on all citrus production in San Diego, Orange and Riverside County.

CO-MODERATOR JONES: Mr. Quarles, if you can summarize.

MR. QUARLES: This demands the attention and effective remedy of our government. It must be recognized that as government is downsized, if all agencies are downsized at the same rate, some will be downsized to the point where they can no longer do their jobs. APHIS has long since passed that point.

The Congress and the Administration must focus more attention and restore more budgetary resources to address this need. We call on President Clinton for leadership toward this end. Otherwise, it is feared the elimination of all tradition of restraints of trade in citrus in the next round will go for not.

Thank you, Mr. Chairman, for bearing with me.