Yes, Mr. Ambassador.

AMBASSADOR BAAS: Thank you. I have one for the two nut guys.

(Laughter.)

AMBASSADOR BAAS: I'm sure you've heard that a million times. Anyway, I appreciate that there are high tariffs in a number of your markets and that maybe some of these countries don't produce almonds or pistachios. But the thought occurs to me that maybe they produce other nuts that they're afraid are competing or will be hurt by imports of your products.

Are there any studies that have ever been done on, you know, the competitiveness of almonds and pistachios with other nuts, I don't know, cashews or walnuts or whatever, that are produced in India and Korea and any other places you mentioned? Is there anything along that line that's ever been done that would show that, you know, almonds, for example, are really not competing with cashews, because they're used this way or another way?

I'm kind of just looking here for some ammunition.

MR. EASTER: Let me start here. Steve Easter --

AMBASSADOR BAAS: And maybe my assumption is wrong too, I don't know.

MR. EASTER: Steve Easter with Blue Diamond. And I'll start off and address that issue. The principal market that I mentioned as being a problem for the almond industry is India. And they are a cashew producer of sorts. They actually do a lot of reprocessing of cashews and ship them.

But those cashews, most of which come into the United States, come in duty-free. So, you know, what we're talking about here is kind of a reciprocal arrangement. And what we find in looking at those markets, and I suppose experience may be the best study, and this has to do with a lot of, let's say, a basket of nuts, tree nuts, we put them in that category, is we find there are a lot of complementary uses.

And, in fact, the industries together, through the International Nut Congress, are doing a lot of work together on the research about the benefits of consuming nuts. And so what we find out is that we tend to be complementary, that if nut consumption in a country or in an area is up, all nuts are generally up and it helps everyone.

And so we don't believe it's a big competition factor. It could come up in one or two instances, if one particular nut product is especially expensive one year and another is particularly cheap, there may be some cross over, but even then we usually don't find more than about ten percent. That's been our experience.

And, you know, I think a good example here at the table is almonds and pistachios. Pistachios are largely, what we call, eaten out of hand, as a snack item, where almonds are largely an ingredient item. And so there are all types of uses of these different products.

And so at least our history, as we go along, has shown that we're much better off acting as complementary products than as competing products.

MR. KAPLAN: The only thing I have to add is that in a lot of cases pistachios are not competing directly. And when you look at a tariff on a raw product, when we would -- and pistachios, being a consumer item, need more processing, roasting, salting. And it's upsetting to us that a raw product that could help an industry, an example, India, where they can be taking that raw product and then processing it to still have a 45.6 percent tariff makes no sense, because we're not sending a finished product. We're trying to get a raw product.

AMBASSADOR BAAS: It makes no sense from their point of view.

MR. KAPLAN: Yes, thank you. It makes no sense for them, because it can help start industries within their own country.

AMBASSADOR BAAS: Thanks.

USDA DEPUTY SECRETARY ROMINGER: I want to comment on the two nut commentators here as well.

(Laughter.)

USDA DEPUTY SECRETARY ROMINGER: The almonds --

CO-MODERATOR JONES: Figuratively speaking.

USDA DEPUTY SECRETARY ROMINGER: I think you know Steve that we had negotiations going on in Geneva, now with India, over some of our balance of payment issues. And we're arranging this tariff issue there in that forum. If we're not successful there, however, it certainly will be an item in the next round of negotiations. So we're going to keep after them.

MR. EASTER: Thank you very much.

USDA DEPUTY SECRETARY ROMINGER: Ken, on the pistachios, if you have any data on domestic subsidies, we'd like to have that so we could have that ammunition going into the negotiations.

MR. KAPLAN: I will get that for you.

USDA DEPUTY SECRETARY ROMINGER: Okay. Thank you.

On Taiwan and their new pesticide tolerances, that's an issue that actually is being discussed, as we speak here today, in an APEC forum that's taking place. Ambassador Fisher is raising that issue there. And Taiwan's accession to the WTO is certainly going to be contingent upon a satisfactory negotiation with respect to this issue, so we're working on it.

MR. MILLER: That would be good to have that resolved.

CO-MODERATOR LYONS: Mr. Chairman, maybe I could ask Mr. Miller to maybe expand on what that issue is for the rest of the panel that might not quite have the in-depth -- you know, how serious it is.

MR. MILLER: Thank you, Mr. Secretary. Yes. Well, Taiwan, as you know, is trying to come in to the WTO. So you assume that they've read the existing laws. And that's why I see where we need some clarification, because here they are trying to set up a maximum residue level for incoming commodities from throughout the world. They're looking at their old standard, which is fairly limited, a small island nation, tropical country, practically, so it has a different list. So it's now trying to figure out how to apply Codex.

It's very haphazard their implementation of this process. They're not clear on what they're supposed to do, therefore our growers who are currently in the midst of shipping season suddenly have to face a new range of conditions upon entry of fruit that was shipped without prior knowledge of these conditions.

And it's difficult for the Taiwanese. Obviously, they're trying to come in to this new process. But we need to have a fairly clear set up how to put in this type of residue testing, so that everybody has fair access and fair warning of that access. And I just think that we've seen -- hopefully, we've learned from this particular experience with Tawain that we have to have a good dialogue and a good standard that can be put forward in these types of negotiations.