MR. SCHULER: Good morning, I'm Ron Schuler, President and Chief Executive Officer of California Canning Peach Association and this is the position I've held for the past 25 years. I'm testifying today as a member at large for the California Cling Peach Growers Advisory Board.

The Board represents all 750 California cling peach growers and our processors of canned peaches. This represents the entire U.S. canned fruit for the canned peach industry.

Our industry's position on the upcoming WTO agriculture negotiations is shaped by our longstanding dispute with Europe over illegal EU canned fruit subsidies. Nearly two decades of bilateral and multilateral efforts, including a GATT action, a bilateral agreement and the Uruguay Round have failed to resolve this dispute or even provide interim relief.

Not only has our industry had no relief, but EU canned peach subsidies over this period have increased the national subsidies. This small EU sector, predominantly in Greece, receives between $161 million and $213 million annually of EU aid. To put this in perspective, this is more than the farm-gate value of the total California cling peach crop and more aid than any single fruit or vegetable the U.S. agriculture sector receives.

This exceptional level of aid has encouraged chronic overproduction in Greece, allowed Greece to dominate the export market, to depress global canned peach prices while doing so. Our industry has lost markets in Europe, Japan, Canada an even here in our own U.S. market.

Most recently, we are facing competition from Greece and Mexico that has forced the cling peach processor, who for many years has purchased raw product, fresh cling peaches, from California, forced him to close his cannery in Tecate, Mexico. Here we thought we had NAFTA preferential access to the Mexican market. And now the Greeks are selling Greek canned peaches to Mexico at a price below our cost to produce canned peaches either in California or in Mexico. The Mexican duty for canned peaches is 23 percent, California duty is six percent and still we cannot compete.

Time is running there -- we are also equally insistent on maintaining our U.S. Tariffs in the face of increasing U.S. imports of subsidized low-price EU canned peaches. We need assurances that U.S. Tariffs on canned peaches, fruit mixtures and other cling peach products will not be further reduced until equitable market-oriented conditions are restored. This means U.S. canned peach tariffs should be exempt from tariff reductions until EU canned food subsidies are substantially reduced, if not eliminated.

In conclusion, our industry needs to see that the past agreements will produce the relief we are due before we endorse new agreements in Agriculture.

We thank you very much for being out here today and listening to our concerns.