Greg Thompson from the Prune Bargaining Association.

MR. THOMPSON: Thank you. My name is Greg Thompson. I'm general manager for the Prune Bargaining Association. We represent growers throughout California. However, I'm here today on behalf of the California Prune Board to address three trade issues that are of particular concern to the California prune industry.

The first of these is the protectionism of the Israeli Government for their very small domestic dry prune industry. The Israeli government allows importation of prunes only by import license. These licenses are distributed through favoritism to companies that are not even prune importers, who then resell them at a profit to legitimate prune importers. There's no transparency to the licensing system. It's inefficiency limits access for California prune exporters.

In addition, an artificially low tariff rate and import quota of 2,000 metric tons, an exorbitant tariff above this quota, creates an ex-custom price of $7,500 per metric ton, which further limits our ability to export prunes.

Our second concern is the import tariffs of 30 percent that China levies on California prunes and a 35 percent levy on prune juice and concentrate, which discourages direct importation.

In China, there's a 17 percent value added tax and a 5.1 percent consumption tax. This increases the price of our prunes to a point where a bag of California prunes costs nearly ten percent of the average Chinese worker's weekly salary. If China is allowed to enter into the World Trade Organization, they must be persuaded to lower their protectionist import duties.

Finally, the European Union's processor subsidy system has led to the expansion of prune production in Europe under artificial price supports. These subsidies began in 1978 and encourage farmers to expand production. This resulted in a severe over supply in 1996. While France, the largest producer in Europe, has since taken measures to limit production, California has lost market share in Europe due to the permanent expansion of their industry, which was encouraged by the EU subsidies.

The EU pays these subsidies to prune processors who then agree to pay guaranteed minimum prices to prune growers. The resulting grower prices have averaged more than twice as much as what California prune growers receive.

While the prune industry in France has taken steps to manage their supply, we are concerned that unless these subsidies are limited, further expansion of prune production in Europe will result in further loss of markets to our California growers.

The GATT agreement, resulting from the Uruguay Round, only affected producer subsidies, not processor subsidies. This unfair trade practice has continued, but must be addressed in the next round of trade negotiations. I'd like to thank you for this opportunity to speak to you today.