MR. NELSON: I, too, want to thank you for the opportunity to participate in listening session. My name is Jack Nelson and I'm president of the Rio Grande Valley Sugar Growers. Rio Grande Valley Sugar Growers is a cooperative that's owned by 134 farmers and produces 35 to 45 thousand acres of sugar cane in Hidalgo, Cameron, and Willacy Counties. Rio Grande Valley Sugar Growers injects about 40 to 60 million dollars into that local economy. We're very important in that area of the state of Texas. U.S. agriculture is extremely vulnerable as we approach the next trade round. If we negotiate carefully, there's enormous potential for responsible American producers to compete and prosper in a genuine free trade environment. U.S. sugar farmers endorse the goal of genuine, global free trade. Through our national coalition, the American Sugar Alliance, we have endorsed the goal since the start of the Uruguay Round in 1987. We want global free trade because U.S. sugar producers are efficient by world standards, and we would welcome the opportunity to compete on a genuine level playing field.

U.S. sugar growers are among the most efficient in the world despite costs -- high labor costs and environmental standards. The world sugar market is the most distorted in agricultural trade. Lavish export subsidies by the European Common Market allow it to dump excess sugar on the world market. Also the EEC helped subsidize exports of sugar from Africa, the Caribbean, and Pacific regions through refined sugar from Europe.

Mexico has been an importer of sugar for a number of years prior to the inception of NAFTA; nonetheless, NAFTA has provided Mexico with more than three times its traditional access to the U.S. market during the first six years of the agreement and 35 times its traditional access during the seven to 14 years, and virtually unlimited access thereafter.

These provisions were negotiated by U.S. and Mexican governments and contained in President Clinton's NAFTA submission to Congress which Congress approved in November of 1993. The sugar provision, as altered from the original NAFTA text, were critical to the narrow Congressional passage of NAFTA. Nonetheless, Mexico is now undermining the integrity of NAFTA by claiming that the sugar provisions are somehow invalid. This questioning by Mexico has bred deep feelings of distrust in trade agreements among U.S. sugar-producing -- my U.S. sugar-producing colleagues.

The WTO ministerial will play a pivotal role in establishing the scope and parameters and goals of the next multilateral trade round. Due to past experience with trade

agreements, U.S. sugar farmers urge the U.S. agriculture negotiators do to the following:

First, U.S. must not forge any new trade agreements, nor reduce its government programs any further, until countries have complied fully with the Uruguay Round and other trade agreements, as the U.S. has done. U.S. must not produce -- reduce its support for agricultural programs, particularly from import sensitive crops such as sugar, any further until other countries have reduced their support to our level.

Elimination of export subsidies and State Trading Enterprises must be given top priority in the next trade round. The wide gap in labor and environmental standards between developed and developing countries must be taken into account in the next trade round to provide both incentives and penalties that ensure global standards rise developed country levels. A flexible request offer type negotiation strategy must be followed in the next trade round.

U.S. sugar producers believe that the next trade round poses a serious threat to efficient U.S. sugar producers. The only way to respond to this threat and respect the integrity of the no-cost U.S. sugar program is to operate the tariff rate quota on a needs basis with adequate second-tier tariff -- with adequate second-tier tariff. No more sugar should be imported into the U.S. market than the markets needs. To do otherwise would destroy the U.S. sugar program and the U.S. industry.

I thank you for the opportunity to make these brief comments, and if you have any questions I'll be glad to answer them. Thank you.

MR. GALVIN: Thank you, Jack. By the way, I saw Paul Yancy (sp) yesterday and he said be sure and tell you hello today.

MR. NELSON: Thank you.

MR. GALVIN: Do you have any comments over the current implementation of the TRQ program for sugar? Do you feel like it's working well, not so well, anything like that?

MR. NELSON: The only -- the TRQ program is working very well. The only problem we have is with the low price of world market being with NAFTA, where the tariff quota is so low that five cent world market sugar with a competitive tariff that would bring in sugar over the quota sugar. It basically lowers the domestic price of raw sugar in this country.

Other than that, the rest of the GATT is fine. If the tariff was at the GATT level, even at these prices, they would not be able to bring sugar in over the quota sugar. And I think that's the only way.

MS. BOMER-LAURITSON: Yeah, I have a question. In the beginning of your comments you talked about global free trade. Reading between the lines, are you suggesting that if all other countries were to eliminate quotas and have the same market access and everybody have the same playing rules for sugar, that you would support elimination of the TRQ. Or are you suggesting that we have to keep the TRQ no matter --

MR. NELSON: We feel like that if everybody played by the same rules -- in other words, if you could do something on exchange rates so that countries such as Brazil get lowered exchange rates of four percent three months ago, and make them tremendously more competitive in the world

market than what we are, something could be done on that. That if you eliminate all the different barriers that there is to trade and we played on a level playing field, that we can compete with most of the countries' work. There are countries like Australia, probably the most efficient in the world; we might have a hard time competing against them. Most other countries we could.

There's other accounting procedures that countries use where their depreciation and interest are not counting in their costs. And so -- and the value of the currency in those areas makes them more competitive even than we are.

The other thing is most of these countries at world have prices within their own country that they sell their product at, they have special trade agreements with other countries, and then they take 10 or 15 percent of the rest of the sugar and dump it on the world market. There's only 10 or 15 percent of the total production in the world that's actually marketed on the world market at a price far below the cost of production in most of those countries. Those kinds of things are what I'm talking about.

MR. GALVIN: Thank you.