Introduction

Mr. Chairman, thank you for the opportunity to appear before the Subcommittee today to discuss the topic of trade policy and fast track negotiating authority. This is a timely discussion as we prepare for the Seattle WTO Ministerial Conference later this year. At that time, the world's trading nations are expected to launch another round of negotiations which will enhance our trading opportunities. My distinguished colleague, Deputy U.S. Trade Representative, Ambassador Richard Fisher, has addressed the need for fast-track authority which would provide additional impetus and support for the ongoing efforts of the Administration to open foreign markets to U.S. goods. Ambassador Barshefsky, with the support of her team and that of the Commerce and other agencies' staff, have done an excellent job to increase U.S. export opportunities. With fast-track, we could do more.

First, however, I want to address an underlying, fundamental issue which has prolonged the debate over fast-track authority. As I see it, one of the most important issues that confronts us in the trade arena is the lack of domestic consensus regarding the importance and impact of international trade and the best means to address it. That remains the central fact in the debate about fast track. At the Department of Commerce, we are keenly aware of this problem. Today, I would like to discuss some of the opportunities that lie before us as well as some of the challenges we face and what we in the Commerce Department are doing to try to build domestic support for our important trade agenda.

Trade makes a tremendous contribution to the strength of our national economy and to the economic well-being of our citizens. Our standard of living is the envy of the world. However, recently exports have leveled off as a result of the global economic downturn. At the same time, a booming U.S. economy has resulted in steady import growth, contributing to record trade deficits. As global economic conditions improve, it is essential that we continue our work of opening markets and promoting U.S. exports. If we are to maintain the best jobs and best wages, a strong export sector will be key to sustaining economic growth and rising living standards; we must take every opportunity to maintain and improve the system of trade.

In the ten years ending in 1997, U.S. exports gained over 140 percent (adjusted for price changes) and accounted for one-third of total economic growth. These gains have provided job opportunities for millions of Americans. And these jobs pay wages that are significantly above those in the rest of the economy. The U.S. economy is inextricably linked with the world economies through trade. Relative to the size of the economy, total trade (exports and imports) has risen from about 9 percent of GDP in the early 1960s to 24 percent today.

The balance of trade in goods and services was in deficit in the amount of $164 billion in 1998 and at an annual rate of $218 billion thus far in 1999. Exports declined 0.4 percent in 1998, the first outright decline since 1985, and in early 1999 were down 1.2 percent from the same period a year ago. Imports, however, continue to advance on the strength of the U.S. economy. This not, however, a reflection of a loss in U.S. competitiveness, but rather the weakness in the global economy outside the United States. With a continuing strong economy imports continue to grow at a rate consistent with our domestic growth. The United States more than any other economy in the world is at the forefront of the new digital information economy. This puts us in a superior competitive position. Our competitive strength will be clearly demonstrated as the global economy picks up.

Opportunities for U.S. in International Trade

Mr. Chairman, we face many opportunities in the near term to build on these competitive strengths, and we are working hard to seize them for the benefit of American firms and workers. We have the opportunity to conclude multilateral market opening initiatives in the WTO by the time of the Seattle meeting. We expect to launch talks then for further liberalization in the WTO where we will work for more market access in services and further reductions in tariffs among other issues. We are also working at the regional level, as in the Free Trade Area of the Americas initiative, to open those markets as well

To reap fully the benefits of these opportunities, the President - and the Administration -- believes that traditional trade negotiating authority should be renewed, as he noted in the State of the Union, "to advance our prosperity in the 21st century." It is an important tool that lends credibility to our negotiators. And while it is not necessary to launch negotiations as we have done in the Free Trade Area of the Americas and expect to do in Seattle, it will be essential when it is time to bring those negotiations to a close.

Sectoral Initiatives -- One of the most immediate opportunities before us is the "Accelerated Tariff Liberalization" initiative. The United States and our APEC partners are seeking agreement this year on a global tariff reduction package worth $1.5 trillion in world trade in eight sectors: chemicals, energy, environment goods and services, fish, forest products, gems and jewelry, medical and scientific equipment, and toys. As a result of this agreement, U.S. industries could gain significant market access in foreign markets as duties as high as 60 percent will be eliminated. Last month, APEC Ministers also agreed that the sectors of food and oilseeds, civil aircraft, fertilizers, and rubber tariffs should be addressed in the tariff negotiations of the new round. U.S. worldwide exports of the industrial products (aircraft, fertilizers, rubber, and food products) account for more than $155 billion.

In another important tariff area, the Administration remains strongly committed to opening markets for information technology products and the U.S. information technology industries are solidly behind our effort. If successful, the ITA II will eliminate tariffs within four years on many products which were not covered in the original ITA.

Electronic Commerce - An area where we are seeking to ensure that governments do not do anything on tariffs is in electronic commerce. Currently, cyberspace is duty-free and we are seeking to make permanent the current moratorium on tariffs on electronic transmissions.

Transparency in Government Procurement -- The annual global government procurement market has been estimated at over $3.1 trillion. However, the vast majority of WTO Members do not have binding international obligations in the area of government procurement, primarily because they are unwilling to accept the market access commitments of the Agreement on Government Procurement. As a result, the United States has been pressing for conclusion this year of an Agreement on Transparency in Government Procurement. The WTO has made considerable progress and with more hard work, we believe an agreement is possible by the Ministerial.

New Round -- Beyond these initiatives that we hope to achieve by the time of the Seattle Ministerial, we expect to launch broad based negotiations because the cornerstone of our trade policy remains, as it has been since World War II, to reduce tariff and trade barriers globally, as well as regionally and bilaterally. Despite years of negotiations, though, there is no question that American exporters still face formidable barriers in some parts of the world. That is why the President called for a new round in his State of the Union address this year.

Our focus is on the "built-in" agenda of services and agriculture to which we may add industrial tariffs. Of course, many aspects of upcoming WTO agriculture negotiations will present important opportunities for U.S. processed foods exporters as well as others but today I would highlight two particular areas of opportunity for the manufacturing and services sectors.

We need to work on reducing the gap between bound tariff rates and applied tariff rates. It is inconceivable to me that a country could apply a tariff of, say, 15 percent to our exports for years -- high as that may be -- yet face no penalties under international trade rules for raising that tariff several times over up to the bound rate if it chooses to offer protection, for example, to a new investment. To ensure that we receive the benefits of tariff reductions we need to look at other barriers in customs, standards or certification requirements that can be important obstacles to market access.

The new round offers the possibility to improve access for U.S. services providers in overseas markets. Working in coordination with USTR, Commerce is leading our industry outreach effort, holding roundtables with industry groups to determine their views and priorities. Too few countries made meaningful market access commitments in the services area during the Uruguay Round and this is the time to make further progress.

Priorities for us include a broad range of service sectors with deeper commitments in telecommunications, together with fundamental improvements in commitments on distribution, audiovisual, construction, travel and tourism, the professions, finance, education and health, and others as well. We will seek to prevent discrimination against particular modes of delivering services, whether through electronic commerce or through a commercial presence in the host country.

Regional Opportunity -- An example of opportunities that lie before us at the regional level is the Free Trade Area of the Americas. The FTAA will remove trade barriers, offer preferential access to Latin markets, establish clear and transparent rules, and improve conditions for workers and the environment. Latin America already accounts for 21 percent of U.S. merchandise exports, up dramatically from under 14 percent at the beginning of this decade. The region has been a key contributor to the export-led expansion which has fueled one-third of all U.S. economic growth since 1992. In fact, Latin America has been responsible for almost half of all U.S. export growth since 1995. Further, excluding Mexico, Latin America is the only region of the world where the United States has consistently run a trade surplus in the 1990s.

Tariffs are a clear example where we have much to gain and little to lose, since tariffs in Latin America are four times higher than in the United States on average. In fact, because of the many U.S. preferential duty programs more than half of our imports from Latin America already enter the United States duty-free, and the average U.S. tariff on Latin goods is a low 2.3 percent. In contrast, most U.S. products face a minimum tariff of 5 percent in Latin markets and more typically 10-20 percent in the larger markets.

The advantages of strong trading rules in an FTAA are no less important. U.S. exports benefitting from Latin America's unilateral market openings and economic reforms need to be locked in. The peso crisis demonstrated the usefulness of Mexico's NAFTA commitments in keeping its market open to U.S. goods and its economic policies on course. By way of comparison, prior to the onset of its current fiscal crisis, Brazil enacted several measures to discourage imports, such as restrictive import financing, import licensing requirements, and an increase in Mercosur's common external tariff.

In the more foreseeable future, FTAA Ministers have agreed to implement meaningful business facilitation measures as a demonstration of "concrete progress by the year 2000." The immediate focus is on 10 customs-related business facilitation measures designed to ease the process of doing business within the hemisphere.

Mr. Chairman, we need to continue to level the playing field and reaping opportunities by engaging our trading partners in all these areas-sectorally, multilaterally and regionally. This Administration is not resting on past accomplishments -- we cannot afford to, especially in today's turbulent trade world that is changing so rapidly in terms of markets and technologies.

Challenges for United States Leadership

Clearly behind your call for these hearings today, Mr. Chairman, is the sense that we face many challenges at the international level and domestically. Many countries are seeking and forming trading alliances with their neighbors and even across oceans, and in this respect the EU has been particularly active. We can meet many of some of these challenges by making use of existing institutions, international rules and other tools available to us to continue to provide leadership. However, some of these problems have nothing to do with our domestic debate about trade and the availability or absence of fast track would not necessarily fundamentally change the dynamics. However we must continue our efforts to build the consensus on trade domestically for we do need fast track.

Latin America -- One of the areas where we most need to do something about increased foreign competition is right here in our own hemisphere. We cannot afford to take for granted the markets that have been responsible for almost one-half of all U.S. export growth since 1995. Latin nations, strongly encouraged by the United States, have moved beyond their traditional closed markets to embrace greater market openness and increased competition. We have welcomed this change, because it has created greater economic growth, expanded market opportunities, reinforced economic reform, and buttressed the emerging democratization of the region.

But at last count, more than 30 regional and subregional trade arrangements were active within the region without U.S. participation. Chile, for example, either has or is negotiating trade agreements with every democratic nation in the Western Hemisphere, except the United States, including free trade agreements with Mexico and Canada, and is now entertaining overtures from Korea. Just last week, Brazil announced agreement with the five members of the Andean Pact to reduce or eliminate tariffs on more than 2,800 products. Just last week, Brazil announced agreement with the five members of the Andean Pact to reduce or eliminate tariffs on more than 2,800 products.

Other than with NAFTA partners, we are barely maintaining our share of the hemisphere's purchases, as U.S. exporters find themselves competing against foreign firms that enjoy preferential tariffs that we do not. For example, in 1997, the American Chamber of Commerce in Chile identified more than one-half billion dollars in lost U.S. sales -- these were specific instances -- to firms situated in countries that had preferential trade agreements with Chile. That's between 10 to 15 percent of our annual exports to Chile. If the same ratio were to apply to all our Latin markets outside Mexico, lost U.S. sales would approach $9 billion.

Second, the European Union -- traditionally our strongest competitor in Latin America and especially in Mercosur - is turning its attention to the region. Having watched the United States realize a seven point gain in import market share with Mexico in the 1990s -- largely at the EU's expense -- the European Union and Mexico are now negotiating a free trade agreement which they expect to conclude this year. We are closely watching these talks to ensure that they are consistent with obligations that Mexico undertook in NAFTA and with obligations under the WTO.

A key EU objective on the trade front in Latin America is to achieve at least parity with the FTAA. Many observers expect the EU's resistance to agricultural liberalization to be the stumbling block in these talks, and the United States will be vigilant to make sure that any agreement struck -- with either Mexico or Mercosur -- strictly complies with the WTO criteria of covering substantially all trade and raising no new barriers to third parties.

Europe -- Last year, the EU launched accession negotiations with Poland, the Czech Republic, Hungary, Estonia, Slovenia and Cyprus. Those which are slated to join at a later time include: Romania, Latvia, Lithuania, Slovakia and Bulgaria. The U.S. Government fully supports EU enlargement into Central and Eastern Europe (CEE) in a manner which encourages further economic reforms and facilitates these countries' continued transition to market economies.

U.S. commercial interests in the region, however, are being negatively affected by transitional trade arrangements that were put into effect prior to accession. Since 1991, the European Union has had association agreements with Poland, Hungary, the Czech Republic, the Slovak Republic, Romania, Bulgaria, Estonia, Latvia, Lithuania, and Slovenia. These agreements grant preferential tariff treatment to EU products and establish schedules for gradually reducing CEE tariff rates on EU non-agricultural products each year until the tariff rates reach zero. For U.S. products, higher most-favored-nation (MFN) rates are maintained at average tariff levels three times higher than ours and EU's MFN tariff rate and, on average, eight percentage points higher than the tariffs that U.S. products face when entering the EU market. Some U.S. industries, such as the auto industry, have complained that these tariff differentials hinder their business prospects in the CEE markets.

A permanent solution to this issue is to encourage CEE countries to reduce their MFN tariffs on industrial products to the level of the EU's common external tariff as soon as possible rather than only when they accede to the EU. I have made this a high priority. In June, I sent Assistant Secretary for Market Access and Compliance Patrick Mulloy to the key countries of Poland, Hungary and the Czech Republic to raise this important issue. He received a commitment to work with us and to respond with a counter-proposal which would seek to address this problem. We will continue to seek a satisfactory resolution.

The Administration is increasingly concerned over the question of access to the European Union market for U.S. agricultural exports derived from bio-engineering. The United States has long viewed the EU's process for approving new agricultural products through bioengineering as being too slow, non-transparent, and scientifically unjustified. Unfortunately, the problem is getting worse. Strong European public opposition to the use of genetically modified organisms (GMOs) in food now threatens to stop the EU from approving any new bioengineered products.

To establish agreed rules for trade in biotech products and to foster greater understanding and acceptance of the U.S. approval process for GMOs, the United States is engaged in a number of international and bilateral initiatives. The Transatlantic Economic Partnership's, or TEP, Biotech Working Group is one such forum where the United States is working with the EU to address issues of mutual concern. In spite of changes underway to the EU approval system, we certainly intend to hold the EU to the commitment it made at the recent U.S.-EU Summit to launch a pilot project on simultaneous approvals. At the G8 Summit last month, leaders asked the OECD to look at the implications of biotechnology in light of increasing concern over food safety for consideration at the G8 Summit in Japan next year. We have much work ahead of us in this area, but we are committed to finding solutions as the stakes are so high for the United States.

The TEP process of close consultation and information exchange is ongoing, and I have high expectations that we will be seeing some tangible, real benefits coming out of the TEP in the coming months. The Leaders at the recent U.S.-EU Summit took note of this -- TEP was mentioned by them in the joint press conference which was held at the end of the Summit, and the work of the TEP was highlighted in the Senior Level Group Report to the Summit.

During the Summit, an Early Warning mechanism to better manage U.S.-EU trade issues was announced. The TEP Steering Committee was identified as one of the key channels for providing such advance warning of potentially contentious, politically sensitive issues. Thus, TEP will play a key role to better address sensitive issues, such as "hushkits." I expect that the U.S. and the EU will actively use the TEP to further eliminate economic barriers between us and promote cooperation among our regulators.

Africa and Middle East -- In February 1999, South Africa and the EU reached agreement on an FTA which may be ratified by the South African Parliament some time in the fall of this year. While we endorse a free trade agreement, as with any arrangement that the EU concludes in Latin America we will examine this agreement for consistency with WTO requirements. There is the clear possibility that the EU-South African agreement could have adverse implications for U.S. exports to South Africa as European suppliers will enjoy duty-free access to the South African market, while U.S. companies will face an average tariff of 8-36 % in sectors which comprise the bulk of our exports (total over $2 billion). U.S. exporters are not yet fully aware of the implications of the FTA, because its full terms have not been disclosed and we do not know its tariff stagings. However, U.S. soda ash producers and truck manufacturers have indicated some concern. We will use the U.S.-South Africa Trade and Investment Framework Agreement Council later this month to seek clarification on the final terms of the agreement.

Over the past few years, the EU has begun to negotiate bilateral preferential trade agreements with countries in North Africa and the Levant. These agreements, when final, will create an area into which European exports will become more competitive due to the elimination of tariffs. Since both the United States and Europe export similar products to this region (technology, consumer products, and agricultural goods), U.S. market share will erode. In many cases, European goods are already less expensive due to lower transportation costs.

Asia -- The ASEAN Free Trade Area (AFTA) was established on January 28, 1992 as a scheme to lower tariff rates on manufactured products produced in member countries. Under AFTA, the ASEAN countries have made significant progress in regional economic integration, tariff reduction, industrial cooperation, and customs streamlining and harmonization. This integrated internal market of 500 million people is designed to make ASEAN a more attractive site for investment. Economic Ministers agreed to move ASEAN's deadline for tariff elimination under AFTA to 2002, several years ahead of the original deadline, for six ASEAN countries -Brunei, Indonesia, Malaysia, Philippines, Singapore, and Thailand. Vietnam, Laos, Cambodia and Burma are on more extended time tables to bring tariffs down. While some members recently admitted that they will be unable to eliminate barriers by the agreed time frame (due to the financial crisis), the process continues to move forward. As these agreements become effective, U.S. competitive access to these markets can be adversely affected by the margin of preferential access ASEAN members will enjoy in each other's markets.

Domestic Concerns -- Mr. Chairman, as we are aware, while these challenges at the international level are before us we face an equally challenging climate here at home. Despite the many great opportunities before us and the markedly higher standards of living that the phenomenal increase in cross border trade -- nearly 14 fold in the past half century -- has brought for almost all trading countries, especially the United States, in a recent poll, 58 percent of Americans agreed with the statement that foreign trade is "bad for the U.S. economy because cheap imports hurt wages." Only 32 percent agreed with the statement that trade is good for the U.S. economy; it creates foreign demand, economic growth and jobs." There is a clear disconnect between the fact that the American economy has never been in better shape and the fact that the benefits of free trade are still unclear. Why? Because the vigorous economic expansion of the 1990s hasn't helped all Americans, and many of the needs of those who Alan Greenspan calls the "victims of progress" have not been addressed.

The labor community has concerns. While the unemployment rate is at a 29-year low and wages are rising, the share of U.S. income going to many American families has continued to fall. While trade is a small force underlying this trend -- and technology has played a predominant role - trade is more visible to the public. As Secretary Herman said recently, we need a way to include worker protection in a formula for sustained economic growth. Trade and adherence to core labor standards must become mutually reinforcing objectives in our economic policy. Trade negotiating authority would enable us to advance a progressive agenda which includes stronger linkages between the WTO, the ILO and non-governmental organizations.

Similarly, the environmental community has expressed concerns that trade might lower environmental standards become a race to the bottom. But trade liberalization and environmental policies can and should be mutually supportive. As the President stated in his remarks to the WTO last year, "Enhanced trade can and should enhance -- not undercut -- the protection of the environment." The U.S. is taking the lead in promoting improved environmental and conservation standards worldwide. For example, in Japan, our efforts to open their housing markets led to their acceptance of the U.S. standards on energy saving insulated glass. This trade initiative has effectively led to the export of improved environmental standards that will conserve energy in Japan. We are seeing great support for our initiatives to eliminate trade-distorting subsidies in fisheries and agriculture which can have important positive environmental effects. The Administration discussed a number of proposals to further integrate trade and the environment at the WTO High Level Symposium on Trade and Environment in March 1999, and we are continuing to discuss ways to further this integration.

Commerce Efforts to Build Domestic Support

An important element in gaining support of more Americans for free trade is to assure them that trade works to their advantage and that their government has policies and programs in place to help. At the Commerce Department we are constantly improving current programs to assure compliance with trade agreements, enforce our trade laws, promote U.S. exports and educate Americans about the importance of international trade. These efforts, I hope, contribute to building support for our trade agenda. I want to thank you Mr. Chairman, along with Chairman Roth and Senator Moynihan, for your help in making sure our compliance and enforcement programs are adequately funded by our appropriators.

Compliance -- Mr. Chairman I believe that a component in building that support is to assure Americans that that the agreements we negotiate are honored and that American firms and workers obtain the benefits and opportunities intended. It is also one of the best ways to help create confidence among business, labor, and the general public that trade agreements actually work and actually create new business and employment opportunities. Hence, compliance and enforcing our trade laws are a priority throughout the International Trade Administration. The Trade Compliance Center coordinates our compliance activities but all our country market access officers, our industry experts, as well as our Commercial Service officers overseas, are involved.

Our increased monitoring tells us that most countries are attempting to live up to their trade agreements, but we have seen some actions inconsistent with obligations. We have been trying to get Korea to live up to its obligation to allow American companies to compete fairly on contracts for its new $6 billion airport. Despite months of effort, we have had to turn to the dispute settlement process through USTR and a WTO panel has been formed to hear our complaint and we expect to prevail.

But we have successes too. We have been successful in getting Korea to reinterpret its standards so as to allow the sale in Korea of high efficiency washing machines that use a step-down transformer. The manufacturer was told it violated Korean electrical codes even though the machine was safe and efficient and was being exported to many other countries. Our team of MAC and TD as well as our US&FCS officers at the Embassy cleared the way for the U.S. company to begin exporting by successfully marshaling U.S. government technical and standards experts and working with the Koreans to resolve the issue without appealing to the WTO. Congressional interest in this issue also helped convince the Koreans to resolve it.

We helped a small company in Auburn, Indiana, making specialized bulk packaging products for the chemical industry, which was being shut out of the European market by a European competitor who got product standards changed to exclude its product design. We got European governments to remove the discrimination, and saved over 300 Indiana jobs.

By the company's own account, ITA's work kept a Poulsbo, Washington, company from possibly going out of business by convincing the Singapore Government to stop a local company from selling pirated versions of the U.S. firm's directory of importers. Until we stepped in, the company said it was powerless to stop the loss of its global markets to pirates.

We worked with the Swedish government to end a local jurisdiction's regulations in Sweden that had prevented exports of a U.S. chemical product.

We have tailored much of our work to smaller companies, because they lack the time and resources to deal with foreign governments -- or our own government -- on trade barriers. Our Internet website usage (www.mac.doc.gov/tcc) has quadrupled in the past year. Our website is undergoing renovation and will go public with a redesigned online presence before close of this fiscal year.

The significance of compliance advocacy lies in attempting to resolve problems rapidly without the necessity of the United States having to enforce its rights through formal dispute settlement mechanisms. It also creates confidence that the United States is actively monitoring and ensuring that our exporters receive their rights under our trade agreements.

Tough Trade Law Enforcement -- Key to the Administration's support of trade liberalization is the strong and swift enforcement of the fair trade laws which ensure that U.S. industries and American workers are not injured by imports of unfairly priced or subsidized goods. Commerce vigorously enforces the fair trade laws - during the first six months of this year alone, we have either completed or are in the process of conducting more than 65 antidumping or countervailing duty investigations.

Over the past year, Commerce has conducted or is conducting antidumping and countervailing duty investigations on hot-rolled steel, cold-rolled steel, cut-to-length plate and a variety of stainless steel products. Commerce has also taken a number of important steps to enhance and improve overall enforcement of these laws including: 1) expediting a number of investigations to provide swifter relief to the industry; 2) instituting a new policy on "critical circumstances" to address import surges by putting importers on notice earlier than ever before that they could be liable for retroactive dumping duties; and 3) other modifications to our dumping methodology.

Other enforcement efforts undertaken over the past year by Commerce in response to the steel crisis include enhanced subsidy and import monitoring efforts. In response to concerns raised by the steel and semiconductor industries, Commerce's Subsidies Enforcement Office expanded its activities and worked closely with USTR to evaluate industry concerns about possible new subsidies abroad. As a result of these activities, the U.S. government has actively engaged countries that have announced new programs before their implementation to seek changes. We have taken a strong stance on steel-related subsidy issues such as the privatization of POSCO, Korea's largest steel company, and the sale and disposition of Hanbo Steel. The Subsidy Enforcement Office established an import monitoring program to monitor imports for potential surges and price movements that may indicate unfair trade. Much of the focus of the program over the past year has been on steel -- we currently monitor imports of most major steel products and cover major steel exporters such as Japan, Russia, Brazil, Korea and the EU. As part of this import monitoring program, Commerce has been releasing preliminary monthly steel import statistics approximately three to four weeks before the release of the official statistics to provide the industry with the most timely accurate data on steel imports.

Regarding China's WTO accession, we have insisted that we maintain our ability to apply our nonmarket economy methodology in future dumping cases. This is crucial for ensuring that our firms and workers are not devastated by unfairly priced imports from China.

We have also made our commitment to strong enforcement clear in the multilateral context by fending off attacks on the fair trade laws. For example, within the WTO Working Group on Trade and Competition, Japan and others have made a number of attempts to initiate a discussion of replacing the dumping laws with laws on competition. We have made it clear that such discussions are untenable and that any future work on competition issues in the WTO would need to exclude dumping. We have also made it very clear in discussions regarding the new round that we will oppose any effort to include the antidumping agreement in negotiations in order to weaken those laws. We are firmly committed to ensuring that the integrity of the fair trade laws is maintained.

Monitoring Bribery -- Twenty-one years ago, the United States Congress passed the Foreign Corrupt Practices Act (FCPA). Later, in the 1988 trade bill, Congress directed the Executive Branch to seek an agreement in the OECD to address bribery. This Administration with the strong support of the business community and Congress, has achieved that goal by concluding the Convention on Combating Bribery of Foreign Public Officials. Through the Convention, thirty four nations have agreed to enact criminal laws that will follow closely the prohibitions found in our FCPA and separately agreed to disallow the tax deductibility of bribes. So far 15 of the 34 signatories accounting for 60 percent of OECD exports, have deposited their instruments of ratification of the Convention and it entered into force in February 1999. We are working with the State and Justice Departments and our General Counsel to continue efforts to encourage the remaining signatories to ratify the Convention. There is a huge amount of money at stake. Just last year, there have been allegations of foreign bribery in 55 contracts worth $37 billion. Over the past five years, we received allegations that bribery of foreign public officials influenced decisions on 294 major commercial contracts valued at approximately $145 billion.

Commerce, working with other agencies, completed on July 1, 1999 the annual report mandated by the Congress in the law implementing the Convention which was enacted last December. Our first report included descriptions of domestic laws enacted by participants, an explanation of laws to prohibit the tax deductibility of bribes, and other information requested by the Congress. We will continue to monitor country implementation of the agreement and will work with business associations, NGOs and other groups that have an interest in the Anti-Bribery Convention and can be helpful on monitoring. We will also continue to collect and analyze signatories' laws on bribery and work to inform the public of the benefits of the Convention.

Export Promotion Efforts -- Our export promotion services are reaching out to an ever-wider universe of potential exporters to help them bring the benefits of exports to their communities. Every company needs to consider the potential impact of trade on their business outlook. And given the high level of competition in the global marketplace, a company's best defense may be a good exporting offense. By reaching out to every company, particularly small companies, we are building domestic support for trade.

We are aided in this effort by a new understanding of the breadth of our small and medium sized enterprise (SME) client base. Between 1992 and 1997 the number of small businesses involved in exporting increased 87 percent. The most recent data on small and medium-sized exporters show that in 1997, almost 97 percent of exporters were small or medium-sized companies but accounted for only 31 percent of the value of U.S. merchandise exports. In addition, 63 percent of all SMEs that exported products sold goods to only one market, so there is clearly room for these companies to export more.

Commerce is undertaking a number of new and innovative efforts to reach out to small and medium-sized enterprises. This year, our Advocacy Center is implementing an initiative to expand U.S. Government advocacy outreach to more small, medium and minority-owned businesses throughout the country. And we opened the U.S. Trade Center at the Ronald Reagan International Trade Center Building this year to make it easier than ever for a company to take the first step toward global export counseling and assistance from the Commerce Department and the other federal agencies providing export services and financing (1-800-USA-TRADE).

Commerce is also working hard to respond to the rapidly changing needs of the exporting community. Through our Innovation 2003 Initiative, we have begun shifting our product focus from a standard, off-the-shelf approach towards full customization based on the needs of clients.

We are engaging an array of new E-commerce products that will reduce market entry costs and open up a world of business opportunities. Virtual trade shows showcase U.S. products and services in distant markets at a fraction of the cost of on-site participation. Video conferencing puts American companies in front of prospective foreign business partners without costs of travel. And electronically delivered market research, trade leads, and business contacts will enable clients to receive information updates instantaneously.

We are also putting our global network of trade professionals in over 100 U.S. cities and more than 80 countries into the hands of traditionally under served or disadvantaged communities. The total number of businesses owned by minorities increased 60%, from 1.34 million to 2.2 million over five years. To better serve this growing business segment, through our Global Diversity and Urban Export Initiative we are working with national and local organizations, conducting outreach activities, and integrating minority-owned firms into our programs. This Initiative seeks not only to boost exports, but to enhance the economic development of minority communities through trade.

Our Rural Export Initiative is helping companies located in rural areas to enter into export markets via the Internet, satellite communications, and other state-of-the-art technologies. Our domestic network provides these companies with access to export assistance, global market research, and international trade services such as freight forwarding and banking otherwise unavailable to them.

Over the past year, Commerce sponsored a series of 12 conferences about the Euro and EMU preparedness. These conferences brought together leaders in business, education and government to discuss the euro and its implications for U.S. businesses in the future. There were also more than two dozen other Euro-related events initiated by U.S. export assistance centers across the country.

By more closely coordinating our trade finance and promotion programs with those of the states, we hope to encourage them to play a bigger role in helping U.S. small businesses to export. By combining our efforts with our national and international presence, we can make sure that our efforts complement, rather than compete, with each other.

We are working with the National Governors Association on a number of projects. We want to help them better coordinate governors' trade missions and match their most competitive sectors with overseas markets. They want us to develop a one-stop web site where governors can get information about agency programs, as well as information to plan and complete successful trade missions. And we plan to leverage our resources to fill in the "gaps" between state and federal programs.

Secretary Daley's Trade Education Initiative - Secretary Daley has realized that it takes more than government programs to change views regarding international trade. He knows that a deeper understanding in the public of the value of international trade to our economy and national well-being is a central factor in finding the way forward on trade. By the time of the Seattle Ministerial he will have visited a dozen cities, having an honest face-to-face dialogue with people, trying to build a pro-trade majority at diners, and on the factory floor. The tour is a partnership with the President's Export Council, Virtual Trade Mission, U.S. Chamber of Commerce, and Business Roundtable and other organizations active on international trade issues The tour represents a coordinated effort involving leaders in government and the private sector -- all committed to broadening this understanding and helping develop a new national consensus on trade.

There are three main messages of the tour, each targeted at the local, "grass roots" level: first, to put a more "human face" on trade by illustrating what it means for "everyday Americans" -- including workers, consumers, and small business owners -- and build a new trade consensus on how to promote greater trade and advance the rights of workers and protection of the environment. Second, the critical role of trade in local economic development, including the promotion of good, high-paying jobs. And third, the importance of keeping communities strong and competitive through private-public partnerships that address the need for strong education and training programs.

He has spoken to participants at every event about their fears for their jobs and their pensions, and their concerns about trade agreements with other countries where workers earn less and don't have health care. Last month, he met with some executives from Caterpillar in Peoria and they reported that Caterpillar's exports to Mexico have tripled. But while that may be understood in Peoria, it hasn't caught on in the rest of America. We have a long way to go to convince people that globalization is good for the next century.

Conclusion - Trade Essential to America's Future

Mr. Chairman, in closing, let me reiterate what the President has noted -- globalization is not a policy choice, it is a fact. Trade -- and the larger markets it brings -- is essential to the future of our farmers, businesses and workers. But this Administration recognizes that in order to move forward in the world economy we must recognize that expanded trade and investment is not an end in itself; it is a means by which we seek to raise the living standards of our people. We must continue to work to assure that the trading system works to benefit all Americans - and that they have the tools to take advantage of the opportunities it presents.

Our ultimate goal must be to liberalize trade in a way which promotes the broadest possible progress in living standards as well as sustainable development and to craft a trading system that reflects and honors our values. Our negotiating tools and strategies for trade agreements should reflect these fundamental objectives. Mr. Chairman, we stand ready to work with you and the members of this committee to continue to find the consensus that points the way forward.

Thank you and I will be glad to respond to your questions.