STATEMENT OF

MICHAEL WOOTTON

DIRECTOR, FEDERAL GOVERNMENT AFFAIRS

SUNKIST GROWERS

PRESENTED TO

COMMITTEE ON AGRICULTURE,

NUTRITION AND FORESTRY

U.S. SENATE

MARCH 1, 2000

Chairman Lugar, Senator Harkin, Members of the Committee, I am Michael Wootton, Director of Federal Government Affairs for Sunkist Growers, which is headquartered in Sherman Oaks, California.

As you may know, Sunkist Growers is a non-profit, farmer-owned marketing cooperative serving 6,500 citrus farmers in California and Arizona. For nearly 107 years, Sunkist has successfully marketed fresh citrus fruit grown by its farmer-members. Today, Sunkist Growers produce approximately 65 percent of the oranges, lemons, tangerines and grapefruit grown in Arizona and California. Our cooperative enjoys a long and successful history of developing and expanding markets around the world for our U.S.-grown fresh citrus fruit. Today, nearly 33 percent of our fresh fruit is marketed in foreign country markets, accounting for nearly 45 percent of our farmers' fresh fruit revenue.

I'd like to begin by first commending the Committee for holding this hearing on the subject of agricultural trade between the United States and the People's Republic of China and whether that trading relationship will be enhanced by the recently concluded U.S.-China Trade Agreement.

Market access for U.S. citrus fruit exports to the huge and potentially profitable consumer markets of China has long been a policy goal for both the U.S. citrus industry and our government. With growing intensity and determination since signatures were affixed to the 1992 Bilateral Memorandum of Understanding between the two countries, negotiators for the Office of the U.S. Trade Representative and the U.S. Department of Agriculture have pursued this objective. Last Spring, those efforts finally reached fruition with the achievement of a citrus market access agreement including acceptance by China of specific work plans and phytosanitary protocols for each of the four U.S. citrus production states, Arizona, California, Florida and Texas.

This phytosanitary agreement and the implementing work plans and protocols constitute, in our view, a model for commodity trade agreements. They were negotiated by USDA and USTR in coordination with the U.S. citrus industry. By accepting these terms, China has joined with the U.S. in adhering to sound science and pragmatism in its application of trade policy. China has committed to fully abide by the terms of the WTO Agreement on SPS measures which requires that all animal, plant and human health import requirements be based on sound science, not political or protectionist concerns.

In keeping with the obligations of that agreement, last month Chinese phytosanitary inspectors conducted a two week inspection tour of U.S. citrus production, packing and shipping facilities and concluded that all phytosanitary requirements needed for U.S. producers to export to China indeed have been met. We are now awaiting an announcement by the Chinese government officially opening their markets to U.S. citrus for the first time since 1980.

Under the terms of the U.S.-China Trade Agreement incident to China's accession to the WTO, the benefits accrue exclusively to U.S. interest, including the interests of the U.S. citrus industry. China has agreed to dramatically reduce its tariff on citrus imports from the U.S. from the current 40% to 12% by 2004. No quota or volume limits were imposed by China and we will be able to export as much fruit as the market will accommodate. This will further enhance the competitiveness and affordability of our exports to the China market. However, for us to be able to benefit from these hard fought trade concessions, China must successfully gain membership in the WTO and the Congress must extend permanent normal trade relations (PNTR) to China.

When the tariff reductions to 12% are implemented, the total burden of the import duty and the VAT (13%) on citrus imports into China will be less than the duty currently imposed on our citrus exports into Japan, which is now our largest and oldest market in Asia.

In our view, it is not an overstatement to say China will in the course of the next several years become the single most important U.S. agricultural export market. Demographic studies have identified a consumer market with disposable income of over 200 million people in China today with the middle class projected to grow by an additional 170 million over the next five years. But those opportunities and all the advantages to U.S. interest achieved in recent trade negotiations will be precluded for U.S. exporters if China is denied WTO membership or permanent NTR in its trading relationship with the United States. The establishment of permanent normal trade relations with China maximizes the opportunity for expanding commercial and cultural relationships between America and the PRC. The dramatic changes witnessed in China over the past twenty years demonstrate how this approach optimizes progressive western influence over China's evolving public policies and political character.

We urge the Congress to extend to China the same normal trade relations policy granted on a permanent basis to 133 WTO country trading partners. To our advantage, WTO membership will, furthermore, obligate China to adhere to the same rules of international trade and commerce as subscribed to by all WTO member countries, including the United States.

Thank you for the opportunity to present our views on this matter of great interest and concern to Sunkist Growers and our 6,500 citrus farmers in Arizona and California.

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