Mr. Chairman and distinguished members of the Trade Subcommittee, I am John E. Pepper, Chairman of The Procter & Gamble Company. I appear today as Chairman of the President's Advisory Committee on Trade Policy and Negotiations (ACTPN).

This is an organization that was created by the Trade Act of 1974. It consists of approximately 45 members who are appointed by the President and represent business, labor, industry, agriculture, services, retailers, environment and consumer interests. The ACTPN is charged with advising the President and USTR on trade matters.

Let me begin by saying that I accepted the role as Chairman of ACTPN because I feel passionately that unless the U.S. sets an example by forging a consensus on many of the controversial issues related to trade policy, this country will jeopardize its role as a global leader. While the views of our ACTPN members on specific components of the negotiating objectives for the WTO Ministerial are diverse, we are all in agreement that the U.S. has a unique opportunity to provide leadership in bringing together the 133 representatives of the WTO member countries. Success will bring enormous benefits to the world economy. Failure would be a blow to our common prosperity. We must not let that happen.

As host of the WTO Ministerial, the U.S. plays a key role in establishing the agenda for trade liberalization over the next decade. Why is this important? Over one-third of U.S. economic growth since 1992 has resulted from trade. Americans by nature believe in playing by the rules. If we can bring those rules to the rest of the world and establish a level playing field, U.S. companies will be able to send our products to other countries and make our strong economy even stronger. If not, American firms and workers will be placed at a competitive disadvantage. ACTPN members are concerned that our trading partners are concluding preferential trade agreements without us. Already, Chile's 11% tariff is being reduced unilaterally for both Mexico and Canada, but not for the U.S. MERCOSUR countries are progressively eliminating tariff rates among member countries. Virtually all trade between Brazil and Argentina now enjoys a duty-free status. With 95% of the world's population living outside the U.S., the vast majority of growth potential for American industry--growth that provides American jobs--comes not from the U.S., but the rest of the world.

To support our U.S. negotiators in the challenges confronting them at Seattle, Ambassador Barshefsky has engaged the ACTPN in three key areas--market access, the new economy, and the role of trade and labor. I'd like to briefly comment on our policy recommendations in these areas.

MARKET ACCESS

As 60% of world trade will soon be covered by regional free trade and customs union agreements, ACTPN supports a bold initiative to bring these efforts into the WTO.

ACTPN also supports a broad market access package, such as that negotiated in the Uruguay Round. To be specific, tariff and non-tariff barriers in all industrial sectors should be dramatically reduced, and export subsidies eliminated. Obviously, we'll continue to battle our European friends over their $60 billion in agriculture trade-distorting subsidies, but like Vince Lombardi, I believe "winning becomes a habit."
      • AGRICULTURE
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U.S. farmers lead the world in productivity and efficiency, sustaining our health and quality of life at home and aiding a hungry world abroad. As agriculture is certain to be a key element of the next WTO Round, the ACTPN has focused our energy on agricultural products of modern biotechnology and the U.S. Trade Agenda. USTR's goal is to insure that access to new agricultural technologies is not restricted by protectionism and fear. While there was general agreement among ACTPN members not to reopen the current sanitary and phyto sanitary (SPS) standards, a working group has been charged with defining the issues in SPS that present problems to some of our members and determine how these problems should be addressed. Dean Kleckner, President of the American Farm Bureau Federation and a long-time member of ACTPN, will elaborate more on this in his testimony.
      • SERVICES
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In 1998 U.S. services exports were $260.3 billion, while imports were $180.8 billion, producing a trade in services surplus of $79.4 billion. Services comprise nearly 30% of U.S. exports. Additionally, in 1998 U.S. service exports supported about four million U.S. jobs--jobs both in services and manufacturing sectors.

The ACTPN Services Working Group urged USTR to adopt broad liberalization and market access in a range of sectors including, but not limited to, audio visual services, telecommunications, travel, tourism and others. The Working Group also recommended to USTR that they adopt a negative list schedule as the most effective negotiating strategy and one which would speed market access. Dean O'Hare, CEO of Chubb Corporation and a member of ACTPN, will comment in more detail on the services agenda.

THE NEW ECONOMY

Since 1994, the ACTPN has produced five reports on the WTO. This morning, I want to review the most recent report--on the subject of e-commerce--and share with you the context of ongoing ACTPN discussions on the "new economy" which is so critical to America's future.
      • E-COMMERCE
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At our June 10, 1999 meeting, ACTPN finalized a report led by Hewlett-Packard's Lew Platt that dealt with a variety of electronic commerce issues.

ACTPN opposes the classification of electronic commerce as a good or service. While it still believes that substantive regulation of electronic commerce should be left to the member countries and other international organizations, it advocates the adoption of WTO rules on transparency notification and review of domestic regulation. Our key message is, e-commerce is in its infancy and governments need to resist the urge to regulate. We should allow technology to follow market forces as it matures.
      • INFORMATION TECHNOLOGY
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ACTPN's evaluation of e-commerce led our members to recognize that e-commerce is only one element of a fundamental change in the global economy--that of information technology (IT).

Lew Gerstner of IBM reported to ACTPN members that computing power has been doubling every eighteen months for the past 30 years, with a parallel geometric decline in prices. Internet usage doubles every 100 days. By 2006 almost half of the U.S. work force will be employed by industries that are either major producers or users of IT products and services.

IT's explosive growth is already stretching existing trade agreements, and is certain to raise new, unforeseen issues. And make no mistake--the U.S. is leading the creation of this new economy. IT spending as a percentage of GDP in the U.S. in 1998 was 5.3%. By comparison, Europe was 2.9% and Japan was 3.5%, which is where the U.S. was in 1990. Our trade policy must reflect this rapidly growing global marketplace.

An ACTPN Task Force was established to make recommendations to USTR on how to ensure we remain in a leadership position to deal with this rapidly changing technology. I'm pleased to report that Lew Gerstner has agreed to chair this important effort.

Charlene Barshefsky has also requested that the IT Task Force consider presenting educational forums for trade ministers on IT issues at Seattle. I personally think this is a terrific idea and a meaningful role for ACTPN to play at the Ministerial.

TRADE & LABOR

A priority for which there is no consensus in ACTPN, but one that must be addressed if we are to make progress in trade policy, is the controversial role of labor and trade. In Procter & Gamble, we refer to controversial issues as "moose on table." These are issues that no one wants to deal with head on as there are always competing agendas. Unfortunately, unless leadership focuses on the moose, these issues never get resolved. ACTPN members, John Sweeney of the AFL-CIO and Tom Donahue of the COC have assumed leadership for our group in clarifying trade and labor issues and in establishing a framework for resolving these concerns through U.S. trade policy. Their goal is to present issues upon which there is and is not agreement at our September 28, 1999, ACTPN Meeting. I remain hopeful that there will be some areas of mutual agreement and progress. Global growth can and should be accompanied by safer workplaces, elimination of forced labor and exploitive child labor and respect for core labor standards. The WTO, in particular, can work in more coordination with the International Labor Organization on some of these issues. While developing countries are expected to argue against inclusion of any work on trade and labor in the WTO, our U.S. negotiators have a unique opportunity to deliver results in this important area.

CONCLUSION

In conclusion, let me say that each of us here today must assume ownership if the U.S. is to be successful in Seattle. My Company, Procter & Gamble, along with the Coalition of Service Industries, the American Farm Bureau Federation, and over 140 other organizations, have led the formation of the U.S. Alliance for Trade Expansion. The mission of this coalition is to promote the benefits of a rules-based trading system for all Americans and support U.S. Leadership at the Seattle Ministerial.

As Members of the Trade Subcommittee, each of you also has a vital role to play at the WTO. Your education of other Members of Congress and your own constituents about the importance of the Ministerial and what it means to the future of this great country is paramount. Congress as a whole must build on their recent trade successes including passage of the Africa Growth and Opportunity Act, CBI, China NTR and Vietnam NTR. Bipartisan support for GSP renewal and permanent NTR for China (if an agreement is reached) should follow. We must support our U.S. negotiators. They will be working around the clock to build a better future for you, me and for our children.

Tom Friedman writes in his book, The Lexus and the Olive Tree, that globalization is everything and its opposite. We are a nation that is not afraid to go to the moon, but also still loves to come home for Little League. We are a nation that invented both cyberspace and the backyard barbecue. We can never take this for granted. For globalization to be sustainable, America must be at its best--today, tomorrow, all the time. That is our challenge and our responsibility.

Thank you.

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