(2) to expand the export promotion programs of the United States government to include wine so as to increase the foreign demand for American wines; (3) to achieve access to foreign markets for United States wine and other grape products substantially equivalent to the market access afforded to such products by the United States; (4) to eliminate tariff and nontariff barriers existing in international trade involving wine and other grape products; and, (5) to provide the President with the authority and remedies to effect the reduction in foreign trade barriers relating to wine and other grape products. SEC. 3. DEFINITIONS. For purposes of this Act (1) The term "designated major trading country" means any country, or group of countries represented as an economic union, in which there is a market potential for the export of United States wines and which the United States Trade Representative, after consultation with the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives and representatives of the wine and other grape products industries, designate as such a country. The criteria for designating a country or group of countries as a designated major trading country under this Act include, but are not limited to, the market potential for the export of United States wines, foreign wine production, and wine exports to the United States. (2) The term "nontariff barriers" may include but is not limited to distillation aids; assumption of operating expenses; including storage costs; production and marketing aids; preferential financing; export refunds; certification requirements; license and quota systems; unreasonable customs delays or procedures; reference price systems; and process, bottling, and labeling requirements. (3) The term "wine" means any substance that (A) is made from grapes or grape products or other fruit or fruit products; (B) contains not less than 0.5 per centum alcohol by volume and not more than 24 per centum alcohol by volume, including all dilutions and mixtures thereof by whatever process produced; and (C) is for nonindustrial use. (4) The term "grape product" means grapes and any product made from grapes, including, but not limited to, raisins and grape juice, whether or not concentrated. SEC. 4. REDUCTION OF TARIFF AND NONTARIFF BARRIERS. (a) The President shall direct the United States Trade Representative to enter into consultations with each designated major trading country to seek a reduction of foreign tariffs on United States wine. (b) The President shall also initiate an investigation pursuant to the provisions of Section 301 of the Trade Act of 1974, as amended, (19 U.S.C. 2411) with respect to the nontariff barriers of designated major trading countries on wine and other grape products. The President shall begin an investigation within two months after a country has been designated a major trading country. Each such nontariff barrier shall be investigated to determine if it constitutes an act, policy, or practice of such major trading country that is unjustifiable, unreasonable, or discriminatory and burdens or restricts United States commerce as provided for in Section 301(a)(2)(B) of the Trade Act of 1974 as amended. If such nontariff barrier is found to constitute an act, policy, or practice of such major trading country that is unjustifiable, unreasonable, or discriminatory and burdens or restricts United States commerce as provided for in Section 301(a)(2)(B) of the Trade Act of 1974, as amended, then the United States Trade Representative shall proceed under Section 301. (c) In the event that the President is unable to negotiate reductions in the foreign tariff and nontariff barriers on United States wine by January 1, 1986, with each designated major trading country, then (1) the President shall exercise the authority available to him under Section 301(b) of the Trade Act of 1974, as amended. The actions taken may include but are not limited to a review of the practice of certifying for import, wines produced by enological practices inconsistent with United States requirements but are legal in the county of origin; provided that if the country of origin certifies for import enological practices of United States wines legal in the United States, then the President may not terminate the practice of the Treasury Department of making such certifications. (2) in exercising the authority granted to the President to obtain increased access to the markets of a trading partner under any provision of United States law, or under any agreement to which the United States is a party, or in exer cising the authority to suspend, modify or withdraw concessions pursuant to Section 125, Title 1 of P.L. 93-618, or any other provision of United States law, and in keeping with the intent of Section 854 of the Trade Act of 1979, the President shall give due and full consideration to gaining access for wine to those markets or failing to gain such access, to raising the tariff level on wine imported into the United States. SEC. 5. REPORTING. The United States Trade Representative shall report to the Committee on Finance of the Senate and Committee on Ways and Means of the House of Representatives one year after the commencement of each consultation and each investigation initiated under Section 4. These reports shall include a description of the tariff and nontariff barriers and other distortions to trade that have been identified, those that have been reduced or eliminated, those that remain to be reduced or eliminated and the proposed actions that could be taken to reduce or eliminate such barriers. SEC. 6. CONSULTATIONS. For purposes of identifying tariff and nontariff barriers to, and potential markets for, United States wine and other grape products, the United States Trade Representative shall consult with the Committee on Finance of the Senate, the Committee on Ways and Means of the House of Representatives, and with representatives of the wine and other grape products industries. SEC. 7. WINE EXPORT PROMOTION. In order to develop, maintain, and expand foreign markets for U.S. wine, the President is authorized and encouraged to utilize the authority granted under Section 135 of the Omnibus Budget Reconciliation Act of 1982 to make available at least $2,000,000 but not more than $10,000,000 to initiate an export promotion program for U.S. wine with non-governmental trade associations representative of U.S. wineries. When such programs are initiated, the President shall direct that the budget of the cooperator program as provided for under the Agricultural Trade Development and Assistance Act of 1954 (P.L. 480), or any other program available to the President for this purpose, be sufficiently increased to maintain support of such wine export promotion programs in subsequent fiscal years. SEC. 8. AMENDMENT OF THE TARIFF ACT OF 1930. (a) Section 771 of Title VII of the Tariff Act of 1930 (19 U.S.C. 1671 et seq.) is amended (1) by adding at the end of Section 771(4)(A) the following: "In the case of a processed agricultural product, the industry shall consist of the producers of that product and the producers of the principal raw agricultural product, determined on either a volume or value basis, which is included in the processed agricultural product subject to investigation, provided that such producers of the principal raw agricultural product allege material injury, or threat of material injury, as a result of imports of the processed agricultural product subject to investigation." (2) by adding at the end of Section 771 the following Subsection: "(18) PROCESSED AGRICULTURAL PRODUCTS.-The term 'processed agricultural product' means any product of farm, forest or fishery which has undergone processing beyond that customarily required to prepare it for marketing in its natural form.' (b) No provision in Title VII of the Tariff Act of 1930 shall be interpreted to prevent the refiling of a petition pursuant to Section 702 or 732 of Title VII that was filed before the effective date of this Part. Chairman GIBBONS. We are glad to have Mr. Horton here along with Mr. Matsui and Mr. Thomas this morning. We will hear from you next, Mr. Horton. Mr. HORTON. Thank you very much, Mr. Chairman. I am happy to join this panel of members who are principal sponsors of this legislation and I have a very short statement. Chairman GIBBONS. We will put your entire statement in the record. Mr. HORTON. We were before you last fall, as you recall. STATEMENT OF HON. FRANK HORTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW YORK Mr. HORTON. As Congressman Coelho has already indicated, we had questions brought up by agricultural groups, most notably the soybean producers. After many meetings and much discussion their initial opposition has been resolved and the bill is before us as a compromise bill which I fully support as do my other colleagues. It is a good bill and it does enjoy the support of the soybean producers. I want to commend them for what they have done. Last fall, Mr. Chairman, I spoke with you about the wine industry in New York and about the quality of the product that we produce. Our wines continue to win international acclaim but since my last appearance before the subcommittee, much has happened to the industry in New York State. Our industry is growing weaker. As a matter of fact, just the early part of this year some of the wineries indicated they were not going to be buying grapes and many of the small wineries are going out of business. Some of them, having had notable achievements in international tasting competitions, have closed their doors. The State of New York is very much concerned about it. They passed legislation that will permit wine sellers in grocery stores and permit sale of wine at meetings such as State fairs. But the point I am making is that the wine industry in New York is sick. It's having very, very difficult times. I don't pretend to tell you that the Wine Equity Act will be the solution to all the problems in New York State but it is certainly a part of the solution. It does hold hope for the future in an export market which we believe we can effectively compete. Today we are barred from that competition and we look to this subcommittee and the Committee on Ways and Means to correct this situation. As I stated, Mr. Chairman, this bill is a compromise. It enjoys broad support. It is GATT compatible, contains no specific tariff provisions-the part of the bill considered hostile by the soybean producers has been as I indicated before, resolved. In short, it is a good and responsible piece of legislation. I know my colleagues will speak about the bill itself but I want to urge the subcommittee to act as expeditiously as possible. I know we only have about maybe at the most 7 or 8 weeks left in this session but I think it would be very important for us to report it out of the Ways and Means Committee, get it to the floor and let us act and express our will before this House adjourns. [The prepared statement follows:] STATEMENT OF HON. FRANK HORTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW YORK Mr. Chairman, I am proud to be here today and speak to you and the Members of this Subcommittee about the importance of the Wine Equity Act. I'll keep my statement short and to the point. We were before you last Fall with a bill that I believe would have adequately and equitably addressed the justified concerns of the American wine industry. These concerns centered around trade inequities tht allow an open door to wines imported into the United States, but restrict-through tariff and non-tariff trade barriersthe importations of American wines into foreign markets. Mr. Chairman and Members of this Subcommittee, some concerns were expressed by you last Fall and by some agricultural groups-most notably the soybean producers-about the Wine Equity act as it was drafted. Over the past several months, we have met for long hours to address and resolve these concerns where possible. The bill before you is the result of countless meetings, phone calls and negotiations between a number of parties. The bill before you is a good bill and a fair bill. It enjoys broad support, including the support of the soybean producers. I commend them for their responsible position and their commitment over the past several months to seek a compromise that would not threaten their interests, but that would address some very legitimate concerns of the American wine industry. Mr. Chairman, last Fall, I spoke with you about the wine industry in New York, and about the quality of the product we produce. Our wines continue to win international acclaim. But since my last appearance before your Subcommittee much has happened in New York. Our industry is growing weaker. Several wineries, including some with the most notable achievements in international tasting competition, have closed their doors. I don't pretend to tell you that the Wine Equity Act is the complete solution to our problem in New York-for it is not. But it is a part of the solution. It does hold hope for the future in an export market in which we believe we can effectively compete. Today, we are barred from competition. We look to you to help correct that situation in a manner that is equitable to all parties. Mr. Chairman, as I stated, this bill is a compromise. It enjoys broad support. It is GATT compatible. It contains no specific tariff provisions-the part of the bill considered so hostile by soybean producers, Members of your Subcommittee and others. It is, in short, a good and responsible piece of legislation. My colleagues will speak to the specific provisions of the legislation, but it was my intention to underscore both the importance of this Wine Equity Act to wine producers in every state, as well as to impress upon you and this Subcommittee the commendable effort by so many to achieve a satisfactory solution. I thank you for this opportunity and look forward to your positive consideration of this bill. Chairman GIBBONS. Mr. Matsui, you want to be heard next? STATEMENT OF HON. ROBERT T. MATSUI, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA Mr. MATSUI. Thank you very much, Mr. Chairman. I will be brief. As Mr. Horton indicated, we did testify before your subcommittee last fall. I think some of the comments made by myself and others at that time are still applicable here. I would only point out additional information has come up, our trade deficit for last year is now estimated at $69 billion for the fiscal year 1984 and now we estimate it to be in excess of $100 billion, in 1985 the estimates are going up to $120 or $130 billion. The wine trade component of that 1983 deficit was $862 million, and the deficit has grown just in the area of wine alone, 35 percent since the year 1979. As Mr. Horton has indicated, in California many of our wineries are having grave financial problems. The problems are getting worse as the months go on. Many of them have indicated to me that the sales of wine throughout the United States has stabilized to the point where there is not showing the trendline up as it has in the past and it is mainly because of the penetration of foreign wine. It is obvious just by going into a liquor store or grocery store you see many more foreign wines on the market now at the lower cost than U.S. wines. This is greatly harming the ability of our domestic industry to compete effectively. As Mr. Horton has indicated, many significant changes were made from the original bill. The reciprocity element is eliminated, and now the President will have discretion under section 301 after negotiations with the foreign companies involved. This being the case, we think that this legislation is very moderate. It is really only a first step in terms of reducing the trade deficit but one we think that is necessary. I know the chairman has met with a group of wine leaders in California last fall-I guess it was in the month of February this year. Chairman GIBBONS. Yes. Mr. MATSUI. And he indicated that perhaps this industry should be one in which experimentation in the area of trade should be utilized. We think that this kind of legislation would be that kind of experimentation. It's very moderate. It is one in which we think that it is compatible with GATT and we are certainly hopeful that in the next 30 or 40 days that we have left in this session that we can move the bill from the House and have the Senate move it and also have the President examine it and sign the legislation. Thank you, Mr. Chairman. [The prepared statement follows:] STATEMENT OF HON. ROBERT T. Matsui, a Representative IN CONGRESS FROM THE STATE OF California Mr. Chairman, the bill before the Subcommittee on Trade, H.R. 3795, the Wine Equity and Export Expansion Act of 1984, attempts to harmonize, reduce and eliminate tariff and non-tariff trade barriers which exist in the international wine trade. The bill does not seek to provide the means to control imports, impose additional duties that will increase the cost of wine to consumers, nor seek special treatment in the American market. Despite the fact that American wine has achieved worldwide recognition, the American wine producer seeking to market the product abroad is continually plagued with a maze of restrictive and prohibitive trade barriers. In 1983 alone, the United States trade deficit was more than $60 billion of which the wine trade element was $862 million. In addition, the wine trade deficit has grown 35 percent since 1979. Historically, there has been an imbalance in the international wine trade. This results from the easy accessibility enjoyed by foreign wines in the U.S., which is in direct contrast to the export position of the United States wine industry. Unlike the wine industry in many foreign nations, the U.S. wine industry receives no government aid or subsidy and the U.S. imposes no non-tariff trade barriers on foreign wines. Foreign wines can move freely within the American market, subject only to the same laws applicble to the American produced wines and to payment of the lowest duties assessed anywhere by a significant wine producing country. This legislation will help to encourage equity within the international wine trade. Extensive negotiations were undertaken to modify the bill to assure its GATT compatibility, thereby removing any legal basis for retaliation and still provide the president additional tools in dealing with trade barriers. The reciprocal aspects of the original legislation have been dropped entirely. The amendments now direct the president to seek reductions in tariffs on U.S. wines through consultations with our trading partners. The amendments further direct the President to use existing U.S. law, Section 301 of the 1974 Trade Act, to investigate non-tariff barriers to wine in those countries designated through the process provided for in the bill. If barriers are found that burden U.S. commerce and are unjustifiable, unreasonable or discriminatory, the President is expected to pursue negotiations under GATT procedures to remove those barriers. If a country refuses and the negotiations are unsuccessful, the President is directed to use his discretionary authority under section 301 and other existing GATT compatible U.S. laws, to compensate the wine industry. Thank you. Chairman GIBBONS. Thank you. Mr. Thomas. Mr. THOMAS. Thank you, Mr. Chairman. |