ELIGIBILITY OF FOREIGN ENTITIES

Mr. SKEEN. Are foreign entities producing in the United States eligible for MPP funds?

RESPONSE. CCC does not enter into MPP agreements directly with foreign entities. However, foreign entities producing in the United States may receive MPP funds indirectly through a nonprofit U.S. agricultural trade organization, a nonprofit State regional trade group, or a State agency. The Department works closely with the MPP participants to determine the most effective means of promoting exports of U.S. agricultural products and commodities. Generally, less that eight percent of the total MPP funds have been allocated to foreign entities.

MPP/FREEDOM OF INFORMATION ACT

Mr. SKEEN. In order to qualify for MPP funds, applicants must submit substantial amounts of information about themselves and their marketing plans. Is this information subject to release under Freedom of Information Act-FOIA-requests?

RESPONSE. Generally, the applicants/program participants are subject to the Freedom of Information Act. However, there is one major exception. The applicants/program participants would not be required to release information that would be harmful to their competitive position in the markerplace. The FOI Act requires the Agency to forward the FOI request to the participant to determine what portions of the requested information can be released. The participant must provide sufficient justification to the Agency on why the requested information can not be released. The process is there to protect strategic information; however, it can be a cumbersome task.

MPP/DOMESTIC CONTENT

Mr. SKEEN. What percentage of domestic content must a product have in order to qualify for MPP funding?

RESPONSE. The CCC will only enter into MPP agreements where the eligible agricultural commodity is comprised of at least 50 percent U.S. origin content by weight, exclusive of added water.

AGRICULTURAL TRADE OFFICES

Mr. SKEEN. You are proposing to expand or open several Agricultural Trade Offices. What are these offices and how do they differ from other USDA offices overseas?

RESPONSE. Congress authorized FAS to establish up to 25 Agricultural Trade Offices overseas in the Agricultural Trade Act of 1978. As envisioned in that legislation, Agricultural Trade Offices concentrate their efforts on trade promotion and support for cooperators and U.S. private firms in their efforts to sell U.S. food and agricultural products in the markets where they are located. While other FAS offices are also involved in promotional and trade-servicing activities, they are also heavily involved in trade negotiation and agricultural intelligence, as well as supporting other USDA projects and activities within their regions of responsibility.

EXPORT GROWTH

Mr. SKEEN. Can you estimate how much of the annual increases in dollar value of food and fiber exports that we are seeing is due to higher prices?

RESPONSE. Yes, we estimate that roughly 30 percent of the increase in dollar value in fiscal years 1995 and 1996 is due to higher prices-in particular, higher prices for certain bulk commodities and intermediate products. In fiscal year 1995 and again this year, prices for coarse grains, wheat and wheat flour, oilseeds and products, and cotton rose due to a generally tighter global supply and demand situation. However, despite higher prices for some products, export volumes are also generally higher.

If we examine the fiscal year 1994 through 1996 period, export value is expected to rise 38 percent from $43.5 billion to a projected $60 billion. Over the same period, export volume is expected to rise 27 percent from 127.4 million tons to an estimated 161.6 million tons. The volume figure for total agricultural products should be used with some caution, however, because only products which are measured in tons are included. Products that are measured in "head" or "number" such as live animals or plants, or in "liters" such as fruit juices or wine are not included in the total agriculture volume figures.

RICE EXPORTS TO JAPAN

Mr. SKEEN. Your Status of Program statement says that Japan is buying more foreign rice. How much U.S. rice have they bought in fiscal years 1995 and 1996? RESPONSE. Japan has increased the amount of foreign rice they import in recent years. U.S. rice export sales data are reported on an August/July marketing year basis. During the current marketing year 1995/96, the U.S. has exported 191,000 metric tons of rice to Japan. For the preceding marketing year 1994/95, U.S. rice exports to Japan were 4,300 metric tons. Two years ago, in marketing year 1993/ 94 when Japan experienced a major crop shortfall and imported exceptional quantities of rice, U.S. rice exports to Japan reached 509,000 metric tons. Prior to that time, U.S. rice to Japan averaged only 1-2,000 metric tons per marketing year.

UNFAIR TRADE BARRIERS

Mr. SKEEN. What countries would you identify as being particularly difficult in terms of erecting unfair trade barriers to U.S. exports?

RESPONSE. Although Korea is one of our leading and fastest-growing markets for agricultural exports the third largest market in calendar year 1995, it could be even larger in the absence of its many non-tariff trade barriers. While formal barriers to imports have fallen as the result of both bilateral and multilateral trade agreements, Korea has erected numerous secondary barriers that effectively undermine or prevent liberalization commitments.

Korea's import clearance process is among the most frequently cited barriers to U.S. agricultural exports. Clearance procedures are often excessively slow and arbitrary, typically taking 2-4 weeks versus 3-4 days by most of our Asian trading partners. The greatest delays are attributed to the Ministry of Health and Welfare MOHW-and the Ministry of Agriculture, Forestry and Fisheries-MAFF, which share responsibility for health, food safety and sanitary-phytosanitary inspection at Korea's ports of entry. Examples of the numerous requirements that prohibit access or inhibit import clearance include: product testing of all shipping containers for pesticide and other chemical residues; testing and fumigation for insects already found in Korea; and sorting/repacking of imported fresh produce to remove spoiled product, even though the import contract specifies acceptable levels of spoilage.

The MOHW also administers the Korean Food Code, which lists only specific products permitted for marketing in Korea. Unless a product is included in the Food Code, it is considered "new" and is thus subjected to excessive regulatory review prior to import. This regulation particularly affects imports, since most Food Code products are those already produced in Korea. Similarly, the MOHW administration of Korea's Food Additive Code restricts food imports by failing to recognize additives already approved by internationally recognized organizations, i.e., FAO's Codex Alimentarius-and/or the USFDA. These regulations, which are supposedly intended to protect health and safety, deviate from international practices in both substance and method. They do not appear to be founded on any scientific basis or risk assessment, and are often drafted in such a way that they affect only imported foods.

Another frequent problem for U.S. food products is that Korea's country-of-origin and general labeling requirements for food products are frequently changed, often without notice. Shipments will have already arrived at port when an exporter discovers that the products must be unpacked and relabeled, at considerable expense. In general, lack of transparency or adequate notification of regulations is still an ongoing Korean trade barrier. Korea often fails to meet its obligations to notify under the World Trade Organization—WTO, or to allow adequate time for comments from trading partners.

Lastly, Korea is notorious for finding loopholes or evading the spirit of existing trade agreements. For example, since the Beef Agreement of 1989, Korea has defined end-user industries in such a way as to limit access for U.S. beef exports. Another example is the Shelf-Life Agreement of July 1995, where Korea continues to restrict shelf-life for sterilized milk products and bottled water.

China is a particularly difficult market to penetrate for U.S. agricultural exports. China committed in the U.S.-China 1992 Market Access Memorandum of Understanding-MOU—to reform significant import barriers in its trade regime. However, China continues to use non-tariff trade barriers to block imports of U.S. wheat from the Pacific Northwest and U.S. citrus, in particular from California, grapes, plums, and tobacco. Since the signing of the MOU, China has made progress in several areas: Import protocols have been signed for bovine semen and embryos; for apple imports from the states of Washington, Oregon and Idaho; and for sweet cherries from Washington state. A research protocol for tobacco has also been signed, and research is proceeding. The U.S. Department of Agriculture and the Office of the

U.S. Trade Representative have been working together to push China to fulfill the remaining commitments in the MOU.

Many of China's other import barriers are being examined in the context of China's bid for WTO accession. These include high tariffs, non-transparent import quotas, state trading monopolies, testing and certification policies, taxation, and currency convertibility difficulties.

EXPORT SUBSIDY COMMITMENTS

Mr. SKEEN. Please provide a schedule of required reductions in U.S. export programs as a result of the GATT/WTO agreement.

RESPONSE. A table summarizing U.S. export subsidy commitments follows. It is worth noting that the commitments are on a commodity basis, not a program basis.

DAIRY PRODUCT EXPORT FORECASTS

Mr. SKEEN. What is the reason for the large increase in the forecast for dairy products from $100 million to $900 million for fiscal year 1996?

RESPONSE. Our current forecast is for a $100-million increase in U.S. dairy product exports, to $900 million in fiscal year 1996 from $800 million in fiscal year 1995. Two factors lie behind the $100 million increase. First, although prices for butter and nonfat dry milk have softened somewhat from their peaks, for all of fiscal year 1996, export prices for butter and nonfat dry milk are expected to average above those of fiscal year 1995, mainly because price increases in 1995 came late in the fiscal year. Second, exports of other dairy products, including cheese, have been enjoying favorable growth in recent years, and that pattern is expected to continue in fiscal year 1996. Markets in the Pacific Rim have been especially buoyant.

FORECAST FOR U.S.-MEXICO TRADE

Mr. SKEEN. What is the export and import forecast for U.S.-Mexico Trade in agricultural products for fiscal year 1996?

RESPONSE. U.S. agricultural exports to Mexico are expected to reach $3.8 billion in fiscal year 1996, up $100 million from the previous year. Continued weak economic prospects continue to hamper U.S. sales, especially for the more income-sensitive high-value consumer foods. However, bulk exports should rise on the strength of corn and soybean sales, due to continued drought conditions in Mexico and GSM102 support. U.S. agricultural imports from Mexico are forecast to remain unchanged at $3.7 billion.

EXPORT CREDIT ARREARAGES

Mr. SKEEN. According to last year's hearing record, the total arrearages for P.L. 480 and the Commodity Credit Corporation-CCC-were $562.5 million on February 28, 1995. What are the total arrearages now?

RESPONSE. As of February 29, 1996, arrearages under our P.L. 480 and CCC programs total $721.7 million.

Mr. SKEEN. What can be done to collect this money?

RESPONSE. It is our policy to suspend programming for significant arrears-arrears more than $250,000. Nearly all of the arrearages under these programs are public sector arrears, the bulk of which is in countries considered among the poorest or in countries where we have legal or political constraints. For example, $529.4 million of total arrears are owed by the Dominican Republic, Liberia, Somalia, Sudan, Syria and Zaire. Of the remaining arrears, $149.4 million will be resolved within the next month-$102.9 million owed by Russia will be rescheduled and $46.5 million owed by Bangladesh will be converted to a grant under the terms of a 1987 agreement.

This leaves a balance of $42.9 million owed by all other countries.

Mr. SKEEN. Are any countries in arrears continuing to receive the benefit of P.L. 480 or CCC programs?

RESPONSE. Several years ago we revised our suspension policy to allow for private sector CCC programs in countries with protracted public sector arrears. Therefore, we have private sector CCC programs in several countries where there are public sector arrears on our records, particularly in Latin America, Eastern Europe and the Former Soviet Union. With regard to public sector CCC programs, currently we are reporting significant arrearages for Korea-one of our best debt servicing countries and Morocco. We have advised these countries that we will suspend their programs if arrearages are not resolved quickly.

Under P.L. 480, our policy is not to sign a new agreement with a country's government unless the country is current on its Title I payments. Occasionally a country may lag behind on payments during the course of the year after an agreement has been signed. Given the concessional nature of this program we will not suspend shipments. However, we will suspend new Title I programming until arrearages are resolved. We are currently reporting significant Title I arrearages for Congo and the Philippines and we are working with these countries to resolve outstanding pay

ments.

PASSENGER MOTOR VEHICLES

Mr. SKEEN. For which posts are you planning to buy the three new cars? RESPONSE. The three new vehicles will be purchased for Canberra, Australia; Brussels, Belgium, U.S. Mission to the European Union; and Athens, Greece.