September 29,2000

Chair, Committee of Government Representatives of Civil Society
c/o Tripartite Committee (Ref. Civil Society) Econol:nic Commission for Latin America and the Caribbean (ECLAC)
1825 K Street NW, Suite 1120
Washington, D.C. 20006 -

Re: Executive Summary: Open Invitation to the Civil Society in FT AA Participating Countries

Dear Chair:

I am writing to you on behalf of the Grocery Manufacturers of America (GMA) in response to the "Open Invitation to the Civil Society in Ff AA Participatin 9 Countries."

GMA fully supports the Free Trade of Area of the Americas (Ff AA) negotiations and has actively participated in the process through the Americas Business Forum and continued dialogue with our government representatives.

GMA is the world's largest association of food, beverage and consumer product companies. With U.S. sales of more than $463 billion, GMA members employ more than 2.5 million workers in all 50 states. The organization applies legal, scientific and political expertise from its member companies to vital food, nutrition and public policy issues

affecting the industry. Led by a board of 42 Chief Executive Officers, GMA speaks for food and consumer product manufacturer~ at the state, federal and international levels on legislative and regulatory issues. The association also leads efforts to increase productivity, efficiency and growth in the food, beverage and consumer products industry.

The Committee on Civil Society is anew initiative within the trade -negotiating framework. The stated objective of the committee is to "obtain input from Civil Society on trade matters relevant to the FT AA". GMA supports this overall objective, but suggests that there is a more effective means to obtain meaningful input from relevant stakeholders. GMA believes that national consultations are the best means to incorporate private sector concerns into trade negotiations. GMA encourages all FT AA participating countries to undertake national measures to solicit comment from all stakeholders while developing country objectives and priorities for FT,L\A negotiating groups. In this manner, the negotiations will proceed in a manner that balances national positions representative of all local constituencies.

GMA firmly believes that the FrAA negotiations should be conducted as a government- to- government process. Observer status should not be conveyed to any business, labor, environmental human rights, or consumer groups during the negotiations. Furthermore, no such group should have a "seat" at the negotiating table. The intergovernmental status of trade negotiations must be preserved.

Attached, as an Annex, are GMA recommendations for the Fr AA agricultural negotiations. GMA appreciates this opportunity to provide comments on the Committee on Civil Society and the agricultural negotiations. We look forward to providing additional, more detailed comments as the negotiations proceed. In the meantime, please consider GMA a resource as you continue to develop Rositions for the FT AA.

Sincerely,

~..,C.~.V~

Mary C. Sophos
Senior Vice President, Government Affairs

Attachment

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ANNEX
Recommendations for the FT AA Agriculture Negotiating Croup

Market Access
Barriers to processed food and beverages in the FT AA countries remain significantly higher than those for many other products. And, although the wro Agreement on Agriculture delivered some benefits by lowering barriers and reducing subsidies to producers and exporters, the reductions in tariffs for processed foods and beverages were mostly at the lower end of the allowable range. Because the rules allowed countries to average their tariff cuts, countries naturally chose to make high percentage reductions on already low tariffs and lower percentage reductions on higher tariffs. Consequently,
tariffs on processed food products outside the US ar~ as high as 50% whereas average industrial tariffs have declined to an estimated 4%.

T o address these barriers, GMA strongly favors tariff elimination based on a formula approach that will accelerate the elimination of tariff peaks (asymmetrically high tariffs) and address the problem of tariff escalation, where tariffs increase with the level of processing. This approach should, in essence, reduce the higher tariffs faster than the lower ones to create meaningful market access for processed food products. The negotiations should also result in elimination of non-tariff barriers to processed food products. In addition, we recommend that this liberalization in tariff and non -tariff barriers be completed in less than the ten -year period negotiated in the NAFT A.

GMA also believes that there should be no product or policy exceptions in the FT AA negotiations. For the benefits of the FT AA to be truly realized by the food processing industry, it is imperative that sugar, peanuts and dairy be subject to meaningful reform and liberalization throughout the hemisphere. Finally, GMA recommends that the negotiations on tariff reductions begin from applied rather than bound rates to ensure commerciaHy meaningful reductions in a reasonable timeframe.

'1 Export Competition
GMA supports the recommendations made during the Fifth Americas Business forum for a hemisphere-wide "subsidy free zone." Export subsidies artificially distort world market prices and steal market share from efficient producers. Elimination and prohibition of future subsidies in the FT AA will not only level the playing field for agriculture commodities and processed food products, but will increase pressure on the European Union to do the same during the up-coming WTO negotiations on agriculture.

Domestic Support
GMA believes the most effective means for achieving a reduction in domestic support for agricultural commodities will come through increased market access and an elimination of export subsidies. GMA recommends however, that any continued domestic support be decoupled from production so that it is the least trade distorting as possible, consistent with provisions in WTO Agreement on Agriculture