MR. FLIKKEMA: I want to take this opportunity to thank you for the ability to speak here. My name is Dale Flikkema, and I'm from Bozeman, Montana. And I'm on a family farm, and we have just recently started growing peppermint on our farm, and we have seen a big downturn in the mint markets. I guess, I'll read this to you.

Mint has been grown in the US for over 100 years. It is a specialized crop requiring a capital investment of a steam process on the farm to extract oil from the mint plants. There are only a few growers in the country as far as an overall perspective of other ag industries. The US is the world leading producer of mint oil with an average probably right around 10 million pounds. About 8 million pounds of peppermint and about 2 million pounds of spearmint.

Mint is an essential flavoring ingredient with about 95 percent of its usage in oral care products; candy, gum, and also toothpaste. A small amount of mint goes a long way. For example, about 100 pounds of mint oil, which is about the same significant amount that is grown on one acre, will approximately flavor 1,250,000 sticks of gum or 100,000 tubes of toothpaste.

The bank for mint is extremely elastic. Small oversupply situations create significant pricing reductions, and even the threat of a shortage can cause notable price increases. India, China, and Canada account for the most remaining world production of spearmint oil. China produces approximately 440,000 pounds per year. India is about 640,000 pounds a year. And Canada is 250,000 pounds per year. US spearmint growers are one of the most efficient growers in the world, and we would welcome competition in the field, if it were leveled. It is not.

As China continues to try to meet World Trade Organization terms, the time is right to seek fairness in trade policies. India has been aggressively seeking export markets for agriculture products for the past half dozen years. The timing is good for them also. The discussion to follow addresses three areas where at least two countries have significant competitive advantages.

First, labor. The average daily wage on a mint farm in China or India is about $2 a day. A large segment of peasant farmers supply this labor and are a significant factor in our difficulty to compete. They often live a somewhat weary life of labor and conditions of despair for themselves and their families. This great disparity between their standards and ours needs to be addressed.

Eternal support to China. Historic policies have given Chinese spearmint producers an unfair advantage. While state-owned enterprises are reportedly being phased out, under this system, a glut of spearmint oil was produced. This production occurred in the nineties, and was exported to what may be considered dumping levels. During the period from 1994 to 1996, annual imports to the US from China averaged 500,000 pounds a year, an outstanding figure for an industry that annually uses just over 2 million pounds. Most of this oil was priced at less than $4 a pound. US production costs are approximately $10 a pound. Even with low labor markets, such levels would not have been attained without government policies that ignored market considerations in setting prices. Inventories from this period continue to depress our markets.

International supports in India. The farm sector in India is the recipient of several benefits including: One, support prices for grain, cereal, and oil seeds. These prices are fixed each season and affect premarket prices for other crops, including spearmint, which requires the above named crops for rotation. Two, subsidized planting materials, including fertilizer and fuel. Three, surface irrigation subsidies, farm equipment loans are also subsidized. All agricultural income is tax free. Export income is tax free. Farm credit for land improvements is subsidized.

Chinese tariffs. The oil imports into the US from China and India is duty free. Such is not the case for our oil going to China. Current duties are about 25 percent plus a 17 percent value added tax, a total of 42 percent. While the value added is perhaps difficult to address in these negotiations, the 25 percent duty should be addressed. Makers and users, such as Colgate and Wrigley, have established production facilities in China, and for the most part, would like to use US higher grade and quality oils to ensure constant flavor to their products. Duties at these levels greatly hinder this possibility.

India tariffs. During the period of 1995 and '97, India exports of spearmint oil increased about 120 percent, from about 80,000 pounds in '95 to about 170,000 pounds in 1997. The United States was the main export market, receiving about 55 percent of India's total exports. At the same time, India's imports of spearmint oil had been declining, going from about 70,000 pounds in 1995 to less than 30,000 pounds in recent years. 77 percent of India's spearmint imports come from China, and the US accounting for a minuscule amount of about 1,000 pounds. The import duty on spearmint oil in India is about 40 percent with an additional 5 percent tax, a total of 45 percent. Again, the playing field is not level.

These factors, combined with the peasant labor force, make it impossible for the US mint producer to compete. Even with superior efficiency and quality, there are too many cards stacked against us.

Mexico does not have a domestic spearmint industry and yet they currently post a 42 percent tariff on our oil. This, of course, significantly increases the incentive for Mexican spearmint users to use cheaper oil from China and India to fill their needs. Because Mexico is one of our major export markets, this desperately needs to be addressed.

The difference in labor between developing countries and developed countries must be addressed. We will do their labor force a favor if we establish policies that will motivate their government to raise their labor standards rather than let current policies remain, which seem to encourage a continuation of apparent exploitation of their labor force. This, it seems to us, is important, not only from an economic standpoint but also from a standpoint of human decency.

Internal support programs must be addressed. Spearmint oil has never received a subsidy or support payments here in the US, and we are not seeking one now, we are seeking fairness. Either competing countries must reduce their subsidies to their mint farmers or we must have to resort to some sort of government help here in order to compete. We prefer the first option and would welcome the opportunity to compete on a level playing field.

I want to take this time again to thank you for listening to me today. I would be happy to answer any of your questions.

MR. GALVIN: I think you just made a very strong case for having both China and India as members of the WTO because until they become members, there's really little we can do to impose disciplines on their domestic subsidies and their exports and that sort of thing. So I think you outlined the case very well.

MR. FLIKKEMA: If they don't become a part of the world trade, would we be able to put those tariffs on their products coming in here?

MR. GALVIN: There's some action we can take, but it's a lot tougher to -- I mean, you can't take them to the WTO, for example, you can't take them to the dispute resolution process.

MS. LAURITSEN: I would just like to clarify India is a member of the WTO, and we are hopeful China will become one before Seattle. I just wanted to add a comment that come up a little bit in some of the testimony concerning labor, and it is one of our objectives. The President has made it clear from the top that we will address labor standards around the world as part of the WTO negotiations as well as other countries' environment laws.