export any significant quantities of such olives to the United States, it is clear that Spain is the principal potential foreign supplier to the United States market.

In California there are over 2500 olive growers with over 32,000 acres devoted to the production of olives. The California olive canners operate packing plants representing a capital investment of millions of dollars. Over 2,000 persons are permanently employed in the cultivation and harvesting of the crop and employment at the harvest peak exceeds 10,000. Additional thousands are employed in the processing and sale of California olives.

Because of the abundance of olives in Spain and the significant difference in costs of production in Spain and in California, we cannot help but view Spain's potential for exporting California-style olives to the United States as a threat to the future welfare of the California olive industry. In addition, this threat inhibits investment in additional orchards to meet the growing consumption of olives to fill the normal future needs of our industry.

In order to protect the future of our industry, in recent years we have joined with the importer-packers of Spanish-style green olives in seeking to obtain legislation raising the import duty on all olives imported in containers of less than 9 pounds as well as legislation subjecting imported olives to U.S. marketing orders and to Section 22 of the Agricultural Adjustment Act. We hoped that such legislation would serve to safeguard our industry from the disastrous effect which would result from the importation of California-style olives from Spain. Also, some of our members import and repack Spanish-style olives. These members have shared the concern of other importer-packers that the increasing importation of bottled green olives from Spain would have an adverse effect upon their importing, repacking and distributing operations. We wish to make it clear, however, that we joined in these legislative efforts in order to protect our industry and not with the purpose of harming Spain or its olive industry.

During the past few years, imports of bottled green olives from Spain have increased rapidly. Hardly any bottled green olives were imported from Spain three years ago, but this year bottled Spanish olives are expected to account for over 25 percent of the olives imported from Spain by quantity and over 45 percent of the value of the imports of Spanish olives. Some of our importer-packer members were required to make some initial adjustments, but the increased importation of bottled Spanish olives has not had a significant adverse effect upon their operations. Like most other importer-packers of Spanish olives, these members are importing and distributing increasing quantities of bottled Spanish olives.

These members have found it to be more economical to buy Spanish olives bottled in Spain and we believe it has come to be recognized both in Spain and in the United States that traditional importer-packers of Spanish olives can play an important role in the importation and distribution of Spanish olives bottled in Spain. Moreover, because of their different taste and texture and the lower price of California-style ripe olives, Spanish olives do not compete directly with California-style olives and there can be an advantage to marketing and distributing these two products together.

Nevertheless, the abundance of olives in Spain and the capability of the Spanish olive industry to produce and export California-style ripe olives to the United States, continue to pose a threat to our industry.

In the last year, we have pointed out this problem to you. You have recognized the serious problem which this situation causes our industry. We have recognized the natural desire of the Spanish industry to bottle its unique product in Spain. Because of the above circumstances, we have given considerable thought and consideration to developing a means by which these diverse interests of our respective olive industries may be reconciled. We have developed what we believe to be a reasonable solution to this problem. Enclosed herewith is a draft of proposed compromise legislation which we believe can serve to safeguard the interests of both the Spanish and the California olive industries. We intend this proposed bill to take the place of the Tariff and Marketing Order bills currently pending before the Congress. The introduction of this bill would avoid the necessity of our industry supporting those bills, which would so adversely affect the Spanish industry.

Before proceeding to attempt to obtain the introduction of the compromise measure, we would be interested in obtaining the benefit of any views or comments of your Government with respect to the enclosed draft legislation. We would appreciate hearing from you with respect to this matter.

Sincerely,

BRUNO A. FILICE, President.

PROPOSED LEGISLATION

[H.R., 91st Cong., first sess.]

A BILL To amend the Tariff Schedules of the United States with respect to the rate of duty on olives

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That subpart B of part 9 of schedule 1 of the Tariff Schedules of the United States (19 U.S.C. 1202) is amended by deleting TSUS Items Nos. 148.40 through 148.56 inclusive and by inserting in lieu thereof immediately after, and subordinate to, the superior heading, "Olives, fresh or prepared or preserved:" the following new provisions:

Section 2. California style olives, as referred to in the first section of this Act, are olives known as black ripe olives or green ripe olives which: (1) are processed from olives that are not fully matured from which the bitterness has been removed by a caustic solution and which, in the case of those known as black ripe olives have been darkened by oxidization to a color ranging from reddish-brown to black; (2) are packed in brine in containers and then preserved by heat sterilization; and (3) have a pH of 6.0 or greater. "California-style" does not include "Spanishstyle" olives, which are classified in 148.55.

Section 3. The amendment made by the first section of this Act shall apply to articles entered, or withdrawn from warehouse, for consumption on or after sixty days after the date of enactment of this Act.

SPANISH EMBASSY, Washington, D.C., June 1, 1970.

Mr. BRUNO A. FILICE,

President, California Olive Association,

San Francisco, Calif.

DEAR MR. FELICE: Thank you for your letter of May 1, 1970 with regard to the position of the Spanish authorities concerning proposed U.S. legislation affecting olive tariffs. We have forwarded your letter to the Spanish Commerce Ministry and have received from the Ministry the following statement of policy with respect to this issue:

"The position of the Spanish authorities with respect to the proposed legislation affecting Spanish olive exports to the United States is clear and has been formally stated to the United States Government on several occasions. There are currently two types of bills pending before the Congress of the United States which could gravely affect Spanish olive exports. The first type of bill would raise the duty on olives imported in containers of 9 pounds or less to 50% ad valorem, a duty which is more than four times the current duty on such imports. The second type of bill would subject Spanish olive exports to the United States to United States agricultural marketing orders, a particularly odius form of non-tariff barrier, pursuant to which the size, quality and quantity of olives which Spain could export to the United States would be controlled by United States producers and would also authorize the imposition upon Spanish olives of fees (other than duties), quotas and even complete prohibition of their importation.

The Spanish authorities are completely and inalterably opposed to the adoption of such legislation by the Government of the United States. The adoption of either type of such legislation by the United States would constitute a serious violation of the solemn international obligations undertaken by the United States Government pursuant to the General Agreement on Tariff and Trade. In the Kennedy Round negotiations, the United States, in negotiations with Spain, agreed to bind the duties applicable to olives classified in Tariff Schedules of the United States Items Nos. 148.44 and 148.50 at 20 cents per gallon and 30 cents per gallon respectively. Moreover, it was understood by both countries that any change in the United States tariff on these olives which discriminated or differentiated between bulk and bottled olives would be subject to indemnization by the United States or retaliation by Spain pursuant to Article XXVIII of the General Agreement on Tariffs and Trade.

48-940-70-4

Since the Kennedy Round, the Spanish authorities have on several occasions expressed to the Government of the United States their concern over the serious threat which these two types of bills affecting Spanish olive exports poses to Spanish-American relations. The value of United States exports to Spain is almost triple the value of Spanish exports to the United States and Spain's trade deficit with the United States is in the order of $400 million a year. Moreover, olives constitute Spain's second largest export to the United States and account for about 15% of the value of Spain's exports to that country. The adoption by the United States of either of these types of legislation affecting Spanish olive exports would have a serious adverse economic effect upon the Spanish olive industry and particularly upon Western Andalusia where both that industry and the joint Spanish-American military facilities at Moron and Rota are located.

Given Spain's balance of payments situation, such action would also seriously inhibit Spain's ability to purchase United States exports. The foregoing facts clearly demonstrate the seriousness of the threat which such legislation poses for the future of relations between Spain and the United States.

With respect to the draft of legislation proposed by the California Olive Association in their letter of May 1, 1970 to the Spanish Commercial Counselor in Washington, we believe it represents a new approach to the olive problem which exists between the United States and Spain and appears to offer a means of amicably resolving this serious problem which threatens Spanish-American relations. The draft legislation suggested by the California Olive Association proposes that the United States duty on California-style olives be increased to 15 per pound and that in return for its loss of a potential market for the export of California-style olives, Spain would in turn be compensated by a reduction in the duty on Spanish olives to 15¢ per gallon. In addition, the draft bill would simplify considerably the United States tariff provisions relating to olives, which in their present form are confusing and subject to considerable dispute.

Because of the deterioration in the olive oil market in recent years, the Spanish olive producers have had to consider the large United States market for Californiastyle olives as a potential market for its olive production. While there may be some doubt as to whether the tariff reduction on Spanish-style olives proposed by the California industry is adequate to compensate for the loss of this potential market, the proposed reduction is not unreasonable. Moreover, the draft bill offers the advantage of removing the threat which the other bills pose to the increasing cooperation and friendship which the Spanish and United States Governments have been developing between their respective countries.

In view of the situation set forth in the facts outlined above, the Spanish authorities would not object to the draft bill suggested by the California Olive Association as long as it remains completely clear that "Spanish-style olives" will not be reclassified into TSUS No. 148.50 of the bill which applies to "Californiastyle" olives since the section applicable to Spanish-style olives in the bill is TSUS No. 148.55 which includes TSUS Nos. 148.44 anc 148.50 of the tariff currently in effect, which are bound in GATT. On the other hand, it would not be appropriate for these authorities to support such legislation or otherwise attempt to intervene in the internal affairs of another country. If the United States Administration wishes to propose such a compromise measure as a means of resolving this problem, we would be pleased to discuss this matter further with them."

We appreciate the interest and initiative which the California industry has taken with respect to attempting to develop an amicable means of reconciling the interests of the California and Spanist olive industries in a manner worthy of the friendship and respect which exists between the United States and Spain.

Very truly yours,

RAMUNDO BASSOLS,
Commercial Counselor.

Mr. EGGE. The first letter is dated May 1, 1970, from the California Olive Association and it begins by expressing the deep concern of that association and its members as regards the possible serious adverse economic effect upon the California olive industry which could result from a large-scale importation of California-style olives from Spain.

It goes on to say that to express a reason for concern, that although Spain has not yet begun to export any significant quantity of these olives some one has got my marked up copy. I gave it away. One of you has the benefit of my marked up copy.

Mr. FOLEY. Off the record.

(Discussion off the record.)

Mr. EGGE. It goes on to state that although Spain has not yet begun to export any significant quantities of such olives to the United States, it is clear that Spain is the principal potential foreign suppliers for the U.S. market.

It then states the great stake that California has in the production of olives, thousands of workers that are employed in the production of olives, and goes forth to state the California problem, that because of the abundance of olives in Spain and the significant difference in costs of production in Spain and California we cannot help but view Spain's potential for exporting California-style olives to the United States as a threat to the future welfare of the California olive industry. They point out how in recent years, in order to protect the future of their industry, they joined in efforts both with regard to raising tariffs on all olives imported in containers of less than 9 pounds as well as legislation subjecting imported olives to U.S. marketing orders and to section 22 of the Agricultural Adjustment Act.

They further state that:

We wish to make it clear, however, that we joined in these legislative efforts in order to protect our industry and not with the purpose of harming Spain or its olive industry.

And then at the bottom of page 2 they note that:

Because of their different taste and texture and the lower price of Californiastyle ripe olives, Spanish olives do not compete directly with California-style olives and there can be an advantage to marketing and distributing these two products together.

And in conclusion, on page 3, the California Olive Association notes that in the last year in their letter to the Spanish commercial Counselor:

In the last year we have pointed out this problem to you. You have recognized the serious problem which this situation causes our industry. We have recognized the natural desire of the Spanish industry to bottle its unique product in Spain. Because of the above circumstances, we have given considerable thought and consideration to developing a means by which these diverse interests of our respective olive industries may be reconciled. We have developed what we believe to be a reasonable solution to this problem.

And then they go on to say that they are enclosing a draft of compromise legislation that they believe would serve to safeguard the interests of both the Spanish and the California olive industries:

We intend this proposed bill to take the place of the tariff and marketing order bills presently pending before the Congress. The introduction of this bill would avoid the necessity of our industry supporting those bills, which would so adversely affect the Spanish industry.

And then he concludes by saying that:

Before proceeding to attempt to obtain the introduction of the compromise measure, we would be interested in obtaining the benefit of any views or comments of your government with respect to the enclosed draft legislation.

And attached is a copy of the draft legislation.

The draft legislation, if I may summarize it, would increase the duty on California-style olives from 5 cents a pound to 15 cents a pound and in return for the loss of a potential market it would decrease the duty on Spanish-style olives in the instance of a pitted or stuffed from 30 cents a gallon to 15 cents a gallon and in the case of the whole olives, from 20 cents a gallon to 15 cents a gallon.

I think that this is a unique example of a U.S. industry who has had a potential problem and has gone out of their way to seek to resolve it in as amicable a manner as possible. They have been diplomatic, sensitive to the foreign policy implications of the problem with which they were faced, and have made every effort to attempt to work out a means by which both industries' interests could be safeguarded without the necessity of someone goring somebody else's ox, if you will.

Mr. SISK. Mr. Chairman, if I may be recognized briefly for a comment, I do not wish to interfere with the witness. The witness is talking about a statement that should be directed to the Ways and Means Committee. He is talking about a bill basically that is pending before the Ways and Means Committee. Congress will be considering it very shortly, but we, in this committee, do not deal with this at all.

Mr. FOLEY. As I understand it, Mr. Egge's point was that the suggestion was made by the California Olive Growers Association that they would support legislation which is pending in Ways and Means and the witness was suggesting that

Mr. SISK. No. That is

Mr. EGGE. No. Not at all. If I may, Mr. Chairman, responding to Mr. Sisk's comment, Mr. Sisk, in the letter it relates-the comment specifically relates to both bills, as being a way to resolve the problem. the thing that they were seeking to accomplish both by the tariff bill and by the marketing order bill. If you will note at the top of page 2

Mr. SISK. As the gentleman knows, I represent an area that is pretty heavily involved. I have been talking to the olive growers and I think I know what they are concerned with and basically most all of your testimony this morning is of concern to the Ways and Means Committee and I am going to have some questions when you are concluded. I do not wish to cut off your statement but I think the committee should understand, you are talking about a matter that is under active consideration by the Ways and Means Committee today and it does not concern itself primarily with what the Committee on Agriculture is concerned.

Mr. EGGE. On the second part of that, apart from the top of page 2, Mr. Sisk, on page 3 at the bottom of the second to the last paragraph, the California olive industry states:

We intend this proposed bill to take the place of the tariff and marketing order bills currently pending before the Congress. The introduction of this bill would avoid the necessity of our industry supporting those bills, which so adversely affect the Spanish industry.

I grant you, I think certainly it is so, Mr. Sisk, that it does relate to the bill before Ways and Means, but here in this they refer specifically also to the bill pending before this committee.

In response to that letter I think the California Olive Association certainly went more than halfway and proposed a compromise approach and I think the good faith of that industry was met by the good faith of a response that was received from the Spanish commercial counselor. The Spanish commercial counselor indicates that he had communicated this view to the Commerce Ministry in Spain and had received the following statement of policy with regard to the issue.

I will not go into it in detail. First, it expresses the opposition that their government has expressed to our Government with respect to