46 



to profit in agriculture depends on future opportunities in open 

 markets. 



Having said that, I have been following the GATT closely for the 

 last 6 years. It seems to have a life unto its own, without certainly 

 current solution. 



Given the fact that the European Community subsidizes its agri- 

 cultural program $3 for every $1 of ours — that is internal sub- 

 sidies — externally $10 to $1 on their exports. 



Given that enormity of difference, and recognizing that it is very 

 difficult to find an agreement without overthrowing the govern- 

 ments of France and Germany in the meantime, politically, how do 

 you ever get to a level playing field or some sort of equity in trade? 



Having said that, the philosophical question is simply this: Rec- 

 ognizing Japan is a huge purchaser of our commodities, and rec- 

 ognizing that agriculture is only one part, why don't we begin to 

 open the question with the Japanese of a free-trade agreement? We 

 recognize that it would certainly send a chill into the negotiations 

 with the European Community, which might be productive. Second, 

 a bilateral agreement with the Japanese surely would enhance our 

 agricultural exports. 



Would you comment on that? 



Ambassador Kantor. I would be happy to, with great trepidation 

 and sometimes in speculation, but certainly I will try to comment 

 as I have before. 



We have not done enough, frankly, Mr. Smith, in looking at the 

 Pacific Basin — not just Japan, but the Pacific Basin in general. It 

 is the fastest growing market in the world right now. For instance, 

 we have been talking about China. Southern China is growing at 

 40 percent a year. The ASEAN nations — the so-called Four Ti- 

 gers — are growing very quickly. 



Frankly, the Japanese are having some economic problems right 

 now. In fact, their economy is not growing. In fact, it has been de- 

 clining in the last two quarters. 



That doesn't mean what you're saying philosophically is not cor- 

 rect. It is only to say that we have enormous opportunities which 

 we have not addressed adequately. This is not by way of criticism, 

 but I think it is by way of explanation and pure fact. We have an 

 opportunity to do so. 



Prime Minister Keating about 2 months ago made an interesting 

 speech in Australia where he felt we ought to put a framework 

 around something called the Asian Pacific Economic Cooperation 

 Forum, of which we are a member and the Asian nations are mem- 

 bers, including China. We are the chair of that forum this year, by 

 luck and by chance. 



It may be an opportunity to open up just the kind of dialog you're 

 talking about, not just with the Japanese — with which we have 

 some bilateral problems right now — but in a wider sphere. I think 

 you are correct that we will certainly gain the attention of others 

 in the world who might have some concerns in that regard. 



Mr. Smith. I have just one quick follow-up question. 



When you meet with Mr. Wilson, Mr. Ambassador, we of the 

 West have a constant thorn in our side with the crow's nest rate, 

 as you may know. There is no subsidy going to Thunder Bay, but 

 there is going to the Pacific coast, which places the United States 



