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**International Trade**

***Background***

In fiscal year (FY) 2005, the United States exported \$62.4 billion in
agricultural products while importing \$57.7 billion, resulting in a
trade surplus of \$4.7 billion. Agricultural exports have increased 23
percent since 2000, rising to record highs in recent years. While U.S.
agricultural exports have risen steadily, growth in imports of
agricultural products has outpaced our export growth, causing our
agricultural trade surplus to decline.

The lower trade surplus does not signal reduced export competitiveness
of the farm sector. U.S. bulk commodity exports continue to exceed
imports by \$15 - \$20 billion, as has been the case for the past 15
years. The rise in the value of agricultural imports reflects strong
consumer food demand in the United States, especially for seasonal and
ethnic foods, and strong economic growth and rising incomes.
Furthermore, the gains in imports have been mainly in processed foods,
not in farm products that compete directly with U.S. production.

Title III of the 2002 farm bill includes programs ranging from
international food aid to commercial export credit programs and export
market promotion assistance. Subtitle A centers on the economic
development of foreign countries and humanitarian relief through food
assistance and the monetization of donated agricultural products.
Subtitle B consists of programs designed to assist and expand the export
of U.S. agricultural products. These include the Commodity Credit
Corporation Export Credit Guarantee Program, at \$2.6 billion in FY
2005; the Market Access Program, at \$140 million in FY 2005; the
Foreign Market Development Cooperator Program, at \$34 million; and the
Food for Progress Program, at \$122 million. Under Subtitle C, several
programs are aimed at removing nontariff barriers affecting U.S.
agricultural exports, including technical assistance for specialty
crops.

***General Opinions Expressed***

-   Some participants expressed the increased global nature of
    agricultural markets due to growth in international trade.

-   Some stated that our policy should promote and increase agricultural
    trade with other countries. Some suggested opening trade with Cuba;
    one suggested Iran and Iraq.

-   Others (especially sugar producers) stated that we should not have
    any more trade agreements like NAFTA, CAFTA, or other free trade
    agreements.

-   Various pork producers thanked USDA for passing CAFTA. Several beef
    producers were concerned about CAFTA. Others questioned whether the
    United States can control the amount of beef that could come from
    Brazil, Argentina, and Australia.

-   Many feel we should be developing biofuels for export and domestic
    use. Several stated that CAFTA, allowing up to 7 percent of U.S.
    ethanol production to be imported through CAFTA countries thereby
    avoiding the 54-cents-per-gallon tariff, will undermine the optimism
    that younger farmers have developed for the potential of renewable
    fuels, especially ethanol.

-   Several commented that our trade agreements are skewed to providing
    increased benefits to \"developing\" countries (at the expense of
    U.S. agriculture).

-   Some stated that any actions taken to maximize competitiveness in
    global markets benefit only the exporters. Farm policy should be
    formulated to benefit the producer first.

-   Many stated that the United States needs fair trade, not free trade.
    U.S. negotiators give away access to the United States without
    gaining access to other countries. Some feel that U.S. agriculture
    is used as a pawn in international negotiations. Nontariff trade
    barriers need to be addressed also. Some stated that we must ensure
    that trade agreements are enforced. Some cited the need to address
    currency manipulation (China) and foreign subsidies.

-   The United States should not pay import tariffs on our exports when
    imports come into the United States tariff free.

-   Several stated that the U.S. Government should use enhancements to
    sell grain overseas and actively use our Dairy Export Incentive
    Program (DEIP) to export dairy products.

-   Some suggested lowering our domestic support prices to make us more
    competitive in international markets. More said that we cannot
    compete internationally, especially when one considers the cheap
    cost of land and labor in countries such as Brazil.

-   Our policy needs to offset the cost of our higher standard of living
    and food safety, environmental, and other requirements. Remove the
    burden of paying for these high standards from the U.S. producers or
    add the cost to imported products.

-   Many opined that all imported agricultural products must be required
    to meet the same safety standards (including pesticide restrictions)
    required of producers in the United States.

-   Several requested 100 percent inspection of imported food products
    and that inspection fees be charged for imported agricultural
    products.

-   Several indicated that our regulations are out of control and make
    us less competitive. One stated that "if you really want us to
    compete against third world countries, rescind all of the
    unproductive laws, health and safety standards, and excessive
    taxes."

-   Every trade agreement should include environmental protection, fair
    wages, and worker rights.

-   The U.S. Government should support immigrants who work on U.S. farms
    to produce crops by ensuring they receive at least the minimum wage
    and are well treated. Some stated that we need to control illegal
    immigration and deal with the problems it is creating. Some stated
    that we need to develop a new policy for migrant farm labor to
    ensure a legal and adequate work force.

-   Some felt we need to compete on the basis of high quality at the
    best price instead of just price. Instead of subsidizing farmers for
    production, our policy (price incentives or discounts) should help
    increase the quality of our crops so that we can compete better
    internationally.

-   Consider incentives to those producers who supply the type of
    products that meet the demand of the foreign market. If a cattle
    producer can provide evidence to the packer that the meat from a
    particular animal can be traced from pasture to plate, this producer
    should be given a financial incentive.

-   Some stated USDA should assist farmers by providing
    information/education programs on the world market and standards and
    regulations affecting trade.

-   Some stated that USDA should accept that exports have not been and
    will not be the cure for the malaise in U.S. agricultural markets.
    Exports are important, but they have lost ground to imports. A few
    participants stated that we should set our domestic prices at parity
    and then worry about the global markets.

-   Some stated we should maintain agricultural subsidies like the EU
    and push to sell our products all over the world.

-   Several suggested we should limit imports and be allowed to export
    just as much as we are importing. A few stated that imports should
    be limited to products U.S. producers cannot supply. Others
    suggested taxing imports of resources already produced in the United
    States. Several stated that we should encourage import substitution
    on a regional scale through the development of regional/local
    markets and programs to encourage small organic farms. Some felt
    that diversification and regional markets would improve our homeland
    food security. A few suggested using food as ransom for oil.

-   USDA should stop showing other countries how to raise crops and
    export ours to them.

-   Some suggested that in order to meet WTO standards, the U.S. should
    stop supporting specific commodities and move to green-box-type
    subsidies such as conservation, direct payments, or income
    insurance. Several stressed that we should not give away our
    counter-cyclical price protection in some trade negotiation. Despite
    the WTO ruling in the Brazil cotton case, several participants
    requested a continuance of the Upland Cotton Step 2 Program.

-   Several stated that we should not finalize the farm bill until the
    WTO Doha Round discussions have been completed. Some suggested that
    the farm bill should be flexible enough to allow for it to meet WTO
    requirements.

-   Several stated that the WTO and trade agreements should not dictate
    U.S. farm policy.

-   Some felt that farm subsidies should do a better job of providing a
    safety net for U.S. farmers facing unfair foreign competition.

-   Many stated that the U.S. transportation infrastructure needs to be
    vastly improved to compete internationally.

-   Some opined that U.S. farmers need competitive freight rates for
    grain exports.

-   Some cited the international demand for organic products and
    requested export support, such as having AMS' National Organic
    Program comply with international standards (ISO) for certification
    and accreditation.

-   Several stated timber markets in other countries are
    protected/advantaged by their government's involvement in timber
    holdings and/or lack of labor and environmental regulations. U.S.
    policy should level the playing field so forestry products imported
    into this country are priced similar to the same product grown and
    produced in the United States.

-   Several did not understand why USDA would not allow individual beef
    processors to implement 100 percent testing for BSE as requested by
    Japan in order to export to Japan.

-   Several said the U.S. should be able to sell high-quality beef to
    China.

-   Several stated that the debate over antibiotics used in animals,
    pesticide usage, animal rights, and other issues seems to affect
    what other countries buy. USDA should eliminate "egregious animal
    practices," such as the use of farrowing crates for sows, to make
    our products more attractive internationally. We should invest in
    programs to produce hormone-free beef in response to demand in
    foreign markets.

-   If U.S. agriculture is going to remain globally and domestically
    competitive, the U.S. must update our Federal dairy policies, many
    of which date back to the Great Depression.

-   A few asked USDA to support Alaska fish meal processing as an export
    product.

-   Some asked for continued support of the Market Access Program (MAP)
    and Foreign Market Development (FMD) export promotion programs.

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-   Some requested additional funding for the Technical Assistance for
    Specialty Crops Program (TASC).

-   Some support donations of food in U.S. foreign aid programs versus
    cash-only donations as currently supported by the European Union.

-   Some stated that our farm programs should not result in negative
    impacts on farmers in developing countries.

-   One of our competitive edges in the international market has been
    our cutting-edge research. The U.S. must continue to fund research.

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-   Many stressed the need to address rising fuel and fertilizer costs
    in order to be competitive.

> ***Detailed Suggestions Expressed***

-   Globalization can cause jobs to be transferred from Macon County or
    Madison County to China, negatively affecting the economic viability
    of our local communities. Therefore, Federal policies need to
    address the resulting situation on a very local level.

-   A minimum price for agricultural commodities should be set
    worldwide.

-   Set a \$2.97 loan rate for corn and \$5.95 for beans (for example)
    and forget all other parts of the program. After the loan prices are
    set, the Government can set prices for export (because it will be
    the Government's grain) or use it as food aid for foreign countries.

-   Eliminate current domestic price support programs. Keep the disaster
    program, but only to the extent that it would provide assistance to
    rebuild devastated acres so that they are farmable again (e.g.,
    bridges, culverts, clearing debris). Set a minimum worldwide price
    for grain commodities at a profitable level for all (worldwide)
    growers (e.g., the U.S. 2005 prices might be \$2.50 corn, \$3.50
    wheat, \$6.00 soybeans).

-   The WTO allows revenue protection up to 70 percent of income to be
    included in the green box. The U.S. should negotiate upward to 80 to
    85 percent, and the balance of income protection could be provided
    by a limited marketing loan and/or single peril or buy-up coverage
    under crop insurance.

-   Another commenter suggested an export enhancement program to export
    our surplus grain and create higher domestic prices.

-   Keep the border to Canadian cattle closed as long as the U.S. does
    not have normal beef export opportunities.

-   We should reduce subsidies so we can demand the same from the EU. We
    should be world leaders in conservation so that we can demand the
    same from Latin America, Russia, and China.

-   The United States must have a program that protects our farmers in
    years of over-production because at some future point
    under-production will be our biggest concern.

-   Many countries would open trade if we did not subsidize our farmers
    so much. New Zealand eliminated almost all farm subsidies in the
    1980s and now they are one of the leading exporters of
    agricultural-based commodities.

-   Farm policy needs to effectively address the transition costs to
    producers that will inevitably arise with trade liberalization. With
    the implementation of the North American Free Trade Agreement in
    1994, some commodities have suffered a profit loss due to Canada or
    Mexico being able to produce that crop at a lower price. In such
    cases the Federal Government should provide assistance to farmers
    negatively affected by policy.

-   NAFTA and the WTO have driven up fuel and equipment prices for U.S.
    farmers.

-   The additional traffic generated by CAFTA will hurt our already
    lacking rural road systems.

-   Farm policy should be written by farmers, agricultural specialists
    at 1890 and 1862 land-grant universities, USDA specialists, and
    domestic and foreign agricultural specialists.

-   U.S. trade teams lack practical agricultural knowledge and thus are
    at a disadvantage to other trade teams.

-   Economic projections concerning trade agreements have often been
    wrong. USDA needs to initiate a thorough review of past models and
    projections.

-   USDA should upwardly harmonize global import standards for beef and
    allow voluntary BSE testing for U.S. packers. USDA should obtain
    substantial reductions in beef tariffs by trading partners such as
    Japan and Korea. USDA should create a global marketing information
    program to provide regularly updated information on commodity
    prices, supply and demand trends, exchange rates, and dominant
    market shares of trading companies.

-   Address beef export problems with tariff-rate quotas and high
    tariffs.

-   Uruguayan beef is brought into this country with a "USDA inspected"
    label just like U.S. beef, but a USDA inspector may have never seen
    the beef or the cow. Concern was expressed that this practice is
    misleading to the American consumer and unfair.

-   Concern was expressed over allowing Canadian beef products and live
    animals into the United States.

-   The 1995 WTO negotiations led to lower farmgate milk prices because
    of the importation of milk protein concentrates. Trade negotiations
    should first make a commitment to current and future U.S. dairy
    farmers.

-   Milk protein concentrates (MPC) with more than 40 percent protein
    should still be considered a dairy product.

-   Instead of imposing tariffs on imported MPCs, which would be
    counter-productive to ongoing trade negotiations, the Government
    should focus on helping develop the infrastructure needed for U.S.
    MPC production.

-   One issue that needs immediate attention is food safety. MPCs are
    imported into our country by the billions of pounds and have no
    import tariffs. They also come into the country labeled 'FOR ANIMAL
    USE ONLY,' yet are used in many food products. Concern was expressed
    that the Food and Drug Administration has never approved MPC usage.

-   Ensure the total enforcement of the dairy check-off dollars
    assessment on imported dairy products.

-   The United States should offer incentives to U.S.-based textile
    mills and other industries that would use U.S.-produced farm
    products.

-   The Mediterranean Basin, a large exporter of canned tomatoes to the
    U.S. east coast, is not the low-cost producer, but is being
    subsidized by the European Union. This inequity needs to be
    addressed.

-   Connecticut greenhouses cannot compete with product coming from
    Canada because of the operational subsidies received by Canadian
    producers.

-   U.S. producers and exporters of Adzuki beans would like Japan's
    quota on Adzuki imports to be removed.

-   Action was requested against many products coming in from China that
    are subsidized by that Government.

-   Some fruit and vegetable industry representatives requested Free
    Trade Agreements (FTAs) with Asian Pacific Rim countries in order to
    reduce high tariffs and phytosanitary barriers.

-   Reduce Mexico's 45 percent import duty on red and golden apples from
    the United States. Mexico ships large amounts of fruit and
    vegetables into the United States---we need a level playing field.

-   TASC (Technical Assistance to Specialty Crops) funds have been
    helpful, but this issue needs further attention.

-   Funding for the TASC Program should be increased immediately to \$4
    million (\$2 million discretionary and \$2 million mandatory) and to
    at least \$7 million in mandatory funding per year in the next farm
    bill.

-   An issue is costing Illinois corn growers 10 cents a bushel. The
    U.S. needs to resolve the 8-year-long high fructose corn syrup
    dispute with Mexico. The marketing allotments for sugar contained in
    the farm bill have been a significant barrier to resolving our
    dispute. If marketing allotments are maintained, imports of sugar
    from Mexico should be exempt from those allotments.

-   The sugar subsidy problem is a global problem which must be
    addressed comprehensively in the WTO -- all programs, all countries,
    sector--specific negotiations.

-   The U.S. negotiators have been hampered in international
    negotiations by having to protect sugar and other industries that
    rely on border protection. We need to find a way to capitalize the
    economic rent these industries receive in order to remove them from
    the debate.

-   The farm bill provides very little Government assistance for
    forestry compared to other countries (Canada). Support the Tree Farm
    Program.

-   The U.S. should have a value-added tariff on raw timber products
    sent out of the country, helping to keep jobs in the United States.

-   In West Virginia, lumber exporters would save about \$400 per load
    if export inspections were done in West Virginia as opposed to the
    ports, such as Baltimore and Norfolk.

-   Third world developing countries do not have the same environmental
    standards we do. Therefore, competition in the export market for
    forest products will become much more severe in the future. The U.S.
    should consider some sort of payment for ecological services that
    the forests provide such as clean water, carbon sequestration, and
    wildlife habitat.

-   Entering into the Kyoto Agreement and related carbon sequestration
    markets would provide increased opportunity for planting and
    management of trees in order to obtain carbon credits in established
    markets.

-   One aspect that the United States needs to address to remain
    competitive in global markets is \'chain of custody\' as it relates
    to food safety and land stewardship. The new farm bill could include
    the development/recognition of Environmental Management Systems
    (EMS). U.S. producers could use an EMS to certify their land
    stewardship and food safety measures. The EMS could then be used as
    an environmentally friendly marketing tool in international trade.

-   Concern was expressed about the limitations on USDA\'s Foreign
    Agricultural Service in distributing tobacco data and about
    restrictions that prevent them from promoting the exports of U.S.
    tobacco---a legal commodity. USDA should be permitted to provide
    equivalent services to tobacco farmers as those provided to other
    commodities.

-   Since the tobacco buyout of 2004, none of the tobacco imported from
    other countries has to be checked for dangerous pesticides and other
    chemicals that are not allowed in the United States. This inequity
    is unfair.

-   Higher standards for vessel and plant sanitation could improve the
    competitiveness of Alaska salmon, particularly in markets such as
    the EU.

-   The United States should consider producing industrial hemp.

-   In dealing with foreign interests, loans or other financial
    guarantees must be available to assure a loan institution\'s
    financial stability.

-   In West Virginia and surrounding States, wild-growing ginseng could
    be developed into an export to China.

-   Oppose Senate bill 2941, The North American Investment Fund.

-   U.S. organic product exports are assisted by programs such as MAP,
    but are not eligible for USDA\'s export incentive programs such as
    DEIP because of limited export price data.

-   In terms of global competitiveness, U.S. artisan products with
    distinctly regional flairs can compete with European wines and
    cheeses and Argentine and New Zealand beef.

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-   Concern was expressed about an APHIS inspection station in
    Washington State being closed within 2 years.

-   A producer from Guam requested that the FAS identify and prioritize
    commodities that could be developed and supported for export.

-   USDA has not prioritized opening up Japan and Korea for beef exports
    and USDA has done little to help Washington fruit and vegetable
    producers who face difficult foreign market challenges, including
    Canada blocking Washington potato imports and U.S. policies in Peru
    that have devastated the Washington asparagus industry.

-   Requested USDA support for opening markets in Asia to greenhouse and
    nursery crops.

-   Request that the next farm bill and future FTAs consider Hawaii's
    unique agriculture. Hawaiian producers of orchid leis cannot compete
    with imports from Thailand and the cut flower and foliage industries
    are directly competing against countries in East Asia and Central
    America.

-   Request to see Hawaii declared a specific pest-free (SPF) shrimp
    zone, which would prevent the introduction of pathogens from Asia by
    prohibiting the import of raw frozen shrimp.

-   Request that the USDA appropriate funds to build an inspection and
    treatment processing facility and an adjoining cargo consolidation
    area in Honolulu to mitigate against pests coming in on imports.

-   A shrimp producer in Guam expressed concern about competing with
    lower priced shrimp imported from the Philippines.

-   Aquaculture imports are second only to oil imports as a contributor
    to our trade deficit. The U.S. should capture some of that market
    and provide support for projects such as freshwater shrimp
    production.

-   A commenter asked for help opening foreign markets to Hawaiian
    pineapple.

-   Increase funding for the bee industry to compensate for the sharp
    increase in imports from China entering the United States
    undetected.

-   Fund Food and Agriculture Policy Councils in each State to develop
    marketing opportunities for producers.

-   USDA should put U.S. firms involved with product development into
    contact with foreign food market retailers/players.

-   Recommended permanent funding for the FAS minimum residue level
    (MRL) database, and recommended a comprehensive study exploring
    major trade opportunities and challenges with China, Brazil, and
    India.

-   A commenter commended FAS but noted it is woefully understaffed and
    underfunded.