U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Publishing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

21–112 2016

ADVANCING THE U.S. TRADE AGENDA: 

BENEFITS OF EXPANDING U.S. 

AGRICULTURE TRADE AND ELIMINATING 

BARRIERS TO U.S. EXPORTS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON TRADE 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

JUNE 11, 2014

Serial 113–TR05 

Printed for the use of the Committee on Ways and Means 

( 


joloto on DSKB35BYQ1 with HEARING
ii 

COMMITTEE ON WAYS AND MEANS 

DAVE CAMP, Michigan, Chairman 

SAM JOHNSON, Texas 

KEVIN BRADY, Texas 

PAUL RYAN, Wisconsin 

DEVIN NUNES, California 

PATRICK J. TIBERI, Ohio 

DAVID G. REICHERT, Washington 

CHARLES W. BOUSTANY, JR., Louisiana 

PETER J. ROSKAM, Illinois 

JIM GERLACH, Pennsylvania 

TOM PRICE, Georgia 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

AARON SCHOCK, Illinois 

LYNN JENKINS, Kansas 

ERIK PAULSEN, Minnesota 

KENNY MARCHANT, Texas 

DIANE BLACK, Tennessee 

TOM REED, New York 

TODD YOUNG, Indiana 

MIKE KELLY, Pennsylvania 

TIM GRIFFIN, Arkansas 

JIM RENACCI, Ohio 

SANDER M. LEVIN, Michigan 

CHARLES B. RANGEL, New York 

JIM MCDERMOTT, Washington 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 

BILL PASCRELL, JR., New Jersey 

JOSEPH CROWLEY, New York 

ALLYSON SCHWARTZ, Pennsylvania 

DANNY DAVIS, Illinois 

LINDA SA ́ NCHEZ, California 

JENNIFER M. SAFAVIAN, Staff Director and General Counsel 

JANICE MAYS, Minority Chief Counsel 

SUBCOMMITTEE ON TRADE 

DEVIN NUNES, California, Chairman 

KEVIN BRADY, Texas 

DAVID G. REICHERT, Washington 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

AARON SCHOCK, Illinois 

LYNN JENKINS, Kansas 

CHARLES W. BOUSTANY, JR., Louisiana 

PETER J. ROSKAM, Illinois 

CHARLES B. RANGEL, New York 

RICHARD E. NEAL, Massachusetts 

JOHN B. LARSON, Connecticut 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 


joloto on DSKB35BYQ1 with HEARING
iii 

C O N T E N T S 

Page 

Advisory of June 11, 2014 announcing the hearing .............................................. 2 

WITNESSES 

Dermot Hayes, Professor, Pioneer Chair in Agribusiness, Iowa State University ......................................................................................................................... 7

Bob McCan, President, National Cattlemen’s Beef Association .......................... 22 

Andrei Mikhalevsky, President and CEO, California Dairies Inc. ...................... 32 

Terence Stewart, Managing Partner, Stewart and Stewart ................................ 49 

Ryan Turner, President, Westside Trading Company .......................................... 41 

SUBMISSIONS FOR THE RECORD 

American Farm Bureau Federation, statement .................................................... 80 

Corn Refiners Association, letter ............................................................................ 83 

European Union, letter ........................................................................................... 85 

Express Association of America, statement ........................................................... 86 

Humane Society International and World Animal Protection, statement .......... 88 

National Farmers Union, statement ...................................................................... 92 

National Milk Producers Federation, statement ................................................... 95 

National Oilseed Processors Association, statement ............................................ 102 

National Pork Producers Council, statement ........................................................ 111 

QUESTIONS FOR THE RECORD 

The Honorable Charles Rangel ............................................................................... 77 


joloto on DSKB35BYQ1 with HEARING

joloto on DSKB35BYQ1 with HEARING
(1) 

ADVANCING THE U.S. TRADE AGENDA: BENEFITS OF EXPANDING U.S. AGRICULTURE 

TRADE AND ELIMINATING BARRIERS TO 

U.S. EXPORTS 

WEDNESDAY, JUNE 11, 2014 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

SUBCOMMITTEE ON TRADE, 

Washington, DC. 

The subcommittee met, pursuant to notice, at 10:05 a.m., in 

Room 1100, Longworth House Office Building, the Honorable Devin 

Nunes [chairman of the subcommittee] presiding. 

[The advisory announcing the hearing follows:] 


joloto on DSKB35BYQ1 with HEARING
2 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.001
3 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.002
4 

f 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.003
5 

Chairman NUNES. The hearing will come to order. But before 

we start, today is a very special day for us, especially for Mr. Rangel. It is his birthday today. So, Charlie, we brought you a little— 

do you want to light the candle and blow it out? 

Mr. RANGEL. Thank you, thank you, thank you. 

Chairman NUNES. Should we do the—anybody know the Boehner birthday song? I know you guys know it. 

[Laughter.] 

Chairman NUNES. Okay, ready? Kelly, ready? 

This is your birthday song, it doesn’t last too long. Hey. 

[Applause.] 

Mr. RANGEL. Thank you. Thank you. 

Chairman NUNES. And Charlie is 62 today. 

Mr. RANGEL. This is the 22nd anniversary of my 62 years old. 

[Laughter.] 

Chairman NUNES. Well, congratulations, Charlie. 

Mr. RANGEL. Thanks a million, Chairman. 

Chairman NUNES. Absolutely. Good morning. Welcome to today’s hearing on the benefits of expanding U.S. agricultural trade 

and eliminating barriers to agriculture exports—key factors in advancing our trade agenda and creating U.S. jobs and economic opportunity. 

I would like to make four points. First, the United States must 

remain the world’s leading agriculture exporter. We excel at producing and exporting a wide variety of agricultural products. For 

example, my home state of California is a leading export of dairy, 

beef, fruits, vegetables, and nuts. Global demand for agriculture 

products is increasing rapidly, creating opportunities to boost U.S. 

economic growth and create U.S. jobs by selling to these expanding 

markets. 

The second point, agriculture exports benefit both rural and 

urban America. America’s farmers and ranchers increasingly depend, for their livelihood, on exports. In addition, two-thirds of the 

jobs supported by agriculture exports are in the non-farm sector in 

diverse areas such as transportation, financial services, and biotechnology research. 

Third, we must tear down tariff and non-tariff barriers to U.S. 

agriculture. Tariffs must be eliminated without exclusion. In negotiations for the Trans-Pacific partnership, or TPP, I am concerned 

that the Administration is not holding Japan and Canada to the 

level of ambition that Congress has demanded. In some cases, a 

long timeframe may be warranted. But there has to be a path to 

zero. If any countries insist on retaining tariffs, then we must complete the negotiations without them, and allow them to rejoin when 

they can commit to full tariff elimination. 

A growing concern is non-tariff barriers, particularly unwarranted sanitary and phytosanitary or SPS measures. While countries can implement measures to protect human, animal, and plant 

health, many measures are actually thinly veiled protectionist barriers that ignore science and international standards, and do not 

enhance food safety in any way. I am pleased the Administration 

has heard Congress’s message that only strong, enforceable rules 

will ensure that SPS measures are transparent, science-based, and 

are not unduly restrictive. 


joloto on DSKB35BYQ1 with HEARING
6 

I am particularly concerned by European restrictions on the use 

of generic food names, which the EU improperly designates as geographical indications. The TPP and the U.S.-EU trade negotiations 

are good opportunities to reduce both tariff and non-tariff barriers. 

To gain support in Congress, these agreements must result in complete market access. 

Fourth, to strengthen USTR’s position in trade negotiations, we 

must pass Trade Promotion Authority without delay. The bipartisan Congressional Trade Priorities Act introduced earlier this 

year would establish clear direction to open agricultural markets 

and address unwarranted SPS measures and other trade barriers. 

If the Administration finishes these negotiations before TPA is 

granted, it will not get the best deal for our farmers or other exporters. Therefore, I call on the Administration to focus on passing 

TPA this Congress before completing TPP. 

Chairman NUNES. I will now yield to Ranking Member Rangel 

for the purpose of an opening statement. 

Mr. RANGEL. Thank you, Mr. Chairman. This is an important 

and timely hearing. Agriculture imports are important in my home 

state of New York, and to our country as a whole. Many markets 

are still protected, or even closed to our farm, ranch, and dairy 

products. We need to open those markets, and new trade agreements are one way to do it. 

But it isn’t just foreign governments that deny our farmers and 

ranchers access to the markets. In the case of Cuba, our very own 

government stands in the way. And I know the chairman does not 

agree with me on this issue, and I respect his views, but, in my 

view, the embargo is not working, not for the Cuban people, and 

certainly not for Americans. So, I hope we can work together to 

find a path for the solution of this important agricultural issue. 

Another issue we want to discuss today is food safety. Without 

a doubt, some of our trading partners put into place laws that they 

say is about food safety, but they really are keeping U.S. products 

out of their markets. We do need strong rules in our trade agreement to prevent this from happening. And I want to make certain 

that we don’t agree to a set of rules that ends up tying the hands 

of our own regulators, who is trying to keep our people safe, and 

trying to protect our crops from invasive pests. We need to eliminate bogus food safety laws, but we also need to preserve the legitimate ones. 

Our regulators are increasingly having to defend these rules at 

the World Trade Organization. In the first years of the WTO, U.S. 

sanitary measures was challenged just twice. But in the last five 

years U.S. measures had been challenged five times. It is important to remember that what makes U.S. products so attractive to 

other markets is their quality. And our regulatory regime supports 

that quality. Our regulators do their best to make certain that we 

don’t produce tainted food. They protect our growers by doing their 

best to keep away invasive pests. We need to make certain that 

any rules that we sign into free trade agreements allow them to 

continue to follow these high standards. 

Finally, let me say a word about the Trans-Pacific Partnership 

negotiations. They’re at a critical stage, and our attentions need to 

be focused on ensuring an outcome that this Congress can support. 


joloto on DSKB35BYQ1 with HEARING
7 

We need to work with our colleagues, with our stakeholders, and 

the Administration, on major outstanding issues, as you pointed 

out, including tariff, as well as non-tariff barriers on the agricultural products. 

In Japan, in particular, have not—they have not demonstrated 

an interest in opening up their agricultural market, nor has Japan 

shown an interest in opening up its automobile market, for that 

matter. Unfortunately, Japan’s position in these negotiations looks 

like a real problem that still yet has to be resolved. 

Some say the problem is that we haven’t passed trade promotion 

authority legislation, that Japan won’t get serious until TPA is in 

place. I don’t believe that argument fits with the facts. To the contrary, I think a lot of Members want to make certain what the TPP 

negotiations are moving in the right directions right now. I don’t 

believe it is helpful to blame ourselves for the position that has 

been taken consistently by the Japanese Government. 

So, I think these hearings are timely. I thank the chairman for 

holding them. And I thank the witnesses for taking the time to 

share their views with us this morning. 

Chairman NUNES. Thank you, Mr. Rangel. Today we are joined 

by five witnesses. 

First we will hear from Professor Dermot Hayes, the Pioneer Hybrid International Chair in Agribusiness, professor for economics, 

and professor of finance at Iowa State University. Professor Hayes 

is a highly regarded agriculture economic expert, particularly regarding trade. 

Second we will hear from Bob McCan, who is President of the 

National Cattlemen’s Beef Association and oversees the cattle and 

other operations of his family’s company, McFaddin Enterprises, in 

Texas. Mr. McCan has a distinguished record as a leader in the 

cattle industry. 

Third we will hear from Andrei Mikhalevsky, President and CEO 

of California Dairies. California Dairies is a top dairy-processing 

cooperative in the leading dairy-producing state in the country. 

Fourth we will hear from Ryan Turner, President of West Side 

Trading, a leading almond, pistachio, and walnut trading company. 

Finally, we will hear from Terence Stewart, managing partner of 

the Law Offices of Stewart and Stewart. 

We welcome all of you, and we look forward to your testimony. 

Before recognizing our first witness let me note that our time 

this morning is limited so witnesses should limit their testimony to 

five minutes, and Members should keep their questioning to five 

minutes. 

Professor Hayes, your written statement, like those of all the 

other witnesses, will be made part of the record. You are now recognized for five minutes. 

STATEMENT OF DERMOT HAYES, PROFESSOR, PIONEER 

CHAIR IN AGRIBUSINESS, IOWA STATE UNIVERSITY 

Mr. HAYES. Chairman Nunes, Ranking Member Rangel, thank 

you for focusing on this issue at this time. The trade negotiations 

that are underway with the Pacific Rim and with Europe have the 

potential to fundamentally transform U.S. agriculture. 


joloto on DSKB35BYQ1 with HEARING
8 

In the first class, when I teach Economics 101, I contrive to get 

two copies of a textbook into the hands of one student. I recognize 

that student, and then find a student who has yet to purchase the 

textbook. The second copy is worth almost nothing to the first student, but it is worth about $100 to the second student. When they 

trade, each student comes out—they typically trade at about $50, 

and each student comes out $50 ahead. In that sense, wealth is 

created with free trade. And the theory that underlies the economic 

arguments in favor of free trade are based on that simple principle: 

you take resources from a place where they are in plenty supply, 

and you move them to a place where it is scarce. 

Now, as it happens, the U.S. has an abundance of agricultural 

resources. So we are a natural exporter of agricultural products. 

The problem is that the countries that have imposed trade barriers 

on value-added agricultural products, whereas they allow their raw 

materials to enter free. So if these negotiations are successful, we 

will end up adding much more value-added agriculture products 

to—and those industries will effectively move from places like Asia 

back into the U.S. 

As crop production technology has improved in the U.S., rural 

areas have become depopulated. And this is a real opportunity to 

repopulate those areas with people working in livestock and dairy 

sectors, and with industries that use livestock and dairy products 

such as ice cream or manufacturing eggs. So that is the punch line. 

So I see enormous opportunity here for my part of the world in 

Iowa, and for all of rural America. And I really appreciate your focusing at this time on this issue. 

I want to make two points specifically to the ongoing agreements. 

The first is about Japan and the TPP, and the second is about Europe and the regulatory equivalence that we should ask for. 

Prior to the entrance of Japan, the focus of the negotiations was 

to eliminate all duties and non-tariff barriers, and progress was 

very, very successful. Unfortunately, Japan has recently hijacked 

the negotiations by insisting on permanent protection for its beef, 

pork, dairy, wheat, rice, and sugar sectors. As announced, the intention of using the money generated by these duties to subsidize 

the relevant sectors—so, for example, duties collected on imported 

pork would be used to subsidize the Japanese pork sector. And, in 

that sense, the U.S. pork producer is paying a tax to subsidize their 

competitor. 

I sincerely hope that our negotiators will hold out for an agreement that results in eventual free trade, and I do so for the following reasons. 

The benefits of trade I described earlier come from the reallocation of resources, putting the resources in the right place at the 

right time. What Japan is asking for is, essentially, allowing free 

trade, but one student has to end up with two textbooks. And that 

doesn’t make sense. You can’t protect a sector under free trade. 

The second, Japan has insisted on this outcome because of food 

security. But Japan imports all of its feed grains. And so, you don’t 

get much food security from animals that are located in Japan, but 

which are—rely exclusively on imported feed. 

And, third, if Japan gets away with this distortion, then other 

countries that join the TPP, such as China, will ask for a similar 


joloto on DSKB35BYQ1 with HEARING
9 

rule. And, in that sense, we could lose billions of dollars in trade 

because of a giveaway right now. 

Next I want to talk about equivalence and Europe. Right now, 

in the U.S. corn market, we have a serious disruption because 

China did not recognize one of our scientific technologies, one of the 

varieties we grew last year, and it is causing enormous disruption 

in that market. Now, the solution to that would be for China and 

the U.S. to agree on similar science. And, in so doing, when U.S. 

scientists approve of a technology then it would be automatically 

approved in China. That is called equivalence, and the U.S. has 

asked for that equivalence in all of its—in most of its free trade 

agreements. 

And equivalence works because the scientists can eventually 

form a consensus on what is safe. The process breaks down if nonscientific arguments are introduced. The European Union has allowed this to happen, and has imposed bans on genetically modified crops and growth enhancers in livestock that scientists all over 

the world view as being perfectly safe. Now, I realize that some 

consumers in the U.S. oppose these technologies. But under the 

U.S. system, these consumers have a choice. The European system 

eliminates this choice, and it is as if the people who shop in Whole 

Foods in the U.S. had a veto power over the rest of us. 

And in a well-structured TTIP agreement, the U.S. and EU systems will be viewed as equivalent, and European consumers will 

have a choice amongst the alternatives. Unless the deal results in 

regulatory equivalence, countries will be able to impose new subjective barriers to replace those that have been eliminated. With 

equivalence, the U.S. will be able to avoid the type of trade distortion currently roiling the U.S. corn market. Thank you. 

[The prepared statement of Mr. Hayes follows:] 


joloto on DSKB35BYQ1 with HEARING
10 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.004
11 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.005
12 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.006
13 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.007
14 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.008
15 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.009
16 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.010
17 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.011
18 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.012
19 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.013
20 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.014
21 

f 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.015
22 

Chairman NUNES. Mr. McCan, you are now recognized for five 

minutes. 

STATEMENT OF BOB MCCAN, PRESIDENT, NATIONAL 

CATTLEMEN’S BEEF ASSOCIATION 

Mr. MCCAN. Chairman Nunes, Ranking Member Rangel, and 

Members of the Committee, on behalf of the U.S. beef industry I 

thank you for holding this hearing on the benefits of expanding 

U.S. agricultural trade, and eliminating barriers to U.S. exports. I 

am a rancher from Victoria, Texas, located in southern Texas, near 

the Gulf of Mexico, not far from the Mexican border. I am also the 

current president of the National Cattlemen’s Beef Association. 

For NCBA, the elimination of tariff and non-tariff trade barriers 

is a top priority for the U.S. beef industry. We view potential trade 

agreements like the Trans-Pacific Partnership as a great opportunity to eliminate tariffs, quotas, and non-tariff trade barriers to 

all TPP countries. Terms that all countries, including Japan, 

should agree to. 

NCBA is also a strong supporter of trade promotion authority because, without it, our negotiators will have a difficult time finalizing terms of TPP. Unlike other parts of our culture, the U.S. beef 

industry is not subsidized, nor do we wish to be. To put it plainly, 

we thrive on competition, and we live and die by the marketplace. 

The only guarantee we have is that if we do not deliver a highquality product to our growing consumer base, then we will lose 

market share to another country. At the same time, we are successful because we do everything we can to give our consumers what 

they want: a safe, tender, delicious product. 

Many times, U.S. beef has been the victim of trade terms that 

have been driven by politics and not science. For instance, the 

United States has one of the safest risk designations from the 

World Organization for Animal Health, yet we continue to have 

age-based restrictions on our product that are not supported by 

science. It is estimated that U.S. beef has lost over $20 billion in 

export opportunities due to BSE restrictions alone. 

The removal of tariffs and quota restrictions are important to our 

future success. But just as important is the establishment of trade 

terms based on sound science. Unfortunately, U.S. beef has also 

been victim to U.S. trade policies that are also based on politics instead of science. As you may know, we are facing an intense 

drought throughout California and the southwestern part of the 

Unites States. Our herd size in the United States is the smallest 

it has been since the 1950s. 

At the same time, international demand for U.S. beef is at an alltime high. In order to continue meeting demand, we rely on the importation of Mexican-born and Canadian-born cattle to supplement 

our herd loss. My family has been importing Mexican-born calves 

for many years, and we have enjoyed the benefits of international 

trade. Unfortunately, the cost of compliance of mandatory countryof-origin labeling has driven some feed yards and processors out of 

the business, creating less competition for my cattle. And that 

places me, and cattlemen like me, at a disadvantage. 

And if the World Trade Organization rules against the United 

States on the pending appeal, you can rest assured that beef will 


joloto on DSKB35BYQ1 with HEARING
23 

be at the top of the list of retaliatory tariffs. Mexico and Canada 

are two of our largest export markets for beef. But they won’t be 

for very long if we face retaliation. 

So, it is my hope that my testimony will highlight expanded 

trade opportunities, as well as the barricades to trade that we continue to face in the U.S. beef industry. I appreciate this opportunity 

to appear before you today, and I look forward to answering any 

of your questions. Thank you very much. 

[The prepared statement of Mr. McCan follows:] 


joloto on DSKB35BYQ1 with HEARING
24 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.016
25 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.017
26 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.018
27 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.019
28 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.020
29 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.021
30 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.022
31 

f 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.023
32 

Chairman NUNES. Thank you, Mr. McCan. Mr.—I should know 

how to pronounce your name, but it is—you are my constituent, so 

I should know. 

Mr. MIKHALEVSKY. Andrei is fine. 

Chairman NUNES. Andrei. 

Mr. MIKHALEVSKY. Andrei is perfect. 

Chairman NUNES. You are now recognized for five minutes. 

STATEMENT OF ANDREI MIKHALEVSKY, PRESIDENT AND CEO, 

CALIFORNIA DAIRIES INC. 

Mr. MIKHALEVSKY. Thank you very much. Thank you, Mr. 

Chairman and committee, for allowing California Dairies to come 

speak with you today regarding a subject that it very important to 

us, and it is a big part of our business every day. 

My name is difficult, but I am Andrei Mikhalevsky, and I am 

president and CEO of California Dairies. And I have been fortunate 

in my career to be able to manage dairy businesses on six continents, and the seventh continent doesn’t have many dairy cows 

right now. 

My comments today will focus, really, in three areas. The first 

is the opportunity for U.S. dairy exports; the second the key barriers that we face in exporting product; and third, the upcoming 

free trade agreements. 

California Dairies may not be familiar to everyone, but we are 

a member-owned cooperative based in California, and a major dairy 

exporter today. You can find our products on your local grocery 

store shelves in all 50 states, and you can find it in 50 foreign 

countries, also. We are responsible for 12 percent of U.S. dairy exports. We export already today over 425 million pounds of milk 

products every single year. And increasing these dairy exports is 

very important to our industry, beneficial to the United States, and 

also good for California Dairies. 

And I will give you three areas that we believe these benefits are 

centered: first it is around economic and financial benefits; second, 

it creates jobs domestically and creates jobs internationally; and, 

third, we believe there is implications for national security of having a good dairy export business. 

In 2013, just last year, the industry reported a record 15 percent 

of all milk in the United States was exported valued at about $6.7 

billion. One day of every week’s production of milk—so one day of 

milking cows—now goes into export in the United States. And in 

2014, this year, California Dairies will export more milk powder 

than we will sell domestically in the United States. So we have become a larger exporter than we are domestic seller in milk powder. 

And the U.S. dairy industry is currently in a state of transition 

from an inward-facing industry to a dominant world exporter. And 

the question might be asked, ‘‘Why is there a change in the U.S. 

dairy industry?’’ And the answer is, really, opportunity. We all 

know the worldwide demand for dairy continues to grow, driven by 

population growth and disposable income growth. And this is creating a large demand gap in the world market for dairy products. 

And dairy is very important. Remember, people start from infants 

using dairy, all the way through old age. 


joloto on DSKB35BYQ1 with HEARING
33 

But there is barriers to us taking advantage of that export 

growth, and they fall in the areas that were earlier mentioned: tariff barriers; non-tariff barriers; and internal domestic barriers, 

which we haven’t mentioned. 

Let me first give an example of tariff barriers. Canada and 

Japan, today who are in the news, both imposed astronomically 

high tariffs on imported dairy products. The tariffs we face every 

day are between 250 and 300 percent of the value of the product 

that we ship into those countries. So, basically, impossible to meet. 

There is also non-tariff barriers, which are commonly known as 

SPS measures, sanitary and phytosanitary measures. Those are 

being abused in markets around the world. 

And third, geographical indications. And the EU, as we all know, 

is probably the most aggressive and abusive in its interpretation of 

these GIs. 

I would also just note that there are internal barriers that we 

face also, but that is a conversation for another day. 

I would like to shift now to free trade agreements. We have 

talked about the TPP and the TTIP, TTIP. And both of these are 

wonderful opportunities for us to break down these barriers and expand our area of exports. And so I would like to just share our 

viewpoint in a few sentences. 

First, we actively support the inclusion of dairy in all FTAs. We 

would like dairy in. 

The second thing we would like to see is the inclusion of all dairy 

products. For example, the South Korean FTA excludes things like 

butter. It is a fundamental product, and we would like to have all 

products in the FTAs. 

We support the complete elimination of all tariffs. We need a 

level playing field with our competitors. China, for example, we 

don’t have a level playing field with New Zealand. They get the 

first 300,000 tons in there at a reduced tariff. We need a level playing field. 

Market access must be real, measurable, and equitable. And we 

believe that TPP and TTIP are really the most likely—the most important trade agreements that we have seen in a generation. California Dairies also highly supports trade promotion authority. We 

think it is essential. 

So, in summary, there is a great opportunity here. But to achieve 

the success, we must have FTAs that are comprehensive and inclusive of all dairy, including zero tariff access, and ensure that unjustified non-tariff barriers and regulatory requirements do not 

block us, moving forward. Thank you very much for your time 

today. 

[The prepared statement of Mr. Mikhalevsky follows:] 


joloto on DSKB35BYQ1 with HEARING
34 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.024
35 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.025
36 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.026
37 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.027
38 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.028
39 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.029
40 

f 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.030
41 

Chairman NUNES. Thank you, Mr. Mikhalevsky. Mr. Turner, 

you are now recognized for five minutes. 

STATEMENT OF RYAN TURNER, PRESIDENT, WESTSIDE 

TRADING COMPANY 

Mr. TURNER. Good morning, Chairman Nunes, Ranking Member Rangel, and the Members of the Subcommittee on Trade. 

Thank you for inviting me to be here with you today. My name is 

Ryan Turner, and I am here to testify today as a farmer and as 

the president of Westside Trading Company, WTC. I founded WTC 

three-and-a-half years ago to export California almonds, walnuts, 

and pistachios. 

WTC is a trading company that buys product from farmers and 

packers and resells the product exclusively into export markets. 

WTC specifically finds its niche in taking the export risk for our 

suppliers. After purchasing the product from California growers 

and processors, we are responsible for payment to supplier, marketing, logistics, documentation, and collection of the export sale. 

Any export-import problems, failure to collect funds, false quality 

claim from the end customer, it all falls on WTC. And we make our 

name by insulating the suppliers from these risks. So we truly are 

on the front lines of the trade discussion. 

Since the inception of the company, we have exported to more 

than 40 countries around the world. We have exported to Canada 

and Mexico, South America, all over Europe and Eastern Europe, 

Russia, Middle East, North Africa, as well as China, India, Singapore, and Bangladesh. About 85 percent of the products we have 

shipped to date are almonds, and so I will focus, in the interest of 

time, on almonds for the rest of the testimony. 

The California almond industry is a great example of the strong 

U.S. industry that dominates the world market because of our significant long-term investment, innovation, high food safety standards, and strong global marketing. California almonds add $2.82 

billion in export value in the 2012–2013 season, ranks as California’s largest agricultural export, and the U.S.’s largest specialty 

crop export. Currently, more than 80 percent of the world’s supply 

of almonds are grown and produced in California. 

The U.S. is the largest buyer of California almonds, consuming, 

on average, about a third of our supply. However, that means that, 

on average, two-thirds of California almonds are exported. The top 

5 export countries are China, at approximately 10 percent of the 

U.S. crop, followed by Spain, India, Germany, and UAE. In total, 

California exported directly to 57 countries last season. 

The California almond industry is dependent on export for the 

long-term sustainability of the industry, but it is also a huge success story. Over the past decade, export growth has averaged nearly 10 percent, year after year. The industry has not been able to 

wait for trade agreements in many countries, but has forged ahead 

in tackling major issues, opening new markets around the globe. 

These challenges, though, however, come at a high risk to farmers, 

processors, and exporters, as well as our overseas processors and 

the end user, ultimately increasing the cost of our products to consumers, worldwide. 


joloto on DSKB35BYQ1 with HEARING
42 

WTC faces export challenges head-on every day, due to trade 

barriers that exist in markets around the globe. From tariffs and 

SPS differences to banking and finance rules, as well as labeling 

requirements, port protocols, documentation requirements, as well 

as dispute resolution issues. The almond industry faces tariffs, specifically, in dozens of its markets. However, like in other industries 

where the product is in strong demand, gray market activities are 

developed to avoid such tariffs. The biggest examples exist in two 

of our largest export markets, China and India. 

The vast majority of almonds are exported to China, are shipped 

from California to Hong Kong, then redirected through Vietnam 

and trucked north to various points for delivery to processing 

plants mainly in China. Most U.S. exporters ship to Hong Kong 

and are paid for the product at that point. While it customarily 

only takes two weeks or so to ship a container from California to 

Hong Kong, it could take an additional three to four to move that 

product through the gray channels to the end user. 

While a larger percentage of customers actually pay the tariff in 

India and take delivery in major ports, more and more importers 

have begun to smuggle the product from Kashmir. This product is 

mostly shipped from U.S. to Dubai and then shipped in trucks, via 

trucks, saving the importer the tariff. While lower trade barriers 

and relatively strong business protections in Dubai and Hong Kong 

keep risks lower for us exporters, the risks borne by our end customers through the gray channels increases their risk and delays 

shipment of product. 

In addition to the gray markets, where product is physically 

moved to avoid tariffs, many markets in the Middle East rely on 

falsification of documents to reduce tariff exposure. These practices 

create challenges that differ in each market which require exporters to constantly stay on defense, to ensure that gray market behaviors do not put our companies and our products at risk. 

The U.S. produces the safest food and food products in the world. 

Agricultural and food safety regulations, coupled with innovation of 

farmers and processors themselves, have given our products the 

strongest reputation for quality. However, differing SPS standards 

in some of our export markets create major problems, add costs, 

and, at times, significantly put our products at risk. Whether it is 

lower allowable levels of aflatoxin in the EU, or the ever-increasing 

changing and somewhat arbitrary standards in other parts of the 

world, it is extremely important that SPS standards must be, at a 

minimum, based on science. 

We have had many loads returned to the U.S., and many more 

held at ports for long periods of time, subjecting our products to additional testing and fees for results that we never see. It is very 

important that any new trade agreement address banking finance 

and dispute resolution protocols, as well, so that exporters such as 

ourself can have more confidence in international collection and 

contract enforcement. We have had minor typographical errors lead 

to major searches of funds, we have had several international 

banks release documents prior to payment, we have had ports release containers without proper documentation, we have had 

money rerouted and lost through illegal foreign currency traders. 


joloto on DSKB35BYQ1 with HEARING
43 

These are just a few of our examples caused by lack of uniform 

standards. 

In conclusion, multi-faceted, comprehensive, regional trade agreements that not only level the playing field, but normalize business 

practices between the U.S. and its trading partners, will allow us 

to grow export markets faster and more reliably. Thank you for 

your time. 

[The prepared statement of Mr. Turner follows:] 


joloto on DSKB35BYQ1 with HEARING
44 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.031
45 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.032
46 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.033
47 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.034
48 

f 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.035
49 

Chairman NUNES. Thank you, Mr. Turner. Mr. Stewart, you are 

recognized for five minutes. 

STATEMENT OF TERENCE STEWART, MANAGING PARTNER, 

STEWART AND STEWART 

Mr. STEWART. Thank you, Mr. Chairman, Ranking Member 

Rangel, Members of the Subcommittee. I am here in my personal 

capacity, not representing any particular clients. We have had the 

opportunity to work with agricultural fishery groups over the 

years. 

There is little doubt that the United States, as the world’s largest agricultural exporter, faces many unwarranted barriers abroad, 

and that a key priority in any trade negotiation should be the liberalization of tariffs, quotas, and non-tariff barriers, such as SPS 

measures, and an effort to restrict our friends in Europe in their 

effort to claim that nothing can be shipped that doesn’t come from 

Europe because of geographical indications. Those are givens. Global trade in agriculture in 2012 was $1.6 trillion. The United 

States occupied about 8 to 9 percent of that, at 148 billion. And 

what our true exports could have been, if we had had much more 

open markets, is anybody’s guess. But it certainly would be a far 

larger percentage and a far larger dollar amount. So there are, obviously, enormous opportunities for American business, American 

workers, and rural America, in terms of liberalization of agriculture. 

At the same time, when one looks at SPS measures, there is a 

tension between food safety, on the one hand, and control of the 

SPS measures on the other. The World Trade Agreement’s sanitary/phytosanitary agreement is the first global effort to try to put 

some discipline into SPS measures. The United States has tried to 

use that agreement to upgrade or harmonize, in an upward direction, international standards. That is a desirable objective. At the 

same time, we run into serious cultural and political problems in 

other major trading partners. Europe has been identified as one, 

and certainly the problems our beef industry has faced from the 

BSE and that our grains exporters have faced from genetically 

modified challenges around the world are significant challenges. 

When you look at it from the import side, which, from a U.S. perspective, is relevant, as well, to consumers, the issue is not whether 

there should be liberalization, the issue is whether or not the liberalization is coupled with the ability to ensure that products that 

enter the United States maintain the food quality that the United 

States has been famous for, and that U.S. consumers expect. That 

is an issue which, as trade has developed with a lot of developing 

countries, is a much more complicated matter. The United States 

engages in a lot of technical assistance to try to help other countries raise their standards, and that is important to do. But there 

are many stories, including in seafood, but certainly also in other 

agricultural products, where imported products contain elements 

which are banned in the United States and yet have made it into 

our food supply. 

So, there are legitimate concerns from consumers about the safety of their food supply. And, as you look at trade negotiations, it 

is important that that aspect be dealt with. At the same time, the 


joloto on DSKB35BYQ1 with HEARING
50 

merits of an SPS measure are often in the eyes of the beholder. 

We—USTR puts out an annual report. There is more than 100 

measures that we identify abroad that are problematic to U.S. exporters. Europe puts out its own report, and there is a large list 

of things that they complain about in terms of the United States. 

Dialogue is a critical element if you are, in fact, going to get past 

disputes, and if you are, in fact, going to facilitate the liberalization 

in agriculture, particularly an SPS measure. 

Technical assistance is important. With that I think that you 

have a big challenge ahead of you, in terms of getting our trading 

partners to comply. Japan is a classic example, and I wish you 

great success, and the Administration great success in that effort. 

Thank you. 

[The prepared statement of Mr. Stewart follows:] 


joloto on DSKB35BYQ1 with HEARING
51 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.036
52 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.037
53 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.038
54 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.039
55 

f 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.040
56 

Chairman NUNES. Thank you, Mr. Stewart. Since you discussed 

SPS measures, we will start on SPS. The real issue is whether or 

not we are going to have dispute resolution. Because, as all of you 

are well aware, all of the other areas of the economy and all the 

previous trade agreements are subject to dispute resolution. Agriculture, however, has always been left at the table without dispute 

resolution, and so they are forced to go to the WTO, which can take 

years and years to come to resolution. 

So, do you see any problem with having—and I will just start 

with Mr. Stewart and I will ask the same question—a dispute resolution mechanism in TPP? 

Mr. STEWART. The answer is I don’t see a problem with having 

dispute resolution in any free trade agreement. The real issue is 

how it will be administered, and whether there is agreement, in 

terms of the basic terms and conditions. The challenge that we face 

in the WTO, as an example, where there is dispute settlement, is 

that we are the subject of 8 of 41 challenges that have been made. 

If you were to step back and ask yourself would you expect the 

United States to be one of the worst offenders in terms of SPS 

measures, I think your answer would be the same as mine: obviously not. 

So, part of the challenge is whether the rules actually work to 

conform practice to what you have agreed to, or whether it becomes 

a forum for people to achieve that which they haven’t achieved 

through the negotiations themselves. But I don’t have a philosophical issue with having dispute settlement in TPP or any other 

agreement. 

Chairman NUNES. Thank you, Mr. Stewart. One of the reasons 

I wanted to have Mr. Turner here is because he is an exporter. Mr. 

Turner, I don’t know if you could walk the committee through a 

real-life example of the problems that you face. If you could pick 

one example and just kind of walk the committee through where 

you faced an SPS measure that has blocked the entry of your product. 

Mr. TURNER. The most consistent SPS issue that we deal with 

is in Europe. And Europe has, as I mentioned, lower allowable levels for aflatoxin. And so, there is now an entirely different process 

to deal with and work with the EU in getting product in. 

But basically, because they require a lower allowable level, the 

almond board has worked with the industry to create what we call 

a—or what is called a VASP. So it is a voluntary aflatoxin sampling program—I believe it is program. And so, every single load 

that is going to go to Europe has to basically have this additional 

test. Right? And it is a—sampling procedures that are required by 

Europe. Then we go through the entire process, and then it has got 

to have this VASP report. 

We have probably had a—I would say maybe about 10 loads that 

we have had stuck for any sort of reason, but just related to not 

having the proper VASP. So when we ship product, all of it has 

been certified, inspected by USDA, internal, as well—internals, as 

well. And we shop that product. Europe requires the VASP, 

though. So if you—we have had product that we have shipped to 

the Middle East. We need to redirect it, it can’t go to Europe. So 

that is it. 


joloto on DSKB35BYQ1 with HEARING
57 

Chairman NUNES. Thank you, Mr. Turner. I am going to shift 

gears, Mr. Mikhalevsky, to talk about TPP. Specifically, you are 

probably well aware, but there has been rumors floating around 

that Japan has hundreds of items that they want to take off the 

table. And in your testimony you mentioned how butter was left 

out of the South Korean agreement. What do you think the solution 

is? 

For example, if Japan does not want to reduce these tariffs and 

take them to zero, should we wait and have Japan come in later? 

Or do you have any other options of how we could move forward? 

Mr. MIKHALEVSKY. Well, I truly believe, optimistically, that 

with proper negotiation we can get Japan in. And it is very important. Japan is a highly developed market in dairy. It is very important to us. There is a lot of things in TPP and TTIP. Ultimately, 

they will probably be the blueprint for maybe 70 percent of the 

traded dairy around the world. So it is important we get these first 

ones right. And I would be optimistic about getting Japan in. And, 

from our perspective, dairy has to be one of those items in, not just 

because we are in the industry. We think it is because it is also 

very important, as you look at the other countries that are involved, and how important dairy is to them. So that would be kind 

of my response. 

Chairman NUNES. Mr. McCan, can you answer the same question? 

Mr. MCCAN. Yes. I think that it is—you know, Japan needs to 

comply by the same rules that all the other TPP countries have to 

comply with. And, you know, we don’t—I don’t think we are at that 

point yet to where—in our negotiations where we—they really tried 

to shift the weight towards us, which—I think Japan really wants 

to be part of this trade pact more than they are letting on. And so 

I think, you know, we just need to work through it. It may take 

more time, but it is important, as Andrei mentioned, that this is 

a 21st century type modern trade pact. Because, as we look forward towards TTIP and the European negotiations, we need to 

make sure that it is that type of a trade pact with tariff elimination. 

And the beef industry has certainly put pressure on Japan for 

the tariff elimination, and that is what we would look forward to. 

Chairman NUNES. Thank you, Mr. McCan. In the interest of 

time, I will go ahead and recognize the ranking member, Mr. Rangel. 

Mr. RANGEL. Thank you so much, Mr. Chairman. Do any of 

you, as exporters, see any sound economic or political reasons why 

we should continue the embargo against Cuba? Are there any reasons that you could suggest to guide the Congress as to what is in 

our best national security or economic interests? 

[No response.] 

Mr. RANGEL. Then I assume, by your silence, that all of you 

think that it would be sound trade policy for us to resume negotiation with Cuba, for the Cubans and for the United States, and let 

competition be an element where we can gain, as we would with 

any trade agreements. 

I hope that you don’t find yourself being placed in a political position because of this, but we are talking about exports, we are 


joloto on DSKB35BYQ1 with HEARING
58 

talking about jobs, we are talking about improving our economy. 

And if there is no reason why we should not expand these exports, 

I think that, under American system, you have to be heard. 

The second question is that all of you agree that we should 

have—maintain a high quality of imports that come into the 

United States because, while you cannot expect each and every 

product, the reputation of our country in having high standards is 

something that has to be maintained. Have any of you ever thought 

about the issue as to whether or not the Congress provides enough 

resources to make certain that we can do this? Has that ever been 

an issue that you discuss? Anybody? Mr. Stewart. 

Mr. STEWART. Thank you, Congressman Rangel. The issue is 

that, for many industries that confront imports, where there are 

issues of quality there is a perception that the Administration does 

not have the resources to be able to ensure the safety of the product. Some of that flows from the change in patterns of trade that 

have occurred over the last decade or so, where we are dealing with 

a lot more developing countries, and developing countries have 

greater challenges, in terms of getting their standards up to what 

the U.S. requires. And some of it has to do with practices in certain 

countries where, whatever the agreement is as to the standard 

they should export, individual producers choose to go around that 

and ship product in that clearly is not suitable. 

When you take a look at the small percent of products that can 

be inspected at the border, the answer is that the security of the 

food supply system in the United States can be at risk. And so it 

is an important issue for Congress to consider, to be sure that we 

don’t let ourselves get into that situation. 

Mr. RANGEL. Well, I am hoping that when you have your trade 

associations meetings, and you have your priorities, which we, as 

Americans, support because it is good for our great country, that 

you also put in there what you expect the Congress to do to maintain these standards, to help us to have less of a political problem, 

and more that is related to the expertise which you bring to the 

field, which—clearly, you have more than any of us. 

Lastly, you very strong about—say in Japan—that they maintain 

their international standards, that they don’t protect just their 

products, in terms of our exports, and allow theirs to come in. Now, 

how would you expect the Congress to support the positions that 

we agree with? Most of you know that the Constitution gives this 

authority to the Congress, and nobody would want to have 535 negotiators with these countries. And so, therefore, we agree to give 

the trade promotion authority to the President. 

Now, when the bill finally comes to the Congress, it is just yes 

or no. In order to protect some of the things that you advocate, and 

we support, wouldn’t you believe that we have to get that into the 

trade promotion authority, that what authority we give the President has to include the things that we are talking about in terms 

of fairness in trade? 

There is another way to do it, and that is just to give them authority to do whatever he wants to do. And after they negotiate, 

then we have to say, well, it doesn’t help our dairy people, doesn’t 

help our cattle people, and then we are left either swallowing the 

whole trade package, or rejecting it because of something that 


joloto on DSKB35BYQ1 with HEARING
59 

could be local. Have you discussed the trade promotion authority? 

I know you should be advocating that we give that authority to the 

President. Without doing it, our trade ambassador cannot adequate 

negotiate. Isn’t that correct? 

How could he negotiate—if he is negotiating with people that 

have the authority to cut a deal, and we are sending an ambassador that can’t cut the deal unless he comes back to the Congress, 

doesn’t it make sense that he should have—the President should 

have some authority to close the deal and bring it back to us? 

[No response.] 

Mr. RANGEL. The answer is yes. Well, you better give some 

thought to it, because I can see that you haven’t. And it is going 

to be a big political problem. We want to make certain that the 

President is able to authorize the negotiations of deals that are 

good for the American people in international trade. 

By the same token, it just doesn’t make sense to have included 

or excluded from agreements the things that may cause us not to 

be able to support it. Some of them is labor standards, some is environmental issues. Some of it is just the quality of the products. 

But please help your congresspeople to resolve these problems and 

not leave it to us to seek a political solution to come and—problems 

that we have to resolve. 

Thank you, Mr. Chairman. 

Chairman NUNES. Thank you, Mr. Rangel. Mr. Reichert is recognized for five minutes. 

Mr. REICHERT. Thank you, Mr. Chairman, and thank you all 

for taking time to be here today. I am from Washington State, so 

I visit with my farmers, apple growers, cherries, heading into the 

wine—little bit of—I think we are second from California now, with 

the amount of wine we produce out of Washington State. 

So, you know, when I talk to my Washington farmers, they are 

pro-trade, obviously. Washington State is the most trade-dependent 

state in the country. And they also recognize, though, that the way 

to get there is—and I am going to jump on Mr. Rangel’s bandwagon and the chairman’s bandwagon—and that is TPA. 

And I talked to some business folks yesterday, and explained the 

need for TPA and how important it is for us to proceed forward 

with TPP, and asked for their help. And I think that is what Mr. 

Rangel is saying today, too, is we need your help to convince others 

in Congress that TPA is a needed tool here to move forward with 

this trade agreement. 

And—but I am also interested in your testimony that you shared 

today about the benefits incurred from previous trade agreements, 

the benefits as it relates to jobs. And if we don’t work hard to continue to increase American ag exports, what happens? What is the 

negative impact, Professor Hayes, if we don’t continue to increase 

our ag imports, United States? 

Mr. HAYES. Our agricultural exports. If we—— 

Mr. REICHERT. I am sorry, exports, yes. 

Mr. HAYES. Yes, yes. Argentina is a great example of how you 

can go wrong. Fifty years ago, it was the seventh wealthiest country in the world. Then it began to look for import substitution. It 

began to fight trade. It taxed exports. It tried to create domestic 


joloto on DSKB35BYQ1 with HEARING
60 

alternatives for imports. And it fell from number 7 to number 75 

in wealth tables. And so it essentially created poverty. 

Singapore is an example of the other side. Average person in 

Singapore makes 20 percent more than the average American. And 

it is a complete free trade country; they even import their water. 

They have no resources, and they are a very wealthy country, 

based on the principle of free trade. Wealth is created when you 

move from surplus to deficit areas. 

Mr. REICHERT. So if TPP doesn’t move forward, what do you 

see happening in the United States? 

Mr. HAYES. A stagnation. But, more importantly, other countries are concurrently negotiating free trade agreements. Europe 

has a negotiation with Japan. Canada, outside of TPP, has a negotiation with Japan. If we don’t participate and keep up with those 

countries, they will form free trade agreements, and we will be left 

out. 

Mr. REICHERT. It is already happening, isn’t it? 

Mr. HAYES. Yes, it is already happening. 

Mr. REICHERT. Yes, sir. Anyone else wish to comment? 

Mr. MCCAN. I would add that, in the free trade agreement that 

was negotiated recently, that the United States gained a pretty 

good advantage over our Australian friends because we were able 

to negotiate a quicker phase-in of tariff elimination. And so we are 

benefiting from a good advantage of being able to export bigger volumes of beef to Korea because of that. We got in there with a free 

trade agreement before the Australians did. They have ultimately 

got one now, but they are behind us because we have got a better 

tariff advantage to them. So we are able to get more volume there. 

So—— 

Mr. REICHERT. That is a great point. And—yes, sir? 

Mr. MIKHALEVSKY. I thought I would just add, too, we were— 

two subjects to address your questions. 

First, in terms of jobs, when a—there is $1 billion worth of exports generated out of the manufacturing sector. It generates about 

5,500 jobs in the U.S. When you have $1 billion worth of agriculture products go, you generate about 6,800 jobs. So, moving agriculture and moving more into agriculture exports actually does 

more for job creation, we believe, in the United States. 

Secondly, the power of free trade agreements. While, from my 

company’s point of view, we are not satisfied with the South Korean free trade agreement due to exclusion of products, dairy actually gained nine share points just increasing exports of cheese, 

whey, and lactose after that agreement was signed. And that is 

share of imported products. So it actually has a real benefit, once 

you get these free trade agreements. And expanding exports and 

agriculture products also generates more jobs. 

Mr. REICHERT. Well, appreciate your testimony. And, remember, we do need your help. I yield back. 

Chairman NUNES. The gentleman from Massachusetts is recognized for five minutes. 

Mr. NEAL. Thank you, Mr. Chairman. Mr. McCan, you seem to 

indicate during your testimony that you had some inside knowledge as to the Japanese coming around on some of these issues. Do 


joloto on DSKB35BYQ1 with HEARING
61 

you perhaps have some perspective that you want to share with us 

on currency manipulation? 

Mr. MCCAN. It is just my personal opinion that—— 

Chairman NUNES. Mr. McCan, your mike is not on. 

Mr. MCCAN. I think it is just my personal observation. I think 

they would like to try to shift the weight to us that we really need 

them in here, whereas I really feel that Japan, you know, wants 

to be part of this trade pact pretty badly. They were a latecomer 

into the negotiations, and I think they are—they really want it 

worse than what they are letting on to us. 

But, you know, I think eventually we will get there with them, 

but I don’t have any particular intelligence that I could base that 

on. 

Mr. NEAL. Okay. And perhaps—Mr. Stewart, would you expound on the whole notion of currency manipulation and remind us 

again of why it is such a barrier? 

Mr. STEWART. Thank you, Congressman. You know, if you— 

well, it has primarily arisen from industrial users such as the auto 

sector vis a vis Japan. We have had problems with misaligned currencies that are driven by government policies for several decades 

with countries in Asia, Japan being one of the major ones, Korea 

being another. And, obviously, China is the one that has received 

most of the attention. 

And it is—if you think about liberalizing trade and reducing tariffs, if you permit a false exchange rate, you basically create a new 

tariff, which, in many ways, is often higher than the average tariff 

that is being eliminated. So it is a question of whether you are 

really liberalizing trade or not. And currency manipulation, when 

it occurs, can drive a dramatic false competitive advantage. 

Mr. NEAL. As you know, the President has set out a pretty assertive and a pretty aggressive trade agenda, and he has been able 

to, I think, highlight some pretty encouraging statistical data, as 

well. But there are, as it relates to Asia and the Pacific, there are 

a number of very stubborn problems, as we go forward. And we are 

going to have to wait and see how they are best resolved. But I 

think it is fair to say that, whether it is beef, or whether it is currency manipulation, there is a ways to go on all of this. Thank you, 

Mr. Chairman. 

Chairman NUNES. The gentleman yields back. Mr. Buchanan is 

recognized for five minutes. 

Mr. BUCHANAN. Thank you, Mr. Chairman. I want to thank all 

our panelists. As one of my colleagues mentioned from a different 

state, I am from Florida, and I can just tell you, over the last four 

or five years, where it has been difficult construction and tourism 

is up, but it was also impaired to some extent. Agriculture kind of 

carried along the state. It is a gigantic industry in our state. So I 

appreciate the opportunity to visit with everybody here today. 

Let me mention, Mr. Stewart—I want to start off with you—I 

just got back about 30 days—or it seems like 30 days or maybe 60 

days ago—one of the largest delegations, Democrats and Republicans, we went to Tokyo. We are talking about China and the Japanese, but all of us—a lot of us were concerned. I think we had 13 

Democrats, 7 Republicans, so we had a large delegation, I think the 

largest in 30 years. 


joloto on DSKB35BYQ1 with HEARING
62 

But everybody—and some of my colleagues have brought up 

about the whole thing of the—we spent a lot of time on TPP. But 

the thought was—is that, you know, the idea is a lot of them were 

for the free trade agreement, but they want to make sure it is fair. 

And one of the things they bring up as it relates to these industries, even if you get an agreement—and I can tell you, the prime 

minister, we had a chance to meet with him, he seems like he 

would like to move, you know, clearly, in this direction—but as we 

look to the ag industry and we talk about Japan, the thought was, 

by some of the Members, is that when you look to the auto industry, we have somewhat of a free trade agreement, but they have 

30 percent of the marketplace here in the U.S., or whatever that 

number is—and I am in the car business, so I will say that—but 

the other side is we had less than one percent there. 

So, even if you get the trade agreement, and you get a point 

where it looks like it is fairly fair, the question is, does it work both 

ways, and why hasn’t it worked that way in the auto industry. But 

that was one of the concerns they brought forward, and it is a concern I have, as well. So I will boot it to you. 

Mr. STEWART. Well, I think that that is a very valid concern 

with certain of our trading partners, where it is not—for Japan it 

has not been an issue of what the tariff levels are, although in agriculture they can be extraordinary. My recollection is that the end 

of the Uruguay round they had a deal on rice where they could 

charge 600 percent duties and have a 400 percent minimum markup, and they still wouldn’t let any rice in the country, even it could 

come in and compete at those prices. 

But in industrial goods, and I think in agriculture, if a country 

is not, in fact, committed to opening its market, there are lots of 

ways to do that, and you will spend your time in disputes, trying 

to go step by step. But we have had the same problem with Europe 

on beef. I mean how long ago was the beef case? It was back in 

the 1980s, as I recall. And we are 25 years later, and we have had 

a little bit of progress, but hardly the kind of progress that the—— 

Mr. BUCHANAN. I think the mindset—let me just say this, because we are limited time—is that a lot of us are free trade. But 

at the end of the day, my idea of negotiation—I have been in business 40 years—at the end of the day, in 6 months, a year, 5 years, 

it has got to be somewhat a win-win. 

Mr. STEWART. That is right. 

Mr. BUCHANAN. And that is the attitude I take to it, because 

I want to fight for our industries. I want to—and I think if we do, 

we got a good chance to win. 

Dr. Hayes, let me just mention just quickly, you had mentioned 

that these trade agreements would transform our exports. Could 

you expand on that a little bit, what you mean by that? 

Mr. HAYES. Sure. As I indicated, most of what we export now 

without duty are raw materials, such as corn and soybeans. The 

duties that are in place against our products are typically against 

value-added products like pork or milk or beef. And so it is as if 

those countries are artificially located value-added industries in 

their own countries. And, with free trade, those industries would 

naturally migrate back to the U.S. because it is far more efficient 


joloto on DSKB35BYQ1 with HEARING
63 

to move the final product than it is to move the bulkier raw material. 

But to put this in an example, free trade with China, we could 

double or triple some of our livestock industries just to access—just 

because of the potential demand out of that market. 

Mr. BUCHANAN. Thank you. And I am going to go with Andrei. 

The—you had mentioned about tariffs being 250, 300 percent. That 

is unbelievable to me. I mean maybe it is something I should know 

about, but why is it so high? 

Mr. MIKHALEVSKY. I think generally, for Canada and for 

Japan, they are protecting their internal dairy industry. But it also 

has the added detriment to the people in those countries that they 

are paying an awful lot for the dairy products that they have. And 

if you look at the price of dairy products in Canada, it is much 

higher than you might find in the United States. 

Similarly, I believe Japan probably has the highest priced dairy 

products on shelf for their consumers of anywhere in the world. So 

it is really, I believe, just protectionism of the local industries. And 

I think that is pretty much the simple answer. 

Although there are areas—for example, China—where the duty 

is around 10 percent on dairy products. But their countries get an 

advantage of five percent for a product. And that puts us on an 

unlevel playing field. And that is why it is so important we have 

a level playing field as we look out around the world. 

Mr. BUCHANAN. Yes. And let me just say, Mr. McCan, in terms 

of the beef industry, you know, I have eaten a lot of meat around 

the world, been in 60, 70 countries. We have got the best beef in 

the world. And the bottom line, you know, what more can we do, 

or should we do, to help get our exports, as it relates to your industry out there? Because, obviously, you know, you are getting 

blocked in a lot of different directions. But is there a couple of 

things that we could do to make a big difference on it? Because I 

think that is an industry that has enormous opportunity, worldwide. 

Mr. MCCAN. Well, I think, from the beef industry standpoint, 

you know, we adding about $300 a head to every animal, fed animal, harvested right now that is due to our international export 

market. So it is significant, what that trade does for our industry. 

And, you know, I think what—all we would ask is that, you know, 

we try to get all these trade pacts back to sound science negotiations, and non-tariff-type trade barriers, and it would help tremendously. It really adds a lot. 

In 2013 we exported $6.1 billion worth of beef, internationally. 

And it was pretty much all due to a lot of the trade pacts of the 

past. However, as Andrei mentioned, we have a very high tariff in 

Japan. We exported $1.4 billion worth of beef in Japan in 2013. 

They love our beef. It is the highest quality, we feel like, in the 

world. And so they want it. And if we could remove that tariff, it 

would mean a lot for our producers and for our market, certainly. 

Mr. BUCHANAN. Thank you and I yield back. 

Chairman NUNES. Thank you. Thank the gentleman. Mr. Smith 

is recognized for five minutes. 

Mr. SMITH. Thank you, Mr. Chairman. Thank you to our witnesses today. 


joloto on DSKB35BYQ1 with HEARING
64 

Dr. Hayes, if you could, touch a little bit more on the impact to 

consumers, foreign consumers, for example. You mentioned a little 

bit about how wealth is created when you move away from a surplus. And also, how protectionism—and then I think we heard also 

how the price of dairy to consumers with protectionism is much 

higher. Could you elaborate more on that? 

Mr. HAYES. Sure. I will give you an example. In Colombia they 

have almost no feed grains, and so, therefore, pork production is 

extremely expensive. And people in Colombia can literally not afford to eat pork. However, we now have a free trade agreement 

with them. And their per capita pork consumption is skyrocketing. 

They literally have access to something they didn’t have before. 

I have been in supermarkets in Korea and seen pork selling at 

four or five times the U.S. price. When those consumers eventually 

get access to our product, they will benefit from having a much 

more affordable product. And, in that sense, their wealth grows. 

Mr. SMITH. Is—are there any examples of where consumers— 

perhaps in Japan, because Japan is such a central point of discussion here this morning, with protectionism—do Japanese consumers benefit from any of their protectionism? Can anyone point 

to such a thing? 

Mr. HAYES. I will take a stab at it. They believe that they have 

food self-security because of protectionism. But, as I mentioned, 

they are importing all their animal feed, so it doesn’t make a lot 

of sense. 

Mr. SMITH. Anyone else? Mr. Stewart. 

Mr. MIKHALEVSKY. Yes. I would just say that they import a 

tremendous amount, as Dr. Hayes said, import a tremendous 

amount of their product. And there is a very small percentage of 

the population that are actually ag producers there. So it is—and 

it is a—they are very protectionist. 

Mr. SMITH. Mr. Stewart. 

Mr. STEWART. Just address the food security issue, because it 

has been a big issue in Japan and in a number of other countries. 

If you go back to 2007, 2008, grain prices, rice prices went up 

200, 300, 400 percent because there ended up being a few shortages. And I think it was 35 or 40 countries imposed export restraints on key agricultural products, including rice, including 

wheat, including a number of other products. 

If you are an import-dependent country like Japan, right now the 

international trading system doesn’t guarantee them access to food 

supplies. Every country has a right to restrict exports if they perceive it to be in their national interests. That is a legitimate issue. 

Whether it drives the high tariffs and other things, I would say 

probably not. That is large political. But that is an issue that the 

overall trading system has not addressed. 

Mr. SMITH. Okay. All right. I thank you, Mr. Chairman. I yield 

back. 

Chairman NUNES. I thank the gentleman. The gentleman from 

Oregon is recognized for five minutes. 

Mr. BLUMENAUER. Thank you, Mr. Chairman. I would like to 

just continue the discussion dealing with Japan. I am wondering if 

we are going to reach a point where the Japanese political system, 

or their philosophy regarding trade negotiations, just makes it no 


joloto on DSKB35BYQ1 with HEARING
65 

longer reasonable for us to pursue. Or do we reach a point where 

we just decide that it is not worth it to fight to keep Japan in the 

agreement? 

Mr. MCCAN. I would just say I don’t think we are at that point 

yet, Mr. Congressman. I hope. I think, from our industry, we certainly view Japan as an important part of this negotiation. And we 

just remain confident that we—in the future we will be able to 

bring them on board at the level of all the other TPP countries. 

Mr. BLUMENAUER. Mr. Turner. 

Mr. TURNER. Yes, I would just say that the framework of the 

TPP itself is supposed to be a living treaty, you know, to grow and 

to adapt. And I think to—not to fight through those issues with 

Japan now—Japan gives the TPP much more credibility with the 

size being added to it, and it is important. 

And I just relate to a lot of my packers and suppliers. You either 

ship to Japan or you don’t. There is no middle ground. Because you 

have to do certain things, you have to work through it. But, at the 

end of the day, good business opportunities, and a big market, and 

I think it should be included—at least fought for. 

Mr. BLUMENAUER. Well, certainly that is the philosophy with 

which we have pursued it. And, all things being equal, we are all 

better off in a comprehensive agreement that speaks to some of the 

problems that you are alluding to. 

But I just wonder—and perhaps, just in terms of making the negotiations work better, if it is clear that there is a point where we 

do pull the plug, where we are just not going to continue down this 

path, that we will reach a point, if we can’t reach reasonable accord 

on things that give our producers access, and we are not facing 

pretty grotesque barriers, that it is clear that we are not going to 

play. 

I must admit I was blown away recently in conversation with 

some Japanese officials about their expectations dealing with fisheries. Pretty unsettling, in terms of what their plans were, and 

some of their practices that are going to pose a challenge for us, 

I think, in reaching an agreement that is acceptable for most of us. 

And I am just curious at your reflections. Appreciate your feedback. 

Thank you. 

Thank you, Mr. Chairman. 

Chairman NUNES. The gentleman yields back. The gentlelady 

from Kansas, Ms. Jenkins, recognized for five minutes. 

Ms. JENKINS. Thank you, Mr. Chairman, and thank you all on 

the panel for being here today. I represent eastern Kansas, and I 

have seen firsthand how strong trade agreements open international markets to Kansas beef, pork, Kansas wheat and cereal 

grains, as well as planes and other products manufactured in Kansas. 

I also know that the best way for Congress to ensure that we can 

get strong agreements that include congressional priorities is to 

pass legislation like the bipartisan Congressional Trade Priorities 

Act that Chairman Camp has introduced, along with our chairman 

and Chairman Sessions. And it is my hope that we can get that important legislation through the House and the Senate this summer. 

Mr. McCan, as president of the National Cattlemen’s Beef Association, you are well aware that the World Organization for Animal 


joloto on DSKB35BYQ1 with HEARING
66 

Health places U.S. beef at its lowest possible risk category. Unfortunately, some countries, including some of those who are currently 

participating in the Trans-Pacific Partnership negotiations, continue to either ban or limit U.S. beef exports. 

So, Mr. McCan, could you please discuss the markets that are 

still closed to U.S. beef and pork, and the impact this has on U.S. 

producers? I would also like you to discuss the challenges that the 

mandatory country-of-origin labeling, or COOL standards, created 

by the USDA plays on our negotiators when they try to get other 

countries to end non-tariff based barriers. 

I specifically mention COOL because, over the past couple of 

years, I have heard from many Kansas producers that these standards are placing an unworkable burden on their operations. In addition, a study done back in November of 2012 by Professors Glynn 

Tonsor, Ted Schroeder, Michael Taylor from Kansas State University, and Jayson Lusk of Oklahoma State University found that 

U.S. consumers are not willing to pay a premium for labels that 

distinguish between livestock born in Canada but raised in Montana and those born and raised anywhere else in the U.S. So it appears that these standards may be more trouble than they are 

worth. Could you comment? 

Mr. MCCAN. Yes, ma’am. I will answer your concerns about the 

BSE status first. We are a negligible risk status country now, 

which is the lowest status you can be for BSE. And there are other 

countries who are exporting beef that don’t have as low a status 

for BSE than we do that are exporting beef to China. China we 

view as a really huge future market for us. We were locked out of 

China in 2003 with the BSE cattle from Canada, and we have not 

been able to get access back into China. 

So, we certainly view that as something that we need to—our 

Administration, I think, needs to work hard on. And our industry 

views that as a very important market. And we don’t see any reason why we should be kept out at this point. 

As to the country—mandatory country-of-origin labeling, it has— 

in our opinion, in the beef industry, we—it has not really benefited 

anyone. Referring to the study that you referred to done at Kansas 

State and other universities, our domestic consumers really don’t 

seem to really care, really pay a lot of attention to that origin label. 

So it has certainly not shown any economic benefit to any of our 

producers in the United States, although it has been a really tough 

rule to comply with. 

And we handle Mexican steers on our family’s operation. And so, 

every year, when we market them, we are faced with anywhere 

from a $35 to a $50 a head discount for no apparent reason. And 

when those cattle come in to this country, they are lightweight 

calves, usually. And it is an added value type of a program. We add 

value at the ranch level, the feed lot operators add value, the packers add value. By the time those animals are processed and ready 

for distribution in the retail markets, the majority of the value of 

that animal is value that has been put on them here in this country. 

So, another reason why we don’t see any real benefit to the mandatory country-of-origin labeling rule right now. And I—and it has 

caused some serious disruption on the borders, south and north. 


joloto on DSKB35BYQ1 with HEARING
67 

There are some processing facilities that have recently gone out of 

business that depend on a lot of that border trade, and because of 

mandatory COOL have been hurt and had to go out of business. 

So, we have limited infrastructure now across the country for 

processing cattle. We want to protect that infrastructure as much 

as we can to keep a good, robust competition in our industry. 

Ms. JENKINS. Thank you, Mr. Chairman. I would yield back. 

Chairman NUNES. Thank the gentlelady. The gentleman from 

Louisiana is recognized for minutes. 

Mr. BOUSTANY. Thank you, Mr. Chairman. And I thank all the 

witnesses for their testimony. My home state of Louisiana is a maritime state, highly dependent on trade. And agricultural exports 

are the top—our top export item. Rice is very important in my district, and getting a high level agreement that opens up markets for 

rice and some of our other agricultural commodities is of major importance to me. 

But I would submit that, even with all the work done on TPP 

and TTIP, the negotiations, very difficult negotiations, much more 

needs to be done. And these are much more than commercial agreements. They are not static. This is the way we get back to a rulesbased trading system. And I will tell you. American leadership is 

in demand more so than ever before to get this done. And the first 

step, I think, that is critical in exerting this American leadership 

in this engagement is to get trade promotion authority. 

Now, we have a bill, the Bipartisan Congressional Trade Priorities Act of 2014. It was introduced on January 9th. A lot of work 

was put into that. It is much more—it is a much more-evolved 

piece of legislation than the previous TPA. And I believe it addresses all the 21st century issues, from SPS to, you know, the global 

digital economy, state-owned enterprises. It also enhances the consultative role of Congress as it engages with the executive branch 

and USTR. 

So, my question to all of you is—I want each of you to answer 

this for the record. Do you believe that our negotiators can get the 

best possible deal, which I believe is essential, the best possible 

deal in these negotiations, if we don’t have trade promotion authority, and specifically, this legislation we have before us? 

Why don’t we start with Dr. Hayes? 

Mr. HAYES. Common sense suggests that you don’t give your 

best deal until the very last minute. And you can’t do that under 

the current situation. Because without trade promotion authority, 

there is always the possibility we will go back and reopen the deal. 

So I absolutely agree with you. 

Mr. BOUSTANY. And would you agree that time is slipping by? 

There are a lot of external events going on, both politically and economically? 

Mr. HAYES. Yes, just—— 

Mr. BOUSTANY. That is why we need to have a sense of urgency? 

Mr. HAYES. Absolutely. Just looking at the congressional 

timeline and the U.S. election process, this is a very critical moment. 

Mr. BOUSTANY. Thank you. Mr. McCan. 


joloto on DSKB35BYQ1 with HEARING
68 

Mr. MCCAN. I would concur that I think the trade promotion authority is critical in being able to get these negotiations done in a 

timely manner, and get the right trade pact that we are looking 

for, and a good, modern, 21st century-type trade pact. I think we 

need to give the Administration all of the latitude that we can, and 

the agencies that they have at their disposal. 

Mr. BOUSTANY. Thank you. Yes, sir? 

Mr. MIKHALEVSKY. Thank you. Two comments. First, as I said 

in my comments, we are highly supportive of the trade promotion 

authority. Right on board, we believe that it is essential to make 

this thing go forward, and so we are right on with that. 

The second Part I wanted to answer a little bit differently, and 

I just wanted to talk about time running out, and the sense of urgency. From a dairy industry perspective, the EU has caps on dairy 

products today that go off in 2014 and 2015. Those products—there 

is a significant amount of product that is going to flood into the 

world market at that point in time. So it is really important that 

we tie these things up very quickly. Otherwise, we will be at a competitive disadvantage in the dairy industry in the future. 

Mr. BOUSTANY. Thank you. Mr. Turner. 

Mr. TURNER. I agree that trade promotion authority is not only 

urgent, but required. The sooner, the better. 

Mr. BOUSTANY. Thank you. Mr. Stewart. 

Mr. STEWART. Thank you, Congressman. I will be—take a 

contrarian view, simply because I am a bit of a historian. We didn’t 

have TPA before 1974, and we managed to do lots of trade agreements. I am not opposed to TPA, and the bill that was introduced 

is a good start. And for some trading partners it may be a help. 

But I don’t actually believe that it is critical to have before you 

have a deal. 

Most of the trading partners we deal with have a process that 

is not a lot different than ours. And, theoretically, the deals could 

be taken back and reopened. And they don’t do TPA, we are the 

only country that does. So, I am in favor of TPA, but I don’t view 

it as a critical element, legally or historically. 

Mr. BOUSTANY. I would just simply submit that history is a 

nice guide, but we are in a much more complex negotiating environment with many very difficult 21st century issues. And I do believe that the full weight of the U.S. Government needs to be exerted in these negotiations. And if we get bipartisan trade promotion authority, that sends a very powerful signal to all of our negotiating partners that we mean business. It is essential to get the 

best possible deal. 

And, with that, I will yield back, Mr. Chairman, thank you. 

Chairman NUNES. Thank you, Dr. Boustany. The gentleman 

from Wisconsin, Mr. Kind, is recognized for five minutes. 

Mr. KIND. Thank you, Mr. Chairman. I want to thank the panelists for your testimony today. Obviously, being from Wisconsin, agriculture is a very important part of our state’s economy. Dairy, in 

particular, second in the nation when it comes to dairy exports. 

And I would agree with my friend from Louisiana, Dr. Boustany. 

I would have preferred to see TPA dealt with sooner, rather than 

later. Obviously, I am concerned that we are not going to get the 

last best offer from those in TPP, unless they have some assurance 


joloto on DSKB35BYQ1 with HEARING
69 

that the President can ultimately deliver the agreement at the end 

of the day, and trying to negotiate with 535 independent Members 

of Congress is going to make that a little bit dicey. 

But let me also paint a little political scenario which would make 

TPA passage eventually very difficult in this Congress. I think the 

political reality is we are not going to be able to move it before the 

elections. If there is a flip in the Senate, if there is any backing 

away from the May 10th agreement, which was embraced by the 

previous Bush Administration, involving core international labor 

and environmental standards and access to prescription medicine 

in the developing world, it is going to make getting the votes for 

TPA very, very difficult in this place. And so, I think the November 

elections are going to be very important to where the trade agenda 

goes in the future. 

We have also—I have also done a lot of outreach with our TPP 

negotiating partners. I have had meetings, breakfast and lunch 

meetings, with the TPP ambassadors, including the Japanese ambassador. It would be weird, to say the least, if we moved forward 

on TPP without Japan being there at the end of the day. 

And my impression, Mr. McCan—I think I agree with you—a little more optimistic. I think all the nations involved in negotiations 

want to get to yes, they want to get to an agreement. But, naturally, all eyes are on Japan right now. I would like to be able to 

support a good negotiated agreement, but I have a hard time supporting a bad agreement. I think a lot of Members in this place 

probably feel the same way. And agricultural access to these markets is going to play a crucial role in where this agreement ultimately ends up. And we all know that there is more work to be 

done. 

But let’s face it. We have got work to do in our own Congress 

when it comes to our own agriculture policy to be good stewards 

of the global trading system. So I have been so active in the past 

on farm bill debates, trying to move us away from these market 

and trade-distorting commodity subsidy programs that tend to get 

us into trouble, globally. 

Probably the most salient one that we are dealing with right now 

is the box we are in with Brazil and our domestic cotton subsidy 

program, and the WTO implications of that. I understand this 

week there are important negotiations to see if we can resolve this 

with Brazil. They are convinced that this Congress did not fix it— 

neither am I—in the last farm bill. And, because of that, we have 

been, in effect, bribing Brazil with $150 million worth of payments 

that now go to subsidize Brazil cotton farmers. It just shows you 

how crazy this farm bill has gotten in this country. 

And we have a responsibility to be living up to some of our trade 

obligations and the challenges that we face in the WTO on the 

front end, as well. So I am hoping that, as we continue talking 

about our own agricultural reform programs, that trade and the 

implications of trade are considered a little more deeply in it, rather than kind of shoulders being shrugged, and we taking our 

chances through WTO claims and cases. That puts us in a bad 

spot. 

Mr. Turner, you came and talked about SPS and that, too, is 

kind of a new phenomenon that we have in our trade agreements, 


joloto on DSKB35BYQ1 with HEARING
70 

and certainly with the trade promotion authority legislation that 

was introduced earlier. Is there any concern on your part in regards to the standards used for SPS—because it is a two-way 

street—that they might ultimately be used against us or our products? 

Or do you see the way it is being negotiated and the language 

that is being used right now is going to create a livable world for 

us when it comes to some of the nuances of SPS and some of the 

non-tariff barriers that we face, especially for agriculture in recent 

years? 

Mr. TURNER. Everything I have seen so far, I mean, looks good. 

You know the two-edged sword. As a farmer I used to struggle with 

the stringent requirements that we had growing our food with both 

federal standards and state standards and everything else in California. But now, as an exporter, and someone who spends time 

traveling the world, I have a great appreciation for the reputation 

that we have built globally, based on our high standards. And so 

I do think it is very important. 

You know, we have to respect foreign countries’ standards, and 

the reasons why they want to do things the way they want to do 

them. And they have a right to protect the food in the best way 

that they seek. However, at the end of the day, transparency, and 

if it is based on science, I think we can all agree with that. 

Mr. KIND. I think it really comes back to whether it is sciencebased research that we can agree to, as far as the equivalency 

standards and what not. That will be crucial, moving forward. 

Mr. Mikhalevsky, obviously we would like to be able to work 

with you a little bit more about how we can take advantage of 

some of the greater export opportunities in the dairy market that 

exist in the Pacific Rim, China, right now. One of the—I think the 

tragedies of Russia and Crimea was we had talks in regards to 

Russia with dairy that suddenly collapsed overnight. We have been 

shut out since 2010. Hopefully there will be an avenue to try to revive them when things start settling down again over there. 

Thank you, Mr. Chairman. I yield back. 

Chairman NUNES. Thank you, Mr. Kind. Mr. Paulsen is recognized for five minutes. 

Mr. PAULSEN. Thank you, Mr. Chairman. And this is a topic 

that is important to my home state of Minnesota, as well. And 

while I don’t have a district that is necessarily agriculture-oriented, 

there is no doubt that Minnesota is an agriculturally-oriented 

state. In fact, Minnesota is the fourth largest agriculture exporting 

state in the country. 

In 2012, our agriculture exports totaled about $8.2 billion. That 

was a 14 percent increase over the year before, which is a pretty 

common pattern, I am thinking, from—based on some of the testimony we have had here, and what I have read, and has happened 

in other states. And so the agriculture and food industry accounts 

for more Minnesota exports, actually, than any other industry in 

our state. More than double, actually, than the next closest industry, which is machinery. So, we are absolutely helping feed the 

world, much as you and the folks that you represent are. And so 

it is absolutely vital to our economy. 


joloto on DSKB35BYQ1 with HEARING
71 

I just want to associate my comments about the importance of 

getting TPA authority so we can get the best-negotiated deals possible that will benefit American consumers and American exporters. And I just want to thank you for your testimony, for your help, 

for asserting that relevance of having trade promotion authority. It 

is actually really, really critical. 

And, of course, as you mention, we are not just dealing about tariffs, which are issues, though. It is also these non-tariff barriers 

and the opportunity to think about 21st century trade agreements, 

modernizing high-standard agreements so that other countries will 

then follow our lead. Right? 

And the United States has definitely gotten back into the game 

with the passage of the recent agreements that occurred with 

Korea, and Colombia, and Panama. And so, we are back on the 

playing field. But we need to push forward with these huge opportunities with both the Trans-Pacific Partnership and the TTIP. 

Let me do this. I just want to ask a question real quick, because 

it is not just, as we mentioned, tariffs, it is non-tariff barriers. But, 

Mr. Turner, I was interested in your testimony. You are directly involved in getting agriculture products through this myriad of administrative and regulatory hurdles to get those products into foreign markets. You deal with that every day for your customers. 

Can you describe a little bit just your experience in dealing with 

countries that have multiple entry requirements, and the lack of 

harmonization of customs procedures between countries, and the 

opportunity that we should be looking at with these agreements in 

trade? 

Mr. TURNER. Yes. Are you looking for a specific example, or just 

kind of talk about—— 

Mr. PAULSEN. Yes, anecdotal stories. I mean give some perspective of why this is important, and why this is something that we 

should address, or help address, that can benefit us in the United 

States. 

Mr. TURNER. Yes. You know, there—when you look at the SPS 

issues in particular, there are just so many different things to get 

products from one place to another. And we look at—you know, the 

easy part, when we talk about the businesses doing the commodity 

trade and doing the sale, and then we have to, you know, then 

send that through the office and the conference room, where the ladies do the real work, and deal with all the different layers and all 

the different things. And it is just—every single country is different, you know. 

We have import permits required in some places. Import permits 

are very, very challenging. We have products that need to get 

shipped out, but we can’t ship the product until it has been labeled 

properly with an import permit number. We face that mostly in 

India. Fumigation requirements are different. Biggest challenge is 

Chilean fumigation. Chilean fumigation has to—is a—even the 

packers themselves have to weave a fine little line to be able to accomplish what needs to be accomplished to get into Chile with still 

being legal in the U.S. It just goes on and on and on. 

Mr. PAULSEN. Let me just follow up on your comment about 

India, because U.S. agriculture exports to India are actually really 

small, or paltry, with a mere $863 million in 2013, and it has gone 


joloto on DSKB35BYQ1 with HEARING
72 

up a little bit in 2012. But you think about India, it should be a 

booming market of opportunity, right? Growing middle class, rapidly growing population becoming wealthier. 

Can all of you maybe just comment and just follow up on that 

regarding what are some of the barriers to agriculture that we see 

right now with—dealing with India? Maybe Mr. McCan? Or you 

can go right down the line. 

Mr. MCCAN. I am not terribly familiar with all of those issues, 

but I know that, because of their—because of the—their feeling towards bovines in that country—and I am not sure how it really relates to beef consumption—that there is just not a huge interest to 

negotiate with the beef industry for importing much of our product. 

They also have a huge population of water buffalos, which they 

export. And they don’t put on the same equivalency as a bovine 

animal over there. So there is lots of kind of cultural issues there 

that seem to complicate the trade over there. And, yes, we haven’t 

had much opportunity there at all. 

Mr. PAULSEN. Mr. Mikhalevsky, on the dairy side, can you 

speak to that just a little bit? 

Mr. MIKHALEVSKY. Sure. The—one of the issues that we have 

when we ship to countries—and I will primarily speak about India 

in a second—is we are actually testing for 933 separate substances 

today in order to meet different export requirements, which creates 

a lot of cost in our system. But there is a number of things that 

you test for that are related to food safety, and then there are other 

things that you test for that are related to food quality and perception of quality. And, for us, the food safety one is essential. The 

food quality one is a matter of judgement. 

When it comes to India specifically, they do have a wonderful 

market there. They have tariffs there. They do give tariff holidays 

occasionally when they need product to come into the market. But 

we have generally had problem with the SPS standards there. One 

example of that would be testing for things like Para tuberculosis 

in milk and that. There are a number of standards that they impose that are more food quality standards, as opposed to food safety. 

And so, the way I would respond is it is a closed market to us 

and many of the other dairy exporters around the world, and it is 

a wonderful opportunity. 

The last piece on dairy, which might be interesting, is dairy in 

India is different than dairy here. We assume that our dairy comes 

from cows. Over there it may come from buffalo or other sources. 

Mr. PAULSEN. Thank you, Mr. Chairman. Yield back. 

Chairman NUNES. I thank the gentleman. The gentleman from 

Pennsylvania is recognized for five minutes. 

Mr. KELLY. I thank the chairman, and thank you all for being 

here. I am greatly interested in this. I come out of the automobile 

industry—in fact, the retail end of it. We do a lot of bid work. But 

as we would go through the bid process, there were—sometimes the 

bid specs were set up so that no matter what the final price was, 

I couldn’t have met the specs. 

And I am looking at each of you. You are producers. So, first of 

all, you better have a product that everybody wants to own. Right? 

And then you better be able to put it at a price point that is affordVerDate Sep 11 2014 08:03 Oct 27, 2016 Jkt 021112 PO 00000 Frm 00076 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\21112 .XXX 21112 

joloto on DSKB35BYQ1 with HEARING
73 

able. And we are looking now at—talking with you about these 

trade agreements. One of the things for me that was very important, if I was sitting across from a perspective owner I had to have 

the decision-maker at the table. Or none of the negotiations 

mattered. It was just chatter. 

And the other thing was time was always of the essence, because 

I would know that if I wasn’t able to satisfy a need at that time, 

or fill a need at that time, this person is probably going to leave 

our dealership and go someplace else. And the next day there 

would be an automobile in their driveway with somebody else’s 

name on the back of it, which really didn’t help me, because I still 

had payrolls to meet. 

I think sometimes we get really involved in these things as to 

what it is that we’re trying to do. 

So, American products, globally. Globally. And did I read there 

somewhere—one of you say that the consumers, as a percentage, 

consumers—outside of the United States, how big is the market? 

Mr. MCCAN. I would just tell you for the beef market we consider that 96 percent of our product’s consumers are outside of this 

country. 

Mr. KELLY. So out of 10 buyers, 9.6 of them are not here. You 

are trying to fill a market that is someplace else. 

Mr. MCCAN. Ninety-six percent. 

Mr. KELLY. Ninety-six percent. Well, okay. But my whole point 

is your market is not just the United States. And you are producing not just for the United States, because there is no way in 

heck we could digest the product that you are producing. There is 

an overcapacity, which we have watched in the automobile industry with some of the domestics. You can’t overproduce for a market 

that isn’t there. And if you do, you better look at the market that 

is available, and then produce for that and get your share of it. You 

are all looking for your share of the market. Is that not true? And 

all you are asking for is to be treated fairly, and not to get gamed. 

So, my question is, when we go into these other places, and we 

are trying to drive these trade negotiations—and I am with Dr. 

Boustany, because I do believe time is of the essence. And if we 

think we can sit back and the world will wait for us to come 

around, I guarantee you somebody will put a product in somebody 

else’s driveway, and we will never get a chance to get back in that 

home again. 

So this TPA, a lot of question about that back home. In Pennsylvania ag is the number-one business. There is a lack of confidence, 

or a lack of trust that it is going to be handled the right way. I 

have people tell me, ‘‘No, you guys better keep track of that. You 

better not let him do something that really hurts us. Okay?’’ Now, 

whether you agree with the President or don’t agree with the President, there is a real perception out there that we have a problem 

in negotiations. 

You are all here for a very particular reason. And I like what Mr. 

Rangel said. You have got to help congresspeople understand what 

is going on. But, more importantly, we have got to help the American people to understand what it is we are trying to get to. Don’t 

we? 


joloto on DSKB35BYQ1 with HEARING
74 

I mean if we don’t get a bigger share of this global economy, we 

won’t have a dynamic and robust economy. We will not have jobs. 

We will not have the ability to fuel all these wonderful programs 

we have, because they are all revenue-driven. Tell us. What would 

be the best way right now? Because I know you are all looking for 

something. 

Mr. McCan, you are in beef. Mr. Turner, you are in almonds. 

Andrei, you are with the dairy products. Mr. Stewart, you have 

been on both sides of it, right? Mr. Hayes, just tell us, please, because I think it is critical that the American people understand 

where it is we are trying to get. 

And I got to tell you, from my perspective, I wanted to be in 

everybody’s driveway every day. I didn’t want to get there from 

time to time. But I didn’t want to get gamed, either, by the process. 

How badly gamed are we right now, in order to get our products 

around the world? If 96 percent of the market is outside our shores, 

then that is the target we have got to shoot for. 

What else can we do, gentlemen? 

Mr. MCCAN. Well, I will take a stab at it, Mr. Congressman. 

But, you know, we view trade promotion authority as very critical 

in the negotiations. The Administration—— 

Mr. KELLY. But tell me why. Why is it important? 

Mr. MCCAN. Well—— 

Mr. KELLY. Because the American people need to know why—— 

Mr. MCCAN. My personal view, the President has his different 

agencies, the USTR, USDA, FAS, they are all very critical in these 

negotiations and these trade pacts. And, you know, without TPA, 

I view it that they are somewhat weakened if they don’t have that 

strength of the TPA authority. And those are the people that are 

at the table on these things, more so than anybody. 

Mr. KELLY. Decision-makers are at the table. 

Mr. MCCAN. Exactly. 

Mr. KELLY. The people who are going to say yes or no are at 

the table. 

Mr. MCCAN. Exactly. 

Mr. KELLY. So if we are going to negotiation, but the person or 

the entity that needs to be there to go ahead and compete head to 

head doesn’t have that same authority—— 

Mr. MCCAN. They have the expertise for these negotiations, 

whether it is technical, you know, non-tariff stuff, SPS, they have 

the expertise within these agencies, and those agencies are part of 

this Administration. 

Mr. KELLY. Okay. Any of you? I know you are all facing a difficult challenge. Tell us—and not so much Congress, but the American people—about the market and how we have to go about getting a bigger market share. Because, at the end of the day, it is 

good for America. And our products, I don’t think it is a matter of 

not having the right product, it is just not having the right policies. 

At least that seems to me—and the other thing is time. We cannot 

continue to let this time slip away. It is the one thing you can 

never get back. And another thing you will never get back, you will 

never claw back market share. 

Andrei, were you going to say something? Because the dairy 

products that we put out are phenomenal. 


joloto on DSKB35BYQ1 with HEARING
75 

Mr. MIKHALEVSKY. Well, I was just going to say that you 

asked about why TPA is so important and how we might explain 

that—— 

Mr. KELLY. Right. 

Mr. Mikhalevsky [continuing]. Outside of this room. And my view 

on that is whenever you do a negotiation, as you mentioned, if you 

don’t think you have someone across the desk that can make a decision, or that had some authority, your negotiation is not going to 

go very far. And if you believe that negotiation, when you bring it 

back, is going to get modifications or twisted or turned around, you 

are very unsure of how you are going to negotiate. You may not 

put your best foot forward, because you don’t believe that you are 

actually negotiating the final and best deal for both countries. 

So, our support for TPA is we believe that is the fastest way to 

get the best deal, and then you bring it back to Congress for an 

up or down vote. But you have to have the authority sitting at the 

table, and people have to believe it. And that is the way I would 

explain it to anyone in our area. 

Mr. KELLY. Mr. Turner? Anything at all on that? 

Mr. TURNER. I would just expand on your prior question, which 

is, you know, we are competing globally. When you look at the population growth in India and China, Southeast Asia, you know, 

there is limited ag land, there is limited water, globally speaking. 

And we are here, the time is now, to position ourselves in the best 

possible way that we can to compete globally to feed the world and 

the next generation. 

Mr. KELLY. Okay. Well, I got to tell you, just from what I have 

done all my life, if I didn’t have the decision-maker sitting across 

from me, I knew there was no sense in going forward with it, because I couldn’t finish the deal. And I think that is what we are 

looking at right now. You all do such great things with the product, 

you work so hard. At the end of the day we are looking to get market share that grows and grows and grows and gets the American 

people back to work and does an awful lot of things. 

I think people want to own American products. I think sometimes we get to the point and we forget we are not the only person 

in town with a product. There is other people that will work just 

as hard for the market. But I just don’t like the way we get gamed 

sometimes. Sometimes the specs are set up that, no matter what 

we do, we can’t get there. And I guess that is where the oversight 

part comes in. But I want to thank you all for what you do. Not 

just what you—by coming here today. 

But would you please do me a favor, and to everybody in Congress, and the country? You all have such great credentials. You 

have great credibility. Your associations have the ability to get the 

message out to the American people in a way that they will believe 

it and they will understand it. That is the real challenge we have 

right now, the lack of understanding of how we get to market domination. How we get to growing our market share all lies in the fact 

that people just don’t understand, and they seem to think that 

there is somehow that we can just sit back and they will come to 

us, the world will flow to us. 

I really do believe, with the market opportunity we have, the sky 

is the limit. We never had bluer skies or a stronger wind at our 


joloto on DSKB35BYQ1 with HEARING
76 

back in America than we have right now, of all the assets that we 

have. So it is just a time now to put ourselves in order, get out, 

win these trade negotiations. But we better have somebody at the 

table that can actually drive a hard bargain and come back home 

and say, ‘‘You know what? I closed the deal, and it is good for everybody.’’ It is a win-win situation. 

Thanks so much. Mr. Chairman, thank you for allowing me to be 

here. I appreciate that. 

Chairman NUNES. The gentleman yields back. I will just say 

that Congress has the authority vested by the Constitution. If we 

look at what has happened in the previous few years, whether it 

is the implementation of different laws that have passed the Congress, the various different executive orders, and not to get into the 

politics of this, but the situation with the Bergdahl-Taliban five 

swap, clearly—and I will just reiterate—we have to have trade promotion authority, or you could very well kill TPP in its infancy. 

That is the reality of the politics that we face, and it is the law. 

And so, I would encourage the Administration to work as quickly 

as they can with Chairman Camp and others to pass TPA as quickly as possible. 

Our record will remain open until June 25th. I urge interested 

parties to submit statements to inform the Committee’s consideration of the issues discussed today. 

I want to thank all of you for your testimony. This Committee 

is now adjourned. 

[Whereupon, at 11:49, the subcommittee was adjourned.] 

[Questions for the record follow:] 


joloto on DSKB35BYQ1 with HEARING
77 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.041
78 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.042
79 

f 

[Submissions for the record follow:] 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.043
80 

American Farm Bureau Federation, Statement 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.044
81 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.045
82 

f 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.046
83 

Corn Refiners Association, Letter 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.047
84 

f 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.048
85 

European Union, Letter 

f 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.049
86 

Express Association of America, Statement 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.050
87 

f 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.051
88 

Humane Society International and World Animal Protection, Statement 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.052
89 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.053
90 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.054
91 

f 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.055
92 

National Farmers Union, Statement 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.056
93 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.057
94 

f 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.058
95 

National Milk Producers Federation, Statement 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.059
96 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.060
97 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.061
98 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.062
99 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.063
100 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.064
101 

f 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.065
102 

National Oilseed Processors Association, 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.066
103 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.067
104 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.068
105 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.069
106 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.070
107 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.071
108 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.072
109 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.073
110 

f 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.074
111 

National Pork Producers Council, Statement 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.075
112 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.076
113 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.077
114 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.078
115 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.079
116 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.080
117 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.081
118 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.082
119 

Æ 


joloto on DSKB35BYQ1 with HEARINGInsert 21112.083