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S. HRG. 109–490

TO REVIEW THE STATUS OF THE WORLD TRADE

ORGANIZATION NEGOTIATIONS ON AGRICULTURE

HEARING

BEFORE THE

COMMITTEE ON AGRICULTURE, 

NUTRITION, AND FORESTRY

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

SEPTEMBER 21, 2005

Printed for the use of the 

Committee on Agriculture, Nutrition, and Forestry

(

Available via the World Wide Web: http://www.agriculture.senate.gov 

COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

SAXBY CHAMBLISS, Georgia, Chairman 

RICHARD G. LUGAR, Indiana 

THAD COCHRAN, Mississippi 

MITCH MCCONNELL, Kentucky 

PAT ROBERTS, Kansas 

JAMES M. TALENT, Missouri 

CRAIG THOMAS, Wyoming 

RICK SANTORUM, Pennsylvania 

NORM COLEMAN, Minnesota 

MICHEAL D. CRAPO, Idaho 

CHARLES E. GRASSLEY, Iowa 

TOM HARKIN, Iowa 

PATRICK J. LEAHY, Vermont 

KENT CONRAD, North Dakota 

MAX BAUCUS, Montana 

BLANCHE L. LINCOLN, Arkansas 

DEBBIE A. STABENOW, Michigan 

E. BENJAMIN NELSON, Nebraska 

MARK DAYTON, Minnesota 

KEN SALAZAR, Colorado

MARTHA SCOTT POINDEXTER, Majority Staff Director 

DAVID L. JOHNSON, Majority Chief Counsel 

STEVEN MEEKS, Majority Legislative Director 

ROBERT E. STURM, Chief Clerk 

MARK HALVERSON, Minority Staff Director 

(II) 

(III)

C O N T E N T S 

Page

HEARING(S):

To Review the Status of the World Trade Organization Negotiations on Agriculture ................................................................................................................... 01

Wednesday September 21, 2005

STATEMENTS PRESENTED BY SENATORS 

Chambliss, Hon. Saxby, a U.S. Senator from Georgia, Chairman, Committee 

on Agriculture, Nutrition, and Forestry ............................................................. 01

Harkin, Hon. Tom, a U.S. Senator from Iowa, Ranking Member, Committee 

on Agriculture, Nutrition, and Forestry ............................................................. 13

Salazar, Hon. Ken, a U.S. Senator from Colarodo ................................................ 22

WITNESSES 

Panel I

Johanns, Hon. Mike, Secretary, U.S. Department of Agriculture, Washington, 

DC .......................................................................................................................... 03

Portman, Hon. Robert, U.S. Trade Representative, Washington, DC ................. 06

Panel II

Condon, Leornard W., Director, International Business Relations Altria Corporate Services, Inc., Washington, DC ............................................................... 41

Erickson, Audrae, Co-Chairman, AgTrade, Washington, DC .............................. 37

Helms, Allen, Vice Chairman, National Cotton Council, Clarkedale, Arkansas 39

Viso, Mark, Vice President of Operations, International Program Group World 

Vision, Washington , DC ..................................................................................... 43

APPENDIX 

PREPARED STATEMENTS: 

Harkin, Hon. Tom ............................................................................................ 84

Johanns, Hon. Mike ......................................................................................... 50

Salazar, Hon. Ken ............................................................................................ 88

Condon, Leornard ............................................................................................. 105

Erickson, Audrae .............................................................................................. 90

Helms, Allen ..................................................................................................... 94

Portman, Robert ............................................................................................... 58

Viso, Mark ......................................................................................................... 113

DOCUMENT(S) SUBMITTED FOR THE RECORD: 

Grassley, Hon. Charles .................................................................................... 120

Leahy, Hon. Patrick ......................................................................................... 125

Lincoln, Hon. Blanche ...................................................................................... 130

Roberts, Hon. Pat ............................................................................................. 132

Stabenow, Hon. Debbie .................................................................................... 139

Letter from the Wheat Export Trade Education Committee, the National 

Association of Wheat Growers, and the U.S. Wheat Associates ............... 143

Page

IV

DOCUMENT(S) SUBMITTED FOR THE RECORD—Continued

Statement of the American Farm Bureau Federation (AFBF) ..................... 140

Statement of Constance E. Tipton, President and CEO, International 

Dairy Foods Association ............................................................................... 162

Statement of the National Pork Producers Council ...................................... 146

Statement of the Ranchers-Cattlemen Action Legal Fund - United 

Stockgrowers of America (R-CALF USA) .................................................... 155

QUESTIONS AND ANSWERS SUBMITTED FOR THE RECORD: 

Harkin, Hon. Tom ............................................................................................ 166

Lincoln, Hon. Blanche ...................................................................................... 167

Salazar, Hon. Ken ............................................................................................ 174

Stabenow, Hon. Debbie .................................................................................... 172

(1)

TO REVIEW THE STATUS OF THE WORLD 

TRADE ORGANIZATION NEGOTIATIONS ON 

AGRICULTURE 

WEDNESDAY, SEPTEMBER 21, 2005

U.S. SENATE, 

COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY, 

Washington, DC. 

The committee met, pursuant to notice, at 9:12 a.m., in room SR–

328A, Russell Senate Office Building, Hon. Saxby Chambliss, 

[Chairman of the Committee], presiding. 

Present or submitting a statement: Senators Chambliss, Lugar, 

Roberts, Talent, Thomas, Coleman, Crapo, Grassley, Harkin, Baucus, Lincoln, and Salazar. 

STATEMENT OF HON. SAXBY CHAMBLISS, A U.S. SENATOR 

FROM GEORGIA, CHAIRMAN, COMMITTEE ON AGRICULTURE, 

NUTRITION, AND FORESTRY 

The CHAIRMAN. This hearing will come to order. I welcome you 

to this hearing to review the ongoing agriculture negotiations in 

the World Trade Organization. I appreciate our witnesses and 

members of the public being here to review this very important 

topic as well as those who are listening through our website. 

With less than 85 days until the Hong Kong Ministerial Conference, I am eager to hear from Secretary Johanns and Ambassador Portman on the status of negotiations and what will need to 

happen in the coming days and weeks to reach a successful outcome. 

As the world’s largest exporter of agricultural products, the 

United States has much to gain and lose in the negotiations. In 

some ways, the negotiations will define the future of U.S. agriculture and the balance sheet for millions of farmers and ranchers 

in the United States. 

Most U.S. commodities and agricultural products depend on export markets and agriculture remains one of the few sectors in the 

U.S. economy that has a net trade surplus. In 2004, the value of 

agricultural exports was $61 billion versus almost $54 billion of imports. In addition, exports count for one-fourth of foreign cash receipts and more than one out of every three acres of U.S. agriculture land is cultivated for exports. Thirty-six percent of exports 

are bulk products—grains, oil seeds, cotton, and tobacco. Sixteen 

percent are livestock products, horticulture at 21 percent, and the 

remainder in processed foods. 

2

The importance of the current WTO negotiations is heightened 

by the fact that 95 percent of the world’s population lives outside 

the United States and growth in developing countries will increase 

at a higher rate than in developed countries. 

While it is important to diversify the farm economy through new 

uses domestically, farmers and ranchers will be impacted by future 

demand and competition from customers and competitors abroad. 

Key to future success will be the extent to which countries provide 

new market access by lowering tariffs, eliminate export subsidies, 

and reducing barriers to trade, namely sanitary and phytosanitary 

requirements. 

China has 20 percent of the world’s population, and agricultural exports to that country have grown from $1.7 billion to $6.l billion 

since China entered the WTO. The Department of Agriculture 

projects an agriculture export surplus of $2 billion in 2005. The assumption underlying support for the WTO negotiations is the expectation that farm income will continue to grow as more developed 

and developing countries open their doors to our high-quality food 

and fiber products. In return, the United States will have to commit to reform our domestic programs. 

While the President’s statement at the United Nations last week 

called for the elimination of, quote, ‘‘all tariffs, subsidies, and other 

barriers to the free flow of goods and services as other nations do 

the same,’’ close quote, by 2010, we must be careful to do so while 

also providing a stable and secure safety net for America’s farmers 

and ranchers. 

I believe it is possible to promote trade liberalization and reform 

of our domestic support programs at the same time, but we must 

do so very carefully while being mindful of what future programs 

will replace the ones we are eliminating. The administration must 

make sure farmers and ranchers at the grassroots support its trade 

agenda. 

As recent trade debates have illustrated, producers are more 

skeptical of the promises and predictions of future market access 

than in years past. Problems with Mexico, Russia, China, Canada, 

and Europe, among others, are often used by the opponents of 

trade to make the case for suspending future bilateral and multilateral negotiations. In order to quell this sentiment, farmers and 

ranchers will need to se for themselves the benefits of trade at the 

farm gate level. This is the greatest challenge that confronts us. 

This committee will be traveling to Hong Kong to view firsthand 

the ministerial. It is my hope that the talks leading up to Hong 

Kong accomplishes most of the work and the events at the conference are ceremonial and capped by celebration. We will be 

watching closely the Ambassador’s trip to Paris this week and are 

interested in the feedback from our witnesses regarding the visit 

last week of their European counterparts. 

In closing, while I believe the negotiations are extremely important, my advice and counsel to the administration is that the 

United States should not accept a deal in Hong Kong unless it provides tangible and real rewards for our agricultural sector. No deal 

is better than a bad deal. 

Before we proceed, I would ask that other Senators hold their 

comments until they have the opportunity to ask questions. SenVerDate 0ct 09 2002 13:26 Aug 03, 2006 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 C:\DOCS\28419.TXT TOSHD PsN: LAVERN
3

ator Harkin is obviously not here at this point in time, but when 

he does arrive, he will have the opportunity to make any opening 

statement that he wishes to make. 

And speaking of that, I have a statement from Senator Grassley 

that I would ask unanimous consent be inserted into the record. 

[The prepared statement of Senator Grassley can be found in the 

appendix on page 120.] 

The CHAIRMAN. We have as panel one today the Honorable Mike 

Johanns, Secretary of the United States Department of Agriculture, and the Honorable Robert Portman, United States Trade 

Representative. 

Let me just publicly state one more time how much I appreciate 

both of you gentlemen. Mr. Secretary, I now have had the privilege, 

I guess, of serving under four different Secretaries of Agriculture. 

No Secretary of Agriculture has been more cooperative with members of the House and members of the Senate than have you. You 

have been very open to discussion, even on difficult and sensitive 

issues when we maybe didn’t always see eye to eye. You have never 

hesitated to come to the Hill when we asked you and we appreciate 

that very much. The way you solve problems is to face them headon and you have done that. 

Mr. Ambassador, I would say the same thing for you. Everybody 

on this committee obviously has a very good personal relationship 

with you. You and I go way back to both of our days in the House 

when you were such a strong leader in that body and you have 

brought the same kind of leadership qualities that you exhibited in 

the House to your position as Ambassador for the United States 

with issues relative to trade. You have been very open, very forthcoming, and once again, when it comes to tough issues, you have 

never backed down from coming up to visit with us and working 

out the differences that we have and making sure that the answers 

to the United States, and in particular farmers and ranchers, is 

well lookayed after. 

So to both of you, I appreciate very much your great service to 

our country and to farmers and ranchers all across America. 

I note, too, Mr. Ambassador, one of your staff members who is 

with you today, Allen Johnson. I think it is his last week as a 

member of your staff and organization. Allen, of course, is a holdover from the previous Ambassador and he is an individual who 

has worked very hard for farmers and ranchers in his capacity as 

a member of the trade staff. Allen, we just want to tell you how 

much we appreciate your service to America and we will miss you. 

I have an idea that we will continue to see you from time to time. 

We certainly hope that is the case. But thank you for all you have 

done and for all your hard work and efforts. 

Mr. Secretary, we will turn to you for any opening comments you 

have to make and we lookay forward to hearing that. 

STATEMENT OF HON. MIKE JOHANNS, SECRETARY, U.S. 

DEPARTMENT OF AGRICULTURE, WASHINGTON, DC 

Secretary JOHANNS. Thank you, Mr. Chairman and members of 

the committee. It is a pleasure to be here today. I do appreciate the 

compliment. Likewise, it has been a pleasure working with the 

members of this committee, each and every one. 

4

I am pleased to be here today along with Rob Portman to discuss 

the WTO negotiations. If I might just briefly, though, I would like 

to make mention of a few statistics relative to the farm economy, 

mention very quickly some of the work that we have done on 

Katrina, Hurricane Katrina, and then offer a perspective on the negotiations. 

It is important to recognize that net farm income has been at 

record levels, actually, for the past few years and it is expected to 

be at a near record this year. Our farm sector has been robust. It 

has been enjoying a period of unparalleled prosperity in recent 

years. 

We note that commodity prices have moved lower this year and 

that fuel prices and interest rates have moved higher, and, of 

course, that impacts agriculture. And we have seen adverse weather conditions affecting several areas of the country. 

But cash-flow continues at record or near-record levels. The first 

was set in 2003. A new record at a substantially higher level was 

actually set in 2004 and we are projecting a level close to that this 

year. 

Similarly, our agriculture exports are at record levels. Sales 

worth $62.4 billion last year were at an all-time record, to be followed by an estimated $62 billion this year. That will be the second-highest ever. And in 2006, we are forecasting a new record of 

$63.5 billion. When we succeed at opening major beef markets, I 

expect that these numbers will be even better. 

The composition of our sales has evolved, as well. Consumer food 

and intermediate product sales are growing steadily. These are 

value added. They generate jobs and economic activity for each dollar of product sales. 

In reference to Hurricane Katrina, the destruction and the social 

disruption of this hurricane, it just defies comprehension. I am 

proud to say that the USDA has been playing a major role in doing 

all we can to improve human conditions in the area that was hit 

by the hurricane. 

Prior to the hurricane’s landfall, the USDA through the Food and 

Nutrition Service placed food in warehouses in Louisiana and 

Texas so we could move that food into the affected areas very 

quickly. Since then, we have delivered over 15 million pounds of 

food. Working with our State partners, we have provided food 

stamps to over 400,000 households totaling more than $100 million 

worth of benefits. Our Rural Development Agency has identified 

30,000 housing units across the country in the event that there is 

a need for this housing. The Forest Service has been operating instant management centers and the Farm Service Agency is providing emergency farm assistance. 

Our preliminary estimates which we released this week, and I 

emphasize preliminary, related to the hurricane and crop loss are 

$900 million, and again, I would emphasize that is our first lookay 

at that. With that said, there is a long road ahead for producers 

who face infrastructure and long-term losses not accounted for in 

the assessment. 

On the port area, I do want to indicate to you that we have also 

been working on those issues and done a number of things to try 

5

to get grain moving again because it is such an important thoroughfare for our grain into the export markets. 

I cannot emphasize enough that the future strength of American 

agriculture hinges on our success in the international marketplace. 

Historically, we have been the world’s largest agriculture exporter. 

We derive 27 percent of gross farm receipts from foreign customers. 

Large portions of our production of many crops go into the export 

market. Export markets are vital to the economic prosperity of our 

farmers and ranchers. 

As the chairman indicated, and we all can cite these statistics 

from memory, 95 percent of our customers or potential customers 

live abroad. Only 5 percent of the world’s population is in the 

United States. The major growth opportunity for our farmers and 

ranchers is going to be urban areas in developing countries, such 

as China and India, and gaining access is the key. 

This is a critical time to make progress in the WTO negotiations. 

You well understand the disparities we face. The European Union 

utilizes the vast majority of export subsidies. The average world 

tariff is 60 percent, while the U.S. average is 12 percent. You can 

see why we talk about market access all the time when we talk 

about trade. The EU can use domestic subsidies at a level four 

times what we are permitted, even though our agriculture economies are roughly the same. 

We face the Hong Kong Ministerial literally weeks away. 

We have made it very clear that it is absolutely essential to gain 

real market access for our farm products around the world. Our objective is to achieve a balanced package, one that levels the playing 

field on domestic supports and levels the playing field for market 

access. 

The President has challenged his counterparts to eliminate tariffs and trade distorting subsidies. He strongly believes that the 

American agriculture community can be a global competitor if we 

have a fair chance to compete. 

The Doha Development Agenda negotiations now provide an opportunity to move closer to a fairer trade environment. Last week 

at the United Nations, the President said, and I am quoting, he 

said, world leaders, to achieve a successful Doha Round, quote, 

‘‘will reduce and eliminate tariffs and other barriers on farm and 

industrial goods that will end unfair agricultural subsidies,’’ unquote. 

We want fair trade. If others would join us and make proportional cuts in domestic supports and harmonize and substantially 

reduce tariffs, we are prepared to do as well. 

We are ready to negotiate a strong, balanced package. Let me reiterate our objectives. Export competition—we want to see the end, 

and very soon, of export subsidies. Market access—we must have 

significant reductions in barriers to our products. In domestic support, we have said all along that we are amenable to significant reductions if others do likewise. 

Ambassador Portman will address the specifics of negotiations in 

his remarks. He and I are doing our utmost to move these talks 

forward and we have an excellent working relationship. We did 

meet last week with our counterparts from the European Commission and we are leaving later today to continue those talks. 

6

This is an opportunity we cannot bypass. We need to reach 

agreement on agricultural reform. President Bush reiterated our 

ambition last week with a vision that will provide greater opportunities for our farmers and our ranchers to prosper in the global 

marketplace. We will now work tirelessly in the time until Hong 

Kong to achieve that goal. 

Thank you, Mr. Chairman and members of the committee. 

The Chairman Thank you, Mr. Secretary. 

[The prepared statement of Secretary Johanns can be found in 

the appendix on page 50.] 

The CHAIRMAN. Ambassador Portman? 

STATEMENT OF HON. ROBERT PORTMAN, U.S. TRADE 

REPRESENTATIVE, WASHINGTON, DC 

Ambassador Portman. Thank you, Mr. Chairman. I am pleased 

to be here with Mike Johanns, and Secretary Johanns has just laid 

out much of the presentation on the general situation in agriculture and then touched on the trade issues. I will try to get a little deeper into the trade issues. 

I would like to have my written statement be accepted into the 

record, and then instead have a more informal dialog based on the 

handout that I have provided. 

The CHAIRMAN. Certainly. Without objection, it will be included. 

Ambassador Portman. It is supposed to be a Power Point presentation, but we don’t have a Power Point, so we will just walk 

through it, if that is okay. 

I want to start by thanking you for your earlier comments and 

telling you that in my four and a half months here at USTR, I have 

thoroughly enjoyed working with you, Mr. Chairman and other 

members of this committee. It has been a great working relationship and I appreciate the fact that we are able to have the kind 

of candid and constructive relationship that we have had so far. I 

know that will continue. 

You mentioned the fact that Al Johnson has joined me today. 

When I first was going through the confirmation process, Ambassador Johnson told me after four and a half years at USTR, he was 

ready to move to the private sector. I have been trying to twist his 

arm ever since to get him to change his mind. We have held him 

on this long and he has worked his heart out for America’s farmers 

and ranchers and I want to add to the chairman’s comments about 

him. His public service has been extraordinary. He has also been 

a great friend of this committee. I know that, as the chairman said, 

we are going to continue to hear from Al. I certainly expect to continue to get his advice and counsel, so I thank him for his service 

and for being here today. I am also joined by Jason Hafemeister. 

Some of you know Jason already, but Jason is our WTO negotiator 

who is also behind me. 

This presentation is an opportunity for us to get into some of the 

trade issues, not just Doha, but what this committee is interested 

in in terms of expanding markets. I divide it into three areas: First 

is our bilateral and regional agreements, second is the global trade 

talks, and third is enforcement and compliance. 

With regard to the bilateral agreements, we won’t spend any 

time on CAFTA-DR, just to say there are some very specific beneVerDate 0ct 09 2002 13:26 Aug 03, 2006 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 C:\DOCS\28419.TXT TOSHD PsN: LAVERN
7

fits for agriculture here and I am eager to get that agreement in 

place. We hope to do so at the first of the year for the six countries 

that have already ratified it. We expect one more will before the 

first of the year, and then I think we should go ahead and have 

that put in place because it really does help our agriculture exports. 

We are also lookaying at a number of other free trade agreements. I would love to get more advice and counsel from you all 

as we move forward on these, but each of them has some benefits 

for agriculture. In Panama, the average allowed tariff now is 27 

percent, for instance, and we have the opportunity here to expand 

the same kind of exports that we saw with regard to the other Central American countries—corn, soybeans, and so on. This is an 

agreement where I think we can perhaps work more on a bipartisan basis in the House and Senate to get it done. 

Oman, the same thing, average allowed tariff of 35 percent there, 

Mr. Chairman, so we have an opportunity here to expand our exports. We are hoping that we can move those two agreements, 

Oman and Panama, fairly soon, and I will talk about Bahrain in 

a second. 

There are others that we are lookaying for in 2006, Thailand, the 

Andean countries, United Arab Emirates. We can talk more about 

those if you have some interest, but again, in every one of these 

countries, we have relatively high tariffs now. As an example, in 

the Andean countries, the Colombian allowed tariff is 93 percent, 

Peru, 31, and Ecuador, 25 percent. 

Bahrain will be the next agreement that we hope to bring up to 

the Hill and this agreement was actually signed about a year ago. 

It is important for foreign policy, as I say. The 9/11 Report actually 

talks about this idea of the Middle East Free Trade Agreement. 

This would be another one of hopefully several agreements we can 

do in that part of the world to help with our foreign policy goals 

as well as our commercial interests. Eighty-one percent of agriculture exports to Bahrain would be immediately duty-free, for example, and would help, again, to increase some of those export opportunities that Secretary Johanns talked about. 

We also have some interesting potential new partners. For some 

of these, you may be seeing these countries for the first time. They 

have all come to us, expressed interest in joining with us in a Free 

Trade Agreement. I think when a country does that, particularly 

of the size of some of these economies, like South Korea, we should 

lookay at it very seriously. 

We have had serious talks with them. We have not launched a 

Free Trade Agreement yet. We have not launched those talks yet 

because, frankly, we are going through the process of letting them 

know what we require in our Free Trade Agreements, which is extensive. As you know, we have the most comprehensive Free Trade 

Agreement requirements in the world. We particularly focus on 

market access and we need to be sure that these partners know 

what they are getting into if they want to negotiate with us. 

But South Korea, as an example, is our fifth-largest agriculture 

market. This would be the largest Free Trade Agreement we would 

have done in over a decade, so this could be a substantial benefit 

8

to U.S. agriculture. We had a $2.3 billion agriculture surplus with 

Korea last year. 

Egypt, again, interesting from a lot of different perspectives, including foreign policy, but also on the commercial side. As you can 

see, it is a big agriculture market for us already, could be much 

bigger. We had a $900 million agriculture surplus in 2004 with 

Egypt. 

Malaysia and Switzerland are also interesting opportunities for 

us. In both those cases, we have a deficit right now in agriculture, 

but I think you have the opportunity to do much more in terms of 

exports. In Malaysia, the deficit is now around $200 million. Switzerland, as you know, is one of the more closed markets to agriculture right now. Getting into a Free Trade Agreement with us is 

not something I thought they would be interested in for that reason, but they are, so we are talking. There, we have a deficit of 

around $77 million. 

On the global side, the global trade talks have already been addressed briefly by the chairman and then by the Secretary There 

is a great opportunity here, obviously, for agriculture, for us to do 

what we can only do in a global trade talk, which is have an impact in every country in the world in terms of our market access. 

The timing here has been the end of 2006, but this has been 

going on for 4 years and, frankly, for the last year and a half, the 

talks haven’t made much progress. So we are stalled, in a sense, 

and we are really stalled going into this Hong Kong Ministerial 

which is coming up at the end of this year and we need to figure 

out a way to break the deadlock and move the talks forward because it is going to be great for farmers and ranchers if we can get 

a good deal. 

The three main pillars of this Doha Round are manufactured 

goods, services, and agriculture. I won’t go into any detail, but just 

briefly, on the next chart, you can see why the manufactured goods 

area is important to us. On the left, you see America’s tariffs for 

manufactured goods in red, all goods in blue. Anything that reduces barriers to trade in manufactured products is going to be 

good for us. We are still the world’s largest exporter of manufactured products, and frankly, we are relatively open here, so this 

could be very beneficial to our workers and to our economy. 

On services, same story. We have a comparative advantage in 

services. We actually have a surplus of about $48 billion in services 

in 2004. Our services are expanding dramatically, but we do have 

still a lot of very high barriers to our global trade in services, and 

in the interest of the United States, but also in the interest of the 

world economy, it would be very beneficial for us to make progress 

in the services front. 

So these are two important areas that, frankly, are being held 

back at this point because of the focus on agriculture. This round, 

as you recall, was to be the development round and agriculture was 

to be a centerpiece and it really is, in a sense, the engine that 

drives the round. 

With regard to agriculture, I won’t go over all these figures because the chairman has done a good job of that, as has Secretary 

Johanns, but I like what the chairman pointed out early on in his 

statement, saying we are the world’s largest exporter. We have a 

9

lot to gain from knocking down barriers to our trade, as we will see 

in a second on our charts. Currently, one out of every three acres 

planted in Ohio, where I am from, and around the country are 

planted for export. So our agriculture economy, as the Secretary 

has outlined well, is dependent at this point on us providing that 

additional market access. 

Where are we on negotiations? We are building on the July 2004 

framework. About a year ago, we set out a framework. Again, we 

haven’t made a whole lot of progress on it since, but it has three 

basic elements. One is to expand market access. For us, that is particularly important in some of these larger developed countries, like 

the EU and Japan, but also the emerging developing countries, and 

I would identify Brazil, some of the ASEAN countries where there 

are huge opportunities and, frankly, very large tariffs in place right 

now. 

Second was to eliminate all export subsidies. We can talk about 

that in a second, but this was an agreement that was made a year 

ago and the question is, can we get a date certain and move forward on that? 

And third is to substantially reduce trade distorting agriculture 

subsidies around the world. As the Secretary has said, that would 

be only done in concert with these other important elements, including market access. 

I throw in this next slide because you hear a lot of talk, and 

some of you have been very involved in this over the years, others 

have not been as involved, about what does the WTO framework 

lookay like for agriculture. The WTO puts all subsidy programs 

into one of three boxes, the amber box, the blue box, and the green 

box, and you hear these words kicked around. 

What they mean, basically, the amber box is the highly trade distorting subsidy programs, something that would encourage production or depress prices. Our commodity loan program, market loan 

program, would be an example of that. 

Second is the blue box, and this is something that would be less 

trade distorting. Right now, there are no limits on that. The setaside programs would be an example there. We think our countercyclical programs could fit well into the blue box, although at this 

point, it is defined in a way that may make that difficult, so we 

are working on that. 

And then third is the green box, and the green box is unlimited 

at this point and these would be minimal or non-trade distorting 

payments, for instance, our food stamp program or research or direct payments, environmental programs. 

The idea is, of course, with the amber box programs, you are 

more concerned about their distorting impact on trade, so you have 

reductions there that would be more than in the blue box, and then 

in the green box, there would not be limits. So that is just generally how the WTO takes agriculture programs all around the 

world and puts them into categories. 

With regard to agriculture, you have seen these charts before, 

and before Senator Conrad has a chance to do it, I thought I would 

put them up here. But this gets into—since he is not here, I can 

say that, I guess. 

[Laughter.] 

10

Ambassador Portman. This gets into what we all know, and the 

reason these talks could be so good for us. I mean, first, on market 

access, lookay at that top bar. The U.S. average allowed agriculture 

tariff is 12 percent, and we just about use that. The EU is 31 percent. So it is not just the SPS issues, which I would like to talk 

to you about, but it is also tariffs. They have higher tariffs than 

we do and they use them. Now, some of these countries, like India 

don’t use the full 114 percent, but it is allowed. Their tariffs may 

be more in the area of 30, 40 percent, but we will always benefit 

when we are talking about reducing tariffs because ours are relatively low. 

Second are these export subsidies I talked about, and again, the 

2004 framework said these export subsidies are to be eliminated, 

not just reduced, but eliminated, and there, you see the EU has 

about 90 percent of them, 87 percent. So that is in our interest. We 

need to get a time certain for that. 

And the third area is domestic support. Here, I have put into red 

what is allowed and yellow what is actually used, and as you can 

see, the EU is allowed to use about four, four-and-a-half times 

what we are allowed to use under the current WTO rules, and they 

use about three times what we do. Japan, with much smaller production, also has a larger allowance than we do. So it is in our interest, again, to deal with this issue in the way of reducing those 

who have higher subsidies more through harmonization. 

The next chart is important because it is kind of the reality of 

where we are in terms of the reduction of these trade distorting 

supports, and the reason the Europeans and others say, gee, it is 

time for the U.S. to take a step forward. The fact is that since the 

Uruguay Round, they have made progress and we have to acknowledge that. Under the CAP reforms, as you can see by the black 

bars there, European trade distorting support has gone down since 

1995. What they are allowed is that top black line that runs across 

the chart, so they are well below what they are allowed. The next 

line down is the Japanese limit, and Japan is in red. You can see 

what the Japanese have done since 1995. They have reduced their 

trade distorting supports. The yellow is us, and the final line is us, 

so we are pushing up close to our limit, and since 1995, we have 

seen an increase in our support. 

So this is where, again, Mr. Chairman, you talk about the fact 

that we make sure this negotiation is fair and that nothing we 

agree to is anything other than a good deal for our farmers and 

ranchers. ‘‘Needs to have tangible results for America’s farmers 

and ranchers’’, was your exact statement. I couldn’t agree with you 

more and we need to be darn sure that we get the market access, 

the export competition, and other things for our farmers and ranchers, and that with regard to subsidies, those who subsidize more 

reduce more. But this is just the situation that we face currently 

in Doha. 

The next page, I mention briefly where we are in terms of the 

negotiations themselves. We are stalled, as I said, on these agriculture subsidies and tariff issues. We are actively consulting with 

the Hill and key farm groups here, as we are doing today. We are 

coalition building with other countries, frankly, to put pressure on 

those key developing markets. We have got to have more access 

11

and we are getting a lot of support, actually, in the other 147 members of the WTO. But, as I said, other countries are lookaying for 

moves on our part in terms of the trade distorting subsidies per 

that 2004 framework that I talked about. 

So what is the dynamic now? We are building on the framework. 

There is no final deal that is going to be reached at Hong Kong in 

December, although I do think we can and should make progress 

leading up to that ministerial to be able to reach some agreement 

for Doha that avoids some of the problems some of us saw when 

we were in Seattle, or we saw in Cancun. We need to be sure that 

the meeting is successful in Hong Kong. 

I know a number of you are planning to come to Hong Kong. I 

want to be sure that you are getting the briefings you need moving 

up to that date and also in Hong Kong, that you are part of the 

process. I think one thing that has not been done adequately in the 

past is to use members of Congress more effectively on behalf of 

U.S. interests. I plan to do that,—so be expected to be put to work. 

I am going to need you. 

We are making progress in all areas of Doha, I believe it is fair 

to say, not just in services and manufactured products, as I talked 

about earlier, but also in agriculture. We had good meetings as the 

chairman alluded to last week with the EU in the sense that they 

were very candid. We were starting to put our cards on the table 

for the first time, as I say, in quite a while and getting closer to 

figuring out how to make Hong Kong a success. 

The critical path issues are pretty straightforward. In market access, we need to know what the shape of the tariff formula might 

be to begin to reduce these tariffs, as I talked about earlier, what 

is the depth of the cut, how are we going to deal with sensitive 

products, special products and safeguards. With export subsidies, 

again, we need a time certain. And on domestic support, we need 

to work within this context of the blue box, what is the depth of 

the cut in the AMS, or the amber box, and what is the overall subsidy cut. 

Here is a little time frame in terms of where we are. Again, the 

framework was a year or so ago. We have got Hong Kong coming 

up. And then by the end of 2006, we would hope to complete this. 

Why? Because in mid–2007, the Trade Promotion Authority expires, and we also have a little something called a farm bill apparently that comes up for renewal in 2007. 

So we have got some dates we are pushing up against, and particularly the TPA extension. Last time, it tookay us nine years to 

renew TPA. I will say I was pleased a couple months ago when we 

renewed it for another 2 years, until July, but we all know in July 

2007, that is going to be tough. So my goal is to be sure that by 

the beginning of 2007, we can send up a package to the Hill that 

really makes sense, that is a good deal for America’s farmers and 

ranchers, and we can get that moving within the context of TPA. 

The final part I want to just touch on, and my time is about expired here, but I just want to touch on the issue of enforcement and 

compliance because I think this is one area where we don’t spend 

enough time and effort. Is my time already up? 

The CHAIRMAN. YOU ARE DOING JUST FINE, MR. AMBASSADOR. 

Ambassador Portman. I will try not to filibuster, though. 

12

The CHAIRMAN. If you were still a House member, you would 

have been called a long time ago. 

Ambassador Portman. Yes, all right. 

[Laughter.] 

The CHAIRMAN. Now that you have ascended——

Ambassador Portman. Let me just leave this, then, for the questions, but just to say that we have made progress on the enforcement side. Even this summer, there are a number of cases. Some 

of you have been very involved in these—the high-fructose corn 

syrup case, the Japan apples case, even on beef hormones. We have 

made some progress. 

My goal in this job is to focus more on enforcement and compliance and follow-up, even on these FTAs. When we make a commitment, we have got to be sure that we have the kinds of enforcement and follow-up that is expected by our farmers and ranchers 

to be sure they do get a good deal. 

So thank you, Mr. Chairman. I appreciate the opportunity to 

present where we are in terms of these trade negotiations and 

lookay forward to your questions. 

The CHAIRMAN. Thank you, Mr. 

Ambassador. 

[The prepared statement of Ambassador Portman can be found 

in the appendix on page 58.] 

The CHAIRMAN. That is an excellent primer for those of us going 

to Hong Kong. A very good presentation by both of you. 

Mr. Ambassador, before we get into questions relative to this, 

today is the day in which we are supposed to correct the serious 

prejudice charge in the WTO patent case. Since there will be questions asked about that, maybe statements in the press, I want to 

give you an opportunity to make any comments you wanted to 

make initially in reference to that case. 

Ambassador Portman. Well, thank you, Mr. Chairman. It is timely that we are meeting today because tomorrow is the date that we 

set for implementation of the recommendations of that WTO case. 

As you know, and you have worked with us, we have taken significant steps to implement the decision, both with respect to the 

findings regarding the prohibited subsidies, but also regarding the 

subsidies found to be causing serious prejudice. On July 5, we proposed legislation that would repeal the Step 2 program. This would 

be an important development with respect to both sets of those 

findings. We think the repeal of Step 2 significantly reduces any 

price effects these programs might have. Separately, reductions in 

payments under other domestic support programs, including those 

that were discussed in the case, are being considered as part of the 

deficit reduction efforts by the administration. 

Although the legislative process has been delayed, in part because of the crisis with Hurricane Katrina, we are continuing to 

work actively with Congress on this issue. We have been able to 

work well with Brazil so far to manage this dispute settlement 

process and we plan to continue that dialog with Brazil in our upcoming meetings. I am meeting with the trade minister of Brazil 

tomorrow in Europe, in fact, on this very issue, as well as WTO 

issues. 

13

But we are committed to abiding by our WTO obligations by implementing the cotton decision. We stress that we believe negotiation, not litigation, is the way to go. We think that is the key to 

a meaningful reform and we believe it is in the mutual interests 

of the United States and Brazil to focus our reform efforts on the 

Doha negotiating process. 

So, Mr. Chairman, I thank you for giving me the opportunity to 

address this issue and I hope the constructive relationship we have 

had with Brazil so far can help us both in future discussions and 

negotiations. We need to continue the dialog. 

The CHAIRMAN. Thank you very much. 

We are now joined by Senator Harkin. We welcome any comment, Senator you wish to make at this time. 

STATEMENT OF HON. TOM HARKIN, A U.S. SENATOR FROM 

IOWA, RANKING MEMBER, COMMITTEE ON AGRICULTURE, 

NUTRITION , AND FORESTRY 

Senator HARKIN. Well, thank you very much, Mr. Chairman. 

First, I apologize to you and members of the committee for being 

a little late, and also to you, Mr. 

Secretary I am sorry I missed your statement, but I just wanted 

to compliment Ambassador Portman on an excellent statement and 

to thank him for his great leadership in this area, and to also 

thank you for always being open and willing to meet with us and 

discuss with us these issues of trade. So again, that was a great 

primer, as you said, Mr. Chairman, on just where we kind of find 

ourselves right now. 

Just a couple things I just want to say before we get into questions, and that is that, first, I am on record as supporting our objectives in the Doha Round. I think it would be better for everyone 

concerned if we could agree multilaterally to open markets more 

broadly and eliminate export subsidies and reduce the use of trade 

distorting support for farmers. So I am committed to that and 

hopefully we can move this ahead. I am a little disappointed that 

in the last year, not much has happened and we have reached 

some stalemates in that regard. 

There are a couple of issues that I will go over with you in questions. I met with Fischer Boel, the new EU Commissioner. I think 

some of the rest of you probably met with her last week when she 

was here regarding the issue of our Food for Peace Program, and 

to the extent that the European Union is going to push to convert 

that from food to cash is going to be a sore point, I think, for many 

of us on this committee and for a lot of us perhaps even not on the 

committee. I think in both the Senate and the House and I think 

bipartisanly, this has been a wonderful program for 51 or more 

years. It has done a lot of good in feeding the world’s poor. 

In my discussions with Fischer Boel, they want us to convert it 

all to cash and I said, we have got reams and stacks of reports and 

investigations about how some of the money that goes to countries 

for food always gets siphoned off for something else. Most of these 

underdeveloped countries have dictatorships or whatever. The 

money very rarely gets down to help people. But when it goes to 

NGO’s and other organizations like that and it is food, nine times 

out of ten, the food actually gets to people and helps them. So I 

14

let her know that that was going to be a big sticking point if they 

were going to fight for that, and I am going to be asking you, Mr. 

Portman, about your views on that. 

Last, while we all support—well, I don’t know if we all, but at 

least I know I can speak for myself—support the Doha Round and 

the goals of it and where we want to get, it is clear that in doing 

so, we are going to have to pretty drastically change our support 

system under the amber box, maybe somewhat under the blue box, 

too. That is why I fought so hard in the last farm bill for what is 

known as the Conservation SecurityProgram, to begin to shift payments to farmers that would come under the green box that would 

be non-trade distorting, that would be acceptable by the WTO. In 

traveling around Europe, I had seen how they had done that and 

I thought, well, maybe that is how we have got to be lookaying at 

it, too. 

It is much to my dismay that in the last couple of years, that in 

our appropriations bills that have passed the House and the Senate, this program has been severely curtailed and distorted in a 

way that was not intended under the farm bill. Now, when we 

passed the farm bill here, you know, there are a lot of different 

streams that come together and a lot of agreements are made and 

maybe some of the things that were in the farm bill that some people didn’t like, and some were there that some people liked, but we 

hammer it out, and that is what we hammered out in this farm 

bill. 

We made agreements on a variety of different things, and one of 

those was to have a conservation program like the Conservation 

Security Program that did not take land out of production, that 

paid framers not so much on how much they grew but on how they 

grew it. That would be green box and that would be treated—conservation would be treated like a commodity, that once you were 

in the program, once you met the requirements, you got compensation or you got paid. 

Now again, I am not saying about the Department, but I am just 

saying that it is to my great dismay that in the last couple of years, 

this Congress has distorted the program and put caps on it and severely curtailed it, and to my fellow members of the committee, I 

just say, you know, we are going into the next farm bill and that 

is cutting our baseline down. So whatever we might want to do in 

the green box in the next farm bill is going to be severely curtailed 

unless we lift the caps that were put on that program. 

Now, I say that because I believe that in thisWTO, if we are successful in the Doha Round, which I hope we are, Mr. Secretary and 

Mr. Ambassador, we are going to have to make some pretty severe 

changes, and that is going to have to be in the next farm bill. If 

it is in the next farm bill, we are going to need the baseline in 

order to do that. That baseline was set in the last farm bill with 

the Conservation Security Program and it is being curtailed. We 

may find ourselves in a very bad situation, Mr. Chairman, coming 

up if, in fact, we succeed in the Doha Round and we have the farm 

bill coming up in 2007, and how we are going to support our farmers and ranchers in the future without it being put in the amber 

or blue box. 

15

Having said that, I thank you, Mr. Chairman, for giving me this 

time. Again, I want to thank the Secretary and especially Ambassador Portman for his great leadership in this area. 

Senator BAUCUS. Mr. Chairman, I am low man on the totem pole 

here, so I won’t take time, but I would like to submit a statement 

for the record, please. 

The CHAIRMAN. Without objection. 

Senator BAUCUS. I would just say to the Ambassador, I appreciate what you are doing, but my main point is just consult with 

us earlier and more aggressively on all this than your predecessors 

have so that you avoid Doha problems, get TPA extended, and for 

all the reasons we have discussed. You have got to go the extra 

mile in working with us. I know you will, I know you want to, but 

I am urging you to go even farther. 

The CHAIRMAN. SenatorBaucus, I would say that that same sentiment has been expressed by a number of us to theAmbassador 

and he understands that fully and that is one of the reasons he has 

been back and forth to the Hill as often as he has since he came 

to his new position. 

Senator BAUCUS. Allen, I wish you the very best. Thanks. 

The CHAIRMAN. Mr. Secretary, there is something else I just need 

to say. It is not a question because it doesn’t have reference to this, 

but we have another very critical issue that I know your office is 

considering and it is going to have a direct effect on everybody on 

this committee, and with you leaving town today, we won’t have an 

opportunity to discuss it with you in the short term, but there has 

already been some publicity out there about the FSA Tomorrow 

Program and Under Secretary Penn was gracious enough to come 

over and have a discussion with me and I know some other folks 

in the last several days and we lookay forward to working with you 

on this. 

But I will have to tell you that I have not had a chance to discuss 

this with the members of this committee and my intention is that 

once we get all of the information, particularly relative to the criteria that is going to be determinative of which FSA offices stay 

open and which close, that we will dialog with your office to make 

sure that we both have a thorough understanding about the direction in which you wish to proceed. I hope we can do that in the 

short term. I think the goal is a very admirable goal, to provide 

better service to our farmers and ranchers all across America 

through the FSA, which is so critically important. 

But I want to make sure that your office understands that we 

have not—Tom and I have not even had a chance to talk about 

this, much less with members of the committee, but we will be 

doing so in the short term. 

Gentlemen, last week, President Bush stated at the United Nations that the United States is ready to eliminate all tariffs, subsidies, and other barriers to the free flow of goods and services as 

other nations do the same. While this has been a longstanding 

United States policy and repeated by previous administrations, in 

2002, theUnited States Trade Representative presented a proposal 

to our negotiating partners that would reduce trade distorting support of 5 percent of a country’s total value of agriculture production 

16

over a 5–year period. That is commonly referred to as the 5 percent 

rule. 

Subsequent discussions among the various actors in the agriculture negotiating groups have discussed reducing trade distorting 

domestic support by levels up to 50 percent. The President’s statements admittedly are ambitious, and while I hope we can achieve 

the success in the outcome of those negotiations, I am concerned 

that statements do not reflect what is necessarily possible, both domestically as well as in the current round. 

Mr. Ambassador, do you believe the current state of negotiations 

can produce equally ambitious proposals on market access from 

theEuropean Union and the G–20 group of developing countries? 

Ambassador Portman. Mr. Chairman I do, and I agree with you, 

the President’s statements set out a vision that is bold and, I think, 

one that is very constructive toward us making progress. However, 

the negotiations inGeneva are focused on simply reduction of these 

trade distorting supports in exchange for real market access gains. 

You talked about tangible gains, and I believe there is an opportunity to do that if we work together. We have to make it clear that 

we are not going to move unilaterally on anything. We will work 

with the European Union and the other 147 members of the WTO 

on coming up with something that is consistent with the 2004 

framework, consistent with what has been expressed by this committee, which is real market access gains for our farmers and 

ranchers, which is an elimination altogether of the export competition we talked about earlier and which gets at reforming trade distorting subsidies. But we need to move together, in parallel. 

My frustration, I have only been on the job four and a half 

months, but is we are just now getting around to talking about 

these issues in real ways. We had a good meeting last week, as I 

said. We are continuing to talk to trading partners, not just in Europe, but around the world, and to answer your question, I am 

hopeful that we can still come together, not with a final product 

in Hong Kong—that will not happen and we ought not to have 

those expectations—but with the kind of formulas and the kind of 

modalities, as they way in the WTO, that enable us to make 

progress in 2006. 

The CHAIRMAN. Mr. Secretary, the President’s statements were 

made while the Department is hosting a series of listening sessions 

on the current farm bill, and for that, I particularly commend you 

for traveling to all parts of the country to listen to farmers and 

ranchers. Feedback from those events conveys that, generally, producers are favorable and happy with the 2002 legislation. In fact, 

Congress Daily reported yesterday that farmers in nearly every region of the country want the 2002 law extended and are disappointed with recent trade agreements. 

Do you believe the administration has sufficient grassroots support to radically transform current farm safety nets? 

Secretary JOHANNS. Let me offer a thought first on theCongress 

Daily article. I could not disagree more, to just be very blunt and 

direct about it. In fact, we pulled out from our farm bill listening 

session quote after quote after quote from producers, from farmers, 

and I have now done, I think, 15 of these—14 or 15—in the Department, that that 14 or 15 is now over 20—where farmers are exVerDate 0ct 09 2002 13:26 Aug 03, 2006 Jkt 000000 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 C:\DOCS\28419.TXT TOSHD PsN: LAVERN
17

pressing concern about the 2002 farm bill. Every place we go, we 

hear about the capitalization of farm payments and higher land 

costs, higher cash rent costs, the inability of young people to get 

into farming, and I could go on and on. Like I said, we pulled those 

criticisms and comments and we have provided them to 

CongressDaily and hopefully, they will offer the thoughts of many 

farmers across the country in terms of their concern about the farm 

bill. 

But in reference to your question, the other part of your question, I really appreciate the comments of Senator Harkin in how we 

approach farm policy as we think about 2007, and that is the whole 

idea of the listening sessions. We want to get around and hear 

what is on the mind of the producers. 

If there were two points I would make today in reference to the 

President’s comments, it would be this. The 2007 farm bill can find 

approaches, I think very positive, forward-leaning approaches to 

supporting agriculture. Our bill is to build good farm policy. That 

is where we are starting. Our goal is to identify the best farm policy for the United States, not only for today but for the future, and 

that is where we are headed with this. Now, we also recognize that 

27 percent of the gross receipts do come from the export market. 

We need to be mindful about that. 

The other thing I would mention in reference to the President’s 

comments is that I worry that the status quo is very high risk for 

American farmers. Why do I say that? You know what we are dealing with with the cotton case. It is there, and we have got the WTO 

ruling. As you know, we are trying to work with Congress to get 

through that. 

You have been reading the articles, as I have, that some other 

countries are now lookaying at the rice program. Up in Canada, 

they just opened up a study or investigation, whatever you call it, 

relative to the corn program. These things are there and they are 

real, and again, 27 percent of our marketplace is in that foreign 

market. 

But our goal is going to be to work with the House and the Senate through the farm bill listening sessions, through the input that 

we get from farmers and ranchers and agriculture groups to try to 

develop farm policy that recognizes we can be supportive of America’s farmers and ranchers. We need to be forward-thinking about 

that and forward-leaning, but I believe we can do it. 

Here are some of the ideas that have been mentioned. Working 

lands conservation—I have heard about it in just about every farm 

bill. We have had people say, Senator, exactly what you said. It 

would be nice if we could figure out a way to build that into the 

next farm bill. 

Crop insurance—disaster brings out discussion about crop insurance, but we have heard an idea that has been here before about 

maybe a more revenue-based approach to this. 

Direct payments—we know that you can make direct payments 

without running afoul of any trade rules or WTO rules. 

Risk management tools—you know, we had a young guy in Kansas get up and his testimony was fairly straightforward. He said, 

‘‘I worry I will probably make every farmer in the room mad at me, 

18

but,’’ he said, ‘‘there is a way to work with risk management tools 

that are available.’’

Here is my thought just to sum up my response. This farm bill 

dates back—this farm bill—this approach to farm policy, by and 

large, dates back 70 years to the time of the Depression and the 

need to try to figure out how to save agriculture in the United 

States, and some of the same tools that we used 70 years ago, we 

are trying to fit into today’s world and it is a different world today. 

But again, if there are two points I would make, we can support 

American agriculture, but we need to be creative in how we approach that and we can do that. 

And the second point I would make is that the status quo, just 

saying, lookay, I am happy with everything, has real risk to it and 

we may not like that result, either. So I think we have to put everything in the mix, work together to try to figure out how this develops good farm policy for 2007. 

The CHAIRMAN. Thank you. 

Senator Harkin? 

Senator HARKIN. Thank you, Mr. Chairman. 

Ambassador Portman, again, let me just focus on the question, 

the issue that I raised in kind of my opening statement that I had 

raised with Fischer Boel last week. The European Union is after 

us to cut back on our Food for Peace Program, convert the food to 

cash. They did that themselves a few years ago, but if you track 

what they did, they converted it to cash, then they cut it down. I 

am really concerned that the EU is pushing this. I told her so. 

I guess my question to you is, is there any way we can get a lot 

of the other countries in the developing world where they have 

really benefited from our Food for Peace Program to support us in 

this effort, and where do you see this headed? 

Ambassador Portman. Well, first of all, I couldn’t agree more 

with what you were saying earlier about the importance of the program and why we need to fight for it. I will also tell you it is not 

just the EU, as you know. There are others who are also after our 

food aid program. 

Senator HARKIN. Who is that, beside the EU? 

Ambassador Portman. Well, Switzerland, Brazil, Australia, pretty much anybody who is in the export business and some of those 

who, as you say, have converted to cash only. 

But what I have found is in talking to some of the African nations, some of their leadership, in talking to some other trade ministers from countries that understand the importance of food aid, 

that we can counter this with a coalition of our own and we are 

working hard at that. We are also working with the NGO’s. As you 

know, the NGO’s are——

Senator HARKIN. I am sorry, Rob. Did you say we can or we 

can’t? 

Ambassador Portman. We can. 

Senator HARKIN. We can? 

Ambassador Portman. I believe we can, Senator. I just—getting 

back to your comments about the fact that this money sometimes 

gets siphoned off, I think there is plenty of evidence of that and 

there is still a significant concern on our part of corruption and the 

need to get this food to people who need it quickly. 

19

You know, one of my points that I made with the Europeans last 

week is that there is not enough food aid out there right now and 

the last thing we want to do is to cut back on emergency food aid 

as it is needed. There has been, as you know, by the Europeans 

and others, a reasonable concern, in my view, raised, and that is 

that we not displace commercial sales. In my view, we do not and 

we do not intend to do that. In fact, our same exporters who are 

providing food aid would object to us displacing their commercial 

sales. 

So I think we can address that concern, Senator, in a way—since 

we share that concern—in a way that continues to give people the 

comfort to know that our food aid is not wasted shipments that 

aren’t needed, they are desperately needed, and that we are not 

asking our exporters to compete with food aid programs. We need 

to oppose the European position strongly. We need to be sure that 

the most vulnerable people who are short of food aid right now, 

when global food aid shipments are not even meeting current requests, are getting what they need. 

So I agree with you, it is important for us to build a coalition of 

other countries, also to work with NGO’s, some of whom, as you 

know, are very supportive of our food aid program. Others have 

some questions and I think we can address some of those questions 

in terms of, as I said earlier, the commercial displacement issue. 

Senator HARKIN. Thank you very much. 

Ambassador Portman. I lookay forward to working with you on 

it. 

Senator HARKIN. Thank you, Ambassador. I appreciate that 

and——

Ambassador Portman. Thank you for raising it with her. 

Senator HARKIN. 

Whatever we can do to be helpful, let us know, and I am 

sure——

Ambassador Portman. You were helpful. I spokaye to her after 

your meeting and I appreciate your raising it. 

Senator HARKIN. Thank you. Mr. Secretary, just my final question, and I thank you for your observations and all the hearing 

posts, listening things that you did around. I thought they were 

very good, that you did that to get that input, and I lookay forward 

to working with you on some of those things in terms of the nontrade distorting aspects of support. 

This question I have has to do with the WTO and with our moving ahead on the Doha Round. The essence of the U.S. agricultural 

proposal is that the U.S. is willing to reduce its use of trade distorting domestic support in exchange for significant reforms by 

other countries in their use of export subsidies and tariffs so as to 

provide our farmers with greater export opportunities in foreign 

markets. 

Now, I am not going to get into the whole thing between applied 

and bound tariffs, but the issue is in having a good analysis done 

as to what the net benefits to us, our farmers and our exports 

would be, depending upon what they are doing with their bound 

and their applied tariffs. And so the question is this. Will USDA 

be able to provide U.S. negotiators, and hopefully us, also, with 

rapid quantitative analysis of the implications of proposed deals so 

20

that they and we will know before the agreements are made if the 

deals are likely to generate a net benefit for U.S. agriculture? It is 

my understanding that such a capacity was in place during the 

Uruguay Round and I think it is important that our negotiators 

and those of us here in the Congress have such analysis at our disposal in the Doha Round. 

In other words, getting a quick quantitative analysis right 

away—when they come up with a proposal, that your people are in 

place, maybe under your shop, too, I don’t know, Rob, but that we 

get a quick quantitative analysis done right away so that when we 

go to Hong Kong, we will have that analysis at our fingertips. 

Secretary JOHANNS. We will. We will work with you to make sure 

that you are comfortable with the information that we are 

lookaying at, and I suspect, Senator, that you will probably have 

some of our agriculture groups out there that will be pretty geared 

up to offer their thoughts, too, and their analysis. But from USDA’s 

standpoint, we will, and we will endeavor to work with you folks 

to make sure that you get what you need and also that the Ambassador has at his disposal what he needs to make the negotiation 

successful. 

In this area, I will tell you, just to summarize, the working relationship between the USDA and USTR is completely seamless. Our 

staff works with USTR as if there is no boundaries between our 

Departments. 

Senator HARKIN. Thank you, Mr. Chairman. 

Ambassador Portman. Senator, may I just add to that quickly, 

the partnership we have, I think, is unprecedented. Certainly, I appreciate the fact thatSecretary Johanns has an interest in this area 

and I am fully utilizing him and his incredible resources. As you 

say, they can come up with data very quickly. They have a much 

larger staff than we do. 

In the negotiations, we have a USDA official that Secretary 

Johanns has kindly lent us at the table, literally there, hearing everything and providing the data. I have even dragged Secretary 

Johanns to some trade meetings that he might otherwise not have 

chosen to be at, including this week in Europe. He is going over, 

canceling some other important meetings, because it is critical that 

we work seamlessly. We have, and this partnership has been terrific. 

I appreciate the committee supporting USDA to be able to do 

that, because frankly, we need that support. These are going to be 

delicate, tough negotiations. We are going to have to work 

seamlessly not just with USDA, but with you all to be sure that 

we are giving you the full brief, you know exactly what we are 

doing, and at the end of the day, as SenatorBaucus said, we have 

an agreement that people can support. 

Senator HARKIN. Thank you very much. Thank you, Mr. Chairman. 

The CHAIRMAN. As I turn to Senator Crapo, Mr. Ambassador, let 

me say, as you know, Senator Crapo has been a leader on this 

issue relative to the Canadian softwood lumber issue and he is 

leading a delegation of us to an interparliamentary group meeting 

next weekend. I want to thank you for your strong support of the 

lumber industry in our country and these negotiations, which have 

21

been very difficult. Senator Crapo has done a good job, but you 

have also done a very good job. Senator Crapo? 

Senator CRAPO. Thank you very much, Mr. Chairman. I appreciate you bringing up the softwood lumber. Although I won’t raise 

that as one of my questions, the Ambassador and I have talked 

about that. I, too, want to express my appreciation for the support 

that we have in this effort. 

Ambassador, given the significant challenges that face American 

agriculture and manufacturing today, I think it is critical that we 

have the maximum effectiveness for our trade remedy laws, and I 

think you probably didn’t get a chance to go into that as much as 

you might have liked in your presentation. It seems to me that the 

United States should not sign an agreement that would lessen in 

any way the ability of the United States to enforce its trade laws 

and to decrease the effectiveness of the domestic international disciplines on unfair trade or safeguard provisions. In fact, one of the 

concerns that we are seeing in a number of arenas is that many 

of us perceive that we don’t now have the ability to effectively pursue trade remedies. Could you give me your thoughts on this? 

Ambassador Portman. Yes, and I appreciate your raising it. As 

you indicate, at the end of the presentation, I was hoping to talk 

a little more about enforcement, including our trade remedies. The 

countervailing and antidumping laws, as you know, are administered by theDepartment of Commerce, not by USTR, but I think 

they are an incredibly important part of our arsenal and we use 

them and we use them appropriately. 

We are a relatively free and open country to trade. Our trade 

deficit numbers indicate that, as do our low tariffs, as do our low 

non-tariff barriers. Yet we want to be sure trade is fair and we do 

this through our trade remedy laws that are transparent, and that 

provide due process. We are under some pressure, as you know, 

around the world on this issue and I think, frankly, we haven’t 

made our case as well as we could have. 

So we are undertaking to do that and also build some coalitions. 

SenatorHarkin talked about building coalitions on food aid. We also 

need to build coalitions around the world to understand what our 

trade remedy laws actually do and don’t do, and lookay at other 

countries that are using trade remedy laws aggressively and be 

sure that they understand that their potential use of those could 

also be at risk if the WTO goes the wrong way. 

I will say that we believe there could be some improvement globally in trade remedy laws, particularly in the area of transparency, 

as I mentioned, and due process. So I think we have nothing to be 

ashamed of. In fact, we have laws that are working and that do 

provide the kind of rights to both the petitioners, but also the importers and we will vigorously defend those. 

Senator CRAPO. Well, thank you. Because of the brief time that 

we have, I am going to move on to another topic, but I want to say 

to you that I think this is an incredibly important arena in the entire negotiation process and I hope that the United States can work 

aggressively, not only to enforce and to be effective at enforcement 

under our current system, but to help improve it, because a lot of 

us are concerned about whether there truly is fairness in the process. 

22

The other area that I wanted to go into is geographic indications, 

and I would like to discuss the current effort of the EuropeanUnion 

in the Doha Round negotiations to extend to foods the geographic 

indication protections that were established for wines and spirits in 

the Uruguay Round agreement. This issue is of importance to producers and processors in Idaho, and I am sure you are aware of the 

competing interests on this issue. What is the view of the administration on extension of geographic indications to food? 

Ambassador Portman. Well, again, as you know, this is an issue 

where we differ from our trading partners in the EU and also some 

other countries that are not part of the EU, but have a similar concern. We will continue to strongly promote the enforcement of intellectual property laws, including patents, trademarks, copyrights, 

and in the area of agriculture products, we think that is the appropriate course to take. 

This is an issue that has come up in every one of my meetings 

with the EU and in some of the mini-ministerial meetings, and the 

U.S. position is clear. I think, again, this is an issue where we need 

to perhaps explain our position a little more forthrightly and perhaps work with other countries who would share our concern. Australia has been a real leader on this, for example. They understand 

the consequences. But we will continue to hold firm to our position. 

Senator CRAPO. All right. I appreciate that very much. And 

again, let me say to both of you, we thank you very much for the 

ability that you have shown to work closely together and your commitment to work closely with us. I lookay forward to working with 

you. Thanks. 

[The prepared statement of Senator Harkin can be found in the 

appendix on page 84.] 

The CHAIRMAN. Senator Salazar? 

STATEMENT OF HON. KEN SALAZAR, A U.S. SENATOR FROM 

COLORADO 

Senator SALAZAR. Thank you very much, Chairman Chambliss 

and SenatorHarkin, for scheduling these very important hearings, 

and to you, Secretary Johanns andAmbassador Portman, thank you 

for the service to our country and thank you, as well, for your advocacy for agriculture. 

Mr. Chairman, I have a longer statement for the record and I 

would ask unanimous consent that that be included in the record. 

The CHAIRMAN. Without objection. 

[The prepared statement of Senator Salazar can be found in the 

appendix on page 88.] 

Senator SALAZAR. Let me just say that from my point of view, 

these are very important negotiations and deadlines that are not 

too far off in our future, and I, from my point of view, believe that 

a successfully negotiatedDoha Round could level the playing field 

for U.S. producers and provide incredible market access for U.S. 

products, as you have said in your testimony today. So it is the 

right thing that you are doing, Ambassador Portman and Secretary 

Johanns, and I just want to encourage you to continue to be great 

advocates for agriculture, as you have said in your comments. 

At the same time, I just want to let you know that I had a very 

moving meeting with Catholic bishops from all across the hemiVerDate 0ct 09 2002 13:26 Aug 03, 2006 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 C:\DOCS\28419.TXT TOSHD PsN: LAVERN
23

sphere in Latin America and it included some bishops from the 

UnitedStates, such as Cardinal McCarrick from here in Washington. It included Cardinal Rodriguez from Washington, D.C. 

Many of these people were leaders in my church or people who are 

not protectionists. They understand the importance of the global 

economy and the importance of what we are doing with respect to 

trade. 

But they obviously are also leaders in what is probably one of the 

oldest multinational institutions that we know, and one of the concerns that they expressed to me in terms of the trade negotiations 

that are underway is that there are always winners and there are 

losers. One of the major concerns that they have with respect to 

CentralAmerica and Latin America as we move forward with some 

of these trade agreements is what happens with respect to some of 

the small farmers and ranchers that are displaced economically 

within a system that has been around for centuries and how we are 

dealing with that particular issue. 

So I would like you just to comment briefly on that concern that 

the Catholic bishops have raised with me. 

And then second, with respect to the listening conferences that 

you are having around the country, Secretary Johanns, could you 

explain a little more in detail about what it is that you are doing 

to try to get the input from the family farmer and the family 

rancher? At the end of the day in Hong Kong, when you are there 

in December, the farmers and ranchers from my State more than 

likely are not going to be able to be there. There may be a few that 

actually go, but they will be participating in those world trade negotiations through your voice and through your mind as well as 

Ambassador Portman’s, and so I am wondering if you could give us 

a little more explanation with respect to what you are doing on outreach efforts to get their input. 

Ambassador Portman. Just briefly, Senator, first of all, I agree 

with you about the level playing field, that Doha offers an opportunity that we should not miss, which is to help level that playing 

field, because we are relatively open here and our tariffs are relatively low and our subsidies are relatively low. So this is an opportunity for us and our farmers and ranchers need to be sure that 

we have not squandered it. 

With regard to the statement from the bishops or your meeting 

with them, we certainly understand that concern. With regard to 

the DohaRound, as you know, there is an opportunity here to really 

assist on development around the world that is, again, unprecedented and one we should not miss. The World Bank studies show 

that if you were to reduce all the barriers to trade, which is the 

ultimate goal, you could pull 300 million people out of poverty. 

There is a recent study here by an institute, the NationalInstitute 

of Economics, saying 500 million people would be lifted out of poverty by reduction of barriers. So there are tremendous opportunities here. 

In the case of CentralAmerica and Latin America, as you know, 

in the CAFTA context, we did things that were unprecedented in 

terms of trade aid, in other words, capacity building to be sure that 

these countries can take advantage of the new trade agreements. 

That includes infrastructure, that includes being sure that the 

24

rural communities are assisted to be able to handle the new trade 

agreements in beneficial ways. 

Trade is a matter of some displacement, but huge net benefit, 

and I think we have shown some sensitivity to that and will continue to. Part of this round, the Doha Development Agenda, as it 

is called, is to be sure that we are providing trade capacity building 

at the same time that we are reducing these barriers to trade that 

ultimately hurt the poor and hurt the developing world. But I appreciate your comments on it and lookay forward to working with 

you on that, both in the bilateral context but also with regard 

toDoha. 

Senator SALAZAR. Thank you, Ambassador. 

Secretary JOHANNS. In reference to your question about the farm 

bill forums, Senator Roberts was with me in Kansas, so he can 

kind of give you an idea of what we do in these, as was Congressman Moran. But that has not been an unusual phenomena. We 

have actually had participation from university people, government 

people at the State level, people in the House and in the Senate. 

What we always do is we work with broadcasters, some farm 

broadcasters, but broadcasters in general, too, and they promote 

the forum. We have tried to adopt a model of joining the forum 

with an agriculture event. It might be a State fair, as it was in 

Kansas. It was a State fair in Kansas. It was HuskerHarvest Days 

in Nebraska a few days after that, because you have kind of a 

ready-made crowd of producers. 

We identified six questions that we wanted their thoughts on, everything from how do we develop policy that allows for young people to be involved in agriculture in the future to do you think the 

distribution of the farm program benefits is a fair distribution. We 

ask a question about, are we getting the job done from an environmental standpoint, conservation programs? Are we getting the job 

done in our rural development programs? 

But having said that, it is pretty much an open mike. We encourage people, if they have a specific problem—my loan application is 

not getting processed—to come and see us. We are very interested 

in solving that problem, but we are there more to address the policy issues of the next farm bill, the 2007 farm bill. 

And it has been a wide-ranging discussion. It has been for me 

very, very helpful just in terms of thinking about farm policy. We 

get everything from very specific suggestions about what people 

would like to see in farm bill policy to just more global thinking 

about what farm policy has done, and we have had arguments all 

over the spectrum. 

I could show you a quote from one gentleman who said, ‘‘Throw 

it out and start over,’’ to others who say this has worked pretty 

well and I hope you keep that in mind as you think about 2007, 

and everything in between. 

If I might just offer one other quick thought on the question you 

asked of theAmbassador, I had the opportunity to go to AGOA this 

year, the AGOA forum in Senegal. African nations were there. I 

had a number of bilateral meetings. But one agriculture minister 

came to me in a bilateral meeting and he sat down and he said, 

‘‘Mr. Secretary, I am here today not to ask you for more aid, alVerDate 0ct 09 2002 13:26 Aug 03, 2006 Jkt 000000 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 C:\DOCS\28419.TXT TOSHD PsN: LAVERN
25

though we appreciate the aid.’’ He said, ‘‘I am here to ask you for 

opportunities for trade.’’

They just overwhelmingly, the people at that forum, which by 

and large was African nations, were saying to us, we need help 

here, and the reasons, I think, are obvious. We come from a very, 

very progressive nation when it comes to agriculture, very progressive. Our farmers and ranchers produce at remarkable levels. That 

isn’t the case all over the world. And so we had conversations about 

how do we get fertilizer? How do we get seeds? How do we literally 

lay the platform for our agriculture to be successful? 

You see, I believe it is good to raise the standard of living and 

create consumers around the world for our products. I just think 

that is where we should be headed. That is what we should be 

thinking about. But other nations just are not as fortunate, and if 

we can reform agriculture in a way that is a good deal for American farmers and ranchers but also provides the world access for 

agriculture products, I think that is very definitely what they were 

reflecting to me in their statements when I was at the AGOA 

forum. 

Senator SALAZAR. I appreciate the comments very much, 

andSecretary Johanns, I am sure that probably every member of 

this committee is going to make a request of you to do this, but I 

very much would love to have you, as well as AmbassadorPortman, 

come to Colorado and engage in one of these forums with agriculture in our State. We would make sure that it was a bipartisan 

forum that was widely attended by the people in myState. The eyes 

of the world are on you, and Colorado is a part of that world, so 

I hope you can come to Colorado. 

The CHAIRMAN. Senator, the longer you serve here, the more you 

will realize agriculture has always been bipartisan. It has to be. 

Senator Thomas? 

Senator THOMAS. Thank you, Mr. Chairman. Thank you, gentlemen, for being here. I had an opportunity to work you quite a little 

bit in the previous year, as I recall. 

I am, of course, very much interested in agriculture. I am also, 

as you know, chairman of the Subcommittee on Trade and Finance, 

so I am lookaying at it also from a broader standpoint. 

I do want to strengthen the notion, and you have already committed to do that, is to have a little more conversations with 

theSenators prior to bringing up the treaties, and I think we can 

have more input and I appreciate both of you doing some of that. 

I also just want to suggest that we were down in Cancun, and 

I must confess that I didn’t think there was much talk about trade 

there. All we talked about was other countries’ needs and these 

kinds of things. These are supposed to be trade agreements, andI 

think we ought to be willing to pursue trade and we ought to do 

that, and quite frankly, I think we have a large deficit in trade. We 

are buying more than anyone else and we ought to utilize that 

strength a little bit to be able to strengthen our processes, particularly in agriculture, and I hope we do that. 

With regard to this—I guess I was, frankly, concerned that sometimes there is more interest in foreign policy development than 

there is in trade, and I realize the two go together to some extent, 

26

but these are trade agreements, not foreign policy relationships, 

and so I hope that we emphasize that. 

With respect to what is coming up, of course, no question that 

the beef industry has been hurt a lot by global bans on U.S. beef 

and so on. These were put in place when the bans were first enacted. Where are we today with regard to beef trade and the various bans, health bans and so on around the world, from either or 

both of you? 

Secretary JOHANNS. Your observation is correct. The industry 

was hurt significantly by the bans relative toBSE and we have diligently worked country-by-country to reopen markets. We can give 

you the exact statistics on where we are at, but we have recaptured 

a fair amount of that market. What is left, the majority of what 

is left by a lot is Japan and Korea, and, of course, we have been 

engaged with Japan for many, many months now, and we are also 

engaged with Korea. China has committed to sending a technical 

team to our country in October, and so we are also working with 

China. That was one of the things we were able to accomplish 

when we were last there. 

Here is an observation I will offer relative to Japan. I visited 

with Senator Nelson about the amendment that he proposed yesterday, and as you know, it did get a lot of support in the Senate. 

Just speaking candidly, I warned Japan this was coming. I said to 

them over and over again, there is a point at which folks on the 

Hill are just going to lose patience with this very, very slow process. There is no scientific or world justification for the continued 

closure of this border to our beef. 

I will be very honest. I am not excited about the action yesterday, butI understand it. I understand the frustration. My hope is 

that we can continue to move forward to get this border reopened. 

I do believe—I sat down with the new agriculture minister. They 

have a new minister over there, and we literally went through 

their chart of the process to reopen the border, and quite simply, 

they are running out of process. I mean, they are at the end of the 

process chart here. So it appears to me that the end is in sight, but 

it has been so painfully slow and so painfully deliberate. 

We aren’t going to give up. We are going to continue our efforts 

to get those markets open. 

Senator THOMAS. Ambassador, are there things in the trade 

agreement that we can do to avoid having these subsequent kinds 

of enforcements that really weren’t part of the trade agreement? 

Ambassador Portman. Well, there are, and that is to be sure that 

we have a good sanitary and phytosanitary agreement as part of 

the WTO, that we protect what we got in Uruguay and that we 

build on it. You and I have talked about this a lot in terms of these 

trade agreements, focusing on market access and not getting sidetracked on other issues, like the foreign policy issues you talked 

about. We have also talked about not just BSE, but other access 

issues that are SPS issues, such as beef hormones in Europe, poultry processing, the issue of biotech, and all these issues, I just want 

you to know that we are raising them. 

I met with the trade minister of Japan last week and the trade 

minister of Korea this week and, of course, this issue is at the top 

27

of my agenda, as well. Mike Johanns and I are working in concert 

on this. 

I do think that Secretary Johanns is right. As we push them on 

process and walk through all the science-based reasoning on our 

side, I think we are lookaying at the end of a process rather than 

their ability to continue to delay. I do think it is helpful, Chairman 

Thomas, that we have got some positive signs from other countries 

that have smaller markets. As you know, the President met with 

the Prime Minister of Thailand this week and had some good conversations about this, a small market, but you begin to get a little 

domino effect. Taiwan is another one we would like to see reopened. We have a strong trading relationship there with that 

economy. 

So we have the opportunity here, I hope, before getting into Hong 

Kong, to make some progress on this, but we need to see more, particularly with regard to SPS issues and theEuropean Union. 

Senator THOMAS. I appreciate what both of you are doing. I just 

think we ought to utilize the strength we have on some of these 

things. 

Thank you, Mr. Chairman 

The Chairman. Thank you. 

Mr. Secretary, let me say that with reference to that vote yesterday, you are exactly right. It was frustration. It has been 6 months 

ago that 20 members of the Senate sat around this table with the 

Japanese Ambassador and discussed this issue and we walked 

away with the feeling that we were probably very close to getting 

this issue resolved and nothing has happened. It is very frustrating 

to us and we hope you will be able to use that to exhibit the frustration here in your future discussions with the Japanese. 

Senator Roberts? 

Senator ROBERTS. Thank you, Mr. Chairman. Thank you for 

holding the hearing. I would suggest we need a bigger room and 

maybe another hearing. There are a lot of people in the hall that 

are interested in this. 

I am going to start off to thank the Secretary andAmbassador for 

coming. I want to thank the Secretary for coming to Kansas. Has 

Ken left? I was going to tell him that I think the opportunity for 

Secretary Johanns to come to Colorado really depends a lot on the 

Colorado-Nebraska football game, but I will let that go. 

[Laughter.] 

Secretary JOHANNS. You figured me out. 

[Laughter.] 

Senator ROBERTS. The Secretary came to Kansas, there must 

have been 250 farmers in the room. He sat on the wagon tongue 

and he listened to them all and he tookay copious notes. I left to 

go watch a ballgame about halfway through, but—no, I had a plane 

to catch, and I do thank you for coming. 

I just would say that there is a yellow light warning not only on 

the time that I talk, but in farm country, and I think we are suffering from trade fatigue. That is to say that many times, I think 

we oversell and overestimate the goals of the trade agreements. I 

understand that. Many times, certainly we over-criticize them, but 

that is on the tube and in the media and all of the detractors. I 

28

know all of that. As a result, I think in farm country, they are a 

little weary, a little suspect of this animal we call free trade. 

Sitting behind the Secretary is his Chief ofStaff, Dale Moore, who 

is an old rodeo rider, and so at the Doha rodeo, I am concerned 

when chute No. 1 opens up and the WTO critter comes out of the 

chute. I hope agriculture is on board and it just isn’t a bucking bull 

out there. 

You can see that with the Nelson amendment. You can see the 

frustration, and the Allard amendment prior to the Nelson amendment in terms of a strong message. 

So I hope, Mr. Secretary, that you will be able to continue your 

work. You have gone to 15 counties now, and I am keeping score 

because I suggested that originally when you came in in regards 

to you confirmation, that would be my best advice, is to go out to 

farm country and to listen. 

But in your role as Secretary of Agriculture, you are the voice of 

all farmers and ranchers. I hope that we can get some support and 

some real cooperation between the various farm groups and commodity groups in trying to work toward increased market access as 

opposed to demanding special treatment. That is going to be a 

tough thing to do. 

My question really is to Rob Portman, who is a good friend and 

a former colleague and I am delighted. He is the right man in the 

right time in the right place. So Mr. Ambassador, I met with the 

EU Agriculture Commissioner Mariann Fischer Boel as of, what 

was it, last week, and she has met with you and with the Secretary 

and with other members of this committee and the distinguished 

chairman. She was wanting to know what was going on in Kansas, 

how did I feel in regards to the WTO round, and I told her that 

basically in Kansas, our farmers were sitting down and writing 

checks, $50 and $100 to Katrina victims, and then turning around 

and wondering how on earth we are going to survive because of the 

increased gasoline, diesel, access to fertilizer, so on and so forth, 

and that right now, the WTO was not on their minds, although 

they knew it was coming and they knew that it was a threat, and 

I will use that word, to our farm programs as we see them. So I 

think that is where we are. 

The one question I want to askRob is that I am concerned about 

your comments not only with our farm programs and the case by 

Brazil, and I don’t have any illusions about that, more especially 

with the cotton program, but our food aid programs. Now, Senator 

Frank Carlson and Cliff Holt from Kansas started thePL–480 program and I am concerned with the perception, including the EU, 

that we use our food aid programs as a haphazard tool for simply 

distributing our excess commodities, sort of a dumping ground. 

Now, this is not the case. This food is often the difference between somebody going to an extremist military wahabi school and 

then sitting on the top of a building with an AK–47 in an area that 

we do not want this young man to sit in and an education. It is 

the difference between a young woman having access to school in 

many countries and the empowerment of women, which I think is 

one of the things that we can use, and I am speaking as the Chairman of the Intelligence Committee, as one of the best anti-terrorism tools that we have. 

29

So I would like to ask you, how would you characterize these negotiations in regard to food aid? I know they would rather go to 

cash as opposed to commodities. We are not going down that road 

and we are not going to lessen our food aid programs in the war 

on terror, more especially with the world food program and other 

programs like that. I know they are also after the export programs. 

I don’t know what we would have done during the 1980’s and the 

very tough times without the 416 program so we could move our 

product. So I have a lot of concern about that, if you could respond 

more especially in regards to the food aid programs and where we 

are. 

Ambassador Portman. Well, thank you, Chairman Roberts. I had 

an opportunity to talk about this a little bit with Senator Harkin, 

so I won’t repeat myself too much, but I will say that it is very important to me that you had that meeting with her and that you 

made the statement today. I know you will continue because in 

your heart, you understand that this is about providing emergency 

aid to people who need it and there is not enough out there. The 

idea that we would go to cash and that some of that food, therefore, 

would not make its way to the people who need it is outrageous. 

Why would we do that? 

So I agree with you. This is one where I think there is also, as 

I said earlier, some misunderstanding about commercial displacement. As I said earlier, the very exporters who are sending food aid 

out through what Senator Harkin called the Food for Peace Program are people who also export on a commercial basis. They don’t 

want commercial displacement either, and we don’t believe that is 

occurring. 

So it is a little strange to me that this has become such a big 

issue. I think we need to better explain what we do, why we do it. 

I think we need to get more of these governments that are sometimes, unfortunately, dependent on emergency food aid to stand up 

and be counted. I think we need to have some of these nongovernmental organizations, as you talked about, including the United 

Nations, to understand what is at stake here. We are making some 

progress in that regard by being able to build this coalition a little 

bit and communicate better what we do and why it is so important. 

So thank you for standing up for it. I do think that the kind of 

radical rules changes that the European Union and others are talking about would be not just damaging to our farmers and ranchers, 

but would be terribly detrimental to the developing world. 

Senator THOMAS. Thank you for your response. Thank you, Mr. 

Chairman. 

The CHAIRMAN. SenatorLincoln? 

Senator LINCOLN. I guess I am the last man standing over here. 

Mr. Chairman, I just want to thank you for your tremendous leadership on what I think is such an incredibly important issue and 

I appreciate you holding the hearing today and your steadfast involvement and interest in this. 

Welcome, Secretary Johanns. We are delighted to have you back 

with the committee. You have definitely been very busy over these 

past 6 months and I want to tell you how grateful we are that you 

visited Arkansas. 

Secretary JOHANNS. Thank you. 

30

Senator LINCOLN. I think, without a doubt, you saw that we in 

Arkansas take our agriculture very passionately. We had a tremendous turnout and a lot of very passionate feelings at that meeting 

and I am grateful to you for coming. 

We want to welcome Ambassador Portman to the Agriculture 

Committee. We have worked closely in the Finance Committee and 

I know that you certainly understand the importance of our trade 

policies to our American farm families. With that in mind, I hope 

you feel as comfortable talking about trade here in the Agriculture 

Committee as I do, because it is absolutely a critical issue for agriculture. 

There is—certainly, agriculture is one of the nearest and dearest 

issues to my heart, as a farmer’s daughter, and certainly it is one 

of the things I take the greatest pride in in terms of advocating on 

behalf of Arkansas farm families. They are hardworking people 

who do something pretty incredible absolutely every day. Against 

all odds, they provide us with the safest, most abundant, and affordable food supply in the world, and they do so against tremendous odds. 

One of those odds is an increasingly competitive world market 

that is not always free and not always fair. Our U.S. farmers survey the world and what they see, and what I think contributes to 

some of the frustration that the chairman mentioned and others, 

is that an average bound tariff of 62 percent against their products 

compared to 12 percent that our foreign competition sees when 

they want to send something to our borders. I think that is why 

our negotiators’ work in Geneva and ultimately in Hong Kong this 

December is so vital. It is of vital importance to the future of U.S. 

agriculture and it is something that is very important and it is 

truly on the minds of producers all across this country. 

Our farmers recognize the importance of trade, but they are becoming increasingly frustrated with the actions of the WTO members who have chosen to litigate rather than negotiate and who 

have focused their attacks on our U.S. commodity support programs. And while the Doha talks drag on and the WTO continues 

to rule against our commodity support programs, programs that 

under the Uruguay agreement were considered fully compliant 

with WTO principles. 

Our farmers want to meet our WTO obligations. They definitely 

know how important it is to be good neighbors, to negotiate and 

come up with good agreements, but they also need the assurance 

that the U.S. Government is going to stand by programs contemplated and authorized in an upcoming multi-year farm bill. To 

be undercut by policies from our own government when they see 

the, I guess the fragile nature of the international marketplace is 

just absolutely not just frustrating, but disappointing, I think, to 

American farmers. 

Farmers have been frustrated—well, they are always frustrated, 

I suppose. It is either too hot or too cold, too wet or too dry. I certainly experienced that growing up. But continued demands by the 

Europeans that we unilaterally accept the drastic cuts in our farm 

programs without their expressed commitment to provide meaningful market access to our producers in return. That is all they are 

lookaying for. 

31

I grew up on a farm. I grew up with a farmer as a father and 

in a community that recognized that fairness is important, being 

a good neighbor is important. All of those things are critical, but 

it is a two-way street and that is very important to them. 

We know that you all were able to meet with European officials 

in Washington earlier this month and we lookay forward certainly 

to continuing the dialog of what your assessment and any progress 

both here today in the committee and also coming forward. 

Just a couple of questions. Ambassador Portman, we are just 

hoping, I think, here today and in the days moving forward you can 

provide assurances to us and to our constituency that moving forward in the WTO will not require the U.S. to trade away the farm. 

I mean, that is it. Our farmers are meeting tremendous obligations 

with the price of fertilizer, the price of fuel, the kind of drought 

that we are seeing. Just the assurance that those who remain in 

production agriculture, who really are the most efficient and effective in today’s world under our circumstances in the U.S., that we 

won’t trade away that farm, and the specific steps that the administration will take to ensure that the market access benefits will be 

achieved that are at least equal to the cuts in the trade distorting 

domestic supports that our negotiators have already agreed to. 

So I hope that in the days to come, you will share that with us, 

you will be very vocal and encouraging to our constituency in what 

you will be doing, what you can do. I know that some of the reports 

that you have discussed scenarios or tradeoffs with theEuropeans 

in terms of domestic support and market access. I hope that you 

will elaborate on some of those with us so that we will have a clear 

view of what it is that you are lookaying to do and how you intend 

to achieve that. 

Our USTR continually assures our Arkansas rice producers that 

trade agreements will result in higher sales and prices, and ours 

is an export-oriented industry. Arkansas rice producers and millers 

have joined with their colleagues in the South and California in 

strong support of trade agreements like NAFTA, the 

UruguayRound, most recently CAFTA. I have been there. I have 

worked with my producers. They want to be supportive. But these 

promises that they continually get are quickly tarnished when our 

trading partners fail to live up to their obligations. 

Our rice industry has spent close to three-quarters of a million 

dollars to defend against anti-dumping charges by Mexico, some of 

which were completely unwarranted. Access for U.S. brown rice in 

the EU was reduced when the EU withdrew the margin of preference concession last year, and I also understand that Korea has 

yet to implement its commitment to increased market access for 

rice, while at the same timeKorea is asking for free trade agreement with the U.S. 

I think that what our producers want to see is not only that we 

know how to be good neighbors, but that we also understand that 

it requires demanding respect. When agreements are made and 

that we are willing to meet our end of those agreements, we want 

to make sure that our neighbors and our trading partners are willing to do that, as well. 

So I hope that we can see some reassurances from you and from 

the administration to ensure compliance and enforcement and hope 

32

that you will share with us how that can be achieved, particularly 

with the Doha Round agreement. 

I know that you have mentioned transparency and I am pleased, 

and I hope that there will be further opportunities to talk about expediting some of the rules that we do have. Our trade laws are important to us, but if we can’t use them and we don’t have the time, 

if it drags on too long, it does us no good. I testified before the ITC 

just last Friday on a steel issue. They are great to talk about, but 

unless we make them usable and something enforceable, they really don’t help us. 

So I hope that you can share any or all of that with us. Certainly, the trade safeguards, any progress being made by our U.S. 

Government tradeofficials in the WTO rules and negotiations, specifically what actions are going to be taken to ensure that we can 

vigorously enforce our trade laws, I think that is going to be important, as you well know, and I hope at some point I get an opportunity to visit with you about some of the efforts that we have been 

trying to make here to expedite some of those trade rules in order 

to be able to do that. 

So those are a lot of things. I would also be remiss if I did not 

just take the opportunity to shift gears and—because I am not sure 

when I will ever have the opportunity again, but to express my disappointment with the administration moving forward to support 

Saudi Arabia’s accession to the WTO. I guess, again, so much of 

what I do goes back to many of the other hats I wear in my life, 

and it is really hard to imagine that we really do want to enforce 

poor behavior, bad behavior. 

I know that Senator Thomas brought up the issue of not wanting 

to include some of those types of issues, that these are trade agreements and that we have to be careful about that, and I don’t think 

people mind that if it is consistent. But we know that there are 

many countries out there that we continue to trade with and we 

continue to ask enormous requirements of, former Communist 

countries and others, in order to be able to have the kind of free 

trade and open trade. But to see the kind of record on human 

rights, women’s rights, religious freedoms, I know there have been 

some advancements on the boycott issue, but quite frankly, our 

hope is that we could use those opportunities to really encourage 

a nation likeSaudi Arabia to move further in a direction that is so 

important to many of us. 

Thank you both for your hard work and I lookay forward to 

working with you as we move forward. I appreciate the leadership 

of our chairman here and hope there will be opportunities where 

I can help and work with you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. SenatorTalent? 

Senator TALENT. Thank you, Mr. Chairman. I appreciate your 

holding the hearing, too. I know a lot of the issues that I was concerned about have been raised. I may have some questions for the 

record for you all. 

Let me just ask a general question and then I, too, want to 

switch subjects and bring up another issue to get your comment, 

Mr. Secretary, on something you and I discussed. 

33

I know these negotiations are always very complicated, and at 

the same time, there are basic principles that apply to any negotiations. I remember an old State Senator friend of mine said to me 

about 20 years ago, he said, ‘‘If you want to get somebody to do 

what you want, find out what they want and find out how bad they 

want it.’’

Talk a little bit about what our trading partners want and how 

bad they want it, and maybe what they don’t want and how bad 

they don’t want it. I am not asking you to give away your negotiation strategy, but I am presuming you are thinking going in, and 

maybe, Mr. Ambassador, you could do the same, what are some of 

the leverage points we have got? I know a lot of the frustration our 

people feel is that we go into these negotiations and we are committed to this both in terms of our economy, but also in terms of 

our principles, and sometimes I am concerned other people feel 

like, well, they want this so bad that we can play that game with 

them. So discuss that general subject, the leverage points. 

And then the second point, Mr. Secretary, and it is a different 

subject, although it certainly relates to trade, I indicated to you before the hearing my concern about what is happening with the 

river and the fact that we have a lot of our product, particularly 

our corn, tied up in elevators and on barges upstream and we are 

unable to offload it and we have got the soybean harvest coming. 

Discuss some of the things you are doing, if you would, and if you 

have any suggestions about what we might do to help you with 

that, I would appreciate it, because that is an immediate concern 

I have. 

Secretary JOHANNS. Yes, it is a very important concern, and 

maybe I will jump in here ahead of the Ambassador and the Ambassador can handle the trade question that you posed. 

As I indicated to you before the hearing started, we have been 

working on this transportation of grain issue literally from the moment Katrina struck and the aftermath. The USDA is assisting the 

movement of barges of damaged corn from New Orleans. USDA is 

providing incentives for alternative grain storage. We are encouraging alternative shipping patterns to help relieve some of the 

pressure. We are allowing producers to storeUSDA-owned corn on 

the farm with the option to purchase. 

USDA is providing a temporary incentive to assist immediate 

movement of some 140 barges of damaged corn, and that would be 

about seven million bushels, out of New Orleans to up-river locations. Once unloaded, the empty barges will continue up the river, 

then, to begin moving the new crop commodities, the 2005 commodities. USDA will pay incentives for alternative storage up to 50 million bushels of grain. We think all of these actions will help to relieve the pressure. 

To reduce stress on theCentral Gulf transportation and handling 

system, USDA will provide a transportation differential to cover 

the costs of moving grain to other river transportation modes and 

handling locations. And to further alleviate grain movement into 

the Mississippi River, USDA will allow producers forfeiting commodities to USDA actually the opportunity to buy back the grain 

when the farm stored loan matures in September and October. 

34

So we have done a lot of things that we had the power to do. Fortunately, the House and the Senate has given the USDA very 

broad power to deal with emergencies and we have just encouraged 

everybody at the USDA to be as creative as they possibly can in 

dealing with this. We will be happy to offer a briefing to your or 

your staff or to anyone else. It is a significant issue. I have said 

publicly, if there was one of the good news pieces of the recovery 

relative to Katrina, it is how aggressively everybody worked on the 

port issues, the Mississippi River issues. The Corps of Engineers 

has been great. The shippers have really gone overtime to try to 

deal with this issue. 

If anyone ever doubts the importance of exports, boy, lookay at 

this circumstance, because really all we did was stall exports for 

a while and it just backs up right into the middle of the country 

immediately. 

Senator TALENT. That is exactly right, and so are you satisfied, 

then, that this has a high enough priority within the administration’s overall efforts. I mean, I know you are paying a lot of attention to it, which that is very appropriate, but are those outside of 

the Department within the administration’s efforts aware of this? 

Is it a priority with them, as well? 

Secretary JOHANNS. Absolutely. It is a priority not only for me, 

but it is a priority for the President and the folks in the White 

House. We have engaged them in our thinking on this and in 

where we are headed. So we understand the problem and the issue 

and we are going to do everything we can to facilitate moving this 

product, because really what happened here is it just backed up. 

There was all of a sudden a glut in the system because the system 

was not operating for a while, and now that it has come back up, 

it is operating, I think, 12 hours a day. So those people are working 

very hard to get this system operating around the clock, but we 

have to deal with a glut of grain that was out there. We are going 

to be just as aggressive as we can in trying to help with that. 

So it is very much a priority issue for us. I have probably spent 

as much time on this issue as any other issue relative to Katrina 

recovery. 

Senator TALENT. Thank you. 

Ambassador Portman. Just one further comment with regard to 

Katrina. I was able to go down to the region on Friday, and I went 

down specifically because of the export and import interest, the 

trade interest. Sixty-two percent of our agricultural exports, as you 

know, and the Secretary knows well, goes out of those ports, primarily the Port of South Louisiana, and I was able to tour the Port 

of New Orleans and also get a briefing on that port, South Louisiana and Baton Rouge. 

The traffic is moving, more slowly than we would like, but it is 

moving and all I can say is my sense is this is not just a very high 

priority of the administration, and certainly it is of mine from a 

trade perspective and the Secretary’s, as you heard, but we are also 

relatively fortunate. With all the devastation ofKatrina and all the 

human tragedy involved, it is amazing these ports weren’t more 

damaged. 

Most of the wharfs are in good shape. As you know, electricity 

is back, I think, to all but one terminal now. We have the ability 

35

to be able to move barges up and down the river. There was a lot 

of concern about silt early on. The soundings were taken. That has 

not been a problem. There were, I think, 200 ships or boats that 

were potentially in the channel at one point. We have been assured 

that that is not an issue. 

So compared to what it could have been, we are relatively lucky, 

but boy, this is critical to our exports and imports as——

Senator TALENT. Is the key remaining issue personnel, getting 

enough people there? 

Ambassador Portman. That is what I was going to mention. I 

think one of the challenges that the administration has focused on 

particularly in the last week is temporary housing for the ports 

themselves. You know, these three ports, we are told, support 

about 100,000 people, so it is critical to the economic development 

and the maritime services in that area are critical to the economic 

development of that region and bringing it back. But you have got 

to have workers to move this product, soMerit has provided some 

ships, as you know, and they have provided some housing, but it 

is focusing on some of this temporary housing, and I know the Secretary has been involved in that. The Secretary of HUD, Alfonso 

Jackson, and I have talked about it. He was actually in the region 

with me. 

So the administration is very focused on this, Jim, as a way to 

be sure we are both dealing with the economic dislocation in that 

area, but also with regard to the importance of trade, and the message to our trading partners needs to be the harvest is moving. We 

will be able to provide your needs and we will do everything in our 

power to be sure these exports go out. 

Secretary JOHANNS. If I could underscore that point, our international friends have been great in responding to this emergency 

in a lot of different ways. It is just very, very important that I assure them when it comes to the shipment of products they need, 

we are going to do that. Everybody is absolutely focused on responding to the purchases and needs of the international marketplace. It has just been a great effort by everybody involved to accomplish that. 

And then the last thing I failed to mention that Dale reminded 

me of is that navigation on theMississippi is done with navigational aids. They literally site these aids in the river. Some of those 

aids were pushed aside by the storm or pushed up onshore, whatever, and that is kind of the last piece here to get this system back 

to 24 hours. 

But my last briefing with the Corps ofEngineers, which was just 

within the last few days, is that everybody is working diligently to 

get that accomplished. Once those aids are back in place, then you 

will see the system come back up online around the clock and that 

will be yet another positive step to move that grain harvest that 

has already started in the Southern corn belt. I mean, we are seeing that harvest already and it will definitely be in full swing 

across the corn belt here pretty quickly. States like Illinois that 

had drought, their corn is going to cure fast, as will the soybeans. 

So it would not surprise me if you are seeing combines out in the 

field already in those areas. 

Senator TALENT. Do you have comments on my broad——

36

Ambassador Portman. Well, I thought your question was very astute and I also thought that Senator Lincoln’s analysis was right 

on in terms of what we face. I mean, it is a challenge to determine 

how you can better understand the other person’s point of view in 

any negotiation. In this one, the importance to the farm community, as we have talked about all during this hearing, cannot be 

overstated. We absolutely depend on exports in our farm economy. 

My whole job in this negotiation as I see it is to make sure those 

Arkansas families that you talked about have a better situation as 

a result of this agreement. 

So Missouri farmers and Arkansas farmers should know that we 

are doing our best to determine what is not just in the interests 

of other parties, therefore, getting them to agree with negotiation 

that is sensible for our farmers, but we are also working very hard 

with some allies who are exporters, as we are. This would include 

some of the countries even in the G–20 which we mentioned earlier, some of the developing countries that have an export interest, 

certainly the Australias andCanadas and New Zealands of the 

world who share a lot of our interests. 

As I said earlier, I am hopeful that we will have a result that 

provides meaningful market access, that eliminates export subsidies altogether, where about 87 percent of that use is currently 

by the EU, and where we have in the trade distorting domestic 

support a situation where those who have higher supports, and this 

chart we pulled out earlier, that those countries reduce more. That 

is what the framework provides for. And if we end up with an 

agreement along those lines, it will be very beneficial to our exporters, manufacturers, service providers, but also to our farmers. 

So that is the goal of these negotiations. It is sometimes difficult 

to know, Senator Talent, in response to your specific question, what 

other people really care about as compared to maybe what they are 

saying publicly——

Senator TALENT. Perhaps I shouldn’t ask you to muse on that, 

because you maybe give away the game, but maybe we can talk a 

little bit later, because my sense of it is they do a pretty good job 

of acting like, well, you know, if this thing busts up and we don’t 

get an agreement, that is okay with us, and to the extent that they 

are putting that idea across, it seems to me they have more leverage at the table. Maybe we will talk later about how you counter 

that with them. 

I think I am sharing some of the frustrations Senator Lincoln 

mentioned. They act like, well, we will disrupt the system and you 

guys will be disadvantaged and that is okay with us, whereas we 

always come back and everybody knows we are committed to it. I 

just wonder whether that puts us sort of behind the eight-ball 

going in. 

Ambassador Portman. We are committed to a good agreement 

and only a good agreement. 

Senator TALENT. okay. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Talent. 

Mr. Chairman, I am going to do a floor statement a little later 

on today where we talk about some of the successes ofNew Orleans 

after Katrina and the thing I am going to highlight, a situation relative to the port. That is a classic example of how the private secVerDate 0ct 09 2002 13:26 Aug 03, 2006 Jkt 000000 PO 00000 Frm 00040 Fmt 6633 Sfmt 6633 C:\DOCS\28419.TXT TOSHD PsN: LAVERN
37

tor and the public sector working together can get something positive done in a hurry. USDA, the Corps of Engineers, as well as the 

lessees from the port authority, like Cargill and ADM, have really 

worked very closely together to make sure that farmers are well 

served by getting that port reopened. 

It is kind of interesting that the major issue we have, Senator 

Lincoln, is getting enough workers back and being able to house 

those workers so that they can go to work and start getting paychecks again. 

Senator LINCOLN. We have got about 60,000 evacuees in Arkansas, so we are well aware of the need to get people back home. 

The CHAIRMAN. Gentlemen, thank you very much for taking the 

time to be with us today. I think this has been an extremely informative hearing. We lookay forward to continuing to dialog with 

you as we move toward Hong Kong. Obviously, we send our best 

wishes with you as you leave today to go to Paris. We lookay forward to visiting with both of you when you return to see the results of what I know will be a very productive meeting, so thank 

you very much. 

The CHAIRMAN. We will now call our second panel. Our second 

panel today consists of Ms. Audrae Erickson, who is President of 

the National Corn Refiners. She is here today in her capacity as 

Co-Chair of AgTrade, based here in Washington. We also have Mr. 

Allen Helms, theVice Chairman of the National Cotton Council 

from Clarkedale, Arkansas; Mr. Leonard Condon, Director, International Business Relations, Altria Corporate Services based here 

in Washington; and Mr. Mark Viso, Vice President of Operations, 

International Program Group, World Vision, based here in Washington. 

Welcome to each of you. We are very pleased to have you here. 

We lookay forward to your testimony, and Ms. Erickson, we will 

start with you. 

Senator LINCOLN. Mr. Chairman, may I just add a welcome to 

one of my constituents, Mr. Helms, who is testifying today on behalf of the National Cotton Council. He is a cotton producer, as you 

mentioned, from Clarkedale, Arkansas, and a member of the Arkansas Agriculture AdvisoryCouncil, but he is also a great friend 

of Southern agriculture and I just want to commend Allen’s leadership and all of the hard work. I appreciate you taking the time to 

offer your insight in the direction of our trade negotiations. I know 

I hear it at home. I am glad to hear it up here. 

Thanks, The Chairman. 

The CHAIRMAN. I met Mr. Helms previously and any cotton farmer has got to be a great American, the way I figure it. 

Again, I thank all of you for being here. Ms. Erickson, we will 

start with you. We lookay forward to your comments. 

STATEMENT OF AUDRAE ERICKSON, CO-CHAIR, AGTRADE 

COALITION, WASHINGTON, DC 

Ms. ERICKSON. Thank you, Mr. Chairman, SenatorLincoln. 

Thank you for this opportunity to testify today on behalf of the 

AgTrade Coalition, which is a coalition that was formed in 1999 

and has over 100 organizations, associations, and firms in it that 

supports further trade liberalization in agriculture. I am interested 

38

in submitting a copy for the record of the principles that our coalition has recently revised for the WTO negotiations. 

The CHAIRMAN. Sure. 

Ms. ERICKSON. I should note that each member of theAgTrade 

Coalition has its own set of negotiating priorities, and in some 

cases, those priorities may be even more ambitious than what I will 

present today, and some may be noted as we begin. 

The WTO negotiations represent the most important element of 

the trade agenda from the President for our coalition, and key 

among that, really, is substantial improvement in market access. 

An ambitious market access package must include a harmonizing 

formula that reduces the high tariffs more than the low ones and 

results in substantial and commercially meaningful—and that is 

important—market access in all products to all markets. 

All tariffs should be capped and complex tariffs, of which there 

are many, as you know, must be converted to ad valorem or specific 

tariffs. 

Only a limited number of sensitive products ought to be allowed, 

and for those, market access should still be improved through reductions in tariffs or expansion of tariff rate quotas. 

Regarding tariff rate quotas, all end duties, end quota duties for 

TRQs ought to be eliminated, and the administration of those 

TRQs should be improved. 

Sectorial negotiations should be pursued for those commodities 

and food products that are seeking a more ambitious market access 

outcome. 

And balance in the level of the ambition in all three pillars is a 

central objective of the AgTrade Coalition. Reductions in total trade 

distorting domestic support and other U.S. concessions must be balanced with our goals for what we hope to achieve in market access 

and export competition. 

On domestic supports, a formula that harmonizes total levels of 

trade distorting support is needed. 

On the blue box, our coalition continues to support the July 2004 

framework agreement. On the green box, there should be no caps 

on or excessively restrictive criteria defining eligibility for nontrade distorting domestic support. 

Now, for the export competition pillar, the elimination of export 

subsidies by a date certain is key and must remain. Export subsidy 

rules should be tightened and should be applied equally to developed and developing countries. 

The monopoly powers of state trading enterprises, they must be 

eliminated, as should the government subsidies, the financing, the 

underwriting of losses on their export activities. STE disciplines 

should result in transparency and the end of discriminatory pricing 

practices. 

Regarding export credits, a topic that the coalition and even the 

Export Credit Working Group here in the United States has 

worked diligently on, official export credit and credit-related programs should be applied to allWTO member countries, and reductions in the subsidy component of existing programs that do not 

comply with any disciplines that are established should be implemented in a parallel manner with the phase-out of export subsidies 

39

and the elimination of monopoly powers of state trading enterprises. 

And there are many programs throughout the world, as you can 

imagine, that assist exports. Disciplines should be developed on 

other export measures that have equivalent trade distorting effects, 

including the elimination of differential export taxes. 

On food aid, I will touch on it briefly. I know it is a topic that 

will be discussed in more detail. Disciplines on food aid should be 

imposed only to the extent necessary to prevent such aid from distorting commercial markets. Our coalition opposes prohibitions on 

government-to-government food aid or any requirement that food 

aid be in the form of cash only. 

The WTO negotiations on agriculture must be concluded as a single undertaking that encompasses all sectors. Cotton is as part of 

the coalition, as well. 

Regarding developing countries, certain more advanced developing countries, particularly exporting developing countries, must 

assume obligations similar to developed countries in all three pillars, and WTO rules for developing countries to graduate them to 

the developed country status ought to be developed using objective 

economic criteria. 

Geographical indications is an important topic that will be 

touched on momentarily, but we oppose any extension of geographical indications beyond wines and spirits. 

And finally, ensuring market access for products of biotechnology 

and that the regulation of those products is based solely on science 

is an important principle that must be upheld. 

Mr. Chairman Senator Lincoln, thank you for this opportunity to 

testify. We lookay forward to working with you to ensure that the 

final deal represents a balanced approach and one that will ensure 

the future viability of America’s farmers and ranchers, processors, 

and agribusinesses. Thank you. 

The CHAIRMAN. Thank you. 

[The prepared statement of Ms. Erickson can be found in the appendix on page 90.] 

The CHAIRMAN. Mr. Helms? 

STATEMENT OF ALLEN HELMS, VICE CHAIRMAN, NATIONAL 

COTTON COUNCIL, CLARKEDALE, ARKANSAS 

Mr. Helms. Mr. Chairman and members of the committee, I am 

Allen Helms, a cotton producer fromClarkedale, Arkansas. I currently serve as Vice Chairman of the National Cotton Council. 

Thank you for the opportunity to present the views of the cotton 

industry concerning the WTO issues confronting cotton. 

The U.S. cotton industry believes that a beneficial agricultural 

agreement in the Doha Round negotiations must provide meaningful benefits to farmers and agribusinesses in return for any concessions. While significant attention is rightly paid to theEU, we believe China, India, and Pakistan must also be full participants in 

these negotiations. 

We also firmly believe that agriculture negotiations must be part 

of a single undertaking, comprehensive negotiation. Efforts to single cotton out for special treatment have been misguided, have unVerDate 0ct 09 2002 13:26 Aug 03, 2006 Jkt 000000 PO 00000 Frm 00043 Fmt 6633 Sfmt 6633 C:\DOCS\28419.TXT TOSHD PsN: LAVERN
40

dermined support by cotton farmers, and threatened the overall 

DohaRound. 

In order to facilitate development of a framework agreement, the 

cotton industry did not object to the establishment of a special Cotton Committee. We were assured that the subcommittee would not 

become another forum for negotiations. Unfortunately, many participants in that committee ignored its original mandate, which 

was to monitor and coordinate developmental efforts with the trade 

policy negotiations. 

In his outgoing assessment of the agricultural negotiations, 

former Chairman Grosser made it clear that the progress of cotton 

trade issues was fully dependent on overall progress within the agricultural negotiations. 

The U.S. cotton industry is fully prepared to work toward the 

beneficial agricultural agreement. We are prepared to make an equitable contribution toward that positive result, but we will oppose 

any agreement that singles out cotton for unfair treatment. 

Much of the call for special treatment for cotton has come from 

several African countries that depend on cotton for a significant 

portion of their export earnings. Since early 2004, the National 

Cotton Council has engaged in a number of outreach activities with 

the West Africans. These efforts are detailed in my written testimony. They underscore the commitment of the U.S. cotton industry 

and the U.S. Government, but I must add that the U.S. cotton industry cannot correct the legacy of European colonialism. African 

leaders must take the initiative to privatize their industry and join 

the world’s mainstream cotton trade. 

Mr. Chairman, the National Cotton Council’s specific priorities 

for the DohaRound are also detailed in my written testimony. I 

would like to make a few additional points. 

First, it is critical that we obtain real increases in market access 

in the Doha negotiations. For example, China is applying a new 

sliding-scale tariff to imports of cotton. It is designed to favor domestically produced cotton and synthetic fibers. It limits our ability 

to sell product there and encourages the use of manmade fibers by 

textile mills. 

Second, we believe that special and differential treatment must 

be provided to truly less developed countries. Under current practice, Brazil can insist on the same benefits as Mali. 

Third, our experience in theBrazil case proved to us that we 

must do a better job of ensuring the language in the final agreement accurately reflects the intent of the parties. The United 

States never agreed that theExport Credit Guarantee Program was 

an export subsidy, but the dispute settlement panel read the Uruguay Round agricultural agreement differently. We cannot be 

blindsided again. 

Fourth, WTO agreements can have significant impact on our 

ability to construct effective domestic agricultural policy. As a result of the panel decision in the cotton case, the administration has 

recommended that a 15–year-old component of the cotton program 

be eliminated in the middle of a marketing year. I doubt a mandate 

to change loan rates or direct payment rates in the middle of a 

marketing year would be favorably received. This committee would 

probably find a less disruptive means to achieve this objective. 

41

Finally, the DohaRound agreement must appropriate protect 

countries that comply with the agricultural agreement from unexpected challenges under the subsidies code. Domestic farm programs that are structured to comply with a new agricultural agreement should not be undermined by subsidies code challenges that 

cannot be anticipated by Congress. 

Mr. Chairman, the cotton industry is committed to continue to 

work with Congress and the administration to find solutions and 

to support agreements that are balanced and fair for U.S. agriculture. This concludes my testimony. I will be happy to take any 

questions. 

The CHAIRMAN. Thank you. 

[The prepared statement of Mr. Helms can be found in the appendix on page 94.] 

The CHAIRMAN. Mr. Condon? 

STATEMENT OF LEONARD W. CONDON, DIRECTOR, INTERNATIONAL BUSINESS RELATIONS, ALTRIA CORPORATE 

SERVICES, INC., WASHINGTON, DC, ON BEHALF OF THE GROCERY MANUFACTURERS ASSOCIATION 

Mr. CONDON. Thank you, Mr. Chairman and Mrs. Lincoln. I appreciate the opportunity to share the views of the Grocery 

ManufacturersAssociation on the status of the WTO negotiations. 

GMA strongly supports the talks. We believe the Doha Development Agenda offers huge potential for expanding U.S. processed 

food exports. 

Processed food remains a significant and increasingly important 

component of U.S. agriculture. Global processed food sales now 

total $3.2 trillion, about three-fourths of total world food sales. Annual U.S. processed food exports exceed $19 billion and now account for one-third of total U.S. agricultural exports. 

With 95 percent of the world’s consumers living outside the U.S., 

future growth of the U.S. food and agriculture complex will be 

closely tied to our ability to expand exports. Emerging markets 

offer enormous potential. The annual growth rate for processed 

food sales in developing countries range from 7 percent in uppermiddle-income countries to 28 percent in lower-middle-income 

countries, versus a two- to three-percent growth for developed 

countries. 

Processed foods provide an important export gateway for many 

bulk commodities. My company, Kraft Foods, for example, purchased $3.6 billion worth of farm commodities for use in our U.S. 

processing plants last year. This included $1.3 billion worth of 

dairy products, nearly half-a-billion dollars worth of pork, and almost a quarter-of-a-billion dollars worth of sugar. Worldwide, Kraft 

buys $7 billion worth of farm commodities annually. 

U.S. processed food exports grew rapidly in the 1970’s and 

1980’s. By the 1990’s, processed foods represented a greater share 

of agricultural exports than bulk commodities. Since the late 

1990’s, however, growth in exports has leveled off. Despite progress 

in the Uruguay Round, significant trade barriers remain. 

Tariffs on agriculture products are excessive, 62 percent compared with a global average of only 4 percent for industrial products. Tariffs on processed products tend to be even higher than the 

42

average. The UruguayRound also created tariff rate quotas for sensitive products, like sugar and dairy, that are key ingredients in 

many processed food products. U.S. TRQs restrict access to key 

commodity markets and keep our raw material prices higher than 

they would be otherwise. This impairs our ability to be globally 

competitive. Unjustifiable labeling requirements, burdensome certification rules, and unique packaging standards also restrict processed food exports. 

In the ongoingWTO agriculture negotiations, GMA wants to 

achieve new commercially meaningful access for food products. We 

are pleased that negotiators have agreed in principle to a formula 

that will cut high tariffs more than low ones. We urge as ambitious 

a formula as possible to reduce tariff peaks, address tariff escalation, and most importantly, achieve substantial reductions in 

both bound and applied tariff rates. 

The concept of, quote, ‘‘substantial improvements in market access,’’ should be applied to all products, even those considered sensitive. The U.S. has far more to gain by pursuing an ambitious tariff-cutting formula for all products than an agenda centered on protecting our sensitive commodities. 

We also support a tariff cap in order to allow meaningful market 

access for all products. Increased market access for sensitive products must come from tariff cuts, substantial increases in TRQs, or 

a combination of the two. 

On domestic support, amber box payments must be reduced and 

capped on a product-specific basis to achieve equitable reductions. 

To ensure that domestic support policies are minimally trade distorting, new disciplines should be developed for the expanded blue 

box and there should be a commitment to reduce blue box support 

over time. 

Agricultural export subsidies are reprehensible trade policy instruments. They should be terminated within 5 years. 

GMA remains extremely concerned about the EU’s aggressive 

push for new protections for geographical indications, especially its 

proposal to claw back rights to names that the U.S. considers generic, like parmesan and feta. In many cases, Kraft and other U.S. 

companies have built brands around these generic names. The EU 

demands to rescind the rights to these and other names should be 

flatly rejected. 

Finally, trade is the engine of global economic growth. A successful conclusion to the Doha Development Agenda will boost world 

economic activity, lift millions of suffering people out of poverty, resolve a number of festering trade frictions, and restore confidence 

in the global trading system. However, a deal is not possible without an acceptable outcome on agriculture. With our abundant natural resources, highly efficient agriculture production system, and 

superior marketing capabilities, we are convinced that U.S. food 

and agriculture producers can only gain from new WTO rules that 

will role back government intervention in the agriculture production and trading system. 

Thank you very much. 

The CHAIRMAN. Thank you. 

[The prepared statement of Mr. Condon can be found in the appendix on page 105.] 

43

The CHAIRMAN. Mr. Viso, I understand I mispronounced your 

name earlier. For that, I apologize. We lookay forward to your comments. 

STATEMENT OF MARK VISO, VICE PRESIDENT OF OPERATIONS, INTERNATIONAL PROGRAM GROUP, WORLD VISION, 

WASHINGTON, DC 

Mr. VISO. Thank you. Mr. Chairman, good morning and thank 

you for inviting World Vision to testify today. 

World Vision recognizes the staunch support this committee has 

shown over past decades for ensuring that hungry people around 

the world are fed and provided a helping hand. Your track record 

reflects a genuine concern and empathy for the world’ spoor. I am 

sure this will continue and we thank you. 

We would also like to recognize and thank Senator Johanns and 

Ambassador Portman for their support of food aid as well as thank 

Senators Harkin and Roberts for their comments here today. 

My testimony will focus on food aid in the WTO Doha Round 

trade negotiations. It reflects the views of the 16 American private 

voluntary organizations and cooperatives, jointly called PVO’s, that 

are members of the Coalition for Food Aid. In partnership with the 

communities we serve, we use food aid to improve the well-being 

and food security of poor and vulnerable people. 

Coalition members have a long history with Food for Peace and 

USDA, providing food to millions of hungry men, women, and children who are in desperate need of assistance. Rather than just providing a meal today, we link food aid to long-term development programs so people can build a better tomorrow. 

Today, however, the future availability of food aid is in jeopardy 

due to proposals made during the Doha Round negotiations. At the 

USDA Kansas City Food Aid Conference in May of this year, Agriculture Secretary Mike Johanns outlined three critical issues that 

we believe could form a solid basis for a U.S. position in the 

DohaRound. 

First, the Secretary stated, we understand the important, often 

lifesaving role of food aid. Unfortunately, others in some countries 

take a dim view of the way in which U.S. food aid is delivered, 

characterizing it as a subsidy for our producers. We hear, no, this 

is not the case. 

Mr. Chairman, we agree. Food aid is humanitarian in essence 

and nature and should not be treated as an agricultural subsidy 

program. The driving force behind U.S. food aid is not negotiational 

subsidies to producers, but rather the assessed humanitarian needs 

in recipient countries. As recipient countries themselves have commented during the Doha negotiations, the needs of recipients 

should come first and food aid must remain available for both 

chronic and emergency needs. 

Second, Secretary Johanns said, what the world needs is more 

food aid commodities, more cash, and more donors, not new and 

impractical rules that require everyone to contribute in exactly the 

same way. We agree. What we absolutely concur is that more food 

aid and cash is indeed needed, as important a point as the need 

to maintain the various ways food aid is contributed. 

44

Several exporting countries claim that in-kind food aid creates 

unfair competition for their commercial agricultural exports and 

have put forth proposals to restrict or eliminate food aid. The most 

extreme suggestion is to phaseout in-kind food aid, defined as food 

procured in the donor country, and then only permit food in times 

of crisis. 

Based on our decades of work in partnership with those who receive aid, we believe that a variety of options for providing food aid 

are needed, including in-kind commodities for targeted distribution 

as well as cash available for local purchase and program support 

so that a program can be tailored to meet the specific context and 

needs of the recipients. 

Other proposals would require all food aid to go through international organizations and would eliminate non-emergency food 

aid. This would, for example, no longer allow World Vision and 

other U.S. PVO’s to directly partner with the U.S. Government to 

provide food aid for mother-child health care, food for education, 

and other agricultural development projects. We urge the committee to work to maintain a variety of food aid delivery options 

as well as the role of American PVO’s in food aid programming. 

Third, Secretary Johanns said we also believe that any new disciplines applied to food aid should be discussed by international 

food aid experts, not just trade experts negotiating the trade agreement. We agree with Secretary Johanns once again. TheWTO’s objective is to provide ground rules for international commercial 

trade, not international aid. While only governments participate in 

negotiations, much of the expertise in food aid lies with PVO’s and 

other organizations that implement programs in recipient countries. These groups approach food aid as a humanitarian program 

rather an agricultural trade program and work in partnership with 

local communities to save lives. 

What is not discussed enough at the Doha negotiations by those 

who would criticize U.S. food aid programs are the many benefits 

these programs provide. Millions are benefiting as food aid provides 

the nutrition needed to complement the use of anti-retroviral drugs 

in HIV-AIDS programs. Food for Work supports the construction of 

sanitation and clean water infrastructure in poor communities. And 

school meals and maternal-child health programs care for hungry 

children and improve their chances for a healthy, productive, enriching life. 

We urge you to continue keeping the poor and hungry at the center of decisions regarding the Doha discussions on food aid. If we 

don’t make the right decisions at Doha today, the plight of the 

world’s poor will be alarmingly worse tomorrow. We ask that the 

world’s poor do not become the unfortunate and unintended victims 

of negotiations of international trade agreements. 

Mr. Chairman, thank you again. I would be happy to try and answer any questions you have if time permits. 

The CHAIRMAN. Thank you very much. 

[The prepared statement of Mr. Viso can be found in the appendix on page 113.] 

The CHAIRMAN. Ms. Erickson, in your testimony, you note that 

the best means for ensuring the continued positive impact of our 

sector on the U.S. economy is to achieve commercial and meaningVerDate 0ct 09 2002 13:26 Aug 03, 2006 Jkt 000000 PO 00000 Frm 00048 Fmt 6633 Sfmt 6633 C:\DOCS\28419.TXT TOSHD PsN: LAVERN
45

ful results in the WTO negotiations on agriculture. In your opinion, 

what is the most important objective that must be maintained in 

order to conclude the WTO negotiations on agriculture and what 

political hurdles need to be overcome in order to reach the critical 

mass for a consensus to be developed? 

Ms. Erickson. Well, the balance amongst the pillars is truly one 

of the more important ones, and clearly, the United States is willing to show its flexibility, but what we are seeing is that other 

countries, developing countries and clearly the European Union, 

are perhaps not as interested in the true market access improvements that are going to be needed to create the delicate balance 

and the political sign-on around the world. 

And when it comes to market access, the cuts, as you know, are 

being taken from the bound rates, and if they are not significant 

enough, substantial enough, they may end up being above the applied rates today. So we need to see that when each of the members of the AgTrade Coalition hit the ‘‘total’’ button on the calculator, once they see what the deal lookays like, it has got to result 

in a net improvement in their economic situation. 

The CHAIRMAN. Mr. Helms, like you, I am concerned about the 

relative impact regarding proposals to significantly reduce domestic 

support levels. Even if the United States agrees to more reasonable 

proposals offered in the agriculture negotiations, Congress will not 

be able to model the next farm bill after the 2002 legislation. Your 

testimony highlights the impacts of the various proposals. What 

would be the likely impacts at the farm gate level, and how many 

farmers would we lose and what would be the impact on per capita 

farm income in the cotton belt? 

Mr. HELMS. I think some of the proposed models that would advocate as much as a 50 percent cut in our aggregate measurement, 

and that would probably equate to about a five to ten percent cut 

in our loan levels, which to the average cotton farmer could mean 

as much as a five percent—five cent reduction in his loan. The average cotton farmer probably would be a 1,000–acre farmer, so you 

are talking $50,000, probably average per producer. That is a good 

number, I think, for us to use for an example. Of course, this would 

equate, then, into, I think a half-billion dollars over the entire cotton industry within the United States. There would definitely be a 

lot of producers who couldn’t stand to have those type of reductions 

in their income. We have not developed any numbers yet as to how 

many we think there would be, but we know it is significant. 

The CHAIRMAN. Mr. Condon, you state the emerging economies 

hold the most potential for increased exports of processed food 

products. To which countries in particular are you most interested 

in securing additional market access and what would the cost be 

to the food industry of the EU’s proposals on geographical indications? 

Mr. CONDON. With respect to the emerging economies, the ones 

we are most interested in are the ones with large populations and 

rising incomes and they would be countries like China, of course, 

India, Brazil, Russia. Most of those countries—three of those countries are currently members of the WTO. Russia is in the process 

of acceding to the WTO. All of them have relatively high tariffs. To 

the extent we can get those tariffs down and get more processed 

46

foods into those countries, that is a big gain for the processed food 

industry and for the bulk commodities that supply us. 

With regard to your question on geographic indications, the real 

answer there is we don’t know what it will cost us, but it is likely 

to cost us a lot, and I will use, for example, our green can of parmesan cheese that Kraft sells. We are one of the biggest manufacturers of parmesan cheese in the world. We can’t sell parmesan 

cheese under that name in the EU. In the EU, we sell it as 

parmacello, because we can’t use the name parmesan. 

In the U.S. market, for example, if we had to repackage our product, relabel our product, there would be considerable costs involved 

in doing that, but the big problem for us would be then convincing 

the consumers that it is the same product, it just has to have a different name. We just don’t know what it would cost us to conduct 

a new marketing campaign to maintain confidence in our product, 

but there would be considerable cost to us and considerable cost to 

other members of the U.S. food processing industry. 

The CHAIRMAN. Mr. Viso, you mentioned in your testimony that 

proposals to eliminate the direct role of private voluntary organizations to eliminate developmental food aid, to eliminate monetization, and to move to a cash-only system were problematic, and I 

think that was highlighted in Senator Harkin’s comments. Would 

you briefly explain from your position why each of these four proposals would be problematic? 

Mr. VISO. Yes. Thank you for the question. I will try and go over 

as many as I can. We consider these proposals problematic and 

perhaps even dangerous for several reasons. 

One, it would eliminate the ability for the U.S. Government to 

partner directly with American private voluntary organizations and 

we would think that that adds another layer of bureaucracy and 

cost and reduces the level of accountability and transparency visa-vis the U.S. Government’s programming and policy intentions, for 

one. 

We think that the proposals would eliminate our ability to choose 

the most appropriate food aid delivery mechanism, cash or in-kind 

or monetization, and allow us to make the best possible program 

to fit the context and needs of the foreign hungry recipients. 

Third, it would eliminate our ability to address non-emergency 

situations, longstanding chronically poor, chronically food deficit 

situations like much of Africa is facing today. 

So those are just, very briefly, three main reasons why we think 

the current proposals are ill advised. 

The CHAIRMAN. Let me thank each one of you for taking time to 

be here today. Let me also say that your full statements will be entered into the record, as well as full statements of Secretary 

Johanns andAmbassador Portman. We will leave the record open 

until Friday of this week for any member wishing to submit a 

statement for the record. 

Again, as we move toward WTO, we are going to be calling on 

you folks to use you as resources to make sure that we are negotiating the right kind of agreements for farmers, ranchers, and the 

American public, and we thank you for your continued willingness 

to work with us. 

With that, this hearing will be concluded. 

47

[Whereupon, at 11:42 a.m., the committee was adjourned.] 

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A P P E N D I X

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