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[Senate Hearing 106-973]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 106-973

              TRADE INJURY COMPENSATION ACT OF 2000 (TICA)

=======================================================================

                                HEARING

                               before the

                       SUBCOMMITTEE ON FORESTRY,
                CONSERVATION, AND RURAL REVITIALIZATION
                                 OF THE
                       COMMITTEE ON AGRICULTURE,
                        NUTRITION, AND FORESTRY
                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                                   ON

              TRADE INJURY COMPENSATION ACT OF 2000 (TICA)

                               __________

                           SEPTEMBER 25, 2000

                               __________

                       Printed for the use of the
           Committee on Agriculture, Nutrition, and Forestry

                   U.S. GOVERNMENT PRINTING OFFICE
71-411                     WASHINGTON : 2001

_______________________________________________________________________
            For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 
                                 20402

           COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

                  RICHARD G. LUGAR, Indiana, Chairman

JESSE HELMS, North Carolina          TOM HARKIN, Iowa
THAD COCHRAN, Mississippi            PATRICK J. LEAHY, Vermont
MITCH McCONNELL, Kentucky            KENT CONRAD, North Dakota
PAT ROBERTS, Kansas                  THOMAS A. DASCHLE, South Dakota
PETER G. FITZGERALD, Illinois        MAX BAUCUS, Montana
CHARLES E. GRASSLEY, Iowa            J. ROBERT KERREY, Nebraska
LARRY E. CRAIG, Idaho                TIM JOHNSON, South Dakota
RICK SANTORUM, Pennsylvania          BLANCHE L. LINCOLN, Arkansas
GORDON SMITH, Oregon                 ZELL MILLIER, Georgia

                       Keith Luse, Staff Director

                    David L. Johnson, Chief Counsel

                      Robert E. Sturm, Chief Clerk

            Mark Halverson, Staff Director for the Minority

                                  (ii)

  
                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing:

Monday, September 25, 2000, Trade Injury Compensation Act of 2000 
  (TICA).........................................................     1

Appendix:
Monday, September 25, 2000.......................................    19
Document(s) submitted for the record:
Monday, September 25, 2000.......................................    51

                              ----------                              

                       Monday, September 25, 2000
                    STATEMENTS PRESENTED BY SENATORS

Craig, Hon. Larry E., a U.S. Senator from Idaho, Chairman, 
  Subcommittee on Forestry, Conservation and Rural 
  Revitalization, of the Committee on Agriculture, Nutrition and 
  Forestry.......................................................     1
Baucus, Hon. Max, a U.S. Senator from Montana, Ranking Member, 
  Subcommittee on Forestry, Conservation and Rural 
  Revitalization, of the Committee on Agriculture, Nutrition and 
  Forestry.......................................................     3
                              ----------                              

                               WITNESSES

Galvin, Timothy J., Administrator, Foreign Agticulture Service, 
  U.S. Department of Agriculture, Washington, DC.................    10
Moore, Dale, Executive Director, Legislative Affairs, National 
  Cattlemen's Beef Association, Washington, DC...................    12
Ambassador Peter Scher, Exq., Former USTR Special Agricultural 
  Trade Negotiator, Partner, Mayer, Brown & Platt, Washington, DC     5
                              ----------                              

                                APPENDIX

Prepared Statements:
    Craig, Hon. Larry............................................    20
    Baucus, Hon. Max.............................................    22
    Burghardt, Guenter...........................................    48
    Galvin, Timothy J............................................    25
    Hauck, Dana R................................................    40
    Scher, Peter.................................................    34
Document(s) submitted for the record:
    Letter to Gruenter Burghardt, with enclosure (Daily Human 
      Estrogen Production) submitted by George Hall, President, 
      NCBA.......................................................    52
    Editorial from Commerce Beef Hormone Retail list Trade Bill, 
      submitted by Timothy J. Galvin.............................    60

 
              TRADE INJURY COMPENSATION ACT OF 2000 (TICA)

                              ----------                              

                       MONDAY, SEPTEMBER 25, 2000

                                       U.S. Senate,
         Subcommittee on Forestry, Conservation, and Rural 
Revitalization, of the Committee on Agriculture, Nutrition, 
                                              and Forestry,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 9:37 a.m., in 
room SR-328A, Russell Senate Office Building, Hon. Larry E. 
Craig, (Chairman of the Subcommittee), presiding.
    Present or submitting a statement: Senators Craig and 
Baucus.

 OPENING STATEMENT OF HON. LARRY E. CRAIG, A U.S. SENATOR FROM 
 IDAHO, CHAIRMAN, SUBCOMMITTEE ON FORESTRY, CONSERVATION, AND 
    RURAL REVITALIZATION, OF THE COMMITTEE ON AGRICULTURE, 
                    NUTRITION, AND FORESTRY

    The Chairman. Good morning, everyone. The Subcommittee on 
Forestry, Conservation, and Rural Revitalization will come to 
order. Of course, this is a subcommittee of the full Committee 
of Agriculture, Nutrition, and Forestry.
    The Subcommittee today is here to take testimony on S. 
2709, the Trade Injury Compensation Act of 2000 known as TICA, 
as it is known by most of us, at least, and we will also be 
looking generally at the issue of European Union's ban on U.S. 
beef.
    Since 1989, the European Union has banned the importation 
of U.S. beef on what many of us believe is a false premise that 
additional naturally occurring growth hormones in U.S. beef 
constitutes a health risk to the consumer. This premise is 
demonstrably scientifically false, as has been found out by the 
World Trade Organization.
    In 1999, the WTO authorized $116.8 million in retaliatory 
duties. Theoretically, imposing 100-percent duties would block 
importation into the U.S. of $116.8 million worth of EU 
products targeted with such duties. But the U.S. implementation 
of WTO's retaliation authority has not been effective. The EU 
ban of all U.S. beef continues and EU goods carrying 100-
percent duties are still being imported into America. USTR 
calculates that $35.65 million in EU goods with 100-percent 
duty were still imported between July 1999 and June 2000.
    To strengthen the retaliation tool, Congress instructed the 
USTR in the African-Caribbean Basin Initiative legislation to 
impose carousel retaliation by June 20, 1999. We want to know 
why USTR has not yet acted to impose carousel.
    I am a cosponsor of TICA, which also seeks to make 
retaliatory duties more effective. Currently, such duties are 
deposited in Treasury general revenue accounts. TICA would 
segregate into a trust fund that retaliatory duties collected 
by EU goods carrying 100-percent duty that would nevertheless 
come into the U.S. The Secretary of Agriculture would then 
release the money to a duty-constituted U.S. beef industry 
promotion board to promote U.S. beef in foreign markets.
    The U.S. beef industry's real goal here is not retaliation 
but rather re-access to the European market. Retaliation is 
just a means to an end, but if there are duties collected 
beyond the 100-percent tariff placed on targeted EU products, 
the U.S. beef industry should have the money to lessen the harm 
caused by the EU ban. TICA is a good method to accomplish that 
goal as we continue to seek total removal of the ban.
    The Subcommittee is pleased this morning to have witnesses 
with a great understanding in this controversy and we welcome 
all of you here today. Because of the scheduling of this 
hearing, we had some conflict in getting USTR folks with us, 
not their fault because of their schedules and their 
involvement in Europe.
    In regard to the record, Ambassador Gunther Burghardt of 
the delegation of the European Commission was invited to 
testify today on behalf of the European Union. Ambassador 
Burghardt responded that EU policy barred his appearance before 
the U.S. Congress. However, the Ambassador has submitted a 
written statement on the subject of compensation and requests 
that it be included in the record, which it will be without 
objection.
    Just a couple of housekeeping notes before I turn to my 
colleague, Senator Baucus, for an opening remark or remarks 
that he would like to make. The Subcommittee will ask the 
witnesses to hold their oral testimony to 5-minutes and then we 
will subject you to any questioning and we will also this 
morning allow Ambassador Peter Scher to go first. I think he 
has got an airplane to catch or something like that, is that 
not correct?
    Ambassador Scher. That is. Thank you.
    The Chairman. A fast ride out of town.
    [Laughter.]
    The Chairman. Anyway, thank you all very much for being 
here. Now let me turn to my colleague, Max Baucus, who really 
has played a role in bringing these hearings. He was insistent, 
as many of us have been, that we get more information on this 
issue to understand why we are not responding in the manner 
that we have an opportunity to respond. So let me turn to my 
colleague from Montana for any comments he would like to make.
    [The prepared statement of Chairman Craig can be found in 
the appendix on page 20.]
    [The prepared statement of Mr. Burghardt can be found in 
the appendix on page 48.]

  STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR FROM MONTANA, 
  RANKING MEMBER, SUBCOMMITTEE ON FORESTRY, CONSERVATION AND 
RURAL REVITALIZATION OF THE COMMITTEE ON AGRICULTURE, NUTRITION 
                          AND FORESTRY

    Senator Baucus. Thank you very much, Mr. Chairman. I 
appreciate your holding this hearing on a bill which I 
introduced to hopefully help the beef industry, which is not 
helped at all by current WTO ruling, and more particularly by 
European intransigence in not abiding by a WTO dispute panel 
decision. I thank you very much, and in particular the beef 
industry thanks you. I also thank our witnesses for changing 
their schedules. I know it is true, Ambassador Scher had made 
schedule changes to accommodate us here today and we very much 
appreciate your changing, Mr. Ambassador.
    I might point out that this is a bipartisan group in favor 
of this legislation, Senators Bingaman, Dorgan, Daschle, 
Kerrey, Johnson, Thomas, Ashcroft, as well as you, Mr. 
Chairman, and the fellow co-Chairman of the Senate Beef Caucus, 
Senator Bond. The legislation establishes a beef industry 
compensation trust fund to help the United States cattle 
industry and applied to the European Union's illegal ban on 
beef treated with hormones and the EU's refusal to abide by the 
WTO decision.
    Last year, the World Trade Organization approved 
retaliation in the amount of $117 million when the European 
Union, ignoring a WTO decision, refused to open its market to 
American beef. The purpose of retaliation clearly is to inflict 
pain on the guilty party so that they will change their rules 
and abide by a WTO decision. Yet the EU continues its 
recalcitrance. Frankly, I think this is nothing short of 
outrageous.
    We are forced to enact carousel legislation to revise the 
retaliation list every 6-months in the hope that that might 
work. In the meantime, we need to take action to press harder 
on compliance, and also importantly to give some relief to our 
domestic industry.
    Mr. Chairman, we have a broader problem here. When the WTO 
finds a foreign practice illegal under WTO rules and the guilty 
party refuses to take action, the damage to the American 
industry continues. The increase in tariffs on selected 
European exports to the United States does nothing to help the 
beef industry.
    It is no different than the so-called ``chicken war'' 
between the United States and Europe in the early 1960s. The 
GATT determined that U.S. chicken farmers were harmed by 
European tariffs on poultry. The United States retaliated, 
principally with the French and Germans who were major 
violators, by increasing tariffs on products such as French 
cognac and German Volkswagen vans. The result, U.S. chicken 
farmers not helped, French and German chicken farmers still 
protected, and innocent German Volkswagen workers and innocent 
U.S. Volkswagen purchasers harmed.
    It is no wonder trade retaliation is not the most popular 
kid on the block. We win the case at the WTO and the guilty 
party refuses to make changes. Our injured industry loses 
twice. They get no improvement in the market access. They get 
no benefit from retaliation.
    The Trade Injury Compensation Act establishes a mechanism 
for using the tariffs imposed on the EU to aid the injured beef 
producers in this country. At present, the additional tariff 
revenues received from retaliation simply go to the Treasury's 
general fund. That amounted to $36 million between July of last 
year and June of this year.
    This bill establishes a trust fund so that the affected 
industry will receive those revenues as compensation for its 
injury. The Secretary of Agriculture would call upon the trust 
fund to provide grants to a nationally recognized beef 
promotion and research board. The money would support education 
and market promotion for the United States beef industry. This 
would continue until the EU complies with the WTO ruling.
    Now, some critics may complain that this is an improper 
export subsidy as defined by the WTO. It is not. First, 
according to recent WTO appellate body decisions, receipt of 
the money must be contingent upon exports for it to be 
considered a subsidy. TICA money can be used for quality 
improvement in the United States and that is not export 
contingent. Further, market development expenses for 
agricultural products are exempted from the categories of 
prohibited or actionable subsidies by various articles of the 
WTO agreements.
    In a perfect world, we would not need this legislation 
because the EU would abide by its international trade 
commitments, and it is still my hope that the EU will recognize 
the dangerous path that they are on and comply with the WTO 
dispute settlement rulings so that our beef can be sold in the 
EU. Unfortunately, that has not been the case and no resolution 
is looming on the immediate horizon. Therefore, the U.S. beef 
industry as well as U.S. importers continue to pay the price of 
non-compliance.
    To summarize, TICA provides a limited financial benefit to 
the U.S. industry. It is WTO consistent. It gives an additional 
incentive to our foreign competitors to simply cease their 
unfair trade practices. And, it helps an industry that is 
damaged by an EU trade practice which the Europeans refuse to 
fix.
    TICA is a means to an end. We all want the Europeans to 
comply with WTO dispute decisions. The United States is working 
hard to fix a problem that we have with the FSC, Foreign Sales 
Corporation. Europe should do the same on beef hormones and 
bananas. If they will not, we need to do something to help our 
industry.
    TICA is a good measure that bridges the gap between 
compliance and market access, and I thank my colleagues for 
their sponsorship and particularly you, Mr. Chairman, for 
holding the hearing. Hopefully, we can get some action on this, 
if not this year, very quickly next year.
    [The prepared statement of Senator Baucus can be found in 
the appendix on page 22.]
    The Chairman. Max, thank you for your leadership in this 
area.
    Let me introduce to the Committee Tim Galvin, 
Administrator, Foreign Agricultural Service, USDA, along with 
Dale Moore, Executive Director, Legislative Affairs, National 
Cattlemen's Beef Association, and, of course, Ambassador Peter 
Scher, who is the former USTR Special Agricultural Trade 
Negotiator, now a partner in Mayer, Brown and Platt. As I 
mentioned earlier, there are some time restraints on you, 
Ambassador Scher, so we will allow you to proceed first, if you 
would, please.

  STATEMENT OF PETER SCHER, FORMER USTR SPECIAL AGRICULTURAL 
    TRADE NEGOTIATOR, AND PARTNER, MAYER, BROWN AND PLATT, 
                        WASHINGTON, DC.

    Mr. Scher. Mr. Chairman, thank you, and thank you, Senator 
Baucus. I appreciate your consideration. I am pleased to have 
the opportunity to testify this morning regarding the European 
ban on U.S. beef and S. 2709 in particular. I have submitted my 
full remarks for the record and in the interest of time will 
summarize them for the Committee.
    Mr. Chairman, I would like to make several points. First, 
putting this dispute in the larger context of the WTO dispute 
settlement system, in particular to talk about the difficult 
balance we have to strike between the issues of compliance with 
WTO decisions and the sovereignty of all countries. As both of 
you will probably recall, the question of sovereignty was 
central to the debate in Congress over U.S. entry into the WTO 
in 1994. Perhaps more than any other issue, we were debating 
what many of the critics said was an unwise subjecting of our 
laws and our own authorities to the jurisdiction of bureaucrats 
from Geneva, and the Congress was clear and the United States 
was clear that the United States could not order a country to 
change its laws.
    So even in the face of EU recalcitrance on both beef and 
bananas, the painful reality we have to face is that in both of 
these cases, the system has worked as it was intended and as 
the United States intended. The European Union has the right 
under the laws and under the agreements that we negotiated not 
to change its rules, and, of course, in response, we the 
injured country have the right to impose a penalty.
    I want to make no mistake that I am in no way defending the 
European Union, because I do believe that their approach to 
both the beef and banana cases has damaged the credibility of 
the WTO system, particularly true in the beef case. It has 
become very apparent that at least at this time, the European 
Union lacks the political will to allow the importation of 
hormone-treated beef. As much as I and members of this Congress 
and I think most of us here would disagree with this view, that 
is the reality.
    Frankly, I believe it would be better for the system as a 
whole for the EU to simply acknowledge their problem, accept 
the findings of the panel, invoke its right to maintain its 
regulation, and pay the penalties imposed by the WTO. Frankly, 
there can be no greater demonstration that the WTO does respect 
the sovereign power of nations than such an act. But instead of 
this honest and lawful approach, what the European Commission 
has embarked on is another effort after literally 20-years of 
failure to try to use pop science to justify a ban that has no 
scientific or health rationale. In fact, the Financial Times, a 
London-based newspaper, last year commented that the EU's ban 
is not a scientific ban but a political ban.
    The irony of all this is, of course, that the EU was the 
prime cheerleader for a new WTO dispute settlement system, 
believing that the U.S. had too much power as the judge, and as 
they call it, the jury and the executioner of our 301 law and 
they believe that the new system would help, hopefully, in 
their view, kill that.
    Some of you may remember, during the early days, it was the 
European Trade Commissioner who came to Washington and lectured 
all of us on the need to use the new system to resolve 
disputes. Well, we have used that system in the United States, 
and even when we have not prevailed, we have taken great 
efforts to comply with the results of the panel decisions, even 
when not politically popular. Unfortunately, the European Union 
has not taken a similar approach.
    Mr. Chairman, I will not go through the history of this 
dispute. I think we all know that it has gone on for nearly 20-
years and retaliation was imposed by President Bush beginning 
in 1989, despite efforts by the U.S. to mediate the dispute. 
When the WTO came into effect in 1995, we were for the first 
time able to litigate successfully the ban under the new 
sanitary and phytosanitary agreement, and so far as you both 
talked about the sanctions that we have put in place as a 
result of the WTO decisions, have not changed the EU's 
behavior.
    Mr. Chairman, this dispute holds important lessons about 
the WTO dispute settlement process and how we should respond 
when countries fail to comply with its ruling. As a starting 
point, I think it is important to remember that in the vast 
majority of cases, the dispute settlement process has worked 
because in most instances, countries found to be in violation 
of the WTO amend their trade rules accordingly. And when the 
dispute settlement process has not resulted in changed 
behavior, it is again important to remember the underlying 
reason, that the WTO does not have the power to order changes 
in these rules.
    Since the EU has yet to lift its ban on hormone-treated 
beef, the U.S. has rightfully retaliated, but I think there are 
a couple of ways in which the current retaliation system has 
probably fallen short, particularly for U.S. beef producers, 
and S. 2709, the TICA bill, addresses one of these 
shortcomings. TICA seeks to, as you both talked about, ensure 
that the injured party in a trade dispute, namely the beef 
industry, receives relief. While the current system imposes a 
price on the EU, it does nothing to provide relief to American 
ranchers.
    There is an additional refinement as the Committee 
considers this problem that you and the administration may want 
to consider and that is the current retaliation practice has 
been to impose 100-percent tariffs on goods with the express 
purpose of keeping those goods out of the U.S. market. Well, 
this approach is sometimes sufficient to force an offending 
country to bring its rules into compliance, and, in fact, just 
threat of these tariffs has brought countries, including Canada 
in a case last year, into compliance. Frankly, it has certainly 
moved the EU in the banana dispute a lot farther than we would 
have thought.
    There are several problems which need to be considered, 
some of which, Senator Baucus, you referred to in your 
statement. First, we have to deal with the real problem of 
harming innocent bystanders. In the case of beef and bananas, 
USTR received more than 400 comments seeking the removal of 
particular items on the list.
    A second issue with attempting to completely block goods 
when you are trying to create revenue to compensate an injured 
industry is that when you block goods, it creates little if any 
tariff revenue. In cases such as this, as the beef hormone 
dispute, where countries refuse to comply and some type of 
retaliation is already assumed, one thing to consider may be a 
lower level of tariff, one which imposes significant penalty, 
harms fewer innocent bystanders because it allows goods to be 
traded, but generates real tariff revenue which can be 
channeled to the aggrieved parties.
    For example, instead of 100-percent tariffs no a small list 
of goods, we might consider imposing a ten to 15- or 20-percent 
tariff on a larger list of goods, which would clearly 
disadvantage those imported goods in the U.S. market because 
U.S. goods would be traded lower. It would not block those 
goods and would, therefore, generate actual tariff revenue 
which could provide appropriate compensation for the aggrieved 
party in a trade action.
    Make no mistake, we should never be cavalier about raising 
tariffs, even when authorized to do so, and there is no, I do 
not believe, having dealt with both of these disputes, there is 
a cookie-cutter approach that we could say, in this case, we 
should always impose 100-percent tariffs or we should always 
impose lower tariffs. I think we have to deal with the reality 
of the situation and when it appears, as in this situation, 
that a country is refusing to comply with the decision and our 
industry is not finding any relief in those limited number of 
cases, we should be thinking about new approaches.
    There are clearly no clear-cut solutions to this dispute. 
While the current system has proved successful, refinements 
such as TICA and possibly adjustments to tariff levels could 
make the system more effective, and I applaud both of you, Mr. 
Chairman and Senator Baucus, because this hearing is an 
important step towards accomplishing that goal. Thank you for 
your time.
    [The prepared statement of Mr. Scher can be found in the 
appendix on page 34.]
    The Chairman. Ambassador, thank you very much.
    We are going to ask you some questions so you can exit, if 
you wish, and then we will take testimony from our witnesses. 
You suggested the possibility of spreading, if you would, 
dropping the tariff down and spreading it to possibly greater 
leverage, greater revenue flows in tariff, whatever might be 
the end result. But without it being scored as a budget action, 
how would we use these revenues to provide appropriate 
compensation for the aggrieved party in a trade action?
    Mr. Scher. I think the same way. I think it would have to 
be done in conjunction with TICA. I mean, what I am suggesting 
is right now, you have 100-percent tariffs imposed on European 
goods. While some goods are still traded and still come in and 
some importers actually pay that tariff, I do not know what the 
current numbers suggest, but it is not a tremendous amount of 
tariff revenue. So I think it would be the same approach.
    Rather than 100-percent, you would simply have WTO 
authorize--WTO does not tell you how much the tariff needs to 
be. It could be 500-percent. It could be 5-percent. So in this 
case, you would simply to--if one of your aims is to try to 
provide relief to the industry, you would try to find a level 
that would generate a substantial amount of revenue within the 
amount authorized by the WTO.
    The Chairman. What are the products on the list now that 
have basically had their price doubled by this tariff and are 
still being purchased by American consumers?
    Mr. Scher. How much is still coming out? Mr. Galvin, I do 
not have the specifics on what is still coming in.
    The Chairman. We will ask him, then, about it when we get 
to him.
    Mr. Scher. Tim has that. I know there are some cheeses and 
some dijon mustard and some things like that, luxury items. I 
know, for example, some of the high-priced luxury handbags, for 
example, that have come in, I think there has been tariff 
revenue generated by this. I do not have the latest numbers on 
what has come in.
    The Chairman. USTR data for July 1999 to June 2000 say that 
$35.6 million of 100-percent duty EU goods are still being 
imported. Do you agree that this means that the U.S. beef 
industry last year lost the impact of 30.5-percent of the 
$116.8 million in WTO authorized trade retaliation for the 
illegal ban on the industry?
    Mr. Scher. Well, they certainly have not received any 
benefit from--they have lost $116 million in terms of lost 
export opportunities into Europe and they have received no 
benefit from the results of the tariff revenue generated.
    The Chairman. Ambassador, thank you very much. We 
appreciate your testimony.
    Senator Baucus?
    Senator Baucus. I thank you, Mr. Chairman.
    Mr. Ambassador, what about the potential challenges to this 
legislation? How bulletproof have we made it thus far and how 
might we modify it to withstand challenges?
    Mr. Scher. I think there will be two challenges. One 
challenge, as you talked about in your statement, is does it 
create WTO consistencies, or inconsistencies, and I think, as 
you said, we would need to make sure that as the fund would be 
established to benefit cattle farmers, that it not be tied 
directly to exports, and that would be what would create a 
problem. But certainly the money could be used for export 
promotion, which is not WTO consistent. As you said, it could 
be used for quality improvement. I think there are a wide 
variety of areas that it could be used.
    The other, I think, policy challenge, frankly, that I have 
heard in preparing for today's hearing is whether or not we are 
creating a precedent in dumping and in other cases where tariff 
is generated, for example, dumping cases or CBD cases or 201 
cases, and the suggestion is when the steel industry or the 
lamb industry or some other industry has tariffs imposed on the 
imports of a foreign product, would they be entitled under this 
precedent to that revenue?
    I would argue that there is a very important distinction in 
these two cases. In a dumping case or in a CBD case or a 201 
case, the injured industry is receiving relief in this market. 
So when the U.S. imposes higher tariffs, for example, on 
imported steel, domestic steel producers are benefitted. When 
we impose quotas and tariffs on lamb from New Zealand and 
Australia, that is designed to benefit the domestic industry. 
So I think in those cases, they are already receiving a benefit 
from the trade action.
    In this case, the beef industry is receiving nothing. We 
have had retaliation in effect on and off now for 10-years and 
the beef industry has not received any benefit from that 
action. So I think that is the second challenge, I think, that 
will be----
    Senator Baucus. I appreciate that. One frustration, 
clearly, is Europe just does not seem to have enough pressure 
on it that it does not have to abide by these WTO rulings, that 
the tariff just is not enough to force them to do what they 
should do. An idea just now occurred to me. What about some 
kind of MFN principle here, changes in the WTO. That is, the 
effect of the WTO ruling is that the United States is not doing 
anything illegal. That is, it is not a trade barrier. It is a 
level playing field.
    So applying the principles of MFN, if Europe is found to 
take an unfair action against the United States and the WTO 
dispute panel finds, yes, that is unfair, why should the 
penalty not apply worldwide, not just to the United States? 
Even though the United States is the defendant, is there some 
way, some MFN principle here? I do not know exactly what it 
would be----
    Mr. Scher. Yes.
    Senator Baucus.--but it just seems to me that MFN works one 
way but it does not work the other way.
    Mr. Scher. Yes. I mean, as a partial answer to that, in 
this case, in the beef case, for example, and in the banana 
case, other countries do have the right to impose retaliation. 
So, for example, Canada--I do not think it was very much. Tim 
may remember. I think it was maybe $25 or $30 million worth of 
retaliation because Canada was a party to this dispute.
    I think it is something that should be explored. The 
difficulty is, you want to have a proportional response to the 
offense, because the fact is, as much as we all like to whack 
the EU around, and I like to do it as much as anyone else, we 
are receiving benefits from our trade relationship with them 
and I think our agricultural exports are $7, $8, or $9 billion, 
so there are some important benefits we are receiving, so we do 
not want to, in a sense, throw the baby out with the bathwater, 
but we do want to, I think, put serious pressure.
    I think one of the problems that we have seen here, and 
this is, I think, a big problem in the EU, is this goes to the 
whole issue of food safety and the fact that the EU does not 
have an independent food regulatory system that people have 
confidence in. So what happens is politics replaces what should 
be scientific and health decisions, and until the EU actually 
establishes such a system and gives people with credibility the 
authority to make decisions without political interference, I 
think we are going to be facing these problems, particularly in 
animal health and in food safety, for quite some time.
    Senator Baucus. You sure have been working hard in this 
area and I thank you very much, Ambassador.
    Mr. Scher. Thank you.
    The Chairman. Ambassador, thank you. You are certainly 
welcome to leave if you need to.
    I am going to have a time crunch in a few moments and will 
need to step out. Max, what is going to be your schedule?
    Senator Baucus. We are pretty similar.
    The Chairman. Here is how we are going to do this, then. We 
will take one of you and then we will ask that the Committee 
stand in recess for just a few moments and then I will step 
back in, we will complete that, and go to questions. I hope 
that your time will allow that this morning. With that, again, 
Tim Galvin, Administrator, Foreign Agricultural Service, USDA. 
Welcome before the Committee. Please proceed.

    STATEMENT OF TIMOTHY J. GALVIN, ADMINISTRATOR, FOREIGN 
     AGRICULTURAL SERVICE, U.S. DEPARTMENT OF AGRICULTURE, 
                        WASHINGTON, DC.

    Mr. Galvin. Mr. Chairman, Senator Baucus, thank you for the 
invitation to be here today. I would like to ask that my full 
statement be made a part of the record.
    The Chairman. It will be, without objection.
    Mr. Galvin. The beef hormone issue has been a long and 
frustrating one for the U.S. cattle industry. The EU first 
banned beef in 1989, at the time costing our beef producers 
well over $100 million a year in lost sales. After years of 
negotiations, the U.S. eventually took the issue to the WTO on 
the grounds that the EU action was not based on sound science 
and, therefore, was in violation of the sanitary and 
phytosanitary agreement.
    In three separate rulings, the WTO agreed with us that the 
EU had produced no new information against the use of hormones. 
The WTO eventually decided that the damage to the U.S. totaled 
$116.8 million annually, and since July of 1999, the U.S. has 
been imposing punitive duties against an equivalent amount of 
EU exports to the U.S. Those duties are being felt by EU 
exporters today.
    The purpose of the retaliatory duties is relevant with 
regard to the intent of S. 2709, the Trade Injury Compensation 
Act of 2000, introduced by Senator Baucus, yourself, and 
others. As we understand that legislation, it would establish a 
fund financed by the additional duties imposed under the beef 
hormone retaliation list to be used to provide assistance to 
the beef industry for market development, consumer education, 
promotion in overseas markets, and beef quality improvement.
    While we can certainly understand the impetus for the 
legislation, the purpose of the retaliatory duties is to bring 
about WTO compliance by making trade in the sanctioned items 
prohibitive. In other words, the 100-percent duties commonly 
imposed in these cases are intended to be so onerous as to 
prevent trade from occurring and thereby encourage the losing 
party either to eliminate its offending practices or to offer 
compensation in some other fashion. If the duties have the 
intended effect, then the items would not be imported and, 
thus, no duty would be collected. Therefore, a fund established 
on the assumption that such duties would be collected would 
likely realize far less revenue than implied by the 100-percent 
duties.
    Despite the current impasse with the EU, we have made 
efforts to find an interim solution, including the idea of 
labeling U.S. beef for the European market or increasing access 
for non-hormone-treated beef from the U.S. The EU rejected the 
labeling idea and our discussions on increasing access for our 
non-hormone-treated beef were derailed when the EU cut off even 
that market for us this past year. However, that program has 
recently resumed.
    Finally, I would note that despite our problems in Europe, 
U.S. beef exports in general have been doing exceptionally 
well. For the first 10-months of fiscal year 2000, beef exports 
are up by double-digit levels and the current U.S. trade 
surplus in beef is over $1 billion per year.
    Mr. Chairman, that concludes my statement and I would be 
happy to answer any questions.
    [The prepared statement of Mr. Galvin can be found in the 
appendix on page 25.]
    The Chairman. Max, do you have any questions?
    Senator Baucus. No, just that, that is really something, 
the beef exports. On a net basis, where are we?
    Mr. Galvin. On a net?
    Senator Baucus. Yes.
    Mr. Galvin. It is a positive $1 billion.
    Senator Baucus. It was not too many years ago it was 
negative by a huge amount.
    Mr. Galvin. Just since 1990, we have seen this kind of 
growth. It really is incredible.
    Senator Baucus. So Canada, Japan--which countries for 
export?
    Mr. Galvin. Japan, Korea, Mexico. Mexico is number two.
    Senator Baucus. Japan is one, Mexico number two----
    Mr. Galvin. Then I believe Korea.
    Senator Baucus. Thank you very much.
    The Chairman. I will ask a question that joins that one. 
Have you done any guesstimation when you have seen the growth 
in these other areas of the countries you have cited and the 
success of the industry in moving those up double digit, what 
it would have been if we would have had access to the European 
market? I mean, is the $116 million that we talk about a real 
figure today or would it be substantially more than that?
    Mr. Galvin. We think it would be larger. In fact, if you 
recall when we had the discussions in the WTO about the level 
of damage, the U.S. side submitted figures in excess of $200 
million. So I think something closer to that. If you assume the 
trade not just in prime cuts of beef but offal and that sort of 
thing, it is quite a large amount.
    The Chairman. I am going to ask the Committee to stand in 
recess for about 10-minutes and then we will be back. Tim, I do 
have a couple more questions of you, so if you would, please 
stay, and thank you. Excuse me.
    [Recess.]
    Gentlemen, thank you very much for accommodating the way we 
have had to juggle this, this morning from a time standpoint. I 
will bring the Subcommittee back to order and I would ask Dale 
Moore, Executive Director, Legislative Affairs for the National 
Cattlemen's Beef Association to proceed with your testimony. 
Dale, thank you.

   STATEMENT OF DALE MOORE, EXECUTIVE DIRECTOR, LEGISLATIVE 
AFFAIRS, NATIONAL CATTLEMEN'S BEEF ASSOCIATION, WASHINGTON, DC.

    Mr. Moore. Thank you, Mr. Chairman. Chairman Craig, we 
appreciate you holding this hearing on TICA. We appreciate 
Senator Baucus and all the time he and his staff have provided 
in pulling this legislation together and working with us on it. 
We certainly appreciate your support of this legislation and 
working with Mike and Janie on this, as well.
    I am Dale Moore, Executive Director of Legislative Affairs, 
and Dana Hauck, our chairman of our International Markets 
Committee, extends his apologies and regrets for not being able 
to make this morning's hearing.
    We appreciate the opportunity to discuss how S. 2709 would 
provide an additional trade policy tool to help resolve the EU 
ban on U.S. beef, not to mention the temporary benefits that it 
would provide to U.S. cattlemen and women should Europe 
continue to refuse American access to their market. Regaining 
access to the EU market has always been the U.S. beef 
industry's primary goal for over a decade. WTO retaliation 
measures serve one key role in the WTO dispute settlement 
process--that is to provide a burr under the European saddle 
that hopefully pushes them toward compliance with the rulings. 
They certainly seem to expect rapid compliance when rulings 
fall in their favor.
    NCBA and the U.S. beef industry have tried to settle this 
case and it is important to remember that we did win. The EU 
has had 15-months to comply, yet there is little indication 
that they are even intending to try to come into compliance. In 
efforts to reach an amicable settlement, the NCBA, working 
through U.S. negotiators, has proposed to label our products so 
that EU consumers could make informed purchasing decisions. 
This offer has been declined. NCBA has sent volunteer leaders 
to Brussels to meet with EU representatives in Brussels to 
explore alternative political solutions to lift the ban. We 
have been assured that there are no such solutions.
    Using a concept very similar to S. 2709, we offered to 
settle for an annual lump sum cash payment from the EU treasury 
to the U.S. beef industry in the amount of injury determined by 
the WTO. This has been declined. We have offered to accept 
interim compensation in the form of elimination of the 20-
percent end-quota duty and a significant expansion of the non-
hormone product quota, but only if meaningful trade of non-
hormone product resumes at the presummer 1999 levels. So far 
the response or the counteroffers have not been forthcoming.
    The EU's ongoing refusal to work with us led Congress to 
enact the carousel retaliation act, which you had mentioned 
earlier. This new law spelled out that the first date for the 
administration to announce a change in the list of products was 
June 19, 2000--3-months ago. We appreciate the efforts of 
several members of this committee to urge the administration to 
release the new beef retaliation list because we believe 
without periodic changes to this list, there is little, if any, 
internal political pressure from the offending countries to 
settle. Now that the list of affected commodities is subject to 
change on a random basis, countries and/or the commodities 
impacted can never be certain that they have escaped targeting. 
This uncertainty will help generate constant pressure on all 
offending parties to come into compliance with WTO rulings, 
which brings me to TICA.
    Companion legislation similar to TICA is being discussed by 
Congressman Jerry Moran and Congressman Cal Dooley in the House 
and we urge all members in the Senate who are not yet on this 
bill to join. Retaliation is the least desirable of the three 
possible outcomes from a WTO ruling. Even with the current 
assessment of 100-percent duties, some trade continues for some 
products on the list. In the beef case, this is roughly $35.6 
million. This means that $35.6 million of unanticipated revenue 
is generated and paid into the U.S. general Treasury.
    The intent of the TICA legislation is to direct the tariff 
revenue generated by retaliation toward the injured industry as 
partial compensation. The proposed legislation provides for a 
national promotion and research board to administer the 
revenues generated from retaliation duties for market 
development, consumer education, and promotion of the beef 
industry in overseas markets.
    This approach would allow the Cattlemen's Beef Promotion 
and Research Board members to decide how best to utilize these 
funds to improve the beef industry. The board's members who 
would make these decisions are appointed by the Secretary of 
Agriculture from nominations submitted by eligible State 
organizations, including the Farm Bureau, Farmers Union, 
Cattlemen's associations, Dairy Producer associations, and 
other organizations. The board currently funds various 
promotion, consumer education, and research programs throughout 
the United States and in foreign markets, and therefore would 
have the administrative and management expertise in place to 
handle TICA revenues.
    The Europeans will likely object to TICA with a wide array 
of claims. This is logical. After all, they are currently 
paying a $116.8 million fine for noncompliance with a check for 
roughly $81 million, a 30-percent discount. TICA would help 
ensure the EU pays the full measure determined by the WTO. It 
is important to remember that if TICA were in place and if 
concerns about its funding source were raised, the EU could cut 
off TICA's funding simply by complying.
    Like other retaliation measures, TICA is not a silver 
bullet, but it would provide another important tool in the 
trade toolbox. It would provide equity by taking retaliation 
duties and compensating the injured industry in the amount of 
retaliation discount that occurs after duties are imposed. 
Selfishly, I also enjoy the fact that TICA would allow U.S. 
cattlemen and women to use EU funding to promote our product in 
Europe should we ever get that door open.
    In closing, the objective of the U.S. beef industry is to 
regain access to the European beef market. Retaliation does not 
benefit the beef industry and is viewed by us only as a means 
to an end. TICA would compensate the industry for the amount of 
under-retaliation that results when trade continues on some 
products. Importers or exporters of product from the EU who are 
concerned that retaliation may impact their business should 
urge the Governments in the exporting countries to join the 
United Kingdom in opposing this illegal ban within the EU 
political process.
    Mr. Chairman, the NCBA again thanks you and thanks the 
cosponsors for this legislation and the opportunity to present 
these comments to you. I also appreciate the Committee's 
indulgence in allowing me to substitute for Chairman Hauck.
    The Chairman. Dale, thank you very much.
    Let me get back to a line of questioning that Max and I 
were involved in when I had to step out. Tim, I had asked 
Ambassador Scher the question of what products or commodities 
coming in are at the 100-percent tariff level now. Do you have 
a list of those for the record? I would be just curious.
    Mr. Galvin. I do have a list. I do not have the exact 
dollar amounts, but----
    The Chairman. No, the type of product, where it appears the 
American consumer is willing to still pay it double the price.
    Mr. Galvin. The list I have shows truffles, jams, berry 
juice, roquefort, chicory, mustards, and rusks.
    The Chairman. What was the last one?
    Mr. Galvin. Rusks. Those are those little dried biscuits.
    The Chairman. So we really have kind of picked--to me, that 
sounds fairly selective to the palate. I am thinking of the 
wine set, the grey poupon kind of ad. We have created that into 
a market of exclusivity, if you will, instead of going at the 
heart of maybe a consumer product.
    With that in mind, let me ask this question of you. You 
have heard a suggestion that possibly we could lower the tariff 
and spread it, 15- or 20-percent across a broader range of 
product, or simply take these and bump them up another 100-
percent. Put them at 200-percent. Put them at 300-percent, 
somehow to cause the EU to react to something that we believe 
and the WTO believes they are now operating illegally in. Your 
thoughts and suggestions about that. First of all, just 
increasing what we have or lowering them and spreading across a 
broader band.
    Mr. Galvin. I think, first of all, the idea of raising the 
current tariffs from 100-percent to 200-percent is a real 
option and a live option right now on some of these products, 
and clearly we have authority to do that. The idea is that we 
have authority to increase the duties to whatever point is 
necessary to absolutely prohibit trade, and there is simply an 
assumption right now that 100-percent duties is sufficient to 
prohibit trade.
    In terms of going, though, to a broader reduced duty that 
hits other products, again, I understand some of the sentiment 
for going in that direction but I just think it has to be 
acknowledged that, that would represent a rather fundamental 
shift in the intent of these retaliation lists. I think the 
intent would be then, rather to force a policy change by the 
offending party, it would be to try to direct some assistance 
to the damaged party here in the U.S. and I think that would be 
a fundamental change in policy.
    The Chairman. Go ahead.
    Mr. Galvin. If I may, Mr. Chairman, just on the issue of 
how much revenue we are still earning under that trade that is 
occurring, you cited the figure of about $35 or $36 million. 
That was the figure that we had initially received from 
Commerce, as well. We have since received, I guess, some more 
accurate figures show that for the last 12-months the total is 
closer to $16.6 million.
    The Chairman. Would you submit that list for the record?
    Mr. Galvin. I would be happy to.
    The Chairman. Thank you.
    [The information referred to can be found in the appendix 
on page 60.]
    The Chairman. Tim, TICA would direct that retaliatory 
duties on EU products generated by EU ongoing ban of U.S. beef 
be collected into a trust fund administered by the Secretary, 
who would disperse the funds to a beef industry promotion 
board. Under existing law, the 1930-era agricultural marketing 
adjustment law known as AMAA, does not the Secretary already 
administer industry product promotions boards for eggs, stone 
fruits, nuts, citrus, and, yes, beef?
    Mr. Galvin. Yes, he does.
    The Chairman. So are not TICA and AMAA for the beef 
industry analogous since both mechanisms concern beef industry-
generated money used solely to promote beef?
    Mr. Galvin. I think they are analogous, other than the 
source of the revenue, yes.
    The Chairman. Some critics of TICA are concerned that TICA 
would generate budget authority for domestic spending programs 
outside the normal budget process. Would you comment on that?
    Mr. Galvin. I am really not able to comment on that. I do 
not know how CBO would react up here and just what some of the 
budget problems might be.
    The Chairman. NCBA raises an important question in the 
battle between free trade and protectionism where the question 
in the agricultural community is whether to support free trade 
at the grassroots when the EU beef ban situation makes unclear 
the U.S. Government's willingness to go to the mat with our 
trading partners on enforcement. What can you say to allay the 
fears in our producer community that our government is willing 
to protect our industry with bad faith trading partners?
    Mr. Galvin. Well, I would point out that this was one of 
the very first cases that we brought under the WTO after the 
WTO was formed, so we have been pushing very hard throughout 
the initial case and the appeal and then the discussions on the 
level of damage. As I said earlier, we went in with a larger 
figure. We were disappointed in the end that it was just $116 
million, but nevertheless, that is what we are implementing 
today. As you indicated, there is under discussion the new 
lists of different products, not just for the beef hormone 
retaliation but bananas, as well.
    The Chairman. Tim, thank you very much.
    Dale, let me turn to you. I regret that USTR witnesses 
could not be here today, but Ambassador Frazier submitted a 
statement where he states USTR's concern that TICA would 
provide the beef industry with a stake in maintaining a trade 
barrier, in this case, a retaliatory tariff or tariffs. The 
ambassador states that the beef industry's position is 
inconsistent with USTR's basic trust in trade policy, open 
markets, and lower tariffs.
    Dale, I thought the beef industry was the one suffering 
from the trade barrier. Does the U.S. beef industry really want 
to keep retaliatory tariffs, as the ambassador implies?
    Mr. Moore. Mr. Chairman, I can emphatically state that 
retaliation, and as our testimony reflects, is a means to an 
end, and that end is access to the European market. We would 
love nothing more than to have TICA go into effect. If this $16 
million figure, and as Mr. Galvin has pointed out from the 
numbers that the administration submitted, beef trade potential 
in the $200 million range, $16 million versus $200 million in 
trade is a pretty easy math for me to work out. We would 
certainly prefer to have access. We want to hit Europe with 
every retaliatory, every trade policy weapon we have bring them 
into compliance. But simply put, no. We would have no desire to 
drag this out.
    The Chairman. Recently, the EU has begun to soften their 
position somewhat and is promoting compensation as a means of 
resolving the impasse. I would like to understand the context 
of that compensation. Could non-hormonal beef be increased 
beyond the 10,000-metric-ton quota by amounts against the 
$116.8 million retaliatory duty? That would be one question. 
And could you explain to the Subcommittee how that might work 
and the likelihood that the beef industry perhaps would live 
with such a compromise? You might also want to respond to that, 
Tim.
    Mr. Moore. I was going to say, Mr. Chairman, I know Mr. 
Galvin and Ambassador Scher have both actually worked with us 
as we had talked through this several months ago, but the 
concept would be--what we had, I guess, proposed was that once 
Europe worked with us to reestablish the beef from non-hormone-
treated cattle trade that they had cut off, that once we got 
that up to the, what was it, 11,000----
    Mr. Galvin. Five-hundred.
    Mr. Moore. Eleven-thousand-five-hundred-metric-ton quota, 
then we would be willing to talk about a compensation approach 
that for every, I guess, dollar, if you will, that we went 
above that quota level, that, that could be used to offset the 
$116 million in retaliation as a rational approach to the 
compensation.
    Part of what we have been wrestling with is this moving 
target that Europe has set on the non-hormone beef process, and 
as a result, we have a 2-year time lag in our industry before 
producers can take advantage of that effort, and as such, we 
have a lot of our members who are interested. But they want a 
little more, I guess, good faith showing on the part of Europe 
that this is going to be a consistent and predictable market 
before they take the risk of entering that market again.
    The Chairman. Dr. Galvin, do you wish to comment to that?
    Mr. Galvin. I think Dale has done a very good job of 
describing the situation. We have had informal discussions with 
the EU about increasing access for our non-hormone-treated beef 
and that increased access could be in the form of either the 
higher quota beyond the current 11,500-tons or perhaps a waiver 
of the current duty on beef, which is about 20-percent in the 
EU. If beef then started to flow under either the reduced duty 
or if it exceeded the quota of 11,500, then the idea would be 
to reduce the retaliation list accordingly.
    But as Dale indicated, under the new program for certifying 
that our beef is not treated with hormones, it really takes 
about 2-years from the time that calf is first dropped in the 
pasture until it is out of a feedlot, so there is such a long 
lag time in the current system that we would not see any 
benefits for some time. And then as Dale indicated, and I think 
it is a very good point, there is always a risk in dealing with 
the EU because it seems like there is always another issue that 
is threatening our trade and the question is whether or not our 
cattlemen want to gear up for a program with the understanding 
that something could be yanked out from under them.
    The Chairman. If there is no compromise on compensation, 
how does the NCBA come down on the idea of vastly increasing or 
decreasing duties under carousel? Is it better to place, say, 
15-percent duties on many more goods and give the revenue to 
the TICA trust fund, or would it be better to put 200, 500-
percent type duties on goods to stop absolutely those targeted 
goods from coming into the U.S.? Dale, could you react to that 
kind of discussion?
    Mr. Moore. Yes, Sir, and I apologize if I sound a little 
schizophrenic in my answer. We kind of like both approaches. We 
like the higher retaliatory levels for, I guess, sort of the 
reverse pain and suffering that causes on our EU trading 
partners. By the same token, if they are going to remain 
stubbornly committed to keeping us out of their market, then 
spreading that pain a little thinner over a number of different 
products and using that to generate some revenues which TICA 
would operate and which we could thereby use some of our 
European trading partners' funds to promote our product and 
increase our demand. That has some interesting promise to it.
    At this particular stage of the game, I would reiterate 
that we simply want to get access into that market. If this 
helps us get there, fine. If not, we are for putting as many 
burrs under their saddle as we can.
    The Chairman. If duties were adjusted such that significant 
revenues were raised from EU goods coming into the U.S. and the 
EU would not lift or compromise the ban, would the U.S. beef 
industry reconsider a per capita distribution of revenue or is 
that just impractical whatever the total?
    Mr. Moore. I would not rule anything out. We have enjoyed a 
lot of back-room brainstorming with Mr. Galvin, with Ambassador 
Scher, with Ambassador Frazier, and we certainly are not 
opposed to taking a look at anything that they or the Europeans 
might put on the table. I have to admit, getting into that 
level of detail is starting to get dangerously close to 
enabling me to display my ignorance as to how some of that 
might work.
    The Chairman. We all have limitations.
    [Laughter.]
    The Chairman. I guess maybe one last question of you, 
Administrator Galvin. When does the administration plan to 
announce the carousel retaliation list that was due in June of 
this year?
    Mr. Galvin. Mr. Chairman, I simply do not know. I wish very 
much I had an answer here for you today, but I do not.
    The Chairman. I understand that is a moving target.
    Gentlemen, thank you both very much. I think it is obvious 
by the concern that we have and the industry has here and the 
credibility of the WTO on issues like this and our desire to 
make the WTO work that something ultimately has to get done. 
That is not suggesting that nothing has been done on this 
issue, but there really are some pretty real questions being 
asked out there on the ground at this moment amongst producers 
as it relates to the viability of these trade organizations, 
and, of course, we recognize, I think especially in 
agriculture, the importance of trade. It is very difficult to 
suggest to our producers that they should allow us to move 
freely in the area of trade to expand markets when we cannot 
keep them open or open them. Rhetoric and action just have to 
coincide, and here we have got that credibility gap looming 
against a market out there that appears to want to remain 
closed and by intent of the politics of it.
    Yes?
    Mr. Galvin. Mr. Chairman, if I may, just one last point 
where we have clearly gone to bat for beef producers and that 
is in Korea, which, as I mentioned, is our number three market. 
As you know, the Koreans had a system in place that seemed to 
discriminate against imported beef whether it is from the U.S. 
or Australia or elsewhere and we took them to the WTO. We won 
on that case. It is now under appeal, but I think it is another 
indication of where we have gone to bat for beef producers.
    The Chairman. I think the figures that we were all just 
visiting about a few moments ago, the rates of increase in beef 
exportation, as someone who was active in the beef industry for 
a good number of years, those are very nice statistics. I think 
we were all frustrated, both beef and dairy, that those were 
markets out there that were just generally by character of 
product not going to be available to us. But obviously, by both 
domestic industries moving abroad and using product but by our 
efforts, your efforts, the Government's efforts and the 
industry's efforts to get into these markets, we can, in fact, 
move in those markets and move quite successfully.
    So when we talk about potentially a $200 million loss and 
you compare a Japanese market against a European market or a 
Mexican market against a European market, I think those numbers 
are very real. And when you travel in Europe and see the 
prices, I think you begin to recognize that the consumer over 
there is being tremendously disadvantaged and so is the 
producer here.
    Gentlemen, thank you very much for your time with us today.
    Mr. Galvin. Thank you.
    Mr. Moore. Thank you, Mr. Chairman.
    The Chairman. The record will remain open for the balance 
of the week for any additional information that we would want 
to provide or that you have that you would want to become a 
part of the Committee record.
    With that, the Subcommittee will stand adjourned.
    [Whereupon, at 10:48 a.m., the Subcommittee was adjourned.]
      
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