U.S. GOVERNMENT PRINTING OFFICE

60–951 WASHINGTON : 1999

U.S. EFFORTS TO REDUCE BARRIERS TO TRADE IN

AGRICULTURE

HEARING

BEFORE THE

SUBCOMMITTEE ON TRADE

OF THE

COMMITTEE ON WAYS AND MEANS

HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTH CONGRESS

SECOND SESSION

FEBRUARY 12, 1998

Serial No. 105–91

Printed for the use of the Committee on Ways and Means

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COMMITTEE ON WAYS AND MEANS

BILL ARCHER, Texas, Chairman

PHILIP M. CRANE, Illinois

BILL THOMAS, California

E. CLAY SHAW, JR., Florida

NANCY L. JOHNSON, Connecticut

JIM BUNNING, Kentucky

AMO HOUGHTON, New York

WALLY HERGER, California

JIM MCCRERY, Louisiana

DAVE CAMP, Michigan

JIM RAMSTAD, Minnesota

JIM NUSSLE, Iowa

SAM JOHNSON, Texas

JENNIFER DUNN, Washington

MAC COLLINS, Georgia

ROB PORTMAN, Ohio

PHILIP S. ENGLISH, Pennsylvania

JOHN ENSIGN, Nevada

JON CHRISTENSEN, Nebraska

WES WATKINS, Oklahoma

J.D. HAYWORTH, Arizona

JERRY WELLER, Illinois

KENNY HULSHOF, Missouri

CHARLES B. RANGEL, New York

FORTNEY PETE STARK, California

ROBERT T. MATSUI, California

BARBARA B. KENNELLY, Connecticut

WILLIAM J. COYNE, Pennsylvania

SANDER M. LEVIN, Michigan

BENJAMIN L. CARDIN, Maryland

JIM MCDERMOTT, Washington

GERALD D. KLECZKA, Wisconsin

JOHN LEWIS, Georgia

RICHARD E. NEAL, Massachusetts

MICHAEL R. MCNULTY, New York

WILLIAM J. JEFFERSON, Louisiana

JOHN S. TANNER, Tennessee

XAVIER BECERRA, California

KAREN L. THURMAN, Florida

A.L. SINGLETON, Chief of Staff

JANICE MAYS, Minority Chief Counsel

SUBCOMMITTEE ON TRADE

PHILIP M. CRANE, Illinois, Chairman

BILL THOMAS, California

E. CLAY SHAW, JR., Florida

AMO HOUGHTON, New York

DAVE CAMP, Michigan

JIM RAMSTAD, Minnesota

JENNIFER DUNN, Washington

WALLY HERGER, California

JIM NUSSLE, Iowa

ROBERT T. MATSUI, California

CHARLES B. RANGEL, New York

RICHARD E. NEAL, Massachusetts

JIM MCDERMOTT, Washington

MICHAEL R. MCNULTY, New York

WILLIAM J. JEFFERSON, Louisiana

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records

of the Committee on Ways and Means are also published in electronic form. The printed

hearing record remains the official version. Because electronic submissions are used to

prepare both printed and electronic versions of the hearing record, the process of converting

between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process

is further refined.

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C O N T E N T S

Page

Advisory of January 26, 1998, announcing the hearing ....................................... 2

WITNESSES

U.S. Department of Agriculture, Hon. August Schumacher, Jr., Under Secretary, Farm and Foreign Agricultural Services ............................................... 14

Office of the U.S. Trade Representative, Hon. Peter L. Scher, Ambassador,

Special Trade Negotiator for Agriculture ........................................................... 29

Agriculture Coalition for Fast Track, and National Pork Producers Council,

Nicholas D. Giordano ........................................................................................... 71

American Farm Bureau Federation, Dean R. Kleckner ....................................... 54

American Meat Institute, Leonard W. Condon ..................................................... 89

American Peanut Coalition, and Citizens Against Government Waste, John

E. Frydenlund ....................................................................................................... 133

Chiquita Brands International, Carolyn B. Gleason ............................................ 127

Consumers for World Trade, Doreen Brown ......................................................... 121

Sunkist Growers, Michael Wootton ........................................................................ 96

Thurman, Hon. Karen L., a Representative in Congress from the State of

Florida ................................................................................................................... 8

Western Growers Association, David Moore, as presented by Anita Brown,

Schramm, Williams and Associates .................................................................... 109

SUBMISSIONS FOR THE RECORD

U.S. General Accounting Office, JayEtta Z. Hecker, Associate Director, International Relations and Trade, National Security and International Affairs

Division, statement .............................................................................................. 144

American Sugar Alliance, Jack Roney, statement and attachments .................. 158

Biotechnology Industry Organization, statement and attachment ...................... 171

California Cling Peach Growers Advisory Board, Dinuba, CA, statement and

attachments .......................................................................................................... 175

DeLaney, Paul H., Jr., Washington, DC, statement and attachments ............... 188

Florida Fruit & Vegetable Association, Orlando, FL, statement ......................... 201

International Dairy Foods Association, statement and attachment .................... 207

National Lumber and Building Material Dealers’ Association, statement and

attachments .......................................................................................................... 216

National Pork Producers Council, statement ........................................................ 223

Smith, Hon. Robert F., a Representative in Congress from the State of Oregon, statement .................................................................................................... 236

Wine Institute, statement ....................................................................................... 240

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U.S. EFFORTS TO REDUCE BARRIERS TO

TRADE IN AGRICULTURE

THURSDAY, FEBRUARY 12, 1998

HOUSE OF REPRESENTATIVES,

HOUSE WAYS AND MEANS COMMITTEE,

SUBCOMMITTEE ON TRADE,

Washington, DC.

The Subcommittee met, pursuant to notice, at 2:21 p.m., in room

B–318, Rayburn House Office Building, Hon. Philip M. Crane

(Chairman of the Subcommittee) presiding.

[The advisory announcing the hearing follows:]

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Mr. CRANE. Thank you. The committee will now come to order.

Good afternoon.

This is a meeting of the Ways and Means Subcommittee on

Trade to consider the status of U.S. efforts to reduce barriers to agricultural trade. I want to welcome the witnesses and thank them

for coming today. I’m sorry to announce that the chairman of the

House Agriculture Committee, Bob Smith, will not be with us

today. I hope to reschedule his testimony at a later date. He has

supplied an excellent written statement for the record which is

available for members to review.

The trade agenda for U.S. agriculture which we plan to discuss

today will be severely damaged if Congress and the President are

not successful in passing legislation to extend the President’s fasttrack negotiating authority.

Looking at the trends facing U.S. farmers from a strategic perspective leads only to one conclusion: opening foreign markets is essential for the future health of U.S. agriculture. The United States

possesses the most efficient and most competitive agriculture sectors in the world. Our farmers capitalize on this country’s rich natural resources and on their extraordinary ability to develop and

apply the latest managerial and technological innovations in the

achievement of ever-expanding crop yields. But because U.S. food

consumption is projected to remain relatively stable in the future,

the further elimination of trade barriers and the development of export opportunities is absolutely essential as we move into the 21st

century.

Currently, 96 percent of the world’s population lives outside of

the United States. The markets for the greatest potential for

growth are abroad, not here at home. U.S. inaction on the fasttrack issue dictates that we are missing opportunities every day to

improve the well-being of U.S. farmers and safeguard their future.

Europeans who we continually have to bring to the negotiating

table on these tough issues will be thrilled if we fail.

U.S. agriculture exports have doubled since 1985 reaching almost $60 billion last year. It is my view that it is the responsibility and

the duty of the Congress and the President to preserve and support

the continuation of this success story. The language in the fasttrack bill laying out objectives for trade negotiating for U.S. agriculture is the strongest ever approved by the Ways and Means

Committee, and my goal is to get it enacted into law.

With these comments, I’ll yield to our ranking member, Mr. Matsui, on an issue I know is important in his State of California.

Mr. MATSUI. Thank you very much, Mr. Chairman. I commend

you for holding these hearings today on the United States’ effort

to reduce barriers to trade in agriculture. Agriculture exports account for over 30 percent of the United States’ farms income and

support nearly a million American jobs; one out of every three

acres of our crop production is exported. The United States is the

largest agricultural exporter in the world reaching a record of $60

billion or nearly double the level of imports in 1996.

The United States is the most competitive nation in the world,

of course, in agriculture. As a result, many agricultural and crude

industry interests have been among the strongest supporters of renewing fast-track authority for the President. They recognize that

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the continued prosperity of American agriculture lies in further

opening of foreign markets through trade agreements. At the same

time, we need to recognize concerns raised by some of the agriculture interests about the impact of increased import competition

on domestic producers and assure consumers that trade agreements will not result in the lowering of our food, safety, and health

standards.

So far, we have had an excellent record in the World Trade Organization, the WTO, on settling disputes affecting market access for

agricultural goods. Significantly, the WTO vindicated the United

States’ complaints against the European Union’s ban on hormonetreated meat and discriminatory banana regime; however, full and

timely implementation of the results is essential for the system to

maintain credibility and domestic support.

Much work remains to be done as the agricultural sector is still

highly protected and subsidized around the world, and now the financial crisis is hurting our farm exports to Asia, of course, the

largest and fastest growing market in the world at least in the

short-term.

Another round of negotiations in the WTO on agriculture is

scheduled to begin in 1999. It is essential that these negotiations

make further progress beyond the Uruguay Round to strengthen

international rules against trade-distorting subsidies and to reduce

import barriers. Meaningful market access commitments for agriculture exports are also essential—to the ongoing WTO accession

talks with China. Agriculture will also be an important component

of the negotiations to be launched in April for a free trade agreement for the Americas.

I welcome the testimony of Representative Karen Thurman, a

member of our committee, and certainly, we will review the record

of Chairman Smith. We look forward to the views of you, Representative Thurman, and, of course, the other witnesses that will

testify today. Thank you.

Mr. RAMSTAD [presiding]. Thank you, Mr. Matsui. Mr. Watkins,

do you have an opening statement?

Mr. WATKINS. I should say, I look forward to hearing testimony

and asking questions of several of you. Karen, I’m glad to see you.

Mrs. THURMAN. I’m glad to be here.

[The opening statement follows:]

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Mr. RAMSTAD. Our first witness, our distinguished colleague,

Karen Thurman. Please begin Karen.

STATEMENT OF THE HONORABLE KAREN L. THURMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA

Mrs. THURMAN. Thank you, Mr. Chairman and members; I appreciate that. I actually came from the Agriculture Committee to

the Ways and Means Committee, and one of the reasons that this

was extremely important to me was because I knew that trade

issues would begin to take an important part in this Congress and

the future of this country. So, I speak from a feeling that I at least

know Florida agriculture and hope that I have some good understanding of some other areas. While we may disagree because of

our specialty crops, we don’t necessarily disagree in the area of

trade, but we do have some very big concerns in Florida.

I want to thank the chairman for scheduling this meeting. I applaud your efforts in scheduling this hearing on obstacles that our

Nation faces in trade. Agriculture, especially for Florida, perishable

agriculture faces an uneven playing field abroad. In many instances, it is even denied entry into the game. Florida agriculture

differs from agriculture in the chairman’s State of Illinois. During

the winter months, Florida is the only State which produces the

many fresh fruits and vegetables that are so critical to the diet and

health of Americans. The total economic impact for Florida agriculture is $54 billion. We are the winter basket—winter food basket of the United States.

Yes, Florida and Illinois have different crops, a different climate,

and different needs, but the challenges we meet with the rest of

U.S. agriculture is one and the same. We competitively provide safe

abundant food for American families and millions of families

around the world, but we face too many closed doors as we try to

open new trade opportunities. U.S. officials should not negotiate

away the few safeguards left to American farmers nor should they

reduce tariffs and other protections where unequal barriers and

subsidies exist for major foreign producers.

The U.S. showed its leadership with the passage of the 1996

Freedom to Farm Act. This landmark legislation set forth a disciplined 7-year, phase-out of subsidies and price reports to American farmers. Farmers in other countries continue to be more protected than their U.S. counterparts. Inconsistent regulatory requirements, non-tariff trade barriers, and unworkable safeguards

put unfair pressure on U.S. agricultural exports.

Aggressive and thoughtful U.S. leadership is necessary to prevent any further erosion and disappearance of our food production.

We must address tariff equivalency on most agricultural products,

the elimination of export subsidies, and the establishment of meaningful rules on State trading enterprises now.

Just as importantly, U.S. leadership must acknowledge that U.S.

agriculture cannot truly enjoy free trade until all of its commodities

enjoy fair trade. As I have stated many times before this committee, Florida has yet to get one orange into Mexico, and our citrus shipments into China remain blocked by their unfounded concerns about the Mediterranean fruit fly. I call upon our negotiators

to seek workable and effective safeguards for seasonal and perishVerDate 11-MAY-2000 09:29 Jun 07, 2000 Jkt 063436 PO 00000 Frm 00012 Fmt 6633 Sfmt 6602 E:\HEARINGS\60951 pfrm07 PsN: 60951
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able commodities and to remove unfounded SPS barriers to all U.S.

agricultural exports. Agriculture disputes at the WTO must be resolved quickly.

Perishable agriculture products have many unique considerations. For instance, oranges, tomatoes, and peppers cannot be

stored until markets change or trade disputes get resolved—often,

very slowly. The United States should encourage the development

of international trading rules that address the special concerns of

some of our seasonal and perishable produce such as our fresh

fruits, vegetables, and orange juice.

On another side with food safety, I commend the President for

his food safety initiative. We must ensure that our negotiators do

not lower food and safety standards which are based on sound

science. Let’s keep in mind the recent food-borne outbreaks caused

by imported agriculture products. In March of 1997, almost 200

Michigan children were infected with Hepatitis A after eating imported frozen strawberries in their school cafeteria. In Florida,

hundreds of Floridians were infected with the parasite, Cyclospora,

from imported Guatemalan raspberries. The United States must

retain its right to take appropriate science-based actions against

imports when necessary. After all, if my Government tells me not

to eat the fruits and vegetables in a certain country when I travel,

why should I eat them at home?

Florida agriculture believes that labor and environmental issues

can and should be addressed as an integral part to any new negotiations. The health of U.S. agriculture and consumers is gravely

impacted by the use of child labor in competing countries and their

tolerance of contaminated waters for irrigation.

American food production faces another threat but it is a domestic threat that we can readily control. It is the threat of conflicting

policy. I do not understand why one agency is seeking to liberalize

markets but other agencies are giving away the means which help

us open those markets. Why do these agencies persist in giving our

direct competitors significant competitive advantages over our own

farmers?

Mr. Chairman, I greatly appreciate this emphasis on reducing

barriers to trade in agriculture. The concerns I have broached

today represent all segments of Florida agriculture, especially the

Florida Department of Agriculture and Consumer Services. For any

more details, I would refer you to testimony that was presented to

the Subcommittee on Risk Management and Specialty Crops of the

House Agriculture Committee during the January 22 meeting in

1998 which was held in West Palm Beach.

Agriculture, as I see it, continues to be an important component

in our balance of trade. Our ability to produce food for the world

remains one of our country’s greatest strengths. Our trade policies

and negotiations must not allow to be weakened U.S. food production and the safety of our food supply.

I thank you, and I’ll answer any questions. And if I could ask

that my written statement be included for the record.

Mr. RAMSTAD. So ordered.

[The prepared statement follows:]

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Mr. RAMSTAD. Thank you for your thoughtful testimony, Karen,

and I just have two brief questions. First of all, you refer in your

testimony to the broken promises of NAFTA. In your view, what

were those broken promises, and how can they be addressed in a

way that will restore the trust and faith that’s desired for trade negotiations?

Mrs. THURMAN. Well, I think, Mr. Ramstad, one of the things

that we talked about during the fast-track was some language that

we actually were trying to get to trade representatives which, quite

frankly, was not conclusive, but with our tomato industry particularly, the anti-dumping. When we saw dumping coming in Florida,

tomatoes below cost which subsidize through their own country and

we were never able to get any kind of remedy which was one of

the things that was promised during the NAFTA; that there would

be remedies available for our agriculture products.

Mr. RAMSTAD. Thank you for your response, Karen. Let me ask

you what I think is a key question here today. It is mind boggling

to realize that our country spent about a little over $5 billion in

direct payments to farmers in agricultural programs last year

while the EU spent about $47 billion; over eight times as much as

our country. Do you think that we could truly get reforms in this

area in 1999 negotiations for agriculture if the administration does

not have fast-track authority?

Mrs. THURMAN. I don’t know, and—but let me say that in reading some of the material I know that the EU has been working on

trying to reduce some of their subsidies. We were over there in

England a couple of years ago; talked with the Parliament; they

had, in fact, done some things at that point. It is my understanding

that by the year 2002 they are also looking at trying to reduce

some of areas within their subsidies as well. Now, whether they do

that or not, I don’t know, but they continue to be one of our biggest

competitors.

Mr. RAMSTAD. Well, again, I thank you. Mr. Matsui.

Mr. MATSUI. Thank you, Mr. Chairman. I have really no questions. Karen and I have talked a lot about NAFTA and our interpretation of the negotiations that went on in 1993, and we may differ a little bit, but, certainly, we have the same goals of making

sure that our industries are put in a fair position to be competitive,

and I think your efforts to try to help work in that direction are

extremely helpful, and we, obviously, want to continue to work

with you on that.

Mrs. THURMAN. Well, I appreciate that, and that’s one of the reasons I wanted to testify. At least this lays it out a little bit as we

go into further kinds of trade issues and discussions whether it’s

fast-track or whatever. We do have an awful lot of things in common much more so than that are different, so I hope that we can

continue this kind of dialogue and conversation and thank you.

Mr. RAMSTAD. Thank you. Mr. Watkins, any questions?

Mr. WATKINS. Karen, I appreciate your testimony. I think we

have a real job to do if we’re going to get the fairness up in the

international marketplace for our farmers and our ranchers, and

I’d be happy to have a bipartisan effort to do that.

Mrs. THURMAN. You betcha, thanks.

Mr. RAMSTAD. Mr. McDermott. Too late for rhetoric. [Laughter.]

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Thank you, again, Mrs. Thurman.

The next panel consists of the honorable August Schumacher,

Jr., Under Secretary for Farm and Foreign Agricultural Services in

the U.S. Department of Agriculture and the honorable Peter L.

Scher, Special Trade Negotiator for Agriculture, Office of the

USTR. Welcome to the subcommittee, gentlemen. We’ll begin with

you, Mr. Schumacher.

STATEMENT OF AUGUST SCHUMACHER, JR., UNDER SECRETARY, FARM AND FOREIGN AGRICULTURE SERVICES, U.S.

DEPARTMENT OF AGRICULTURE

Mr. SCHUMACHER. Thank you, Mr. Chairman, Mr. Matsui, Mr.

McDermott, and Mr. Watkins. Chairman, it’s a distinct pleasure to

be here from the agricultural side to report in this committee. I’m

delighted to be here with Ambassador Scher.

American agriculture, like most other industries, is absolutely

linked to the global economy as we’ve seen with the Asian crisis

increasingly dependent on trade. Given the opportunity, American

agriculture can meet export challenges anywhere in the world. Our

farmers, ranchers, and others in the ag community have made investments in technology, transportation, research that have turned

opportunity into real export success. I’ll mention that we reached

$60 billion in 1996, $57 billion last year, and we really actually

haven’t plateaued. In the early nineties, we were going along about

$42 billion, $43 billion; a bit of a plateau, and that has jumped now

in the late nineties to $55 billion, $57 billion, $59 billion, $57 billion, and we’re in that higher plateau now which I think is terrific.

These sales generated close to 1 million jobs, and as we men- tioned the trade surplus during the last year was $21 billion.

American agriculture has now registered trade surpluses in each of

the last 37 years; an extraordinary record. The success of the

American farmers and ranchers affects, certainly, a decade, many

decades, of bipartisan efforts to put American agriculture on a level

playing field in the global arena. The bilateral and multilateral

agreements are working for the benefit of agriculture.

In the last year alone, we mentioned the success in the WTO

that Peter will talk about in Geneva on hormone treated animals,

so our beef will now be able to, eventually, get into the EU. The

Appellate Body released its review of the panel decision and clearly

affirms the earlier finding that the EU ban was imposed and maintained without credible scientific evidence. Removing the beef import ban has now become a serious international obligation of the

European Union and Members of Congress will be expecting them

to fulfill it.

Other accomplishments including the first commercial shipment

of U.S. tomatoes to Japan; the lifting of Egypt’s ban on imported

poultry; gaining market access for sweet cherries to Mexico; preserving the market for U.S. pet food exports to Switzerland; implementing the pilot project to expedite shipments of live cattle from

Montana, and Washington to Canada, and working, particularly, to

open Chile market and reopen it to U.S. wheat—our successes have

been solid and significant, Mr. Chairman, but we have serious challenges ahead. It is crucial that we work to support the international effort led by the IMF, the International Monetary Fund,

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to help the countries of Southeast Asia to help themselves. It is

very much in the interest to America’s farmers and ranchers and

the American people in general.

To conclude, we continue to face trade policy challenges with the

European Union. It’s unfortunate that the United States and EU

have appeared to be on the verge of trade wars more often than

not in the past few years. The list of issues that remain to be resolved include the EU ban on specified risk materials; European

Union approvals for new biotech products that are coming out very

rapidly and benefiting farmers and consumers; the veterinary

equivalency issue; the circumvention in the European Union of export subsidies, and the continuing EU subsidies on canned fruit

and wheat gluten. Mr. Chairman, let me assure you that we will

do whatever is necessary to protect U.S. trade interests.

We’re also concerned about Canada’s dual dairy pricing system

and have launched a panel request in the WTO. We’re also committed to preserving the hard won achievements of the Uruguay

Round as we negotiate with China and Russia and many other

countries on accession to the World Trade Organization.

And then in conclusion, we’ve begun preparations for the continuation of the reform process begun in the Uruguay Round. We’re

looking at a number of key issues such as how countries are applying tariff rate quotas; state trading entities, both for import and export, and how to pursue further liberalization disciplines in the

area negotiated in the Uruguay Round especially domestic support

and market access.

As you can see, Mr. Chairman, much work remains ahead, but

we are optimistic about the future of U.S. ag exports and working

under the leadership of Peter Scher and his great team at STR. We

hope to work very closely with you in a bipartisan effort to overcome some of these challenges and to move forward. Thank you for

holding this hearing.

[The prepared statement follows:]

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Mr. RAMSTAD. Thank you, Mr. Secretary. Well, let me just ask

a couple of questions. First of all, to what extent are the Federal

agencies charged with monitoring the agreement confronted with

the competing goals of food safety and effective monitoring of the

WTO Agreement?

Mr. SCHER. Sure, I’m happy to Congressman. Let me say, I think

that both are very important goals, and one of the important elements of the——

Mr. RAMSTAD. Ambassador Scher, if I may interrupt, I’m not

used to doing this. I’m not the chairman; I’m a pretender here. Unfortunately, Chairman Crane took ill, and, hopefully, it’s not serious, but he’s not going to be back. Please give your testimony first

which is proper procedure. I’m sorry I screwed up. I’ll ask my questions later. [Laughter.]

Go ahead, Ambassador.

STATEMENT OF PETER L. SCHER, SPECIAL TRADE NEGOTIATOR FOR AGRICULTURE, OFFICE OF THE UNITED

STATES TRADE REPRESENTATIVE

Mr. SCHER. Mr. Chairman, this is a first for us both, so we’ll

muddle our way through it. You have my written statement, and

so I will just summarize a couple of points, so we can get on to

some of the issues of concern.

First, let me say I am pleased to be before the committee and

very pleased to be testifying alongside Under Secretary

Schumacher who is such an important leader around the world for

American agriculture.

I want to start out by just recognizing that we are at the start

of another year of economic expansion in this country. This is, in

fact, the seventh year. Our unemployment rate is the lowest in

nearly a quarter century. We’ve created nearly 13 million new jobs.

More Americans are working today than in any time since the Government began recording labor statistics. Now, I know this is not

a hearing on the economics in the United States, but one cannot

understate the role that international trade has played in our economic expansion. Since 1992, exports have accounted for one-third

of our growth, and, today, more than 11 million jobs now depend

on exports.

There is no other sector of our economy where the link between

trade and today’s economic prosperity is clearer than in agriculture, and as Under Secretary Schumacher and the chairman

earlier pointed out, we’ve had near record agricultural exports of

over $57 billion. I believe that the importance of trade to our agricultural community is underscored by our shrinking share of the

world’s population. We are near 4 percent—only 4 percent of the

world’s population and are reaching close to zero population

growth, but the world is still growing, and the success of American

agriculture, frankly, will depend on our ability to engage global

consumers in the—that live outside our borders; the 96 percent of

the world that do not live within the borders of the United States.

So, despite our successes which are many, we still face many

hurdles as Congresswoman Thurman pointed out. We still face

high tariffs in Europe and elsewhere; trade restrictions which are

very thinly disguised as science; administration schemes in many

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countries for tariff rate quotes that, frankly, mimic the tariffs that

they were intended to replace, and state trading enterprises that

restrict imports and unfairly compete with our exports. So, we need

to continue aggressively our efforts to tear down these barriers

using all of the tools at our disposable including the dispute settlement process in the WTO; including the agreements of the Uruguay Round, and, frankly, our own domestic trade laws.

Mr. Schumacher referred to one of the most important victories—

I know Mr. Watkins has taken a great interest in the beef hormone

victory which we can talk about in a minute. Let me also say that

we are currently using the WTO to challenge a number of practices

which we believe violate obligations under the Uruguay Round. We

are challenging the way Canada and the EU subsidize dairy exports. In fact, tomorrow, we will take the next step in Geneva in

our case against Canada by asking for the formulation of a dispute

settlement panel to hear our complaint. We are challenging Japan’s

testing program for fruit—I know an issue that’s very important to

the Congresswoman’s constituents in Florida. We are challenging

Korea’s taxes on alcoholic beverages; Chile and the Philippines failure to open its market for pork and poultry.

Let me say we have been very aggressive in using the WTO to

assert our rights. In fact, we have brought more cases than any

other country, and we are winning more cases than any other country. In fact, a third of the cases we have brought have been in the

area of agriculture. We have new negotiations in 1999 which are

an important opportunity to address things like cap reform which

was discussed earlier, and we’ve already begun preparations for

that effort.

Let me just say in conclusion, because so much of what was in

my statement has been said by others, I often hear people in this

country blame trade agreements as the cause of trade problems,

and I want to strongly disagree with that notion, because it fails

to recognize that the United States already has the most open market in the world. The objective of trade agreements is to open new

markets and create new opportunities for our products. That is

why we cannot shrink from the challenges of a global economy. Because as the chairman pointed out, as we hold back and we debate

the merits of trade, our competitors are aggressively moving forward to seize new markets at our expense.

Mr. Chairman, let me end there and simply say I look forward

to working with you and the members of the subcommittee as we

seek to forge new partnerships and create new opportunities for

American agriculture. Thank you.

[The prepared statement follows:]

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Mr. RAMSTAD. Thank you, Secretary Schumacher and Ambassador Scher; both of you for your testimony, and, moreover, for

working with us in a bipartisan, pragmatic, collaborative way on

these important issues. That is appreciated; that’s the way it

should be done, and you’re doing your jobs well.

Let me ask you, first, Secretary Schumacher, in light of the

Asian financial crisis, how is the Economic Research Service revising its forecast of agricultural exports? And, also, what commodities do you think will be most effective?

Mr. SCHUMACHER. Right, three things, Mr. Chairman. One, we

looked at this very hard. Lat Hadamir is with me today, the new

head of the Foreign Ag Service from California who’s doing an outstanding job. He and I and the general sales manager spent two

weeks talking to some 600 traders, government officials, and others

in Asia to get an on the ground view of what was going on in Asia

right after Christmas. During Christmas, we saw that there was

some liquidity problems in Korea, and we felt that the economy’s

going to come back, and so we put on the guarantees on the GSM

of about $1 billion; slightly increased it last week if that economy

comes back, and that is having a resonating affect, we feel, and especially in key areas like cotton and meat and hides and skins, and

also horticulture. We fought hard to get horticulture to keep that

flowing very well. So, I think that’s been taking up about $270 million right away, and that’s certainly had, I think, a stabilizing impact out there.

We looked at other countries, and, over all, I think we’re going

certainly to see a softening, and the formal announcement will be

made of the new export figures during the Ag Outlook Conference,

but they certainly will be in the order of 3 percent, maybe slightly

higher, but in that area, but probably not below the plateau that

we’ve seen the last 2 or 3 or 4 years, but certainly on that newer

plateau above $55 billion, and I think we’re very competitive, and

with the tools, GSM, and others, we’re going to stay there.

One of the key issues, however, as I said earlier, is that the IMF

package, if you didn’t have it, we couldn’t have made the GSM, because they would not have been creditworthy because of liquidity

and currency issues. So, with the IMF package, we came in quickly

underneath that and are helping to stabilize exports to that critical

market.

Mr. RAMSTAD. And, hopefully, that message won’t be lost on the

present Congress as we look down the road.

Let me ask you, Ambassador Scher, a constituent recently wrote

to me that ‘‘The IMF has been successful at getting Indonesia to

do something that USTR has been aggressively working at for a

long time; that is opening up their markets to agricultural imports

with the exception of rice.’’ Has the IMF been successful at opening

markets as conditions for assistance in any other Nation?

Mr. SCHER. Well, I think that, frankly, you look at the whole

IMF effort and what is going on in Asia, and the message out of

this financial crisis is that the closed markets that Korea and

Japan and so many other countries have followed don’t work. In

fact, they’ve led to this type of instability, and so the whole thrust

of our efforts—this administration’s efforts and the President’s efforts is to move these countries to more market-based systems, and

42

we have had success with Korea and with other countries in getting them to adopt more market-based systems which will lead to

more open markets. One of the analogies I would point out—you

know, we’ve heard so much about NAFTA and the criticism several

years ago when the administration took efforts to help Mexico during their recession in 1995. The fact is by doing that we protected

our own interests. As a result of the peso crisis in 1995, we lost

about $1 billion in agricultural exports, but because this administration and the United States stood by Mexico and Mexico stood by

their commitments to open their market, not only did we rebound

within a year but we have now exceeded our agricultural exports

by over 20 percent. So, this is an opportunity, I believe, to do what

we all have been trying to do in a bipartisan fashion for many

years: to move Asia and many of these countries into a more open

market-based system, and I think it’s clearly in our interest to pursue that goal.

Mr. RAMSTAD. So, you’re implying these are permanent improvements?

Mr. SCHER. Well, I think if these countries hope to remain stable

economically, they need to be.

Mr. RAMSTAD. And there is, in your judgment, then, the potential

to work through the IMF for additional liberalization.

Mr. SCHER. Absolutely, absolutely.

Mr. RAMSTAD. Very well. Thank you, again, both of you for your

testimony. Mr. Matsui.

Mr. MATSUI. Thank you, Mr. Chairman. I want to thank both

you, Mr. Secretary and Mr. Ambassador, for your testimony. Let

me start with you, Peter. The recent Kodak. Fuji case ruling that

last month, was completed and finalized, created somewhat of an

uproar. In fact, there’s a lot of interest in this issue on Capitol Hill.

The fact that we’ve been out of session probably has dampened that

somewhat, but probably in either the month of March and April it

may intensify again. I know there’s a couple of letters that are

going around and certainly a bipartisan resolution that may be

brought to the floor—it will probably have to go through our committee or subcommittee first. How has the WTO worked in terms

of agriculture—and both of you can answer, but, Peter, you first,

perhaps? It seems to me—I understand the record was 16 to 1—

or 16 to 0; now it’s 16 to 1 after the Kodak case. Could you give

me an idea of—you said a third of the challenges by the U.S. have

been on the area of agriculture. Perhaps, you can state the impact

of this on our interests.

Mr. SCHER. Mr. Congressman, let me say a couple of things. Obviously, we never like to lose a case. One of the common threads

that run through trade negotiators I’ve found, whether it’s been

Mickey Cantor or Charlene Barshefsky is they’re all bad losers.

Having said that, let me say, again, we are bringing more cases in

the WTO than any other country, and we are winning more cases

in the WTO than any other country. We have a vested interest.

Agriculture—the agricultural community in this country has a

vested interest in maintaining the integrity of that system, because

we can win. We are meeting our obligations. It’s other countries

that are not, and finally we have a system in place, as a result of

the Uruguay Round, that countries understand they can’t get out

43

of their obligations. They can’t block panel decisions, and, frankly,

we are at the point now that merely by bringing cases even without

seeing them through to the whole dispute panel, we are opening

new markets, and, frankly, in Korea on the shelf life issue, simply

by bringing the case and making clear to the government of Korea

that we intended to pursue our rights, Korea agreed on a number

of measures that opened that market.

So, I would, again, say we hate losing cases, but we have to keep

the broader picture in mind, and the broader picture here is that

we are winning and will continue to win more cases than we lose,

and I think our job is to support the system, and to, frankly, educate people around the country about how important this system

is to our interests.

Mr. MATSUI. Do you have a dollar value—either of you have a

dollar value in terms of what those 16 victories meant to us as

compared to, perhaps, would have been otherwise?

Mr. SCHER. I don’t offhand. We can certainly get that for you. I

can tell you just last week we won a case against the EU which

is always a great pleasure for the—[laughter]—in the computer

field which, as I know, is important to some of your constituents

which is valued at $500 million. I mean, these are—now—as Secretary Schumacher said earlier, now we have a binding obligation,

and if countries don’t abide by these rulings, we have the ability

either to seek compensation for the loss or to retaliate, and we are

going to be very aggressive in using all of our rights under the

WTO.

Mr. MATSUI. Would you disagree with that, August, at all in

terms of the impact of the WTO; the importance of it in terms of

your department and how it operates?

Mr. SCHUMACHER. Well, certainly, Peter and I work closely together and the impact of the WTO has been very helpful—the combination—we have the IMF opening up—helping to open more

transparency, and it’s really helped us a lot in Asia and Indonesia

on getting rid of monopolies and BULOG and others for our recourse, but I think as Peter said very clearly and very forcefully,

the WTO has been very helpful to American family farmers.

Mr. MATSUI. With the Asian crisis now, and, obviously, the whole

issue of the IMF funding is not certain yet in terms of the results

of it, the Ex-Im Bank may have to take on a larger role in terms

of making sure that we provide at least some assistance to some

of these countries so that they might continue to purchase our exports, particularly agricultural exports. Is your Department working in that area now in terms of trying to, perhaps, rachet up the

interest of Ex-Im Bank and some of the companies and countries

to look at this?

Mr. SCHUMACHER. Well, we’ve had a number—several interagency meetings recently, and we have the tools provided by you

in Congress for the general sales, the GSM program, and we’ve

been using that, frankly, quite aggressively by increasing it $2 billion; that certainly has helped as I said earlier. A lot of the industry, especially in the West Coast, have maintained market share,

because it’s a liquidity problem, and once we can get through that

with the IMF and other bank structural reforms that have been encouraged, these countries will be more transparent; more open to

44

trade from all countries, and we certainly think we have a competitive agriculture and can compete—meet with competition in those

countries.

Mr. MATSUI. If I could move over, Mr. Chairman, to anther

area—I know my time is running out, but I do want to explore the

whole issue of fast-track. Obviously, without fast-track, the 1999

negotiations, although they will continue and they’ll go on and we’ll

prepare for them and we’ll probably begin our negotiations; it is

somewhat more difficult, obviously, and I don’t want to get into,

and you wouldn’t want to get into, how difficult it will be because,

obviously, that’s something you want to keep somewhat proprietary, although I don’t think anything proprietary anymore, but,

you know, we do the best we can.

In terms of the other countries that we’re negotiating with—180

or whatever it is, 186—are they cooperating? I know the French

are always a historic problem for us. Are we getting any kind of

feeling that they’re going to be helpful in trying to resolve? Not

helpful in terms of working with us but in resolving the ag problems and subsidies?

Mr. SCHER. Some are. I mean the Cannes group, as you know,

is taking a big leadership role. In fact, they’re meeting in early

April in Australia, and I believe Secretary Glickman is planning to

attend that meeting—at the end of March? In March. But I think,

again, without revealing any proprietary information, I think

you’re right.

We are going through a process now of preparing for the next

round in 1999. We’re working with the administration; we’re working with other countries, but I also think we can’t kid ourselves

here, and the fact is there are other countries that will use any excuse not only to not adopt the type of reforms that we’re seeking

but to block the type of reforms that we’re seeking, and what I fear

is that fast-track becomes just that excuse, and we have to be prepared that many countries—I’m not saying all—but many countries

will use an excuse, our inaction, as an excuse not to come to the

table and not to negotiate seriously.

People will come to Geneva; we’ll all make our statements; we’ll

have good meetings, but I think if we expect to obtain the type of

reforms—I know earlier there was discussion of the EU’s cap; I

think Congressman Ramstad brought this up—that’s the type of

thing that we have to try to pursue in the next round in 1999, and

we need to have every tool at our disposal to ensure that other

countries are negotiating with us, and other countries are making

tough political decisions that we have already made in this country.

Without fast-track, it makes the job harder.

Mr. MATSUI. If I could just make an observation and not to ask

a question, there’s a lot of ag people in the audience right now. I

think most of us that were working on fast-track—and I know on

the Republican side and Democratic side—were somewhat disappointed in the agriculture community’s enthusiasm for this. We

had a whole year to work on it, and it wasn’t until right at the end

did they come on board after they cut a few deals that were probably coincidental to the main thrust of getting fast-track.

I guess what’s a little troubling to me is that you got the WTO;

we lost 1 case, but we won 16, and we really helped ag, because

45

one-third of the cases we brought were for agriculture’s interest,

and so you’re all being helped. Yet, when the opposition of the

WTO comes out and starts pounding away—and I’ll tell you, there’s

a lot of opposition to the WTO; you can see a real thrust to do some

real damage to the WTO over the next few years; we know where

it’s all coming from—I don’t hear from agriculture saying, ‘‘Hey,

look, we’re the beneficiaries of this.’’

You know, in this town, it’s the one who squeaks the loudest

that’s going to get the grease, and if you don’t make your noise, two

years from now, you can see the WTO greatly dismantled or diminished, and all of a sudden you’re going to say, ‘‘Well, geez, how

come we can’t open up markets?’’ Same thing applies to fast-track.

I don’t think we’re going to get fast-track this year unless some

miracle happens, and we’re going to go right into the year 1999,

and then you’re going to get into the presidential election year, and

it may never happen, I think as Mr. Crane has been saying over

and over again in 1997. And you’re going to be the losers. There

may be a few that are going to win out of this, but you’re going

to be the big losers, and you can’t come back to us and start complaining once you find out that you are going to be the losers, and

so I would hope that you would look more strategically instead of

tactically next time we have an issue like the WTO or fast-track

that you know is clearly in your long-term interests, but because

of various reasons, because you want to try to squeeze the lemon

for just a little bit more, you wait to the point where we can no

longer be successful in a lot of our efforts. So, it’s my hope that

these hearings, perhaps, will be a lesson that you know what’s in

your interest, and you have to pursue your particular interests.

Thank you, Mr. Chairman.

Mr. RAMSTAD. Well, thank you, Mr. Matsui, and, again, thank

you, Secretary Schumacher and Ambassador Scher for your testimony. Mr. Portman?

Mr. PORTMAN. Mr. Chairman, I don’t want to hold things up, I

know you’ve got a lot of panels, but if I could just make one quick

comment and ask a question.

I just want to thank the panelists for their support of the new

WTO dispute settlement mechanism and just echo what Bob Matsui said which was many of us fought hard for the new, more binding WTO process. We said the old GATT panel system didn’t work,

because countries could veto it as the Europeans did repeatedly on

various issues; twice on bananas, for instance. We had to argue

against people who had legitimate concerns about sovereignty, and,

frankly, back home it was not a terribly popular issue. Now, finally, we’re at the point where we’ve got a couple good cases, the

beef hormone case, which I know Mr. Watkins feels strongly about

and the banana case; which I feel strongly about it. And I want to

thank Peter Scher, particularly, because he has been out front and

pushing this issue as we must on behalf of U.S. interests, but just

to tell folks in the audience and others at USTR and in the administration, if we cannot—as Bob Matsui implied—be able to enforce

these cases where we so clearly have a victory—I think in the banana case we have 20 some violations of international trade laws;

the most of any case ever—if we can’t do this, then what good is

46

it and how can we move with not just retaining WTO but fast-track

and other important liberalization measures that all of us support?

So, Mr. Chairman, I thank you for the time and appreciate all

the support, and I want to encourage USTR to continue to promote

U.S. interests in this case. Thank you.

Mr. RAMSTAD. Mrs. Thurman.

Mrs. THURMAN. Thank you, Mr. Chairman.

Peter, let me just ask you a couple of questions that—this really

goes to my testimony when I talked about the kind of conflicting

policies that we were having. This question deals with

methylbromide and the issues that have actually happened over

the last couple of months. What I want to know right now is what

USTR is doing to get those countries to change their policies? Because as you mentioned, and others will mention, that that is a

major issue for the citrus industry, because Japan will not take our

citrus without methylbromide. Are we negotiating or do anything

in those areas as to what would happen once this goes into effect?

Mr. SCHER. Well, let me say a couple things. In terms of Japan,

we are pursuing a WTO case against them right now on the issue

of varietal testing, because we disagree—we don’t believe there’s

any scientific basis for their regulations. To the broader issue of

methylbromide in terms—and I think you’re referring to the differences between the Montreal protocol and the Clean Air Act obligations—we need recognize that there are differences between our

obligations under the 1990 Clean Air Act regulations and the Montreal protocol, and as the administration has said that we are committed to working with Congress to try to address those differences, because there is a disparity right now. We recognize it

needs to be addressed, and we are committed to working with you

and other members to try to address that.

Mrs. THURMAN. Maybe to Mr. Schumacher, then, because it also

falls under your purview, and I know in earlier testimony before

the Ag Committee there has been—at least from USDA, a concerted effort to try to do better research to find an alternative, but

in—one of the things that I’m seeing and not necessarily, maybe,

with Peter and yourself, but in other areas where there doesn’t

seem to be much coordination between the agencies. Who would be

looking at the regulatory process? If other countries are allowed to

continue to use methylbromide who might be our direct competition

with us in citrus and we’re phased out by 1998?

Mr. SCHUMACHER. Two thousand, 2000.

Mrs. THURMAN. Two thousand, and then—but some of these

countries in 15 years down the road. So, maybe you can help me

understand what the Department of Agriculture is doing. Are we

speeding up some kind of research? What are we doing, on the

other side, to help our agriculture community?

Mr. SCHUMACHER. Well, again, as Peter said, this is one of the

most difficult ones we’re dealing with, Congresswoman. I think in

agriculture one with working through the interagency very closely

through EPA and with working with STR, but the key one is what

other alternatives and we’ve actually greatly expanded our research into the alternatives. It is not much yet underway, but

we’ve seen an enormous amount of progress in things like biotech

and others, we expect, hopefully, to come up with some alternatives

47

that will help not only Florida but also California. It’s a major

issue we’re working very hard on. Mr. Romerage, the Deputy, has

taken great leadership on that issue.

Mr. SCHER. Could I just add one thing to that just to plug the

President’s budget? There is a substantial increase in research

funds in the Fiscal Year 1999 budget for methylbromide research.

I think it’s an indication that we recognize that there is a real

issue here that our agricultural community has not been shy in letting us know——

Mrs. THURMAN. Nor have they been shy in letting me know.

[Laughter.]

Mr. SCHER [continuing]. And we have to figure out how to fix it.

Mrs. THURMAN. Let me continue on that same line. We had a

problem just recently with some product coming in from some other

countries that potentially had med fly. We stopped it. Florida really

came out against it, because it potentially came into Florida. We’ll

go to the President’s budget again then. What do you know is in

Fiscal Year 1999 budget request for APHIS inspectors? How many

in Florida and how many along the Southwest border?

Mr. SCHUMACHER. Well, that’s, again, a very interesting question. I think my understanding is that APHIS has expanded its

coverage in Florida and along the borders, and I believe there’s

money in for additional expansion. What I would like to do is get

the exact numbers back to you, Congresswoman, and we’re prepared to do that very quickly early next week.

Mrs. THURMAN. Since the Med fly is also one of those issues that

keeps us out of these countries or superficially, I think, keeps us

out of some of these countries, let me ask you this question, because this is a really—again, as an interagency issue. Do you think

Florida has a med fly problem?

Mr. SCHUMACHER. Well, my understanding is, according to Dan

who’s sitting right behind me from APHIS, if there is one it’s going

to eradicated in March.

Mrs. THURMAN. Okay, but then I’ve got EPA saying we do or we

don’t—[laughter]—so we should get rid of any of the pesticides that

we have available to us today to get rid of it. I mean, this is—somehow, we need to get this intercoordination going. I mean, we need

to have these agencies understand what’s going on on the other

side, because it is really causing some major problems. We’re getting some very mixed signals. That’s not your fault. I just think it’s

the fact that these agencies don’t sit down and talk to each other,

and you’ve got to start doing that, because I think we’re creating

some real problems for us domestically. I thank you for your testimony.

[The following was subsequently received:]

48

49

Mr. RAMSTAD. Thank you, Karen. When it’s 10 below, we don’t

have Med flies in Minnesota. [Laughter.]

Mr. Watkins.

Mrs. THURMAN. Do you have pretenders?

Mr. RAMSTAD. Well, our State bird is the mosquito. [Laughter.]

Go ahead, Mr. Watkins.

Mr. WATKINS. Thank you, Mr. Chairman, and let me say I want

to express my thanks to Chairman Crane and members of this

Trade Subcommittee for allowing me to participate. I know I’m a

ex-officio, but I want you to know my heart—I’m genuine, sincere,

and committed to international trade and to agriculture. I know I

was probably obnoxious about the beef hormone ban with the European Union. I guess you were nodding, Peter, that I was obnoxious.

[Laughter.]

Mr. SCHER. No, no; just that it was an important issue. We noted

your interest.

Mr. WATKINS. I felt like I was, maybe to some extent, out of character, but a lot of people think I’m in character when I got obnoxious, but I thought it was so blatantly unfair.

I might say to members of the panel I grew up on a cattle and

peanut farm. I went to college and got a couple degrees in agriculture, so I’m genuine in my thinking. I can remember when I

served as State President of the Oklahoma Future Farmers of

America. As I traveled across the State of Oklahoma, I would talk

about the fact that 16 percent of us were in the production of agriculture. Four years later at graduation, I was lucky enough to be

the outstanding ag student at OSU. I got up and made this speech

that there’s only 12.5 percent of us in the production of agriculture.

As a United States Congressman, I now make speeches, and I say

there’s 1.5 percent of the population in the production of agriculture. That’s as clear a vision, I think, as I can put it on what’s

happened in the production of agriculture in this country.

In 1996, we passed a farm bill here. I wasn’t here at that time.

We moved from subsidies to a free market, freedom to farm; depending on our international markets. So, it behooves us to do everything—and let me say ditto to what Bob Matsui said: it means

that we, as agriculture, need to get together or we’re going to leave

our farmers and ranchers dangling out there.

Now, I was unabashed and unconditional in my support of fasttrack. I was deeply disappointed we couldn’t get the kind of support we needed, and I imagine there’s a lot of reasons for it. We

put in the strongest agriculture language that we’ve every had in

a trade bill in this country. Part of it was my language there, and

we also put in a permanent chief negotiator for agriculture, which

would have been the first time with ambassadorial status. As I said

to a lot of my agricultural community, ‘‘we should be out there supporting fast track’’. Now, part of the problem was the beef hormone

situation, but let me say, we’ve got to have WTO. We’ve got the

greatest quality agriculture products in the world, and surely the

WTO will rule in our favor. However, the biggest problem is that

the beef hormone went into effect in 1989; 9 years ago. Now, we’ve

got to get some kind of ruling, why so long?—I’m getting to the

question, I guess—why so long?

Mr. SCHER. Congressman——

50

Mr. WATKINS. Pardon me, but I’m mean about this thing.

Mr. SCHER. No, no. I share your emotion. Let me first make a

comment about the beef hormone. One of the reasons why so long

is because under the old GATT there was not an enforceable mechanism, so we could bring as many cases—as Congressman Portman

referred to the banana case; we won the banana case two times

under the GATT, and you could say, ‘‘Well, thanks, we appreciate

your advice, but we’re just not going to abide by the ruling.’’ You

now have—as a result of the Uruguay Round negotiations in 1994,

which went into effect in 1995—you now have an enforceable dispute settlement mechanism. That’s why we’re winning so many

cases, and that’s why these countries, in many cases, abiding by it.

But, I think, as Congressman Portman referred to, both about the

banana case and the beef hormone case, these are very important

tests of the WTO, particularly with regard to the European Union.

The European Union was always quick to tell us we have to respect

the multilateral system.

I remember several years ago when I was working for Ambassador Cantor and we got into a little discussion with Japan over

automobiles, and there was unilateral action threatened and many

in Europe said, ‘‘You can’t do that. You have to respect the multilateral system. That’s why we have the WTO.’’ Well, we are respecting the multilateral system. We’re using those processes, but

now other countries have to respect it as well, and the only way

we can demonstrate to the American people that being part of the

WTO and being part of the World Trading System works is if Europe abides by these rulings.

Mr. WATKINS. What’s the time limit, now we think we can

start——

Mr. SCHER. In terms of beef hormones?

Mr. WATKINS. Well, the beef hormones we’re expecting—hopefully, through the appeal process we’ll be able to get that beef—we

better get there before election day. [Laughter.]

Mr. SCHER. Well, Congressman, I, of course, don’t think in those

terms, so it would be——

Mr. WATKINS. You should from now on. [Laughter.]

Mr. SCHER. I know, I know. I’m just very apolitical. Let me say

that tomorrow in Geneva the appeal decision, the appellate decision of the—on the beef hormone case will be adopted by the WTO.

The European Union then has 30 days to indicate whether or not

it plans to comply with the decision, and let me make clear that

we expect the WTO to comply with the decision. The panel was

very clear, there is no scientific evidence that supports this ban,

and, in fact, the panel went out and brought in another panel of

scientific experts and said, ‘‘You tell us whether or not there’s a scientific basis for this ban,’’ and they said ‘‘No,’’ and the appellate

body upheld that finding, and, in fact, upheld the right of the initial dispute panel to bring in these scientific experts.

Mr. WATKINS. Peter, let me say I’ve been over there with the European Union; I met with them, and the agriculture ministry in

France. Being a, I guess an agriculture farmboy. If Wally would

just yield to me just a little bit—but as I kneeled down and dug

in the soil in France, I looked up and I saw all these multitude of

small farms. We all know we’ve shifted that to bigger farms. So,

51

I stood up; I looked at the agriculture minister, and I said, ‘‘Why

all the small farms? Why are you taking it and going in the opposite direction?’’ I’ll never forget his answer. He said, ‘‘Congressman,

we went hungry twice in our life, World War I, World War II.’’ He

said, ‘‘We’ll pay whatever the price it takes to maintain our agriculture in those countries.’’ That we should never forget, and you

should never forget it. They’ll pay whatever price. Now, not only

are they subsidizing internally the production, they’re subsidizing

externally to get markets and they’re willing to lose. In fact, the

European Union back in that time, five or six years ago, they were

using 70 percent of their budget to subsidize agriculture against

our farmers and our ranchers. Now, you’ve got a big job to do.

Mr. SCHER. And it’s now up to 75 percent.

Mr. WATKINS. And I’d like to know—yes. I’d like to know what

all—how many times have you gone before the WTO?

Mr. SCHER. How many times has the United States?

Mr. WATKINS. Yes.

Mr. SCHER. We have brought 35 cases.

Mr. WATKINS. No, I said you.

Mr. SCHER. Me, personally? We have a team of litigators who are

much more adept at appearing before the WTO than I am, but we

have a very good team of people who do that.

Mr. WATKINS. And this is the point I want to make: I don’t know

what those litigators’ background, but they’re dumb if they don’t

understand that 99.9 percent of our beef in the United States is

grown with beef hormones. They were not willing—they didn’t understand around that table that they were negotiating our ranchers

right out of business with Europe. Now, either they don’t care or

they sold our cattlemen down the drain. Now, that’s what I’m mostly—that’s why I wanted to set the stage. It’s not political to me,

I’m sincere. We’ve got to have, Mr. Chairman, negotiators who understand agriculture—and Mr. Chairman is very patient, and I appreciate that, and I appreciate getting to kindly led this off. You

may have saved a heart attack this afternoon. [Laughter.]

Mr. RAMSTAD. Thank you, Mr. Watkins, for telling it like it is.

Mr. Herger.

Mr. HERGER. Thank you, Mr. Chairman. I’m not sure if I can be

quite as lively as my predecessor here from Oklahoma, but, Mr.

Ambassador, I’m sure you can tell by the questioning and the fact

that we’re having this hearing that this is an incredibly important

issue to the Congress; to those of us on Ways and Means; certainly,

to the districts that we represent in the Nation. I also have been

one who has supported our trade agreements over the years. I was

a supporter of fast-track. But in supporting these agreements,

we’re doing so—I’m certainly doing so—with the presumption that

the Administration is going to be enforcing the agreements that

we’re making. I mean, that has to be a given; that the Administration is going to be enforcing the agreements that we’re making, and

I share the same concerns of each of those who have questioned

prior to me.

I want to move to another question, and it has to do with the

USTR and the issue of the EU canned fruit subsidies. Ambassador

Barshefsky has acknowledged that the EU regime under which Europe has been subsidizing their canned peach producers with hunVerDate 11-MAY-2000 09:29 Jun 07, 2000 Jkt 063436 PO 00000 Frm 00055 Fmt 6633 Sfmt 6602 E:\HEARINGS\60951 pfrm07 PsN: 60951
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dreds of million of dollars annually is ‘‘an inequity’’—that was a

quote from her—that needs to be corrected. I understood that several months ago that resolving this problem was a priority at

USTR, and my question is: What positive steps has the USTR determined to take over the next 6 to 12 months to resolve the quote

‘‘inequities’’ and harm to the California industry that we all agree

have resulted from the EU regime?

Mr. SCHER. Congressman, let me say a couple things. First of all,

we are concerned that these subsidies are putting our producers,

your producers, at a competitive disadvantage, and this is something—as you know, this is a long standing issue between the

United States and the EU. We are working very closely with the

industry to develop the strongest possible case and the strongest

possible strategy to address this problem. I would rather not go

into the specifics of that right now in a public hearing, but I’m

happy to come up and go through those with you in your office or

with your staff at your convenience, and one of the reasons I say

that—one of the reasons we have been successful in the WTO, particularly on the agricultural front is that we do our homework before we go in there and that we go in there with the strongest possible case, so whatever action we choose to pursue on the issue of

the canned peaches, we want to have the strongest possible action.

So, I hope—I’m not trying to put you off at all, but given the fact

that this will likely be subject to further negotiation, I’d rather not

do that publicly, and I’d rather come up and talk to you privately

and bring our team an go over what we believe we can do to address this issue.

Mr. HERGER. I can understand that, and I want to take you up

on that. I would like you to come in and go over that with me.

Mr. SCHER. Okay. Can I—Mr. Chairman, if I—can I make—I

want to make one other point, because I—one of the things that

both Congressman Matsui and Congressman Herger brought up I

think is relevant and that is this sort of—people, often, in this

country look at a trade problem and say because we have this trade

problem we shouldn’t move forward on other areas, and I think

there were some suggestions that the agricultural community has

not been as supportive as they should have been on fast-track, and

I hate to come before the committee and disagree with any member, but I will say from my vantage point the agriculture community, frankly, has been the strongest supporter of our fast-track efforts, and I know Dean Kleckner is up next, and there is no stronger supporter in this country in the agriculture community for the

adoption of fast-track than the farm bureau and the pork producers

and the many of the industries that will be testifying later today.

But there remains this disconnect between what we’re trying to

do and the success we’re having around the world and how people

perceive trade, and I think until we can try to bridge that and educate people about the realities of global economy, the fact is the

biggest challenge in the next 30 to 50 years will be meeting world

demand for food. We are in a position to take advantage of that

challenge, and it doesn’t serve the interests of Oklahoma or Ohio

or California or Minnesota farmers if we don’t have all the tools at

our disposal to do that. So, I would like to just take a second and

commend the agriculture community for their very strong and very

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forceful support and very continuing support for fast-track and

hope we can work with you to build the type of consensus we need

to move forward.

Mr. HERGER. Good. Thank you.

Mr. RAMSTAD. One final question that Mrs. Dunn asked me to

ask you, Ambassador Scher, if I can read her writing. Mrs. Dunn

wanted me to inquire about a duty that Mexico has recently imposed on U.S. exports of apples.

Mr. SCHER. Right.

Mr. RAMSTAD. I understand that this duty is high enough that

it has virtually stopped U.S. exports of apples to Mexico. Do you

intend to request consultations in the WTO on this matter which

is of great interest to growers in the State of Washington?

Mr. SCHER. When you said Congresswoman Dunn, I was going

to offer to ask the question for you. [Laughter.]

No, this is—and she has communicated very forceful as have

Chairman Smith and other people from Washington and Oregon

about this. This is a very major problem and the actions that the

Mexicans have taken to impose these duties are of great concern

to us. We are working very closely with her industry in fact, right

now. The duties are not final which is a fact that is relevant to our

review of this, but we’re reviewing our options, and we will get

back to Congresswoman Dunn on what we believe the best way—

I will tell you, in addition, that Deputy U.S. Trade Representative,

Richard Fisher, was in Mexico this week and raised this issue,

himself, with the highest levels in the Mexican government including the trade ministry and the foreign ministry, and so this is

something that we’re very concerned about, particularly as we see

the problems in the Asian market for our northwest producers, and

we will continue to focus on it.

Mr. RAMSTAD. Well, thank you. I know Mrs. Dunn’s on a plane

back to her district. I know she’ll be reading your response; probably getting back to you soon.

Well, thank you again, Mr. Secretary, Mr. Ambassador, for your

testimony and responding to the questions so well.

The next witness is Dean Kleckner who is president of the American Farm Bureau, and, Dean, before you begin your testimony

Chairman Crane asked that I think you were here when I explained that the chairman took ill—asked that I just state, for the

record, his feelings, and I’m quoting now from our Chairman Crane

who says ‘‘As the president of the American Farm Bureau since

1986, Dean, you are the only farmer on the Private Sector Advisory

team to the GATT when the Uruguay Round was launched. You

have been actively involved in promoting free trade at the grassroots level for many years, and the Trade Subcommittee has benefited enormously from your work as I have as chairman. I want to

thank you for your tireless effort on behalf of fast-track and urge

you to continue to do everything possible to let the Nation know

how important this legislation is.’’ Those words from Chairman

Crane.

Please begin your testimony and welcome to the committee.

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STATEMENT OF DEAN R. KLECKNER, PRESIDENT, AMERICAN

FARM BUREAU

Mr. KLECKNER. Thank you, Chairman Ramstad, and I thank

Congressman Crane for his compliments and comments. I’m a

farmer from northern Iowa, about 35 miles south of Austin, Minnesota. I grow corn, soybeans, and hogs on my farm when I’m able

to be there. I’m serving as president of the American Farm Bureau

which is the world’s largest farm organization not only just in the

U.S. but in the world, and our members grow all the 280 or so commodities that are produced commercially in the country; there’s

farm bureau members growing all of them. And, Mrs. Thurman, I

want to say just off the subject a little bit, we appreciate your support and your cosponsoring the farm legislation. I testified on that

this morning before the full committee. Twice before the Ways and

Means Committee in one day is a lot, but I’m here again. [Laughter.]

We want to thank this committee for your support to pass fasttrack in the last session and pledge to you that the American Farm

Bureau is going to do everything we can to work on it yet in this

session. I know there’s a lot doubt of—I heard Congressman Matsui

say it doesn’t look good, and maybe it doesn’t, but we’re going to

work on it, and we think turn a few votes around, and we can have

it yet this year. We need it now.

Our producers are the most effective and efficient producers in

the world, but what we can’t do is break down barriers created by

other governments. This has got to be done government to government with our negotiators, hopefully, in the leadership role. What

we, as producers, hope that we can do is have a positive impact on

removing barriers created here at home.

I want to discuss some of those barriers that I see that we’re creating here. We continue to put economic sanctions on our trading

partners which only have the effect of cutting our sales out of their

markets. History has shown, gentleman and Mrs. Thurman, that

economic sanctions are an ineffective means of resolving political

differences. Short-sided budget reductions, also, and market development promotion programs; reduced resources for research—that’s

eating our seed corn, in other words; cutting back on human resources in overseas posts—and we’re doing that—only reduce our

ability to compete.

I want to comment that the expertise that we have in our overseas USDA–FAS offices are the eyes and ears to us, and we’re cutting back on that, and we simply cannot afford to do it. They help

us resolve trade barriers before they become irritant. They could

have resolved, Congressman Watkins, maybe, back then in a proper manner, the beef hormone issue. We’re cutting back on those

people now, and that’s wrong.

The economic crisis in Asia puts the entire U.S. economy at risk

if strong, effective measures are not taken to stabilize the currencies in those countries. IMF has taken steps to see that this

happens. We should not risk losing our biggest market by failing

to provide IMF with needed funding to prevent economic disaster.

Whether that means we continue IMF in the future, I don’t know.

I read the Wall Street Journal article 10 days ago saying we

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shouldn’t have an IMF, but it’s there now, and we’ve got to use it

now today.

I’d like to submit, for the record, Mr. Chairman, a copy of letters

of intent from Korea, Thailand, and Indonesia that show that critical, structural changes are part of the IMF program to bring stability to those markets, and they’ve committed to do that.

Going on, failing to grant the administration fast-track negotiation authority has allowed our competitors to move forward while

we watch market share disappear and see our leadership role in

shaping trade diminish. We would not have the agreements that

have made the United States a leader in international trade without the fast-track authority of the past. They wouldn’t be there. At

the beginning of the Tokyo Round there was no fast-track authority. At the beginning of the Uruguay Round there was no fast-track

authority to negotiate. The world waited for two years to begin negotiations after September 1986 as you mentioned, Mr. Chairman

or Chairman Crane mentioned. It was two years before we got fasttrack authority. Nothing happened in those two years. I guess we

negotiated the size and shape of the table and how soft the chairs

were but not much else. You don’t talk seriously without fast-track

negotiating authority, and many people are saying we won’t have

the next round which is scheduled to start in 1999—whether it will

be called Millennium Round or whatever—we won’t be a player

without fast-track. We can’t afford to wait for this authority in

1999 when the talks are due to begin.

Our trading partners are not going to wait for us. We believe

that the European Union has a number of issues they wish to move

forward that they know we won’t support. We won’t be at the table

without fast-track; EU goes forward. The beef hormone issue is

maybe a tip of the iceberg for what they want to do. The same is

true of Canada and a number of other trading partners in the

WTO.

Also, we are going to be very concerned if the administration negotiates trade deals without agriculture as part of the package. We

strongly oppose any agreements or negotiations that exclude agriculture. We’re currently losing market share in South American.

Canada just negotiated a deal with Chile; eliminated tariffs 11 percent at the border. How can we compete with 11 percent tax at the

border with Canada and Chile? Answer: we can’t.

Over 20 new agreements are in the western hemisphere in recent

years; we’re a part of one, called NAFTA. Nineteen, if not more,

we’re not a part of. Trade is our future; we can’t reverse our course.

Our share of international sales—of U.S. farm cash receipts now,

is 30 percent and rising; it was 20 percent a dozen years ago. Over

50 percent of our rice and wheat are exported; 40 percent of our

soybeans and cotton have been exported in recent years; beef, pork,

and poultry are lower, but it’s increasing. Exports have doubled

since 1998, so have exports of value of added products.

Our agriculture exports are now $60 billion versus $29 billion in

1985—some of you were in Congress, I think, In 1985—it’s more

than doubled, and it’s due to opening markets through trade agreements and multilateral trade negotiations. That’s the only reason

that happened. Developing countries now in Asia and the Pacific

rim are more important than at the previous time. Over 40 percent

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of our U.S. ag exports now go to Asia. Last year that was $23 billion of the roughly $60 billion that was exported; $23 billion to that

part of the world. We’ve got to have low duty—we give low duty

access now to most Nations of the world. I heard Secretary Glickman say at our convention that our average ag tariff is about 2

percent, and he said trade fluctuations make more than that difference daily, and that’s how open we are; other countries aren’t

open. We can’t open them without trade negotiations, and we’ve got

to have authority to do it, and that’s called fast-track.

Three things that we believe should be in future negotiating authority and they’re in there in the President’s message last September: binding agreements to resolve sanitary and phytosanitary

issues on the bases of sound science. You can argue with sound

science, but there is a broad middle ground of science where it’s

peer-reviewed and the scientists do agree. The fringes don’t agree;

we write them off.

Secondly, tariff equalization and increasing market access by requiring U.S. trading partners to eliminate tariff barriers within

specified timeframes; eliminate them. Don’t do what we did with

Canada and kind of put it off. And we’re not getting poultry, poultry products, and dairy products into Canada today.

The third one, changes in international agreements in U.S. law

and practices that would facilitate and shorten dispute resolution

procedures and processes and that speaks directly to Florida and

their niche markets with their vegetables.

Our dispute resolution processes are working, but they are not

time efficient to respond to market needs. Our trading partners

continue to take advantage of the timeframes allowed within the

process to delay compliance with banana findings—beef hormones,

the banana case would be examples of that also. There is a potential trade dispute or barrier for every product we have in the marketplace. I hadn’t thought about that until recently. For every

product we sell there’s a potential barrier in place somewhere in

the world. The list would go from unfair tariffs and phytosanitary

barriers in Mexico and Japan to apples and wheat and pork into

China. There is no product not affected by barriers somewhere in

the world.

Our trade agreements are good but not perfect. We must expand

the existing market access and open new markets. Our negotiators

have got to have fast-track authority or our trading partners will

not meet us at the negotiating table. If I were them I wouldn’t talk

to us either without fast-track authority. It’s a waste of time when

fast-track is not in place. I wouldn’t negotiate with us if I were

from Europe or China or somewhere else. Tremendous resources

and effort have been expended to create the current markets for

U.S. ag products whose sells support millions of U.S. workers.

In conclusion, our ability to gain and maintain market share is

based on many factors including strong trade agreements; the administration’s ability to negotiation freer and fairer market access

with fast-track authority; sound monetary policies, and the ability

to utilized market stabilizing tools such as a properly functioning

IMF. It is extremely important to U.S. agriculture and the Nation’s

economic strengths that you all do the right thing and pass both

of these trade measures early in this session of Congress. I urge

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you also to take the steps necessary to prevent us from creating

our own trade barriers by providing funding necessary for the IMF

to address the needs of our trading partners in Asia and to move

as quickly as possible to provide fast-track authority to continue to

open the markets. We’re ready to work with you in any we can,

and I thank you for this opportunity to talk with you.

[The prepared statement follows:]

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Mr. RAMSTAD. Thank you very much, and thank you for your outstanding leadership as president of the Farm Bureau. I think, although it’s probably already been printed, the Congress Daily pm

quote of the day should certainly be from you from your testimony,

‘‘We won’t be at the table without fast-track.’’ How true that is. I

just hope we can get that message out to the other members.

Let me just ask you a question, If I may, Dean. Other Nations,

as you know, are reticent to reduce their barriers to agricultural

imports, and we don’t have very many barriers to bargain away. Do

you think we should be calling for another major round of negotiations along with the agricultural negotiations?

Mr. KLECKNER. Well, Congressman, I think in 1999, the WTO

negotiation are supposed to be broad ranging agriculture. What I’m

afraid of is ag. may be cut out of that. We’re talking something

about a transatlantic—I think it’s called that—an atlantic trading

authority with Europe. I met with Charlene Barshefsky yesterday

or the day before, and said we would be unalterably opposed to negotiating a transatlantic authority—or whatever it’s called—without agriculture, and she said we’re not going to do it. That was

good news, but the WTO round that’s scheduled to start in 1999—

I’m hoping early 1999, not December 31. I think that’s what Europe wants; if not December 31, 1999, maybe the year 2005, but

delay it as long as you can, but we’re going to start it, and it should

be major; it should encompass services and intellectual property

and all the other things, and I think without a broad negotiation

in 1999 WTO, agriculture probably can’t do anything by itself.

There needs to be a broad agreement like the GATT was, the Uruguay Round.

Mr. RAMSTAD. Dean, in terms of new or ongoing negotiations,

what are your specific priorities, your organizations specific priorities?

Mr. KLECKNER. Yes, the sanitary and phytosanitary we simply

somehow must make sure that’s scientifically based, and I know

you can find a scientist somewhere in the world who will tell you

anything you want to hear just like you can find a lawyer that will

tell you anything you want to hear or anybody else, but there is

a broad—I offended all the lawyers on the panel, didn’t I? [Laughter.]

I didn’t intend to, but there’s a broad, middle ground of science,

in my view, that does agree, it’s in essence peer reviewed, you forget the wings that will tell you what you want to hear. There’s a

broad, middle ground of science that agrees, and if they tell Dean

Kleckner that the corn or the soybeans that I’m growing with BT

or whatever it is are not safe for human consumption, I want to

quit growing them. I don’t want to grow them anymore, but I don’t

want Europe telling us that we can’t do it when science today says

it’s completely safe. And we need the—sanitary and phytosanitary

is one; phase out tariffs in a time certain, and I don’t think it has

to be within five years. Some tariffs you can phase out in five

years. It may take 10 or 15, but at least have an ending date to

phase out tariffs. Those are very high priority.

Mr. RAMSTAD. Well, thank you, again, Dean. I can tell you as one

recovering attorney, I wasn’t at all offended by your remarks.

[Laughter.]

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Mrs. Thurman, Mrs. Thurman.

Mrs. THURMAN. I thank you for your comment earlier, and I’m

sorry I missed your testimony.

I guess the one thing that strikes me, and I know that you’re

here for the Farm Bureau, but I know that Florida has departed

from the National Farm Bureau within the fast-track debate. I just

kind of want that clarified, because I know that is a big issue, and

I don’t to mean to diminish your presidency and the people that

you are representing, but for the panel members you need to know

that the Florida Farm Bureau has not accepted this position and

has been very concerned about what is going to happen to them in

particular.

But I do appreciate the fact that you have recognized at least two

or three things that the Florida Farm Bureau has picked up and

has said were very critical and the last three things that you

talked about as well as some additional areas that they’re very concerned about. So, I do appreciate the fact that you’ve included some

of their issues within as we move forward into this debate, and I

thank you for being here today.

Mr. KLECKNER. Thank you, Mrs. Thurman, I appreciate that. I

get to Florida often; I hear the same things you hear only you hear

it oftener. I’ve not changed many minds in Florida, but I think the

thing that I think we need to keep in mind that you fix what’s

wrong with present agreements in the context of new agreements.

If my Florida farming friends—and I have many in Florida; Carl

Loop is the vice president of the American Farm Bureau. He and

I are long-time buddies, and Carl is great; he was the first chairman of our Farm Bureau Trade Advisory Committee, but—and I

know that Florida is more concerned, in my view, than any other

State because of the niche marketing, the Mexican dumping. I personally think that the Mexican dumping of tomatoes and peppers,

et cetera in Florida has zero to do with NAFTA and 100 percent

to do with the peso devaluation, but it happened at the same time;

NAFTA got the blame, and I can’t convince my Florida friends that

it isn’t NAFTA’s fault, and I don’t think you can either. But you

fix what’s wrong by coming up with new agreements, and without

fast-track negotiating authority—I’ve been told by people high in

USDA—we can’t even go to Mexico, Canada, and other countries to

fix what’s wrong because we don’t have authority to talk. If Florida, for example, or North Dakota with Durham wheat or Maine

with potatoes or beef in Montana or wherever concerned about the

trucks coming across, if you really want to fix what’s wrong, and

there are things wrong, you should be in favor, in my view, of fasttrack which gives us the authority to fix what’s wrong. I’ve got

good friends, Mrs. Thurman, in Florida that said the old saying,

‘‘Fool me once, shame on you; fool me twice, shame on me.’’ We’ve

all heard it and probably said it. And my friends down there who

grow oranges and grapefruit—disastrously priced right now, certainly grapefruit—are saying, ‘‘I’m not going to be fooled again,’’

and my answer is, ‘‘Yes, there’s things wrong, but we fix it in the

context of new trade agreements, and we need fast-track to do it.’’

Mr. RAMSTAD. Mr. Herger.

Mr. HERGER. I don’t have any questions at this time.

Mr. RAMSTAD. Mr. Nussle.

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Mr. NUSSLE. Thank you, Mr. Chairman. I want to thank you,

Dean, for coming in and speaking to us today. I’d like to go in two

directions. One is on your testimony and the other is more having

to do with regard to Asia and how what’s going on in Asia affects

the urgency of what you came to tell us today. Just yesterday it

was reported by the Department of Agriculture there would be

some concerns with regard to corn exports as an example.

The first has to do with, I think, understanding and education.

I don’t think there’s anybody in this room who does not have at

their fingertips good information, statistics, dollars and cents, jobs

created, jobs traded, jobs this—on a number of different agreements that we’ve had before us. Unfortunately, what I’ve seen in

my district in Iowa is that far too few farmers have that same information at their fingertips. In this battle of demagoguery that is

out there on the issue of, particularly, jobs lost as a result of trade,

we, unfortunately, are losing the battle. It’s much easier to blame

a straw man of NAFTA than it is to get good information out to

real people who are combining in the field and are sending a number of those bushels that they’re dumping into their combine in one

way, shape, or form, whether through value-added or whether

through bulk commodities, to another place in the country and certainly throughout the world through trade.

I would just urge you to do whatever you can to try and impress

upon your farmers the urgency of fast-track and the need to be at

the table if we’re going to improve these agreements. This is not

to blame; this is not to point fingers; this is only to suggest to you

that on the street corners, at the grain dealers, or wherever you

might meet farmers, they’re just not getting that information and

are listening to the Pat Buchanans and Dick Gephardts of the

world that run around trying to scare people. It’s on both sides;

they’re extremists, and they’re doing us, I think, a terrible disservice. So that’s my speech—amen.

But I guess what I was more interested in is impressing upon

you the urgency of getting that information to farmers; second, to

get your opinion about how the urgency has changed as a result

of what is happening in Asia.

Mr. KLECKNER. Thank you, Congressman Nussle. We come from

the same State. I know the people at Dyersville, at Ertl, that lost

their jobs blame it on NAFTA or something. That’s human nature,

I guess; it’s not true, but that’s human nature.

It bothers me too, maybe even more than you, that we can’t get

the story out. I think to some degree the good things that have

happened, the exports have gone up dramatically to 30%, a third

of what we produce. Without exports, we’re dead as farmers; we’re

dead. It’s gone up, but we farmers accept it as just a matter of

course, and we don’t give credit to the trade agreements that created the atmosphere where we could export more. As human nature, again, we seize on the negatives. We’re hearing all the bad

things that are said from the Buchanans on one wing and the Gephardts on the other wing; organized labor who blames all job losses

on NAFTA, or GATT, or something else, and spending a lot of

money to get their message out, and we’re finding it very difficult.

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I’m doing everything I can, and I’ve got kind of bully pulpit in

my job, and I’m using the bully pulpit, but it bothers me that we

can’t get the true message out.

I mean, we’re not going to lose exports without fast-track. I think

we’re going to maintain what we’ve got pretty well; Asian crisis

was something different. But we’re not going to gain—as we increase production as we’re going to do in agriculture, we’re not

going to gain the exports that we need for the increased production

without new trade agreements. We’re open now, we’re taking everything from everybody, we can’t get in there. We’ve got to have

agreements to open their markets.

The Asian crisis—I had in my testimony support for IMF. I honestly have some long-term wonderings about IMF and the philosophy that’s involved, but right now we’re here; IMF is in place. We

need to use it, and I hope that the Congress will allocate the $18

billion, or whatever it is, a portion thereof, to make the funding.

Asia is very important to us, and the strong economies, basically

in my view, those folks over there—and I’ve been in most of those

countries—work hard, and the economy will bounce back. I don’t

think it’s going to be in 1998, maybe not even in early 1999; but

it will come back. In the meantime we’ve got to prop it up, and I

think IMF funding, if it moves forward, will do it, and we will lose

less exports than we would without it.

Mr. NUSSLE. Thank you.

Mr. RAMSTAD. Mr. Portman.

Mr. PORTMAN. Thank you, Chairman, and Dean, thank you, for

your support of free trade, and as Jim Nussle said, it’s a grassroots

effort in my district. I think you’re a district representative on this

committee and subcommittee. It’s been very helpful to those of us

who want to open markets and lead to more agricultural exports,

and all those other exports.

I have a question for you. You testified about some of the Farm

Bureau interests and future trade agreements. You talked about

fast-track. I couldn’t agree with you more that we have to have

fast-track if we’re going to get people to come to the table. In fact,

that’s a way to fix what’s wrong. Rather than looking at it as a

problem; it should be looked at as a solution.

With regard to WTO, we talked a little bit earlier—I think you

were in the audience—with Peter Scher about whether the beef

hormone case, bananas case, and other cases involving agriculture

at WTO are satisfactory to us; whether the implementation of a

WTO decision was satisfactory.

Do you have any specific reform suggestions on that? Are you

satisfied with the way WTO’s working or would you like to see

some changes?

Mr. KLECKNER. Good question, Congressman. I supported what

Peter Scher said.

Under the old GATT agreement, the beef hormone issue and

other ones went on forever. They could stonewall it. They’d lose

court cases and say—or lose trade panels and say, so what; they

wouldn’t comply. Under the WTO the rules are in place, it takes

about 18 months, and that’s what the beef hormone case took.

Now, that’s the process. But 18 months is a heck of a lot different

than 10 years or never.

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Now Europe has lost every appeal. They’ve got in my view

three—in beef hormones they’ve got three choices; they can comply

and let our beef in, which is what we want; or they cannot comply,

and they can pay retaliation, or pay the amount of supposedly—we

won’t argue about how much that would be, but they can pay us

in some way; or we can legally retaliation, which I hope we do if

they don’t comply.

I have many good farming friends in Europe; I love them dearly.

We have a beer or coffee together, and we talk, but their leaders

in government pick at every little niche. It’s like a thumb in the

dike. There’s a little crack, and they wiggle their way through, and

expand it, and they drive trucks through. They’re masters at that.

And I think the WTO, and Peter Scher—I wasn’t aware of the figures, but 35 cases we found he said, and most—two-third were in

agriculture. We’re winning most of them. It’s to bad that we’ve got

to file those cases. They ought to comply. But we’re going to keep

on filing, and I think we’ll keep on winning them. And the beef hormone issue, I think it’s settled, but how will Europe respond; we

don’t know.

Mr. PORTMAN. It’s probably too early to assess how the changes

since 1995 are working, but you are satisfied at this point that we

have enough leverage to deal with, of course, these decisions.

Mr. KLECKNER. Congressman Portman, I think we do. It’s a little

bit early in the process. You’re referring to WTO and the process

here. It’s a bit early. We’ve got to win some more cases, perhaps

lose a few more. We lost—the first case we took, WTO; that was

on gasoline from South America. I think we lost that one. We’ve

been winning a lot since.

We need to support WTO. It’s the best we’ve got out there.

Maybe it could be made better. It possibly could be made better in

the context of the next WTO round of talks. But it’s so much better

than the old GATT agreement; there really is no comparison.

Mr. PORTMAN. Well, I thank you again, and I hope that we do

see results, whether it’s on beef hormone, and bananas, and other

cases; because if we don’t it’s tough to continue to have that grassroots support for free trade.

Mr. RAMSTAD. Mr. Watkins, any questions?

Mr. WATKINS. I appreciate it. Let me say, Dean, thank you, and

I appreciate the leadership of Farm Bureau on this.

I was reflecting as we’re talking. Maybe we need to have a summit among our agriculture groups, concerning not only fast-track,

but IMF. I’d like to suggest that we need to discuss that. We’ve got

to monitor IMF. We’ve got to look at how a lot of the money’s going

in there, and how it’s being utilized, et cetera, and make sure it’s

a positive way.

But we were divided. Not too many—the farm groups did not

support fast-track, but we did have a couple of key groups that

found some rationale. To me it doesn’t take a rocket scientist to

know we’ve got to penetrate those markets around the world, with

96 percent of the consumers outside the United States.

I don’t know what our approach is going to be on the IMF right

now. It may be a little shaky, but I think we need to analyze the

role of the IMF.

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We need to closely monitor the IMF to ensure that they’re not

engaged in activities we cannot be supportive of.

Let me say, I was alarmed about an article in The Wall Street

Journal just a couple of weeks ago, where it stated that the European Union was going to enter into with some trade negotiations

which would disclude—that would not include—agriculture. That

was quite alarming to me. It was like, we’re going to just leave agriculture off from being around the negotiating table.

I shot a letter to the USTR to express my concern and they gave

me a letter back. I don’t have a comfort zone with their response,

and I didn’t have a comfort zone with Peter’s remarks when he left.

I asked him about the article, and he said the European Union

leaked that. I don’t know exactly what that meant when he said

the European Union leaked that article. I think we must be around

the negotiating table with agriculture. We’re going to give you the

tools, all the tools in the world, to do that. So I hope you’ll help

us keep a running track of our progress.

I’m concerned because politically, because agriculture as I mentioned a while ago, we’re small in number, we’re scattered, and

thank goodness we do have some farm organizations. But sometimes I think it’s easy for some of the negotiators to trade us off.

Like to be farm-owned, that shouldn’t have been—anyone familiar

with agriculture should have known that was going to be very, very

harmful to our panel people in this country. That’s why again I

worked to try to put the chief negotiator’s position in fast-track, because I felt like it would be one of the most important things we

could do is to put someone who understood agriculture around that

table.

So I just want to say, help us monitor the IMF; take a good hard

look at that. You also may want to consider trying to pull together

a little summit of agriculture groups to try to make sure we’re all

singing the same song on this issue.

So, Mr. Chairman, that’s what I mainly wanted to say. I don’t

know if you have any remarks on that or not, Dean.

Mr. KLECKNER. Thank you, Mr. Watkins.

On the issue of agriculture being excluded, as I mentioned a little while ago—I think they called it a trans-Atlantic meeting or Atlantic conference or something; it was Europe and the U.S. And we

also heard, or probably read the same article, that said agriculture

would not be a part of it.

Europe doesn’t want agriculture to be a part of it. They would

rather talk about services, intellectual property, other trade-related

items, and leave agriculture out, because it’s so controversial in Europe. We can’t allow that to happen. If we allow it to happen, agriculture is never going to make any change—we won’t have the leverage that we have if we’re lumped together.

And I said to Charlene Barshefsky, at a meeting with her and

Jeff Lang a couple days ago—just right out, I said, Ms. Barshefsky,

if this happens, Farm Bureau is going to be unalterably opposed

to it, and whatever results from it. Agriculture has got to be involved, either this one or at the WTO level. We’ve got to be there

at the table.

Mr. WATKINS. Dean, I was working also on some legislation—and

my colleagues may want to join me in it—on the retaliation of how

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to implement—that we’re still waiting now—let normal negotiations take place and trade take place. If they’re willing to accept

fines and not allow us, I want to use those fines—and this is what

my legislation’s supposed—I want to use those fines to advertise in

that country that product that they’re bearing.

Will you join with me in that?

Mr. KLECKNER. I had heard about it before; it doesn’t sound too

bad an idea to me.

We’ve always said let the European consumers—let them make

their choice. Have American beef in their market. If they’re really

concerned about hormones, they won’t buy it. But let the consumers make the choice around the world. Consumers ought to decide without governments deciding for them.

Mr. WATKINS. Thank you, Chairman.

Mr. RAMSTAD. Thank you again, Dean, for your presence here

today and your effective leadership; your support of fast-track as

well. Thank you again.

Mr. KLECKNER. Thank you.

Mr. RAMSTAD. The next panel—we’re going to have to move

along, because we have to conclude by 5:00, and we’ve got two panels left.

The next panel, Nicholas Giordano, Assistant Vice President for

Foreign Trade, National Pork Producers Council on behalf of Agriculture Coalition for fast-track; Leonard W. Condon, Vice President

for International Trade, American Meat Institute; and Michael

Wootton, Director, Federal Government Affairs, Sunkist Growers.

Gentlemen, thank you for your patience, your indulgence, and for

being here today to testify.

Mr. Giordano, please.

STATEMENT OF NICHOLAS GIORDANO, ASSISTANT VICE

PRESIDENT FOR FOREIGN TRADE, NATIONAL PORK PRODUCERS COUNCIL ON BEHALF OF AGRICULTURE COALITION FOR FAST TRACK

Mr. GIORDANO. Good afternoon, Mr. Ramstad and members of

the subcommittee. I am Nicholas Giordano, and I serve as assistant

vice president for Foreign Trade for the National Pork Producers

Council. I’m testifying today on behalf of the Agriculture Coalition

for fast-track, of which I am a co-chair. Our coalition is comprised

of 72 members, representing agricultural producers, farm and food

groups, trade associations, and companies in all 50 states; and is

working to ensure free and fair market access for U.S. agricultural

products around the world. I would note that Mr. Kleckner from

Farm Bureau of course is—his organization is a member of this coalition, as is Mr. Condon to my right, and the American Meat Institute.

American agriculture is twice as reliant on foreign trade as the

economy as a whole. One-third of U.S. agricultural production must

go into export markets just to maintain farm income. In order for

U.S. agriculture to grow and prosper, we must be able to serve

growing markets overseas. Secretary Glickman has stated it well,

‘‘For American agriculture it is export or die.’’

Trade agreements, particularly the Uruguay Round in NAFTA,

have played a crucial part in agriculture success. Last year, as you

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know, the administration sought broad fast track authority, including the authority to enter into and complete the Uruguay Round

follow-on negotiations on agriculture, beginning next year, and to

enter to bilateral or regional market-opening agreements beneficial

to U.S. exporters. The Ag Coalition for fast-track unequivocally

supports such a broad grant of authority.

Let me put our position in perspective. Given our reliance on expanded trade, U.S. agriculture has always steadfastly supported

the efforts of our negotiators to break down foreign market barriers. U.S. agriculture strongly supported and ambitious Uruguay

Round and the NAFTA. But we have always seen the Uruguay

Round and NAFTA as only first steps towards establishing a true

level playing field for agricultural trade.

Because of the great competitiveness of U.S. agriculture, the

trade distortions that remain worldwide operate to the detriment

of the United States. We have always been committed to the importance of the next round of agricultural negotiations, scheduled to

begin in 1999 in the WTO. We favor a broad agenda for the upcoming negotiations, including not only the further reduction of tariffs,

but internal supports, export subsidies, disciplines on state trading

enterprises, rules for trade in biotechnology products, defending the

SPS Agreement, and rules on tariff-rate quotas.

The need for U.S. leadership is unmistakable. As Congressman

Rangel once said, ‘‘In world trade, the United States drives the

bus.’’ Without our full, unstinting involvement, there will be no serious agricultural negotiations under the WTO, because there will

be no counterweight to the Europeans and others who want to

maintain distorting trade practices.

For our negotiators to have credibility and to have a seat at the

bargaining table, this administration, any administration, must

have fast track authority. Continued rejection of fast-track can only

produce two possible outcomes; one is essentially that breaking

down foreign market barriers will grind to a halt, particularly in

its politically difficult sector, such as agriculture. This is the likely

scenario in the WTO if we do not provide the leadership for which

fast-track is a prerequisite. But the second scenario is that trade

negotiation and expansion will continue to go on without the

United States. Strategic alliances and preferential arrangements

will be formed without us and around us. The rules of trade will

be written by others for the benefit of others.

For example, as you know, Argentina, Brazil, Paraguay, and

Uruguay have formed a common market, MERCOSUR, that provides significant trade preferences to each other in this rapidly

growing region of the world. Chile, one of the best economic performers in Latin America, has been particularly aggressive, signing

trade agreements with Bolivia, Columbia, Ecuador, Mexico, Venezuela, MERCOSUR, and most recently Canada. As a result, these

countries exports to Chile have a delivered price advantage of approximately 11 percent over U.S. products. Indeed, more than 30

bilateral and regional trade agreements are already operating here

in the Western Hemisphere, and the United States is party to only

one, NAFTA.

The EU is already the world’s largest trading bloc, and it’s expanding into the emerging markets of Central and Eastern Europe.

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And the EU has also begun negotiations with Mexico and with

MERCOSUR for free trade arrangements.

The great irony is that as we hesitate and debate whether the

administration should be given new negotiating authority, nations

all over the world are moving forward, lowering barriers, negotiating with their neighbors in an effort to do what—to emulate what

we’ve already done, to emulate the American model and our success of recent years. If we don’t get back into the game, we will fall

behind.

Mr. Ramstad and members of the committee, I know you agree,

we need fast-track, and we need it now.

[The prepared statement follows:]

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Mr. RAMSTAD. Thank you, Mr. Giordano.

Mr. Condon, please.

STATEMENT OF LEONARD W. CONDON, VICE PRESIDENT FOR

TRADE, AMERICAN MEAT INSTITUTE

Mr. CONDON. Thank you, Mr. Chairman. I represent the people

that process and pack meat, and sell it in world markets. And our

members are clearly aware that the growth opportunities in our

home market are very limited, and the future of the industry depends on exports.

Exports are directly responsible for a growing share of the income received by U.S. livestock producers. Export sales of U.S. beef

added over $110 per head to the value of each fed animal marketed

in 1996; pork exports added almost $15 to the value of each hog

sold. Without export markets U.S. cattle and hog prices would be

much, much lower than they are today.

Exports of red meats have grown rapidly over the past decade,

reflecting economic expansion, cultural changes, and the success of

U.S. efforts to open Asian markets. In 1996 the Asia Pacific region

took over three-fourths of the $3 billion worth of beef and beef variety meets that U.S. packers and processors sold. Japan alone

bought $1.9 billion worth. Between 1987 and 1995 the value of U.S.

exports of beef and beef variety meats to Japan tripled. In 1996 we

exported $1.1 billion worth of pork and pork variety meats, and

Japan bought $756 million worth; a seven-fold increase from 1987.

Let me make a few comments about fast-track and briefly support what you’ve already heard.

The Uruguay Round was expected to the beginning of a process

to liberalize trade in agriculture. For the previous many years

under the GATT, agriculture wasn’t comprehensively addressed,

but the Uruguay Round was meant to be a start, and there’s much

work left to do. You’ll see some numbers in my testimony as to

what kind of tariffs we’ll face in certain countries after the Uruguay Round is done. We’re talking about tariffs of 150 percent in

Europe. Canada will have a tariff on chicken of 238 percent.

We face many other kinds of barriers in the world; restrictions

on beef, and pork, and chicken, placed by the Philippines, Taiwan,

Russia, Europe. We need action on these barriers immediately, and

the best thing to do is get going with fast-track as Chairman Crane

said.

WTO accession. WTO accession negotiations provide another important leverage point for addressing market-access problems with

those countries that are not now WTO members. We’re talking

about over 30 countries, but specifically countries like Russia,

China, and Taiwan. Given its huge population, China has the potential to become the largest economy in the world and the largest

importer of meat and poultry products.

Beyond the significance of these three WTO-member candidates

as important markets for our meat and poultry products, and the

opportunity that the accession negotiations provide for solving access problems, the overall political and economic significance of

Russia, China, and Taiwan suggest that the terms of accession for

these countries will be extremely important. The trade policies of

these countries will undoubtedly have a growing impact on global

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trade flows, and permitting these countries to enter the WTO on

terms more favorable than those which apply to existing members,

will seriously erode member support for the organization and weaken its disciplines.

Support for the IMF. Regarding the need for action to stabilize

the financial situation in Asia, AMI feels strongly that the United

States should support the IMF as the leader of international efforts

to help countries in the region. Only if these countries have stable,

growth-oriented economies will we see global trade, including trade

in livestock, poultry, and other agriculture products, recover and

expand further.

The IMF’s efforts to shore-up the troubled Asian economies deserve U.S. support, because the multilateral agency is forcing badly

needed reforms in these countries in exchange for its financial assistance. In many cases these reforms are consistent with the actions the United States has unsuccessfully advocated to these countries for years.

GSM–102 credits. We urge USDA to make available additional

credits for meat and poultry products under the GSM–102 program. Under Secretary Schumacher mentioned earlier that USDA

has made available two $50 million allocations for meat and poultry. Those were immediately used. The industry asks for an allocation of $500 million, and continues to believe that is the appropriate amount. At least in the near term, it is clear that the volume of our red meat exports to Korea and other financiallystrapped Asian nations will be largely determined by the amount

of GSM–102 credits available.

On the hormones case, we commend the administration for its

aggressive use of the WTO dispute settlement process to address

trade restrictions which clearly WTO rules. We’ve heard a lot about

bananas here today and beef. The significance there is the WTO

dispute-settlement pipeline is a relatively long pipeline. The WTO

agreement went into effect on January 1, 1995, and so far we’ve

had about 10 cases that have been all the way through the pipeline.

Bananas is just ahead of beef in the pipeline, and what I have

told my members, and anyone else who will listen to me, in the last

year—so when they ask what is the community going to do on beef,

I would say, watch what they do on bananas. If they try to weasel

out of their obligations on bananas, they will probably do the same

thing on beef. And my understanding at the moment is that’s exactly what they’re doing.

Thank you very much, Mr. Chairman.

[The prepared statement follows:]

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Mr. RAMSTAD. Thank you, Mr. Condon. I want to thank you and

the other witnesses as well, for adhering to the committee’s 5-

minute rule, for presenting your testimony in summary form. I can

assure you and the other witnesses that your entire testimony will

be included in the record.

Mr. Wootton, please.

STATEMENT OF MICHAEL WOOTTON, DIRECTOR, FEDERAL

GOVERNMENT AFFAIRS, SUNKIST GROWERS

Mr. WOOTTON. Mr. Chairman, members of the subcommittee, I

appreciate the opportunity to be here today. I’m Michael Wootton,

director of Federal Government Affairs here in Washington for

Sunkist Growers. We commend you for conducting this hearing in

anticipation of what we believe will be very important agricultural

trade negotiations scheduled to commence next year.

Sunkist Growers is a nonprofit, farmer-owned marketing cooperative, serving 6,500 citrus farmers in California and Arizona. For

105 years Sunkist has successfully marketed citrus fruit grown by

its farmer-owners, today producing approximately 65 percent of the

oranges, lemons, and grapefruit grown in California and Arizona.

My cooperative enjoys a long history of developing and expanding

markets around the world. Over 33 percent of our farmers’ fresh

fruit is marketed in foreign countries, accounting for 45 percent of

our farmer’s fresh fruit revenue.

While progress in international agricultural trade was indeed

made in the Uruguay Round, much remains to be accomplished.

Tariff rates in many markets remain unjustifiably high, imposing

tremendous economic and anticompetitive burdens on both the producer and the consumer. Uruguay Round negotiators did reduce or

eliminate some tariff or non-tariff barriers, and as a result we currently see those still intent upon maintaining protectionist barriers

against fair competition, resorting to the use of sanitary and

phytosanitary claims to prevent importation of agricultural products.

Uruguay Round Sanitary and Phytosanitary Agreement or SPS

agreement, with its requirement that sound science be the foundation for all SPS standards for agricultural trade, at last has created

some order out of chaos. The SPS Agreement is a significant

achievement that should be further strengthened and expanded to

compel all countries engaged in agricultural trade to adhere to

internationally accepted SPS standards, norms, and practices,

based upon sound science. Only by adopting and implementing

science-based policies can subjective, unpredictable, and arbitrary

requirements that constitute unjustified barriers to trade be successfully over come.

SPS issues increasingly determine the course of international

trade and agricultural products. SPS concerns, including pest quarantines have with growing regularity become the linchpin of trade

negotiations, seeking market access for fresh produce.

For example, our efforts to gain market access to the huge and

potentially profitable consumer market in China have for years

been stymied by protracted technical discussions and scientific exchanges between our technical experts and scientists from USDA,

and their counterparts from the Chinese Ministry of Agriculture.

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Along with other SPS issues, we’ve responded to China’s expressed concern about periodic outbreaks of Mediterranean fruit fly

in California and Florida, but only when these SPS issues are resolved will market-opening talks yield results.

Given this relatively new aspect of trade negotiations, manpower

and resources of USDA agencies like APHIS and ARS, whose technical roles have become pivotal to success, are now spread dangerously thin. SPS management of production areas, swift eradication of destructive pests and diseases, mandatory certification

that food exported is pest free, have become critical components of

international trade. The discovery of a destructive Med fly in or

near our production areas is the fastest way for us to lose our overseas markets. And that is why work of USDA’s Agricultural Quarantine and Inspection Service to prevent exotic pests and diseases

from entering the U.S. from abroad is vitally important both to the

consumers of this country and to our industry.

Tariff rates in many foreign markets remain, as I said,

unjustifiably high, suffocating our competitive efforts. These tariff

rates need to be reduced and harmonized with our own.

Some quick examples. China, even when we overcome the SPS

problems we face in negotiating with China, we still face a 40 percent duty on citrus fruit, plus an additional 17 percent value-added

tax. In Korea we face a tariff-rate import quota, which limits citrus

imports. Tariffs on imports within the quota are pegged at 50 percent; tariffs on oranges outside the quota impose a stifling 89 percent.

Now furthermore, Korea has granted the license to import its entire citrus quota volume to the control of its own Korean growers.

The Korean citrus industry, albeit small and not an objective party,

controls all citrus imports. This is clearly a conflict of interest, and

one not likely to be favorably disposed toward fair treatment of

U.S. fruit. We urge an opening up of that quota volume.

Japan, our second largest market, imposes a duty of 40 percent,

nearly, on our winter oranges; 20 percent on our summer oranges.

California and Arizona citrus producers last year paid Japan $38

million in tariff fees, just for the right to compete in that market.

Sunkist Growers appreciates the opportunity to bring these matters to the committee’s attention in the hopes that agricultural

trade policy pursued by the government in 1999 or sooner will address these inequities important to our farmers. It is also for these

reasons that we urge the Congress to grant to the administration

traditional negotiating authority to remedy these problems.

Thank you, Mr. Chairman.

[The prepared statement follows:]

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Mr. RAMSTAD. Thank you, Mr. Wootton.

Mr. Nussle.

Mr. NUSSLE. Thank you, Mr. Chairman. I just have one—it’s

more of a plea than a question. And that is, in your testimony as

an example—of what I was trying to get at with Mr. Kleckner from

the Farm Bureau.

I have a real difficult time communicating the importance of this

with my farmers, and I think that probably one of the organizations that I’ve seen that has done the best has been the pork producers. And we called to get information, as an example, we were

able to find out that, how everyone of my farmers might be impacted, as far as in the sale of one head of pork; $10 is what they

were suggesting may be the impact of trade.

I don’t want anyone to feel as though I’m blaming them. But, it’s

hard to get that same, per farmer, on-farm impact of trade across

agriculture. And all of you are very good at summing it up, and

putting it in the millions and billions of terms, as we are often

times as well, but I think the battle of educating farmers on the

importance of trade is going to be done on farm.

And I recently tried to write an opinion article for the Iowa Farm

Bureau Spokesman. So I had my staff call around, and I said, just

tell me, on an average farm, tell me what the percentage would be

of how many bushels of corn harvested went into trade. They

couldn’t tell me that. They couldn’t tell me for soybeans. The most

I got was $10 a head for hogs.

The information I finally did get back took 3 days, and I was trying to write this article in order to try and educate farmers about

this issue. All I’m trying to get at, is that I think if we’re going to

beat the demagoguery out there about the importance of trade and

agriculture, we’re going to have to personalize it, the way that the

people who demagogue personalize it; and are able to point at one

job, and say this job was lost as a result of trade. It may or may

not have been lost, and thank goodness we have passed what we’ve

talked about on many other instances, for that kind of job. But

when it comes to $10 a head, or when it comes to however many

bushels that are not available, or whatever it might be, we’re not

good at personalizing this for every farmer out there.

So I would suggest, in my humble opinion, I think it would work

better if we’re able to personalize it, and anything you can do to

assist in that regard, not only through your organizations, which

I know does a good job, but through encouraging of other organizations, would be extremely helpful in this education process.

Mr. GIORDANO. Mr. Nussle, I appreciate your kind words regarding the pork industry. We in agriculture, our coalition meet pretty

much once a week, and discuss fast-track. And I will ensure that

your comments are passed on. It’s a difficult thing to get the message out. We’re trying; we’ve had some success. Obviously, we need

to do a better job, and we will do that.

Mr. NUSSLE. If you’re interested, I would be glad to meet with

that coalition, and impart on them some unbelievable stories of just

the misinformation that is out there in the hinterlands, outside the

Beltway of Washington, because I’ll tell you, farmers just do not

see that $10 a head. They just don’t see the importance of their inVerDate 11-MAY-2000 09:29 Jun 07, 2000 Jkt 063436 PO 00000 Frm 00111 Fmt 6633 Sfmt 6602 E:\HEARINGS\60951 pfrm07 PsN: 60951
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volvement in the stream of commerce the way they need to, to impact the process in decision-making out here in Washington.

So, anything that I can do to try and give you some, almost, horror stories involving folks who—I’ve gotten Farm Bureau and other

commodity letterhead from county and other leaders within organizations that have told me to vote against fast-track when it was

completely and totally counterproductive to their own interest, and

I’d be glad to impart some of those stories if you’re interested.

Mr. GIORDANO. Thank you, sir.

Mr. RAMSTAD. Mr. Watkins, any questions?

Mr. WATKINS. Yes. Mr. Chairman, I’d like all of you to know,

Iowa and Oklahoma’s here. My two colleagues and——

Mr. NUSSLE. And Minnesota.

Mr. WATKINS. And so is Minnesota. Iowa, Minnesota—one of the

same, corn country; they’re too high on their corn. We’ve got to feed

it.

Mr. RAMSTAD. Just because they sit together, doesn’t mean

that——

Mr. WATKINS. Let me say quickly—the guys are sincere and have

done a great job.

United States has the world’s lowest tariffs overall, and there’s

a lot of fear about WTO. But I don’t know how we put the leverage,

if we don’t have WTO there to help us. If we believe we’ve got the

greatest quality of agriculture products—and I believe that—if we

believe that we have probably better environmental conditions, and

health conditions, and labor conditions, we should not fear going in

front of the WTO. We might be able to improve, but we shouldn’t

be fearing that.

I’ve just got two quick questions. One. WTO’s going to meet in

1999. Do we know when WTO will be meeting in 1999? Do you

know when the WTO meets? Since this is going to be on agriculture, to try to be there, and try to do some things along the way.

And also I wanted to ask, Mr. Condon, I think that you mentioned here that the tariff on beef presently is at 151.9 percent in

your community?

Mr. CONDON. Yes. Well, actually it’s higher than that now. The

Uruguay Round requires a minimum 15 percent reduction over 6

years. This is what it will be after it goes down during the Uruguay Round.

Mr. WATKINS. I thought I was keeping up with it pretty good, but

I’m just shocked when I realize it’s that high, and I think most of

our cattle people would be just as shocked as I am to realize we’re

going up against that kind of——

Mr. CONDON. We have a tariff-rate quota, zero duty for 11,500

tons; that’s our free access. Anything beyond that, it would be paying this tariff.

Mr. WATKINS. That’s quite interesting. Thank you, Mr. Chairman.

Mr. RAMSTAD. Thank you. And I want to thank you three gentlemen, again, for your presence and continuing counsel on these important issues. Thank you.

Final panel of the day. Anita Brown, Associate, Schramm, Williams and Associates on behalf of Western Growers Association;

Doreen Brown, President of the Consumers for World Trade; CaroVerDate 11-MAY-2000 09:29 Jun 07, 2000 Jkt 063436 PO 00000 Frm 00112 Fmt 6633 Sfmt 6602 E:\HEARINGS\60951 pfrm07 PsN: 60951
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lyn B. Gleason, Counsel of Chiquita Brand International; and John

E. Frydenlund, Food and Agricultural Policy Fellow, Council for

Citizens Against Government Waste, on behalf of the American

Peanut Coalition.

Welcome, ladies and John, to the hearing. Let’s begin with your

testimony, please, Anita Brown.

STATEMENT OF ANITA BROWN, ASSOCIATE, SCHRAMM, WILLIAMS AND ASSOCIATES, ON BEHALF OF WESTERN GROWERS ASSOCIATION

Ms. ANITA BROWN. Thank you, Mr. Chairman. I am Anita

Brown. I’m with the firm of Schramm, Williams and Associates,

and we are the Washington representatives for the Western Growers Association. The president of WGA, David Moore was planning

to present testimony today, but as you know, the weather has not

been so good in California, and he had problems associated with

some flooding out there, so he was unable to attend the hearing.

But we would appreciate your having his full written statement

made a part of the hearing record.

In the event the Subcommittee is not familiar with the organization, Western Growers, is a 3,300 member agricultural trade organization, which was organized in 1926. The Association’s members,

pack, grow, and ship more than half of the nation’s fresh fruits,

vegetables, and nuts.

The Uruguay Round of the North American Free Trade Agreement has had varying impacts on Agriculture. Unfortunately in the

horticultural section, fresh fruits and vegetables have not fared so

well. A review of pre-NAFTA data, using the years 1993 and 1997,

indicates that U.S. exports of fresh fruits and vegetables to Mexico

have declined by 9 percent and 7 percent, respectively; while imports of fresh fruit from Mexico have increased by 30 percent, and

fresh vegetable imports from Mexico have increased by 57 percent.

Note the sizable difference in the U.S. import/export figures.

World trade data for the same period indicate that fresh fruit exports and imports have increased by 18 percent. On the other

hand, U.S. imports of fresh vegetables have increased 48 percent,

while our exports have increased only 14 percent.

As you can see, any agricultural success as a result of NAFTA,

and to some extent, the Uruguay Round, has not been shared by

the fresh produce industry. As a result, Western Growers Association, urges Congress and the administration in new trade agreements to focus more in addressing the continuing obstacles to export trade in fresh produce. One of those obstacles was noted earlier today by Mrs. Thurman and also Mr. Kleckner of the American

Farm Bureau—sanitary and phytosanitary barriers.

Your subcommittee press release asked witnesses to provide information on what we thought should be addressed in future trade

rounds. WGA recommends four issues which I’ll mention briefly.

The first issue is phytosanitary barriers, which as I said earlier is

one of the principle obstacles to trade and fresh fruits and vegetables. WGA’s written statement outlines a number of phytosanitary

barriers, many of which are based on unquestionable science. Some

of these barriers have taken many, many years to resolve; as, for

example the California tomato issue.

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The California Tomato Commission was able to get tomatoes into

Japan this past year, as a result of 7 years of long, hard work.

WGA believes that time frames for completion of studies or tasks

should be imposed on all countries that raise phytosanitary questions, and suggests that such time frames be included in forthcoming trade negotiations. I note that the Farm Bureau witness

also made this recommendation.

WGA’s second recommendation is harmonization. Various multilateral trade rounds have attempted to harmonize many topics that

influence trade, but unfortunately country of origin markings, and

labeling have not been topics for harmonization to date. The U.S.

and Canada, after entering into a free trade agreement over a decade ago still have differences in lettering sizes on labels. The U.S.,

Mexico, and Canada continue to have different pesticide residue

tolerances. These problems do not enhance trade, and certainly

should not have any place in a free trade agreement.

A third recommendation is adequate provision of personnel and

funds for federal agencies. When the federal agency officials come

to Capitol Hill in anticipation of a new trade agreement, they always furnish a number of analyses on the economic impact of the

agreement, but they fail to provide an examination of the funding

and personnel required for implementation, adequate monitoring,

and enforcement of these agreements. Particularly at a time when

we are entering into more and more trade arrangements, we must

ensure that there are sufficient personnel and funds to help us

achieve our export objectives.

The last issue WGA would like to bring to your attention is

transparency. Implementation of the Uruguay Round has not curtailed the need for more transparency in the countries who are

members of the WTO. This is particularly true with regard to the

European Union, whose entry price system for fresh fruits and

vegetables is, to say the least, extremely complex and confusing.

WGA believes that future trade agreements should try to ensure

clear, detailed, and timely data on government support to its agriculture sector.

Mr. Chairman, the trade policy of the U.S. must ensure that

other countries open their markets to us. We cannot continue to

open our doors to imports when other countries are raising barriers

that deny us market access. The U.S. has had a very favorable balance of trade in agriculture for a number of years but interestingly

a review of trade data indicates that the U.S. trade surplus in agriculture in 1997 was 23 percent below the previous year.

WGA believes that the U.S. must continue to attack unfair and

questionable sanitary barriers, and we must do this very aggressively.

The Subcommittee’s press release indicated an interest in the

adequacy of current mechanisms for consulting with Congress and

the private sector. Mr. Moore has been, for a number of years, a

member of the USTR/USDA Agricultural Policy Advisory Committee (APAC); and also the Agricultural Technical Advisory Committee on Trade, in Fruits and Vegetables. WGA believes that

these committees are indispensable in coordinating public policy

goals and private sector needs.

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Regarding fast-track legislation, WGA understands the reason

for and supports the general concept of fast track negotiating authority.

With regard to the Subcommittee’s interest in consistency and

coordination among existing and future trade agreements, WGA believes there has been consistency and coordination for the most

part at least in trade agreements involving agriculture; but encourages Congress, as the U.S. enters into more and more trade agreements to strengthen its oversight activities to ensure that this consistency and coordination will continue.

Thank you, Mr. Chairman.

Mr. RAMSTAD. Thank you very much, Ms. Brown, and Mr.

Moore’s complete statement will be included in the record as you

requested.

[The prepared statement follows:]

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Mr. RAMSTAD. Now we shift to Doreen Brown, president of Consumers for World Trade.

Ms. Brown.

STATEMENT OF DOREEN BROWN, PRESIDENT, CONSUMERS

FOR WORLD TRADE

Ms. DOREEN BROWN. Thank you, Mr. Chairman, members of the

subcommittee. I am Doreen Brown, the president of Consumers for

World Trade, and as a point of reference, I have served on the

President’s Advisory Committee for Trade Policy, and Negotiations,

and also for 15 years I’ve been a member of the U.S. Delegation

to the North American/European Union Agriculture Conference;

the delegation that Dean Kleckner chairs.

I’m accompanied today by Joan Schnittker, Senior Economist of

Public Voice for Food and Health Policy; and Dale McNiel, a trade

attorney at McLeod, Watkinson & Miller, who will assist us with

technical information, if necessary.

Consumers for World Trade is a national, nonprofit, nonpartisan

organization that was established in 1978, and is dedicated to promoting the consumer interest in international trade policy through

advocacy of trade liberalization and through educational programs.

Although my statement today—the full statement—is focused entirely on the Sugar Program, I would like to add that Consumers

for World Trade believes very strongly in the need for renewal of

fast track negotiating authority, and urges Congress, as it has in

the past, and will continue to do as long as necessary, to enact

clean fast track legislation as expeditiously as possible. Without

fast track authority we have no doubt that the 1999 WTO Agricultural Round will not be very productive for the United States.

The last farm bill, the Freedom to Farm Act of 1996, phased out

government price support, significantly reduced tariffs and export

subsidies, and started agriculture on a journey toward a free and

open world market; except for sugar and peanuts.

The Domestic Loan Program for sugar was continued at the

same loan rate for raw sugar that has been in effect since 1985,

and during the Uruguay Round of trade negotiations the U.S.

Sugar Program was practically exempted. Sugar was singled out

for a 4 percent tariff reduction while other commodities and products took cuts of 15 to 50 percent. Likewise, the provisions of the

WTO Agreement on Agriculture had absolutely no impact on the

U.S. Sugar Program. This most favorable treatment means that

they have been clearly no market access liberalization for sugar.

The defenders of the current U.S. Sugar Program claim that they

are in fact advocates of free trade, and that they are willing to give

up their special privileges as soon as the other countries, particularly the member nations of the European Union, do so as well.

Well, that’s sort of a red herring, because first the U.S. antidumping and countervailing DoD duty laws protect domestic industries from dumping by foreign businesses and from export subsidies

by foreign countries. Therefore there is very little danger of European subsidized sugar being dumped on the U.S. market. And a

second, and equally important point is that the U.S. has not waited

on the Europeans or any other nation to eliminate their subsidies

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on other commodities, such as corn and wheat; we are not waiting

for them to eliminate theirs before we eliminate ours.

The U.S. negotiators are ill-equipped to push for expanded market access to other countries as long as we maintain a very restrictive special interest program, such as the Sugar Program. The

anomaly of the Sugar Program has already been pointed out by one

of our trading partners. The NAFTA panel that decided the dairy,

poultry, and egg case against Canada pointed to the U.S. sugar tariff-rate quota as helping to justify its decision in favor of Canada’s

protectionist policies.

This preferential treatment for sugar in trade agreements and

foreign policy is detrimental to American interests. As president of

Consumers for World Trade, I object to the fact that consumers ultimately pay the bill for the nearly $1.2 billion annual cost of the

Sugar Program that benefits less than 1 percent of America’s farmers. As a consumer, I can assure you that this hidden billion dollar

consumer tax is unfair, and could even be added to Congress’ tax

relief agenda.

From an economic standpoint, the highly competitive U.S. food

industry has to compete with foreign products made with world

market sugar that is approximately half the price of our domestic

price. This creates a powerful incentive to move plants and job opportunities to other countries. And from a trade point of view, I object to the maintenance of a special interest program, such as

sugar, which benefits only a privileged few at a substantial cost to

consumers, and which counteracts our country’s efforts to liberalize

agricultural trade.

There is a large amount of economic data and trade history on

the U.S. program in my full testimony. I look forward to having

this in-depth information printed in the hearing record for further

reference by the subcommittee.

And in closing, Mr. Chairman, the U.S. Sugar Policy is a very

damaging public policy that hurts American consumers, American

business, American workers, American agriculture, and even our

friends in developing countries. It is a policy that needs to be

changed. The U.S. sugar quota system should be phased out to establish a free and open market for sugar.

Thank you.

[The prepared statement follows:]

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Mr. RAMSTAD. Thank you very much, Ms. Brown. I can assure

you your testimony in full will be included in the record.

Ms. Gleason, please.

STATEMENT OF CAROLYN GLEASON, COUNSEL, CHIQUITA

BRAND INTERNATIONAL

Ms. GLEASON. Good afternoon, Mr. Chairman, and members of

the subcommittee and full committee. I’m Carolyn Gleason, here on

behalf of Chiquita Brand, to share briefly some views on the WTO

as it relates to agriculture, with a special emphasis on the lessons

derived from a case that’s been referred to several times this afternoon, the banana case.

Some of you may know that there isn’t an agricultural policy

anywhere on the globe that has been more heavily litigated in multilateral dispute settlements than the EU Banana Policy. It has

now been exhaustively reviewed and condemned by four separate

panels, and so has contributed quite a lot to our understanding of

the WTO system, including as it relates to agriculture.

In the interest of brevity, I’m going to move to some lessons that

I think are most germane to the subject of this hearing, and in particular to the lessons learned on the shortcomings, potential and

present, as regards to dispute-settlement system.

One very serious potential shortcoming that I believe needs immediate attention is the EU’s questionable commitment to that system. As the American Meat Institute mentioned, the banana case

is the first successful WTO legal challenge against EU agricultural

policy, and is very widely viewed as the first major test of EU willingness to abide by its WTO obligations, particularly in the area

of agriculture. And as the AMI witness mentioned, the early signals coming out of Europe are not exactly encouraging.

The Commission has just issued a reform proposal that would in

fact increase discrimination and restriction in the sector, this following exhaustive dispute-settlement. The Commission is even actively recruiting the Latin American complaining parties to the dispute to, in effect, buy into the opposed illegalities.

This is conduct reminiscent of pre-WTO days when the EU routinely blocked panel ruling. Its behavior threatened to destroy the

system then, and I believe will threaten to destroy the system

again unless we prevent it from happening.

As we learned in the GATT days, it doesn’t matter how specific

and how comprehensive the substantive disciplines are on agriculture, if our principle trading partners don’t have the resolve to

abide them. Before we can turn to the visionary goals for 1999, our

most immediate priority has to be to reassure ourselves through

dispute-settlement successes, actual successes, that the EU and our

other major agricultural partners intend to honor existing WTO obligations.

Because the EU is showing a contrary intention on bananas, one

of two things need to happen before we gain comfort that this system actually works. Either the EU member states have to replace

the proposal with a new WTO consistent one, or the EU will need

to be forced into full compliance through WTO procedures. Based

on EU conduct thus far, the latter is the likeliest scenario, and almost certainly will need to include, not only compliance arbitration,

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but also retaliation. If at the end of the reasonable period of time

the EC is not in strict and perfect compliance on bananas, sanctions will have to be taken for the sake of the entire system.

If we relent on this first case in which EU resolve is being tested,

it will bless EU noncompliance in all the other cases, beef hormones and others, right on down the line, and will have the same

destabilizing effect on the system that EU noncompliance had preWTO.

After we gain confidence that the system is capable of delivering

relief against our principle adversaries, attention is going to have

to shift to the issue of how best to hasten the process of relief.

You’ve heard reference to 18 months in beef hormones. That’s without the reasonable period of time; add another 15 months for that.

In very important ways, the process of getting relief now functions

to the advantage of the offending parties, not the injured ones. The

banana case is a good example.

WTO consultations in that case began in October 1995. Full

WTO compliance, assuming it occurs, will not be in place until January 1999, at the earliest, or more than 3 years after the proceedings began. And throughout that period, damages to U.S. interests have naturally compounded greatly; conversely, unfair advantages for EU firms have skyrocketed. Both the injuries suffered and

the advantages gained are irreversible. WTO delivers relief on a

going-forward basis. It makes no allowances for back damages.

On the other hand, offending parties like the EU, know that by

dragging procedures into overtime, pushing them into the slowest

possible timetable—in our case 3 years—will suffer no adverse consequences. This is why, for example, the EU in the banana case felt

comfortable appealing 19 findings of law, almost all of which were

premised on well established legal findings.

Whatever the legal cost of the EU of that maneuver, and the

other maneuvers associated with resisting compliance, those costs

have been dwarfed by the multimillions of dollars in additional unfair commercial benefits accruing to EU interest.

This slow process of securing compliance isn’t just a systemic inequity; it is also a disincentive for American agriculture to seek

dispute-settlement relief in the first instance. In my written submission I’ve suggested ways in which this inequity and this disincentive might be improved in the 1999 exercise.

I’d just close by stating my full agreement with several of the

other witnesses this afternoon that the WTO dispute settlement

system is essentially the only remedial tool available to American

agriculture for reducing foreign barriers. We have no choice but to

make it work. The system is not going to have broad-based credibility unless we establish a visible model for strict WTO compliance

in the banana case, and insist on that same standard in the other

agricultural cases right behind us.

Thank you, Mr. Chairman, for this opportunity to testify.

[The prepared statement follows:]

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Mr. RAMSTAD. Thank you, Ms. Gleason.

Mr. Frydenlund, please.

STATEMENT OF JOHN FRYDENLUND, FOOD AND AGRICULTURAL POLICY FELLOW, COUNCIL FOR CITIZENS AGAINST

GOVERNMENT WASTE, ON BEHALF OF THE AMERICAN PEANUT COALITION

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

subcommittee. My name is John Frydenlund. I’m the Food and Agricultural Policy Fellow at the Council for Citizens Against Government Waste. I’m accompanied today by Dale McNeill, a trade attorney with McLeod, Watkinson & Miller.

I’m here to speak on behalf of the American Peanut Coalition, a

coalition that believes that the U.S. can only take full advantage

of tremendous opportunities to expand its agriculture exports if it

pursues a progressive trade policy, and Congress moves forward

and provides the administration with fast track negotiating authority.

The American Peanut Coalition is a coalition of associations, representing taxpayer, consumer, public interest, manufacturer, distributor, and wholesale retail organizations, who believe that U.S.

agricultural growth and prosperity will only come from competitiveness in the international marketplace.

Our main objective is to bring about meaningful reform of the

Federal Government’s Peanut Program, by reducing and eventually

eliminating excessive domestic support levels that are almost twice

the world price, thus increasing imports and exports of peanuts.

We are pro-farmer, pro-consumer, pro-growth, and pro-competition.

We believe that the current restrictive Peanut Program is detrimental to the export opportunities of all American agriculture.

During previous GATT rounds, the United States agreed to tariff

concessions on imports of virtually all industrial and agriculture

products; however, in each negotiating round, peanuts were singled

out for protection from international competition, and no tariff concessions were made on imports of peanuts and peanut products.

The Uruguay Round was intended to produce substantial reforms

of agriculture policies by reducing domestic and export subsidies

and expanding market access. Unfortunately, the Peanut Program

also escaped reform in that round. Congress moved to decouple

farm income support from production decisions in the Fair Act of

1996. It’s Freedom to Farm Bill eliminated deficiency payments

and marketing loans, and replaced them with transition payments

for virtually all farm commodities.

As a result of the 1996 farm bill, farmers now have the freedom

to farm almost everything, except peanuts. Only farmers who own

or lease a production quota can legally grow peanuts to be sold for

edible use. This means that the Peanut Program avoided meaningful reform in both the Uruguay Round and the 1996 farm bill. In

fact, the Peanut Program continued to force consumers in this

country to spend up to $500 million more each year, because of artificially higher prices.

When seeking fast track authority last year, President Clinton

sent a letter to Congressman Charles Stenholm, suggesting that

the administration would give preferential treatment to peanuts in

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future trade agreements in return for support on fast-track. This

is a further example of peanut quota holders receiving special protection at the expense of the remainder of American agriculture.

The U.S. Peanut Program is a glaring example of inconsistency

with well-established agricultural trade policy and principles supporting fair and free trade. In a new era of U.S. agriculture, where

almost every food commodity is produced and exported competitively in the world market, peanut and sugar stand out as completely contrary to the objectives of the rest of agriculture. Imports

of foreign peanuts are strictly limited, as part of a scheme to keep

domestic peanut prices well above the world market price. This

gives other countries a basis to deny access to U.S. agricultural

commodities. In fact, the U.S. will find it difficult to make a persuasive case for free trade in agriculture as long as it maintains

a program as restrictive as the peanut program and severely limits

imports. If the U.S. continues to unfairly deny access to its market

for peanuts and peanut products, we can expect other countries to

deny us access to their markets, with billions of dollars in U.S. agricultural exports.

The future of U.S. agriculture lies in exporting commodities

where we have a competitive advantage. Maintenance of the Peanut Quota Program and severe import restrictions on peanuts are

contrary to the interests of corn, wheat, and other commodity producers who need to take advantage of expanded export markets.

We cannot afford to let bad trade policy on peanuts interfere with

our need to reduce barriers and level the playing field in the $600

billion global agriculture market. If we are to continue to be a

strong player in the world markets, and to expand our agricultural

prosperity, we must push for further reductions in trade impediments.

For all these reasons, Mr. Chairman, Congress must make sure

that peanuts are on the table in the next round of negotiations, and

that peanuts do not get singled out again for special protection. We

urge the subcommittee to seek more open trade in peanuts and to

provide the same treatment for peanuts in future trade agreements

that has been afforded to virtually every other agriculture commodity.

If trade in peanuts and peanut products is not significantly liberalized, you can expect the demise of the U.S. peanut industry, as

well as the undermining of future trade opportunities for the rest

of U.S. agriculture.

Thank you, Mr. Chairman and members of this subcommittee,

for giving us this opportunity to present this testimony, and I request the entire statement be a part of the record.

Mr. RAMSTAD. So ordered.

[The prepared statement follows:]

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Mr. RAMSTAD. Thank you, Mr. Frydenlund, for your testimony,

and for all the important work that the Council for Citizens

Against Government Waste does. I might add that as a co-sponsor

of both the bills to reform the sugar and the peanut programs, I

certainly appreciated your input here today.

I want to thank all the witnesses. Let me ask if there are any

questions, Mr. Portman?

Mr. PORTMAN. As a free trader, I also want to echo those comments. I’m also the father of three young children who like peanut

butter. So I agree, put peanuts on the table.

But honestly, on the sugar and peanut program we have to be

consistent, if we’re going to ask the Europeans to open their markets. These are glaring examples. I’m glad you were here today to

talk a little about that, cause we ain’t perfect, and we need to do

more; but we’re better at least than most countries around the

world, which is why WTO makes so much sense.

Ms. Gleason, you made a number of points. You said that it’s a

litmus test, the banana case. And I just want to expand on that

a little bit, and then ask you a question about it, but in three regards. One is in a legal sense, which I think is what you meant;

that for other agriculture cases, whether it’s beef hormones or any

other number of ag cases, this is being looked to I understand by

the international community as a true litmus test.

The second though is a domestic-political litmus test. Both Peter

Scher and Dean Kleckner mentioned sort of this disconnect between our successes in international trade liberalization and the

political sense out there in the country about trade. The disconnect

is, that we’re having success opening markets, and trade is for the

most part going our way. I think the fact is we’ve won 16 out of

17 cases in the WTO, for instance, and yet we continue to have a

hard time convincing people that WTO, and fast-track, and other

trade liberalization measures make sense.

That disconnect is going to be also affected, and I think the disconnect will be broadened, and the gap will even grow if we cannot

enforce these agreements, like the WTO case on bananas.

I’ve got 600 plus good-paying jobs with Chiquita in my district,

and yet people here in Congress tell me, well, this isn’t a U.S.

issue. Well, it is for me, and it is for anybody who represents a

port, it’s people who represent distributors of the product; they

have a lot of investment obviously from my district, and elsewhere

around the country in Central America. It’s a U.S. company, it’s a

U.S. issue, and it’s a trade liberalization issue.

So I think if we’re going to truly begin to close that disconnection, and begin to get people to think along the lines of trade being

positive and not a negative force on employment and on U.S. opportunity, we’ve got to enforce these agreements.

The third way it’s a litmus test is looking from the perspective

of the developing countries. I had the Panamanian finance minister

in my office last week, who came in to give me a lecture about the

U.S. and our trade policies, and he was right. I mean, he’s essentially saying, look, if the U.S. lets us down on this one, why should

we move forward with trade liberalization.

They’re new members of the GATT. We told them how great the

GATT was. We told them that WTO makes so much sense, so they

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went through the process. They’ve made sacrifices. They are doing

the right thing, and yet they’re not sure we’re going to stand by

them, because he comes up to Congress, and hears people saying,

well, we need to give the Europeans a break on this and that.

The Panamanians are getting killed, as are the Costa Ricans, as

are the Hondurans, as are these other developing countries that

are trying to export something that they legitimately, on a level

playing field—they don’t want any deference; they just want to be

able to engage in the trading system and enjoy the benefits that

we keep telling them are out there. So I hope that we continue to

stand by our cases, and continue to insist on compliance.

But I want to ask you a question, because you mentioned this litmus test from a legal sense, so to narrow it back down to that. Do

you see similarities between the way the Europeans have handled

this case, and the way they’ve handled other ag cases that might

be following this one, or preceded it?

Ms. GLEASON. Well, thank you, Congressman. Before I get to the

litmus test question, let me say apropos the disconnect. When we

speak of WTO’s successes, we need to differentiate between the jurisprudential successes and the practical, real successes in hand. In

the area of agriculture and in particular in the area of litigation

with the EU, the jury is very much still out, which is why the banana case is going to be decisive. The model we see playing out on

bananas will undoubtedly be repeated on beef hormones, and some

of the other cases to come.

Similarities. There are similarities. The EU—just to show you

how the model is evolving, the EU is called upon, once it loses a

report, to stand before the dispute-settlement body and declare its

intentions as to whether or not it will fully implement the finding.

What it did on bananas, which was the first ruling against it,

was to wiggle. It rose before the body and said, we intend to honor

our international obligations; very crafty language, designed to

evade the language, ‘‘we intend to honor our WTO obligations’’, or

‘‘we intend to fully implement the finding’’. They were looking for

language to confer them some flexibility.

This week in Brussels the European 113 Committee met—and

Len Condon might now know this—and determined to use that

same obstreperous formulation for beef hormones, so we see it beginning to happen all over again.

On the law, you have lawyers working overtime in the Commission, parsing and mincing the WTO findings to look for some justification to claim that black does not equal white on bananas.

They’re doing the same thing, as I understand it, on beef hormones. That’s why we need to take a stand on bananas, or you

bless nonconformity on beef hormones.

Mr. PORTMAN. One other quick question. This is for any of the

panelists. What can this subcommittee and committee do to help?

Whether it’s beef hormones, bananas, or other cases, what should

we be doing to encourage or even require adherence to these cases

when we’re successful?

Mr. FRYDENLUND. Well, from our point of view with the American Peanut Coalition, I would reiterate the statement that we

need to clean up our house too, so that we have a much better posiVerDate 11-MAY-2000 09:29 Jun 07, 2000 Jkt 063436 PO 00000 Frm 00146 Fmt 6633 Sfmt 6602 E:\HEARINGS\60951 pfrm07 PsN: 60951
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tion from which to argue that the rest of the world needs to come

around.

Mr. PORTMAN. Ms. Brown

Ms. DOREEN BROWN. I agree thoroughly. You took the words out

of my—the peanuts out of my mouth.

Yes, in order to make a case on anything, you’ve got to go in and

not have the odds stacked against you because of your own actions.

And I think it would be beneficial to clean up our act not only in

order to advance the process, but because it would benefit us, the

United States, to the greatest degree.

Mr. PORTMAN. Ms. Brown.

Ms. ANITA BROWN. I don’t really have a comment, but I do agree

with what Ms. Gleason had to say; that the banana case and the

beef hormone case will probably be acted on in the same manner,

that is, the EU will use the same tactics in the beef case.

WGA has not been involved in a fresh fruit and vegetable case

before the WTO, so I cannot comment much further.

Mr. PORTMAN. But it would probably be fair to say that it would

be a likely reaction to a fresh fruit and vegetable case as well.

Ms. Gleason.

Ms. GLEASON. I’d just encourage the subcommittee to lend its

support to USTR as it conveys a message to Europe, which is now

underway, that if there is not full conformity, that full recourse

WTO procedures, including retaliation, will need to be taken.

Mr. PORTMAN. Thank you, Mr. Chairman.

Mr. RAMSTAD. Well, thank you, Mr. Portman. And again, I want

to thank the members of this panel, as well as the previous witnesses today. I thought this has been an excellent hearing, thanks

to all the expertise at this witness table that we received. Hope

you’ll continue to work with us in a collaborative way.

This now concludes the hearing of the Trade Subcommittee. The

record will remain open until February 26, 1998. The meeting

stands adjourned.

[Whereupon, at 5:00 p.m., the hearing was adjourned subject to

the call of the Chair.]

[Submissions for the record follow:]

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