Date: 1987-04-28
Speaker: DE LA GARZA (democrat)
Chamber: H

Mr. Chairman. I yield myself such time as I may consume. Mr. Chairman. one of the facts of life in Washington today is that Congress is going to pass a trade bill. Thats good news. We need legislation that will help expand exports and bring a greater degree of fairness into international trade. We want a bill that will produce net benefits for our farmers. our workers. our industries. and our consumers. As we pass this legislation. however. we should recognize that there is no one. simple cause for the trade deficits that bring this bill to the floor today. And we should recognize that some of the solutions we may propose carry dangers of their own including the danger of trade wars that could boomerang against American exporters. This is not a question. Mr. Chairman. of who wants to protect American jobs. or who wants to create fair. competitive. trade conditions. I want to reach those goals. and I am sure that every other Member wants the same thing. It may be necessary. in reaching for those goals. to move farther toward a tough stance on trade conditions than we have gone in the past. I want to make it as clear as possible that I favor any action we can take to move toward fair trade conditions. If other countries discriminate against American products or use unfair tactics in our American market. I am going to support every practical and responsible step we can take to level the playing field. I do not want to export any more American jobs. and I do not want American farmers and workers penalized by unfair foreign subsidies in other world markets. I think we all agree that if our goals can be reached by negotiation with our trading partners. that is the best course. But if we need to take stronger action. let us take it. I think we all agree that persuasion is better than confrontation. But if the only way to deal with an unfair foreign trading practice is to throw a rock at it. let us throw it. What I want to avoid. however. is a policy of throwing boomerangs that circle back and hit our own people. I ask the House to remember. Mr. Chairman. that our goal in this trade bill is more jobs for American workers. more markets for American exporters including farmers. and more income for all Americans. We cant reach that goal if we create retaliation against American products and destroy American markets. This is a trading nation. Mr. Chairman. We must keep that in mind when We design our national policies. It may be necessary at times to take action against a trading partner that does not treat us fairly. That was done recently in the case of Japanese electronic products and I am sure the House knows that we have some severe problems with Japan in the field of agricultural trade. But the best answer to these problems is to take such trade actions with discretion and judgment to take them at times and under conditions that will produce net benefits for America. As a trading nation. we dont want a cycle of import barriers. retaliations. and counterretaliations that produces a downward spiral in world trade. That would not be good for American workers. American farmers. American business and industry. or American consumers. When we consider the case of Japan. for example. we ought to remember that in spite of our problems with their current trade policies. Japan is a gaint customer for the American farmer. When we look at current problems. I am very strongly opposed to Japans policy of banning imports of rice. That policy costs American farmers very heavily in terms of lost potential sales. and it costs Japanese consumers very heavily because they have to buy their staple food at an artificially high price. I am also strongly opposed to the way Japan limits imports of American citrus and beef. and I hope that the day is coming soon when we can get something done about those quotas. At the same time. Mr. Chairman. I think we should remember that ever since 1964. Japan has been our biggest single customer for American farm products. According to Agriculture Department figures. Japan buys the product of 14 million acres of American cropland every year. That adds up to more cropland than they have in Japan itself. Over the past decade. our American farmers have supplied more than 90 percent of Japans soybeans. half of its wheat. and twothirds of its feed grains. What we want to do with Japan under these circumstances. Mr. Chairman. is to find a way to improve our mutual trade balances in all products. We want countries like Japan to buy more American products. That would be good news for American farmers. businessmen. and workers. and it would be good news for Japanese consumers and taxpayers. What we dont want is a cycle of retaliation that would include a Japanese cutback on imports of American products. including American farm products. This is not an easy call to make. We have to find ways to make our trading partners understand that the United States wants fair trading terms. conditions that are fair to Americans and to other producing and trading nations. One reason the call is not easy is the fact that we have not really analyzed. in depth. all the causes of the trade deficit that we are trying to deal with. Unfair policies in some foreign countries are certainly a factor in our problem. But they may not be the only part of the problem. We need to look at the question of whether some of our troubles may be due to other factors. to factors arising from policies of our own. Solving the international trade problem will not be easy. It involves complex issues of fiscal and monetary policy. international exchange rates. the U.S. budget deficit and the steps we take to reduce it over time and the policies other nations follow to deal with growth in their own economies. All those factors go into the equation. In that connection. Mr. Chairman. I notice that a highranking advisory committee to the Prime Minister of Japan has recently delivered a report recommending a farreaching program of economic adjustment. a program to move Japans economy from primary dependence on exports to a system driven by domestic demand. Full adoption of such policies could go a long way toward easing the problems we are trying to deal with today. All of these things should be considered as we move on to implement the legislation the House will adopt today. We should remember that we are dealing with friendly nations and trading partners of long standing. We should remember that there are two sides to every trade policy problem. As we face our friends abroad with our new policies. we must remember that faults on both sides may have contributed to bringing us to where we stand today. We must recognize that what we are doing today may deal with the immediate issue. but it may not deal completely with the basic root causes of our loses in exports and domestic jobs. Some day. in some way. we are going to have to solve those problems and I hope we can do it in friendly cooperation with our friends around the world. In summary. Mr. Chairman. our overall national trade deficit is far too great. It must be brought down. and it cannot be brought down unless our trading partners take actions that may be difficult for them in many cases. But we also need policies that will give us the opportunity to meet the longterm needs of our country and not merely satisfy immediate apparent gains. I very respectfully hope. that I have laid out a possible road map for our deliberations on this so important piece of legistationhaving said this Mr. Chairman. please allow me to recite the position of the Agriculture Committee. Two years ago. the Committee on Agriculture wrote a new farm bill. the Food Security Act of 1985Public Law 99198which included an extensive trade title. We are just now realizing the positive effects of the trade policy formulated by that bill. This trade policy. together with other changes made in domestic farm programs at that time. is allowing the United States to meet the subsidized competition of some of our trading partners in agricultural commodities and products and to see a modest reversal in our declining share of world trade in major agricultural commodities. While this trend is encouraging. further steps must be taken to improve our position in world trade. Agricultural trade. which has long been a positive factor in our balance of trade account. has fallen considerably over the last few years. Exports have dropped from $43.8 billion in 1981 to $26.3 billion in 1986. Last year. for 3 consecutive months. agricultural imports exceeded exports. providing the first negative trade balanceexcept on two occasions when strikes at U.S. ports hindered American exportsfor the agricultural sector in over 30 years. From fiscal year 1981. the peak year in U.S. agricultural trade. to the present exports have dropped by more than 40 percent while imports have climbed by 16 percent. Over this same period our trade balance plummeted 77 percent. The effect of this drop is adverse not only to our farmers and ranchers but to the overall U.S. economy as well. Agriculture accounts for 18 percent of the U.S. gross national product and nearly 21 million jobs. and 1 million workers are employed in the production of agricultural products for the export market alone. Economists now estimate that each $1 billion decrease in the level of exports causes the loss of 35.000 agricultural jobs and 60.000 nonagricultural jobs. Based on this estimate. the loss in farm exports over the past 5 years has displaced over 595.000 agricultural workers and over 1 million positions in the general economy. Similarly. agricultural imports have an effect in reducing U.S. employment. It is estimated that. in 1984. imported agricultural products totaling $19 billion cost the U.S. economy about 1.7 million jobs and over $30 billion in economic activity. It is also worth noting that total assets in farming and agribusiness today account for more than 50 percent of the combined assets of the manufacturing. retailing. and wholesaling industries in the United States. In 1986. farmers spent almost $130 billion on production expenses. nearly 75 percent of which was spent off the farm. While farm trade is of major importance .to the health of the entire U.S. economy. it is critical to the survival of the U.S. agricultural sector. In 1981 farm exports comprised a record 30 percent of total farm cash receiptstwice the level of a decade earlier. However. in 1987. the share of farm receipts attributable to exports is expected to be only 19.5 percent. It is worth noting. in this regard. that the increase in direct Federal Farm Program payments in 1987. when compared to 1981. represents an amount equal to 80 percent of the decline in the value of farm exports during the same period. American agriculture during the past few years has made many painful adjustments in order to position itself to take advantage of improved trade opportunities. However. to realize the full benefits of a brighter export picture. U.S. producers must be able to depend on fair and open markets throughout the world. The purpose of title VI is to ensure this necessary access on behalf of U.S. farmers. Title VI increases the effectiveness of the U.S. Department of Agriculture in agricultural trade policy formulation and implementation by providing clearer guidelines on what U.S. agricultural policy should be. The operations of the Department are strengthened through authorizations for additional appropriations and additional personnel for the Departments foreign agricultural service. Offices would be established within the agency to monitor trade practices and policies of other countries and provide assistance to U.S. citizens and organizations damaged by unfair trade practices and policies. Longterm strategy reports to establish U.S. agricultural trade policy goals would be required on an annual basis. These provisions follow the recommendations of the National Commission on Agricultural Trade and Export Policy created by CongressPublic Law 98412in 1984. The Commission. last year. completed an 18month evaluation of U.S. agricultural export trade. These improvements should allow the Department of Agriculture to fully implement the trade provisions of this act and the Food Security Act of 1985. The Food Security Act of 1985 provided for 12 new or expanded export assistance programs. Since its inception. the Export Enhancement Program. according to the U.S. Department of Agriculture. has resulted in approximately 33 percent more sales than would have been made in the absence of the program. According to USDA officials. all of the $1.5 billion authorized for the program through fiscal year 1988 will be used. Thus. title VI provides additional authorization of funding up to $2.5 billion through fiscal year 1990when the current farm bill expires. This level of funding should ensure sufficient resources at approximately $500 million per year. which equates to that currently being used by the Department. Additionally. the Secretary of Agriculture is authorized to prioritize traditional customers under the Export Enhancement Program who purchase in. quantities equal to their historical levels. Since current law requires priority to customers who purchase at levels greater than their usual requested levels. this new provision will maximize use of the program in attracting additional foreign purchases. To avoid unnecessarily inflating the costs of commodities used in the Export Enhancement Program. title VI contains a provision requiring that the value of commodities used in the program be determined by using the market value at the time of distribution in lieu of the acquisition cost to the Commodity Credit Corporation. Other export program provisions provide extended authority to banks for cooperatives to finance the international transactions of agricultural cooperatives. and standby authority for subsidized export sales of Government stocks of basic agricultural commodities. In an effort to ascertain which USDA export assistance programs are most suited for lowincome and middleincome developing countries. agricultural aid and trade missions would be established with the requirement that 15 missions be completed within 1 year of the enactment of the bill. To further agricultural and economic development. increased amounts of section 416 surplus commodities would be provided to developing countries and additional levels of monetization under title II of Public Law 480 and section 416 programs is recommended to facilitate the work of nonprofit voluntary food donation agencies. Wood and wood products would be made eligible for concessional sales agreements under title I of Public Law 480 and for shortterm and intermediateterm export credit guarantees. under the USDAs GSM102 and GSM103 programs. With regard to other international and domestic agricultural programs. title VI contains provisions that would limit Federal milk marketing order benefits for foreignowned dairies. take into account excess casein imports and commercial stocks used in the Dairy Export Incentive Program in calculating the net CCC purchases trigger for milk price support reductions. require the Secretary of Agriculture to initiate discussions with other major grainproducing countries on reducing grain production. require countryoforigin labeling on imported meatexcluding meat food productsor the package containing the meat. strengthen the prohibition against marketing certain imported fruits and vegetables that fail to meet Federal marketing order standards. require studies of the effect of Honey and rose imports on the domestic industries. require a study of the effect of reducing or eliminating section 22 authorities on the domestic dairy industry. require a report on the sampling of imported meat. poultry. and egg products to ensure they meet Federal inspection standards. and require that tobacco farmer contributions to the Tobacco Price Support Program be taken into account in any section 22 investigation. Title VI is a bipartisan trade package that Will enhance agricultural exports and provide needed benefits to our ailing agricultural economy. The specific provisions of title VI are briefly described in the following summary: