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Federal News Service - Hearing of the House Agricultural Committee On A Review of Agricultural Trade Negotiations - Transcript

Location: Washington, DC

Federal News Service April 28, 2004 Wednesday
Copyright 2004 The Federal News Service, Inc.
Federal News Service

April 28, 2004 Wednesday







REP. BOB GOODLATTE (R-VA): Good morning. This hearing of the House Committee on Agriculture to review agricultural trade negotiations will come to order. I have an opening statement. On behalf of the committee I welcome our distinguished witnesses, Secretary Veneman and Ambassador Zoellick. We are honored to have you both appear before this committee to discuss issues related to agricultural trade and negotiations.


REP. ADAM H. PUTNAM (R-FL): Thank you, Mr. Chairman.

And I thank Secretary Veneman and Ambassador Zoellick for all the work that you've put into these efforts-to these issues. And I think that the exchange between you and the gentleman from Minnesota highlights the complicated task that both of you have in balancing the needs of all agriculture and weighting the consequences of trade negotiations on existing foreign policy and domestic support and things like that. And so I use that complicated discussion to make the point that there is a great deal of American agriculture that is very uncomplicated because it receives no domestic support, no assistance, no safety net. There are no unintended consequences. It is a pure, free market enterprise, just as other pieces of our capitalistic system.

And so when you take domestic support off the table and push it only to the global round, that's fine. That makes a lot of sense for American agriculture, but it leaves very vulnerable remnants of American agriculture that are no net cost to the American taxpayer, and I appreciate the effort that you have put out for produce producers, for fruits and vegetables, and I just continue to remind you that the unintended consequence of moving domestic support issues to the global level are that at the regional and bilateral level, we're the only ones left on the chopping block and that's a very sensitive issue.

The Australian agreement did have some precedent in there as it related to sugar, and you've commented on that to a great deal. Is the Derbez draft still the underlying document, and does it still provide for certain sensitive commodities to be excluded for purposes designated by those nations?

MR. ZOELLICK: Well, thank you, Mr. Putnam. And as you and I know, I had a wonderful chance to talk to the growers in Polk County and get it directly from them, so I know the balance you're trying to strike too. The Derbez text is the general working draft, but not all countries have formally said they're willing to work from it in all aspects.

And the part that you're focusing on, Mr. Putnam, deals with the market access aspect, and there was an element there that divided the market access into two categories, one for sensitive products, and then another category, and in the sensitive products it used more modest tariff decreases and tariff rate quota increases, and then for the rest would use what American agriculture was pushing, and it's very hard, a harmonizing formula, a Swiss formula. That is still very much a subject of debate.

But I would suggest this, that I think there will remain in any result a need to treat certain sensitive products with care. Now, we as a country, Mr. Putnam, because of many of the interests in this room, are trying to be as aggressive as possible. And as you know, most of our agriculture interests have said, if everybody can move, they will move. But my best judgment is there's going to be sensitivities in certain countries, like rice and others in Japan, and so we'll have our sensitivities and that's why it's important we stay in close touch with you and others on those products.

REP. PUTNAM: Well, I think that it's very important to stay in close touch, and certainly there have been very open lines of communication between you and Ambassador Johnson and the secretary's office and everyone else. Let me just change gears. The chairman raised this issue of the definition of a developing nation. Do we-have we attempted to come up with an alternative definition of a developing nation, something that moves beyond per capita income perhaps, whether they are net exporters of a particular commodity, whether a particular commodity in that nation represents a threshold of percentage of world production or some alternative approach to defining developing nations, even if it is a sliding definition that where they may be a developing nation for some pieces of the agreement but not qualify for special consideration in other pieces of the agreement. Is that something that we have come up with some alternatives on?

MR. ZOELLICK: There are some precedents for that in the WTO, dealing with countries like the least developed countries, and a group called IDA, related to the World Bank definition of what a poor country is. But I think on the issue that you and the chairman are focusing on, our approach has been not to get lost in endless debate of that, because it may vary by country and product, and frankly I'm worried it will just lead us to in some ways just a dead end where the debate will get locked on this. We've tried to make the more basic point that all of you are making, which is that particular for some of the mid-level competitive developing countries, they've got to also ante up. And, you know, I've been-in the letter that Mr. Stenholm referred to and others, I referred to these gently but I've referred to them in other contexts.

We're not trying to ask much of the poor country in Africa or the poor country in the Caribbean, but some of the major Latin American economics, Southeast Asian economies, you know, South Asian economies, and even in the case-take India as an interesting example. India has about 600 million people in a rural area that are very much subsistent. And that will be a challenge to deal with because that in some ways fits a category of special and differential. But it also has a couple of hundred million people that are in emerging middle class. So we need to have a way to be able to sell into those markets.

So in a way I think the way we're trying to address your question is to focus on the countries individually and say if we're going to cut our subsidies and cut our tariffs, you're going to have to open up some of your markets too. And we know which those countries are and we work closely with American agriculture in terms of targeting the markets of opportunity.

REP. PUTNAM: Thank you.

REP. GOODLATTE: I thank you.

The gentleman from North Carolina, Mr. Etheridge.

REP. BOB ETHERIDGE (D-NC): Thank you. Thank you, Mr. Chairman.

And let me wake you up, both of you, as others have. Secretary Veneman and Ambassador Zoellick, we appreciate having you here. This has been covered to some extent, but I want to touch it again, Mr. Ambassador and Madam Secretary. If the WTO dispute panel ultimately should rule against us-we hope it won't, and I know you're working hard to make sure that does not happen-but I sense that there'd be a lot of erosion among farmers and producers very quickly on the trade agreement. It is already, as you already heard and know, is declining to some extent, but I think it would decline very quickly overnight.

And I think if that should happen, it would be unfortunate, because then I think it would be-all the work's gone and I think it would be ultimately almost a waste of time to bring the FTAA before this body. I think it would be awful hard to be able to get the kind of votes we need for a trade agreement that would reward Brazil, a nation that has attacked one of America's valuable agricultural exports, cotton, and continues to be an obstacle, in my opinion, to the progress in WTO agriculture at home, I think it would be hard to get something done.

I know your team is working hard to ensure the ruling does not go that way, and I applaud you and thank you for your efforts, because you've got some tough decisions ahead. Decisions about whether to ask Congress to vote on the trade agreements that you've already worked on, decisions on where to focus your resources regarding negotiations of future FTAs. The consequences of a bad WTO decision this summer, even if not a final decision, I think, would impact the administration's trade agenda for the rest of the year. And I know you don't want to have to get prepared for that today.

So my first question to you, Mr. Ambassador-and it deals with the criteria for deciding with whom we negotiate free trade agreements. Australia and Chile are understandably given, because of their-are given the kind of looks they are because of their outlook on trade in general, which is similar to ours in this country. But I wonder about some of the administration's other choices, Bahrain, Panama, Morocco, Colombia, Peru, Ecuador, Thailand, Southern African Customs Union. Of these nations I believe only Thailand is among the top 25 trading partners. You alluded to this earlier.

And I want to support trade agreements that not only make economic sense but also are with nations that truly believe in fair trade with us and others as well. No one wants to reward a nation with access to the best market in the world if they've stopped the progress of WTO. What can you tell us about the behavior in the WTO and the trade principles of the nations with whom we are currently negotiating FTAs, and are they members of the coalition working for freer, fair trade in that body, or are they obstructionists like some other nations?

MR. ZOELLICK: Well, thank you, Mr. Etheridge, and let me thank you for your support. And I know we've worked on a lot of these poultry issues together and I'm very pleased with the success with the secretary and others we've made on that. We know particularly with the avian influenza it's an ongoing issue, but we'll keep at it with you.

First, let me address the size issue. You know, because of our NAFTA agreement, we already have free trade with about a third of our trading partners. Because I get asked this question a lot and I'm glad you gave me the opportunity to come back to it. We would be pleased to try to have free trade with Europe, Japan and Korea, but they're not willing to put agriculture on the table. And just so this committee knows-many other groups say to me, why don't you do free trade and leave agriculture out? Well I'm not going to leave agriculture out.

So when you take those countries, and China early stayed out, and look at the rest of the world, our free trade agreements amount to about a third of that market, not even including the free trade area of the Americas. So, you know, as we've seen in a lot of things, particularly in votes, small numbers add up. So some of these do create opportunities for us.

Second, in terms of the criteria we used, Mr. Etheridge, we looked first to congressional guidance. Some of the laws that were passed like on the Caribbean Basin Initiative urged us to move forward with a free trade agreement with Central America. The AGOA bill urges to move forward with Southern African countries. Then we look at business and agricultural interests, and this is where particularly working with this committee, that Colombia and Thailand, we see as important big markets. Special product sensitivities, and some of you have touched on them, we have to be able to bring something home that we can get past, so that's an issue.

The seriousness of a partner to engage in a free trade agreement, and this goes to part of your points, Mr. Etheridge, we often work with them in advance, we try to work with them on an earlier process, I mentioned trade and investment framework agreements, see where they clean up some problems with intellectual property and customs issue. Their record on reforms and then their cooperation with this in the FTA, in the WTO and larger negotiations.

And here I would say, you know, all countries are going to have their differences, but by and large the countries we have as free trade agreement partners are committed to that process, and in some ways as we really liberalize with our free trade agreements which are much deeper openness than you get in the WTO, they become good partners on a number of issues.

But then other issues we have to look at is whether, you know, we can try to support economic reform and development, we have environment labor provisions, will they go along with those items. And there is an element obviously, you mentioned the Middle East, where we do have some other larger goals here, this country has a lot at stake in the Middle East, we can try to help Morocco and Jordan and some of the countries in the Gulf region move towards more openness and parliamentary systems and rule of law, that also has a long range benefit for us.

So it's a combination, but this type of a dialog we have with this committee is a critical element, we listen very closely, where you see the priorities are, but one point we often can't address, Mr. Etheridge, is sometimes so many of you have said, why don't you negotiate a free trade agreement with Japan or Korea? I can't, because they're not willing to open up their ag market.

Thank you, Mr. Chairman.


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