Remarks as Prepared for Delivery by Agriculture Secretary Mike Johanns to the U.S. Meat Export Federation

REMARKS AS PREPARED FOR DELIVERY BY AGRICULTURE SECRETARY MIKE JOHANNS TO THE U.S. MEAT EXPORT FEDERATION

Thank you Alan [Alan Smith, Chairman] for that very kind introduction.

And thank you for having me here today.

As some of you may know, I grew up on a farm in Iowa, so agriculture was in my blood at an early age.

When President Bush asked me to join his team as Secretary of Agriculture, I said it was my dream job and it still is.

I am working with great people at USDA and with great partners across the country.

The U.S. Meat Export Federation is one of those partners as is every one of your members.

I talk frequently about the power of partnerships.

They are like force multipliers, they allow us to do more with less.

That does not mean that we will agree on every issue.

However, I make this promise to you right now:

My door will always be open; I will always listen; and I will always respect your views.

I value this relationship very much.

Your worldwide network has formed a bond with American companies and the U.S. Department of Agriculture, which has made a real difference in our agricultural economy.

You all know that 96 percent of the world's consumers live outside the United States.

The current market for American meat and other products is huge and the potential market is unbelievable.

You know the importance of working to make those potential markets into current ones.

So do I, which is why it is so important that we work together as partners toward even higher export sales for U.S. producers and processors.

We're doing that now, by working hard with nations to reopen their borders to American beef.

After that single BSE discovery in Washington in 2003, 64 percent of our total export of beef was immediately closed.

Today, we have recovered well over a third of that with 41 percent, or $3.1 billion, remaining closed.

We are making progress consistently.

As you know, we have recently announced the reopening of Taiwan, Egypt and Oman.

You were instrumental in those successes, particularly in Taiwan.

Your offices worked closely with Taiwan's Risk Advisory Committee and the Department of Health to provide the information needed to resume trade in U.S. beef products.

I want to personally thank you for your hard work and congratulate you and your members on your success.

But the work is not done yet.

We are still going to work overtime for resumption of exporting to other nations.

Japan alone represents nearly half of the market that remains closed.

One of my first meetings as Secretary was with Japanese Ambassador Kato on January 27th.

We have had a series of policy meetings and technical exchanges, including direct discussions between President Bush and Japanese Prime Minister Koizumi.

What remains is a consistent, strong effort on the part of the American team.

And I guarantee that I will not rest until Japan reopens its borders to American beef products.

I know we will be successful in these efforts because I know our beef is safe.

When that first and only cow was discovered in 2003, I was governor of Nebraska at that point the questions going through my head were, would people stop eating beef?

Would exports be banned forever?

And would the industry be harmed?

Fortunately, USDA and its partners, partners like the Meat Export Federation swung into action immediately: banning specified risk materials; banning downer cattle; and increasing surveillance.

That enhanced surveillance program has tested more than 350,000 cattle in the highest risk populations, including non-ambulatory or downer animals, and animals exhibiting signs of a central nervous system disorder and every single one of them has come up negative.

Every single one.

We have devoted tremendous resources to the study of BSE.

President Bush has devoted $7.3 million to increase BSE research in the 2006 budget this is 155 percent more than was appropriated in 2005.

We are creating a National Animal Identification System.

And in the communications arena, we have been promoting the public information campaigns designed to educate the public that American beef is good and safe.

That is an area, by the way, in which our partnership been more crucial: getting information out to producers, to processors, and to the public.

And science is on our side in this debate: American beef is safe.

We are also working to reopen our own borders with our neighbors to the north.

This is, I know, a somewhat controversial position.

But the science is on our side here as well.

The scientific approach we are taking with the Canadian minimal-risk rule is no different than what we should expect from markets for American beef exports.

A USDA team has confirmed that Canada is in compliance with feed ban, which is equivalent to our own.

And opening the border conforms to OIE guidelines.

The fact is, Canadian beef is safe, too.

And if our border remains closed, the implications for our own beef industry are severe.

First, there are trade implications.

Frankly, trade is not a one-way street.

We cannot treat Japan one way and Canada another.

If we demand an equal playing field, we also have to offer one.

Second, as long as our border remains closed, our own processing industry will suffer.

Not too long ago, a gentleman by the name of Monty Weston came to DC with some other producers and he urged me to do everything I can to re-open the border to Canadian beef because with it closed, he is struggling to make a profit.

He is forced to ship cattle to Colorado, Nebraska, and sometimes much farther.

With the cost of shipping, he is struggling to turn a profit.

And he is not the only one.

I just came back from a trip to the EA Miller Processing plant in Hyrum Utah.

There, 66 workers have been let go and the number of cattle processed has dropped 20-percent.

I am hearing stories like this from across the country.

The fact is, American producers and processors will be left out in the cold if the border is not reopened soon.

That is why I announced in Utah that I will be hosting a roundtable discussion on BSE on June 9th in Minnesota regarding the safety of North American beef and the changing infrastructure of the industry.

This conference will bring together USDA experts, producers, packers, other industry groups and academia to discuss the science of BSE and the economic impacts on the U.S. beef industry.

It is time to get all the facts on the table, because the facts favor action.

I'm also hoping for action on another important trade front: the Central American Free Trade Agreement, or CAFTA.

For me, the argument for CAFTA is actually quite simple.

The CAFTA nations have a total population of 44 million people, and the expanding economies and rising consumer incomes will be very important to all Americans.

And as you know, CAFTA nations already have access to the U.S. market-99 percent of their products enter the United States duty free under other agreements.

But we don't have the same access to their markets.

I believe in a fair playing field for American producers and processors and that is what CAFTA is all about.

As a matter of fact, CAFTA will make more than 80 percent of U.S. exports of consumer and industrial products to Central America and the Dominican Republic duty-free.

Within the agricultural community alone, exports to CAFTA nations totaled $1.8 billion in 2004!

Under CAFTA, we estimate that agricultural exports will double.

The CAFTA countries are good markets for American goods and services.

And with the increased market access under CAFTA, they will quickly become great markets for your membership and for all American producers and processors.

In the years before BSE, U.S. beef suppliers shipped an annual average of 4,424 metric tons worth $10.6 million to CAFTA nations.

Duties on those beef products, including offal, range from 15 to 30 percent in CAFTA nations and the WTO would permit those duties to rise as high as 79 percent.

But if CAFTA is approved, duties on beef, both prime and choice cuts, will be eliminated immediately in Central American countries, and phased out over time in the Dominican Republic.

Immediate duty-free access would be provided for other cuts by the creation of a Tariff Rate Quota, or TRQ, totaling 1,165 metric tons.

Tariffs on offal and other products would be phased out over 5 to 10 years.

And the six CAFTA nations would agree to work toward recognition of our meat inspection and certification system.

The stakes are high for pork, too.

Current pork exports average 11,770 metric tons a year, bringing in more than 20 million dollars annually.

Those exports face tariffs as high as 47 percent, and WTO would allow tariffs to rise to 60 percent.

But under CAFTA, a 13,613 ton tariff rate quote, or TRQ, would be established in the first year, and increased every year until tariffs are completely eliminated.

Duties on bacon and some offal products would be eliminated immediately.

And, as with beef, American pork producers would benefit from the CAFTA nations recognizing our meat inspection and certification system.

The fact is that the current trade barriers are part of an older, out-of-date world of agriculture not one in which orders can be made instantaneously on the Internet or in which products can be transported around the world overnight.

That new world of agriculture and commerce is one of open markets and access, where the playing field is level.

American meat producers and processors already know this.

That is why all of the major agricultural industry and trade groups, more than 60 of them in total, support CAFTA.

All they are asking for is a fair playing field.

Because they know, and we know as well, that given that fair playing field, American farmers and ranchers can compete with anyone.

I hope they get that opportunity.

And CAFTA is not the only trade issue on the table right now.

CAFTA would never have been negotiated if it were not for an important power that Congress has granted the President: Trade Promotion Authority.

That is why it is so important that President Bush, and future presidents, continue to have the powerful tool of Trade Promotion Authority.

Since August 2002, the Congress has, under TPA, approved groundbreaking free trade agreements with Chile, Singapore, Australia, and Morocco.

Not to mention multilateral agreements like CAFTA.

These agreements are vital to your members, to all of our producers and processors, and to the entire American economy.

Export sales last year represented 27 percent of total gross receipts.

Ninety-seven percent of U.S. exporters are small and medium-sized enterprises and they are the engine that helps drive the American economy.

They need access to new markets, and our economy needs them.

Nothing good comes from stifling trade.

I believe that, and the President believes that.

And as the world keeps getting smaller as technology keeps changing agriculture continued trade opportunities for your members will cease to become a luxury they will be a necessity.

The President also believes that CAFTA will help cement the gains on economic, social, and political reforms in Central America gains which are vital to both our economy and our national security.

Just last month, he spoke in the Rose Garden about the importance of CAFTA.

He said: "CAFTA would bring the stability and security that can only come from freedom. Today a part of the world that was once characterized by oppression and military dictatorship now sees its future in free elections and free trade.

The President continued, "By transforming our hemisphere into a powerful free trade area, we will promote democratic governance, human rights, and economic liberty for everyone. The United States was built on freedom -- and the more of it we have in our backyard, the freer and safer and more prosperous all of the Americas will be."

I agree with him wholeheartedly.

Our farm economy is strong and that is in no small part due to increased trading opportunities.

This Administration inherited a farm economy that was in recession:

Export sales in 2000 were less than $51 billion down 15 percent from their previous high in 1996.

Farm income was only near its long-term average.

Then the President signed three major tax cuts: Farmers kept $4 billion more of their own money in 2003 and again in 2004; quadrupled expensing from $25,000 to $100,000. Ended the death tax, for now.

The results are clear: Recent records in: farm income, farmers' equity, agricultural exports and production of many commodities.

The new projected record in net cash farm income of $78.1 billion for 2005 … higher even than 2004's remarkable $77.8 billion. Projected record for farm equity this year is $1.25 trillion.

The President is committed to continued success:

Permanent end to the death tax.

Economic development for rural communities.

New risk-mitigation tools and assistance to help farmers conserve natural resources and reducing the federal deficit:

2006 budget funds key priorities while producing savings and deficit-reduction that are essential to the continued economic health of our nation.

Reducing the federal deficit is vital to supporting economic growth.

A lower federal deficit means lower interest rates, and higher incomes.

Higher incomes create new markets and demand for your products.

It is like a tax cut, creating jobs and raising incomes.

Understand that these are sensitive proposals, and willing to work with Congress to achieve savings.

Those savings will be essential to the continued economic health of your members, of our entire agricultural community and of the U.S. economy.

That is where we stand now.

We have accomplished some important things together but there is still much to do.

From CAFTA , to reopening the Japanese border, to keeping our farm economy strong, we can work together to achieve our goals.

I know we can count on you and I hope our partnership will only become stronger in the months and years ahead.

Thank you, and God bless you.

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