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Hearing of the House Committee on Agriculture - Review Agricultural Trade Negotiations

Location: Washington, DC

Federal News Service










TIME: 10:00 A.M.

REP. BOB GOODLATTE (R-VA): Good morning. This hearing of the House Committee on Agriculture to review agricultural trade negotiations will come to order. On behalf of the committee I welcome our distinguished witnesses representing agriculture from around the United States, Arkansas to Wyoming. We are honored to have you all appear before this committee to discuss issues related to agricultural trade negotiations.

Last month, the secretary of Agriculture and the U.S. Trade Representative testified before this committee about the status of agricultural trade. This month we will hear from those who are most affected by agricultural trade, both the positive and negative aspects of trade. There is an ambitious program in place regarding trade, especially agricultural trade. Agreement has been reached in the Morocco, CAFTA, Dominican Republic and Australian negotiations, talks are still going on in the Southern African Customs Union and the free trade area of the Americas, although very slowly.

In fact, the U.S.-Australia free trade agreement was signed by Ambassador Zoellick yesterday and CAFTA will be signed on May 28th. The timetable for consideration of these agreements by Congress is as yet undetermined. Free trade negotiations are beginning in Thailand, Panama, the Andean countries and in Bahrain. However, as I said last month to the administration's representatives, I encourage them to work toward initiating trade agreements with larger populated countries that offer greater opportunities for U.S. agriculture exports.

Over the past couple of weeks, the Doha development round negotiators have noted some progress in these agricultural negotiations. On top of ongoing negotiations, there are trade disputes with several other countries. For example, the European Union has had a moratorium on approval of biotechnology products for the past six years, will not accept U.S. beef or poultry and wants to take away U.S. trademarks and certification marks that are properly registered and allow EU companies to claim such products as their own.

Just a note on the biotechnology issue, I have seen reports that some time this month the EU may approve an additional use of a corn biotechnology product so that canned sweet corn or other similar products can be sold to its consumers. However, it still will not allow this product to be grown in the EU. The EU policy is illogical, the same corn product is sold in the EU for animal feed and the high fructose corn syrup delivered from it is used for food products, all ending up in products available for consumption by EU consumers. So people in the EU already consume biotech products and have for years, but they will not allow U.S. biotech products into European countries.

Mexico has placed a tax on products containing U.S. high fructose corn syrup, assessed anti-dumping duties in questionable investigations on U.S. apples, rice and beef. There are concerns remaining that China is not abiding by its WTO accession agreement on access to its market for U.S. cotton, pork and poultry. United States agriculture depends on exports and a vibrant trade policy is important to United States farmers and ranchers and to all agribusiness. We want to seek greater opportunity for our agriculture products and trade negotiations can make that possible. We want to see markets open around the world.

U.S. agricultural markets are already open to imports and our tariffs are low. Agriculture tariffs worldwide average 62 percent, while U.S. agriculture tariffs are 12 percent, as indicated by the chart. It is to the advantage of U.S. agriculture that we continue to open markets and remove barriers to our agricultural exports. These barriers come from high tariffs, the EU's geographical indications policy and other non-scientific barriers such as those related to biotechnology and beef hormones.

Trade negotiations offer an opportunity for the United States to increase agricultural exports. U.S. goals for these negotiations are to decrease and harmonize tariffs, eliminate export subsidies and reduce and harmonize trade distorting domestic support policies. Just look at the status quo. The EU is allowed to spend more than three times as much as the U.S. in domestic agricultural payments. Japan is allowed to spend one-and-a-half times the amount the U.S. is allowed to spend under the Uruguay round agreement.

It is wrong to continue the Uruguay round kind of deductions in domestic support. That is just applying a percentage reduction to allowable spending. The disparity in spending among the U.S., the EU and Japan must be reconciled and harmonized, and harmonization must be a central part of the agricultural negotiations. The U.S. and the EU have similar agriculture outputs, and yet the EU can spend significantly more than the U.S. under the current WTO agreement. Japan has fewer acres dedicated to agriculture than the U.S. and they also can spend in excess of the U.S. I made a promise at the beginning of this Congress, the committee intends to pay very close attention to all trade negotiations and to listen to U.S. agriculture's views on this important matter. Last year the committee held hearings on agricultural trade, biotechnology and geographical indications. The committee will continue to follow these issues. This includes ongoing multilateral trade negotiations and all regional and bilateral negotiations. It also includes oversight of past agreements such as with China and other accessions to the WTO such as Russia. It means looking closely at problems U.S. agriculture faces regarding sanitary and phytosanitary issues such as those with Australia.

Before I close, I read an April 28 editorial in the New York Times concerning a preliminary decision on a case brought by Brazil concerning U.S. farm programs, specifically cotton. I do not often take advice from the editorial board of the New York Times and this is no exception. They suggest that the U.S. concede its so-called loss at the WTO and dismantle our agricultural programs. I strongly disagree and I said last month reports indicate that the administration intends to appeal that decision and I support that action.

Under the WTO rules, countries are permitted to support their farmers in ways that are the least trade distorting and WTO rules govern the amounts countries may provide their farmers. The United States abides by the WTO rules and EU has been in accord with its rules on agriculture. Changes to countries agricultural policies should come through the give and take of negotiations, not through decisions that do not appear based on WTO rules, no matter what the opinion of the New York Times.

With that, it's my pleasure to recognize the ranking member of the committee, the gentleman from Texas, Mr. Stenholm.

REP. GOODLATTE: Thank you, Mr. Gertson.

We want to hear from you on a number of different subjects, but I also want to look ahead. I know a number of agreements have been negotiated by the U.S. Trade Representative, he's also in the process of negotiating with some countries and it's helpful to hear from you ahead of time so that they can have the benefit of your concerns or your respective opportunities.

What I'd like to ask you about is the FTA negotiations with Thailand. Recently the Congress was notified regarding a trade initiative with that country. The U.S. exports about $600 million of agricultural product with Thailand and imports almost $900 million, so I'd like to ask each of you, what would be your recommendation to Ambassador Zoellick on this, what you think of this negotiation? And if you had to pick a country you'd like to see us get negotiations going on, what would that be?

Mr. Lee?

MR. LEE: Well, sir, I think that on behalf of the National Chicken Council I would respond to you in this manner: we are believers in free trade, we're supportive of WTO activities, and we are supportive of these bilateral trade agreements. We are very-it is very important to us that when negotiating these agreements they are constructed in such a manner that we are on a level playing field, that there is a consideration from a standpoint of terrorists that they be properly addressed as well as I had indicated in my prepared remarks.

We're very concerned about the issues that continue to rise with the existing agreements with regard to enforcing them, particularly around sanitary and phytosanitary issues, so we want to make certain that they are-address those and address a methodology, hopefully an international standard for being able to arbitrate any potential issues that might rise out of those questions.

Beyond that, we're not necessarily going to stand up against any particular country. Are there those that we might have a greater concern about it having a competitive effect on our industry? Yes, sir, we are. But as long as we make sure that everybody plays, let's say, by legitimate rules, we are basically free trade believers.

REP. GOODLATTE: No particular countries you'd like to focus on?

MR. LEE: Well, we would like access to Europe. That has been a real problem, you know, for an extended period of time. Every time we seem to be moving in that direction, they move the target.

REP. GOODLATTE: I'm with you on that.

Mr. Anderson?

MR. ANDERSON: Thank you, Mr. Chairman. The cotton industry would be concerned about access for our fiber, from the fiber side. We export some cotton to Thailand. On the textile side we're concerned that the rules of origin exceptions find their way into that agreement and we would be concerned about third party participation.

REP. GOODLATTE: Thank you. Any countries you'd like to see us negotiating with?

MR. ANDERSON: We, too, are free traders, Mr. Chairman. As I said in my comments earlier, 90 percent of our product is exported back into this country, we just feel like that the level playing field that discussion that in our written comment should be safeguarded in any agreement that is negotiated.

REP. GOODLATTE: Thank you.

Mr. Vaughn?

MR. VAUGHN: Thailand is a net exporter of corn in most year, so the real benefit to us as far as Thailand is negligible, but we would support negotiations with that nation, from the standpoint that occasionally they do have a shortfall because of bad weather or what have you and we could pick up some exports to that nation. As far as a region in the world or a country, maybe it defers to a region. The Middle East as a whole, they have trouble because of lack of water producing enough feed grains. They have a growing population, a young population, an expanding middle class, and because of that there was an potential growth there for meats and for meat production, and so we would see that area as a prime candidate for negotiations.

REP. GOODLATTE: Thank you.

Mr. Ruth?

MR. RUTH: Yes, specifically in regard to Thailand, I'm not familiar with the size of that market that we currently possess in Thailand, but Southeast Asia as a whole has been the driving force behind the soybean industry as far as consumption in the past several years, with China becoming our largest customer, Japan is consistently number two or number three, so that's an area of the world that is extremely important to us.

We-as the rest of the panel has stated, we've been strong advocates for free trade and market access. In the case of soybeans with half of our product being exported yearly, market access is extremely critical to us and anything we can do as far as bilateral agreements with other nations is extremely important to the future of the soybean industry.

REP. GOODLATTE: Thank you.

Mr. Gertson?

MR. GERTSON: We support free trade with Thailand for U.S. rice.

REP. GOODLATTE: And do you have particular places in the world that you would view as good opportunities for your product?

MR. GERTSON: Yes, we would like for the European market to open up and Mexico to open up. The European market has a $330 duty on our rice going into the EU and we're for enforcing the agreement between Mexico and Japan and Korea, and for FTA-let's get a good WTO agreement and enforce the agreement we have.

REP. GOODLATTE: Thank you, very much.

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