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60–787 CC






OCTOBER 20, 1999

Serial No. 106–39

Printed for the use of the Committee on Agriculture

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LARRY COMBEST, Texas, Chairman
    Vice Chairman
RICHARD W. POMBO, California
NICK SMITH, Michigan
FRANK D. LUCAS, Oklahoma
RAY LaHOOD, Illinois
JOHN R. THUNE, South Dakota
KEN CALVERT, California
BOB RILEY, Alabama
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DOUG OSE, California
ROBIN HAYES, North Carolina

    Ranking Minority Member
GEORGE E. BROWN, Jr., California 1
GARY A. CONDIT, California
CALVIN M. DOOLEY, California
EVA M. CLAYTON, North Carolina
DAVID MINGE, Minnesota
EARL POMEROY, North Dakota
TIM HOLDEN, Pennsylvania
VIRGIL H. GOODE, Jr., Virginia
MIKE McINTYRE, North Carolina
BOB ETHERIDGE, North Carolina
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KEN LUCAS, Kentucky
BARON P. HILL, Indiana
Professional Staff

WILLIAM E. O'CONNER, JR., Staff Director
STEPHEN HATERIUS, Minority Staff Director
KEITH WILLIAMS, Communications Director


1\ Deceased July 16, 1999.


    Barrett, Hon. Bill, a Representative in Congress from the State of Nebraska, prepared statement
    Canady, Hon. Charles T., a Representative in Congress from the State of Florida, prepared statement
    Chenoweth-Hage, Hon. Helen, a Representative in Congress from the State of Idaho, prepared statement
    Combest, Hon. Larry, a Representative in Congress from the State of Texas, prepared statement
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Letter of July 19, 1999 to Ms. Barshefsky
    Simpson, Hon. Michael K., a Representative in Congress from the State of Idaho, prepared statement
    Stabenow, Hon. Debbie, a Representative in Congress from the State of Michigan, prepared statement
    Stenholm, Hon. Charles W., a Representative in Congress from the State of Texas, prepared statement
    Walden, Hon. Greg, a Representative in Congress from the State of Oregon, prepared statement
    Barshefsky, Hon. Charlene, U.S. Trade Representative, prepared statement
Answers to submitted questions
    Glickman, Hon. Dan, Secretary, U.S. Department of Agriculture, prepared statement
Answers to submitted questions
Submitted Material
    Gregg, Carol Ann, president, American Agri-Women, statement

House of Representatives,
Committee on Agriculture,
Washington, DC.

    The committee met, pursuant to call, at 10:05 a.m. in room 1300, Longworth House Office Building, Hon. Larry Combest (chairman of the committee) presiding.
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    Present: Representatives Barrett, Boehner, Ewing, Goodlatte, Canady, Smith, Everett, Lucas of Oklahoma, Chenoweth-Hage, Chambliss, LaHood, Moran, Thune, Cooksey, Calvert, Gutknecht, Riley, Walden, Simpson, Ose, Hayes, Stenholm, Peterson, Dooley, Minge, Pomeroy, Holden, Baldacci, Berry, Goode, McIntyre, Etheridge, Boswell, Phelps, Lucas of Kentucky, and Thompson of California.
    Staff present: William E. O'Conner, Jr., staff director; Tom Sell, Lynn Gallagher, Wanda Worsham, clerk, Jason Vaillancourt, Callista Bisek, Andy Baker, and John Riley.
    The CHAIRMAN. The hearing will come to order.
    Today the Committee on Agriculture is reviewing the administration's preparations for the World Trade Organization's Ministerial, which will begin the end of November.
    We appreciate very much Ambassador Barshefsky and Secretary Glickman's attendance today.
    I would note to Members that Ambassador Barshefsky has indicated a problem which has arisen in which she will need to leave at 11:30. Because of that, we will forego all opening statements, ours and the witnesses, and go straight to questions. Any statements for the record from Members will certainly, without objection, be made in order.
    [The prepared statements of Members follow:]
    "The Official Committee record contains additional material here."

    The CHAIRMAN. So we will begin. I thank you again, both, very much for being here. This is an area that, obviously, this committee is greatly concerned about. It is one which we think is going to be extremely challenging and will probably be at the forefront of the trade negotiations and considerations.
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    I would like to start in making a reference that I had made, Ambassador Barshefsky, in my opening statement which we didn't open with. I had mentioned the fact that in just 6 weeks the Ministerial will begin and much of what happens there and the succeeding negotiations will have a significant impact on American agriculture.
    The administration tell us, and it was reemphasized again in your testimony, that agriculture is at the top of the agenda for Seattle; however, it is important that agriculture not be alone or almost alone on the agenda in Seattle.
    What I would like to ask you is what else will be on the agenda in Seattle other than agriculture. Is the agenda broad enough to ensure that, as you said at the June 23 committee hearing, that the administration will make sure that there is enough play on the table at any given point in time so as to maximize our progress in agriculture?
    Ms. BARSHEFSKY. Thank you very much, Mr. Chairman. It is a pleasure to be here.
    There is developing with our trading partners essentially a core marketing access agenda for the negotiations, and that core would include, first off, of course, and foremost, agriculture; services negotiations—and this would encompass the entire range of services sectors, whether telecommunications or financial services, construction, distribution, the professions, so on and so forth; and then, in addition, we in a number of other countries have proposed industrial tariffs, as well as non-tariff barriers.
    So that is the core package, I think, that is developing now that certainly gives us more than ample play in order to achieve our objectives across the range of issues to be negotiated, and, most particularly, agriculture. We are quite comfortable with that formulation.
    The CHAIRMAN. The Japanese apparently do not want to include market access for rice in these negotiations, the European Union wants to exclude beef and dairy. There may be other countries that want to make certain exclusions.
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    Will countries be required to negotiate all agricultural issues?
    Ms. BARSHEFSKY. In terms of the Seattle declaration, we are looking for a declaration that has no exclusions in it, because we want to be able to be sure that we don't see a picking apart in advance of any negotiation of a variety of sectors just simply thrown out by countries as being totally off the table.
    On the other hand, one of the things that we are going to have to work with with the committee—and Dan and I have spent time talking about this—is that we also have some sensitive agricultural sectors here.
    To the extent we have sensitive agricultural sectors here, we are going to want to look carefully at a variety of approaches to ensure that we can maximize our market access, but also minimize disruption in the U.S. market.
    So we, with the committee, I think, will have a little bit of a balancing act. Other countries will, as well. But we want to see a declaration that does not exclude a priori any agricultural sector.
    The CHAIRMAN. Mr. Secretary, at the June 23 hearing we discussed the issue of the supplemental AMTA payments and how USDA will report them to the WTO. You will recall that you said that, while no final decision had been made, the recommendations from USDA staff was to place the AMTA supplemental payment in the amber box, which contains trade-distorting payments to farmers and must be reduced. This was despite the fact that the AMTA payments are made after the production year and could have no effect on a producer's planting decisions.
    As I had said at that time, Mr. Secretary, how in the world is Congress to help farmers deal with lost markets if the most non-trade-distorting assistance is to be limited by the actions of USDA.
    Can you tell the committee the status of this issue and when you intend to respond to my June 23 letter?
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    Mr. GLICKMAN. Based upon your comments, Mr. Chairman, I basically pulled back any decision as to placing those payments in any colored box, and we do not have to report to the various authorities as to what box these should go in until some time next spring.
    I will tell you that I believe we have ample authority under the WTO to provide income assistance to our farmers, and that would include the current emergency assistance package, which I believe can be handled without any problem whatsoever.
    We will have to come up with specific placements, because the agreements require us to put these in different-colored boxes, but I saw no reason to bind us to that at the current time period.
    It is my understanding that you intend to hold a series of hearings early next year on modifications to the farm bill, and I can assure you that, before any decisions are made in that context, you will have a specific delineation of which box these payments will go into.
    But I have held back, largely as a result of the last hearing.
    The CHAIRMAN. So the decision, basically, has just been delayed until the spring?
    Mr. GLICKMAN. That's correct.
    The CHAIRMAN. And it hasn't been decided exactly where——
    Mr. GLICKMAN. That's correct. Has not been decided.
    The CHAIRMAN. Let me ask you one additional question, if I might, Ambassador Barshefsky. The European Union and Japan want to put multi-functionality on the table. Is there a definition of multi-functionality?
    Ms. BARSHEFSKY. There is none of which I am aware, and that immediately, of course, makes us suspicious. We will absolutely not agree to anything in a declaration with respect to negotiations the definition of which is either of unclear or unacceptable.
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    This word has been thrown a lot in Geneva. It seems to mean a lot of different things to a lot of different people. What it adds up to for many countries is a protectionist device, and that's clearly unacceptable.
    Once we have a better sense of specific proposals on how countries would want to define multi-functionality, we'd be pleased to bring this back to the committee for discussion before we make any decisions on how we want to handle that, but at present we have indicated that there is no room in this declaration for ill-defined or unacceptably-defined terms.
    The CHAIRMAN. Thank you very much.
    Mr. Stenholm.
    Mr. STENHOLM. Thank you, Mr. Chairman, and thank both of you for being here this morning, and thank you for the work that you are doing in this area, which all of us in agriculture recognize as absolutely critical to a better future in agriculture than where we are today.
     I have observed in the past, through numerous trade negotiations, that agriculture has always been on the plane when it takes off, but we are not all there when we land. Some of us have bailed out with a parachute, some have been dumped somewhere over the Atlantic Ocean, and we are not there.
    But I like the tone of everything Ms. Barshefsky, and Secretary Glickman, that you are doing today, because I think we are sending the appropriate message, and I think one of the distinct changes in this round of negotiations is the fact that, as you mentioned, that the chairman has announced that this committee will start in-depth hearings on the next farm bill as we examine what is going right and wrong with the current farm bill. I think that has been one of the missing components over the years is that we have not always been as active, this committee, with our trade negotiators in making certain that whatever we negotiate fits with what our policy is or even, to me, more importantly, that we fit our policy to whatever it is you are going to negotiate.
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     We start talking about export subsidies, we are not perfectly clean, ourselves, in many of these areas. We are better than some, considerably better, but some are better than us. That's the difficulty that we have that making sure that what we negotiate levels that playing field. No one would say we got one today, but we set out now on a task of leveling it.
    For example, we are hearing criticism now of our export credit policy. My question is: what other countries currently use export credit to finance their agricultural exports? Will the ongoing negotiations in OECD prove useful in disciplining export credits? And how can we ensure that the use of our very successful GSM programs will not be severely curtailed while trade-distorting practices of state trading enterprises go unchecked?
    Mr. GLICKMAN. Mr. Stenholm, if I may respond, Export Credit Programs are used by Canada, by the EU, and by Australia, that we know of. Sometimes, because of lack of transparency, it is difficult to get a firm handle on this. We are the most transparent of all countries in terms of the use of export credits.
    We have put some items on the discussion of the OECD to deal with this issue, at least to talk about it, but are not going to make any commitments to make any changes in our Export Credit Programs unless these other countries were to agree to do the same thing, as well as the other items that you have mentioned, including reforms on the state trading enterprises.
    What concerns us is that it seems that the EU, particularly, but other friends, particularly in the Cairns Group, may want to put our export credits up front in the WTO round as a legal export subsidy. We think that this is an extremely important part of America's ability to export our products.
    We are not going to be willing to be set up in that process unless the rest of the world decides to make dramatic changes in their export subsidy, their state trading enterprises, and other related programs. We are trying to forestall the use of the WTO as a way to single out and focus our export credits, which, in the big scheme of things, are a rather benign program in the context of any subsidy, because we don't believe that is a subsidy at all. We believe it is done on commercially-acceptable terms.
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    So I guess my answer to you is that we are not going to agree to any modifications of our Export Credit Programs unless it is viewed in the context of significant modifications by these other countries in the way they operate.
    The CHAIRMAN. Mr. Barrett.
    Mr. BARRETT. Thank you, Mr. Chairman.
    I, too, want to thank you, Mr. Secretary, and you, Madam Ambassador, for your work in this area, for the work of your staff.
    I particularly want to suggest, Madam Ambassador, that I was quite impressed with your work in April of this year with the Chinese and the contract that was nearly closed but wasn't. And I was particularly disappointed to see that you are now being hammered by some activist groups with regard to environmental laws, safety laws, and so forth. That's very unfortunate.
    I would hope that you continue to stay focused, and I want you to know that you have the full support of this committee in your endeavor, both you and the Secretary, as well.
    I know that both USDA and USTR have been conducting listening sessions around the country. Could you share with the committee some of the primary issues that have been shared with you?
    Mr. GLICKMAN. Well, in fact, I was in Spokane yesterday, and the issues that are raised—and we have had several of these listening sessions in the country. The concerns raised are pretty much the same concerns that you have raised. Generally speaking, however, there has been more of a focus on specific issues like, for example, Canadian wheat imports into this country. Export of apples and other specialty crops get an awful lot of attention. But, by and large, the underlying issue above-board has to do with the issue of leveling the playing field that Congressman Stenholm has talked about.
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    If I may make one other mention, in terms of the environmental and other issues—because I do believe that Seattle is going to be a hotbed of activism, and the fact of the matter is that I think that the new round of the WTO ought not to be viewed inconsistent with improving the world's environment.
    After all, if we improve the global economy, a lot of these countries will have more resources to take care of their own environmental problems.
    I do believe that it is important for us in agriculture not to view this whole issue as agriculture versus everybody else, or the enemy is the environment or everybody else. I don't think it has to be that way at all.
    One of the things that struck me, after being at some of these hearings, is that in agriculture we have to be speaking more than just to agriculture. We have to be speaking to the role that agriculture can play in opening up the world and improving the ability of these countries to feed themselves, to be food secure, and to help in connection with their own labor and environmental policies, as well, because of that.
    Ms. BARSHEFSKY. If I might add, I think the listening sessions have been extremely useful. USDA and we have held somewhere around 12 of them around the country apart from hearings, formal hearings that we have also held in different places in the country.
    In terms of the issues that seem to arise over and over, one is the elimination of agricultural export subsidies, with particular focus on the European program; second, not to reopen the sanitary and phytosanitary agreement—and we are fully on board with that; third, to be able to maintain non-trade-distortive domestic supports—that has arisen a number of times; fourth, get at the problem with state trading enterprises. This is an acute concern, of course, in our northern tier with Canada, but it is a concern with other countries in the world, as well; and then various sort of special requests, as Dan was saying, to help family farmers, help ranchers, particularly special areas of concern, whether it is cattle or hogs or whether it's apples or particular specialty fruits, whatever the range of individualized issues is for that region of the country.
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    I think, with respect to the question of protest in Seattle, I certainly don't view myself as being hammered. I do think that there are a variety of constituent groups who are paying ever-increasing attention to trade and trade policy. I think that is completely appropriate and to be expected. And the administration, as you know, has followed very much an open markets policy, a freer trade policy, provided that trade is fair. I think that that's the right policy direction for the country. Certainly, that approach has helped to spur growth in exports of 51 percent in the last 6 1/2 years.
    But I do think it is equally important to bear in mind the concerns of various citizen groups, environmental groups, labor, so on and so forth, as we look at this next round, not because an open markets policy is not the right policy, but to build more credibility for the trading system, as a whole, particularly transparency in the WTO and its own workings.
    So I think that some of the concerns raised by a number of the groups are quite legitimate, actually, and need to be addressed, but, in terms of our focus, Dan and I are very focused on the overall agenda, and especially focused on the agricultural agenda, and that focus will be maintained throughout.
    Mr. BARRETT. Good.
    Mr. GLICKMAN. One thing I will tell you, the one common theme everywhere, from the farmers, particularly, was to move forward with expedition—that is, don't let this thing get dragged out forever and over. Move. Start immediately. Get this thing going. Let's get on the road quickly. That is clearly there.
    Mr. BARRETT. I would agree.
    Very quickly, would you anticipate that country of origin labeling would be on the table?
    Ms. BARSHEFSKY. Not clear. I don't even think the issue has arisen yet in Geneva, but if it does we will let you know.
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    Mr. BARRETT. I thought it might have been mentioned in some of your listening sessions.
    Ms. BARSHEFSKY. Country of origin is essentially already covered by existing rules. To my knowledge, it has not been raised in Geneva.
    Mr. BARRETT. Thank you very much.
    Thank you, Mr. Chairman.
    The CHAIRMAN. As you know, Mr. Stenholm and I will be taking a quite large representation of members of this committee to Seattle and look forward to being there with you in that hotbed of activity.
    Mr. Peterson.
    Mr. PETERSON. Thank you, Mr. Chairman, and thank you, Mr. Glickman and Ms. Barshefsky, for your leadership on this. We certainly need to have some success in this next round.
    In my briefing paper here, in regard to state trading enterprises, it says that we are trying to improve transparency, combat price undercutting and cross-subsidization, charging higher prices in the domestic market to lower export prices. That is our position?
    Ms. BARSHEFSKY. Yeah. There are a variety of issues we want to look at in state trading, the important side and the export side, and you have listed a number of them.
    Mr. PETERSON. Right. What kind of a position are we going to put you in, in light of what the Congress is doing on, for example, dairy policy? We are in the process of passing a bill which would, in effect, set higher prices on class I milk so that people can have lower prices on manufacturing milk, and we have California which has their own system that does that.
    This seems to me to be completely contrary to what our policy is in the trade area, so how can we, with the straight face, go to the WTO and lecture these other people when we have this system in our own country that protects one region against another?
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    Mr. GLICKMAN. Well, I, as you know, have probably more——
    Mr. PETERSON. And I appreciate your leadership.
    Mr. GLICKMAN. I probably am more aligned with your position on this issue, as you know. But I would say that I doubt that whatever domestic dairy policy we pursue, whether it pits one region against the other, whether there are compacts or not compacts, is WTO violative unless it relates to duties and tariffs, which would then result in terms of the export/import treatment of the issue.
    You know, of course, that's where European dairy policy has been such a problem, because of their very high supports. They have been involved in subsidizing exports and doing other tariff——
    Mr. PETERSON. I will just report, I have had a chance to travel around the world some, and this has been brought up to me, this particular issue, in Canada and Quebec, and also in Holland, when I was just there. They know about this. This is not underneath their radar screen.
    And so I think you ought to be prepared, because I think it is going to be raised.
    The other concern I have, in some of my travels it is my conclusion, after talking to a lot of parliamentarians in the European Union, that they are going to give up their agricultural program when hell freezes over. Am I way off base on that? I mean, I just don't think there's any chance in the world that they are going to move very far on this.
     If that is the case, if we can't get the Europeans to move and they continue to insist on having this system where there are $50 or $60 billion worth of support, is it legal for this Congress or our Government to set up a similar system in the United States and keep that in place until the Europeans eliminate theirs? Could we do that under what we have so far negotiated in the WTO, or are we committed not to do that?
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    So could we pass a bill that establishes the same kind of price supports for our people that they have in Europe, and we would keep that until the Europeans got rid of theirs?
    Mr. GLICKMAN. The problem is that we are operating within the total caps of the different-colored boxes under the Uruguay Round, so it is obvious the EU has higher caps, because that is what was frozen in the earlier round.
    Mr. PETERSON. So we have locked ourselves in to something?
    Mr. GLICKMAN. We have locked ourselves in to——
    Ms. BARSHEFSKY. I think we have a $20 million cap on——
    Mr. GLICKMAN. Billion.
    Ms. BARSHEFSKY. Yes, $20 billion, sorry, on the AMS.
    Mr. GLICKMAN. And so that would be the——
    Mr. PETERSON. So if we could make the program work for 20 billion, we could do it? Is that what is basically the bottom line?
    Mr. GLICKMAN. Yes. And that, of course, is legal right now. Whatever our limits are, whatever they are and however they are computed——
    Mr. PETERSON. Is that per year?
    Mr. GLICKMAN. That's an annual figure.
    Ms. BARSHEFSKY. Per year. Yes.
    If I might say, though, one of the things that Dan and I have done, which is a little bit different from what happened in the Uruguay Round, is that we have really tried to build a very large coalition of countries that want to break into the European market and that want to see European agricultural export subsidies be eliminated, and that includes sub-Saharan Africa, most of the countries in our hemisphere, the Cairns Group of competitive agricultural exporters, the United States, Canada, and others.
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    This coalition did not exist when the Uruguay Round was launched, and Dan, especially, has spent a lot of time in the past 2 years building this coalition to put maximum pressure on Europe.
    You are looking at 100 countries that will have essentially the same agenda for the first time.
    Mr. PETERSON. I think that's very good. I'm just saying that my discussions with probably 7 or 8 of the parliamentary leaders of those countries in Europe, you know, it just seems to me that this is going to be a tough situation.
    I also had a chance to go to eastern Europe. If any of you are not concerned about this, you ought to see what they have done to the economies of eastern Europe by—from what I was told, the World Bank required these countries, in order to get a loan from them, to give up their tariff barriers, and they basically have destroyed a lot of their industry.
    Sugar, for example, the western Europeans have taken over the eastern European sugar industry because they had to give up their tariffs, they said because the World Bank forced them to, which I don't quite understand, but, you know, we have to really be concerned about what is going on.
    Of course, our economy is bigger and we are not affected as much, but, boy, they have really done a number on some of those countries. Of course, some of it is some other problems.
    But I applaud what you are doing, and I hope that we are successful, but I think we have got a real uphill battle with these Europeans.
    Thank you, Mr. Chairman.
    The CHAIRMAN. Mr. Boehner.
    Mr. BOEHNER. Thank you, Mr. Chairman.
    Let me welcome the Secretary and our U.S. Trade Representative and say how much I have enjoyed working with both of them. I know that they are doing a great job on behalf of our country. I am trying to make sure that they have got all the tools available to them to do a great job as they go into Seattle.
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    The President said earlier this year, in his State of the Union Address, that he would push for fast-track legislation this year in the Congress. I have been waiting and haven't seen much.
    Ms. Barshefsky, at your June 23 hearing, you suggested that we could go to Seattle and really didn't need fast track.
    Now, we all know that these other countries aren't going to get to the bottom line, aren't going to get serious, when they know 535 Members of Congress have an ability to pick away at the final agreement.
    Is the administration going to push for a fast track, or are we just going to wait until we get through the next Presidential election and hope that the next Congress and the next President are going to proceed?
    Ms. BARSHEFSKY. I think that this is, in large part, a question also that Congress needs to ask itself.
    We had spent some considerable time working with the Senate, because, as you know, fast track passed through the Senate Finance Committee on almost a unanimous vote in 1997.
    It had been our understanding for some time that the Senate would move forward on a trade package, including fast track. That is not the case now, and that's a decision made by the Senate leadership. So that, I think, was unfortunate, and perhaps something of a missed opportunity.
    In terms of Seattle, no President who has ever been engaged in the launch of a new round has ever had the authority to conclude it, no President, including with respect to the Uruguay Round, including with respect to the Tokyo round.
    So the fact that we are launching without fast track is not particularly troubling. Certainly, we will need fast track prior to conclusion. The general view among countries is that fast track will be a non-issue—that is to say that the United States will certainly have it well enough prior to closure, and that view is buttressed by the view further, on the part of most countries in the world, that the Congress has always been supportive of GATT agreements, of multi-lateral agreements, that, to the extent there is hostility, it is toward free trade agreements with individual countries, but that is not the case with respect to closure of a new round.
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    Mr. BOEHNER. But at what point will it hinder our ability to get the best deal for our country?
    Ms. BARSHEFSKY. We are going to do our best to make sure it doesn't hinder our ability at all. I can't really project, except to say that certainly fast track I think will be necessary to close the round. Obviously, it would have been desirable to have it going into Seattle, but, as I said, no President who has been involved in the launch of a round has ever had the authority to conclude it when it was launched.
    Mr. BOEHNER. Last year, as we were attempting to move fast track, there was an agreement here in the House that the Agriculture Committee would have some jurisdiction over the issue, and I would hope that, if, in fact, we attempt to deal with fast track next year, that this committee will, again, have some jurisdiction.
    Does the administration support the Agriculture Committee's role in having jurisdiction within the statute?
    Ms. BARSHEFSKY. Absolutely. I think it is vital for the committee, both here and on the Senate side, to be able to look very, very carefully at what we do in agriculture as a part of fast track, because if the committee is dissatisfied, the agreement is not going to go anywhere, anyway.
    So I think it is very important that we be sure that the committees of jurisdiction have a direct role with respect to the fast track legislation, as well as with respect to assessments of the final agreements reached.
    Mr. BOEHNER. Changing gears, the United States has recently imposed section 201 sanctions on Australia and New Zealand lamb imports, and, as you are well aware, these two countries are some of our closest allies in these trade talks, and I'm very concerned about the message that we are sending when the international trade community doesn't believe that these sanctions were called for, yet the President has imposed these what I would describe as fairly severe sanctions on two of our closest allies when it comes to the fight over opening world markets.
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    We have got two countries that probably have done more to deregulate their agricultural sectors and their economies—and, for that matter, their entire economies—probably two countries who have done more to follow our lead than any two countries in the world, and yet we slap them with these severe sanctions, and I'm concerned about what kind of a message we are sending to the rest of the world as we proceed here.
    Ms. BARSHEFSKY. If I might say, I think the message it sends is that foreign countries ought to know we are going to enforce our trade laws.
    You have a situation in lamb where the International Trade Commission, which is an independent body, ruled unanimously—it's very unusual for them to be unanimous on anything—ruled unanimously that there was threat of injury to the industry which was acute, and then unanimously each commissioner voted for relief. Most voted for relief more draconian than what the administration proposed.
    For example, the Commission uniformly said there should be 4 years of relief. The President's decision is 3 years of relief, and a mid-term review of that relief could determine if the industry is adjusting properly to import competition.
    Tariffs that were proposed by most of the commissioners were far in excess to what was done here, and some commissioners proposed very severe cutbacks.
    Mr. BOEHNER. My concern is about the message that we are sending to our partners.
    Mr. Secretary?
    Mr. GLICKMAN. The only thing I would say is let's not put Australia and New Zealand—they are very fine countries, and, by and large, they are allies, but they don't play this game in a Puritanical holy manner, either.
    It is very hard for us to get our citrus into Australia. Our salmon TRQ issues are a problem. They have a Wheat Board there. We have a whole series of sanitary and phytosanitary standards.
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    It is true that Australia generally wants to operate in a world with lower barriers, but they also do some things that we don't think are down the road of where they ought to be in terms of open trade relationships.
    So I don't want to make it look like Australia and New Zealand are some model for the perfect way to deal with the issue. It's just not the case.
    Mr. BOEHNER. Keep up the good job.
    Mr. GLICKMAN. Thank you.
    The CHAIRMAN. Mr. Berry.
    Mr. BERRY. Thank you, Mr. Chairman.
    I just want to thank Ambassador Barshefsky and Secretary Glickman for their leadership and concern and focus on these trade matters.
    We appreciate what you are doing and fully support you, and thank you. I also want to encourage you to keep rice on the screen.
    Ms. BARSHEFSKY. Yes. Believe me, it is on the screen plenty.
    Mr. BERRY. Thank you very much.
    The CHAIRMAN. Mr. Ewing.
    Mr. EWING. Thank you, Mr. Chairman. Thank you for holding this meeting.
    Ambassador Barshefsky and Secretary Glickman, thank you, again. We see each other regularly as we talk about WTO.
    I have a couple of quick questions.
    Ambassador, would you just explain for all of us again the difference between a percentage reduction that might be negotiated and zero for zero?
    Ms. BARSHEFSKY. Sure.
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    There are a variety of ways in which one can look at tariff reductions.
    In the Uruguay Round, one of the tools we used was a zero-for-zero approach. If the world would go to zero in a particular area, we would go to zero. And we were successful in some sectors but not too many sectors.
    There are percentage cut reductions where all the world reduces their existing tariffs by X percent, same percent, and then there are other forms of reductions through different procedures that help to rectify very steep tariff disparities, where you have got some countries with low tariffs and some countries with high peaks, and you want to bring them closer together.
    It has been our observation that we have tended to rely on what are called ''formula tariff cuts.'' Everybody agrees to reduce their tariffs by the same percentage.
    But in the case of agriculture, where our average tariffs are 10 percent and the world is at 50, all you do with a formula cut is to take the existing disparity and just move everyone's number down a notch, but the disparity continues exactly as it had been.
    We can't go that route again. We have got to get those peaks down so they more approximate our levels, and then we can apply various means to reduce then, in a graduated basis, everybody's tariffs.
    So we, with USDA, are working on a variety of different approaches to try and rectify these very steep tariff disparities. One approach, of course, is zero-for-zero. If everyone is going to go to zero, zero is zero. But that won't work for many sectors because countries will be resistant, and we may have some concerns, ourselves. So we are looking at a variety of other approaches to ensure we can help get those peaks down to approximate more our tariff levels before we then start reducing further.
    Mr. EWING. I think that is extremely important, and I certainly support that.
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    Biotech is going to be a big issue at the round. To either you or the Secretary, what are we going to do? We are in a real dilemma, I think, in this country, and many of our producers are in a very big dilemma as to whether they should be producing biotech products.
    Ms. BARSHEFSKY. There have been a number of suggestions made in Geneva on this issue. You may know that the Canadians are proposing a working group on biotech. We are a little bit concerned that the terms of reference are a little ill-defined, but we are willing certainly to look at that kind of approach.
    Right now, the issue is principally a U.S./EU issue, and so we have also tried to see if there are ways to handle this bilaterally with the European Union.
    One approach, apart from our call for transparent and open regulatory processes that are science-based, which is not the current European norm, is to suggest that scientists from both sides of the Atlantic get together early next year, and that the regulatory authorities get together, because, as you know, Europe is looking at the possibility of creating an FDA-type of institution, which would be very welcome, to see if we could make progress bilaterally on the issues.
    So we are willing certainly to look at the question of a working group in terms of the WTO talks, but we also need a variety of bilateral approaches with Europe, because that's where the main problem resides.
    Mr. EWING. One final question.
    My jurisdiction in the subcommittee is on specialty crops, and that's very different, I believe, from the approach we might take on corn and soybeans and wheat and cotton and some of those general commodities.
    What do you see coming out of this round for sugar and peanuts, who are important crops that do have some protection at the boarder, more than the general commodities?
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    Ms. BARSHEFSKY. Right. I think, as a general matter, one of the things we will have to work with with the committee, particularly early next year, is the question of how to handle what have always been viewed in this country as import-sensitive or sensitive for other reasons commodity products that are import sensitive or sensitive for other reasons.
    We have been spending a lot of time, of course, with the various industry members across the board in agriculture, but including in the groups you have mentioned. I think we are going to want to come back to the committee.
    For purposes of Seattle, which sets out sort of the broad negotiating parameters, of course, we don't want to see exclusions because we will just see the world pick apart the agricultural agenda, particularly Europe. But I think we are going to have to discuss before we table the specific negotiating proposal on agriculture that we would make, we are going to want to consult closely with the committee on how to handle our own sensitive industries.
    Mr. GLICKMAN. I just want to say that I think these are two tough issues, and we do need to work with you on the issue of sugar. The way different countries handle sugar is, frankly, rather trade distorting, but I think our sugar industry is of the opinion that they are not willing to go down the road unilaterally. It would kind of depend on whether other countries of the world, you know, go down a road which reduces their trade distortion, and I think there is some interest that they would do the same thing. They would be a partner of that.
    In peanuts, I'm not sure it is exactly the same perspective from the domestic peanut industry, but, obviously, we are going to have to work with these two groups in this country.
    Mr. EWING. We look forward to working with you, and we should probably get at that at the committee level.
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    Thank you.
    The CHAIRMAN. Mr. Dooley.
    Mr. DOOLEY. Thank you, Mr. Chairman.
    Thank you both for being here. I appreciate all the great work that you have done and all the great work you will do.
    I had the chance to speak with some folks that are part of what they refer to as the ''Food Chain Coalition'' that have been advancing this concept of whether you can initiate a process that would try to look at some of the agricultural issues under a food security umbrella, and that if we look at the issues of export subsidies, if we look at some of the issues related to domestic programs and subsidies, what are the impacts that they have on providing for greater food security for all nations and addressing some of the nutritional deficits in many parts of the country.
    I am intrigued by this, because it would allow us to measure our progress in reducing agricultural subsidies and export subsidies in the context of what are the impacts in terms of ensuring that there is a better distribution of food worldwide.
    I would be interested in comments from the ambassador or Secretary Glickman in terms of whether this is something that we can move through a WTO-based format, or is there something that ought to be done external to that?
    Ms. BARSHEFSKY. I think there are two issues there. One is on our side, and this is the question: are we a reliable supplier of agricultural commodities? This has to do, of course, with sanctions policy, and I think the moves that have been made by the Congress, by the administration, to indicate that food is probably not an appropriate basis on which to levy sanctions is a very positive approach.
    But I think that, first off, we need to be sure we know what our policy is with respect to the ability of our producers to continue to supply the global market in a reliable manner. I think this is very critical.
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    With respect to your specific question on the Food Chain Coalition, we have met with the Coalition, and we are working with USDA on this. We are looking at their approach. At least at outset, it looks like it may have some merit, but I think we are going to have to do a lot of work to sort of see how it would fit into the round and how it would fit into a negotiation or working group, or whether the concept, itself, needs to be further fleshed out before we can commit to one approach or another. But we are actively looking at the issues that they have raised.
    Mr. GLICKMAN. I just would say, I went to Montreal recently and met with leaders of four other ministries of countries, and the Japanese minister is very concerned about this, and very concerned, for example, about the export taxes the EU sometimes puts on with regard to sales to Japan and other countries, and how they view it as a kind of threat to food security.
    Ms. BARSHEFSKY. Right.
    Mr. GLICKMAN. You know, they are very, very suspicious about this issue. I tried to talk to them about, you know, the next round creates more-reliable suppliers, not less.
    The interesting thing about this food chain group is that it gives a kind of interesting philosophical undertone to this WTO agricultural talks. It's not just, ''Your tariff will be this and our tariff will be this, and your export subsidy will be this and ours will be this,'' but it creates an overall opportunity to say that people can rely on each other more for food and not be so protective internally.
    Ms. BARSHEFSKY. That's exactly right.
    Mr. DOOLEY. I think we need to further examine this, because we have seen some good moves in terms of China backing away from 100 percent self-sufficiency, talking about maybe going to 90 percent.
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    Ms. BARSHEFSKY. Right.
    Mr. DOOLEY. But unless the United States and other agricultural exporting nations really can define their commitment to being a reliable supplier, which might, you know, lend itself to a WTO process, it is going to be difficult for Japan or China to continue to make that case to move down that path.
    So I'm even interested, Secretary Glickman, in terms of we do not have a policy clearly defined by the United States in terms of our level of commitment to being a reliable supplier. Maybe we need to give some thought in terms of how we can take action to more effectively communicate that and be interested in a continuing dialog.
    I just want to pick up on Mr. Ewing's comments as related to the whole GMO issue.
    My concern is whether we, in fact, have a strategy to even define a process in terms of how we are going to move forward on resolving some of these issues.
    Ms. BARSHEFSKY. Right.
    Mr. DOOLEY. Whether it is bilateral talks with the EU, which is clearly of great concern with the mandatory labeling system that they have put in place—you know, what are we doing in terms of engaging in a process that can define what that labeling requires, and to further have our influence play a role. And also, in the context of the WTO, have we clearly defined what are the issues we are going to advance there?
    Ms. BARSHEFSKY. We have tabled a paper in the WTO on the issue of biotech as follows: That the key area of concern from a trade policy perspective is to ensure that countries have regulatory processes for the approval of bio-engineered product that is transparent, timely, not politicized, and science-based.
    We are not, in our proposal, prescriptive as to what the regulatory agency should look like or certainly not prescriptive on the quantum of science that might be needed, but that simply regulatory authority needs to be transparent, timely, not politicized, and science-based.
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    Our FDA is rather unique, certainly in relation to Europe. Member states don't even have organizations akin to the FDA in stature and scientific expertise, not to mention independence, let alone any pan-European organization.
    So, from a trade policy perspective, our first level of concern is the regulatory process, and that stems from the bilateral situation in Europe where you have a highly-politicized, opaque regulatory process leading to consumer fear about food safety in Europe, because there is no quality to the decisions being made. There is no objective underpinning to the decisions being made at the member state or the commission level.
    Parallel to that effort in the WTO, we are approaching the EU on a bilateral basis, as I have indicated.
    Now, the EU has proposed, as you know, mandatory labeling, and we are providing comments to the EU on their proposal with respect to mandatory labeling, including with respect to the question, for example, on hormones of what it means to be hormone-free in terms of beef.
    So we are working with the EU, but the parallel process in the WTO right now is one that is more regulatory focused.
    Mr. GLICKMAN. If I may for a second respond, one is the truth of the matter is that our Government, as well as most governments in the world, hasn't really begun to focus on this issue until the last 6 months.
    Ms. BARSHEFSKY. Right.
    Mr. GLICKMAN. It was being driven, perhaps, by the product development of the industry.
    I often thought it was viewed almost exclusively through the trade prism, rather than through the foreign policy or the public health or safety prisms or other things, as well.
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    But we are, both in terms of our Government, through an inter-agency process, getting our act together in terms of how to handle the GMO issue. And it is a multi-faceted issue. It involves many departments. It is internal. It is external. It is domestic. It involves farmers, segregation of commodities, all these kinds of issues. It is extremely complicated.
    I think USTR's leadership is that they are focusing on the regulatory regime to make sure it is an open, transparent, science-based regime.
    We have to do the same thing, ourselves. That's why we at USDA are in the process of upgrading our approval process through APHIS and having it peer-reviewed for the National Academy of Science.
    FDA is currently looking at their own internal process because folks around the world have to believe that our process is transparent, it is arm's length from industry, it is independent, it is science-based, before we can really go out in the rest of the world and do that, as well, and that is happening right now.
    The third thing is you have organizations like CODEX that's working right now on issues like GMO health and safety issues, labeling issues, that are being done at the science levels, not at the politicized type of level. I think that's a very positive thing.
    The president of the European Commission is coming here the end of October. He made a phenomenally progressive speech in the last couple of weeks. I mean, it was almost like, my god, the voice of reason has come over there. But he talked about the fact that they need a single food safety agency, talked about the fact that there is nothing in this world that is absolutely risk-free, period.
    Ms. BARSHEFSKY. Right.
    Mr. GLICKMAN. You know, it was a very positive thing.
    So maybe we are beginning to enter out of the hysteria period into the thoughtful period on this.
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    The CHAIRMAN. Mr. Canady, would you like to begin questioning?
    Mr. CANADY. Yes, Mr. Chairman, if I may.
    I want to begin by thanking you, Mr. Chairman, for your ongoing efforts to keep a proper focus on agricultural concerns in the trade arena. I think it is very important that the committee do that, and I appreciate your leadership in that regard.
    Mr. Secretary and Madam Ambassador, I want to thank you for being here today. I appreciate the work that you are doing on these issues.
    Madam Ambassador, I particularly want to thank you for the listening session that was conducted in Lakeland, FL earlier in the year. That's in my district. That's actually my home town. I appreciate the opportunity that afforded people in my district and from elsewhere in Florida, as well, to express their concerns about the upcoming negotiations.
    Let me just tell you what I am hearing from them, and it is that, from the perspective of Florida agricultural producers, they feel that, as we go into a new round of negotiations, that they simply cannot sustain further reductions in import-sensitive tariffs and further denigration of their market shares. That's a message that is coming through loud and clear to me from the producers in Florida.
    I was heartened to hear your comments concerning the formula reduction approach. As an example, Florida citrus currently faces, on average, tariffs of about 40 percent as we export into other countries, while the tariffs on citrus products coming into this country are 6 percent.
    Well, it's pretty clear that a formula reduction approach is simply going to lock in existing disparities, as you very clearly explained, yourself. That's an absolutely critical point, so I just want to express my agreement, along with the other Members who addressed that issue, with your comments on that issue.
    Let me, again, emphasize the fundamental message that, with respect to the import-sensitive tariffs on agricultural commodities in Florida, we are facing great challenges in the existing environment, and I simply implore you to be sensitive to the challenges that we face and take into account the concerns that have been raised by the producers in Florida.
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    Mr. Chairman, I would ask unanimous consent that the international trade recommendations of the Florida Department of Agriculture be included as part of the record.
    Mr. SMITH [PRESIDING]. Without objection.
    Mr. CANADY. I appreciate your accommodating me in that regard.
    Mr. SMITH. Yes.
    Mr. CANADY. I'd be happy to give you an opportunity to respond. I think I am going to miss the vote on the journal.
    Ms. BARSHEFSKY. If I might just say that we are so sensitive to the issues that you have raised, and we try to be timely with requests from Congress, that we are meeting today with the Florida deputy agricultural commissioner.
    Mr. CANADY. Well, I appreciate that very much. Again, we do appreciate the opportunities we have had.
    I will say that I believe that we have talked about fast track earlier, and I believe that ultimately the approach that is taken on many of these issues can affect whether the fast track authority is granted.
    Ms. BARSHEFSKY. I agree with that.
    Mr. CANADY. That's a reality. I will tell you that many of the producers in Florida are concerned about fast track authority, and steps need to be taken to alleviate those concerns in this process as we go forward.
    I know you understand that. That's not news to you. But I think that bears keeping in mind as we go through the process.
    Again, I want to thank both you, Madam Ambassador, and Secretary Glickman for your efforts on behalf of U.S. agriculture.
    Mr. BARRETT [PRESIDING]. Mr. Pomeroy.
    Mr. POMEROY. Thank you, Mr. Chairman.
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    At the outset, I want to apologize for missing the portion of the hearing so far. The Judiciary Committee is hearing testimony right now on the consolidation occurring within the agriculture industries. This is a topic that Secretary Glickman, our dear friend and former committee member, has spoken strongly about.
    I think that the paucity of Justice Department in response to the consolidation raises real question about the adequacy of existing antitrust laws, and perhaps the need for further legislative response. That's where I was.
    My questions would be, in particular, to the U.S. Trade Representative regarding negotiating strategy.
    I want to thank you for being here, and I also want to thank you for your presentation to the WTO Working Group for Agriculture, with whom you met last week.
    In looking at the upcoming round, it seems to me that agriculture must be at the forefront, and yet will undoubtedly be one of the most difficult areas upon which negotiations commence.
    As an advocate for rural America, I am concerned that our issues remain open, even as important issues in other sectors are closed and tentatively agreed upon.
    There is, I understand, a negotiating avenue that basically reaches tentative conclusions subject to snap-back, the stopping of those agreements in the event final agreement is not met.
    My concern, however, is, if in other sectors promising negotiating breakthroughs are reached while agriculture issues are unresolved, there will be a significant pressure arising to take what we have got, irrespective of the status of those agriculture issues.
    When you look at the urban nature of the House of Representatives, just as an example, you can quickly see where you may find more votes for just accepting the non-agriculture wins, irrespective of going nowhere in agriculture. And the net result would be, once again, agriculture, as a national negotiating priority, is left behind, others win, we go nowhere, Europe retains its advantage relative to these prohibitive subsidies that they are using to our disadvantage.
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    So I would like just a general discussion in terms of how you want to deal with that dynamic and what we might have by way of some assurances, rural representatives, that we won't get left behind.
    Ms. BARSHEFSKY. You certainly will not be left behind. There is no question about that.
    This issue of—and you are talking about the accelerated tariff liberalization, I know. This issue actually arose in the Uruguay Round with respect to tropical products, where a similar mode was used. There was interim agreement on tropical products, but any final binding and final commitment was not reached until an entire package closed.
    We view actually the situation a little bit in reverse of what you have just spelled out, and that is that having some going in impetus to the round would be very, very positive toward its earlier conclusion.
    One of our goals is that we don't have another 8- or 10-year round, like the Uruguay Round was 7 1/2 years, Tokyo was 10, we don't have that. And so we want to create incentives for earlier closure. At the same time, we want to make sure we maintain leverage throughout.
    So, apart from services talks, apart from industrial tariffs, overall, as well as non-tariff barriers, we have proposed a provisional acceptance of the accelerated tariff sectors, but only to become final at the time an entire package closes.
    In that connection, we have made very clear to the industry groups involved in the accelerated tariff areas that agriculture retains primacy here. That is to say that there cannot be final closure until that agriculture package coming out of the round is satisfactory to people who are concerned about agriculture.
    That is fully understood by the industries with respect to the accelerated tariff sectors.
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    So I feel we have a good plan, one that is designed to maximize leverage for earlier closure but that doesn't give away leverage in order to get the kind of agriculture package we would like to get.
    The only other point I'd make on the ATL is that, as between Europe and the United States, the accelerated tariff liberalization is a wash because, in about half the sectors, we and Europe are already at zero, and in the other half our tariffs are almost identical.
    So we don't have a situation where we need to trade accelerated tariff liberalization with Europe to get something on European agriculture. They have the same degree of interest in terms of commercial benefit and accelerated tariff liberalization as do we.
    Mr. POMEROY. On that, I would like each of you, in my remaining time, to put on the record your position on behalf of the administration relative to proportional reductions of agriculture subsidies.
    We are, at the moment, in a very disparate world in terms of support for agriculture. Our farmers are competing against foreign governments, not foreign farmers in international marketplaces. And proportional reductions off an uneven base are utterly unacceptable, and I hope anyone paying attention to our propositioning relative to this round understands that is not what we are about at all this round.
    Ms. BARSHEFSKY. We did discuss that, I think before you came in, and you are absolutely right. We cannot continue to lock in the existing disparities. That's an unacceptable outcome, and it should be unacceptable to the Congress for that to be the outcome.
    We have got to bring programs and monies and funds and tariffs much more in line before we then start reducing further.
    Mr. GLICKMAN. We, of course, agree with that.
    I would also make the point, going back to your first question, when the President spoke to the issue of the WTO negotiations last week in his speech, his number one point was expanding opportunities for American agriculture. That was not No. 2, No. 3, No. 4, No. 5.
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    Ms. BARSHEFSKY. Exactly right.
    Mr. GLICKMAN. It was No. 1.
    Ms. BARSHEFSKY. Exactly right.
    Mr. BARRETT. Mr. Moran.
    Mr. MORAN. Mr. Chairman, thank you.
    I thank our panel for being here.
    A follow-up to my friend from North Dakota's questions. We in Kansas care a lot about agriculture. We also care about aviation. Those are two sectors of the economy that, in a trade balance, are positive.
    We don't have a lot to give away, as we look for, particularly in agriculture, what we can do to—and this is a follow-up to Mr. Pomeroy's question. What else, besides these other sectors, do we have as negotiating leverage to get other countries to reduce tariffs?
    Ms. BARSHEFSKY. I think, by and large, the U.S. market is so large as a single market, it is so wealthy as a single market, and, of course, U.S. consumers will buy anything that moves, wherever it was made, that even what might look like a small reduction in tariffs or in other areas provides an extraordinarily rich amount of benefits to our trading partners, because doing business here is very easy because, as I said, the market is so large and so rich as a single market.
    That, in and of itself, I think provides a certain leverage. That is to say, the fact that we might only be reducing tariffs a few percentage points in the context of a market of this size, relatively speaking, is actually a large benefit to foreign countries and to foreign producers.
    So the fact that we have a relatively open market I don't think necessarily works against us here.
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    On the other hand, what we have tried to do in terms of sort of a market access package moving forward is to be sure that we have included industrial tariffs in a comprehensive way, non-tariff barriers, and all the services sectors, which are still in the United States and many areas quite highly regulated.
    So I think we will have enough in the stew to make this work in terms of leverage.
    Mr. GLICKMAN. But your point is interesting, because, see, what other countries are beginning to do is they are beginning to pick on some of those things we use, like the GSM credits, export credits, and say, ''Aha, you have to give up this is you want us to give up the other things.''
    Our point there is that, while we are willing to look at a lot of things we do in this country, it must be conditioned upon them making major reforms in terms of their own export subsidies, or else it would be ridiculous for us to go down that road.
    Mr. MORAN. You are suggesting to me, I guess both of you, that there are sufficient incentives for other countries to reduce their—we have enough to provide them that creates an incentive for them to do even more.
    Ms. BARSHEFSKY. I think so. I think the European situation would be just as difficult even if we had more to give or less to give, because their situation is very much bound by their own domestic politics. It's not a function of parity or not parity with the United States or any other country.
    And so that situation will be difficult in any event, but I do think that we are constructing the kind of package that does provide sufficient incentives.
    Mr. MORAN. Do we intend to negotiate in regard to a process, perhaps as compared to substance—although in this case I think process matters and it is substance—for example, about enforcement? Do we have plans to talk about how to negotiate an enforcement mechanism?
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    It seems to me that we have a growing cynicism, a backlash of populism anti-trade, because even when we have a victory it is very fragile, it doesn't look like it did anything for us.
    Ms. BARSHEFSKY. Right.
    Mr. MORAN. So is there a way to make these trade agreements enforceable?
    Ms. BARSHEFSKY. I do think the dispute settlement system in the WTO has worked quite well. Of the 20-plus cases that we have taken to the WTO dispute settlement and that have been completed, we have basically been victorious in all but two.
    And other than Europe on the two agriculture cases, we have never had a problem with compliance. Even Japan on apples complied, Korea on shelf life restrictions complied.
    Mr. MORAN. So my image that that doesn't work is based upon agriculture and upon Europe.
    Ms. BARSHEFSKY. Your image is based on bananas and beef. And on those two issues, as you know, we have taken retaliatory action against Europe, and that retaliation will stay in place until such time as Europe complies.
    I did have the opportunity to spend considerable time with Pascal Lamy last week, who is the new trade commissioner for the European Union, having taken over the post from Sir Leon Brittan. And both he and the new president of the Commission, Romano Prodi, I think would like to see if there is a means of resolving both of those outstanding disputes.
    We have made various proposals along the way. Lamy is willing to take a fresh look at the proposals that we have made in both bananas and beef. And, while I can't say that that means Europe will finally come to terms on these cases, I can say that we at least have a new Commission willing to look at the issues afresh.
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    Mr. MORAN. Do you both think that our adjudicatory process, our enforcement mechanisms, are satisfactory then, that that's not a subject that needs to be negotiated further?
    Ms. BARSHEFSKY. Well, I do think improvements can be made. We learned from bananas that Europe took the position there could be an endless cycle of litigation. We will fix that in the dispute settlement negotiations that are actually ongoing now. That will be fixed.
    We want to do a little bit of trimming on the time frame for dispute settlement, bearing in mind, however, what is sauce for the goose is sauce for the gander, and if we have to comply with the ruling we also need sufficient time.
    So we have to balance our desire for expedition in litigation with the demands on our own political process when we are on the short end of the stick in terms of losing a case.
    Mr. GLICKMAN. If I just might add, first of all, Charlene has been successful in 95 percent of the cases that we have filed, but we now have—the Australians, New Zealanders are going to go to the WTO on lamb.
    Ms. BARSHEFSKY. Right.
    Mr. GLICKMAN. And so I can see a scenario where us calling for expedition and certainty of getting things done quickly will be resisted by our own domestic industry if we were are on the losing side, at least initially in these cases.
    Ms. BARSHEFSKY. We just have to balance those interests.
    There are a couple of other improvements we'd like to see in the process, including on the time allotted for compliance with WTO panel rulings. Sort of the rule of thumb is 15 months for compliance, but the average time actually is about 10 or 11 months, and we'd like a little bit more of a shift in that direction, at least as a guideline, if you will, bearing in mind, again, when we have to comply we may need a little bit of extra time.
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    So we are trying to balance those, but the most critical feature that we will, I think, take care of is this issue of the endless loop of litigation, which is what we faced in bananas, where we had to keep winning the case over and over and over again in this endless, maddening cycle, finally cut off by our own retaliation, confirmed by the WTO as having been absolutely appropriate under the circumstances.
    Mr. MORAN. Thank you, Ambassador and Mr. Secretary. I thank the chairman.
    The CHAIRMAN [PRESIDING]. Mr. Minge, please.
    Mr. MINGE. Thank you, Mr. Chairman.
    I'd like to focus on three topics: first, currency fluctuations; second, volatility; and, third, a level playing field concept.
    I'd like to preface my question with a statement about what I perceive to be the problem that we face in American agriculture today, and that is low prices and volatility.
    Our best market is clearly our domestic market. The overwhelming majority of what we raise we sell here in the United States. Our domestic market, for most of what is raised on farms in this country, is a market price that is pegged to an international price.
    What I see happening domestically is that, when we have a strong dollar, our farmers are receiving less money.
    Second, when we have any level of surplus internationally at the prices that prevail, the prices drop and the volatility that occurs is devastating to the U.S. farmer.
    I'm wondering what, if any, emphasis are we placing on trying to work within this WTO setting to minimize the volatility in markets that we face and the problem of a strong currency, which takes its toll on the American farmer.
    Now, I recognize, or at least I don't see this in the material that we have in front of us, yet, from what we saw with hog prices, as one example, it has almost killed the hog-raising function on thousands and thousands of American farms.
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    So if there is something that we could do to address volatility and strong currency as a problem that haunts us, I think that we would be serving the American farmer very well.
    And I'd like to also state that, by my count, there are seven countries or blocks in the world that control the market, the export market for wheat and feed grain. It's United States, Brazil, Argentina, Canada, Australia, the European Union, and China.
    Why is it we can't use this trading opportunity or these trading negotiations as an opportunity to work with these other countries to address this problem of volatility?
    I don't think our goal ought to be to destroy the farming units in Brazil or Argentina or Canada or Australia or even the European Union. We ought to, at least as farmers in this country, have a goal of each farming sector in each of the countries being able to maintain a viable farm economy, rather than having us out trying to cut the throats essentially of the Canadian farmer, just as an example.
    Our farmers and the Canadian farmers ought to be allies in this task, not adversaries.
    I hope that, as we proceed with our trade negotiations, we not only keep that in mind but it be a paramount goal.
    I'm interested in your comments on this.
    Mr. GLICKMAN. If I may respond first, I think cooperation is important. I think the exporting nations managing trade in some sort of OPEC system is probably impossible and just will not happen.
    Thinking we and the Chinese and the EU and Australia are going to sit around and basically carve up markets in order to protect domestic farm interests, I just don't think it is going to happen. I think we try to be as cooperative as possible.
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    That's where domestic farm policy comes into play. That's where each country has its role in doing an adequate safety net to protect their farmers during this period of global currency fluctuations or other kinds of economic problems.
    I think what we learned as a result of the 1996 farm bill—this is not to cast any blame—is that trade, alone, is not the only part of the safety net. You have to have an adequate domestic series of farm programs alive to protect farmers during this difficult time.
    You are right. I have got a chart here from Foreign Agricultural Service. It shows that as the dollar declined farm exports went up, and as the dollar appreciates farm exports go down. It may affect all exports like that.
    If it weren't for the trade agreements that were negotiated in the process and the enforcement of them, it would have been a much, much more serious problem.
    Now, we can try to work together—and the Secretary of the Treasury and the Deputy Secretary of the Treasury are very active in dealing with these issues—to try to soften the edges here, and we will do that. I'm kind of speaking for myself here.
    But I don't think there is any way to fundamentally get at this problem unless you have an adequate domestic farm safety net, as well.
    Mr. MINGE. But I don't see that it has to be an all or nothing, either an OPEC or nothing at all. Certainly there ought to be some way we can approach the other countries and say, ''If we have surpluses domestically of what we are raising, our policy should not be to dump those surpluses on the international market and drive down the price for everybody, but we ought to respectively try to manage our surpluses, not to increase prices to the rest of the world, but to have some stability. Otherwise, we are cutting each other's throats.
    Mr. GLICKMAN. I don't disagree with that, but that's where an open trading system allows you to have the kind of relationships to allow you to do that kind of thing, because when we have those markets where we have trade agreements, both bilateral and multi-lateral, there is a greater likelihood that we can sit down and talk to that particular country about their needs.
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    Mr. MINGE. I would just like to point out, in my district the only crop that has consistently made money is sugar, and we have a sugar policy that has been much maligned by some of our colleagues in Congress, but we also know that there is dumping that goes on, there are subsidies that exist for sugar in the world economy or in trade.
    Yet, we have chosen this as one of a handful of areas where we are going to offer some protection to our farmers against the volatility of the international marketplace, and it doesn't do my farmers any good to raise 10,000 bushels of corn as opposed to 5,000 and export them if they are losing money on every bushel. They have to have the sugar beets just to avoid going broke.
    It is a very painful situation for many of us representing farming communities.
    The CHAIRMAN. Mrs. Chenoweth.
    Mrs. CHENOWETH. Thank you, Mr. Chairman.
    Secretary Glickman, I identify with the comments, in part, that Mr. Minge made. We do want to be good trading partners with Canada and we should be, but, unfortunately, when we have a lot of cattle that are being dumped over the border in sealed trucks that come into Idaho and our northern tier States, we don't feel very neighborly about this.
    As you know, every time you are before us, I ask you about country of origin meat labeling.
    Last time you were here, September 15, you indicated that the report that Congress had asked for on cost impact of country of origin would be available fairly shortly. Now, tomorrow, October 21, will mark the 6-month anniversary that the report was to be sent to Congress.
    Mr. Secretary, since that deadline, the cherry blossoms have come and gone, the whole family of beavers were relocated out of the Tidal Basin, a sort of peace has been brought about in Kosovo, and the President has held a news conference or maybe two, and drought and hurricanes have occurred, especially on the western State areas in this Nation, but we still don't have a report.
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    And now during last-minute negotiations from the Appropriations Committee, not the authorizing committee, but the Appropriations Committee, we seem to have solved the problem.
    What we are asking now is for you not only to come up with a report, but we have dumped the whole load on you, Mr. Secretary. Now the Conference has asked you, through the appropriations process, to promulgate rules and regulations which will define which cattle and fresh beef products are products of the United States of America.
    Now, USDA, of course, operates the program requiring domestic meat be supplied to all schools.
    Mr. GLICKMAN. Right.
    Mrs. CHENOWETH. So, therefore, you must have already in place a definition of domestic meat. I'd like to ask you what is that definition of domestic meat and will that definition be applied to meat that we feed school children at home, as well as in our schools.
    Mr. GLICKMAN. First of all, Mrs. Chenoweth, a lot of things have happened in the last 6 months, and I don't want to see more floods and hurricanes in the next 6 months. I'm embarrassed that we don't have that report to you. I did commit to get it to you. It is still in the inter-agency process.
    I am confident that you are going to get this report within the next 30 days. I will do my best to ensure that you get the report. You have asked about it and you deserve it.
    Mrs. CHENOWETH. Thank you, sir.
    Mr. GLICKMAN. And I will do my best to see that you get it.
    Mrs. CHENOWETH. How do you view the definition of——
    Mr. GLICKMAN. Well, we do require, you know, the products that we purchase in the school lunch program to be domestic products. I will have to get you the definition in terms of how hamburger and other meat products are, in fact, defined, but they are required under the law to be domestic.
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    Mrs. CHENOWETH. I appreciate that. As you are aware, are there any trade implications that you are aware of if we tighten up the definition to require that domestic meat be meat that is grown in America and processed in America.
    Mr. GLICKMAN. I think, for the most part, a country can establish a country of origin labeling and not be violative of our trade laws.
    Ms. BARSHEFSKY. I think that's right. I think the only question is you have to think through carefully whether, if what we do here is mirrored abroad, will that then impact export sales in those areas or in other agricultural areas, and I think we just have to always think that through very, very carefully.
    I think the only WTO-related rules that pertain to this issue of country of origin would be that regulations can't be overly burdensome and can't be trade restrictive in intent, essentially.
    Mr. GLICKMAN. Also, notifying the public as opposed to trying to keep the product out, I think that's the issue that the trade laws would look at.
    Ms. BARSHEFSKY. Correct.
    Mrs. CHENOWETH. I thank you very much for your attention to this. I just really do feel that it is important that we feed children at home the same standard of meat that we feed children in school, and so, therefore, the moms and dads and the consumers in America need to be able to know where the meat they are buying came from.
    Mr. GLICKMAN. I would point out that in this era of fairly bleak farm prices, that, at least in the last few months, one of the bright spots is that cattle prices have finally begun to come up.
    Mrs. CHENOWETH. They have.
    I wanted to ask Ms. Barshefsky, the Canadian farmers are permitted to ship a number of their agricultural commodities—i.e., peas, lentils, and wheat—into the United States with products that are not available in the United States. To name just a few of those products, edge, fusion, whole grass 284, odyssey, select, tropitox, venture DG, madivan L, muster, post-ultra, puma, target, tropito plus, and turbo prop. Do you believe that we can begin to equalize this out through the WTO talks, because if these products are not available to us in the United States it is because of consumer concerns and product safety.
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    Ms. BARSHEFSKY. I may be wrong in this. I think what you are referring to are differences in pesticide standards.
    Mrs. CHENOWETH. That's right. That's true.
    Ms. BARSHEFSKY. My understanding is that it is not legal to enter commodities in the United States without EPA-approved pesticides. That is to say that there are rules regarding entry of products that contain pesticides not EPA approved. That's my understanding.
    Mrs. CHENOWETH. I'd like to be able to work with you, because the products that I named off, it has been represented to me that they are forbidden here but allowed to be applied in Canada.
    Mr. GLICKMAN. I think, if I might add to that, one of the issues here is that I think the products that are coming in can use those pesticides. The issue is the tolerances once they are here. If they have zero, there's nothing—we do a test and we find there's nothing on them, then they can be let in. But if there is over that tolerance, they can't be let in. I think that's the issue.
    Ms. BARSHEFSKY. The other issue apart from the tolerance issue is pesticide harmonization, and on that we have been working with EPA, as well as with Canada. One of the goals would be to see if we could harmonize pesticide use so we don't have this problem, which has been a repeated problem.
    Mrs. CHENOWETH. And because I believe that same tolerance standard should be applied to American products, too, if they are tested. Thank you very much.
    The CHAIRMAN. Mr. Phelps.
    Mr. PHELPS. Thank you, Mr. Chairman. I will be brief. Thank you for holding this hearing, and, Mr. Secretary and Ms. Barshefsky, thanks for coming.
    I just want to follow up on Congressman Ewing's and Congressman Dooley's concern about how we enter the WTO conference with more aggressive communication and interest known toward the GMO concern.
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    I don't know if the Department is taking a wait and see sort of attitude about how this mushrooms worldwide, or I guess I fail to recognize the aggressiveness in how we should be, if nothing else, defending. I know it is the labeling you are working with, but beyond that the expectations of WTO soon after we reached an idealistic state that the conference is going to be just overwhelming.
    So how realistic can we get to subjects like biotech, knowing what the WTO conference focuses on and agenda?
    Ms. BARSHEFSKY. What we will do in Seattle is come out with essentially a broad sort of negotiating agenda. In terms of specific negotiating proposals—for example, what will the United States request of global producers of wheat—that won't be done in Seattle. That will be done post-Seattle, probably within the first 6 months post-Seattle.
    I think right now we are looking at the possibility of proposals by which all of the negotiating documents would have to be on the table in all areas by roughly June following Seattle. In the Uruguay Round they took 2 1/2 years; we are proposing 6 months, which I think is doable, actually.
    And I think when we get to that stage—that is, what are we going to specifically put on the table in terms of our requests, what are other countries going to put on the table—I think then we are going to have to sit down with the committee and evaluate that whole range and then determine our strategy from that point on.
    Mr. PHELPS. I know you have mentioned, in response to this concern that Canada has kind of organized a working group to the WTO, but I have learned and read somewhere that Japan wants to do a separate work conference.
    Ms. BARSHEFSKY. Right. A lot of that will be worked out, I think, by the time of Seattle, and we will stay in close consultation with the committee on this in terms of what working groups are established, what would the mandate be of a particular working group.
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    There is certainly no agreement at this juncture among countries that there should be a working group on biotech. And, as I said earlier, we, ourselves, are concerned that the Canadian conception of the working group may be ill conceived, and so we are going to want to look at all of the proposals pretty carefully before we come up with any sort of final declaration coming out of Seattle as to what actually will be established.
    Mr. PHELPS. I guess it just struck me that Canada and Japan had expressed an interest in addressing this issue, but I fail to see if we had really been——
    Mr. GLICKMAN. I think you raise a very good point, and I think it is something that we need to do some self-analysis on. Up until about 6 months ago, this government had not addressed the issue of biotech in an inter-agency basis. That's a fact.
    Mr. PHELPS. Right.
    Mr. GLICKMAN. And the issue did not reach a major public policy threshold until that period of time.
    We have created an inter-agency process that involved all the agencies of Government, both the trade, the public health, and the product approval people, like USDA and, to some extent, EPA and FDA.
    I would say that we are using the current period of time in order to establish that kind of formal position on it.
    This is an extremely—as you know, an extremely complicated factor. The most important thing we can do, however, beyond what Charlene talked about, in terms of insisting that the approval process be science-based around the world, is to ensure that we in the United States have the strongest, most effective regulatory regime, ourselves, to protect the public and to protect agriculture so that we are at the forefront of this thing. Then I think we can lead in whatever our policy is going to be.
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    Mr. PHELPS. Thank you.
    One last question, real briefly. What kind of position do you think or expectation that we can talk about the peace clause at WTO? Is that going to be an item of concern?
    Ms. BARSHEFSKY. There are some countries that would like an up-front extension of the peace clause. We have made no commitments with respect to the peace clause at this juncture.
    Mr. PHELPS. OK. Thank you very much.
    The CHAIRMAN. Mr. Gutknecht.
    Mr. GUTKNECHT. Thank you, Mr. Chairman.
    I want to pursue my colleague, Mr. Phelps, on the whole issue of biotechnology.
    First of all, maybe a question for Secretary Glickman. Approximately what percentage of corn and beans in the United States are GMO?
    Mr. GLICKMAN. A third of corn and a half of beans, basically.
    Mr. GUTKNECHT. That is a very significant investment.
    Mr. GLICKMAN. Yes.
    Mr. GUTKNECHT. Yesterday, I had the privilege of having lunch with representatives from Germany, including at least one member of the German Bundestag, Hans Urlich Klose, and he made it very clear that Europeans, in general, Germans, in particular, were going to take a very, very firm stand on the whole issue of genetically, biotechnology, GMO-type corn and so forth.
    I'm really not clear if we have a strategy, because, you know, a lot of our farmers right now are making decisions in terms of what they are going to plant next year. At least some of the elevators want them to segregate.
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    We know, for example, that 50 percent of what we grow in terms of soybeans we have got to export one way or the other.
    It just strikes me that we have got to have a very clear image of what the world is out there, because, as a salesman, I will tell you we always had a simple thing that we lived by, and that was that the customer is always right.
    Mr. GLICKMAN. Right.
    Mr. GUTKNECHT. And they are the customers, and, you know, I think we have to have clear thinking, not just wishful thinking, on this whole issue of GMO.
    Mr. GLICKMAN. I agree, and I would have to say—I kind of presaged this issue a little bit. I spoke to the National Press Club in June, and I basically a bit opened the door because I was worried that the subject was being driven almost exclusively by companies that were manufacturing genetically-modified seeds, and I said, ''This is a broader issue than just that.''
    The fact is, USTR does have a focused view, and that is that the approval process must be science-based and transparent, and it must be based upon generally-accepted scientific principles, and that is the heart of what we go into this next round—that is, how these seeds are approved, or whatever else is approved, has got to be based on sound science.
    Now you have collateral issues like labeling, for example, that are being discussed right now at the CODEX, as well as perhaps in talks that Charlene will have as a result of trade-related issues.
    And I don't think, other than we have resisted mandatory labeling, because we think that would be a mistake, I think that we are willing to talk about these kinds of issues.
    This is an issue—I wish I could be more precise with you, but it is an issue that is exploding from the standpoint of science, from the standpoint of public awareness.
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    The fact of the matter is that I am convinced that this technology will be the driving, dominant technology in not only agriculture but other areas in the next millennium, because we have seen it in medicine and it is going to happen in agriculture, as well. But we can't thrust these products down people's throats if they don't want them. They have to come along.
    As you said, the consumer has to agree with them. You can't just tell them, ''This is good for you. Eat it at your peril.''
    Mr. GUTKNECHT. Right.
    Mr. GLICKMAN. And that's one of the reasons why we have to focus on the approval process. It has got to be based on sound, sensible, scientific principles.
    Ms. BARSHEFSKY. If I could add to that, I don't think our approach is at all the product of wishful thinking. It is actually the reverse. That is to say, we acknowledge that getting countries' approval processes in order is going to take time. This isn't going to happen overnight. I think that the Europeans have made clear they know they need a regulatory overhaul. It isn't just GMOs. It is related also to mad cow disease, to the dioxin scare. There is no faith among European consumers in European regulatory processes on food safety, and that's because those processes are highly politicized, they are opaque, and even when the science is clear one way or another the Europeans, as in mad cow, didn't release it, didn't tell anybody about it.
    So the approach we have taken is a process-based approach in terms of the WTO thus far, and it may be that a working group or other such things are also appropriate, but there's no question that will take time.
    In terms of the two commodities you raised, in terms of soybeans, for example, the GM soybean that is planted in the United States is already approved by the EU. That was done several years ago. There has been no withdrawal of regulatory approvals.
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    The approval process is now broken. They haven't approved anything for 18 months. But there was no withdrawal of previously-approved products.
    Corn is a problem, and that's what we have discussions now that are going on between USDA, us, and the European Union.
    Mr. GUTKNECHT. Well, just in closing, I would hope that also you would use whatever leverage, jawboning of power you have, because, you know, I think it was Thomas Jefferson a long time ago said, ''Words are plentiful, but deeds are precious.''
    We have got a serious problem when one of the largest pharmaceutical companies on one hand is developing and putting an awful lot of money into developing these GMO seed varieties, and on the other hand owns one of the largest baby food concerns and says, ''We won't buy this stuff.''
    That is a powerful condemnation of this whole technology, in my opinion. And it seems to me from your respective offices you could have some effect on our own companies and executives here in the United States who are literally talking out of both sides of their mouth on this very important issue, because I agree this is going to be an incredibly important issue for our farmers, for our consumers, and for the future, and we could lose this battle before we even fight.
    Mr. GLICKMAN. If I just may add one thing, just yesterday they announced—one of the research laboratories found the gene that causes adult onset diabetes. OK. Once they find the gene, they are going to be able to probably genetically modify something in order to stop the disease from occurring. But there, of course, the public sees directly the benefit to them.
    Ultimately, I think the issue of the company you talked about, which is pursuing a schizophrenic policy right now, will come a long way once they begin to communicate to the public that, in fact, this is good for them, that this is positive for them and the public accepts that. Until such time that happens, all we can do is hope that the processes are clean, open, transparent, and scientifically based.
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    Ms. BARSHEFSKY. If I can also add to that, the key here is a science-based process; otherwise, you have politicized the issue of food safety. When that happened in Europe, consumers immediately lose confidence. I think they would rather have a scientific-based process, some confidence in food safety and food security, than a process that is a product of a bunch of folks sitting around and voting about whether they want to let a particular product in or not.
    In the proposals we have made in Geneva, we do not opine on the issues of science. That is to say, we don't talk about the quantum of science, we don't take any position on the science of any of these products or of the technology, because that's for the scientific community to work on.
    In addition, we recognize two fundamental facts. One, countries can set standards of health and safety, environmental protection, food safety, at whatever level they deem appropriate, regardless of the international standard—and many of our standards are quite above the international standard—and, second of all, that, to the extent the science is indeterminate, or to the extent the quantum of science is inadequate, countries have the right to undertake precaution with respect to imports. We do that in this country. That is certainly the right of other countries. But the underpinning is science.
    Precaution is not a substitute for a science-based process. Trade barriers are not a substitute for a science-based process. That is what needs to be brought to the forefront in terms of other countries' regulatory processes.
    Mr. GUTKNECHT. Mr. Chairman, I know my time has expired, but one real last yes or no question.
    What should we tell our farmers this fall as they make their decisions on seed for next spring?
    Mr. GLICKMAN. I wish I were in a position to do that. I can't. That's a marketing decision they are going to have to make. But I do think the companies that are involved need to be as clear as possible with it.
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    Mr. GUTKNECHT. Thank you.
    The CHAIRMAN. Ambassador Barshefsky, we are not encouraging you to leave, but, you indicated earlier that you must leave. I wanted to let you know we have taken you a little beyond that point. I will leave that to you.
    I just might mention that there—please leave your proxy with the Secretary, by the way. [Laughter.]
    Ms. BARSHEFSKY. I certainly would. I'd be pleased to stay for a few more minutes.
    The CHAIRMAN. Great.
    Ms. BARSHEFSKY. And I appreciate the committee's indulgence.
    The CHAIRMAN. I know that all Members were going to have interesting questions for you. We might, more than usual, submit some of those for a written response.
    Mr. Etheridge.
    Mr. ETHERIDGE. Thank you, Mr. Chairman. I appreciate the opportunity.
    Let me thank both of you for being here this morning. Being from North Carolina, we have faced a lot of challenges this year from droughts, floods, to any number of things, and our farmers are—some are on their knees and some are on their backs, and some of them feel like they are drowning.
    As we talk about expanding markets, we are grateful for that and appreciate the efforts you have put in there, but let me ask a specific question and then go to a second one, because for some time we have been concerned that some countries have really taken advantage of sort of the ongoing tobacco debate in this country and have imposed what some folks have called some phony sanitary standards to prevent U.S. tobacco from entering into the world market because they felt, because of the turmoil here in this country, that the administration wouldn't do a whole lot about it.
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    Can you assure me and hopefully guarantee me that you will treat tobacco fairly and will fight to reduce trade barriers for those countries that are using nothing more than phony sanitary standards just to keep it out of their countries, because we know they are doing it now; that we will be treated fairly, as other commodities are, at the WTO?
    Ms. BARSHEFSKY. We have always taken the position, with respect to tobacco, that countries cannot discriminate against the United States, and that is absolutely our position.
    We also take the position that countries can set whatever health standards they wish with respect to this, whatever requirements they wish with respect to this. And, of course, you know we have many requirements in this country with respect to advertising, labeling, so on and so forth, educative efforts, and so on, and we do not in any respect object at all to any of that, and all of that, from our point of view, is positive.
    We have received a number of comments from U.S. farmers that grow tobacco, as we have from a whole variety of different commodity groups, and we will be considering all of those comments in the period after Seattle when we are starting to formulate negotiating positions.
    Mr. ETHERIDGE. Thank you. All we ask is you to be fair about it, because I have had a number of comments to my office to that effect.
    Let me move back, if I may, to the issue that others have talked about on biotech and genetically-engineered. Let me say, as I ask my question, I am a strong proponent, always have been, since we have started in North Carolina with biotechnology.
    I have had the opportunity in recent days to raise this issue with companies, because they are not bashful about selling the farmers product. The last time I checked, a lot of these companies that are getting huge profits from seeds happen to be headquartered in the European Union.
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    Our farmers are buying the seeds in good faith, bringing them to market, and the very people that are selling the seeds to get the benefit are in the position, in my opinion, to help with that issue.
    So as we talk with them in Seattle, I would trust that we would remind those folks regarding bioengineering crops.
    I realize the consumer is always right, but I also know one other factor is very important is that dollars tend to change the consumer's attitude, and they have found a way to change the farmer's attitude and move them to it, and I would hope that they would be just as aggressive in helping convince the consumer that it is safe, as we have done in this country, and be open in their processes.
    So my question is: as we deal with this, what do you think the prospects of using these negotiations are to help change some of these attitudes of the people we are sitting down to deal with in Seattle that they will work with their business community, because really it is the business communities that deal with this and who are benefitting from it?
    Ms. BARSHEFSKY. I think that the attitude questions are always difficult, but I do think that, as Dan was saying, to the extent we have good working relationships with a number of countries in agricultural issues, as has been developed by USDA with the Cairns Group, as we have tried to develop with the African nations, with many in Latin America, I think that we will see a fairly positive attitude going into this, and that, I think, will, in turn, put quite substantial pressure on countries who are not inclined to be particularly productive in these talks. That's one element.
    I think the interchanges among the business community, in part brought about by the kinds of trade flows that we have established in agriculture, will also help with respect to the attitude issue.
    On the consumer side, the situation is somewhat more complicated, because, as Dan says, we can't force feed the global population. If they don't want to buy, they aren't going to buy. But that is different from foreign governments erecting trade barriers so consumers actually never make that choice. They are simply told they shall not buy, even where the science demonstrates the products are completely safe.
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    So I think the consumer side of this is, in part, affected by governments which attempt to block product, not letting the consumers make an informed decision of their own.
    I think also there is the issue, especially in biotech, of a better educative effort that needs to be made by the companies that are promoting this technology, and I think that educative effort is way behind the curve, and I think it needs to take place.
    Mr. GLICKMAN. But what is paramount in all of this to give the consumers confidence is their belief that the regulatory system is arm's length, independent from the industry and is out there protecting their safety and their interest.
    Ms. BARSHEFSKY. Right.
    Mr. GLICKMAN. If we have got that, then I think the rest of it is a little easier to get done.
    Mr. ETHERIDGE. Good. Thank you.
    Thank you, Mr. Chairman.
    The CHAIRMAN. Mr. Smith.
    Mr. SMITH. I really appreciate the words and the efforts that you have suggested this morning you are making to make sure that agriculture gets a fair shake, but, like Mr. Stenholm, the proof is sort of in the pudding. The proof is what happens at the end of the ride. Agriculture, obviously, is on the plane now.
    I participated in trade negotiations in the early 1970's, and my experience is that those countries, especially many of the countries in Europe, are so determined to protect their agriculture that they are willing to give up all kinds of trade negotiations in manufactured goods, et cetera, in order to protect their agriculture.
    So the challenge, I think, is where we end up at the end of this plane ride, in your determination, to make sure that we don't trade off other good things for pharmaceuticals, manufactured products, and at the disadvantage of agriculture.
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    Chairman Combest last spring asked me to pursue an inquiry into what subsidies were being provided to farmers in our other trade-related countries. And, working with researchers and economists, we have developed not only a review of the kind of subsidies that are being given to protect farmers with our trading partners, but also have developed, if you will, a trade restriction index, so that as we look at such things as marketing quotas with production subsidies and export subsidies and tax breaks and reduced prices for the farm inputs and import restrictions, quotas, and tariffs, and devaluation, we have established an index of how significant that is as a trade restriction.
    When we give this to the chairman, we'd also certainly share it with you, because you need a feeling of what you are trading off when we look at what is happening.
    I'd just like to follow up a little bit on some reservations I have in country of origin labeling, because, as we have talked on biotech and genetically-modified products, I happen to chair the Science Research Subcommittee, where Mr. Etheridge and Mr. Gutknecht also are members of that subcommittee. We have held three hearings so far in agricultural plant biotech and where we might be going.
    But what seems to be happening in Europe is now the consumers are so concerned about genetically-modified products that, regardless of the trade agreement of allowing our products in, if the consumers don't buy them—and I think, Mr. Secretary, you sort of alluded to this, too, so I think we also have to look at trade restrictions that can be implemented simply in don't buy American because of the danger, or whatever. So it goes a little further than just the traditional tariff restrictions.
    Ms. BARSHEFSKY. I agree with that. Let me give you an example of exactly what you are talking about, and that is hormone-free beef.
    When the beef dispute arose, one of the things that we in USDA did was to say to Europe, ''Well, we want to be sure, at a minimum, hormone-free beef can continue to enter the EU while we work out this problem on hormone-fed beef.''
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    Now, Europe has a rule that says hormone-free beef can enter the EU. A year-and-a-half later, there are no implementing regulations that define what hormone-free means. So what is the result? It is all banned. It is all banned. That's an example of, if you will, a new kind of trade restriction—that is to say, a lack of defining what, in this instance, ''hormone free'' means. What are the tolerances, what does it mean to be hormone free as a means of doing nothing other than keeping U.S. beef out of the European market, however it is grown, however it is fed.
    Certainly, that's not a public health issue—that is to say, they certainly can define ''hormone free'' and issue a regulation and our producers presumably would need to comply with that.
    Mr. SMITH. And it's interesting because, in that same line of thinking, I had a draft legislation that said that any grain or nut or fruit or vegetable that hasn't been genetically modified would be so labeled.
    Ms. BARSHEFSKY. Right.
    Mr. SMITH. And I gave that to our witnesses yesterday and said, ''Well, what would be labeled if this bill were to become law, saying that anything that had not been genetically modified would be so labeled?'' Of course, they said, with their technical, scientific definition, that essentially everything we eat has been genetically modified, with also the suggestion—and, Mr. Chairman, just to get it on the record—that it is much more dangerous, health-wise, the traditional biotechnology of cross breeding where you put in thousands of genes, not knowing what their characteristics are or what the results are going to be. That is much more dangerous than the new biotechnology where you can identify particular genes and you know the results as you incorporate them in a separate seed or plant.
    Mr. GLICKMAN. I might tell you—and I would hope to have our organic certification rules out by either the end of this year or early next year, and, you know, depending upon what they finally look like, if something is certified organic it will mean GMO-free. But that doesn't answer some questions about what threshold you have got
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and how you test that. But we are going to have to deal with that in——
    Mr. SMITH. Every seed product we have now has been genetically modified, either through the traditional system or the new system.
    Mr. GLICKMAN. Right.
    Mr. SMITH. So I'm curious. It is going to be a curious pursuit how you develop that threshold.
    Thank you, Mr. Chairman.
    The CHAIRMAN. Mr. McIntyre.
    Mr. MCINTYRE. Thank you, Mr. Chairman.
    Thank you two for the excellent job you all do.
    I have to say, Mr. Glickman, someone the other day, we were talking about your effective work, and they said that you believed that you were the most effective member of the President's Cabinet.
    Mr. GLICKMAN. And that was my mother you were talking to. [Laughter.]
    Mr. MCINTYRE. But I have to say, from personal experience, I appreciate your time you have spent in our district in North Carolina and the time you have given to your work. It has been truly commendable.
    In your statement, which I find very brief and very to the point and good, you state that we must construct a world trading system where every producer gets a fair shake, where all products, goods, and services are traded freely across oceans and continents.
    Now, to follow up on my colleague from North Carolina's comment, Mr. Etheridge, I trust that that statement does include raw tobacco.
    Mr. GLICKMAN. It does.
    Mr. MCINTYRE. All right. I want to make sure. And do you agree with that, Ms. Barshefsky?
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    Ms. BARSHEFSKY. Yes.
    Mr. MCINTYRE. All right. As you all know, we are suffering and recovering and will be in recovery for quite a long period, and the recent rain, even today, does not help in North Carolina from Hurricane Floyd, which now puts us at five hurricanes in the last 3 years that have greatly affected businesses and families, but also, obviously, farmers.
    We also know tobacco farmers have suffered nearly a 30 percent loss in quota the last 2 years, and they are bracing for what may come out this December.
    About 25 percent of our tobacco farm income is dependent on international markets, and when we talk about international markets and the farmers and their needs and their devastation right now and the debt that they already owe, and now, having lost their harvesting equipment and their tractors and all that they owe money on, plus not being able to harvest their crops, plus losing their homes, it is quite a dire situation.
    Global markets are something that farmers obviously cannot do on their own, and that is a very important role we all know that government plays.
    I would like to know if you would be willing to include tobacco farmers in the negotiation discussions coming up in Seattle.
    Ms. BARSHEFSKY. As I said before, we have gotten—there are going to be no exclusions from the agricultural area in terms of the Seattle mandate. Going forward, we are in the process, with USDA, of analyzing hundreds of comments that have been filed, whether it is tobacco farmers or wheat growers and all the information gleaned from the listening sessions that we have had, which has included tobacco farmers. And then we are going to come back to the committee with what we think is a negotiating plan, and we are happy to work with you on that.
    Mr. MCINTYRE. OK. So would it be possible that they could be invited to attend that session in Seattle, tobacco farmers?
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    Ms. BARSHEFSKY. Everybody is invited to attend. Absolutely. And I do believe, from the industry side, there will be a great, great many representatives of industry, and I would encourage your folks to come to Seattle. Absolutely.
    Mr. GLICKMAN. I would also say that we have these two advisory committees, ATAC and APAC, and there are tobacco farmers on these.
    Ms. BARSHEFSKY. On both of them.
    Mr. GLICKMAN. On both of them. I know for sure on ATAC. And some of them already are or will be credentialed.
    Ms. BARSHEFSKY. Yes.
    Mr. GLICKMAN. We will have to let you know who on that list.
    Mr. MCINTYRE. If your office could do that, that would be helpful, and we can coordinate that.
    Thank you very much. Thank you, Mr. Chairman.
    The CHAIRMAN. Mr. Calvert.
    Mr. CALVERT. Thank you, Mr. Chairman.
    Mr. Secretary, I'm happy to be a supporter of free trade and expanding into South America and U.S. entry in WTO, but, unfortunately, we have some undesirable imports, especially into California, my home State. We have had problems with the Medfly, the white fly, the fire ant, Formosa termite, and now we have the glassy-winged sharp shooter. I don't know if you have heard of this latest pest, but it is literally destroying the wine industry right now in the Temecula Valley area, and it is all the way up now to Fresno and Lodi. It is the vector for a disease called Pierce's Disease, which there is no known cure for.
    We are getting together quickly to try to—and your office has been helpful, but I'd invite you to come up to California soon, because it is a tremendous problem. We want to export wine to the rest of the world, but we will not have a wine industry in California, according to some etymologists, who claim that the grape industry will be totally destroyed within several short years if we don't find a cure for this quickly.
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    Apparently, this disease has been around a long time, but this vector is very efficient in transporting the disease through all the grapevines throughout California.
    So I am hopeful that, on that one pest, that we get on top of it, but, more importantly, there are other pests to come. And, as we expand our markets, undesirable imports of insects are going to happen, and we need to be more proactive in the science, as you mentioned earlier, in fighting these insects.
    There have been some proposals made to you about—and especially in the southwest, which seems to be the more desirable location for some of these insects—is that we get ahead of this and think about a more proactive way of attacking these insects, which will come to the United States, that we can protect our farming industry, and especially the fruit and vegetable crops throughout the United States.
    Mr. GLICKMAN. I would just say this is a very serious problem. I wasn't particularly aware about this one anti-grape insect, but the President has put together basically an inter-agency effort on invasive species now.
    This may be more than just invasive species, but he asked Secretary Babbitt, myself, and Secretary Daley to pool our resources to deal with this continuing problem, whether it is the long-horn beetle from packing material from china or a whole litany of insects and animals bearing diseases—for example, the whole Westnyl encephalitis, equine encephalitis, all these things which we are facing in much greater numbers than we probably thought we were going to.
    Maybe it is because of climate change. Who knows what the reason why is.
    The problem here often is resources. You know, it takes a tremendous amount of dollars by both the Feds and the States—the States are doing most of the work. We have worked with the State of Florida, for example, on issues of citrus canker and other kinds of things to try to deal with that particular species, but we need people at the borders, we need people overseas, and, for example, in Latin America, as well, dealing with this issue.
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    Mr. CALVERT. I would argue that sometimes we tend to treat the crisis after it occurs, rather than get ahead of it, whether we are funding APHIS fully or whether or not we attack the problem of putting together regional centers throughout the United States to do the investigation, to do the research, to get—when those insects first land in the United States, to locate them and to eradicate them before they become endemic.
    Mr. GLICKMAN. Right.
    Mr. CALVERT. The fire ant now is in California. Of course, that was in the southwest United States, but we are going to spend millions and millions of dollars to try to eradicate the fire ant. Some people say that's impossible.
    The white fly is already pretty much endemic in the Imperial Valley in California, and now this glassy-wing sharp shooter is probably endemic. The problem is it is a vector for this disease, and you have got to eradicate 100 percent of it, not just 95 percent.
    Mr. GLICKMAN. I'm curious whether our Agricultural Research Service has got focused research on this particular problem.
    Mr. CALVERT. They are working now apparently with the University of California. The is relatively—it has been around for a while, but nobody really paid any attention to it until now it is destroying the wine industry in California.
    Mr. GLICKMAN. I will talk to our ARS people today to see what kind of—both ARS and APHIS on this particular one to see what kind of focused effort there is.
    But your broader point is a good point. There has got to be a proactive way to deal with these diseases before they strike and wreak havoc on American agriculture.
    The CHAIRMAN. I thank the gentleman.
    Ms. BARSHEFSKY. I was going to say, Mr. Chairman, with your permission—you have been very kind—I do need to leave.
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    The CHAIRMAN. I knew you did.
    Ms. BARSHEFSKY. And I would be pleased to leave Jim Murphy here.
    The CHAIRMAN. Thank you.
    Ms. BARSHEFSKY. He's the assistant USTR for agriculture in our office, and he will be available to answer questions as needed.
    The CHAIRMAN. Thank you, Ambassador, and thanks for coming.
    Ms. BARSHEFSKY. Thank you very much, sir.
    The CHAIRMAN. And we might just invite Mr. Murphy, if you'd like, to come up and sit down and engage in the discussion.
    Thank you, again, Ambassador, for coming.
    Ms. BARSHEFSKY. All right.
    The CHAIRMAN. Mr. Ose.
    Mr. OSE. Thank you, Mr. Chairman.
    My questions are very specific, but I want to make a general observation before I ask my questions, and that is, there are times, I have found in my private business, where the customer was not always right, and that it was necessary to fire that customer. And I don't want to suggest that we do that lightly, but, in the event that discussions with existing trading partners just boil down to not being able to come to a reasonable compromise, I would not overlook the opportunity or the necessity, if you will, that such circumstances prevent and fire that trading partner.
    I don't know. The few times I have done it, it hasn't been easy, but is has been necessary, and it sends a very clear message, not only to my organization, but to my other trading partners, that we are not playing around here. This is serious business and we expect it to be treated seriously.
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    I want to follow up on Mr. Moran's comments earlier about enforcement. We talk a lot about the nuances of the trade, but we don't talk a lot about how to actually enforce the decision, and we see that difficulty manifest itself with our European trading partners right now relative to beef and other things. Somehow or another in these discussions in Seattle we have to come to some sort of clear understanding of an enforceable protocol on these decisions, because, as the Ambassador said, and the Secretary also touched on, endless discussion just doesn't get us to the finality that we are seeking.
    Now, my specific questions relate specifically to my district, and they relate to Japan, in particular. We grow a lot of rice in the third district, and we grow short, medium, and long-grain. My question has to do with the Japanese reaction or tariff protocols.
    Right now we are able to ship rice into Japan, but we don't seem to be able to get it on the supermarket shelves.
    My question specifically, as it relates to that, is how will the administration use this round of trade negotiations to achieve meaningful access to Japanese consumers for U.S. rice? And I'm talking medium-grain as well as short-grain.
    And then, secondarily, we have run into a little problem here lately where the tariffication on rice in Japan has come to an extremely high level for imported rice, and I'm wondering what the strategy is for bringing down those tariffs in this round, including the strategy for reforming Japan's domestic support regime for their domestic rice.
    Mr. MURPHY. I had, about 2 weeks ago, a meeting with the senior Ministry of Agriculture official from Japan on precisely this issue, in consultation with our rice industry here. The meeting was primarily focused on the issue of purchases this year and our concern about the low level of purchases thus far.
    But we also had a very candid exchange about the need and about the fact that the United States would be requesting from Japan in these negotiations, obviously, much better access in the rice market.
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    And I made the point that you just made, which is that, under the current terms of that access, we cannot put rice on the shelves in U.S. packages, develop brand loyalty with Japanese consumers, and that is clearly something we have got to do. It's clearly what is in the mind of the WTO when it talks about market access.
    So we have made clear to Japan that that will be on the table in these negotiations and it is a question of getting tariffs down, of getting quotas enlarged so we can have sufficient quantities so they are commercially interesting. U.S. companies conduct ad campaigns to establish brand names and brand loyalty in Japan. We have been very clear that that will be on the table in these negotiations.
    Mr. OSE. Mr. Chairman, I just want to reinforce the comment I made about enforcement.
    We have had these meetings with the WTO agricultural ad hoc committee with the Ambassador here, and if you can't enforce a decision it doesn't make any difference what you have talked about. You guys know that. So I would really encourage focus on that.
    Thank you, Mr. Chairman.
    The CHAIRMAN. Thank you.
    Mr. Riley, with my apologies. I missed you earlier.
    Mr. RILEY. Thank you, Mr. Chairman.
    Gentlemen, I guess I want to be a little parochial today. Fully 60 percent of all the exports that come out of Alabama are in the form of poultry or poultry products. When I look at the total poultry products that we have exported over the last 6 years, it has been relatively flat. There was a big announcement about the Prime Minister of China back in the spring that said that we were going to reduce tariffs going into China, I think from 20 percent down to 6 or 8 percent. Since that time, our total exports to China of poultry and poultry products has decreased 2 percent.
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    I'd like to know first what our current status with the agricultural cooperation agreement with China that was signed or agreed on back in the spring, what that is, and, as far as poultry going into the WTO round, what is our method of increasing our poultry exports?
    If there is one thing that we do very, very well, it is produce meat in this country, particularly poultry in the south. And, with the restrictive barriers that we have not only in China but also in Australia and also in Canada, for different and varied reasons, we have not been able to increase exports anywhere near what we have with other agricultural products.
    So I guess my first question is: where are we in our agreement with China? Where does that stand? What is our proposed negotiating strategy in WTO as it regard poultry?
    Mr. GLICKMAN. Well, first of all, as part of that agreement, China has committed to cut poultry tariffs from 20 percent to 10 percent, but, frankly, I think we need WTO accession to get this commitment implemented.
    Is that a fair statement? USTR would probably know more about it.
    I would have to say, just to answer your question, in fact, poultry exports increased dramatically from 1994, 1995, 1996, and 1997 was record years, then it has fallen in 1998, and then 1999 has fallen. The primary reason it has fallen is because of the absence of the Russian market, which basically zeroed out. But from 1994, 1995, 1996, and 1997 it increased dramatically each year, according to our USDA statistics.
    Mr. RILEY. Looking at the National Chicken Council's numbers here, in 1996 it was 4.4; 1997, 4.6; 1998, 4.6; 1999, 4.6; projected 2000, 4.5.
    Mr. GLICKMAN. Are you talking total exports of poultry there?
    Mr. RILEY. Total. Right.
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    Mr. GLICKMAN. OK. Because I'm looking at a USDA export in terms of dollars from 1994, 1995, 1996, and 1997 were up significantly each of the years, then it has fallen in 1998 and 1999.
    Mr. RILEY. Exactly.
    Mr. GLICKMAN. But whatever it is, we need to get the numbers back up again.
    Mr. RILEY. It seems to me that, again, what we do very, very well is produce poultry in the south, and we can't seem to get any kind of momentum, especially with the Chinese market.
    I guess my question goes back to where are we in those negotiations, what is our posture going to be in the WTO round?
    Mr. MURPHY. As you know, we had something of a pause in those accession negotiations in the spring, but they have resumed about 6 weeks ago and are now proceeding. There is still a desire, certainly on our part, and I think on the Chinese part, to try to conclude those by the time of Seattle Ministerial, and I can just tell you that they are proceeding.
    The agricultural part of those discussions was pretty well concluded. It's other pieces of it that have not been concluded, but the agriculture piece of it is pretty well concluded and we are still optimistic that we can finish by the time of the Ministerial.
    Mr. RILEY. Is there a possibility of taking the 20 percent that goes to 10, could we take it lower than 10?
    Mr. MURPHY. I can take that back and inquire. I think that agricultural package is pretty well locked in at this point.
    Mr. RILEY. Okay.
    Mr. Glickman, if I can, let me ask you about Canada has a supply management program for chicken that severely restricts our imports from the United States. Is there anything that we can do about that?
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    Mr. GLICKMAN. Could I ask Mr. Schumacher to comment on that?
    Mr. SCHUMACHER. Mr. Riley, we have a tariff rate quote with Canada and we export to Canada, and our exports go up by the level that their production goes up, so we are moving chicken into Canada. Their supply management system, similar to dairy and poultry, is, at this point, higher than our tariff rate quota, and that's one of the key issues that we will be negotiating in the next round of the WTO starting in Seattle.
    I know Jim made a comment that dairy and poultry are under supply management. We have access to a limited capability, and that goes up a modest amount each year, but we need to get additional access through the next round of the WTO.
    Mr. RILEY. And I guess that's my point, whether it's the tariff or whether it is a restricted trade policy. In effect, what we are doing is locking out our poultry producers from accessing that market. If we are going to truly have free trade, then I believe we need to have free trade on any and all products, and we do not have it now.
    With Australia, I think that they have an overly restrictive requirement on poultry health. It seems like when it comes to poultry there is always an exception, there is always a reason, there's always a logical explanation why for the reasons that we can't export it. I just wonder what we plan to do about it.
    Mr. MURPHY. If i could just add on your earlier question about the tariff, I took that to be in the context of the accession negotiations, but, of course, in the WTO negotiations we will be seeking further reductions on tariffs on all agricultural products, so we do have that second opportunity across the board for all of our trading partners in those upcoming negotiations.
    The CHAIRMAN. The Chair would indicate that it would be the intent to let Mr. Thune ask his 5 minutes of questions and then go ahead and adjourn the hearing. We have a series of votes.
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    Mr. Thune.
    Mr. THUNE. Thank you, Mr. Chairman.
    Mr. Secretary, I appreciate very much. Again, there is no, I don't think, more important issue to the agriculture sector and the future of it than this one, and I applaud you for the intentions that you have expressed today, as well as the methodical way I think that you have gone about both in preparing for this next round of negotiations, and I am hopeful and optimistic that the results will mirror our objectives. If that's the case, I think we will come out in good shape. But it is just crucial, in my judgment, based upon the U.S.'s percentage of the total production, the way that has changed as the world market has grown, supply has grown.
    Everything I think that we can do here, in terms of policy, pales in comparison to what we can accomplish through these trade negotiations, and ultimately the impact that has on the future of agriculture.
    Just a couple of quick questions, if I might. Are there ways in which we can strengthen enforcement in WTO? I'm thinking, of course, with respect to the EU and the way that they have flouted our decisions, and we do have now some penalties in effect, but are there other things that could be done that would further strengthen the enforcement mechanisms that are in place?
    Mr. MURPHY. There are, and we are in the process of looking at proposals to strengthen the dispute settlement process. Our general counsel's office has been in consultation with committee staffs in the House and in the Senate to look at what aspects of this process we can strengthen, particularly on the front end, trying to shorten times for preparation of the process, for filing of briefs, et cetera.
    It gets, as you can appreciate, into some sensitive areas, even on our side, as to how quickly one can do this, but we do think there are opportunities there, and we are working with committees to come up with specific proposals to do that.
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    Mr. THUNE. Mr. Secretary.
    Mr. GLICKMAN. No, other than this is the most common compliant we would get out there in the countryside is expediting the decisions and creating much more certainty for people who file actions that they can get some relief in a reasonable period of time.
    I would have to say that, even with the delays in the banana case and in the beef hormone case, we were able to finally get the relief that—well, we didn't get the relief we were asking for, but we got relief that was permitted.
    Mr. THUNE. Do you anticipate any changes in, say, green box criteria in this round in terms of domestic support?
    Mr. GLICKMAN. We don't anticipate any, but, you know, I mean, one of the things that we obviously want to see is the Europeans reduce their domestic policies, which are trade distorting, and I don't have any question that our friends in the Cairns Group, particularly, are extremely concerned about this last emergency aid package which we passed here.
    Mr. THUNE. Right.
    Mr. GLICKMAN. So, I mean, I suspect that some of these subjects will be on people's minds in Seattle, but I don't expect any dramatic changes in what I call the ''boxes of color.''
    Mr. THUNE. Are there other countries in addition to the EU where this is a problem—I mean, a major problem? To me, obviously——
    Mr. GLICKMAN. You mean their domestic——
    Mr. THUNE. Right. Correct.
    Mr. GLICKMAN. Well, Japan has very extensive protections. They are mostly in the tariff area. Korea has—tariffs and TRQs are significant.
    Mr. THUNE. Right.
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    Mr. GLICKMAN. They are, in the vast scheme of things, not as great as the EU, because of the nature of the products produced.
    Mr. THUNE. Would you anticipate some improvements with those countries, as well?
    Mr. GLICKMAN. It would be our hope. I mean, that's got to be on the agenda.
    And one of the things that I have dealt with with the Japanese Agriculture Minister is for him to be secure in believing that we would be a reliable supplier. That always governs their thinking, in terms of making changes.
    Mr. THUNE. Again, these are big questions. This is a complicated issue. We have our work cut out for us. But I appreciate the start that you have made. I remain very hopeful and optimistic that this will yield some results that many of us who represent producers are desperately looking for. I just think, again, in terms of all the things that we can do and the basket that we have to improve the farm economy, opening markets and doing everything we can through this round of negotiations to drop some of the barriers other countries have in terms of both export subsidies and domestic supports is going to be critical to the future of our producers.
    So I appreciate what you are doing, and hopefully we will be able to continue to work with each of your respective agencies as this gets underway and wish you success.
    Thank you for being here today.
    The CHAIRMAN. My thanks to the witnesses and to the Members.
    The Chair, without objection, would seek the record of today's hearing to remain open for 10 days to receive additional material and supplementary written responses from witnesses to any questions posed by Members.
    The hearing of the Committee on Agriculture is adjourned. Thank you.
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    [Whereupon, at 12:23 p.m., the committee was adjourned, to reconvene at the call of the Chair.]
    [Material submitted for inclusion in the record follows:]
Statement of Charlene Barshefsky
    Chairman Combest, Congressman Stenholm, and Members of the Committee, thank you very much for inviting my testimony on our agricultural trade agenda as we approach a new Round of international trade negotiations.
    This November 30, the WTO will open its Third Ministerial Conference in Seattle. At this Ministerial—the largest trade event ever held in America—we will launch a new Round of international trade negotiations.
    This will be the first Round held since the creation of the WTO in 1995; and in it, as President Clinton stressed in his address last week, aggressive reform of agricultural trade will be at the heart of our agenda. In these negotiations, we have a unique opportunity to achieve our own interest in opening new markets; strengthen guarantees of fairness for America's farm and ranch families; and help to ensure for the world a reliable supply of food at market prices.
    Over the past year, we have conducted an extensive series of consultations and listening sessions, in Washington and around the country, to develop the objectives that will meet the priorities of American agricultural producers. As a result, we have proposed an ambitious set of reforms in areas ranging from tariffs to export subsidies, state trading enterprises, domestic supports, and tariff-rate quota administration. At the same time, we have worked intensively with our trading partners in every part of the world to build support for these goals, and for a focused negotiation that will allow us to reach them within 3 years.
    My testimony today will review our negotiating objectives; the process by which we have set our objectives; our strategy to reach international consensus on achieving them; and the timetable by which we plan to bring the work to a successful conclusion.
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     Let me begin, however, with some brief remarks about the importance of the WTO system as a whole to American agriculture.
     Mr. Chairman, American farmers and ranchers are the most competitive and technically advanced in the world. We produce far more than we can ever eat; and we therefore must have the ability to export to the 96 percent of humanity that lives beyond our borders if farm families are to prosper. That is already clear today, as 1 in 3 American farm acres now produces for foreign markets.
    At the same time, experience shows us that an open, fair trading system for agriculture is among the world's strongest defenses against hunger. Countries which are open to agricultural trade diversify their sources of supply—ensuring that consumers will have reliable access to food at market prices, and helping to guarantee that natural disaster or other interruptions of supply from any one source of food will not mean famine.
    These realities are the foundation of our agricultural trade policy. Under President Clinton and Vice President Gore, from the beginning of our administration we have sought to:
     reduce tariffs and other barriers to trade;
     ensure that sanitary and phytosanitary standards are based on science;
     promote fair trade by reducing foreign export subsidies and trade-distorting domestic supports;
     ensure greater transparency and fairness in state trading; and
     help guarantee that farmers and ranchers can use modern technologies, in particular biotechnology, without fear of trade discrimination.
    We have pursued these goals in negotiations with all of our major bilateral trading partners in a wide range of commodities, and in the regional initiatives we have opened in the Western Hemisphere, Asia, Europe and Africa. At the heart of our work, however, is construction of a world trading system that opens markets for farmers and ranchers; reduces unfair trade practices; ensures that our trading partners do not use unscientific sanitary and phytosanitary measures to block American goods, while ensuring that consumers in the United States and around the world have the highest possible standards of food safety; and gives us strong and credible means of settling disputes.
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    The completion of the Uruguay Round in 1994 marked the first major step towards such a trading system:
     Under the Uruguay Round's Agreement on Agriculture, we lowered tariffs, eliminated most quantitative restrictions, and reduced trade-distorting subsidies. Specifically, developed countries committed to 36 percent tariff cuts on average, and developing countries to cuts at two thirds the level of developed;
     Under the Application of Sanitary and Phytosanitary Measures (SPS), we ensured that all WTO members—110 at the time, 134 today—would use science-based sanitary and phytosanitary measures to protect human, animal and plant health rather than to impose scientifically unjustifiable bars on imports for protectionist purposes.
     And through the creation of a strong dispute settlement mechanism, we enforce commitments in agriculture and elsewhere. We have used this system to bring 49 cases, including 13 times in the last 4 years in agricultural cases, to enforce the Agriculture and SPS Agreements, on issues from fruit sales to Japan, to pork in the Philippines, dairy in Canada, and the banana and beef cases with the European Union.
    With the Uruguay Round, therefore, we did a great deal to create a foundation of commitments to open markets, fair trade, respect for science and an enforceable rule of law. But while this is a strong beginning, we are very far from done.
    As President Clinton noted last week, for example, even with the Uruguay Round tariff cuts, world agricultural tariffs average 50 percent—five times higher than American rates. Likewise, export subsidies and trade-distorting domestic supports—especially in the European Union, whose $7 billion in agricultural export subsidies makes up 85 percent of all world export subsidies—severely distort agricultural trade and reduce opportunities for farmers in the United States and elsewhere in the world. And a number of countries maintain state trading policies that distort trade and reduce transparency and confidence in international markets.
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    At the same time, the advance of science and technology in agriculture has raised new challenges. The most publicized, though not the only, case is the potential for agricultural biotechnology to improve productivity and nutritional quality in many commodities. This has remarkable potential, for example, to reduce the use of pesticides and ease pressure on land, water and other natural resources. However, such advances also raise consumer concerns which must be met through fair, transparent, timely and science-based regulatory policies that ensure the strongest protection for public health and the environment in the U.S. and worldwide.
    The agricultural agenda for the next Round, is broad and challenging. It will take us well beyond the achievements of the 1990's to make trade more open for our farmers and ranchers; ensure scientific advance and consumer protection; and ultimately to increase the world's food security.
    Over the past 18 months, we have pursued a methodical strategy which has moved us, step by step, toward this goal. This began with our successful effort at the most recent WTO Ministerial, in May 1998, to renew the formal commitment by WTO members on agricultural negotiations, to begin in 1999. At the same time, of course, we ensured that implementation of existing agreements would continue. We then opened a long series of consultations with Congress, U.S. agricultural producer and commodity groups and others interested in the Round to seek advice on the goals and priorities we should set.
    This included publishing notices in the Federal Register seeking public comment on agricultural and other policy goals in the Round, and hearings on the overall WTO agenda through the Trade Policy Staff Committee in Atlanta, Dallas, Los Angeles and Chicago, as well as Washington DC. We also held a series of twelve Listening Sessions with the Department of Agriculture focusing specifically on agriculture this June and July. In these sessions, senior USTR officials and agricultural negotiators visited Austin, TX; Indianapolis, IN; Des Moines, IA, Winter Haven, FL; St. Paul, MN; Memphis, TN; Sacramento, CA; Richland, WA; Kearney, NE; Newark, DE; Burlington, VT; and Bozeman, MT to hear directly from farmers, ranchers and others on the specific issues and commodities they felt should be our top negotiating priorities.
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    Having completed these sessions, we used the advice we had received to develop a set of specific proposals, which together form an ambitious and achievable agenda for the Round. Our approach will address the major concerns raised in our consultations, including worldwide tariff disparities; reform of Europe's Common Agricultural Policy, which is the world's largest single distortion of agricultural trade; the reduction in market transparency and competition created by state trading monopolies; and ensuring fair treatment for trade in agricultural products derived from biotechnology.
    We tabled these papers in August at the WTO in Geneva, proposing that the Round:
     Eliminate Agricultural Export Subsidies—A principal goal of the U.S. will be to completely eliminate, and prohibit for the future, all remaining export subsidies as defined in the Agreement on Agriculture.
     Substantially reduce trade-distorting domestic supports and strengthen rules that ensure all production-related support is subject to discipline, while preserving criteria-based ''green box'' policies that support agriculture while minimizing distortions to trade. In addition, all trade-distorting supports should be more tightly disciplined.
     Lower tariff rates and bind them—this should include, but not be limited to, zero/zero initiatives. We will seek to eliminate disparities in tariff levels. And we will seek to simplify tariff policies, for example in cases in which WTO members use ''compound'' tariffs that include both ad valorem and cent-per-kilogram tariffs.
     Improve access for U.S. exports under tariff-rate-quotas—by increasing quantities eligible for low-duty treatment, reducing high out-of-quota duties, and improving disciplines on administration of TRQs to ensure that they offer real market access for producers
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     Strengthen disciplines on the operation of state trading enterprises—While state trading enterprises are subject to the WTO limits on subsidized exports, there are a number of concerns about their operations, and in particular those of monopoly exporters. These include the possibility of disguised circumvention of export subsidy commitments, and anti-competitive practices such as predatory pricing.
     Least Developed Countries—Improve market access by all WTO members, through a variety of means to the benefit of least-developed members.
     Address disciplines to ensure trade in agricultural biotechnology products is based on transparent, predictable and timely processes. While WTO rules cover trade measures affecting biotechnology products, we are concerned about the European Union's non-functioning approval process for biotechnology. We continue to work with our industry, Congress and other interested groups in developing the best approach for dealing with this subject in the Round.
     As the committee may be aware, we have requested a number of studies from the U.S. International Trade Commission on the barriers that confront U.S. agriculture around the globe. In addition, agriculture is included in the request made to the ITC for advice on market access negotiations. Normally, this advice (which is required by statute) would be requested after negotiations are launched. We determined that in order to be ready, we should have the advice in hand immediately as negotiations are launched.
    At the same time, we are working to build international consensus on our goals and a rapid timetable for achieving them. This process includes several different elements: developing consensus on an overall agenda for the Round which offers the greatest potential for rapid and successful conclusion of the negotiations; creating the broadest possible coalitions in support of our agricultural goals and the 3-year timetable which will help us reach them in a reasonable period of time; and setting concrete precedents for our goals in the Round through our regional trade initiatives and negotiations on new accessions to the WTO.
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    First, to ensure a successful Round, we are building consensus on an overall agenda that meets the interests of all our trading partners. The WTO's ''built-in agenda'' of agriculture and services offers a strong starting point, and the emerging consensus to broaden the agenda to include industrial market access and several institutional reforms strengthens this further. Our goal is to move the market access negotiations for agriculture, industrial items, and services forward as one package and conclude those negotiations at the same time. This will give us the maximum leverage for aggressive reform of agricultural trade.
    As one example, we won agreement from the APEC economies (including all major Asian economies, Canada, Mexico, Peru, Chile and Russia) for completion of an Accelerated Tariff Liberalization program in sectors important to both developed and developing countries. While seeking to finalize this effort in the WTO, we will not be diverted from ensuring that reform of agricultural trade remains central to our agenda. In particular, we are committed to ensuring that any interim implementation will be considered as an integral part of the overall balance of market access concessions to be determined at the conclusion of the new negotiations. One possible approach is to draw on the precedent from the Uruguay Round where an interim agreement on tropical products was applied provisionally after the Montreal mid-term Review and, subsequently, incorporated into the final commitments at the close of the negotiations. There are other possible approaches and we look forward to working with you to develop a method that maximizes our leverage.
    At the same time, we do not believe, as some have argued, that the Round should revisit and reopen each agreement negotiated in the Uruguay Round, or focus on matters that are not yet ripe for negotiation. That would be a recipe for delay, which is unacceptable to the United States and many of our trading partners.
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    At the same time, we have worked to build the largest possible degree of consensus on the 3-year timetable and our goals in agriculture. We started early in the WTO's preparatory process—focusing on the substantive problems with implementation and our goals for further reform. We called for building upon the basic structure of the Uruguay Round disciplines on agriculture—market access, domestic supports and export subsidies—and our trading partners seem to accept this fundamental approach for the new negotiations.
    Most important, we have built consensus on a 3-year negotiation, with benchmarks to ensure that we come away from Seattle with milestones for progress and the organization and conduct of the negotiations. For example, the Cairns Group—joining fifteen nations with particular interest in agricultural reform—has called for ''clear and detailed decisions in Seattle to ensure agriculture negotiations begin on time, conclude before 2003, and have an explicit negotiating time- table to deliver required outcomes.'' Even the European Commission has called for tabling of detailed negotiating proposals in all areas of the new Round by June 2000.
     In practical terms, under this timetable the Seattle ''launch'' will establish the parameters that will govern negotiations for the next 3 years. In January 2000, negotiators return to Geneva for hard bargaining and substantive negotiations. Ministers likely will meet at the midterm to make sure the 3-year schedule is kept. We are now working to confirm this consensus in Geneva, where WTO Members are developing draft decisions for approval in Seattle on the scope and subject matter for the new Round; time lines that establish milestones for progress; and the organization of the negotiations, including establishment of negotiating groups, oversight responsibility, and so forth.
    In addition to our work at the WTO in Geneva, we have used opportunities created by our regional trade initiatives and major international meetings (e.g. the U.S.-Africa Ministerial in Washington this March; the NAFTA Ministerial in Ottawa in April; Free Trade Area of the Americas negotiations and meetings; the U.S.-EU Summit this spring; the Quad meeting in Tokyo; the OECD Ministerial; Cairns Group meetings; and most recently the APEC meeting in New Zealand in September) to build support for our goals in market access, subsidies and biotechnology. Some examples include:
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     Asia-Pacific—At the APEC Ministerial in early September, we won a commitment by all 23 APEC Trade Ministers, including those of Japan, Canada, Mexico, the ASEAN states, South Korea and others, to a 3 year timetable for the Round; to an agenda which considers tariff and non-tariff measures and takes a joint stand for the ''abolition of agricultural export subsidies,'' and to promote ''transparent and science-based approaches to the introduction and use of biotechnology products.''
     Africa—This March, we hosted an historic U.S.-Africa Ministerial, at which we found common ground with many African trading partners on agricultural market access issues. Likewise, we have support from a number of African countries on elimination of agricultural export subsidies, which are especially damaging to developing country farmers.
     Europe—Clearly, many of our most difficult negotiating challenges in agriculture will be with the European Union. However, we are working to develop consensus in as many areas as possible. For example, at the U.S.-EU Summit this spring we confirmed our agreement on a 3-year timetable for the Round, and under the Transatlantic Economic Partnership discussions opened a pilot project to enhance transparency and access to regulatory procedures, under which we will strive to agree on common data requirements for the acceptance of biotechnology products.
     Western Hemisphere—we are working towards commitment from every Western Hemisphere nation participating in the FTAA talks to support worldwide elimination of agricultural export subsidies, and have developed wide support for this goal.
    Finally, 33 economies are now applying for accession to the WTO. In each of these we are requiring full compliance with the provisions of the Agreement on Agriculture as well as significant market-opening measures, immediate acceptance of the Sanitary and Phytosanitary Agreement, and improved transparency in any existing state trading arrangements.
    Specifically, in the past year we have brought Kyrgyzstan and Latvia into the WTO; Estonia has completed its accession and will enter in the next few weeks; we have completed bilateral negotiations with Albania, Croatia, Georgia and Taiwan; and made significant progress with Armenia, China, Jordan, Lithuania, Moldova and Oman. All the successful applicants have made very strong agricultural commitments, which create new opportunities for American agricultural producers and set precedents for the type of reforms we should see in the new Round.
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    In the case of China, while some services and rules issues remain for discussion, agricultural negotiations are complete. The result is a very strong set of commitments in market access, renunciation of export subsidies, tariff-rate quotas and other issues. These negotiations have resumed at the direction of Presidents Clinton and Jiang at the APEC Leaders Meeting in Auckland this September.
    In summary, Mr. Chairman, the new Round offers a remarkable set of opportunities for American farm and ranch families. Agricultural trade reform is at the heart of our objectives for the Round, and we are optimistic about our prospects for success, despite the hard work this will entail.
    Over the past year, we have developed a specific and detailed set of negotiating objectives which reflect the advice and priorities we have received from Congress and American agricultural producers. We have set a timetable that will achieve them soon. And we have begun to build the international coalition that will help us realize our goals in the Round.
    This places us well in advance of the pace set by the Uruguay Round. However, much work remains ahead. We hope to consult closely with the Committee as we prepare for the launch of the Round at the Ministerial, and then as the negotiations begin. We look forward to a continued close working relationship, and to results which lead to a fairer, more open trading world for America's farm and ranch families.
Statement of Dan Glickman
    Mr. Chairman, members of the Committee, I am pleased to appear before you with Ambassador Barshefsky to discuss the new round of multilateral trade negotiations on agriculture under the World Trade Organization (WTO).
    Certainly, no one knows better than the members of this committee that our farmers and ranchers are facing extremely difficult times. Nearly 4 straight years of record production worldwide, which we have not seen since World War II, and financial problems in Asia, Russia and elsewhere have contributed to depressed commodity prices. In some cases, prices have fallen to 30-year lows. Exports have dropped, weather has been severe in many areas of the country, and the value of the dollar, strong. The anguish and doubt among farmers in the United States is as great as I have seen during my time as Secretary.
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    The key lesson from the last four years is the critical significance of trade to our farm economy. Although exports are not the single answer to today's crisis, we must look to overseas markets for the long-term well-being of our agricultural economy. Agriculture is already more reliant on exports than other sectors of the economy as a whole-with some 25 to 30 percent of our total production moving overseas. Moreover, this reliance is projected to grow.
    Accordingly, we need an open and fair trading system and reliable markets. Do not take my word for it, look at the facts. The true test came in late 1997 and 1998 when close to 40 percent of the world's economies stumbled badly. We are not out of the woods yet, but we have seen positive signs in Japan, South Korea, and Southeast Asia. As a result, the Department of Agriculture is forecasting a slight increase in U.S. agricultural exports in fiscal year 2000—to $50 billion.
    Just last week, President Clinton outlined the U.S. agenda for the global trade talks under the WTO that will begin next month in Seattle. His first goal is to ensure that in this round agriculture is treated as fairly as other sectors in the global economy. As he said:
    ''Every American has a stake in the strength of agriculture. So let's be clear: one way we can revive the rural economy in America is to open markets abroad. The family farmer in America finds trade not an abstraction. It is vital to the bottom line, and to their survival.''
    Specifically, as President Clinton said:
    ''We must eliminate export subsidies. All farmers deserve a chance to compete on the quality of their goods, not against the size of other countries' government grants. In the European Union, fully half of the overall budget is spent on agricultural subsidies. The EU accounts for 85 percent of the world's farm export subsidies—85 percent. This stacks the deck against farmers from Arkansas to Argentina to Africa. In Seattle, we'll work to end this unfair advantage, and level the playing field.
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    At the same time, we have to lower tariff barriers. Tariffs remain much too high and, on average, they're five times higher abroad than they are in America. And we must work to reduce the domestic supports that distort trade by paying farmers to overproduce and drive prices down. These steps will help farmers to produce the vast and varied variety of food, for the best possible prices. The benefits will accrue not just to them, but to the global fight against hunger and malnutrition.
    We should also see that the promise of biotechnology is realized by consumers as well as producers, and the environment, ensuring that the safety of our food will be guaranteed with science-based and transparent domestic regulation—and maintaining market access based on that sound science.''
     In addition to these goals, the U.S. agricultural agenda includes:
     Developing disciplines on State Trading Enterprises (STEs) so that their operations do not distort trade;
     Expansion of market access under tariff-rate quotas (TRQs).
     Opposing the opening of the Sanitary and Phytosanitary (SPS) Agreement to ensure the continued effectiveness of the rules governing SPS measures, so that regulations are based on sound scientific data and analysis and nations cannot mask protectionism behind unvalidated, unjustified assertions regarding health and safety.
    Since we first outlined these goals, we at USDA have sought advice and ideas from all segments of our agricultural industry to help better develop trade policy goals for agriculture in the next round. As part of this effort, we held 12 public meetings around the country this past summer.
    We also continue to work through our Agricultural Policy Advisory Committee and the five Agricultural Technical Advisory Committees for Trade to gather advice on the U.S. negotiating strategy. We will continue to meet in Washington, DC with all six committees leading into the Seattle ministerial in November. I am also pleased to report that we are engaged in a full interagency effort—USTR, Commerce, State, Labor, Treasury, and other cabinet agencies are well steeped in the efforts to pursue America's agricultural agenda.
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    As we plan our negotiating strategy, we are also consulting with other countries. In August, I traveled to Argentina to attend the Cairns Group meetings in Buenos Aires. Last month, I met with the agricultural ministers of Canada, the European Union (EU), Australia, and Japan as part of the Quint Group in Montreal, Canada, to exchange ideas and perspectives on the next round.
    While we have many allies in our quest for free and fair world agricultural trade, there is, of course, considerable opposition. Powerful voices still see agricultural trade not as a win-win situation, but as a zero-sum game where the exporter wins and the importer loses.
    We also need to be sure that in these efforts we do not overlook the developing nations or nations that are not yet members of the WTO. We have a unique opportunity to bring more countries into an open trading system that can help lift living standards and promote opportunity for citizens throughout the world. Let me cite just one example-that of China. Both the U.S. and Chinese economies will benefit if the most populous country in the world participates in the new round. China's accession to the WTO would hasten its integration into the world economy and complement our efforts to maintain stability in the Pacific by linking China's economy more closely with the rest of the world's.
    A sound agreement with China will open Chinese agricultural markets to U.S. exporters, strengthen the world trading system, and give U.S. farmers and other agricultural interests stronger protection against unfair trade practices and import surges. The principles of the WTO—transparency, fair trade practices, peaceful settlement of disputes, the rule of law—are those we hope to advance in China and worldwide.
    Our trade relationship with the EU illustrates the need for the agricultural reforms. Earlier this year, in its Agenda 2000 proposal, the EU retreated from fundamental reform of its domestic agricultural policies. These polices have invariably led to the continued use of export subsidies and domestic support programs that distort world prices and agricultural trade. Other countries, such as those in the Cairns Group, have also called on the EU to restructure its farm policies—in particular to eliminate export subsidies.
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    The EU has yet to comply with WTO rulings to lift the ban on imports of U.S. beef from hormone-treated cattle and on its banana import regime. It is important for the integrity of the system that all WTO members, including the EU, honor their international obligations.
    In biotechnology, the EU's slow pace, indecision, and failure to develop a consistent, science-based approval process have disrupted trade and threaten to constrain innovation in one of the most promising new technologies that would ensure future global food security. Under the rule-based system of the relevant WTO agreements, countries must base their policies on science. To do otherwise will lead to trade chaos and thwart progress for agricultural issues in the next round.
    Mr. Chairman, everyone in this room knows the importance of trade to U.S. agriculture. In the recent past, we've been sobered by a global financial crisis that has devastated many of the emerging Asian economies, affected Japan, and softened demand in Russia. While we are seeing some strengthening in the Asian economies, we continue to face global oversupply of many commodities that has sent prices plunging to their lowest levels in years. We have learned that our farmers cannot rely entirely on trade as their only safety net, but we must continue our efforts to reform world agricultural trade so they have new, more open markets and a level playing field.
    President Clinton has stressed that the next round should be about expanding prosperity and improving the quality of life and work here at home and around the globe. The next Round should ensure that the global trading system honors our values and meets our goals for the 21st century.
    For American agriculture to realize the potential of the global marketplace, we have a lot of work ahead of us. We must construct a world trading system where every producer gets a fair shake and where all products, goods and services are traded freely across oceans and continents.
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    In the next round of WTO negotiations agricultural trade will be the focal point, and we will work hard to help American agriculture maintain and expand export markets.
    Mr. Chairman, that concludes my statement. I would be happy to answer any questions the committee may have.
    "The Official Committee record contains additional material here."