SPEAKERS CONTENTS INSERTS
Page 1 TOP OF DOC
60–787 CC
1999
1999
THE ADMINISTRATION'S PREPARATIONS FOR THE 1999 WORLD TRADE ORGANIZATION MINISTERIAL
HEARING
BEFORE THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
OCTOBER 20, 1999
Serial No. 106–39
Printed for the use of the Committee on Agriculture
COMMITTEE ON AGRICULTURE
Page 2 PREV PAGE TOP OF DOC
LARRY COMBEST, Texas, Chairman
BILL BARRETT, Nebraska,
Vice Chairman
JOHN A. BOEHNER, Ohio
THOMAS W. EWING, Illinois
BOB GOODLATTE, Virginia
RICHARD W. POMBO, California
CHARLES T. CANADY, Florida
NICK SMITH, Michigan
TERRY EVERETT, Alabama
FRANK D. LUCAS, Oklahoma
HELEN CHENOWETH-HAGE, Idaho
JOHN N. HOSTETTLER, Indiana
SAXBY CHAMBLISS, Georgia
RAY LaHOOD, Illinois
JERRY MORAN, Kansas
BOB SCHAFFER, Colorado
JOHN R. THUNE, South Dakota
WILLIAM L. JENKINS, Tennessee
JOHN COOKSEY, Louisiana
KEN CALVERT, California
GIL GUTKNECHT, Minnesota
BOB RILEY, Alabama
GREG WALDEN, Oregon
Page 3 PREV PAGE TOP OF DOC
MICHAEL K. SIMPSON, Idaho
DOUG OSE, California
ROBIN HAYES, North Carolina
ERNIE FLETCHER, Kentucky
CHARLES W. STENHOLM, Texas,
Ranking Minority Member
GEORGE E. BROWN, Jr., California 1
GARY A. CONDIT, California
COLLIN C. PETERSON, Minnesota
CALVIN M. DOOLEY, California
EVA M. CLAYTON, North Carolina
DAVID MINGE, Minnesota
EARL F. HILLIARD, Alabama
EARL POMEROY, North Dakota
TIM HOLDEN, Pennsylvania
SANFORD D. BISHOP, Jr., Georgia
BENNIE G. THOMPSON, Mississippi
JOHN ELIAS BALDACCI, Maine
MARION BERRY, Arkansas
VIRGIL H. GOODE, Jr., Virginia
MIKE McINTYRE, North Carolina
DEBBIE STABENOW, Michigan
BOB ETHERIDGE, North Carolina
CHRISTOPHER JOHN, Louisiana
Page 4 PREV PAGE TOP OF DOC
LEONARD L. BOSWELL, Iowa
DAVID D. PHELPS, Illinois
KEN LUCAS, Kentucky
MIKE THOMPSON, California
BARON P. HILL, Indiana
Professional Staff
WILLIAM E. O'CONNER, JR., Staff Director
LANCE KOTSCHWAR, Chief Counsel
STEPHEN HATERIUS, Minority Staff Director
KEITH WILLIAMS, Communications Director
(ii)
1\ Deceased July 16, 1999.
C O N T E N T S
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
Page 5 PREV PAGE TOP OF DOC
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
Witnesses
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
THE ADMINISTRATION'S PREPARATIONS FOR THE 1999 WORLD TRADE ORGANIZATION MINISTERIAL
WEDNESDAY, OCTOBER 20, 1999
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.
Page 6 PREV PAGE TOP OF DOC
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.
OPENING STATEMENT OF HON. LARRY COMBEST, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS
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.
Page 7 PREV PAGE TOP OF DOC
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.
Page 8 PREV PAGE TOP OF DOC
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?
Page 9 PREV PAGE TOP OF DOC
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.
Page 10 PREV PAGE TOP OF DOC
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.
Page 11 PREV PAGE TOP OF DOC
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.
Page 12 PREV PAGE TOP OF DOC
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.
Page 13 PREV PAGE TOP OF DOC
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.
Page 14 PREV PAGE TOP OF DOC
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.
Page 15 PREV PAGE TOP OF DOC
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?
Page 16 PREV PAGE TOP OF DOC
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?
Page 17 PREV PAGE TOP OF DOC
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.
Page 18 PREV PAGE TOP OF DOC
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.
Page 19 PREV PAGE TOP OF DOC
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.
Page 20 PREV PAGE TOP OF DOC
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.
Page 21 PREV PAGE TOP OF DOC
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.
Page 22 PREV PAGE TOP OF DOC
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.
[Laughter.]
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.
Page 23 PREV PAGE TOP OF DOC
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.
Page 24 PREV PAGE TOP OF DOC
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?
Page 25 PREV PAGE TOP OF DOC
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.
Page 26 PREV PAGE TOP OF DOC
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.
Page 27 PREV PAGE TOP OF DOC
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.
Page 28 PREV PAGE TOP OF DOC
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.
Page 29 PREV PAGE TOP OF DOC
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.
Page 30 PREV PAGE TOP OF DOC
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.
Page 31 PREV PAGE TOP OF DOC
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.
Page 32 PREV PAGE TOP OF DOC
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.
Page 33 PREV PAGE TOP OF DOC
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.
Page 34 PREV PAGE TOP OF DOC
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.
Page 35 PREV PAGE TOP OF DOC
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.
Page 36 PREV PAGE TOP OF DOC
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.
Page 37 PREV PAGE TOP OF DOC
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?
Page 38 PREV PAGE TOP OF DOC
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.
Page 39 PREV PAGE TOP OF DOC
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.
Page 40 PREV PAGE TOP OF DOC
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.
Page 41 PREV PAGE TOP OF DOC
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.
Page 42 PREV PAGE TOP OF DOC
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.
Page 43 PREV PAGE TOP OF DOC
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.
Page 44 PREV PAGE TOP OF DOC
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.
Page 45 PREV PAGE TOP OF DOC
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.
Page 46 PREV PAGE TOP OF DOC
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.
Page 47 PREV PAGE TOP OF DOC
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.
Page 48 PREV PAGE TOP OF DOC
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.
Page 49 PREV PAGE TOP OF DOC
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.
Page 50 PREV PAGE TOP OF DOC
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.
Page 51 PREV PAGE TOP OF DOC
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.
Page 52 PREV PAGE TOP OF DOC
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.
Page 53 PREV PAGE TOP OF DOC
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.
Page 54 PREV PAGE TOP OF DOC
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.
Page 55 PREV PAGE TOP OF DOC
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.
Page 56 PREV PAGE TOP OF DOC
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.
Page 57 PREV PAGE TOP OF DOC
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.
Page 58 PREV PAGE TOP OF DOC
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.''
Page 59 PREV PAGE TOP OF DOC
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
Page 60 PREV PAGE TOP OF DOC
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.]