Statement by Dan Glickman
Secretary of Agriculture
Before the Senate Committee on Finance,
Subcommittee on International Trade
March 7, 2000
Mr. Chairman, members of the Committee, it is a pleasure to appear
before you with Ambassador Barshefsky to discuss the World Trade Organization (WTO) and the prospect for progress this year to begin a
new round of trade negotiations.
Although we were disappointed that a new round of multilateral trade negotiations was not launched at the December Seattle Ministerial as we had hoped, the Administration is not deterred in its resolve to see progress made this year to begin a new round. The fact is we made much progress in Seattle, especially in agriculture. For example, we increased understanding on the need to continue the process of fundamental reform begun during the Uruguay Round by increasing market access, improving disciplines governing domestic support, and addressing non-trade concerns, such as supporting rural sectors in ways that do not distort trade.
The critical issue of eliminating export subsidies over time was not agreed at the Conference, along with several other topics, but, on that point, the European Union was clearly isolated. We may not pick up exactly where we left off in Seattle, but at some point we will inevitably confront those issues again before the next round can conclude.
Equally clear is the urgent need to continue the path of reform laid out during the Uruguay Round. The pressures facing agriculture world-wide require that we act to increase opportunities for producers everywhere to market their crops - the tick of the clock counting down on the expiration of the Peace Clause at the end of 2003, making inaction inconceivable. (The Peace Clause basically states that as long as the subsidizing country is meeting its reduction commitments or other criteria agreed to in the Uruguay Round, it is exempt from certain WTO challenges.)
The vast majority of US farmers and ranchers know there is only one direction to go forward. Twenty-five percent of US agricultural sales are for export, 96 percent of the world's consumers live outside of the United States, and agricultural exports account for nearly 750,000 jobs here at home, both on and off the farm. Perhaps more to the point, we export 12 times as much wheat as we import, 21 times as much feed grains, over 5 times as much rice, twice as much tobacco, nearly 9 times as much cotton; and in the case of soybeans, we exported $4.7 billion worth last year and imported virtually none.
It is clear agriculture's prosperity is dependent on opening markets, not closing them.For these reasons, our objectives for agriculture remain firm.
1. Eliminate export subsidies;
2. Reform state trading enterprises;
3. Improve market access by reducing tariffs and increasing market access opportunities for products subject to tariff rate quotas;
4. Tighten rules on trade distorting domestic support; 5. Preserve the Sanitary and Phytosanitary Agreement; and
6. Facilitate trade in new technologies, such as biotechnology.
The Seattle Ministerial laid bare some problems with the WTO system itself. The WTO has outgrown some of the procedures that were appropriate 50 years ago when there were 30 or so WTO members, not the 135 members we have today. Member countries generally agree that a more inclusive and transparent process needs to be established to accommodate a larger and more diverse membership.
For that reason, we have continued to consult with developing countries to ensure a consensus is reached in the negotiating process.
In fact, WTO Director-General Mike Moore recently concluded that the WTO must work closely with least developed and developing countries to provide more transparent means to ensure full participation in WTO negotiations and to widen access to global markets.
Among the ways to improve transparency in WTO operations would be to make public the briefs submitted under WTO dispute settlement procedures, as the United States does, or to open dispute settlement hearings to public observation. The United States supports these and other ways to open the WTO to the public, and we hope the EU will come to accept that point of view. We will continue to work closely with Director-General Moore to improve the transparency and inclusiveness of the WTO decision-making process.
Earlier this month we were heartened by the WTO General Council's decision to begin the mandated negotiations in agriculture and services. Agriculture negotiations will be conducted in the Committee on Agriculture, meeting in special sessions. The first special session is scheduled back-to-back with the next regular meeting of the Agriculture Committee on March 23-24 in Geneva.
The start of agricultural negotiations under the built-in agenda is a positive development. It allows for preliminary work to be accomplished, making us hopeful that this year will be productive whatever happens this year. Working with our colleagues at USTR and in the Congress, we hope to ensure the best outcome for the agricultural negotiations.
Because expanding access to foreign markets is critical to US agriculture, we are very excited about the US-China bilateral WTO agreement. This agreement demonstrates the promise of trade liberalization in today's global economy.
China's WTO accession will strengthen the global trading system, slash barriers to US agriculture, give US farmers and agribusinesses stronger protection against unfair trade practices and import surges, and create a more level and consistent playing field in this market.
But before US farmers can realize the full market-opening benefits of China's entry into the WTO, the US Congress must grant China permanent Normal Trade Relations (NTR) status. Doing so is necessary to guarantee the full market-opening benefits of the agreement we negotiated with China; otherwise we remain at a disadvantage with our competitors.
This Administration has made permanent NTR status a top priority.
We give up nothing to grant China permanent NTR - the United States did not provide any concessions in agriculture to China. However, we lose a lot if we deny permanent NTR status to China. American farmers, companies, and workers would be deprived of the full benefit of China's WTO concessions, and our competitors would gain a huge trade advantage over us.
We estimate that the US-China WTO accession agreement could add an estimated $1.6 billion annually to US exports of grains, oilseeds and products, and cotton by 2005. US export gains could approach $2 billion as the Chinese reduce their tariffs on other products, such as poultry, pork, beef, citrus and other fruits, vegetables, tree nuts, and forest and fish products. Growth in China's economy, increased investment, and market development should make the gains even greater.
All these gains will mean higher prices for farmers, and ultimately, higher US farm income.
However, China does need to do its part. We need China's leaders to show they are serious about increasing imports. Their decision to buy 50,000 metric tons of wheat from the Pacific Northwest was an encouraging sign, especially when you consider that the TCK dispute had kept wheat grown in the Pacific Northwest out of the Chinese market for two decades. But that purchase was just an encouraging first sign. We hope to see many more purchases in the future.
We cannot afford not to give China permanent NTR status. China is the world's largest country, home to 1 out of every 5 people on the planet. Its economy, which is one of the fastest growing at 7 percent annually, will make China a key market for agricultural commodities in the future. Moreover, it is in our long-term interests for China to develop a market-based economy.
Yes, we have disagreements with China on human rights, labor issues, Taiwan. But we must separate the political from the economic provisions of the U.S.-China relationship. In addition, we can best reconcile those differences and influence their behavior by engaging them, by bringing them into a rules-based global community.
Also, remember that China is a major nuclear power, which holds the key to peace and stability on the entire Asian continent. I served as Chairman of the House Intelligence Committee, so I can tell you, from a national security perspective, we simply cannot afford to isolate ourselves from a nation with this much ability to tilt the global balance of power.
As I have said, we have nothing to gain and a great deal to lose by walking away from our agreement with China. The only winners would be our competitors, who are aggressively pursuing new trade deals and would welcome the chance to pick up business that would otherwise now to to US farmers and ranchers.
Mr. Chairman, that completes my statement. I would be happy to answer any questions.