Statement of Dan Glickman
Secretary of Agriculture
Before the House Committee on Agriculture
October 20, 1999
Mr. Chairman, members of the Committee, I am pleased to appear before you with Ambassador Barshefsky to discuss the new round of multilateral trade negotiations on agriculture under the World Trade Organization (WTO).
Importance of Trade to U.S. Agriculture
Certainly, no one knows better than the members of this Committee that our farmers and ranchers are facing extremely difficult times. Nearly four straight years of record production worldwide, which we have not seen since World War II, and financial problems in Asia, Russia and elsewhere have contributed to depressed commodity prices. In some cases, prices have fallen to 30-year lows. Exports have dropped, weather has been severe in many areas of the country, and the value of the dollar, strong. The anguish and doubt among farmers in the United States is as great as I have seen during my time as Secretary.
The key lesson from the last four years is the critical significance of trade to our farm economy. Although exports are not the single answer to todays crisis, we must look to overseas markets for the long-term well-being of our agricultural economy. Agriculture is already more reliant on exports than other sectors of the economy as a wholewith some 25 to 30 percent of our total production moving overseas. Moreover, this reliance is projected to grow.
Accordingly, we need an open and fair trading system and reliable markets. Do not take my word for it, look at the facts. The true test came in late 1997 and 1998 when close to 40 percent of the worlds economies stumbled badly. We are not out of the woods yet, but we have seen positive signs in Japan, South Korea, and Southeast Asia. As a result, the Department of Agriculture (USDA) is forecasting a slight increase in U.S. agricultural exports in fiscal year 2000 to $50 billion.
U.S. Goals for Agriculture
Just last week, President Clinton outlined the U.S. agenda for the global trade talks under the WTO that will begin next month in Seattle. His first goal is to ensure that in this round agriculture is treated as fairly as other sectors in the global economy. As he said:
"Every American has a stake in the strength of agriculture. So let's be clear: one way we can revive the rural economy in America is to open markets abroad. The family farmer in America finds trade not an abstraction. It is vital to the bottom line, and to their survival."
Specifically, as President Clinton said:
"We must eliminate export subsidies. All farmers deserve a chance to compete on the quality of their goods, not against the size of other countries' government grants. In the European Union, fully half of the overall budget is spent on agricultural subsidies. The EU accounts for 85 percent of the world's farm export subsidies -- 85 percent. This stacks the deck against farmers from Arkansas to Argentina to Africa. In Seattle, we'll work to end this unfair advantage, and level the playing field.
At the same time, we have to lower tariff barriers. Tariffs remain much too high and, on average, they're five times higher abroad than they are in America. And we must work to reduce the domestic supports that distort trade by paying farmers to overproduce and drive prices down.
These steps will help farmers to produce the vast and varied variety of food, for the best possible prices. The benefits will accrue not just to them, but to the global fight against hunger and malnutrition.
We should also see that the promise of biotechnology is realized by consumers as well as producers, and the environment, ensuring that the safety of our food will be guaranteed with science-based and transparent domestic regulation -- and maintaining market access based on that sound science."
In addition to these goals, the U.S. agricultural agenda includes:
Developing disciplines on State Trading Enterprises (STEs) so that their operations do not distort trade;
Expansion of market access under tariff-rate quotas (TRQs).
Opposing the opening of the Sanitary and Phytosanitary (SPS) Agreement to ensure the continued effectiveness of the rules governing SPS measures, so that regulations are based on sound scientific data and analysis and nations cannot mask protectionism behind unvalidated, unjustified assertions regarding health and safety.
Since we first outlined these goals, we at USDA have sought advice and ideas from all segments of our agricultural industry to help better develop trade policy goals for agriculture in the next round. As part of this effort, we held 12 public meetings around the country this past summer.
We also continue to work through our Agricultural Policy Advisory Committee and the five Agricultural Technical Advisory Committees for Trade to gather advice on the U.S. negotiating strategy. We will continue to meet in Washington, DC with all six committees leading into the Seattle ministerial in November. I am also pleased to report that we are engaged in a full interagency effort USTR, Commerce, State, Labor, Treasury, and other cabinet agencies are well steeped in the efforts to pursue Americas agricultural agenda.
As we plan our negotiating strategy, we are also consulting with other countries. In August, I traveled to Argentina to attend the Cairns Group meetings in Buenos Aires. Last month, I met with the agricultural ministers of Canada, the European Union (EU), Australia, and Japan as part of the Quint Group in Montreal, Canada, to exchange ideas and perspectives on the next round.
While we have many allies in our quest for free and fair world agricultural trade, there is, of course, considerable opposition. Powerful voices still see agricultural trade not as a win-win situation, but as a zero-sum game where the exporter wins and the importer loses.
We also need to be sure that in these efforts we do not overlook the developing nations or nations that are not yet members of the WTO. We have a unique opportunity to bring more countries into an open trading system that can help lift living standards and promote opportunity for citizens throughout the world. Let me cite just one examplethat of China. Both the U.S. and Chinese economies will benefit if the most populous country in the world participates in the new round. Chinas accession to the WTO would hasten its integration into the world economy and complement our efforts to maintain stability in the Pacific by linking Chinas economy more closely with the rest of the worlds.
A sound agreement with China will open Chinese agricultural markets to U.S. exporters, strengthen the world trading system, and give U.S. farmers and other agricultural interests stronger protection against unfair trade practices and import surges. The principles of the WTO transparency, fair trade practices, peaceful settlement of disputes, the rule of law are those we hope to advance in China and worldwide.
Our trade relationship with the EU illustrates the need for the agricultural reforms. Earlier this year, in its Agenda 2000 proposal, the EU retreated from fundamental reform of its domestic agricultural policies. These polices have invariably led to the continued use of export subsidies and domestic support programs that distort world prices and agricultural trade. Other countries, such as those in the Cairns Group, have also called on the EU to restructure its farm policies in particular to eliminate export subsidies.
The EU has yet to comply with WTO rulings to lift the ban on imports of U.S. beef from hormone-treated cattle and on its banana import regime. It is important for the integrity of the system that all WTO members, including the EU, honor their international obligations.
In biotechnology, the EUs slow pace, indecision, and failure to develop a consistent, science-based approval process have disrupted trade and threaten to constrain innovation in one of the most promising new technologies that would ensure future global food security. Under the rule-based system of the relevant WTO agreements, countries must base their policies on science. To do otherwise will lead to trade chaos and thwart progress for agricultural issues in the next round.
Mr. Chairman, everyone in this room knows the importance of trade to U.S. agriculture. In the recent past, we've been sobered by a global financial crisis that has devastated many of the emerging Asian economies, affected Japan, and softened demand in Russia. While we are seeing some strengthening in the Asian economies, we continue to face global oversupply of many commodities that has sent prices plunging to their lowest levels in years. We have learned that our farmers cannot rely entirely on trade as their only safety net, but we must continue our efforts to reform world agricultural trade so they have new, more open markets and a level playing field.
President Clinton has stressed that the next round should be about expanding prosperity and improving the quality of life and work here at home and around the globe. The next Round should ensure that the global trading system honors our values and meets our goals for the 21st Century.
For American agriculture to realize the potential of the global marketplace, we have a lot of work ahead of us. We must construct a world trading system where every producer gets a fair shake and where all products, goods and services are traded freely across oceans and continents.
In the next round of WTO negotiations agricultural trade will be the focal point, and we will work hard to help American agriculture maintain and expand export markets.
Mr. Chairman, that concludes my statement. I would be happy to answer any questions the committee may have.
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