Good morning. I am Jim Schroeder, I am not Gerhard Schroeder. And those of you that are here for a talk on German agriculture policy are in the wrong room. As has been said, I’m also not Gus Schumaker, who I’m sorry he can’t be with us. I’m your worst nightmare. I am a lawyer and a bureaucrat from Washington and I’m here to help you. If you’re like me, you’d probably like a break right now, five minutes for coffee. Maybe there’s some unreconstructed smokers still in Minnesota. But what I want to do is give you a little slide show, and maybe that will be a break. I apologize, normally I digress from my remarks and unfortunately I’m not going to be able to do that, so some of this may be a little repetitive but I think the slides will be interesting. In this day and age visuals are often helpful. And, by the way, a copy of these slides I think is in your packet for later referral. But what we’re trying to do here is just summarize some of the things you’ve already heard and some of the reasons we’re here and then, believe it or not, we will actually get to a listening session. But, again, I want to welcome you all to this WTO listening session. It’s part of preparation for the third World Trade Organization ministerial conference which the United States will be hosting in Seattle next November, and the meeting in Seattle will kick off a new round of trade negotiations between 134 countries. Last year in Geneva at the 50th anniversary of the world trading system President Clinton commented on the importance of open trade to all nations. He also highlighted the need for the WTO to provide a transparent and open forum where business, labor, environment, consumer groups can provide regular and continuous input to help guide further evolution of the WTO. And that’s exactly what we’re trying to do here today and with these listening sessions around the country, to get your input and to help shape our agriculture trade policies for this next round of negotiations. We appreciate the time and effort you’ve made to attend this session. As we prepare for the beginning of a new round of multilateral negotiations it’s critical that we hear and understand the issues that should be priorities for us. This will help in developing our U.S. negotiating strategy. Are you’re fully aware, while our national economy has been booming along, it’s been a year of struggle and hardship for many parts of rural America. We at USDA from Secretary Dan Glickman on down recognize that much of agriculture is going through a very difficult time. We are marshaling all our resources to address this economic situation. So what we want to do in this brief presentation is to set the stage for our discussions today and we want to address three areas. First, the critical role that exports already play for agriculture. Second, the role that trade agreements have played in obtaining the current level of agriculture exports. And, third, our goals for the upcoming WTO round of negotiations. And after this presentation we want to hear from you who are the people most directly affected by agriculture trade agreements. We want to hear your experiences, what is working, what is not working and how we can move forward. First is to point out that exports are critical for U.S. agriculture. You can see the statistics here. Even in this current downturn, about 25 percent of our agriculture sales are export sales compared with ten percent on the average for the rest of the economy. The vast majority, 96 percent, are potential customers for our products including all agriculture products live outside the United States. So I guess we can go to the next slide that shows that exports are -- are simply vital. Access to customers in foreign markets is a key factor. Compared to the general economy, U.S. agriculture’s reliance on the export market is higher and projected to grow faster. We in agriculture are simply more reliant on exports than the economy as a whole. Now, our trends in agriculture exports, we have an overall trend that has been increasing. Our -- our exports climbed to a new high of $60 billion in ’96 which was up from $40 billion at the beginning of the ‘90s. Unfortunately, exports have been down the last couple of years and we’ve heard some of the reasons and we’re aware of those; the worldwide crop production, the Asian financial crisis, the strong dollar. So our exports last year were down and unfortunately we project exports down a little further this year. I would point, however, our volumes in many cases have held up pretty well. But when you compound the disastrous price decrease that trend line, of course, fell off. But everything comes around. We anticipate the economy -- the global economy is going to rebound and increasing exports are being predicted now and exports will account for a larger percentage of our farm income. The 1996 farm bill actually continued a trend which increases the market orientation of agriculture, and to be prosperous in an increasingly competitive market we must continue to export and increase our exports in areas where we have a competitive advantage. This chart shows some of that. For example, almonds leads the list. And we know we don’t have too many almond trees in Minnesota, but we export 60 percent of that production. Export sales over a billion dollars annually. We have a number of agriculture products. Our productivity is increasing while domestic demand is, obviously, relatively stable. It grows much more slowly. So we’ve got to look overseas for expanding markets. Now, another factor which is interesting pointing to the importance of exports is how closely the level of farm equity has tracked the level of exports. Expanding export markets, while certainly not the only tool, is very important to help us get out of this current slump. Now, we have to be realistic. As I said, our exports are still going to be down this year. 45 percent of the world is still in depression, and so until this global economy turns around we’re not going to immediately increase our consumer base. But in the long run we’ve got to look to that expanding export market. So what is the case now for trade agreements? A key to expanding export markets and increasing our access to consumers overseas is through trade agreements. We would not be at the level of exports that we are today if we did not have good trade agreements. And as this next round develops it’s going to be important and particularly critical. Trade agreements have boosted exports. Soon after implementation of the Uruguay Round, our exports reached their highest level. Now we can’t control everything, as Governor Schafer mentioned I believe, exchange rates, other factors that simply are out of control. But all economists agree that lowering trade barriers through trade agreements is a critical factor in increasing exports. Trade agreements, of course, are a two-way street. We cannot lower -- expect our trading partners to lower their barriers if we don’t lower ours. But we already have probably the most liberalized market in the world, and so we have little to fear from entering negotiations which seek to gain new access to other markets. We are efficient, we are competitive and it’s in our interest to see others lower their trade barriers. It’s estimated that by 2005 our exports, including agriculture, will be $5 billion more annually because of a agreements like the Uruguay Round. It’s estimated that in 1994 we sold $1.3 billion more beef and citrus to Japan, than if we had not had the beef and citrus agreement that we were able to negotiate with Japan. $1.3 billion. So for export growth to continue we must move forward with our strategy of opening markets through trade agreements. NAFTA, NAFTA is, believe it or not, fulfilling its promise for agriculture. Our NAFTA partners, Canada and Mexico, have become more important destinations for our products, now accounting for over 25 percent of our export sales, surpassing even the European Union. In the first three years NAFTA we believe we can credit with three percent additional exports to Mexico and seven percent to Canada. And that growth, ten or 11 percent, for ’97 and ’98 was particularly welcome because that was at the same time when our exports were falling six percent in our leading Asian markets. We recognize that although we have achieved many benefits for agriculture from recent trade agreements the playing field is far from level, a lot of work has to be done. You heard both Governors and our Commissioners point out that our tariffs on average are much lower than our trading partners. On subsidies the EU outspends us 20 to 1. So we’ve got to continue to work to bring those back in balance and be sure that health and safety measures do not act as disguised protection. A major part of our strategy is to level this playing field in the next round. I mentioned the next round will begin in November in Seattle and involve 134 countries. We, of course, want to continue and improve in the progress from the last Uruguay Round in ’94. To understand where we’re going it’s important to understand where we have been. I was talking to a reporter as we came in that we have to remember that we started this back in 1948. We have seven or eight rounds involving industrial products, lowering tariffs, working on trade barriers but it wasn’t until ’94 that agriculture was actually included, and now agriculture is the primary sector to be dealt with in the next round. So it took 40 or 50 years. We’ve just begun with agriculture. We hope to have learned a lot and move faster.

The other accomplishment I believe of the Uruguay Round, and it’s been mentioned, you know for 40 or 50 years there was no Court. You had a dispute with Canada or Japan. And guess what? If you had an arbitration and the arbitrator said, yes, that’s right United States, it couldn’t be enforced. The Japanese, the Canadians could say, well, we’re sorry. We don’t like that. We -- we now have an actual dispute settlement system. We have a Court. And they make a decision and, believe it or not, it can be enforced. Now there are complaints about how long this takes, and we learn from any process and we want to improve this process. But, believe it or not, we actually have a Court now that can give an order and it can be enforced. I digressed from my slides, I was bad here. Just to recall, you’ve been reading about our banana war. We now have our beef hormone case. We had a decision on Japan’s restrictive quarantine requirements for fresh fruit, Canada’s dairy policy on subsidies. We’ve won all those cases. It’s taken too long. We’re not there yet, but we now have a dispute settlement system which promises to actually have some results. So, again, as I said the Uruguay Round was only a start. It's contributed already to an increase in our exports and higher incomes for American producers, but it’s just a start and we’re now planning to move ahead. I mentioned the negotiations starting this fall. We hope that these will only take two or three years this time and not go on forever. The general expectation is that the negotiations should last three years with implementation beginning in 2004, and we hope that that will work, because a lot of the agreements that we made back in ’94. A lot of those are going to sort of run out at the end of 2002, so that there’s a lot of pressure or reason why we hope to reach some new agreements in a relatively short time. In setting this agenda, we want to build on what we’ve already accomplished. Tariffs were reduced in the last round, but they’re still too high. Again, as has been mentioned, some countries maintain average ag tariffs of 50 percent or more while our average tariffs are about eight percent. It’s our goal to negotiate further reductions in these tariffs. We want to expand market access under tariff rate quotas by increasing the quota amounts and decreasing the tariff outside the quota. On export subsidies it’s a travesty. We want to reduce the elimination of these subsidies which -- which are used 80 percent by the European Union. They outspend us at least 20 to 1. We think we have strong allies here and this is a critical area for the next round. STEs, or state trading enterprises, has been mentioned. When a state trading enterprise has government authority and monopoly power, they have the ability to price their products artificially low and unfairly increase market share. It’s important that we develop stricter WTO rules to ensure that state trading enterprises operate in a fair and transparent manner. Some of these hurt us not only on exports but on imports where many countries also have just one buyer. On the domestic support, again, trade distorting domestic support is being reduced under the present rules, but the job is not complete. A comparison of levels of such support shows that globally, including in the United States but particularly in Europe and Japan, domestic support remains high. Our goal is to make sure that the assistance other governments give to agriculture is provided in ways that do not interfere with markets. We support, I hope, our farmers and we try to have domestic programs which are beneficial and support our agriculture. And as Governor Schafer said, every democracy with farmers is going to have programs to help and support its farmers. The trick here is to do -- is to have programs which help farmers and help domestic food security but don’t mess up the international marketplace and unfairly penalize other competitive producers. So I’ve mentioned some of these key issues; lowering tariffs, reducing or eliminating export subsidies, bringing down domestic support levels. Other issues, of course, include the existing strong agreement regarding health and safety issues, the SPS agreement. This is critical. We all want safe food for ourselves and our families and we all expect our governments and our health authorities to examine and protect us from bad food. But, frankly, many countries have used these sanitary or phytosanitary standards simply as trade barriers. We have a strong agreement. We have 130 countries that have said, we’ve got to do this on the basis of science -- sound science. And we want to protect that and -- and improve that principle. Trade reform through the WTO then provides the biggest bang for the buck. In one agreement we’ll have 134 countries, we hope, continuing to cut traffic barriers. Getting all these countries to agree on major reform will take time and effort. We’ve already completed preparatory work in Geneva. We’re using the WTO Committee on Agriculture to identify places where current rules and commitments don’t go far enough to open up our markets and we’re using less formal processes to build consensus and prepare the ground for tough negotiations. Input from those who will be most affected, and that’s you here today, is critical both at this early stage and as we move along. We need your support and suggestions, including any specific proposals you may have. Believe it or not, we want to

-- we want to hear from you. In all our activities we want to send a clear message to the rest of the world that agriculture is a top priority for the United States and we remain fully committed to open markets and fair trade. And we need your support and advice to make sure that the agreements that we enter into continue to work for American farmers and for U.S. agriculture. Is that the last slide? Well, we had a last slide which

-- the last slide shows our Internet and you can always, of course, use the mail or talk to us or reach us. And as the Commissioner said, what we’re trying to do here is have a vital partnership effort between not only the Federal Government but the state governments and the private sector. So in conclusion, agriculture unfortunately -- or fortunately we’re in a globalized industry. We can’t control everything, but we can try to establish the best international rules for U.S. agriculture and our major opportunity is in this coming round which will be and should be focused on agriculture. And so we thank you for your interest and we do want to hear from you. I’m sure you’re tired of listening to us. Thank you very much.