MR. GALVIN: We do have several USDA staff here today that have helped with this event. Catherine Cornelius, if you want to stand please? Alan Hrapskwy with our International Trade Policy Division. Marlene Phillips in the back of the room, who is with our info division helping to make the press arrangements also with our Ag Trade Office in Atlanta, Georgia. I think that's everybody. Thank you.

MR. PECK: Then I'd like to also express appreciation to my staff at the Department of Agriculture that's worked with us. And Bruce Nelson, who we will introduce in a little bit, is with us today, too. So if you need any assistance at all and you can't remember their names, look at the name tags. But also look for Stacia Dahl over there, holler at Stacia. Or look for the Montana gold pin, my Deputy Director is here also, Will Kissinger. So we have staff members available if you need any assistance, need answers to questions, need help with testimony or anything like that, feel free to contact them.

We'll start out today with testimony that we'll receive by telecommunications. And we think we're going to be on-line here really soon.

Our Senior Senator from Montana is going to be joining us from Washington D.C., and I've been really pleased that our delegation from Montana has placed agriculture, each one, individually and separately, has stated that agriculture remains their number one priority in regard to the work that they're doing in Washington D.C. We are pleased about that, we think that's appropriate. Of course, it's very important for the difficult times we're all facing right now in industry in regard to pricing and the price of commodities, it's nationwide the challenges we face. There are not easy solutions to that, but I'm one that believes that part of that solution has to be a very aggressive trade stance. And Senator Baucus has led some delegations to Argentina and China, he has continued to work with Montanans and Montana to work with the World Trade Center to continue to build for and strengthen trade activities for the State of Montana.

So we are pleased that he is going to be joining us. He regrets that he couldn't be here in person, but new technology, when it works, provides for the ability for us to actually have his input and his testimony to the panel today. So Sharon is on the phone and she's hopefully going to get something on-line for us in a minute. So if you would be patient with us, right at nine o'clock on somebody's time, we should have him here. That clock says 9:00, mine says two minutes, and Jim's says three minutes. So somewhere we're close.

MR. BAUCUS: It looks like a great day in Bozeman, it makes me very, very envious. I'm in Washington D.C. and it's not a great day here. Be that as it may, I wish I were there with you. I also understand this is the fair weekend, I hope some of you get a chance to get out to enjoy that as well.

I particularly, though, thank you all for coming today to discuss, I think, one of the most important, in fact, if not the most important issue facing American agriculture. That's trade. I want to also thank USDA and USDR for coming to Bozeman to hear our concerns. I'm glad to see a very strong representation from USDA. I tell you folks, enjoy your time in Montana, I'm sure you'll agree that you saved the best of your WTO listening sessions for the last.

I'll begin by noting that this next round of WTO, the World Trade Organizatin, talks is vital. We have to ask ourselves, "How are we going to make sure that agriculture is a priority, not only a priority, a top priority in the next round of the WTO?" How are we going to do that? As we move toward the negotiations in Seattle in November, we have to realize how critical a time this is for agriculture. I wish you folks there get a chance to talk to some people in some parts of Montana so you realize how dire straights are for agriculture in our state, and other high plains states, in particular.

While the rest of the nation experiences astounding economic growth and prospers through open global trading system, Montana farmers are not. Montana farmers and producers around the nation are suffering deeply, it is disastrous, and have yet to reap the fruits of a free-trade bounty. We've got real problems.

We also know that the European Union in Japan will be very rough, they're very rough customers, they always are. That means we have to stand up and be tough, too, stand tall. And the more we stand up together, make our voice heard together in the government, the stronger our negotiators will be. So I urge all you in the audience today, particularly those of us who are from home, to be very forceful, be vocal, to be very effective in explaining what it is that we think makes sense to those folks at USDA and USDR. The time has come for us to level the playing field in agriculture trade.

We have not dealt sufficiently with agriculture in past trade agreements. I think most will agree with that. Thanks to the foresight of our negotiators, though, 23 nations participated in the last round, the Uruguay Round, on agriculture. We find that 23 now bind themselves to reductions and tariffs and minimum access for agriculture imports, but we must do much more than that.

The next round, the millennium round, is meant to continue the process of reform by focusing on new ways to expand market access. This requires us to be very creative. We must find a way to reduce trade barriers in other countries without losing the ability to help our domestic producers and cope with the temporary crisis.

We also need to keep an eye on the proposals that other WTO countries will be bringing to the table. We know the EU is in the process of making reforms to its agriculture policy. But according to Ambassador Scher, the EU seems to be engaging in something called ABA, that is the "Anything But Agriculture" strategy. The Japanese also appear to be approaching the round with caution as the Japanese always do. Caution to the extreme, I might add. And the Cairns Group will closely monitor and, I believe, support the United States' lead.

There is a point there. The United States must first lead before the Cairns Group and others will be willing to join. Countries are looking to the United States for leadership on trade.

You here today are the hands-on experts.

I really urge you to make your voices heard very strongly because if you give our negotiators a clear picture of our state's needs, they'll know much better and will be much tougher during the negotiations.

There are a group of issues that I think are particularly important to this conversation and I've dealt them the "Key Five." Export subsidies is one; market access, second; dispute settlement, third; elimination of state-owned enterprises, fourth; and safeguard against surges. Now, these are all trade maps, there is a lot we must do internally. For example, a good safety net in the addition of emergency assistance. In addition, it's very important for us to reform crop insurance. There's a lot we have to do at home. But today we're talking about trade, and these items that I just mentioned are the trade items that we have to focus on because trade, I think, for the long term, is going to make a big difference, in fact, a even greater difference to the viability of farming in our state.

First, export subsidies. I believe that the United States has taken the high road by leading by example. We don't have a lot of export subsidies in our country. The trouble is our lead hurts our American producers. The United States has long taken the position that if we reduce export of agriculture, we'll get a fair trade system. We cannot unilaterally disarm. At the time, I knew it was going to be a problem and, in fact, it still is because other countries haven't reduced theirs. For example, across the Atlantic, we find that European Union export subsidies, get this, are 60 times greater than ours in the United States. To state it differently, about 83 percent of the world's export subsidies are European. About 2 percent of the world's export subsidies are American. So it's clear that the Europeans are the big problem here.

During the 1980s, the United States and the EU engaged in an export subsidy war in which both members battled to undercut each other's prices in the export markets. Remember that? Over the decade, because Europeans' export subsidies were so much stronger, the US market share declined while the European Union market share increased, and it increased dramatically. In fact, by the mid-eighties, Europe, formally the world's largest importer of agricultural products, suddenly became the world's largest exporter of agricultural products. Believe me, that had nothing to do with luck.

Today, the United States maintains an anemic, if at best, export advancement program. Authorized at $500 million a year, EU operates well below the Uruguay reduction commitments, it's very, very distressing. Our priority must be leveling that playing field. Simply stated, all export subsidies must be eliminated across the board, zero, that's our goal.

Second, market access. We must be more aggressive here, too. Push aggressively onto countries to reduce their tariffs, they're still very high in many agriculture products. We should ensure those countries with the largest tariffs make the deepest cuts. No more of this percentage reduction, it's going to have to get down to zero. By reducing higher tariffs by greater percentages, all disparities can eventually be reduced and get close to that goal of zero.

Our biggest access challenge, though, in the future will be China, it's also our greatest opportunity. I think there's a good chance that the WTO agreement with China will be reached this year, and it's also my expectation that the congress will vote for permanent NTR status for China this year so that we have the benefit of a good agreement with China. That will finalize a big step for agriculture for United States when China becomes a member of the World Trade Organizatin so that our products, wheat, beef, pork, and other States' products, citrus, will all see the benefits of open trade.

A lot of you know that China made commitments in agriculture extending to all commodities of interest as to the US and to all issues from tariffs to quotas to bulk commodities and also state trading. It's a great opening for Montana wheat and beef after decades of very stiff resistance over there. Let me just give you a couple of examples. Tariff's in China, on an average, on agriculture products is about 50 percent. But under the agreement, which we'll get, I'm confident of that, those tariffs will drop to 17 percent for pork and 14 and a half percent for beef, a huge drop on tariffs on our products that are entering China.

China, right now, currently imports fewer than 2 million tons of wheat, that's probably because of the Asian economy trouble. But after WTO entry, Chinese wheat imports will be at least 7.3 million tons and rising to an agreement, a minimum they've agreed to, of 9.3 million tons by 2004. This increase is going to help us.

Finally, China will agree not to provide agricultural export subsidies, a very important achievement of its own right and a major step toward our goal of eliminating export subsidies in the next WTO round.

Third, is dispute settlement. Yogi Berra once said, "If the world were perfect, it wouldn't be." He said a lot of things, they're all good. We Americans, though, have spent a lot of time trying to perfect our trading system, and it's true we get it a little bit better each time and it's a continuing process of continuing privilege. But the credibility of the global trading system and the integrity of the American trade laws depend on the belief that agreements made are agreements followed. Now many times, more energy goes into negotiating new agreements than ensuring existing agreements work. And I believe that part of the problem is the WTO dispute settlement mechanism, it needs major repair.

Especially since the most controversial cases, that is beef and bananas, are yet to be resolved in a matter of compliance.

To repair the dispute settlement process, I would suggest the following: First, increase the transparency of deliberations and submissions. That's just a fancy term for saying, "Hey, make it much more open, less secretive." Second, shorten the process. That speaks for itself. These WTO dispute settlements take way too long. And finally, give special recognition to losing parties that quickly change their defensive practices for the better. Fourth is the elimination of state-owned enterprises. Between 1994 and 1997, state trading enterprises, get this, accounted for nearly one half of the global wheat imports, a half. And 33 percent of such wheat, exports were handled by two trading enterprises, you got it, the Australian and the Canadian wheat boards.

Now, the Canadian Wheat Board has long been a thorn in the side of the great plains producers, producers who have little or no access to information concerning the board's transactions. Last year, for example, I traveled to Ottawa, I met with Ralph Goodall, the minister in charge of the wheat board, and I urged him to simply eliminate it. I told him without transparency, distrust in market -- otherwise market distortion will prevail. He listened, I think he kind of got my message and I'm sure he understood the truth in it. I kind of got the feeling that maybe the days of the wheat board are beginning to be numbered because they, too, know that it's very in particular for their producers and that they've got problems on their side of the board.

It just simply is time that these STEs, these State Trading Enterprises, are prevented from circumventing their Uruguay Round commitments.

Finally, a safeguard against surges. Under the agreement on agriculture, a special safeguards can be used if low import prices or surges in imports threaten to overwhelm producers. Just this year, we have seen the need for such safeguards to fight off excessive surges, for example, in both cattle and land industries. If all of us work to open markets, we obviously can not be a victim of illegal forms of dumping here at home. And for that reason, I'm very glad the President, acting on behalf of the United States Land Industry, is enforcing the ruling of the ITC. But we must continually keep our eyes open for other unfair practices and stop them before we start.

The United States remained the most open market in the world, I'm convinced of that and I'm committed to that. At the same time, we must do everything we can to open other markets, and we must be sure that our domestic industry is able to adjust and adapt to import surges without being devastated.

I would like to add a note about fast track. At the end of the day, we clearly will need this authority to complete the round. Such authority will send a clear message that America is coordinated in its trade objectives and will negotiate the set goals in mind. Another big point, we need the President, we need his negotiators to stand up for the needs of American producers. The President has to be a lot tougher and a lot stronger than he's been.

I'll conclude by saying, although this will be difficult, we've got a lot of momentum behind us, we've got a lot of arrows in our quiver, but we do need to be tough, we do need to be direct. So I urge you all, let our government representatives hear your voices, hear from you, so we, together, can get the job done and negotiators know how important this is. Thank you so very much, wish I were there, but I know you're going to do an awful lot to help us. Thanks.