MR. DONALD: Thank you, Bruce, and thanks to the panel for allowing me to speak to you today. My name is Bill Donald. Along with my family, I own and operate a cattle ranch in south central Montana, and I'm here representing R-CALF. And my goal in speaking to you today is to convey to you the importance of returning profitability to family agriculture.

R-CALF is a nonprofit corporation whose purpose is to initiate actions to have the US trade regulations enforced to the intent of the US Congress to make sure the trade relief laws are implemented in the cattle industry in a fair, nondiscriminatory manner. With the support of more than 25,000 farmers and ranchers and their families and over 100 farmer and cattlemen associations, R-CALF brought antidumping and countervailing duty case petitions against the dumped and subsidized cattle from Canada and Mexico.

Restoring conditions of fair trade to the US cattle market is an important step to returning our industry to profitability. The United States's cattle producers' future depends in a large measure on establishing conditions of open and fair trade for cattle and beef throughout the world. To date, R-CALF has overcome great obstacles to receive an affirmative preliminary ruling from the Department of Commerce concerning the Canadian cattle that have been dumped on the US market. The petition process is designed to protect domestic industry from the negative impacts of illegal trade, is an arduous and expensive endeavor.

I've heard the success of R-CALF described as ordinary people doing extraordinary things. The ability of United States producers to protect ourselves from illegal imports should not require either extraordinary efforts nor funds. The impact suffered by the cattle producers of the United States by illegal imports are well-documented. If any changes are to be made in the process, they should be changes that enhance the ability of United States citizens and industry to protect our livelihoods, not to make an arduous expensive process more so.

You will hear some comments on changing the dumping petitions and the criteria. And the idea that antidumping petitions should not be allowed when a commodity is in the lowest part of the cycle goes against the very intent of allowing the industry the ability to minimize the negative impacts of the cycles it will inevitably face. One of the basic economic laws is the basis for the antidumping petition process, and that is supply impacts price. A supply increase, price decreases. Most economists agree for every 1 percent increase in the supply of cattle, cattle prices decrease between 1.2 and 1.5 percent. This degree of impact makes it easy to see how imports have the ability to make the lows in the cycle lower and longer. That would be the impact of removing the antidumping petitions for a period when the industry is in a low-price portion of the cycle. The cycle lows would be lower and they would last longer.

I appreciate this opportunity to express our views on these important issues, and I applaud the Administration for listening to the citizens that are affected by these trade regulations. We would like to request the Administration take this opportunity to work toward streamlining and enhancing the process producers utilize to protect our livelihoods. Rules that ensure conditions of fair and equitable trade must be kept and strengthened. No producer should be subjected to competing against export subsidies which have the impact of depressing both domestic and import prices.

Likewise, our market should not be allowed to become a dumping ground for excess supplies when foreign prices fall below foreign production costs. The Administration should also review domestic law and make any revisions necessary to permit cattle producers to pursue unfairly traded imports of beef, as beef prices directly affect the price we receive for our cattle. At this time, cattle producers have no right to pursue unfairly traded imports of beef, only cattle.

Again, I thank you for this opportunity to express the views of thousands of cattle producers and I hope my comments have been helpful in our goal of restoring profitability to family agriculture. So thank you. With that, I entertain any questions.

MR. NELSON: Bill, thank you. One thing before I turn this over to the panel. Just, again, because we had some folks join us who weren't here this morning. Alan Hrapskwy, Alan, would you stand up again, please? Alan is from the Foreign Agriculture Service, and he's here if you have copies of testimony or comments or anything you would like to submit for the record, please, give those to Alan. And, of course, our presenters, their testimony or presentations, we want to make sure that Alan gets copies of those so that everything here is on the record today. Panel?

MR. SCHROEDER: Bill, I see Dennis is from R-CALF also, I guess the question in my mind is, what are we going to do with this border? We've got this NAFTA, Canada is right there next door, Mexico is down there next to Texas. As we look at this, how do you see this in the next five or ten years? Do you want that border maintained and sort of reinforced? Or would you like to see more of a North American marketplace. I think that's the big issue for both Canadians and Mexicans and US producers.

MR. DONALD: Well, the difference, I guess I would like to see it maintained until our cost of productions are equal to those in Canada and Mexico. I figured up our taxes on our ranch and I took all the taxes, the unemployment tax, worker's comp, income tax, property tax, licenses, and I divided it by the number of cows and I got nearly $100 a head. Now, I don't know what the taxes in Mexico are, but if they're less than $100 a head, we can't have a totally free and open border, the same with Canada. At the time that our dollar is the same between all three countries and the time that our regulatory taxing structure is the same, I guess at that point we could discuss it. But at this point, there are several distinct differences in the three countries and those borders are necessary.

MR. McDONALD: In addition to that, if I may just add, in the short run, what we really need is for the existing regulations to be fairly enforced. Subsidies, the dumping laws, at least in the short run. If our trading partners, both north and south, played by the rules, it wouldn't solve the problem, but it would at least place us in a position where we could more adequately compete.

MR. GALVIN: Do you guys see much potential for this dumping issue to be used against our exports? I look at most of our basic commodities from livestock to grains and I think you could make a fair case that most of our producers right now are selling under the cost of production. Might not that lead to charges by some of the countries we're currently exporting to that we're, in fact, dumping our exports overseas, too? Comment on the potential there?

MR. DONALD: As far as cattle go, which is what I'm most familiar with, we exported, I think you said, 51,000 head of feeder cattle. We don't export much of our cattle. We export mostly processed meat to Mexico. And I'm not sure, I know Mexico has talked about an antidumping case against beef, but I don't believe the processors of this country have been in a negative margin for significant enough for that case to have merit. And I'm not worried about them, meaning Canada or Mexico, pursuing antidumping against the ranchers because we don't export enough to them to make it matter.

Now, I know that some of those feeder cattle that went up into Canada did, in fact, go up at a loss. But I don't think 51,000 head is going to be -- have enough merit to make a case. And, I guess, until we start exporting more cattle out of this country, it's not going to be an issue.

MR. GALVIN: How about a commodity like wheat? If the current national average on wheat is, say, $2.30 a bushel, and it's probably under a number of people's cost of production, do you see that opening us up to any potential challenge?

MR. DONALD: Well, it has the potential for that, but I'm not so sure we should be dumping commodities on other countries just as we don't like them dumped on us.

MR. McDONALD: To follow up on what Bill just said, I was asked a similar question while speaking to a few Mexican cattlemen and a group of Texas cattle folks. And my reply was simply, we don't want you to break the law, we're suggesting that you follow the rules. I certainly wouldn't suggest that we be given some special dispensation even in these times of stressed prices. We have a set of rules. I happen to believe that the economics is such that if we all played by those rules and traded by those rules, it would be of some added value to all of these products. We found that, for example, in the tomato case with the Mexicans bringing tomatoes in here, and the antidumping petition was filed. The net result was it improved prices both north and south of the border.