MR. SWANZ: I want to thank you for the opportunity to speak on behalf of the Montana Stockgrowers Association regarding issues to be addressed at the 1999 round of negotiations on agriculture scheduled for the November World Trade Organization meeting.

I am John Swanz, a livestock producer from the Judith Gap, Montana area, and have served on the Board of Directors for the Montana Stockgrowers Association. For over 100 years, Montana Stockgrowers have worked to represent a fair and profitable economic environment for livestock producers in Montana. In addition, I have served on the International Marketing Committee for the National Cattle and Beef Association, and have been very involved in the trade discussions at both the state and national level. I have served and participated in across-the-border trade talks between US and Canada. And as MSGA's President, Keith Bales, mentioned earlier, I would like to explain why it's important that trade negotiations include reciprocity and harmonization of regulations on trade between two countries that are dependant on equal access for both producers and both countries.

In late 1994 and early 1995, Dr. Dick Rath, Chairman of the Montana Stockgrowers Cattle Health Committee began talking to Ben Thorlakson of the Canadian Cattlemen Association to discuss the need of US and Canada to reduce animal health barriers, free movement of cattle north and south. Initial meetings were held in September of 1995, between the two groups, and the beginning of what is now a five-year project known as the Northwest Pilot Project.

Following almost a year's discussion in November 1996, MSGA, NCBA, Ag Canada, Montana Department of Livestock, and USDA met in Helena and began discussing protocol to bring down animal health barriers. In the spring of 1997, the Montana Legislature passed legislation that would allow the Montana Board of Livestock to have the authority to allow unvaccinated cattle to enter Montana from brucellosis-free states or Canada under a two-year provision. So the Northwest Pilot Project moved forward.

In 1997, the protocol for cattle movement under the Northwest Pilot Project was approved and implemented. Almost immediately after that, in November 1997, USDA announced a new animal health regionalization project which essentially eliminated any protocol restrictions on Canadian cattle coming south under the Pilot Project. No reciprocity was demanded from the USDA of Canada to develop a similar regionalization project. Canada tells us today that it will be the spring of 2001 before this can be done. In the meantime, US regionalization moves forward and US markets become more accessible.

To continue with the progress of the Pilot Project, only three feedyards signed up for the project in 1998. Approximately, 780 US cattle moved north to the Canadian feedyards during the winter of '98 and '99, due largely to unfair protocol adopted by Ag Canada and a monetary exchange rate. The bottom line is the project didn't work. US feeder cattle didn't have good access to the Canadian market north, but the US market was still open.

In the spring of 1998, MSGA asked for review of protocol to make the project work. And in April of 1998, Ag Canada released a draft of a proposed protocol and indicated it would be approved by September 1st. During the summer of 1998, the frustration of US producers grew to a point that border demonstrations took place and initiation introduction of trade petitions on dumping and countervailing duties with the Department of Commerce and International Trade Commission took place. Then, all of the sudden, in August 1998, largely due to political pressure, new protocol was introduced that was based on sound science and more favorable to US producers. Cattle began to move, and during the winter and spring '98 and '99, more than 40,000 head of cattle moved north from the US into Canada. The project was finally working after five years of negotiations and worked largely initiated by producers from both countries.

The problem was not with ag producers, themselves, the problem was with the government in both US and Canada. Producers don't mind competing with one another on a level playing field, however, producers feel helpless and feel very frustrated when they find themselves competing with other governments, international politics, and poor science. Had reciprocity and sound science been demanded initially, the animal health regulations of the Northwest Pilot Project would not have been so difficult to implement or may have not even been necessary.

We realize this is a complicated area, but we also see no reason for USDA, for example, to initiate an improvement of regionalization product allowing Canada access into the US without, at the same, demanding reciprocity and regionalization from Canada which would allow US access to same markets. Successful WTO talks are dependant on all aspects of trading being fair to everyone and this includes import regulations, export regulations, and reciprocity that lead to equal access at the same time trade is allowed. US agriculture cannot be sacrificed in the name of free trade. It must include fair trade and regulations to prevent the US producer from the spiraling downward price the global market commodity prices have experienced in recent years.

It is reducing the standard of living of US producers to a poverty level, and will restructure agriculture by eliminating the family farm and ranches across the country. We do not want to see this happen and hope you will take a strong position in the WTO talks to see that it does not happen. Thank you for the opportunity.

MR. NELSON: Thank you, John. Panelists?

MR. GALVIN: I think you made several very good points. And I think your description of the past few years and the difficulty of getting that program up and running pretty much tells the story. Is it your assessment that finally now the program is now working as intended and there aren't any hitches? Or is there room for further improvement?

MR. SWANZ: I think the main point is to keep Canada pushing to get their protocol in place, which they seem to keep putting it off to another six months or another year. And the pressure needs to be applied to make them comply with that protocol and get it in place.

MR. GALVIN: That is true. I think it's going to be several more months, unfortunately, before they're ready to move ahead on regionalization. One other issue that we carved out last fall that I think we made a lot of progress on, is the whole issue of animal drugs and their availability in trying to establish similar procedures on both sides of the border in terms of which drugs can be used and when they can be used. And I think we're very close on that issue and we're ready to harmonize that. So we have made a lot of progress on that specific issue in just the last few months.