SENATOR KERREY: Governor Johanns, nice to see you this morning. Senator Hagel, good to see you, Dr. Barrett and all the rest of you here this morning. I was wondering what it was like to try to gather words of somebody who was signing a speech in the dark, and there are times when our trade policies seem a bit like that.

First of all, let me say that I agree with what Jim was saying. I think it's inevitable and to our advantage for the United States of America to lead an effort to not just enter the next round of the -- of the trade talks at the ministerials in Seattle but to continue to lead for reduction of trade barriers worldwide. We have fewer numbers of tariffs, 67 percent of our products are tariffed against 50 percent worldwide. We have a considerable amount of agriculture products today that we can sell if we get access to foreign markets whether that market be Japan or whether that market be the European Union.

We have made considerable progress in my view in the Uruguay Round and with NAFTA in moving to a world where if I want to sell something, I'll have a direct tariff as opposed to some non-tariff barrier that is essentially an effort to deny the access.

There are obviously considerable amounts of problems that continue to remain between us and trading partners, the key being the disputes that we have with the Europeans hormones and by the way, our trade policy has to be comparable to what Al Capone once advised was that a smile will get you a long ways in life, but a smile and a gun will get you a lot further. By that, I mean that I do think it is not only appropriate but I think necessary for the Europeans for the hormones be the same thing with genetically modified organisms and that in other areas the European Union has already indicated that they intend to give their farmers preferential access to 90 percent of that marketplace in violation of any panel and any determination that is adverse to them. And we have to be prepared to put not just kind of the duties on but kind of putting the duties on for getting them to modify their behavior.

I'm going to say as well that my view is that I'm not going to spend a great deal of time at -- I've expressed it earlier, it is a difference of opinion of some. I do think that our own domestic farm policy is going to need to be changed. You can see the significant differential and the expenditures that are made between the Europeans and Japanese and in the United States.

We are going to depopulate significant portions of our agricultural sector while we wait for trade policies to influence domestic policies either in Europe or in Japan. I do not think that's beneficial to our rural communities for us to do so and believe that we have to be entering these trade negotiations with a very open mind and watch what's going on inside of our own country. And while we work and hammer and negotiate and try to get improved access and reduce tariffs throughout the world, I think we have to make certain that our own domestic producers 500,000 or so still full-time family farmer operators have a chance to be profitable. At 1.85 corn, that's not likely to be the case.

In Europe, there is still considerable amount of prosperity. As they entered into the ministerial negotiations with us, they have a stronger hand in my view as a consequence of looking at the help that they've got not only on their farms but in their rural communities.

There are a number of issues that I hope that we're able to address today in these discussions that we'll hear from Peter Scherr and others from the USTR. On some problems that we're having with trade, and one of the things I think it's very difficult to do with citizens, is to get their support for trade -- good trade policies if trade agreements we entered into in good faith are not honored by our trading partners.

I've seen examples of that with the Europeans with the hormones. This may be a case where this is a environmental safety issue. It is not effort to protect their marketplace. Their already inefficient system of growing the cattle and the price is quite high. If they had to accept the U.S. beef on a competitive basis, their industry would be under a considerable amount of stress to put it mildly and thus they protect their market. That's what the Koreans are doing, that's what the Japanese are continuing to do. They'll do it for all their kinds of reasons and excuses, but what they're basically trying to do is to protect the very inefficient domestic industry. And we've got to -- as I said, we've got to make certain if we have an agreement with them, that we both have the -- have the muscle and the tools to be able to put pressure on with duties and deny them access and preferential ways. But we also have to make certain that they know that whether it's part of a main agreement or whether it's a side agreement such as we currently have with sugar, I'm very much interested in what the trade representatives will have to say.

In Nebraska we signed on to NAFTA with the understanding that Mexico would not be able to import beyond their quota into the United States. We went through significant restructuring in the United States as a result of the movement of corn sweeteners in the soft drinks to replace 100 percent of the sugar that went into soft drinks. The Mexican government said you don't understand, the Mexican taste is different, that's not going to happen in Mexico. They signed a letter indicating if it did happen, they would not go beyond that quota. Now they're saying they don't want to honor the agreement.

Likewise with dryable beans, we were supposed to be given an opportunity to sell 57,000 metric tons of dryable beans without any tariff quota being imposed. Mexico went through an auctioning process that has been very difficult. They've delayed the auction this year which is putting a lot of pressure upon our bean growers. Again, we have a significant number of dryable bean growers in western Nebraska.

It is a U.S. issue, and the essential issue for us is -- as political representatives is that we signed on to an agreement, we were told that the agreement meant something, our trading partners are not honoring the agreement, and immediate action has to be taken with Mexico on both of these items, both to signal to them that we're not going to lie down when an agreement is not honored but also to make certain that the political environment that our citizens are willing to support these kinds of agreements in the future. If there aren't enforcement mechanisms to make sure -- to make certain that the United States of America that has the most open markets at all, that we're not going to be played for fools after an agreement is signed. If there aren't enforcement mechanisms, I think it's going to be very, very difficult for at least the House to get the votes necessary to get any future president the trade negotiating authority necessary to negotiate these agreements.

Anyway, I looked forward to a listening session. I appreciate those who have come today to listen. I want to thank both the Secretary and Trade Ambassador Barshefsky for sending trade representatives here. I think it's an important thing that they have an opportunity to listen to people that are affected directly both positively and negatively by trade. I look forward both to their statements and to the testimony that's offered by Nebraskans.