Town Hall Meeting


SECRETARY GLICKMAN:	Dr. Siddiqui is going to do a little slide show real quick.

DR. SIDDIQUI:	Thank you, Mr. Secretary. Before we open with question and answer, I thought it would be a good idea for us to spend about five to six minutes just to show a few slides, try to connect the role of exports, how they contribute to U.S. economy in general, especially agriculture. If I could have the first slide, please. As you can see, the critical role that agriculture export plays in the general economy -- I have some slides I'd like to share with you. And this is where obtaining trade agreements, they ask what it would accomplish, I'd like to share with you, and also the goals for the next round with the secretary outlined this slide at the beginning. Next slide, please. U.S. agriculture exports reached 53.6 billion in 1998. Those exports are going to be down this year largely because of the economic crisis in southeast Asian countries as well as the glut of agricultural production. We're exporting more in terms of volume, but the depressed prices are only because of that. We expect the exports in year ending 1999 to be around 49 to 50 billion dollars. The contribution of agriculture has forced the U.S. economy into supporting 750,000 jobs throughout the country. For every three acres we harvest, one acre is exported (inaudible) to obtaining partners overseas. And the cash receipts are about 25 percent of the total economy in terms of agricultural economy, and 96 percent of the consumers of agricultural products remain elsewhere outside the U.S. borders. Next. The secretary mentioned the overall role the ag -- in terms of the agricultural economy versus the overall economy. If you look at the red line, it shows in terms of GNP. It's about 39.3 percent exports play the role in terms of contributing to U.S. economy, but when you look at the agricultural economy, it's about 26.4 percent, so we depend about twice as much in terms of all export and the whole economy of the U.S. Next slide. This slide shows you the -- in terms of all the crops and commodities, which make about one billion dollars or more, and there are some commodities which are specific to you of the Pacific Northwest and Washington state. If you look at wheat, 3.8 billion dollars, you have coarse grain, 5 billion dollars, and then you have fresh fruit, 1.9 billion dollars. And this speaks for all the fresh fruit, apples, cherries and other -- the commodity citrus from other states exporting overseas. Next slide, please. This is very significant. If you look at the overall exports, there's a -- this slides takes the role of appreciating dollars and depreciating -- if you look at this -- the peak of 60 billion dollars in 1996 here, and this is a decline because the economic problems in Southeast Asia and others, but if you look at the -- you also have strong dollars, but in those years where those Asia dollars are not as strong, you will see an increase in exports because of peak dollars. But other issues, if you look at the different rounds that we were able to accomplish increase in exports, increase in overall exports, NAFTA in 1994, you'll see there's a (inaudible) Uruguay Round, and this is where we saw tremendous increase in exports. Next slide, please. In terms of overall -- let me go back to this slide. In terms of overall -- this will show it, the last, I think, Robert. Go to the next slide, please. Estimated gains of recent trade agreements, they are essentially (inaudible) showing by the year 2005, the (inaudible) gains in terms of total Uruguay Round benefits is about 5.1 billion dollars every year. Right now it's about 3-1/2 to 4 billion dollars. NAFTA contributed significantly in terms of increasing exports. And similarly, in Japan, beet agreements, citrus agreement, and Mexico (inaudible), these are some of the landmark agreements where we saw a direct connection between increase in exports after those agreements were signed. Next slide. This is a slide which I think we're seeing a change in -- if you see the red line, which is a decline line, the exports over the years have decreased in recent years in terms of exports we keep, European Union countries, but if you see NAFTA, those yellow boxes have gone up. You have seen an 11 percent increase. In the first years it was about 3 percent after NAFTA was signed, and then in recent years you'll see an increase which now -- or NAFTA bunkers exceed total value in terms of dollars, more than overexplosive, is 15 EU countries. You see a sharp decline in gain I referred to earlier, decline in exports, because of the Asian economies that they went through in the last couple of years, but increased in the previous years. They have tremendous increase in terms of exports to Asian economies. Next slide. I think it's critical for us to know that in order to talk about where we're going in the next round, where we have been, GATT agreements, which has started, General Agreement on Fairness in Trade Banking 48, we have had eight different rounds on trade. And what was most significant was in terms of 1994, the Uruguay Round, was agriculture became for the first time in terms of the symptoms overbroad, and we were put on the table in terms of negotiating decreases in tariffs, decreases in subsidies, and this is what the accomplishment was in the Uruguay Round. And the next round is going to essentially, where we left off in the Uruguay Round, we need to make significant progress as we move into the next round. Next slide. Some of the accomplishments of Uruguay Round, I think it's critical to note that the tariffs were cut on an average of 36 percent, with a minimum 15 percent imported, non-tariff base was imported and minimum excess quotas were established. Similarly those (inaudible) export subsidies and (inaudible) outlays in terms of domestic support, which are trade authority, as well as significant agreement was on Sanitary and Phytosanitary Agreement, which required that decisions have to be based on science and not just protectionist policies. And there was another thing which came out of this thing, was a dispute resolution, settlement resolution, where we are going to WTO in terms of resolving a number of disputes. And some of the most significant, which Pacific Northwest has benefited from this, is especially on the Japan Morrano case, where we took Japan on their unnecessary, unscientific department, of going to it every time we wanted to ship a new variety of products that were (inaudible) fruits. They were requiring us to provide data, which was -- we were able to prevail by drawing those agreements. Same thing in regard about EU beef, where European countries were banning U.S. beef raised with the hormones, growth hormones, and again we prevailed. As a matter of fact, the U.S. has gone -- about one-third of the total trade disputes, we have gone to EU and prevailed in a number of cases in terms of justifying these agreements based on science, and this is where we believe that the SPS agreement of WTO needs to be maintained. We will prefer not to reopen that and continue to press the case for basing SPS requirement on sound science. Next. And that essentially was the last slide which I had. Those proprieties -- Robert, will you go back to this thing. In terms of our goals for the next round, here is I think in a capsule, in terms of the next round, negotiate substantial reduction in (inaudible) in connection that will eliminate export subsidies, diving rules and domestic support, and form STEs and explain why (inaudible) in terms of food, and put quotas (inaudible) trade and new technologies including biotechnology. Thank you.

MR. ZUICHES:	Thank you, Dr. Siddiqui. The rest of the session will be devoted to answering the questions that you have submitted in writing. We do not have time to answer every question that has been submitted, so we have sorted through them, taking out some of the duplicated questions, and have come up with a set of questions that focus on significant issues that you have raised. I have been assured that all questions will be answered in writing by the USDA, and so that you will be receiving a response, whether it's an oral response right now or in writing, as a result of your submission of a question. Let me start with the first question. This is from Phil Isaac. It's actually a two-part question. Will President Clinton renew the sanction waiver against Pakistan and allow continued use of GSM credit to buy U.S. wheat, and and second part, what will you do as agricultural secretary to ensure that the President does not use food as a foreign policy tool? That's directed to Secretary Glickman.

SECRETARY GLICKMAN:	Well, I would say this: The president, of course, last -- earlier this summer issued basically a waiver of sanctions for Pakistan and India, and of course, that is still in effect. I think there has been some interagency review of this as it relates to the current coup in Pakistan and what all this means in terms of whose in charge and what its effect is on India/Pakistan relationships and issues of nuclear weapons. But the other issue is on the GSM credits. That is currently under review right now. I would say, just so that you know, that this year we've used GSM credits to the level of about 2.2 billion dollars --

DR. SIDDIQUI:	2.2 million --

SECRETARY GLICKMAN:	I'm sorry?

DR. SIDDIQUI:	2.2 million metric tons was exported to Pakistan.

SECRETARY GLICKMAN:	I'm talking the total use of GSM credits by the United States Department of Agriculture was about 4.5 billion dollars worth of credits this year. There really isn't a limit on this. That is, I can go -- the only thing that puts a stop on us is I have to issue it to creditworthy customers. The people have to be able to pay it back. That's what the law says on the use of credits.

MR. ZUICHES:	Thank you. The second question is from Gretchan Bork and Dixie Riddle. How is the U.S. going to bring the European Union to the table to negotiate export subsidies and assure us that they are fully decoupled productions?

SECRETARY GLICKMAN:	Well, let me -- all we can do is take what we've done in the Uruguay Round, which moved Europe to some degree, but not as much as they needed to be moved, and to negotiate them to further significantly reduce their both domestic supports as well as their export subsidies. Now, one of the things we've been doing is we have been trying -- I wouldn't say isolate Europe, but we've gained a lot of partners in this process. We have the Cairns group of countries, which is Australia, Canada, Chile, Argentina, South Africa and other countries, which have a position which is much more like the United States than it is to Europe to reduce these subsidies, and their subsidies are becoming very expensive. It's hard for them to tolerate the -- half the budget of the EU is in agriculture subsidies. So one of the reasons we've been taking these cases to the WTOs is to assert our rights on the need of hormones in bananas and other issues where we believe that they have been wrong, and we just have to be relentless, quite frankly, during this negotiating strategy to get them to reduce the amount of protection that they provide in this era of world agriculture. I have met repeatedly with the Minister of Agriculture for Europe, Dr. Fischler, and have told them that this is the highest priority of the United States in terms of agriculture issues, is to deal with the very issue of vast EU subsidies, and from my standpoint, it's the highest priority that I have to deal with it. I would have to tell you that in order to negotiate fairly, however, you've got to understand what the other side is doing. Europe views agriculture differently than we do. They have very high domestic supports, significantly higher than we have ever had probably in our history, and it has been extremely slow for them to move away from this for a lot of nonagricultural reasons, cultural reasons and social reasons. They call it multifunctionality. They say we support agriculture for reasons beyond just agricultural issues, and what we have said to them is we said we don't care what you do to help your domestic producers because we do a lot ourselves. We just don't want to see you do it in a way that distorts trade so that it impacts us, so you're shooting at us, so that you're impacting Third World countries that need to grow their agriculture as well. And I think that that will remain, as far as I'm concerned, the number one priority of the United States, to get them in a mode where they are no longer distorting world trade as part of their domestic agricultural production.

MR. ZUICHES:	Thank you. The next question is from Brent Blankenship. How will the U.S. address the unfair trade advantages caused by government-owned marketing organizations such as the Canadian Wheat Board and the Australian Wheat Board?

MS. SWOSKIN:	This is your favorite subject.

SECRETARY GLICKMAN:	Okay. All right. Well, again, this is a high priority for us. Canadian Wheat Board is particularly a problem because it's not transparent. We cannot determine the terms and conditions of sales, nor the level of domestic subsidy that's involved in that. The Australians have actually moved a bit our way, and their board is not quite as closed as it once was. But this is a matter of extreme high blood pressure along the northern border of the United States. We have seen significant amounts of Canadian wheat coming into this country in the last couple of years, the highest ever, especially -- it's probably affected here, but the impact has been particularly acute in the Dakotas and in Montana and Minnesota. Large amounts of durum wheat are coming across the border, and we cannot really determine with much specificity under what circumstances, why, what prices they're being provided for, and this is why it is an extremely important goal to open that process up, to show some sunlight in there so in that way we can determine if, in fact, they're being heavily subsidized and their government is putting a lot of money into these sales. So this is an extremely high priority in the next round as well.

MR. ZUICHES:	Trade Representative Swoskin.

MS. SWOSKIN:	Well, I will just add that this happens to be one area where we have a lot of common concerns with the European Union. There has been quite an emphasis on creating some additional disciplines on state trading enterprises. And I believe it's the Hungarians actually, who are new to go into the European Union, that have actually asked that this specifically be addressed. So it is an area where I think we can find some cooperation with the EU, and that would be important.

MR. ZUICHES:	Thank you. Next question is from Jim Davis, and this is an issue that's been in our paper in the last few days, too. Given that the GMOs have heavily impacted soybean and corn growers in the Midwest with unanticipated segregation requirements and affidavits, et cetera, especially at grain elevators because of foreign buyer assistance, what position will the U.S. take into the WTO negotiations that will protect the U.S. farmers and the grain cooperatives that serve us as new GMO wheat varieties are introduced into our export markets?

SECRETARY GLICKMAN:	I think we can talk about this for four days, but let me try to get at at least some first discussion of this. Number one is that into the next round of WTO is a strong desire to have sound, objective science govern decisions regarding public health and safety of products and not let hysteria or hyperbole govern those decisions. And we have a lot of allies in this regard. We've even been working with countries that are a little bit concerned about GMOs but have been willing to deal with this issue on the basis of science, like in Japan, where we've had some discussions with them as to if they're going to go down the road in labeling GMOs, if they do it on a basis that makes sound objective sense. So the goal is to make sure that sound science governs these discussions. This is a complicated subject, however, because it is one that I've been trying to tell people in agriculture, it involves more than just agriculture because it is one that you've got to make sure that the consumers of this country have exceptional confidence in that our systems are safe, that the way we approve products are safe, that there is no health problems in GMOs, that, in fact, there are no environmental problems, and that, in fact, if we're going to make those claims, which I think we can, but if we're going to make those claims, then the EPA and the USDA and the Food and Drug Administration all have to be geared up in order to be able to say to the world that we have independent, objective scientific review, and we believe the facts are this, and not merely go forward without question because some companies have developed certain products. And this has been a somewhat controversial subject because I happen to believe that the future of agriculture in large extent depends upon genetic engineering, but I also believe you can't force it down anybody's throats either. People have to have confidence that these products are safe and effective in order for them to buy it, and otherwise, the issue becomes too easily developed into an hysterical situation by people who have maybe a political or ideological ax to grind, and they're wanting to stop this technology. And the farmers, unfortunately, get caught in the middle because you're getting into issues, for example, of segregation -- the question's a very good one -- or you're getting into issues as to what is the government's role. And let's say a company decides that they don't want to buy GMO products, and how does a producer deal with this issue, and how do we as a government deal with it. I've basically said sound science, plus we have to make sure that everybody knows that we are on the level when we approve these products, that we're just not approving the product because some company comes to us and tells us to approve the products, that we're going to approve them because they're safe and they're effective and everything else. This is a subject that in Europe is extremely volatile right now. They, because of other issues, mad cow disease, dioxident food, they are scared to death of anything that taints their food. They do not have an independent food safety regulatory agency regime in Europe at all. They're way behind us in terms of getting consumers with confidence that the food is safe and that our approval process works. So when we go into the next round, there is no doubt that this subject is going to be discussed. I would have to say, however, that our goal has to be to base these decisions on effective and impartial sound science, and we should not reopen our previously agreed-to sanitary and phytosanitary agreements to put certain things in there that Europe would like to have. For example, they have something they've talked about called a precautionary principle, which basically says if we're worried about the safety of a subject, we can preclude you from selling it into our country, or we can preclude you from developing it because there may be a problem. You can't do -- you can't have commerce in a world where you keep products out because, quote, there may be a problem. It has to be on the basis of sound and effective science as well. And the other thing is this: It is incumbent in all this -- let me go back. It's a long answer because it's one that we wrestle with all the time. It is incumbent that this issue, this technology, genetic engineering, not just be viewed as a way to make agri-business thrive. It's got to be viewed in a way that is beneficial to the consumer as well. This is where I think agriculture and agriculture interests need to kind of open their eyes a little bit and understand that if people don't buy the product, if they don't have confidence in the product, it doesn't matter, you know, what, let's say, a company that developed the product really thinks about it. And I say that because I believe the future of agriculture is dependent on this technology. I don't think we're going to be able to deal with hunger in the world or sustainability issues or increasing yields without going down the road of genetic engineering. I don't think it's possible. We've seen that in the medical profession. Virtually all the new drugs and pharmaceuticals that are being developed right now are genetically engineered, and they're saving millions of lives. And I think that is going to be true in the agricultural area as well, but I also think it's going to take a teamwork approach between agriculture and the environment and the consumer community in this country and the rest of the world to convince everybody that this stuff is really effective and it's safe. In the meantime, we're going to continue to press the Europeans to deal with this issue on a scientifically sound way and to try to let the companies know, particularly those that buy the product, that those products that have been approved are safe.