Town Hall Meeting


SECRETARY GLICKMAN:	Actually, you raised a very excellent point, too. Your state at least has -- you've got some crop flexibility, especially in the specialty crop/fresh fruit area. And one of the things that we're finding is that agriculture producers, to make money in the next millennium, must really be able to look at different kinds of agricultural production. The production exclusively of bulk commodities, traditional road crops, may not be enough to produce an income in and of itself of what's needed, so we encourage people to do other things, alternative crops, value added, all these kinds of things, but we've got to remove the impediments in order that people will find it attractive to produce these other crops.

MR. ZUICHES:	That's a very good point, and I might just add as an editorial, Washington State University, through its impact center and with some of the new funding from the state legislature, is looking at increasing the alternative crops that are available, managing the pests associated with alternative crops, and hopefully increasing our export markets for our producers. The next question is from Brad Ruland. Why do penalties and payments, such as in the case of penalties leveled against the Europeans for unfair practices against beef, why do these payments go to companies, export companies, rather than to producers? It's a very specific question.

SECRETARY GLICKMAN:	You might let them know how the compensation system works.

MS. SWOSKIN:	Well, currently we have had a dispute with the EU that has not lived up to the dispute settlement findings, and we have put in place retaliation, retaliatory measures, and that has been in the form of increased duties. Those duties are assessed on the imports, and the increase goes to the U.S. Treasury in terms of the collection of the additional duties. So I can't speak to the European side, but a penalty is assessed on products as they enter the United States, and we don't turn around and give the additional increase in duty to the affected farmer. It's an interesting question, but the system would really break down if, in fact, it would make in some ways retaliation more attractive than actually fixing the problem, and actually dispute settlement is to try and resolve the dispute, not enhance the opportunities for more disputes.

SECRETARY GLICKMAN:	The beef issue is a real interesting one because, you know, the WTO has found in our favor on beef, and we've tried to work it out and it was unsuccessful. EU said, "No, we're not taking your beef," so then we retaliated. And what you do is you retaliate on basically a list of what flows into our country. There were many products. There was some pork. What else did we have on that list?

DR. SIDDIQUI:	There were a number of porks and (inaudible).

SECRETARY GLICKMAN:	Goose liver. It sounds like a small thing, but to them it was a really big thing.

DR. SIDDIQUI:	(Inaudible) 16.8 million dollars (inaudible).

SECRETARY GLICKMAN:	Mustard.

DR. SIDDIQUI:	Mustard.

SECRETARY GLICKMAN:	We retaliated on a lot of those things that we knew that they cared about. We increased dramatically the tariffs of their issues. Now, the problem with that is that if they just choose to hardball it, they'll just -- the tariffs will be up there, and we won't get any of our beef in, and so we've got to still look to see what we can do to work with them to resolve the basic problem.

MR. ZUICHES:	The next question addresses an issue that we are very concerned about in this state because so much of our product is exported, and that is -- the question's from Dan Black, and it's how will China's entrance into the WTO effect American agriculture.

SECRETARY GLICKMAN:	Well, let me put it to you like this. If China were a card-carrying member of the WTO and participated in it like other countries and agreed to abide by all of its rules, it would have a profound influence on American agriculture. Now, realize in recent years the Chinese have been trying to be as self-sufficient as they possibly can, but it is impossible for China to be self-sufficient given the nature of their population and the amount of natural disasters that hit China and the urbanization that's taking place and the industrialization. So in years past, China has been very significant importers of oil seeds, of wheat, corn, what else, fresh fruits and, you know, then we have all of these other political problems that have made it much more difficult for us. We, for example, have signed a Sanitary and Phytosanitary Agreement with China separate and apart from the WTO issue, but it's been confounded by the issue of the bombing of the embassy and other kinds of issues. But, you know, the fact is that China, which has a population of 1.2 billion people, could become a dramatic customer of the United States, and that's one of the reasons why it's in our best interest to try to work these problems out with them and get them into the WTO, but they also have to agree to accept the processes, the circumstances of WTO membership as well. I don't know whether, Dorothy, you have anything else to say to that.

MS. SWOSKIN:	Well, one of the benefits of joining the WTO is that the country that is the applicant really has to take on the currents of reforms that we all have assumed and the obligations that we all have assumed in terms of how we are going to follow the rules. So you get them under this rules-based system -- it's important for China. It's important for Russia. We're working with them, with Saudi Arabia, with the Ukrainians, for all of these potentially huge export markets for American agriculture, it gives us a significant advantage.

MR. ZUICHES:	Is there a timetable for these adoption reforms when they join the WTO?

MS. SWOSKIN:	Well, we like everything to be done yesterday, just as a matter of starting out the negotiations. But in the negotiations, we have generally taken the position that once a country decides that they want to join the WTO, that they need to start moving their regimes into compliance. So for example, we've been very tough on SPSs, the sanitary, phytosanitary, and the technical barriers to trade. We try to block in countries to not having export subsidies if they have it or to eliminate those export subsidies. So we've really tried very hard to make sure that people are right at -- or countries are right at our level from the outset.

MR. JESERNIG:	One thing I'd like to bring up on that is this: A very -- as the secretary pointed out, a very top, high possibility of a consumer of our products. The other side of it, too, though is that there is a maybe major competitor coming into the market, especially around apples, and this is one of the issues that has been very devastating to the apple industry, has been the apple juice concentrate problem. There was a 5-0 decision in our favor by the ITC around that dumping. Secretary Daly's now looking into the possible retroactive application of tariffs there. But if we can get the tariffs reduced, tariffs will value at the VAT, the valuated taxes that are there, there is a very good possibility on that side to get into the market in China and have transparency there. The flip side, though, is to always understand the competition side of it, which is going to be the flip side that we're going to have to work on to make sure we are competitive.

SECRETARY GLICKMAN:	One thing that is important -- and this goes back to this whole issue of sanctions and embargoes and everything else. China has this great worry of self-sufficiency. Japan has the same concern as well. You know, they worry about being dependent on us or anybody else. Frankly, the grain embargoes of the '70s kind of created in their mind that the U.S. may not be as reliable as it should be. We have been trying to send this message out that -- at least I have, and I think others in the administration, that, in fact, they must understand that we will be a reliable supplier and that also that China will never be self-sufficient. Japan knows they cannot be self-sufficient. They do the best that they can, but in a changing world, they just can't produce enough for their own domestic consumption. And I think once the Chinese become more and more comfortable that we will be a reliable supplier to them, that we won't cut them off at any moment because we don't like this or that about what they do, then I think we will see a much stronger bond form on agricultural trade.

MR. ZUICHES:	Thank you. We've talked a couple times about the consumer as being the ultimate purchaser of the product, and the next question is from Gary Jewel, who lists himself as a consumer, like all of us, and it addresses a very important issue. Will the WTO allow product labeling on all agricultural products informing the consumer whether it has been genetically engineered or hormonally enhanced, and if not, why not?

SECRETARY GLICKMAN:	Well, let me say this. I don't know if the WTO -- maybe Dr. Siddiqui would like to comment on that. I think that -- well, let me have him comment first, and then let some make my comments. I'll see what he has to say first.

DR. SIDDIQUI:	Mr. Secretary, EU has already established a labeling regime. The problem with EU's directive of labeling about a year ago was that they passed this directive but have not so far delivered in terms of what that will be. The details are still lacking in terms of thresholds. There's been discussion anywhere between 1 to 3 percent thresholds, where you can have -- so-called label genetically modified some unintentional homing of GMO product or non-GMO or vice-versa. They have not specified the testing methods, and they also were supposed to publish list of those negative lists where you remove the DNA or modified protein so you cannot even detect if you are going to put GMO or non-GMO. So essentially the EU has already sent the signal to the community in the world they would require labeling of all GMO products, but the details are still lacking.

SECRETARY GLICKMAN:	Let me say I don't know how the WTO is going to deal specifically with labeling. I do think that what we will continue to do is to insist on the SPS Agreement, the Sanitary and Phytosanitary Agreement, governing a lot of these issues on the basis of sound science. But the WTO does not prevent countries from labeling their food for health and safety reasons. We all reserve that right. But the thing that -- what it would do is it would ensure that it will be done on the basis of sound and effective science. Right now, not only do you have the issue of EU labeling, but the Japanese have -- or will begin labeling fairly soon foods, GMO foods. We see Australia wrestling with this issue. In this country, we have not endorsed any form of mandatory labeling, but I personally have told American companies that I don't think they -- I think they have to ignore labeling at their peril because I think the consumers are going to demand some form of labeling here. It's going to happen. The one thing we don't have very good science yet is how to label, what are the thresholds, how you do the testing. I mean these issues have not really been resolved very well, so right now the labeling issue is way -- is premature until you decide how to do it in a way that properly informs people, what are the thresholds that you use in all these things. And, you know, I think the companies, the manufacturing companies, are now saying this. You begin to see companies like the Gerber Baby Food Company, others doing some sort of labeling. They're giving consumers the information that they deserve to have. Some people view this as a kiss of death for GMO products. I don't because I think ultimately consumers will accept anything providing they think it's safe for them, plus I think you can do GMO labeling that will be positive to people. I think you can do GMO labeling that says this product is genetically engineered and contains extra folic acid and iron which will do the following great things for you. I've told people, I said -- and this is perhaps taking it a little too far. This is a little tongue in cheek, okay, folks, but I've said it. As soon as they come out with a tomato with the Viagra gene in it, GMO products will become very, very popular. But they're taking it beyond kicking it back up a little bit. The fact of the matter is that we will at some point be able to develop GMO products that do tremendous things, nutriceudical things, adding nutrient value to food in addition to other kinds of things. So I don't necessarily view labeling as a negative issue at all. I can think -- like nutritionally, well, today, it's a been a positive issue for the consumer. But what you've got to do is you've got to make it in a sense that it has a science basis to it. My own judgment is the government's are not going to force this issue on the people and shouldn't. These are issues the companies need to develop themselves, but there's got to be the scientific apparatus so that the labeling means something, and right now we're short of that.

MR. JESERNIG:	I'd like to emphasize one thing the secretary talked about, which is the testing and the protocols which is an issue just now with the recent shipment of wheat that we're working with in the Northwest, how did that come up, how didn't it come up. And I think that those are the kind of things that we have to make sure we have down locked solid as we move into this whole arena.

SECRETARY GLICKMAN:	Actually this is on the Thailand issue?

DR. SIDDIQUI:	(Inaudible)

SECRETARY GLICKMAN:	Oh, okay. We'll get this afterwards. Like, for example, there was the issue the Thai government said that there was a GMO wheat. There was no GMO wheat. They've acknowledged that it was a mistake because there was no licensed GMO wheat products out there in the export markets. So, you know, there does need to be a lot better science in this whole area.

MR. ZUICHES:	I think we've found a topic the secretary bears passionately about in this labeling issue. There is a follow-up, which I think also directly relates to USDA's responsibility, and that is how about labeling organic products. How will we protect the integrity of organic labeling, and who controls and is responsible for this?

SECRETARY GLICKMAN:	Right now we are working on a -- based on a congressional statute, which was written several years ago, we are working on an organic certification set of rules that hopefully will be out by the end of the year or shortly thereafter. The statute, called the Organic Standards Act, requires us to set national standards whereby organic foods are -- where you classify them as certified organic. And this is something that's got a lot of interest around the country, and it will -- I've said to people, I've said there's a very strong organic food industry in this country. It's quite profitable actually for those who are involved with it. And while organic doesn't necessarily mean any healthier than any nonorganic foods, it does give consumers a choice, and hopefully we'll have those rules out in the next six months. Thank you.

MR. ZUICHES:	For our trade representative, we hear a lot about WTO, but our best customers are Canada and Mexico. Why don't we work to improve these markets?

MS. SWOSKIN:	Well, Canada and Mexico are important trading partners in the WTO as well. I think we have worked very hard with Canada in particular on building up and building out the WTO in terms of looking at the North American market with respect to some of the accessions, for example, where we coordinate quite a lot. We have not done quite as much with Mexico, but have started to look -- our companies actually have encouraged us to look more at the North American market and the positions that we take in the WTO. So there is actually quite a lot of effort underway, I would say at this point probably more with Canada than in Mexico.

MR. JESERNIG:	One of the things that I think is important to emphasize is to get the expectation kicked around the Seattle Round of the WTO in line with what's really occurring. What you're looking at is setting agenda for the next few years and then those rules perhaps coming in and coming into play in a bilateral place. And one of the things I think is important is that as we have looked very deeply into this, we have seen that with the USDA and USTR, they are very aggressively, competently working within the U.S. agriculture community, directly with folks from the U.S. Wheat Associates here in the state and the Wheat Commission and the Northwest Hort. Council around tree fruits, Chris Schlecter, Bill Bryant and other folks, and are very aggressively working on it. I think it is important upon all of us to understand that aggressive, competent effort on the part of our best people, which is what I think we have, doesn't always ensure success. It's a very difficult issues out there. Other countries are struggling with very difficult issues. Just for an example, the issues with Mexico, right now we have quite a few of them. With the tree fruit industry, we have a floor price on apples in New Mexico. We have a work plan around phytosanitary issues with Mexico we think is not -- shouldn't be required, and we have tariff rate quotas around French fries moving into Mexico. Those have been stalled. They are difficult issues. I just want to emphasize the fact that, whether it's the Foreign Ag Service, APHIS, other folks within the USDA or USDR, we are working in conjunction as a part of a team to make these happen, but I think it's very important upon us to all understand that these are very, very difficult issues. There are reasons these ag issues have continually been kicked and hopefully going to be worked on in the Seattle Round. And so we need to line up those expectations, and I for one have been just very thankful for both USDA's and USDR's aggressive, competent focus on trying to make these things happen.

MR. ZUICHES:	Secretary Glickman, would you like to have the last word?

SECRETARY GLICKMAN:	No. I would have to say, if I can answer the question that was raised by --

MR. ZUICHES:	Earlier.

SECRETARY GLICKMAN:	-- earlier that I think needs to be answered and established and respond to. High-quality U.S. durum generally is higher cost, and the current system of reference pricing penalizes our high-quality durum. We are working with the durum wheat industry to get the price data to make a case with the EU Commission, which may ultimately result in litigation through the WTO process, so they are aware of the problem.

MR. ZUICHES:	That's a real disappointment that high quality is higher cost. We're always aiming for higher quality product. We've asked many of the questions that you provided us. There were a number of duplications, so I did not go through all of these. I want to thank everybody here for your participation in this town hall meeting this morning. I especially want to thank Secretary Dan Glickman, our Trade Representative Dorothy Swoskin, and Director Jim Jesernig. Please thank them with me. And I look forward to continued discussions about issues associated with the World Trade Organization and the international export of products in Washington State. Thank you all for coming this morning.