MR. CLEAVINGER: Good morning. My name is David Cleavinger. I serve as chairman of the Texas Wheat Board, which provides export market development and promotion, research and trade policy for an estimated 33,000 wheat farmers in the state. I am a farmer in the Texas Panhandle, so these negotiations on which you are about to embark will not only have a direct impact on me and my operation, but also to the farmers and ranchers of Texas.

The most -- it is important that we build a fair world trading system. The most recent Uruguay Round and predecessor bilateral negotiations ended up by sharply reducing available options for offsetting unfair trade practices, and has led to the disastrous farm income which we have now witnessed over the recent years. In fact, as I was preparing to come to these hearings, the wheat market hit a 22-year low yesterday. The price I received at market was $2.10 as of yesterday.

The implementation of the Uruguay Round provides for further negotiations in the areas of market access, domestic supports, and export subsidies. We urge the continuation of negotiations for reform in these areas since we have seen an uneven compliance that has adversely affected U.S. agriculture trade.

If the past is any evidence, we believe we and our negotiators must begin a negotiation for new commitments with an understanding of other nations' compliance with the past commitments. The U.S. should establish as its highest priority elimination of all direct export subsidies within three years of the conclusion of the upcoming round. If countries have not phased out subsidies in that time period, and acknowledging that the U.S. has already discontinued subsidies on its wheat exports, our negotiators should seriously consider the possibility of resuming our wheat export subsidies programs so they can be used as leverage against our competitors.

Eliminating State Trading Export monopolies should be another high priority. State Trading Exporters freely admit to price discrimination, and such discriminatory pricing amounts to an implicit export subsidy. Failure to reform these monopolies will continue a distinct and serious distortion in world wheat markets. Producers in those countries need to have more than one option for selling their crops as a way of ending the monopoly pricing of wheat boards. This would be fully consistent with the open market economy advocated by the WTO.

The Texas Wheat Board believes the U.S. has significantly reformed its domestic support program since the conclusion of the Uruguay Round. The passage of the '96 Farm Bill put the U.S. levels of support far below the ceilings established in the Uruguay Round. U.S. negotiators should seek to eliminate the inequities that persist between the U.S. and our competitors.

We support the continuation of the current "green box" conditions on direct payments, which allow direct payments to producers that are not linked to production decisions. In addition, the "green box" should include market loss payments, crop insurance, disaster payments, and environmental programs. Also marketing loans should continue to be exempt from further support reductions.

I would like to stress that the Texas Wheat Board supports international and domestic trade, as our very livelihood is dependent on markets. We also realize that there will never be a perfect trading situation for everyone. We believe it is the role of our agency to work for the economic well-being of all producers, and for any of them to have a future, we will require adequate domestic programs to bolster farm income when economic conditions are at such extreme low levels that is it justified.

Our producers need to be assured of market access to world's consumers. The experiences of the past few years in the U.S. have proven to be very frustrating for wheat farmers. We urge those involved in the negotiations to be solid in their position that other countries will have to lower their tariffs more in line with those now prevalent in the U.S. We also strongly suggest that the U.S. use all programs available to meet trade-restricting policies of our competitors around the world.

In closing, we are grateful for the opportunity to comment on the process leading to the launch of the 1999 WTO negotiations on agriculture. We are convinced that the future of farming as we now know it in the U.S. is directly at stake by the decisions that will be made. We cannot continue to exist if our farmers and ranchers continue to lose trade opportunities in a singular manner to what they have experienced in recent agreements. It is imperative that the U.S. negotiators sustain a strong approach and overcome some of the opportunity losses that were traded away by earlier trade negotiators. In the absence of an aggressive export program, we have our doubts almost about how the U.S. will be able to position itself to achieve this so-called level playing field.

We respectfully urge the Congress to work with the Administration to adopt and implement a strategic export plan for U.S. ag commodities in which -- this commitment was made in a September 30th, 1994 letter from former USDA Secretary Espy and former OMB Director Rivlin and the needs of U.S.production for export market opportunities.

My written statement provides more detailed information on the aspects of our thoughts on trade negotiations, and we thank you for being able to present our views today.

Now I'd like to give you a copy of this letter that was written by Former Secretary Espy, and in that letter it just says, the enactment of GATT is vital -- this was in 1994. The enactment of GATT is vital to continuing economic expansion of U.S. expanding agriculture opportunities. Our estimates are that implementation of the GATT agreement will lead to a cumulative increase in U.S.agriculture exports, and this increase will result in gaining jobs and so forth.

Then it calls for, we also want to reiterate the Administration's commitment to use all export programs, as well as other programs, to maximize levels allowed under GATT and U.S. law. And our question is, have these been used.

MR. GALVIN: Let me say in response to that, basically, these programs have been fully funded over the last six years and we've been quite aggressive in using, for example, our exporter credit guarantee program, where last year we put out nearly 5.9 billion dollars in export credit guarantees. A little over four billion dollars of that total was actually used by the trade, but we put out 5.8 billion. And I think that was very instrumental in allowing our exports to continue in some of these Asian markets like Korea and others that were really hit by the crises.

We also, as you know, really have an unprecedented wheat donation program under way right now, more than five million metric tons of wheat being donated this year. That by far exceeds anything we've done in the past.

The one area where we've obviously not been as aggressive is in the use of our export enhancement program. And that's not because of unwillingness to, you know, challenge the competition or anything like that, it's basically because of our assessment that it would bias additional market share in the current market environment; and, in fact, it could just further depress prices across the board, even to the point where wheat would go out just for feeding purposes and displace a lot of our corn exports and that sort of thing. And for that reason we just wouldn't be any better off.

So with that one exception, I do think we've been quite aggressive in using all the export tools available to us, including the market access program, the cooperative program, and those other tools that we really have to keep us in the game.

MR. CLEAVINGER: In response to Sharon's question while ago about the opening SPS up and how are you going to do that, we feel like other ountries are going to -- are going to open it up. We’re not going to have to. And we just need to be prepared, that the rules that are in place right now are adequate, and there's no need to make more rules for GMO's. And so therefore, we just need to be prepared on the defensive and just leave things as they are.

MR. ACETO: I have one question. You're the first speaker to bring in the issue of - it's in your statement - of export credit guarantees. And you just mentioned it as well. And I notice that you had said that you want U.S. negotiators to refrain from accepting the rules that would diminish the effectiveness of the program. We've already known or we've already heard from some of the other WTO members that they will be pushing on this issue under the kind of general category of export competition.

In your view, what are some of the elements that do make it effective? Is it the volume or is it the length of the tenure? Because obviously, wheat is a very important commodity that benefits from the program.

MR. CLEAVINGER: Well, we just feel like this is another way to use exports and get export, and if you have these credit guarantees, it allows countries that can come in here and buy more wheat from us. And we just feel like that's a better way to use these programs.

MR. ACETO: Thanks.