We will start this morning with Mr. Leon Graves. Commissioner Graves prior to becoming a Commissioner served as a State Senator in the Vermont Legislature. Prior to that he was a representative. During that time he was a dairy farmer, Commissioner of Agricultural for the State of Vermont. Commissioner Graves.

MR. GRAVES: Thank you, Ron. Good morning.

It's my pleasure to be here to host this Listening Session on behalf of the New England states and the State of New York to provide a very important opportunity for input into the next negotiating session for the WTO, which will be held in Seattle in November.

I would like to begin by thanking my staff at the Department of Agriculture, and specifically Steve Justis for his work and for markets and reduce trade barriers to potential markets. Here in the State of Vermont and in the northeast, we continue to utilize market access program funds through the integral efforts between our state and regional trade organizations, through Food Export USA Northeast, and your own State Department of Agriculture that continue to provide opportunities for moving products abroad and clearing the markets here.

However, if our farmers and exporters experience trade barriers, it inhibits their ability to compete in the international markets.

Today, under the current farm bill and the pricing provisions in the current farm bill, farm gate prices of major commodities are continuing to decline. With milk at $12 a hundred weight or less, hogs at $20 or less, corn below, record low wheat and cotton prices, farmers are forced into an unacceptable situation of selling quantities at levels well below the cost of production.

Congress' response to those concerns expressed during the farm bill debate was to plant fence row to fence row, any or all of the crop that you wanted, that we would find markets for them to continue to support the prices at the international level.

Well, it hasn't happened due to a number of reasons. Farm production continues to rise while prices continue to fall, with ever increasing stocks in storage.

I only raise these issues as an opportunity to point out the sense of urgency, importance and responsibility on our trade negotiators in the upcoming Seattle round of WTO negotiations.

I would like to quote briefly from a U.S. Senate "Dear Colleague" letter to the United States Senate dated July 13th to indicate the significance of this issue. And I quote, "History has demonstrated that the United States can successfully negotiate liberalization in agriculture only in combination with improved results in other sectors. The U.S. farm community has overwhelmingly endorsed this single undertaking approach. For reasons that have yet not been explained, USTR considered this week tabling a paper in Geneva that would have departed from this longstanding principle and would have indicated U.S.'s willingness to incorporate an early harvest or early results concept in the next round. This would have meant potentially concluding negotiations in other sectors before there was a successful conclusion of the agriculture negotiations. For us and for American agriculture, that is unacceptable." And I could not agree more. End of quote.

Agriculture must be negotiated with other issues as a package. USDA must make every attempt to gain much needed concessions on agricultural issues before conceding on non-agricultural issues. We must be willing to play hard ball with our trading partners if we are ever going to level the playing field and increase U.S. market profitability.

I have the good fortune to return Friday from a trilateral U.S., Canadian, Mexican trade meeting that was conducted in Salt Lake City, Utah and I would like to add a few issues that were considered, discussed and agreed upon at that trilateral meeting in preparation for input to the WTO round of negotiations in Seattle.

Agricultural representatives of 44 states and provinces from the three NAFTA countries met at the States-Provinces Agricultural Accord in Salt Lake City, July 15th and 17th. The key objective was to develop common positions for the upcoming WTO negotiations that will provide increased potential for the profitability and long-term viability of our producers.

Our countries must adopt a negotiating strategy that makes agriculture the highest priority for the upcoming WTO round. Negotiating strategies that leave the difficult agriculture issues unresolved will be detrimental to the future growth and prosperity of the agricultural industries in all three countries. Any WTO agreement that does not include substantial improved rules in agricultural trade will be judged a massive failure by our farmers and ranchers.

We urge you to utilize the recommendations as you work to finalize your negotiating strategy:

The sanitary/phytosanitary, commonly referred to as SPS, chapter should remain intact and closed for further negotiation. However, the process supporting SPS must be strengthened and effectively enforced in order to ensure WTO member compliance. Improvements and efficiency of the WTO dispute settlement mechanism are required in order to ensure these issues are resolved and enforced in a timely manner. Too often, scientifically unfounded SPS and technical issues have been used to deny market access for our respective nations' agricultural products, continued successful use of export, erode competitive and profitability. Therefore, we urge you to work toward the elimination of all the record subsidies and pursue the substantive and progressive reduction of trade and production this organization supports worldwide.

Food safety is a primary concern of the agricultural industries and consumers of the three countries. With this in mind, we urge intensified efforts to educate and inform consumers and regulators on scientifically- based issues surrounding technology.

International regulatory measures must be based on sound scientific principles and approval procedures for genetically enhanced products must be effective in ensuring safety. These procedures should not be used as a trade barrier.

The international harmonization of pesticide and animal drug usage and standards must also be a priority. We must work to harmonize to the highest possible standards.

The issues outlined above are paramount to the continued viability of our agricultural industries. As you finalize preparations for the WTO negotiations, it is crucial that you extend every effort to improve our trading position and create an environment that affords increased market opportunities for our producers.

This input will be sent to our USDR, USDA trade representatives and will be signed by Cary Peterson, the President of the National Association of State Departments of Agriculture, Jaime Rodriguez Lopez, who is President of the Mexican Association, and Eric Upshall, Chair of Provincial Ministers of Agriculture, Canada.

Any decisions that are made must be made with farm profitability in mind. Our farmers in this country at the present time are on the verge of financial collapse, with a significant number due to exit the business within the next several months. This can and will lead to further concentration, vertical integration, and the demise of our family farms, the backbone of American agriculture.

You have a real challenge ahead of you in the future and I look forward to being able to participate and have input into that debate.

Thank you very much.