[Senate Hearing 111-1026]
[From the U.S. Government Publishing Office]
S. Hrg. 111-1026
PROMOTING AGRICULTURAL EXPORTS:
REVIEWING U.S. AGRICULTURAL TRADE
POLICY AND THE FARM BILL'S TRADE TITLE
=======================================================================
HEARING
before the
COMMITTEE ON AGRICULTURE,
NUTRITION, AND FORESTRY
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
AUGUST 4, 2010
__________
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Committee on Agriculture, Nutrition, and Forestry
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COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY
BLANCHE L. LINCOLN, Arkansas, Chairman
PATRICK J. LEAHY, Vermont SAXBY CHAMBLISS, Georgia
TOM HARKIN, Iowa RICHARD G. LUGAR, Indiana
KENT CONRAD, North Dakota THAD COCHRAN, Mississippi
MAX BAUCUS, Montana MITCH McCONNELL, Kentucky
DEBBIE STABENOW, Michigan PAT ROBERTS, Kansas
E. BENJAMIN NELSON, Nebraska MIKE JOHANNS, Nebraska
SHERROD BROWN, Ohio CHARLES GRASSLEY, Iowa
ROBERT CASEY, Jr., Pennsylvania JOHN THUNE, South Dakota
AMY KLOBUCHAR, Minnesota JOHN CORNYN, Texas
MICHAEL BENNET, Colorado
KIRSTEN GILLIBRAND, New York
Robert Holifield, Majority Staff Director
Jessica L. Williams, Chief Clerk
Martha Scott Poindexter, Minority Staff Director
Anne C. Hazlett, Minority Chief Counsel
(ii)
C O N T E N T S
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Page
Hearing(s):
Promoting Agricultural Exports: Reviewing U.S. Agricultural Trade
Policy and the Farm Bill's Trade Title......................... 1
----------
Wednesday, August 4, 2010
STATEMENTS PRESENTED BY SENATORS
Lincoln, Hon. Blanche L., U.S. Senator from the State of
Arkansas, Chairman, Committee on Agriculture, Nutrition, And
Forestry....................................................... 1
Chambliss, Hon. Saxby, U.S. Senator from the State of Georgia.... 4
Panel I
Kirk, Ron, Ambassador, U.S. Trade Representative, Washington, DC. 6
Panel II
Mencer, Joe, Board Member, USA Rice Federation; Board Member, USA
Rice Producers Group; Vice Chairman, USA Rice Council; and
Arkansas Rice Producers Group, Lake Village, Arkansas.......... 35
Murphy, Danny, Vice President, American Soybean Association,
Canton, Mississippi............................................ 33
Rhodes, Duane, Vice President of Export, Poultry and Prepared
Foods, Tyson Foods; Second Vice Chairman, USA Poultry and Egg
Export Council; on behalf of the National Chicken Council,
Springdale, Arkansas........................................... 37
Roggie, Brent, General Manager and Chief Operating Officer,
National Grape Cooperative Association; on behalf of The
National Council of Farmer Cooperatives, Westfield, New York... 40
----------
APPENDIX
Prepared Statements:
Kirk, Ron........................................................ 48
Mencer, Joe...................................................... 50
Murphy, Danny.................................................... 63
Rhodes, Duane.................................................... 66
Roggie, Brent.................................................... 79
Document(s) Submitted for the Record:
Roggie, Brent:
Additional comments for the Record........................... 86
Question and Answer:
Lincoln, Hon. Blanche L.:
Written questions to Ambassador Ron Kirk..................... 92
Chambliss, Hon. Saxby:
Written questions to Ambassador Ron Kirk..................... 94
Grassley, Hon. Charles E.:
Written questions to Ambassador Ron Kirk..................... 97
Klobuchar, Hon. Amy:
Written questions to Ambassador Ron Kirk..................... 99
Lugar, Hon. Richard G.:
Written questions to Ambassador Ron Kirk..................... 100
McConnell, Hon. Mitch:
Written questions to Ambassador Ron Kirk..................... 101
Kirk, Ron:
Written response to questions from Hon. Blanche L. Lincoln... 102
Written response to questions from Hon. Saxby Chambliss...... 105
Written response to questions from Hon. Charles E. Grassley.. 109
Written response to questions from Hon. Amy Klobuchar........ 113
Written response to questions from Hon. Richard G. Lugar..... 114
Written response to questions from Hon. Mitch McConnell...... 118
PROMOTING AGRICULTURAL EXPORTS:
REVIEWING U.S. AGRICULTURAL TRADE
POLICY AND THE FARM BILL'S TRADE TITLE
----------
Wednesday, August 4, 2010
United States Senate,
Committee on Agriculture, Nutrition, and Forestry,
Washington, DC
The committee met, pursuant to notice, at 9:39 a.m., in
Room 328-A, Russell Senate Office Building, Hon. Blanche
Lincoln, Chairman of the committee, presiding.
Present or submitting a statement: Senators Lincoln,
Baucus, Stabenow, Klobuchar, Gillibrand, Chambliss, Lugar,
Cochran, Roberts, Johanns, Grassley, and Thune.
STATEMENT OF HON. BLANCHE L. LINCOLN, U.S. SENATOR FROM THE
STATE OF ARKANSAS, CHAIRMAN, COMMITTEE ON AGRICULTURE,
NUTRITION, AND FORESTRY
Chairman Lincoln. Good morning. The Senate Committee on
Agriculture, Nutrition, and Forestry will now come to order.
This is the third in a series of hearings to help this
committee prepare for the next farm bill. Today's focus will be
on the state of our agricultural exports and the export
promotion programs included in the farm bill.
I want to thank my very good friend, Senator Chambliss, the
Ranking Member of the committee, for helping me organize this
hearing and for being such a great partner on the committee and
for being a steadfast advocate for our nation's farmers and
ranchers. Senator Chambliss and I both recognize how important
trade is to U.S. agriculture.
I also want to thank many other distinguished colleagues
for their attendance today and for all the work that they do on
behalf of rural America. I am proud to chair a committee which
has always been bipartisan and where we put people above
partisan politics, and I am glad that everyone is here today
and I know there will be others joining us.
As we work to get our economy back on track, we must focus
on creating jobs in our rural communities. In President Obama's
State of the Union Address, his comment that one of the best
ways to create jobs was to increase our exports. He made a
commitment to put our country on a path to double U.S. exports
within five years. I applaud this commitment and believe that
U.S. agriculture can truly lead the way.
Today, we will focus on how we create that demand and give
our farmers and ranchers access to markets that will ensure
their success and the success of our rural communities.
We are blessed to have a bounty of food produced here in
the United States. Our farm and ranch families provide this
bounty with greater respect for the environment than anywhere
else in the world. And we are fortunate that we live in an age
where we can share this bounty with the world, a world that is
growing rapidly and desperately in need of safe food.
We have a number of excellent witnesses that we will hear
from today. I would like to extend a very special welcome to
Ambassador Ron Kirk, U.S. Trade Representative, and I would
also like to say a welcome to fellow Arkansans Joe Mencer and
Duane Rhodes. I appreciate everyone's attendance and input on
this very important issue.
Agriculture is a sector of our economy where we are proving
that we can successfully meet the export demands that will help
rebuild our U.S. economy. For every additional $1 billion of
agricultural products we export, we can create 9,000 jobs.
These are long-term jobs that we desperately need. Agriculture
is one of the few U.S. sectors where we have a trade surplus,
and we actually export more than we import. In 2009, our net
trade surplus was a very impressive $27 billion.
American farmers and ranchers tell me every day we must
continue to look for other ways to grow our exports. My
immediate response is that we don't have to look any further
than the 90 miles south from our own borders in the U.S., and
that is Cuba. Relaxing trade restrictions on travel and trade
with Cuba represents a tremendous opportunity to grow our
economy. Even with the current restrictions in place, U.S.
agricultural exports to Cuba have averaged about $470 million
over the last five years, accounting for about a quarter of
Cuba's food and agricultural imports. A recent study by Dr.
Rossen of Texas A&M University found that passage of a bill
relaxing trade and travel restrictions with Cuba would nearly
double that amount annually and generate increased business
activity valued at $1.1 billion, creating 6,000 new jobs.
While the benefits would reach all parts of the U.S.
economy, Arkansas, my home State, is uniquely prepared to meet
Cuban demand for rice and poultry, both of which land in the
top five of overall Cuban agricultural imports. Throughout my
career, I have cosponsored legislation that will open up this
market once and for all, and I am grateful to Chairman Baucus
for his work in those areas and in all the trade areas and we
are pleased that he is here today.
I will continue to fight to see Congress take this up this
year, and as the trade embargo on Cuba approaches its 50th
anniversary without having had a measurable impact on the
behavior of the government of Cuba, it is high time that we
consider alternative approaches. Everyone should agree that 50
years of a failed policy is unlikely to yield a different
result than it already has.
We can also increase exports by pursuing more Free Trade
Agreements. The first step along that road must be to
expeditiously consider the three pending FTA negotiated
agreements more than three years ago with South Korea,
Colombia, and Panama, and put them into effect. Aside from
lingering concerns over beef access into South Korea, these
three FTAs are broadly supported by U.S. agriculture and could
add up to several billion dollars of overall U.S. agricultural
exports, creating thousands of jobs in the process.
Such action would also allow U.S. products to maintain a
competitive balance with other major agricultural exporters,
such as Canada and the EU. We have also negotiated FTAs with
these countries, who threaten to jump ahead of us in terms of
tariff preferences, not to mention having the added benefit of
keeping our word with our friends in the global community that
has steadfastly stood by our side in sometimes hostile regions
of the world.
If we succeed in these initial steps, these actions could
provide important momentum for launching negotiations with new
sets of trading partners. That effort will require providing
the President with the Fast Track authority he will need to
move forward.
I hope that in this next stage, we can focus on countries
with robust markets. Of our existing FTA partners, only Mexico,
Canada, and Morocco have populations exceeding 30 million. And
even if we add the pending FTAs to those lists, those markets
would account for only about 380 million foreign consumers, or
less than six percent of the world's population outside the
United States.
Our highly productive farmers deserve the chance to compete
and sell their products in a free market. I am convinced that
if we are given unhindered access to the world's markets, they
will rise to that challenge. We cannot afford to stay on the
sidelines. The costs of doing so are so far greater.
I want to thank Ambassador Kirk for the hard work he has
undertaken at USTR and his colleagues at USDA in knocking down
unfair barriers to U.S. food and agricultural products. The
sooner we identify and target these barriers as they emerge,
the sooner trade flows can resume.
One prominent example was the Russian ban imposed on U.S.
poultry. I was very pleased to see the administration's
positions in response to concerns that I and many of my
colleagues have expressed. The Russian market is worth $100
million annually to Arkansas producers, and the decision to
lift the ban will help save 89,000 poultry jobs that are
critical to Arkansas's economy. I am certainly proud to report
that first shipments of U.S. poultry are hoping to arrive in
Russia in the coming months. We know that you are continuing to
work on that issue with us, Ambassador Kirk, and we are looking
forward to a positive outcome and how we can be of assistance
to you.
This committee authorizes and funds an array of trade
promotion programs under the trade title of the current farm
bill, including the Market Access Program, Foreign Market
Development Program, the GSM 102 Export Credit Guarantee
Program, and Technical Assistance for specialty crops. Each of
these programs help U.S. companies market their products in
foreign countries.
USDA and the U.S. Agency for International Development also
operate international food assistance programs, such as Food
for Peace and the McGovern-Dole Food Education Program, which
we are indebted to Senator Lugar for all of his hard work in
those areas. These programs will be a central focus as we begin
debate on the provisions of the next farm bill, and I certainly
welcome the second panel's feedback on how well they do work
and how they might be improved.
Again, thanks to all of you all for being here today and I
will now turn to our Ranking Member, Senator Chambliss, for his
opening statement.
STATEMENT OF HON. SAXBY CHAMBLISS, U.S. SENATOR FROM THE STATE
OF GEORGIA
Senator Chambliss. Well, thanks very much, Madam Chairman,
particularly for holding this hearing today. I think this may
be the most important oversight hearing that we hold as we move
into the writing of the next farm bill, because as we see our
budget in agriculture, and particularly for farm bills, decline
as they have over the last several years and as we see the
influx of policy demands coming out of the WTO, trade issues
become more and more critical, and the future of American
agriculture, I think, lies in our ability to export the finest
quality of agricultural products of anybody in the world. Your
leadership on this has been very strong and we appreciate your
interest from a farmer's standpoint in ensuring that we have
good trade agreements in place and that we monitor those
agreements as we move forward.
Earlier this year, the President announced the National
Export Initiative and I support the plan and goal of doubling
U.S. exports of goods and services over five years. But the
Initiative must have a clear vision and the proper support from
the administration in order to be successful. I remain
skeptical this is the case, since the Initiative lacks tangible
metrics that will measure the results, and I wonder if a
substantial downpayment is not simply achievable by
implementing the pending Free Trade Agreements and working with
key partners that share a common interest in lowering tariffs
and other barriers to trade.
U.S. agriculture exports remain one of the few bright spots
on the domestic economy, with a positive balance of trade, as
you noted, Madam Chairman, noting almost $27 billion in 2009.
Agriculture products make up over ten percent of all U.S.
exports and despite the global economic crisis, exports last
year were up by almost $13 billion compared to the year before
the global economic crisis. This success is due in no small
part to the demand for high- quality agriculture products and
the continuing efficiency and productivity of farmers and
ranchers in the United States.
Despite this success, competition for new and existing
markets continues to grow as other agriculture exporters
aggressively negotiate Free Trade Agreements. In order to
increase agriculture exports, the administration must do more
than pay lip service to initiatives that lull us into a false
sense of action.
As we await the first report on the NEI, the administration
continues to sit on the South Korea, Colombia, and Panama Free
Trade Agreements. These FTAs are ready and represent real and
tangible gains for the agriculture sector in the United States.
If we are serious about promoting exports, the President should
submit all three and press Congress for their immediate
approval.
While opening up new markets is essential, maintaining
existing ones and providing stable access to growing demand is
of equal importance. It is here where I have much praise for
Ambassador Kirk and his team, along with his counterparts at
the Department of Agriculture and the Foreign Agriculture
Service. The growing prevalence of sanitary, phytosanitary, and
other technical barriers to trade threaten to erode key export
markets and proliferate in the new ones.
The recent bilateral talks between the United States and
Russia to resume poultry exports is just one example of a
litany of disputes that confront our farmers and ranchers
around the world. And when President Medvedev was here the
other day, I had the opportunity to mention this personally in
a meeting that I was involved in with him, and actually, the
announcement had already been made, Mr. Ambassador, that Russia
was going to start accepting our poultry products again and I
was very complimentary of him and thanked him for the effort
that had been made by both he and President Obama to get that
negotiation concluded.
Then in the last few days, we find out that we have hit
another stumbling block there, and we had the opportunity to
visit with you earlier today to talk about this. I know it is
very much on your radar screen and the Agriculture Trade
Minister in Russia is being a little difficult to deal with.
Now, Senator Roberts and I had an encounter with that gentleman
several years ago and I would suggest if you need some help,
send Senator Roberts in as your shotgun rider----
[Laughter.]
Senator Chambliss. --because I assure you, he made himself
known to the Russian Trade Minister when we were discussing
imports into Russia several years ago. He has been banned from
Russia since then, but----
[Laughter.]
Senator Chambliss. Not really. Not really.
In addition to the proliferation of these barriers, there
is the challenge of negotiating a multilateral agreement in the
World Trade Organization Doha Round. This is no simple task, as
the talks move into the ninth year of negotiations. The current
impasse is due in no small part to what Ambassador Kirk rightly
notes is the continued resistance of some members to engage in
sustained and meaningful negotiations.
Let me state unequivocally that the deal on the table is
insufficient and unbalanced from the perspective of Congress.
While other countries look to the United States to give more in
order to reenergize the round, I would suggest unilateral
action will harden views in the Senate, and particularly in
this committee, that the Doha Round is fatally flawed. A
successful Round is possible, but only when Brazil, China, and
India recognize that their rising influence in the
international economy requires shared sacrifices in order to
achieve individual and shared gains.
Let me conclude by noting the importance of the farm bill
trade programs and to express my disappointment that we could
not have with us today a representative of the Department of
Agriculture. The Department is a key partner in expanding U.S.
agricultural exports and their perspective is critical to the
future success of the sector.
Madam Chairman, thanks again. I look forward to the hearing
and to hearing our witnesses today.
Chairman Lincoln. As always, thanks to our Ranking Member,
Senator Chambliss. I agree with you that opening those markets
is absolutely critical to our agricultural producers.
[Whereupon, at 9:54 a.m., the committee proceeded to other
business.]
[Whereupon, at 9:55 a.m., the committee resumed.]
Chairman Lincoln. Again, thanks to Senator Chambliss, and
again, I am very grateful that we have Chairman Baucus and
Ranking Member Grassley from the Finance Committee as we have
got much expertise in the trade arena from so many of our
members here in the committee, but certainly with that
jurisdiction in Finance, we are glad they are here.
We have two panels today and we are eager to hear from our
witnesses and get to questions, so in the interest of time, I
am going to ask members' opening statements be submitted for
the record and say a very hearty welcome to Mr. Ambassador.
Thank you for coming to the committee. Thank you for your
testimony today on behalf of your agency. Your written
testimony will be submitted for the record, so we hope that you
can keep your remarks to five minutes. But once again, a very
hearty welcome to the Senate Agriculture Committee and thank
you for coming.
STATEMENT OF AMBASSADOR RON KIRK, U.S. TRADE REPRESENTATIVE,
WASHINGTON, DC
Ambassador Kirk. Chairman Lincoln, Ranking Member
Chambliss, and members of the committee, I really appreciate
the opportunity to come and share with you this opportunity to
talk about what we are doing to advance trade in agriculture.
As both the Chairman and Ranking Member noted, this is one area
of our exports in that we have a surplus and the administration
is working aggressively every day through our enforcement
efforts and others to do all we can to assist our farmers and
ranchers and others.
I would like to say before I begin my remarks, in response
to the Ranking Member's comment about Senator Roberts,
considering the fact, and I always take every opportunity to
remind you, at USTR, I think you get absolutely the biggest
bang for your buck in that we are the smallest staff, and I
think give you an incredible return. But, Senator Roberts, if
you or any other member will raise your right hand, I am
privileged to deputize you----
[Laughter.]
Ambassador Kirk. --as U.S. Trade Ambassadors pro bono. We
need all the help we can get. But I don't know that I am any
more welcome in Russia than you are, Senator Roberts.
[Laughter.]
Ambassador Kirk. Well, it is modest, trust me. But we do
have those rights and privileges and appurtenances thereto.
So much of what I will say in my remarks, the Chairman and
Ranking Member have said, but it does bear repeating. With 95
percent of the world's population outside of the United States,
not just the growth and long-term vitality of our American
agricultural industry, but I think the future of our American
economy is very much dependent on our ability to access these
markets and the world's consumers.
Despite the recent global economic downturn, as has been
noted, U.S. agricultural exports have continued to expand, more
than doubling since 2000, from $50 billion to over $100 billion
in the current year. And has been noted, last year, we exported
$97 billion in agricultural products, supporting a $27 billion
surplus in agricultural trade and supporting roughly 8,000 jobs
in the United States.
The Obama administration is committed to strengthening
American agricultural exports and supporting the good jobs that
come with them. As you noted, Madam Chair, in the President's
State of the Union Address, the President set a goal for us to
double America's exports over the next five years with the
inherent understanding that it could create up to two million
additional jobs in the United States. To that end, he created
the National Export Initiative to leverage all of the resources
across the administration to help American farmers, ranchers,
businesses, manufacturers, or service providers and their
workers succeed through global trade.
At USTR, we are taking the lead in pursuing new
opportunities, but with a special focus on the world's fastest
growing markets through initiatives with our individual trading
partners, across economically significant regions, and in other
multilateral fora. We are also seeking to resolve issues on
many of our pending Free Trade Agreements and are working to
bring to you as soon as possible the pending Free Trade
Agreements with Korea, Colombia, and Panama. All of these
agreements hold significant economic promise for our farmers
and ranchers. For example, in 2009, Colombia was among the
fastest growing among the Central and South American markets
for American farm exports, and Korea is currently our fifth
largest agricultural export market.
As you know, at the just-concluded G-20 summit in Canada,
President Obama expressly directed me to intensify our
negotiations on Korea in particular with the goal of being able
to conclude that by the President's visit for the G-20 summit
in November. Likewise, a week later when we announced our
National Export Promotion Council, the President also
encouraged us to move forward and try to conclude the
agreements with Colombia and Panama.
In the Asia Pacific, we are leading the negotiation towards
a new high-standard 21st century agreement through the Trans-
Pacific Partnership that will ensure America's farmers and
ranchers have access to this incredible dynamic and growing
market.
Globally, we remain committed to an ambitious and balanced
conclusion to the Doha Round, but as I said to many of you when
I visited with you during my transformation and others, Senator
Chambliss, you are right. What is on the table is not
sufficient. It won't get us there. And the President and all of
us have been very clear that no three economies have benefitted
more from trade liberalization than China, Brazil, and India.
We think it is only right that they now accept responsibilities
commensurate with those blessings.
As we pursue these new markets, the Obama administration
will also work to ensure that our farmers and ranchers benefit
from our existing Free Trade Agreements. We now have greater
access to many markets around the world, I am proud to say,
because I worked over the last 18 months to resolve the
outstanding disputes.
For example, after the H1N1 scare, we worked very quickly
with Secretary Vilsack and Secretary Napolitano and throughout
the administration to reopen markets in Russia, China, Ukraine,
Honduras, Korea, and many others to U.S. pork products. Last
year, three months after I took office, we resolved a 20-year
dispute with the European Union that allowed us to resume
exports of U.S. beef to Europe, and we are now exporting about
$48 million in beef to the European Union through the end of
May. And as has been noted, we are working with Russia to try
to reopen their market for our poultry exports.
I see that I am over my time, and Madam Chair, I will
submit the balance of my comments for the record. But we do
look forward to working with this committee to open new markets
and advance the interests of America's agricultural exporters,
and I look forward to entertaining your questions. Thank you.
[The prepared statement of Ambassador Kirk can be found on
page 40 in the appendix.]
Chairman Lincoln. Thank you, Mr. Ambassador, and we
certainly appreciate your testimony and your presence with us
today.
I will just start with a few questions and would like to
begin with an issue of particular importance to me and my State
of Arkansas. That is the terms of our trade with Cuba. Cuba is
located less than 100 miles from Florida, and with a large
population and a strong demand for U.S. agricultural products.
Yet our government continues to maintain barriers on U.S.
exporters who want to meet that demand in Cuba.
I will certainly use one of my largest commodities as an
example, rice. As recently as 2004, U.S. rice exports to Cuba
were valued at $64 million. However, an unfortunate
interpretation of a specific provision of the Export
Enhancement Act in 2005 by the Treasury Department caused Cuba
to seek other sources of rice. And last year, the U.S. shipped
no rice to Cuba, and I think that is certainly a critical part
of what we are looking for, is opening markets that are close
and that bring value to our workers and the job creation that
we need to see happen in this country.
A bill that I have cosponsored along with Senator Baucus
and others aims to clarify that provision so that agricultural
exports can flow more freely to Cuba, and I hope working with
Senator Baucus we can move forward swiftly on something in that
bill, or reporting out that bill. It will still only capture
part of the great potential that the country holds for
producers, but potentially valued in the hundreds of millions
for rice for our State and other rice growing States, as well.
So maybe you can help us by explaining the administration's
position in continuing to deny really our exporters the ability
to compete for and recapture the Cuban market, which they are
quickly and surely losing to China and Vietnam and to other
countries at this juncture.
Ambassador Kirk. Senator Lincoln, as you know, President
Obama has made it clear that he believes that now is an
appropriate time to examine our policy in relationship with
Cuba. As you know, last year the President by Executive Order
released some of the travel restrictions for families on Cuba,
and like you, we see that even under our current constraints,
our agricultural exports to Cuba are not insignificant, just
shy of $700 million, and I think we have calculated almost $3
billion over the last several years. So we agree that this
represents a very important market opportunity.
But those of us in the administration also recognize and
respect the prerogative of Congress to weigh on this and
welcome the debate that has begun under your leadership and
Chairman Baucus and others, as well as, you know, Chairman
Peterson had a hearing on the House side, I guess just several
weeks ago. So we await some direction from Congress on this,
but do believe this could be an extraordinary opportunity, in
particular, for our farmers and ranchers, particularly those in
rice and grains.
Chairman Lincoln. Thank you. Also, three years ago, I
visited Colombia and witnessed firsthand the great
transformation that country has undergone. And yet, today, we
still have not ratified the FTA which the country signed in
2007. I just think it is a huge missed opportunity. We have
spent tremendous resources in getting to this point, but quite
frankly, really, the main losers are not the Colombians but
more so our farmers and our manufacturers. Colombians enjoy a
duty-free access to our markets for nearly 100 percent of their
products, as you well know, yet every single one of our exports
suffers from tariffs that go as high as 200 percent. Even
worse, the Canadian Parliament has just ratified an FTA with
Colombia giving them a major competitive edge over U.S.
producers.
So enacting this FTA would not only boost U.S. exports by
$1.1 billion annually, creating about 10,000 jobs and
sustaining many, many more. I certainly want to urge the
administration to advance this agreement as quickly as possible
and to submit it to Congress for approval for multiple
reasons--the job creation, the potential for our economy, but
also the fact that we are going to lose out to other countries
who are in there and quickly by the first of the year are going
to have some preference that we are not going to enjoy.
Ambassador Kirk. Well, Madam Chair, as I know you were kind
enough to acknowledge your fellow Arkansans, but Texas thinks
of ourselves as at least a friendly cousin. In our part of the
world, honestly, we would say that yours is not so much a
question as an answer. There is nothing you have said that I
don't agree with. The President agrees with you.
There have been concerns about the labor and justice
provisions, which we have worked diligently with the Uribe
administration, and like you, I would say I believe the
progress that President Uribe and his administration have made
in addressing violence is significant. It is real. And it is
important to note that even the ILO now recognizes the progress
that Colombia has made and have downgraded them in terms of
their listing of countries with unacceptable violence. And we
look forward to working with the new administration--I believe
they will be sworn in, I think, Friday or Saturday of this
week--to see if we can't conclude our outstanding issues with
the Colombians and we can bring this agreement to you as soon
as possible.
Chairman Lincoln. Well, I hope we can move swiftly, and I
think it is very important in terms of our economy and putting
people back to work and, again, creating for ourselves in the
global economy and the global marketplace greater
opportunities, particularly in this hemisphere. So I look
forward to working with you to help make that happen.
I see my time is up, so I will turn to my colleague,
Senator Chambliss.
Senator Chambliss. Thanks very much, Madam Chairman.
Mr. Ambassador, on behalf of America's farmers and ranchers
and the policy makers here involved in agriculture, I want to
thank you for continuing the effort that I really think started
with Ambassador Portman, continued by Ambassador Schwab, and
now by you in being very active and very definitive and vocal
about the profile that American agriculture needs to have with
respect to trade agreements. I think in times past, we may have
been the sacrificial lamb, but you have been a real stalwart
and I appreciate the dialogue that we have had and the efforts
that you and your staff have gone to with respect to
agriculture.
With respect to the Doha Round, General Lamy recently
stated, and I quote, ``There are signs of a new dynamic
emerging,'' in the small group discussions and he has called on
negotiators to build on this with a mid-October discussion to
evaluate progress. At the same time, it seems that negotiations
remain at an impasse with no breakthrough emerging from the
main negotiating countries.
Now, you recently told reporters that you feel more
encouraged about the Doha Round and that real progress may be
possible this year if advanced developing countries are willing
to come to the bargaining table. Have the small group
discussions produced any changes in the negotiating positions
of key countries, such as China, India, and Brazil?
Ambassador Kirk. Well, Senator, first of all, thank you for
your acknowledgment of our team and our efforts on behalf of
agriculture. It is central to our work at USTR. But I would
like to note that one of the things I am most proud of is just
the seamless relationship we have built with the Department of
Agriculture and Commerce to make sure that we are using all of
our resources effectively.
With respect to Doha, I can't tell you how welcome Director
General Lamy's statement is, because it has taken us a while to
get him to a point to acknowledge, frankly, that, as we say,
getting on that same old bicycle they have been on for the last
nine years wasn't going to get us there. And if I might, I
think the credit for the change in the negotiating environment
in Geneva is singularly due to the insistence of the United
States, from President Obama on down, that there had to be a
reality check among all of the partners of Doha and we had to
begin to look at the world the way it is now versus ten years
ago.
And so we have moved to understand that they had to
supplement our negotiations in Geneva with these bilateral
discussions, frankly, trying to get Russia, Brazil, India, and
China. And I want to make it careful, when I was asked about my
outlook, I don't know that I would say I am overly encouraged.
I am less discouraged than I was before.
I would say that our efforts have led to an acknowledgement
that there needs to be more on the table. I think the poorest
countries now believe us when we tell them we aren't asking for
any additional contributions from them, but that, frankly, it
is in the poorest countries in the world's interest to make
sure that these three growing economies, like China, India, and
Brazil, give them access to their markets just as, frankly, the
United States and the European Union have done.
And so that is where we are beginning to see the change,
and even though it is subtle, for the first time, you have some
countries other than the developing economies, like the U.S.
and Canada, beginning to say to Brazil, India, and China, why
don't you come to the table and negotiate, because that is
where we are going to be able to close the gap.
So we have had a number of bilateral meetings with each of
those partners. India, at least, has been the most open to
dialogue with us. China has been wonderfully Chinese. I will
leave it at that. But we continue to believe that now that we
are beyond the elections in Japan and hopefully with Brazil,
that if we can sit down and do the tough negotiations that have
to be made, we might.
But I just want to emphasize, because I said it to you all
when I came before you, and President Obama made it plain in
Canada, what is on the table is insufficient and we would not
bring that to this Congress and the American public. But what
we are seeking is not just for America. We think it is in the
interest of the developmental nature of Doha to have a much
more balanced and ambitious package and that is what we are
going to work for.
Senator Chambliss. Great. Yesterday, you were quoted as
saying that the success of the African Growth and Opportunity
Act should not be tied to the export of textiles and apparel,
that countries under the Preference Program should look to grow
their economies through other trade, including in value-added
exports made from the continent's new raw materials. You
correctly note that textile production is crowded, with
multiple centers of production around the world.
At the same time, here in Congress, trade preference
legislation for developing countries often focuses exclusively
on textiles. Is this a short-sided approach, and should we look
to other development models that build around indigenous
industry rather than attempt to create new ones?
Ambassador Kirk. Well, Senator, I don't know that I was
much of a legislative aide when I worked for Senator Bentsen,
but I learned enough not to ever describe any efforts by
Congress as short-sighted, so I won't say that.
[Laughter.]
Ambassador Kirk. I will say this, that in the case of AGOA,
we are pleased with the progress we have made in the last ten
years, but we are extraordinarily frustrated. Through the
generosity of this Congress, 97 percent of products produced in
Africa can be exported to the United States duty-free, and
there are almost 6,500 individual products that you have given
us the privilege to extend duty-free preference, yet less than
400 products are utilized.
So rather than just insisting on more textiles, we have
encouraged them to begin to look at the value-added stream, and
working with partners through U.S. AID and others, beginning
them to understand, you don't just have to sell all your cotton
to China. Why don't you contract with U.S. companies and make
the T-shirts, or shoe leather, or the wood products, and begin
to look at their extracted materials, as well, and particular
partnerships with U.S. interests and our advances in technology
to build the income stream from that, as well. And I think if
that model works in Africa, we are going to encourage our other
partners to do so.
The American public, this Congress, I think, have been
wonderfully generous in extending preferences to the poorest
countries in the world. But with the budgetary constraints we
have now, we have been very honest with them. They can't just
look to us to expand those. They are going to have to work
harder to diversify, I think, within their countries, which
would be to their benefit and, we think, hopefully for our
exporters, as well, as they develop more consumptive capacity.
Senator Chambliss. Thank you very much.
Chairman Lincoln. Thank you, Senator Chambliss.
I would just like to take a very quick moment of personal
privilege and welcome two very special individuals. Mr. Atwood
Bell and Abigail Messier. Mr. Bell is from Jonesboro, Arkansas,
and a retired educator and a veteran of both the Korean War and
World War II. He is joined by his granddaughter, Abigail
Messier, of Saratoga Springs, New York. I just wanted to
welcome both Abigail to the Agriculture Committee and Mr. Bell,
give him a good welcome and a very big thanks for his service
to our country.
[Applause.]
Chairman Lincoln. Senator Johanns?
Senator Johanns. Thank you, Madam Chairman.
Mr. Ambassador, it is good to see you. Let me, if I might,
start my questions by reading something to you that I think you
are very familiar with. I was sitting at the State of Union and
the President said this. He said, ``So tonight we set a new
goal. We will double our exports over the next five years, an
increase that will support two million jobs. We have to seek
new markets aggressively, just as our competitors are,'' which
they are.
Since that time, have you started any new bilateral
discussions that might lead to negotiations of a trade
agreement with any other countries out there?
Ambassador Kirk. Not in a bilateral sense. We have begun
perhaps the most ambitious effort that we have undertaken in
the last several years when the President announced at last
year's APEC Summit that we would move forward with the
negotiations under the Trans-Pacific Partnership. As the
Chairwoman noted, we have a number of bilateral agreements, and
some would say there are economies that would question whether
their economy is significant enough to really make a
difference. The Trans-Pacific partnership, I think, provides us
a unique opportunity to have market access for all American
exporters in what is going to be, by the estimates of all
economists, the major center for economic growth over the next
ten to 15 years, and that is the entire Asia-Pacific region,
so----
Senator Johanns. So other than that, no new efforts within
any other countries?
Ambassador Kirk. Well, we have a number. In terms of FTAs,
no. We are working to conclude bits with several economies, but
I----
Senator Johanns. Okay. And Mr. Ambassador, I think you
would agree with me, no country is going to seriously negotiate
with you without Trade Promotion Authority. I mean, at some
point, they lay all their cards on the table, all face up, they
shake hands, they have got a deal. And without TPA, you say to
them, now you get a chance to try to convince 535 others who
are free to amend the agreement. So you are kind of powerless
in this regard, aren't you?
Ambassador Kirk. Well, I wouldn't say I am powerless, but
it would certainly--it would be very much to our advantage for
us to address the issue of new Trade Promotion Authority in the
very near future.
Senator Johanns. So why--I have talked about this on the
floor. This expired during the Bush administration, as you
know. Congress at that time made it very clear they weren't
going to extend it for President Bush. Why now, when you have
such control over the House and the Senate, why hasn't the
President said, Ambassador, go over there to Congress and let
us start working on TPA?
Ambassador Kirk. Well, one, we have had quite a bit on our
plate. Second, you all have been a little bit busy the last 18
months, and the reality is, I mean, obviously I advocate for
that, Senator, and will continue. But I believe with the work
we have to come in and, frankly, begin to restore the American
public's confidence in the value proposition of trade and the
balance of trade, the focus we have made on enforcement that a
number of you have referenced, our efforts to conclude the
pending Free Trade Agreements, there will be a time in the near
future that we will come and initiate discussions with Congress
for Trade Promotion Authority, certainly with respect to the
Trans- Pacific Partnership, and if we can get a package that we
think merits your consideration, we will have to address that
for the Doha Agreement, as well.
Senator Johanns. Well, wouldn't you agree with me, though,
that you are not going to be successful with any effort, Trans-
Pacific Partnership or anything, without TPA, because you can't
promise them that there is ever an end to the negotiations
unless you have EPA.
Ambassador Kirk. I mean, Senator, unquestionably, we will
have to have Trade Promotion Authority. But I would say it has
not been a hindrance, at least to the first two rounds of our
negotiations under the Trans-Pacific Partnership.
Senator Johanns. Let me share some statistics with you,
changing focus to the three pending agreements. According to
the Ways and Means Committee, in 2009, U.S. agriculture exports
to Colombia decreased by 48 percent. Failure to implement the
agreement has resulted in an 87 percent decrease in U.S. wheat
exports, Ways and Means report. Between 2008 and 2009, American
companies exporting to Colombia lost $811 million in sales of
corn, wheat, soybeans, and soybean oil, same report. Already in
2010, U.S. agriculture exports have fallen by another 45
percent.
I cite these statistics to point out that in my judgment,
and I work these issues just like you have, we are losing this
market because we can't assure Colombia we are serious about
ever submitting their trade agreement. But the biggest concern
for me is one of our key partners out there from an
international standpoint is South Korea, and I am worried that
in that part of the world, folks are going to reach the
conclusion that this administration is powerless to get the
South Korean Trade Agreement approved. Could you comment on
that?
Ambassador Kirk. Well, first of all, I share your concerns
very much about our loss of market share in Colombia and
others. It is one of the reasons I have invested so much time
in not just the agriculture communities, but frankly, those
communities that are most concerned about the issues of
violence and justice in Colombia, because the reality is we are
going to have to be able to build strong bipartisan support in
the House to move that. And so the time we have invested over
the last year in going around the country to places like
Detroit and Pittsburgh and the Carolinas and leaving for Maine
tonight is time that I think is going to pay off in having us
have that balanced argument that we are going to have to have
in the House to be able to move these forward.
Secondly, I think the relationship between the United
States and South Korea could not be stronger, as evidenced by
the recent commitments under President Obama to President Lee
on a number of fronts. And while occasionally I get comments
from our partners about the domestic environment in the United
States, frankly, Senator, I push back hard on that, and I am
kind of tired of our trading partners who always hide behind
and worry about the attitude in Congress. And I remind them
that there is never the right time, in my estimation, to bring
a bad deal to the American public. But notwithstanding what
people may perceive to be the environment and Congress, when we
get a deal right, we always find a way to get it passed.
As Senator Bentsen liked to say, I have got a well-worn
face. I am not quite as old as I look, but I was around, was
Secretary of State to Governor Ann Richards when we went
through the fight with NAFTA. That wasn't an easy battle. I was
Mayor of Dallas and helped to argue for granting China PNTR
status. Every trade agreement in this United States has been a
major battle except for when we have a compelling case to
present to the American public, not only in terms of market
access, but fairness in reflecting our values. And when we get
to that point, I believe we can pass them.
So I am not going to let the Koreans or any of the members
in the WTO hide behind our domestic environment. The bottom
line is they need to come to the table, give us real market
access, reform their behavior, give us the same rights as we
have granted to them, and if we do that, I think the political
environment in Congress and the United States changes
dramatically for the better.
Senator Johanns. Thank you.
Chairman Lincoln. Thank you.
My Chairman, Senator Baucus.
Senator Baucus. Thank you, Madam Chairman.
Mr. Ambassador, I am just a little concerned that when the
President visits Korea November 20, he is going to be under
tremendous pressure to deliver a deal. And you alluded to and
others in this room alluded to some of the reasons why, that
is, the relationship the United States has with Korea and the
importance of Korea to the United States.
I am very concerned that what he might want to deliver
might not be in agriculture's best interest. I am quite
concerned that Korea will not submit an agreement that lives up
to what the President knows he promised back in 2007, that
Korea will live up to OIE standards, all beef, all ages, all
cuts. I must remind you that no deal is better than a bad deal,
and a bad deal would be Korea not living up to its agreement to
live up to OIE standards, all ages, all cuts.
So can you promise me here today that any agreement that
the President brings on November 20 will include the
requirement that Korea opens up its markets to U.S. beef, all
ages, all cuts?
Ambassador Kirk. Senator, I would love to be able to make
that hard promise. I can tell you this. This issue is of the
highest importance to us. I would remind you that not only at
the recent G-20 Summit in Canada, but when President Obama met
with President Lee last year, that publicly in every case that
he has referenced our commitment to getting Korea done. He has
always put it in the context of our ability to resolve the
outstanding issues on autos and beef.
So I understand your concern for the interests of your
cattlemen and ranchers, but this administration has never
equivocated on the need for us to reach and move toward that
full OIE compliance. You know that is currently the standard in
the agreement. It was, frankly, our cattlemen and others that
reached a separate protocol with Korea to accept a standard of
beef 30 months or less. And the good thing is our beef exports
to Korea are rising rapidly. They are up almost 50 percent over
last year. We are almost to 40 percent of market share. But I
want to give you my assurance that we are working for full OIE
compliance, and that is one of the two main issues we will be
discussing with my counterparts.
Senator Baucus. Well, the trouble is that we have lost
market share considerably in Korea. It is very similar to the
point that Senator Johanns made. For example, in 2003, the
United States had 70 percent of the market, Australia and New
Zealand, 30 percent. That has flipped. Now Australia and New
Zealand have 70 percent. Yes, you say 40. It is 30 or 40
percent, just like we are losing market share to other
countries because of our failure to conclude trade agreements.
Other countries are doing deals for their own benefit, at our
expense. I am quite concerned, in fact, I am flabbergasted
almost, that we are not working harder getting deals done.
Ambassador Kirk. Senator, we are----
Senator Baucus. And I mean results. I don't mean just work.
I mean results. If this administration really wanted a Free
Trade Agreement adopted by the Congress, it could do it. It
could do it if it wanted to. I hear a lot of words. I don't
hear a lot of results.
Ambassador Kirk. Well----
Senator Baucus. And I don't know why I should schedule a
hearing on a Korean FTA if it does not include all beef, all
ages, all cuts. I don't know why I should hold a hearing on
FTA. It will have to come before the Finance Committee and I
don't know why the Finance Committee should even have a hearing
on that if it doesn't include those provisions.
Ambassador Kirk. Well, Senator, we share your concerns, but
with all due respect, we have worked as diligently as we can to
resolve the issues to allow us to bring this forward. The
administration has a strong commitment to this. But as you
know, there are very strong opinions within this Congress on
both sides of the aisle about the equities involved in the
accessibility of the Korean market for U.S.----
Senator Baucus. Oh, I think there is pretty much agreement
that we should----
Ambassador Kirk. --ranchers and----
Senator Baucus. I don't think there is much disagreement. I
know there are some who say, don't rock the boat, but the fact
that the producers say they want the bill to export into Korea.
And I just say, Mr. Ambassador, I am going to be looking at
this very carefully and I want to see it all there.
Ambassador Kirk. Well, we want to see it, as well.
Senator Baucus. If not, I don't know why I should schedule
a hearing.
Ambassador Kirk. Well, we want to see it, as well, and we
are going to----
Senator Baucus. The proof is in the pudding, Mr.
Ambassador. We will see, see what you produce.
Ambassador Kirk. We look forward to working with you.
Senator Baucus. Thank you.
Chairman Lincoln. Senator Cochran?
Senator Cochran. Madam Chairman, we know that in June,
China's Central Bank announced plans to allow a more flexible
exchange rate. China is both a major customer of the U.S.
agriculture products and a major supplier of products. What are
the potential impacts of the decision in China to change its
currency values? What would the impact be on agriculture trade
and our economy?
Ambassador Kirk. Well, Senator, thank you. As you know,
this has been an issue of paramount concern to both members of
Congress and to the administration. We have urged China in
every fora, bilaterally, through the G-20 and others, to allow
their currency to float to market rates, and we think having
the yuan rise to a level that is more acceptable obviously
would help to mitigate that delta between the cost of U.S.
exports to China and others and it would be of great value to
agricultural interests, as China is a very, very important
market, particularly in soy and grains and poultry and others.
And, obviously, that would be a benefit to our farmers and
ranchers, as it would for all U.S. exporters into that market.
Senator Cochran. In connection with Colombia's Free Trade
Agreement, it has been documented that that agreement could
provide very positive benefits to the U.S. cotton and cotton
textile sectors. What is your assessment of the need for
implementing legislation to promote Congressional approval of
this new regime of trade? Could you update the committee on the
administration's position?
Ambassador Kirk. Yes, Senator. As you know, the good news
is, obviously, a number of you have spoken to the importance of
that market for our agricultural interests. Our challenges in
moving forward principally have been related to concerns
expressed by a number of members of Congress and the labor
community over what some believe has been an unacceptable level
of violence against labor leaders and the government's failure
to protect, put in place legislative changes and judicial
changes to protect them.
We have been working with the Colombians on that, as the
Chairman has noted and many others. I think the Uribe
administration has made significant progress. We have been
working with all stakeholders to try to move, frankly, in some
cases, to fact beyond fiction and come up with an acceptable
package that we can present to our partners in Colombia that
will allow us to move forward, and we have noticed this in the
Federal Register to get public comments. We have begun that
interagency process. And with the President's direction now, we
are moving as quickly as we can to try to complete that so that
we can bring an agreement to Congress for your consideration.
Senator Cochran. Well, I congratulate you on the job you
continue to do to represent our interests and to try to move
forward on these special troublesome areas, like China and
Colombia. Thank you.
Ambassador Kirk. Thank you, Senator.
Chairman Lincoln. Senator Lugar?
Senator Lugar. Thank you, Madam Chairman.
Ambassador Kirk, I am just simply eager to get your
analysis as to specifically why the Panama Trade Agreement has
not occurred. This would seem to be a very much simpler matter
than either Colombia or Korea. Is it objections in the Congress
that you are working with or what problems specifically hit you
there?
Ambassador Kirk. Senator, in some respects, we were a bit
advantaged in the case of Panama in that when we came into
office, much of the process that I referenced with Colombia,
the noticing and the sort of stakeholding had been done.
Frankly, we had a little bit of--and we were able to present to
our partners in Panama a very defined list of changes we would
like to see them make.
Initially, I will be honest with you, the previous
administration balked very much at the notion of having to
change their tax code to address issues raised not by the U.S.,
but within the OECD in terms of there being a tax haven.
Fortunately, we worked with them over the summer. That has now
changed. We have a new administration in the Martinelli
administration. We have addressed a number of the legislative
changes that we sought in terms of labor and justice and are
now, frankly, waiting on the Martinelli administration and our
Treasury to conclude their negotiations on what will be an
acceptable response to the tax issues raised.
Senator Lugar. Do you anticipate that our Treasury is
moving forward rapidly? Is this a priority for----
Ambassador Kirk. It is a priority for us. Our Treasury is
engaged. But some degree, some of the work is in the hands of
Panama. But we hope that we will be able to conclude those in
the very near future, as well.
Senator Lugar. With Colombia, you have discussed this
extensively, but it would appear, looking at it just from a
foreign policy standpoint for a moment as opposed to our
domestic politics, that the Uribe government has had
extraordinary challenges and right now a transition is
occurring to a new presidency of Colombia. While that is
appearing, the FARC, who have been difficult, to say the least,
in terms of difficulty in Colombia, are apparently housed
across the border in Venezuela, that this has led to Venezuela
withdrawing its ambassador to Colombia and asking really for
the OAS and others to almost go into a state of war against
Colombia.
In the midst of this, I appreciate the sentiments in
Congress that have been expressed endlessly with regard to
whether Colombia has been sufficiently rigorous with regard to
protection of labor unions in Colombia. But I would suggest,
and perhaps you would agree, that for the government of
Colombia, the problem has been existential with regard to
simply maintaining the sovereignty of the country against the
hostility that Venezuelans and everybody else that are around.
That is still the case.
This is, it seems to me, in terms of our own foreign policy
and the security of Colombia, essential to get on with the Free
Trade Agreement. You may have come to the calculation that
labor interests in the United States are still so hostile to
the situation, but notwithstanding the foreign policy problem
or whether the Colombian state exists or not, that this treaty
somehow cannot make it through.
But I would encourage you to give it a try. It just seems
to me that the patriotism in the American people generally and
the understanding of the Colombian predicament is likely to
overcome what have been these, not quibblings, they are
criticisms that are based on human rights of other countries,
but still a small part, really, of the picture of our
relationship.
Ambassador Kirk. Senator, in the broad sense, I would
concur with most of what you have said. I am mindful of the
fact that I only sit here as U.S. Trade Representative because
it was the wisdom of this Congress almost 40, 50 years ago to
create a position within the administration separate from the
State Department to only look at the commercial issues. And so,
one, I am careful not to wager into--wander over into Secretary
of State Clinton's territory. But your macro analysis is
correct. Colombia is a critical ally and partner for the United
States in South America for all the reasons you articulated.
And if I would only just briefly say to you what I said
earlier to Senator Grassley, I want to make it plain. Labor
does not have a veto power over the trade policy of the Obama
administration. But I do think we are greatly enhanced that we
have invited labor back to the table and given them a voice to
express their concerns so that we have a way to resolve these
and move just from some, in many cases, rhetoric that is based
on what may have happened ten to 15 years ago and at least give
them an opportunity to play a constructive role. And that is
the reason I believe we are much closer now to being able to
move forward with a resolution of the issues on Panama and
Colombia, is the time we have invested in bringing labor back
into our Trade Advisory Groups. But I appreciate your
encouragement and support.
Senator Lugar. Well, my time is up, but I appreciate,
likewise, your bringing labor back and your attempt to work, as
you say, in a macro situation. You are right that the State
Department and Commerce and Treasury are different, but the
President still is the President. He has apparently given
pretty strong instructions to get South Korea done before he
goes to South Korea, and I would strongly agree with that and I
am hopeful he has at least enough control over the various
Cabinet officials to have this macro approach that will be
helpful to you.
Ambassador Kirk. Well, I am certain he will be pleased to
hear your acknowledgement that he is still the President----
Senator Lugar. Yes.
[Laughter.]
Ambassador Kirk. and I don't know how much control he has
over the rest of the Cabinet, but he has quite a bit over this
one, so----
[Laughter.]
Ambassador Kirk. He has given me a job to do and I am going
to do everything I can to get it done.
Senator Lugar. Thank you.
Chairman Lincoln. Thank you, and I would like to associate
myself with Senator Lugar in the fact that I do think Panama
and Colombia are certainly very doable. I would also add to the
Ambassador that the esteemed President of Panama is, I believe,
a graduate of the University of Arkansas. And although we no
longer play Texas, we might be of some service there with you
in working on that issue, so----
Ambassador Kirk. But he has told me a number of times that
he could have gotten into the University of Texas----
[Laughter.]
Chairman Lincoln. Senator Gillibrand?
Senator Roberts. Can we go back to that Texas-Arkansas Big
10, Big 12 stuff? I would like to----
[Laughter.]
Ambassador Kirk. Senator, I would say, I think our friends
in Kansas are pretty happy with Texas right now leaving the
Big----
Senator Roberts. I wouldn't quite describe it that way, but
I will talk later about that after you deputize me to handle
things with Russia.
Ambassador Kirk. Yes.
[Laughter.]
Chairman Lincoln. Senator Gillibrand?
Senator Gillibrand. Thank you, Madam Chairwoman.
I would like to turn our attention to the dairy industry
and in particular our relationship with China. New York's dairy
industry is working very hard to continue to rebuild our dairy
producer profitability which is a challenge many of the farm
families in my State are still struggling with every single
day. Given that the horrendous drop in demand for U.S. dairy
products last year was primarily driven by a steep drop in our
exports, rebuilding overseas markets for our quality dairy
products and maintaining access to them is critical to ensuring
that this process does not reverse itself. Our third-largest
export market, as you know, averaging about $168 million over
the last three years, is China, and so it is very important to
this process.
I appreciate the work that you have done to devote
maintaining access to this market for U.S. dairy products in
light of changes this spring to China's dairy certificate
requirements. However, it is disturbing that we have yet not
resolved the issue. Can you tell me what USTR is doing to
prioritize the issue and ensure that it is swiftly addressed so
that the U.S. exports to China are not impeded?
Ambassador Kirk. First of all, Senator, thank you for all
of the information that you and your dairy farmers have
provided to our office as we have engaged China on this. This
is one of the top issues in which we have engaged China
directly through our JCCT, principally because a lot of the
information the industry provided, which is the good news, when
they brought us the concerns over the new certification
process, we were able to intervene very early. We don't have a
complete resolution, but we are encouraged that at least China
did agree to pause and not move forward with the implementation
of those while we worked to come up with an acceptable
resolution of it.
So as opposed to many other cases where we haven't been
able to get any response, at least in this case, we do have a
time out in the implementation of that latest certification
process that was of so----
Senator Gillibrand. Do we have a time line for that
process?
Ambassador Kirk. We will--we have a team, I think that may
be going to China in September----
Senator Gillibrand. In September, yes.
Ambassador Kirk. --and prior to our JCCT formal meeting,
and so hopefully we will--I mean, I will get a readout from
that and we will make sure we keep you up to date on our
progress.
Senator Gillibrand. Thank you. My second question is about
the U.S.-New Zealand dairy trade. If it is included in the TPP,
it is my worry that all the benefits of that trade relationship
would accrue to New Zealand's dairy industry and that it would
be very devastating to the U.S. dairy industry and New York's
markets. In exchange, America's dairy producers and processors
would face tremendous pressure for job loss and reduction in
exports, resulting truly in the loss of billions of dollars to
the U.S. economy and to that sector.
And to further worsen the situation, our dairy exporters do
not even have the prospect of focusing on other significant new
opportunities that the agreement would open up, given that most
of the other TPP participants are already U.S. FTA partners or
else have relatively limited tariffs and offer only small
market opportunities for the dairy industry.
So I appreciate the administration's use of both bilateral
and regional approaches on this, and it is my understanding
that the USTR's approach is to allow countries with existing
FTAs to retain the market access provisions for those trading
partners and that new market access negotiations allow parties
without existing FTAs to be negotiated bilaterally. What is the
status of bilateral U.S.-New Zealand negotiations, and do you
believe that this approach will be successful in protecting the
U.S. dairy industry?
Ambassador Kirk. Well, Senator, first off, let me say we
are acutely aware that perhaps of all of the many barriers and
complex issues that we have to address within our negotiations
in the Trans-Pacific Partnership, dairy is certainly the one
that has gotten the most attention for that reason. We have
spent an extraordinary amount of time with representatives of
the dairy industry. I have met with dairy farmers from
Wisconsin, Milwaukee, and New York. I have met with members of
the caucus and yourself. So we understand your concern. I would
remind you, my interest is not to represent anyone but U.S.
farmers, ranchers, agriculture.
We believe that it is still worth the effort, given the
explosive potential to expand market access not just among this
original nine tranche of countries, but throughout Southeast
Asia, that we ought to continue to look at every opportunity to
create market access for there.
Now, you are correct that it is most likely, in terms of
the existing FTA partners, will retain those tariff lines. Most
of those are about at the end of their expiration period
anyway. But we will not go forward with an agreement that we
believe disadvantages our dairy interests to the advantage of
those in New Zealand.
We have had two rounds. We are scheduled for a third round
in Brunei. We aren't quite to the point that we are negotiating
exact sectoral lines, but I promise you, we have had more
extensive consultation with Congress and industry on this than
ever and we will keep you apprised as we move forward.
Senator Gillibrand. Thank you, Mr. Ambassador. Thank you,
Madam Chairwoman.
Chairman Lincoln. Senator Stabenow?
Senator Stabenow. Thank you, Madam Chair.
Chairman Lincoln. Just before you begin, there are two
votes, and Senator Chambliss and I are going to tag-team so we
can keep our hearing going.
Senator Stabenow. Great. Thank you very much, and welcome,
Ambassador Kirk. It is good to see you.
I wanted to just first comment on a couple of things others
have said. I want to reiterate what Chairman Baucus said, that
no deal is better than a bad deal, and so we need to be opening
our markets, but we need to make sure they are good deals for
us, and I would concur. As I have talked to you about North
Korea, we have got a ways to go before that is a good deal. So
we have got some work to do and I am hopeful that the
deficiencies will be corrected.
I also want to piggyback on what Senator Cochran said and
just chime in on currency manipulation in China. It is
happening. We know it is happening. We need to say it is
happening and we need to do something about it. So I send back
that message to the administration, as well.
I wanted to follow up. Senator Gillibrand talked about
dairy, and I, too, have a tremendous interest in enforcement as
it relates to dairy around the world, and specifically in
India. As you have been talking about, Russia, Brazil, India,
and China and what they need to be doing. For far too long,
India has not been playing by the rules with dairy. There are
many ongoing issues where they are, frankly, ignoring science.
One of the most troubling is the situation with dairy, a
situation that a number of us wrote you about earlier this
year.
For over six years now, India has used dairy certificates
to block legitimate U.S. dairy exports and refused to negotiate
in good faith to find a resolution. This certification
requirement is not based on sound science. India knows that it
is not based on sound science. While our dairy exports are
being blocked, India has exported an average of $77 million
worth of dairy products to the U.S. over the last three years.
So my question is, given the lack of progress with India
over many years, what is the USTR doing to examine legal
alternatives?
Ambassador Kirk. Well, first of all, Senator, I have to
tell you, I agree completely with your assessment of the
situation in India. As frustrating as China has been, I would
say I think one of the values of them being in the WTO, we do
have the opportunity to move forward on other foras. And we
have on occasion with our structure with the JCCT and others to
engage them and at times get them to comply or at least take a
step back.
As I referenced to Senator Gillibrand, we are not there
with them yet. We are exceptionally frustrated. I will tell
you, it is generally not our practice to comment publicly as to
whether we are going to take legal action, but I will tell you,
we are exploring every alternative and every enforcement tool
available to us to get India to open up their markets on a
number of agriculture issues.
I mean, we have raised--I was in India twice. Last year, I
met with them directly about it. Ambassador Marantis just came
back. Ambassador Islam Siddiqui, who is our Chief Agriculture
Negotiator, we have used every tool of diplomacy we have, but
we are going to be examining everything else in our toolbox to
see if we can't get them to behave differently.
Senator Stabenow. Well, I would encourage you to use the
tools that need to be used.
One other area as we look at barriers, and this relates to
maximum residual levels as it relates to pesticides. This is an
area I have raised, as well. For example, Michigan's cherry
exporters face an arbitrarily low MRL, again, not based on
science. I have heard a number of stories that our trading
partners block our exports, requiring certain pesticides be
used in areas where we have banned them in the U.S., but they
are requiring that they be used when we export. We have
approached Japan about cherries directly, my office has. When
we look at resolving these types of issues, it is absolutely
critical to have involvement from all of our food agencies, as
well, the FDA, FSIS.
As the lead agency on trade, what are you doing to work
with those partners to resolve these challenges, because this
is a very significant type of barrier for our specialty crops
right now as it relates to pesticides and we need to address
that.
Ambassador Kirk. Senator Stabenow, first of all, thanks for
bringing this to our attention. We have worked with your
producers, because you do have a very discrete, I think, fly
infestation that can only be treated by one insecticide----
Senator Stabenow. Right.
Ambassador Kirk. --and we are working with you on that. The
good news is we have, because of your bringing this to our
attention, we have gotten Japan to adopt a protocol on these
inspections similar to the one we are using. The difficulty we
have is you have a very discrete challenge. The good news, we
are working both with USDA and, in this case, the EPA. The EPA
has looked at the issue of the product used in your case and we
are working with them to submit that data to Japan to see if we
can't get them comfortable with the application of that.
Senator Stabenow. Thank you. I see my time is up. Thank
you, Madam Chair.
Chairman Lincoln. Senator Klobuchar?
Senator Klobuchar. Thank you very much, and thank you very
much, Ambassador Kirk, for being here.
My State is the seventh largest agriculture export State in
the country, and in 2009, our farmers exported nearly a third
of what they produced, which brought in $4.3 billion to our
State. And when I look at our economy in Minnesota, the fact
that our unemployment rate is only at 6.8 percent, a lot of it
has to do with our rural economy, but also the value of exports
across the board. And that is why I have been very focused on
the export issue, head up the Export Subcommittee in the
Commerce Committee.
And I wondered, first, on a broader way, could you update
us on the President's initiative to double exports in the next
five years, what has been happening? Senator LeMieux and I have
been trying to get a bill with the small business bill to help
out with the Foreign Commercial Service, but in a general way,
what is the status of that?
Ambassador Kirk. The good news, Senator, is exports this
year are up almost 17 percent over what they were last year----
Senator Klobuchar. Although they were at an all-time low
last year.
Ambassador Kirk. Well, but they were at an all-time low all
around----
Senator Klobuchar. Okay. All right. Okay.
Ambassador Kirk. --if you look at that base, we are
trending up.
Senator Klobuchar. Okay.
Ambassador Kirk. Exports accounted for the highest
percentage of our GDP growth ever, at 13.7 percent, and
economists are telling us that we contribute now to the
underlying economy. This is consumer spending. Now, that is not
enough. We are doing a number of things through the Export
Initiative, including what you referenced, the President asking
for more resources, counselors for the SBA, in particular, to
help small businesses begin to engage in exporting. He has
asked for more Commercial Services Officers through the
Department of Commerce. We are looking to add----
Senator Klobuchar. And that is what our bill is in the
Small Business Committee.
Ambassador Kirk. Yes, and that would be most helpful. We
will be submitting a more formal report to the President in
September that he asked to map out some of the matrix that
Senator Baucus and others have referenced.
Senator Klobuchar. Thank you. People have talked a lot
about China. I wanted to focus on what happened in April 2009
with the H1N1 virus and then the closing of the market to U.S.
pork. As everyone knows, the H1N1 virus, there was never proof
that it was spread through contact with pork and blaming the
virus was a blatantly unscientific excuse, as China's
Agriculture Minister was even quoted saying that consumers
can't contract the virus from pork products.
What recourse and authority does the U.S. have when a
country blocks a product for such a clearly fraudulent reason,
and is this kind of action lawful under China's Free Trade
Agreement and WTO rules?
Ambassador Kirk. First of all, Senator, the action was not
lawful. It was not China. I think 28-some countries moved to
block U.S. pork products, both prepared and otherwise. In this
case, we knew we had an actionable case in the WTO. I would
tell you, in terms of your previous question about our working
across government, I think this was an example where we moved
very quickly, from President Obama down to Homeland Security
Director Napolitano, Secretary of Commerce Locke, Vilsack, and
myself. We all got to work to try to get these markets back
open so we wouldn't be in a three-to five-year process. And as
a result of that, there were seven or eight major economies
within a year that reopened their markets to pork.
So through the JCCT in particular, we were able to get
China to open its market to pork. We still have an issue with
China with respect to their blocking pork that utilizes
ractopamine. But for that that doesn't utilize that, the pork
exports have resumed and we are shipping pork back into that
process.
Senator Klobuchar. Right, and I do appreciate, as Senator
Chambliss and others have mentioned, the work that you have
done in reopening some of those markets.
The other thing about this is the Mad Cow Disease, where we
saw the same kind of thing happen. Major markets are still
closed to American beef products. I assume there is work being
done to reopen them. But one of the things that I thought would
be helpful here, while we all know H1N1 had nothing to do with
pork, but the other countries, many of them seem to claim food
safety all the time as a reason, and do you think it would be
helpful to pass a food safety bill to get at some of this?
Ambassador Kirk. Senator, I think any attention we can
bring to the security of our food chain and food safety would
be most helpful.
And I would say, if I could, I know many times we beat up
on the WTO, but after the H1N1 virus, we reached out and
immediately had a letter signed by the WTO, the OIE, all of the
international agencies related to food health safety that
declared and issued a very definitive statement that there was
no risk to humans from consuming prepared pork products.
Senator Klobuchar. Okay. And then one last thing. Are you
looking into this honey issue at all, which Senator Schumer has
coined ``honey laundering''?
Ambassador Kirk. I will be now.
[Laughter.]
Senator Klobuchar. There is a----
Ambassador Kirk. Senator Schumer has talked to me about
cows and apples, but I am sure we will have an opportunity to
get up to date on that.
Senator Klobuchar. Okay. Very good, because we care about
that in Minnesota, as well. Thank you very much, and we will
write you about the honey issue.
Ambassador Kirk. Thank you, Senator.
Senator Klobuchar. Thank you.
Chairman Lincoln. We have a lot of honey in Arkansas, as
well.
Mr. Ambassador, I am going to run to vote and I just wanted
to, in case I miss you, as Senator Chambliss will take over and
keep us going in the hearing, but thank you so much for your
work. I think you have done a tremendous job and I am grateful
to you. I appreciate our conversation on Russia and we look
forward to working with you in the days ahead, particularly on
that. So thank you very much.
Ambassador Kirk. Madam Chairman, thank you for your
leadership, and I thank this community for your advocacy of our
trade efforts.
Chairman Lincoln. You bet. All right. Senator Chambliss, I
am going to hand it over to you, and I think Senator Roberts is
next.
Senator Roberts. I appreciate it. There are two votes,
Madam Chairman, so I am going to have to be brief. I hear my
colleagues laughing.
I am going to go through the obligatory facts and figures
about Kansas, and the same thing applies to Texas, I think, in
regards to the necessity of exports to our economy. We have to
export half of our wheat acres, one-third of all planted acres.
We are the top beef processing State. That might come as some
surprise to you, being from Texas, but we have more cattle than
people. They are in a better mood, by the way.
[Laughter.]
Senator Roberts. At any rate, I am very much attuned and
agree with the Chairman of the Finance Committee that we have a
real problem on our hands, an ongoing challenge on our hands. I
hope we can reopen our foreign beef markets in the post-BSE
area. I think we have made some progress, and that has to go to
your credit to get our trading partners to really start to rely
on sound science instead of being governed by fear and
politics.
But I am concerned about the anti-trade sentiment in
Congress, which I think has stalled action on a number of
opportunities, and it has been mentioned before, South Korea,
Panama, and Colombia, more especially Colombia and what Senator
Lugar was talking about. We have a new president. The FARC is
getting active again. Just as they have apparently won that
battle, here they come back again. That is sort of the history
of those kind of things. But they are being aided and abetted
by Hugo Chavez, who is the new Castro, self-declared, in the
area. So it is a very dicey situation.
And then Senator Johanns pointed out the 45 percent drop in
exports in 2010, $811 million for all farm commodities, 87
percent drop in wheat exports to Colombia. This is not only an
economic situation, but it is a national security situation, as
well, and the same thing applies to South Korea, given the
relationship with North Korea and all that is going on. And so
trade, more especially agriculture trade, can level that
situation out a great deal. You know that. I don't have to tell
you that.
You indicated you are going to make every effort to-- and
let me say you have done an excellent job, a great job with
very difficult circumstances to try to emphasize the value of
our agriculture trade. But you said that we need to reform
their behavior and get them to come to the table, and we need a
compelling use. Well, I don't know what on earth would be more
compelling than the economic situation we face in this country
and our national security concerns and the fact that we have
other countries taking over our markets. I mean, that is pretty
compelling to me, if we just get past basically what is
opposition by labor in this country and by some in the
environmental community--I emphasize some.
I note the story in the Wall Street Journal, I don't know
if you have read it, but it is a pretty good headline: Obama
courts labor support for trade deal. I hope he can do that. But
he said at the Group of 20 Nations Summit in Seoul in November,
already referred to by the Chairman and Senator Chambliss, he
has made it a centerpiece of his efforts to boost U.S. exports
and job growth to convince labor that the matter is
particularly sensitive now as Democrats try to retain union
support in advance of the mid-term elections. I hope we don't
have that interfere in our efforts to the degree that we don't
make any progress.
But interestingly enough, you have said--well, not you
personally, but the USTR, so I guess that is you, filing a
complaint against Guatemala for allegedly--I emphasize
allegedly--violating workers' rights under an existing trade
accord with the country, that will hopefully reassure labor in
this country that it will reflect labor concerns and talks over
any accord with Korea.
I would hope that the trade agreement in Korea would stand
on its own merits and we wouldn't have to run around finding
different countries where they are allegedly violating workers'
rights, or say in Colombia that the government is not really
treating labor leaders there in the proper fashion, well, let
the FARC take over and see what happens to them. I mean, that
doesn't make any sense.
Here we are, filing a complaint against Guatemala for
allegedly violating workers' rights, not to really further our
efforts with Guatemala, but to prove to labor in this country
to quit opposing these FTAs in the three countries that we have
mentioned over and over and over and over again for 18 months,
and it seems like we are treading water. I don't know what--I
think your primary challenge is to convince the labor community
and the environmental community in this country that these
agreements are in our best interest. Would you respond to that?
Ambassador Kirk. Senator, let me thank you for your
observations about our efforts to advance not only agricultural
exports and others.
Secondly, I would only say to you, and I want to be
careful, I didn't see the article you referenced, the decision
we made on Guatemala stands on its own. The decision by the
President to announce, I guess, what, 30 days ago to move
forward with Korea stands on its own. And neither of the two go
hand-in-hand. Our enforcement efforts are based on the simple
premise that we believe the American public have raised a
legitimate concern that the United States hasn't paid as much
attention to enforcing our trade deals and holding our
partners' feet to the fire sometimes as we have been in just
opening new markets.
So it was the right thing to do in Guatemala. The case was
filed two years ago. We had extensive investigations with the
Department of Labor and we think it is important that Guatemala
live by the terms of its agreement.
The Korea, Panama, Colombia agreements will each stand on
their own merits. But I would again submit to you that the time
that we have invested in listening to not only those of us who
want me to put my foot to the pedal and just go forward with
these agreements, but, frankly, those that have raised
concerns, I think it is time that is well spent and will allow
us to get to where you and I would like to go, be in a position
to bring these agreements to Congress so that we can move
forward.
Well, I think you are working--I would ask my distinguished
colleague, the Ranking Member, for an additional minute or two,
if that is permissible.
Senator Chambliss. [Presiding.] Without objection.
Senator Roberts. I thank my friend and colleague.
I don't know what comes first. If you have a trade
agreement--I know the situation with China. They are making
trade agreements with a whole bunch of folks and the trade with
China is exploding. As a result, you have seen even labor
strikes in China. Who would have thought you would have seen a
labor strike in China five years ago. I mean, that would not
have been possible. So if you have the trade agreement and you
get the benefits of economic trade and the wherewithal in terms
of individual citizens improve and workers' rights improve, but
you had the trade agreement first and then you had the trade
and then you have the progress.
Now, it seems to me we get the cart before the horse if we,
in fact, insist on labor concerns or criteria--I don't know
what they are other than just people making speeches, and the
same in the environmental community. So we put a criteria on a
sovereign country and say, you have to live up to the criteria
that we think is good for you. Well, I will tell you what. If I
am the sovereign country and I find another person that is
going to sign a trade agreement with me without that criteria,
I do it, and I think that is what has happened.
So you have got to figure out if you make the speech and
you are satisfying, you know, the labor movement in the United
States, if you satisfy the environmental community, more
especially before November, that is one thing. But if you pass
a trade agreement and you achieve those same things actually on
the ground, that is another thing. Now, I don't know if that is
a question or not, but please feel free to respond.
Ambassador Kirk. Well, I will accept the ``or not'' part of
that question, if that is permissible with you, Senator.
[Laughter.]
Senator Roberts. Okay. Well, thank you very much for
appearing and thank you for the job that you are trying to do.
I think it is very challenging, but I agree with the Chairman
of the Finance Committee. There is no need to be holding
hearings if we are treading water on trade. We have done that
for 18 months.
I thank the Senator.
Ambassador Kirk. Thank you, Senator.
Senator Chambliss. Ambassador Kirk, Senator Thune has
indicated he wants to come back, so we are not going to let you
leave until he gets back here.
[Laughter.]
Ambassador Kirk. I know you have another panel to hear
from, as much as I am enjoying this engagement. I certainly
don't want to----
Senator Chambliss. Well, we are not going to hold them up
too bad.
Let us talk for a minute more about the situation involved
in the export of chickens into Russia. I know we had some
conversation about this. We thought this was a done deal, and
then all of a sudden, I understand last Friday afternoon we
hear from the Russians that they are not going to let imports
into their country without having inspectors on the ground in
the United States. What can you tell us from an update
standpoint on where we are there and what do we need to do as
policy makers to try to provide the right kind of assistance to
you on this issue?
Ambassador Kirk. Well, first of all, your recitation of the
recent events, unfortunately, is a correct one. We were as
surprised as you. As you know, when President Medvedev was here
just last month, this was an issue that rose to the level even
of President Obama and Vice President Biden, all of us rose
with President Medvedev. President Obama and Medvedev directed
the trade ministers at that time to sit down and see if we
couldn't come up with a resolution of this poultry issue, and
President Obama was, frankly, very honest that Russia's
inability to just sort of meet basic agreements and commitments
was one that sort of clouded our thinking in terms of our
overall objective of having Russia in the WTO.
We negotiated an agreement to come up with a protocol to
allow us to resume poultry shipments. We had some difficulty,
frankly, in getting Russia to sign that. We thought we had it
signed last week. Secretary Vilsack and, again, Secretary
Siddiqui and our team have been on the phone almost daily with
our counterparts with Russia. We thought we had this issue put
to bed Friday. The Secretary of the USDA, as you know, had put
out regulations in terms of certifying the plants here. We felt
the matter was put to bed. We had poultry packed and ready to
go. Then we learned of this newest challenge.
So, one, I know Secretary Vilsack and our team are reaching
out to the Russians again to see if we can't get them to adhere
to the agreement they have made, and I would encourage you,
Senator, to express your sentiments to the Russians in whatever
way you feel is appropriate. But we think it is just not too
much to ask to get them to agree what they--I mean, to live up
to an agreement they signed just three weeks ago.
Senator Chambliss. Well, again, we appreciate your efforts
on this. I know you have been very diligent on it and the
Chairman and I will talk about some way that we might impress
upon the Russians how important this is to us. When you have a
deal and the deal is done and you are supposed to stick by it,
and here we are not being able to trust the Russians to keep
their word on the import of chickens into Russia, and yet we
are in the process, and I am one of those who is on the fence
on the issue of whether or not trust the Russians from the
standpoint of the issue of nuclear weapons.
So this type of action on the part of the Russians does not
benefit them in the eyes of a lot of policy makers who are
trying to make up their mind relative to the START treaty. If
we can't work out a deal on chickens and they keep their word,
what can we expect from them on inspection of nuclear weapon
facilities?
Going back to the issue that we touched on a little bit
earlier relative to West African cotton producing countries,
recent reports have indicated that those countries, also known
as C4, plan to step up pressure on the United States and the EU
for what they consider unfair trade practices. This comes at a
time when world prices and demand have, frankly, improved
pretty dramatically. Have there been any recent discussions
between the United States and the C4 on this issue?
Ambassador Kirk. Senator, there have, and your question is
actually very timely. You may know or may not know, we actually
just concluded yesterday the Ninth Annual AGOA Forum, the
African Growth and Opportunity Act, and this is the ten-year
anniversary of that, and obviously a number of members of the
C4. We had 35 trade ministers, commerce ministers, ambassadors
here, and we had a number of individual bilateral meetings with
them.
You should not be surprised that after our ability, again,
working with the Department of Agriculture to avoid what could
have been some pretty devastating retaliation by Brazil over
the cotton case they filed against us, that the C4 have
intensified their interest in this. But we continue to press
upon them that, first of all, a resolution of U.S. cotton
subsidies and other issues is only going to occur through a
balanced conclusion to the Doha Round.
But secondly, we have also been very honest in addressing
with them underlying issues of desperately needed investment in
Africa's infrastructure that would have to be made separate and
apart from whatever the United States may do or the Europeans
may do in terms of our approach to cotton support, that if we
were to resolve those issues right now, the reality is the
principal beneficiaries would be Brazil and other countries
that have much more advanced support programs and
infrastructure to be able to export cotton.
So I don't know if that satisfies them. These are truly
some of the poorest economies in the world. But at least we
have tried to engage them in a much more honest discussion
about what all has to happen to increase their export
competitiveness.
Senator Chambliss. Senator Thune?
Senator Thune. Thank you. I appreciate the Senator from
Georgia giving me an opportunity, and Ambassador, thanks for
your indulgence, too, as we try and work around the votes.
I just want to read a quote to you from a U.S. Chamber of
Commerce study, and it says, and I quote, ``If the EU and
Canada implement their Free Trade Agreements with Korea and
Colombia and the United States does not, exporters in the EU
and Canada will enjoy a competitive advantage over U.S.
exporters in the Korean and Colombian markets. Specifically,
failure to implement the U.S. Free Trade Agreements while our
trading partners go forward with their agreements would lead to
a decline of $40.2 billion in U.S. exports of goods and
services and U.S. national output failing to grow by $44.8
billion. The study estimates that the total net negative impact
on U.S. employment from these trade and output losses could
total 383,400 jobs.''
I guess the point I am making is that this issue really
comes down to, when you are talking about growing the economy
and creating jobs, this is about economic growth. We are trying
to get back on track here and get the economy growing again.
There are tremendous export opportunities that are available to
us that we are not able to access because we haven't gotten
these implementing agreements submitted to Congress and moving
forward with what I think are almost--these just seem like, for
the most part, no-brainers in terms of these trade agreements.
I guess my question for you has to do with regard to
Colombia, Panama, and South Korea. Can you quantify for the
committee the amount of tariffs that our agriculture industry
has paid to each of these countries since these Free Trade
Agreements have been signed?
Ambassador Kirk. Senator, I don't have that information
now. We will get that information for you, if you don't mind,
and resubmit that to you. What I would say is we have been
working very closely with the Chamber and others that are
interested in Korea, and for the reasons that you articulated
in reading the Chamber's statistics, it was a rationale both
behind the President's announcement not only at the G-20 Summit
in Canada, but frankly, when in his State of the Union people
only heard the part of the statement about doubling exports.
But he also spoke to the reality of us being in a very
competitive global environment.
Now, I want to make it plain. Our rationale in moving
forward is not because Korea has signed a Free Trade Agreement
with the European Union and Canada. That certainly would not be
to our advantage.
I would like to give you the other statistics. If we get
this done, and I believe we will, there is a $10 billion upside
for us, and rather than losing jobs, the opportunity to add
70,000 jobs. And while I will get you the statistics and try to
get the analysis you wanted looking back, but looking forward,
the one great advantage is if we can get this Korea deal done
and signed, is that about two-thirds of our tariffs on
agriculture go away immediately. And then many of them will be
phased out over ten years.
So the upside in Korea is a huge market for us in terms of
agricultural exports already. So it represents a very real
opportunity for us to not only grow agricultural exports, but
to help create jobs and grow the economy, and we think that is
worth fighting for and that is one of the reasons the President
has asked us to try to get this done.
Senator Thune. Have the outstanding issues that the
administration feels need to be resolved with these various
countries been communicated to those countries, and what has
been the response?
Ambassador Kirk. In the case of Korea, certainly, I think
it is generally accepted that concerns over the market access
in autos, and you heard Senator Baucus and others speak about
beef.
In the case of Panama, there are a number of issues that we
wanted to see them address on labor and the rights of workers
and justice. And I want to make it plain. We are not trying to
impose our U.S. labor code on other countries, but there are
some generally accepted provisions encompassed in the May 10
agreement we did with Peru that had support from Democrats and
Republicans, we don't think are too much to ask. And in Panama,
we did have the intervening factor of the OECD identifying
Panama as a tax haven. So in our defense, I would say the issue
of their coming up with an acceptable answer for that is not
only one for the U.S., but with all of Panama's other trade
partners. But we are making progress on that.
In the case of Colombia, we did publish a notice in the
Federal Register last August, one, so we could try to move just
beyond some of the rhetoric over violence and really drill down
and come up with a list that we can present to Colombia. We are
now in the interagency review process to refine that, but
again, trying to work in an expedited but thoughtful manner to
meet the President's goal, as well, to present this to you
sooner rather than later.
Senator Thune. With the new Colombian administration about
to take power, does the outlook for the Free Trade Agreement
with Colombia improve?
Ambassador Kirk. Yes. In fairness, Colombia has been ready
to do this deal, because I want to make it plain that we are
anticipating as good of a working relationship with the new
Santos administration. But President Uribe and his team and
Ambassador Barco have been wonderful to work with. So we don't
see any break in the good relationship we had with them, and
frankly, a lot of it has been our trying to work through some
of the issues on our side so we can move forward.
Senator Thune. And that is, I guess, what makes this so
sort of perplexing, is that it seems like that one has been
teed up for a long time and great cooperation from the country.
So I would hope that, because as the President did say in the
State of the Union, which is now many, many months ago that he
wanted to double exports, and this is critical if we are going
to be able to do that, and if we don't get these agreements
signed, we are going to lose significant market opportunities
to competitors. And I think the producers in places like South
Dakota and other areas in America where we have strong, vibrant
agricultural economies are going to really lose out.
So I will share and echo the frustration you have heard
from many of my colleagues here today that these things aren't
getting done and would urge you to move forward as quickly as
possible.
Ambassador Kirk. We will do so, and Senator, we will need
your support in that effort. Thank you.
Senator Thune. Thank you, Mr. Chairman.
Senator Chambliss. Mr. Ambassador, again, we thank you for
coming today, and as you told the Chairman and I before the
hearing this morning, it is the first time in a long time we
have had the Trade Ambassador appear officially. Both
Ambassador Portman and Ambassador Schwab used to come by
informally, but we thank you for coming in and officially
testifying at a hearing before the Agriculture Committee.
I would simply say that our relationship with South Korea
is very strong. We have got a brand new Kia plant that has
opened in my State in the last several months. It has created
1,500 jobs for Georgians directly and probably at least another
1,500 at supplier facilities around the Western part of my
State, the Eastern part of Alabama. We are very pleased with
our relationship with the Koreans there.
That being said, I think what you are going to find is
pretty near unanimous consent around here with the statements
of Senator Baucus. So I urge you to continue to proceed down
the road of trying to conclude this, and we look forward to
that being the case.
But thank you very much for being here today and for your
continued efforts in this.
Ambassador Kirk. Senator, thank you so much, and we would
welcome the opportunity to come back and visit with the
committee at any time. And I particularly want to thank you for
working with us on a number of issues important to American
agriculture.
And if I might say this, and since you referenced the Kia
plant in Georgia, and I know the issues on autos are important.
I mean, there are 790,000 Kias sold in the United States, less
than 7,000 American cars of any kind sold in Korea, and that is
unacceptable. But, on the other hand, with the increased
production in the U.S., the number of Korean imports have
actually declined as more and more of their cars sold are being
produced here in the United States, which is something we would
like to see, so that they are made by American workers.
But thank you for your encouragement and we look forward to
continuing to work with you and all the members of the
committee.
Senator Chambliss. Great. Thank you very much.
And as the Ambassador exits, we will ask our second panel,
Mr. Danny Murphy, Vice President of the American Soybean
Association from Canton, Mississippi; Mr. Joe Mencer, Board
Member of the USA Rice Federation, USA Rice Producers Group,
and Arkansas Rice Producers Group, Lake Village, Arkansas; Mr.
Duane Rhodes, Vice President of International Sales, Tyson
Foods, on behalf of the National Chicken Council; and Mr. Brent
Roggie, General Manager and Chief Operating Officer of the
National Grape Cooperative Association, on behalf of the
National Council of Farmer Cooperatives, to come forward.
[Pause.]
Chairman Lincoln. [Presiding.] All right. I thank the
committee for their patience, and certainly for our panelists,
we want to welcome you all. And again, I want to add my special
thanks to Joe Mencer, who is a rice, cotton, corn, and soybean
farmer from Lake Village, Arkansas, where he has been farming
for 30 years on land owned by his family for 75 years. He
serves on the USA Rice Federation Board in the Executive
Committee and the USA Rice Producers Group Board as Vice
Chairman of the USA Rice Council. Joe, thanks for being here.
We are grateful to you.
And also, Duane Rhodes of Springdale, Arkansas, Vice
President of Export, Poultry, and Prepared Foods for Tyson
Foods, where he has worked for the past 25 years. He is Vice
Chairman of the Board of the U.S. Poultry and Egg Export
Council.
We appreciate both of you all being here from Arkansas as
well as our other panelists, Danny Murphy, who is my neighbor
there in Mississippi. We are grateful to you. And Brent Roggie,
thank you so much for being here, as well.
We are going to now move to your testimony, and I believe
if it is appropriate--Senator Cochran, have you made your
comments? Would you like to speak?
Senator Cochran. Madam Chairman, I would like to have an
opportunity to welcome----
Chairman Lincoln. Good.
Senator Cochran. --one of my favorite constituents, who is
a member of this panel. I want to welcome Mr. Danny Murphy of
Canton, Mississippi, and to thank him for his leadership and
service to both his community and the agriculture community in
my State.
He and his wife and two sons are here today. He represents
the State of Mississippi on the American Soybean Association
Board. He is also an active farmer with his brother. They farm
1,500 acres of soybeans and corn in our State. He has served in
numerous positions of leadership since his election to the
Board of the American Soybean Association back in 2005.
I am glad to see him here and to extend the welcome to him
and his family. We are happy that he could be here.
Chairman Lincoln. Great. Thank you, Senator Cochran.
We are going to wait and see. Senator Gillibrand wanted to
be able to be here, so Mr. Roggie, I will give you a better
introduction as we get down to you, but we will begin with Mr.
Murphy.
STATEMENT OF DANNY MURPHY, VICE PRESIDENT, AMERICAN SOYBEAN
ASSOCIATION, CANTON, MISSISSIPPI
Mr. Murphy. Good morning, Madam Chairman and members of the
committee. I am Danny Murphy, a soybean producer from Canton,
Mississippi, and Vice President of the American Soybean
Association. ASA appreciates the opportunity to appear before
you today to provide our views on international trade issues,
including the export promotion provisions of the 2008 farm
bill.
Soybeans are the second largest commodity in the United
States in terms of annual acreage and value, with 78 million
acres planted and a farm-gate value of $32 billion in 2009.
Soybeans and soybean products are the most important U.S.
export commodity, with sales exceeding $21 billion last year.
This represents over 50 percent of U.S. soybean production and
21 percent of total U.S. agricultural exports in 2009.
As producers of the largest export dependent commodity,
soybean farmers have historically made international trade a
top priority. ASA has actively participated in negotiations on
and strongly supported enactment of every multilateral,
regional, and bilateral trade agreement the United States has
engaged in. We have worked closely with every administration to
ensure enforcement of these agreements, including their
sanitary and phytosanitary provisions, and we have successfully
protected access for U.S. soybean exports to foreign markets as
new biotech traits have been introduced over the last 15 years.
Looking to the future, the growth in world population and
demand in developing countries for an improved diet, including
more livestock products and vegetable oils, indicates a
pressing need to increase soybean production over the next
several decades. With limited opportunities to expand U.S.
soybean acreage, most of this increase will need to come from
raising yields. ASA has strongly supported greater funding for
agriculture research, including the President's request for
$429 million in the fiscal year 2011 funding for the
Agricultural and Food Research Initiative. We are also working
closely with companies that are developing new traits to
increase soybean yields, protein and oil content, and other
quality characteristics.
ASA was pleased with the President's commitment to double
the value of U.S. exports under the National Export Initiative.
Efforts to contribute toward achieving this goal in the
agricultural sector will require Congressional approval of the
pending Free Trade Agreements with Colombia, South Korea, and
Panama, negotiation of new Free Trade Agreements with key
importing countries, and progress on the Asia-Pacific Economic
Cooperation Regional Agreement. Delay in approving the Colombia
Free Trade Agreement has caused us to lose over 50 percent of
our market share for soybean meal. Negotiation of new Free
Trade Agreements will require renewal of Presidential Trade
Promotion Authority, which is a top priority for ASA.
Action is also needed on legislation to normalize financial
relations with Cuba. S. 3112, introduced by Senators Klobuchar
and Enzi, would eliminate current financing restrictions as
well as lift the ban on U.S. citizens traveling to Cuba. Cuba
imported $284 million worth of U.S. soybeans, meal, oil, and
livestock products in 2009. Normalizing financial relations
would improve the competitiveness of U.S. soybeans and soybean
and livestock product exports to the Cuban market.
Turning to the trade title of the 2008 farm bill, ASA is
one of the largest recipients of funds under the Export
Promotion Program of USDA's Foreign Agricultural Service,
including $6.8 million under the Foreign Market Development
Program and $5.1 million under the Market Access Program. These
funds are matched with soybean farmer check-off dollars
contributed by the United Soybean Board. ASA strongly supports
maintaining funding for the export promotion programs at
current levels for fiscal year 2011 and increasing these levels
in the 2012 farm bill.
Finally, ASA continues to follow efforts to revive
negotiations on the Doha WTO Trade Agreement. In December 2008,
we joined other agricultural organizations in opposing the
draft agricultural modalities framework known as the Falconer
Text because it provides little assurance of improved market
access for U.S. farm exports in exchange for major concessions
on trade distorting domestic support. We stated at the time and
repeat now that no agreement is better than a bad agreement. If
the Falconer Text cannot be significantly changed, developing
countries will need to make meaningful concessions during
bilateral negotiations if the Doha Round is to be revived and
completed.
That concludes my statement, Madam Chairman, and I will be
pleased to answer any questions you or other members of the
committee may have.
And I would like to add just a personal note that on behalf
of the Mississippi farmers who were inundated with the rains
last fall, we appreciate your work and Senator Cochran's work
on the disaster assistance. Thank you.
[The prepared statement of Mr. Murphy can be found on page
63 in the appendix.]
Chairman Lincoln. Thank you, Mr. Murphy. And as somebody
that has walked soybean fields with a machete chopping down
coffee bean plants, we appreciate your leadership on behalf of
the American Soybean Association and those hard-working farm
families out there across the country, so thank you.
Mr. Murphy. Thank you.
Chairman Lincoln. And we will continue to work hard on that
disaster assistance.
Mr. Murphy. Thanks.
Chairman Lincoln. Joe Mencer, who is a rice, cotton, and
soybean farmer from Lake Village, just across the river from
Mississippi. Joe, thank you for being here and for all of your
hard work on behalf of growers not only in Arkansas, but across
the country.
STATEMENT OF JOE MENCER, BOARD MEMBER, USA RICE FEDERATION;
BOARD MEMBER, USA RICE PRODUCERS GROUP; VICE CHAIRMAN, USA RICE
COUNCIL; AND ARKANSAS RICE PRODUCERS GROUP, LAKE VILLAGE,
ARKANSAS
Mr. Mencer. It is my pleasure, Madam Chair. I would like to
thank you and Senator Cochran for the opportunity to appear
here today. I appear on behalf of USA Rice Federation and the
USA Rice Producers Associations. Our two organizations
represent rice producers in all the major rice producing
States. We represent millers, merchants, exporters, and allied
businesses.
As you know, Arkansas is the largest rice producing State.
We grow about 1.5 million acres, average, on an annual basis,
and that is about half of the U.S. crop. Rice is also produced
on another 1.7 million in five other States. Last year, U.S.
farmers produced a rice crop of over $3 billion in farm-gate
value. This production and subsequent sales generated $17.5
billion in total value added to the U.S. economy from rice
production, milling, selected end users, and had the employment
effect of contributing 127,000 jobs to the U.S. labor force.
The U.S. rice sector is a key player in the global rice
market and the economic health of our industry is tied to
exports, even though we only produce about two percent of the
world's production. We export rice across the globe, with a
major presence in North and Central America, Northeast Asia,
the EU, Turkey, the Middle East, and Africa.
Trade policy is the key focus of our industry, since we are
greatly dependent on export channels to market nearly half of
our annual production. Over the past 25 years, U.S. rice
exports have risen from just under two million tons to nearly
3.5 million tons, and that is largely because of policy gains
made in key rice consumption markets and the joint
international promotion work of the rice industry and the USDA.
We believe that significant additional exports can be made if
the public and private market promotion and development
partnership with USDA is continued in combination with an
aggressive trade policy agenda.
The U.S. rice industry receives $5.7 million in our current
fiscal year from the Market Access Program and Foreign Market
Development Program to promote rice in foreign markets. For
every one dollar that is received in these programs, the
industry in turn spends $3.91.
Trade agreements are central to our current level of U.S.
rice exports and for future expansion. Prior to NAFTA, rice
exports to Mexico faced high tariffs, discrimination against
milled rice, and government control of imports. Today, U.S.
rice trades duty-free into Mexico and it is now the number one
export for U.S. rice, with over 833,000 tons in the 2009 crop
year.
Future trade agreements must be inclusive of all tariff
lines, must reflect a level of participation by advanced
developing countries commensurate with their economic
development, and include market access gains for U.S.
agriculture while preserving the ability of U.S. agriculture to
maintain a viable domestic farm safety net.
One key export market that can be opened very easily and
requires only action by the U.S. Government is Cuba. Our
industry, along with much of U.S. agriculture, favors an
opening of trade and travel to Cuba. The ability of American
citizens to travel freely to Cuba and to engage in the full
range of commercial activities in Cuba is essential to a
successful and meaningful market establishment there.
Cuban rice imports have averaged nearly 600,000 metric tons
annually for the last five years, and U.S. suppliers enjoy
logistical advantages to meet this demand, but our current
policy thwarts this advantage. U.S. rice sales to Cuba resumed
in 2001 with the passage of the Trade Sanction Reform and
Export Enhancement Act, until sales faltered following the 2005
regulation change by the Department of Treasury. This
regulation effectively placed the U.S. administration between a
willing buyer and seller. It impedes the ability of U.S.
companies to export and should be permanently repealed.
We also urge support and passage of legislation that would
allow for open agricultural trade and travel to Cuba, and two
such bills that would do this are S. 1089 and S. 3112.
In terms of pending trade agreements, rice was completely
excluded from the trade agreement with South Korea and it
blocked us out of that market forever. We do encourage the
agreements with Colombia and Panama and we urge Congress and
the administration to move forward on those two trade
agreements.
Rice farmers and exporters are also facing a challenge in
the European market now because of an accidental presence of
the Liberty Link gene that was introduced into the rice crop in
2006, and we lost that market just overnight. We need the
administration's help to restore that market. After four years
of market absence combined with high and complex tariffs on
U.S. rice, duty-free competition from India and Pakistan, and
the prospective threat of duty-free competition from the
developing countries has set back U.S. exports into the
European market. We are pleased to be working with Ambassador
Siddiqui and others on Ambassador Kirk's team to address our
immediate access problems in the European market.
We feel that there is a duty on brown rice imports in the
European market that are not being met under the WTO
requirements and we need the support of this committee and the
administration to try to get those duties removed from brown
rice.
And in summary, Congress and the administration should
commit to restore normal commercial relations between the U.S.
and Cuba, approve Free Trade Agreements with Colombia and
Panama as well as South Korea. We don't oppose that, even
though we were left out. And we need to negotiate a balanced
agreement in the Doha Round for future trade agreements that
expand for access of U.S. rice and other agriculture exports
into other countries. And, most of all, provide sufficient
funds and resources and policy to direct USDA so they can carry
out the important function of Export Market Promotion and
elimination of phytosanitary and veterinary bases to trade.
In closing, we would like to thank the committee for the
opportunity to present rice's issues here today and I would be
happy to take any questions.
[The prepared statement of Mr. Mencer can be found on page
50 in the appendix.]
Chairman Lincoln. Thank you, Joe. We appreciate all that
you do, and again, having walked a rice levee or two myself, we
are grateful to you all with the U.S. Rice Federation and the
Rice Producers Group and grateful for your leadership, as well.
I should have noted earlier that we will hold our questions
until everyone has given their testimony.
Mr. Rhodes, thank you for coming to the committee, as well.
We are grateful for your presence here. I would say a special
thanks, as well, for your conversations earlier with the staff
of the committee on the Russian poultry issue. Senator
Chambliss and I had an opportunity to visit privately with the
Ambassador, as well, and we will continue to be working with
you all in the industry and others to really come up with the
kind of resolutions that we need in an expeditious way. So we
appreciate very much your input on that, as well.
We look forward to working with you. So thanks for your
leadership in the poultry industry and the livestock industry
and we would love to have your testimony. Thanks.
STATEMENT OF DUANE RHODES, VICE PRESIDENT OF EXPORT, POULTRY
AND PREPARED FOODS, TYSON FOODS; SECOND VICE CHAIRMAN, USA
POULTRY AND EGG EXPORT COUNCIL; ON BEHALF OF THE NATIONAL
CHICKEN COUNCIL, SPRINGDALE, ARKANSAS
Mr. Rhodes. Well, good morning and thank you, Senator
Lincoln, Senator Chambliss, and committee members, for the
opportunity to present the U.S. poultry industry's views on
critical international trade issues.
I am Duane Rhodes, Vice President of Export Poultry and
Prepared Foods for Tyson Foods, Incorporated, based in
Springdale, Arkansas. I also serve as the Second Vice Chairman
of the USA Poultry and Egg Export Council. This morning, I am
representing the National Chicken Council. NCC represents
companies including Tyson Foods which produce and process about
95 percent of the chicken in the United States. Also, as Tyson
is a major processor and exporter of beef and pork, I will
provide some thoughts on the exports of fresh meats, as well.
To begin, I want to thank you, Chairman Lincoln, as well as
Ranking Member Chambliss, for working closely with the
administration to reopen the Russian market for U.S. poultry. A
quarter of the Senate expressed in writing to President Obama
the critical need to achieve a resolution of the six-month
stalemate on U.S. poultry exports to Russia. This strong
statement by the Congress on a difficult trade issue was a
major factor in helping to convince the Russian President to
conclude an agreement to restore U.S.-Russian poultry trade, at
least at the end of June.
Poultry exports to Russia, like poultry exports to most
foreign countries, consist mainly of chicken leg quarters. In
2009, more than 19.5 percent of the chicken that we produced in
the United States was exported, a record percentage. Exporting
the ``back of the bird'' is critical to keeping the U.S.
chicken supply in better balance for overall demand.
With impediments to our two largest poultry export markets,
Russia and China, poultry exports are down for 2010.
Fortunately, there is some good news with beef and pork
exports. Beef exports total $3.7 billion this year, just short
of the 2003 pre-BSE levels, and pork exports are expected to be
the second largest on record, at $4.5 billion.
Across the poultry and meat sectors, we are optimistic that
the U.S. Government focus on trade can yield very positive
results. That is why we were pleased when President Obama
called for doubling the U.S. exports in the next five years,
including agricultural exports. The President's plan, the
National Export Initiative, sends a strong signal to foreign
competitors that U.S. agriculture will become more aggressive
in securing its fair share of the world market for our food and
agricultural products.
For our industry, we believe there are two critical
components to making the President's plan a success. First, the
United States must have policies and programs in place to help
U.S. agriculture compete effectively overseas. USDA's Foreign
Agricultural Service administers two important export promotion
and market development programs, the Market Access Program,
MAP, and the Foreign Market Development, FMD. Both programs
will require increased funding to maximize agriculture's
contribution to the National Export Initiative's goal. The
bottom line is that all sectors of the U.S. economy and
agriculture will need to be energized to meet the President's
goal.
A second critical component is Congressional approval of
the Korean, Colombian, and Panamanian Free Trade Agreements.
These trade agreements should more appropriately be called Job
Creation Agreements, because that definitely is what they would
be for agriculture. According to a recent industry study, more
than 29,000 meat and poultry jobs would be added as a result of
full implementation of the three FTAs.
There is also no question that the FTAs and increased trade
generally boost our overall economy. According to the USDA, for
every $1 billion in agricultural trade, 9,000 American jobs are
created. It is worth noting that leading agricultural export
States, as Arkansas and Georgia, are well positioned to benefit
from the increased trade.
A final area that I would highlight for the committee is
China. In recent years, exports to China have been a real
success story for the poultry industry, and China was our
second largest export market in 2009. However, earlier this
year, China imposed very high preliminary anti-dumping and
countervailing duties on U.S. chicken and chicken parts and
these duties may soon be finalized. While our industry
certainly disagrees with China's rationale for these cases, the
focus should be on the most effective way for U.S. poultry
exporters to regain fair access to the China market.
One effort that may prove productive in reestablishing
trade in China is an industry proposal to settle the anti-
dumping and countervailing duty cases by establishing a minimum
selling price for a number of chicken parts. USTR and USDA have
agreed to support this initiative and the Chinese government
has also indicated a strong interest in such an arrangement. We
would ask for this committee's support for this initiative, as
well.
Another challenge for poultry for China concerns is China's
continued ban on imports of poultry either processed in or
moved through U.S. States that have reported an incident of
low-pathogenic AI. Unfortunately, China is not imposing or
lifting these bans in accordance with World Health Organization
OIE guidelines. For Tyson, the cumulative effect of these State
bans, which includes the Chairman's own State, is roughly 50
percent of our export capacity is blocked. This is a problem
that could grow worse if not addressed.
As this committee knows, there is great opportunity in
China not only for poultry, but for beef and pork, as well.
There is progress on the pork exports, but the beef industry
still lacks a Market Access Agreement. We urge this committee
and the administration to push for a beef agreement with China
that will open the market to beef from cattle aged 30 months
and under as an initial step, with additional market access
phased in.
In closing, although this list of issues facing U.S.
poultry and meat exports is challenging and seemingly ever
growing, we know that we produce the world's highest quality
products and we are optimistic about the future. In order to
maximize poultry exports in the years ahead, we will need
robust export promotion programs, expanded markets through Free
Trade Agreements, and assistance in overcoming non-science-
based sanitary and veterinary prohibitions.
I appreciate the committee's attention to these issues and
will be happy to answer any questions.
[The prepared statement of Mr. Rhodes can be found on page
66 in the appendix.]
Chairman Lincoln. Thank you, Mr. Rhodes.
Mr. Roggie, Senator Gillibrand had hoped to be here--I
think she is going to still be joining us--but I would like to
go ahead and introduce you, if I may.
Brent Roggie, who grew up on a dairy farm in Upstate New
York has served for the past ten years as General Manager and
Chief Operating Officer of the National Grape Cooperative,
representing members in New York, Pennsylvania, Ohio, Michigan,
and Washington State. We know that your industries are vital
both to the economy here in the U.S. as well as our exports and
we are grateful that you are here today to give us your
testimony, so thank you, Mr. Roggie.
STATEMENT OF BRENT ROGGIE, GENERAL MANAGER AND CHIEF OPERATING
OFFICER, NATIONAL GRAPE COOPERATIVE ASSOCIATION; ON BEHALF OF
THE NATIONAL COUNCIL OF FARMER COOPERATIVES, WESTFIELD, NEW
YORK
Mr. Roggie. Thank you. Chairman Lincoln, Ranking Member
Chambliss, and members of the committee, thank you for the
opportunity today to testify on the importance of international
trade in promoting U.S. agricultural exports. On behalf of
National Grape's grower members and the more than two million
farmers and ranchers who belong to farmer cooperatives, I
appreciate that this statement will be made part of the
official hearing record.
I am Brent Roggie, General Manager of the National Grape
Cooperative. It is an agricultural cooperative that has 1,150
members who own and operate 46,000 acres of Concord and Niagara
grapes, as was mentioned, in New York, Pennsylvania, Ohio,
Michigan, and the State of Washington. I also serve on the
Executive Council of the National Council of Farmer
Cooperatives.
National Grape actually owns Welch's, which processes and
then markets our members' grapes in the United States and over
51 other countries. Farmer cooperatives such as National Grape
allow individual farmers, I believe, to truly participate in
the food and fiber system all the way from the farm to retail.
We have built well-known brands that you see every day on the
supermarket shelves. We have also built the relationships and
networks to help expand the demand for these brands and markets
overseas. The earnings from these sales are returned to the
farmer owners and help to provide market-based income from
beyond the farm-gate.
For National Grape's grower-owners, the Welch's brand is
key to expanding market demand and increasing profitability,
and foreign markets represent the greatest potential to do just
that. Seventy percent of the world's juice is consumed outside
of the United States, and foreign juice consumption is expected
to increase at four times the rate of U.S. consumption. While
foreign markets account for 15 percent of Welch's sales, they
represent as much as 26 percent of our growers' income stream.
USDA export promotion programs, such as the Market Access
Program and the Foreign Market Development Program, play a
vital role in helping farmers and their co-ops capitalize on
these opportunities overseas. Both programs have been
tremendously successful and extremely cost effective in helping
maintain and expand U.S. agricultural exports.
For example, by combining the assistance provided by MAP
with a strong Welch's brand, our growers have seen exports to
Japan grow by 46 percent just in the last three years, with our
volume increasing from 857,000 cases in 2007 to 1,251,000 cases
in 2009, and MAP was vital to our success in that market.
Many of my fellow farmer co-op leaders could also testify
to the success that they have had in using brands to build
market share both here and abroad. This branding differentiates
the product in the global marketplace and builds customer
loyalty and confidence in quality. As such, the MAP Branded
Promotion Program has been instrumental in leveraging farmers'
investment in their own co-ops and brands to grow in foreign
markets.
Over the next five years, National Grape plans to increase
foreign market sales by at least ten percent per year and will
be investing heavily to make this possible. Access to matching
funds through MAP is critical to our ability to attain these
sales goals and enable our grower-owners to remain profitable.
Without access to MAP, the effectiveness of our overseas
promotion programs would be greatly diminished.
In addition, since promotion programs are allowed under WTO
rules, many of America's direct competitors have devoted
considerable resources to market development, and MAP helps to
level the playing field for American producers.
As you prepare for deliberations on the 2012 farm bill, we
strongly encourage the committee to maintain eligibility of
farmer co-ops and their branded products under MAP. We also
urge continued funding for MAP and FMD at $200 million and
$34.5 million annually, respectively, as authorized under the
2008 farm bill.
Passage of the Free Trade Agreements in South Korea,
Colombia, and Panama would also help meet the goal of
aggressively increasing exports. The situation that our U.S.
grape growers face in South Korea illustrates this very well.
Currently, our grape juice concentrate is subjected to a 45.5
percent duty, while Chile's competing red grape juice tariff is
minimal, and starting next January it is zero. That puts us at
a distinct competitive disadvantage, and approval of the U.S.-
South Korea FTA would eliminate this disparity. Despite the
45.5 percent duty, we have to maintain a retail premium of just
30 percent, so we are able to make up some of that, but not all
of it.
Other issues which will contribute to expanding U.S.
agricultural exports include resolving outstanding sanitary and
phytosanitary and technical barriers to trade, resolving
disputes such as the one with Mexico over trucking, and a
successful World Trade Organization Doha Round, one that makes
for commercially meaningful advances in market access.
In conclusion, thank you again for the opportunity to
testify today before the committee, and thank you for your
leadership on behalf of American farmers, ranchers, and their
farmer co-ops. We appreciate your support of important
agricultural export programs and policies.
I would also like to mention to Chairman Lincoln, we thank
you for co-chairing the Congressional Farmer Caucus. We
appreciate your leadership in that area.
[The prepared statement of Mr. Roggie can be found on page
79 in the appendix.]
Chairman Lincoln. Well, thanks to all of you all for making
sure that we know directly from the field how important things
are and what we can do to be more helpful in terms of both job
creation and maintaining a safe and affordable supply of food
and fiber, not just for our nation, but for the world.
Just quickly, I would give each of you all also a quick
chance, as you represent the point of view of your producer
groups, if there is one single most important step that could
be taken that would expand exports of your commodities, what do
each of you all think? I know you have expressed some concerns,
but if there is one single one that you would pick out of all
of those, is there any one that from your point of view from a
specific producer group? Anyone? Mr. Murphy?
Mr. Murphy. I would just say that we would like to make
sure that the MAP and FMD programs funds are fully funded as
authorized. I will add a second point, that we would like to
see them applied to Cuba, if we could move forward with this
other previous bill.
Chairman Lincoln. All right. Joe?
Mr. Mencer. I would have to agree with Mr. Murphy. I have
got two. It is hard to pick. A Free Trade Agreement with Cuba
is vitally important to rice production in the State of
Arkansas and the Mid-South.
Chairman Lincoln. Great. Mr. Rhodes?
Mr. Rhodes. I have got two, also.
[Laughter.]
Chairman Lincoln. You all are breaking the rule, but it is
okay.
Mr. Rhodes. Okay. Of course, we would love to get a
finalized version on the Russian deal. That is on the top of
everybody's mind here, I am sure. And the other one would be
that in China, that we prevail or get a solution on the
countervailing duties and anti-dumping.
Chairman Lincoln. Great.
Mr. Roggie. And with us, I would certainly agree with MAP
and FMD I would also remind everyone of the USDA study that was
recently concluded in March of 2010. For every dollar that was
spent in MAP funding, a $35 return was shown in a cost-benefit
analysis. It was just completed. So I would certainly like to
have MAP and FMD fully funded, as they were in the 2008 farm
bill, and certainly to have the FTA agreements that are
currently under negotiation to be completed. And any others
that could be started, that would be good, as were mentioned
earlier this morning.
Chairman Lincoln. Okay. Thirty-five-to-one. That is pretty
good odds. I am with you on that.
Mr. Murphy, according to USDA economic research, 93 percent
of all soybean acres planted in 2010 were planted with seed
with one or more genetically engineered traits, so certainly
acceptance of these GM crops in international markets is
crucial. What more could be done by the U.S. Government to
promote the benefits of agricultural biotech?
Mr. Murphy. I think we need to continue to work on it. Most
countries do accept genetically modified traits, but there is
always a constant challenge to make sure that when you have a
new event, that it is accepted. The EU continues to be a
problem, where they have resisted moving forward. I think
efforts need to be made in the EU to encourage them to accept
our products.
Chairman Lincoln. It sets a good example. I know that.
Mr. Mencer, after discovery of those trace amounts of
unapproved, the Liberty Link 601 gene in the rice supply in
2006, the EU implemented burdensome testing requirements on our
rice which basically closed their markets to our product. I
understand that those testing requirements have finally been
lifted, but the trade has not yet resumed.
I mean, kind of following on the steps of Mr. Murphy there,
what steps need to be taken for that to happen? Is there
something that we can do, do you think, or any comments that we
can make that would help resume some of that trade, building
that confidence? I think those things could be very important.
And I know you have mentioned Cuba, and I echo that. The
average Cuban consumer eats 150 pounds of rice annually and 80
percent of that is imported. If these current barriers that we
have with Cuba were relaxed, do you think the U.S. rice farmers
could beat out the rice produced in Vietnam and Thailand for
this market, where the Cuban imports are currently sourced
from?
Mr. Mencer. On the Cuban issue, we feel like that we have a
better quality product than where they are importing the rice
from now. Before the ban was put on back in the 1960s, we
probably sent them 500,000 to 600,000 tons a year, and most of
that came out of the Mid-South or Arkansas. We feel like that
they prefer our rice. I think between the logistics of being
closer, we can offset the price, higher price of our product by
the lower freight rates that it will be costing. We have
already proven we can supply the rice to them. It is a
preferred product there.
On the European issue, I think just trying to convince the
European market that to base their judgments on sound science,
that this is not a harmful trait to the rice, maybe would help
some. And the issues with the tariffs that they are imposing on
brown rice now is just--we don't feel like that is fair. It is
not compliant under the WTO requirements. And we think that
this committee could urge the administration to try to get
those tariffs removed. They should be closer to zero.
Chairman Lincoln. Right. There is no doubt that the Cubans
enjoyed rice from the Southern States in the 1950s to a great
degree, and that is certainly evidence to me there is great
opportunity to increase that. And certainly with the growing
popularity of brown rice, I think you are exactly right. Making
sure that those markets are open to us and our products are
critical. So thank you very much.
My time has expired and I will turn to the Ranking Member,
Senator Chambliss.
Senator Chambliss. Thanks, Madam Chairman, and gentlemen,
thanks for your testimony.
This is to each of you. The administration's Interagency
Trade Promotion Coordinating Committee recently solicited
industry comments regarding the National Export Initiative. Did
your national associations or companies provide comments, and
if so, can you summarize what those comments were? Mr. Murphy?
Mr. Murphy. I think we did, and we would have
wholeheartedly supported that initiative. As I stated in my
testimony, soybeans are critically dependent on exports. Over
50 percent of the crop is exported and the soybean farmer's
income depends on exports. Thank you.
Senator Chambliss. Mr. Mencer?
Mr. Mencer. Yes, sir. The Rice Federation did support this
doubling of exports and our main focus was this could be
achieved for rice by opening the Cuban market and Free Trade
Agreements and the help with the European Union issue we have.
Senator Chambliss. Okay. Mr. Rhodes?
Mr. Rhodes. Yes, sir. I believe that our trade focused on
the FTAs and the MAP support as far as funding and staffing.
Senator Chambliss. Okay. Mr. Roggie?
Mr. Roggie. Yes. We had comments that were submitted. We
have attached them to our written record and those were through
the Ag Export Coalition. It is a coalition of over 100
agricultural companies that submitted that. And basically, it
is similar to what these other gentlemen mentioned. It is fully
funding MAP, FMD, and working through Free Trade Agreements are
the major three.
Senator Chambliss. Mr. Rhodes, Tysons is one of the largest
meat processors in the United States, and obviously exporting
your products is critically important to you. You heard us
discussing with Ambassador Kirk the situation regarding the
South Korean FTA. How important is it to a company like Tyson
Foods that we have the ability to export all age, all cuts of
beef to a country like South Korea versus our limitation now on
being able to export only beef under 30 months of age?
Mr. Rhodes. Well, it is important to our company, Senator.
We actually believe that--you asked about Korea, but China
would be the place that, if we had an opportunity to gain
access with our beef, would be the place there. I think you are
asking, is it kind of a process where you get one thing and
then add another one. I think our industry would support that.
Senator Chambliss. Okay. Thanks very much, Madam Chairman.
Chairman Lincoln. Senator Cochran?
Senator Cochran. Madam Chairman, I am pleased to have the
opportunity to be here this morning and listen to the testimony
we have heard. I think it has been very helpful, instructive
about the policies at work and those that need to be modified,
improved so that we can gain even more of the world's share of
the market from our agricultural products grown and marketed
out of the United States. I think that is one of our important
roles here in the Congress and this committee is going to be at
the forefront, I think, of leading the way, making sure we
achieve those goals.
Chairman Lincoln. Are you done?
[Laughter.]
Chairman Lincoln. I am sorry----
[Laughter.]
Chairman Lincoln. Well, thanks to you, Senator Cochran and
the other Senators that were here. I want to thank our panel.
I just wanted to mention, too, to Mr. Rhodes that I know
your testimony described several instances in which the
government of China seemed to be imposing restrictions on U.S.
meat and poultry exports. You have mentioned it both in the two
things that you wanted to see happen as well as in the comments
with Senator Chambliss, some of those restrictions that are
inconsistent with WTO obligations, either through improper use
of anti-dumping rules or through the SPS rules which ignore the
OIE standards. We want to continue to work with you and
certainly continue to work as the government contemplates WTO
dispute settlement cases against restrictions and see if there
is not more that we can do about that. I don't know if you have
got any further comments about that, but you have kind of been
pretty clear.
Mr. Rhodes. Well, the one thing I would like to say in
reference to China, in fairness there, that if China--one of
the things that I think would help us with just about all our
trade issues with China, at least from a poultry area, would be
the ability for China to export out of approved facilities
fully-cooked poultry to the United States. I think that is a
point that would allow them to maybe be more reasonable on our
exports.
Chairman Lincoln. And we have certainly been working with
the House and others on that issue and we will----
Mr. Rhodes. We appreciate that, Senator.
Chairman Lincoln. You bet, and continue to do so.
Thanks to all of you all. I would also like to publicly
apologize to Senator Thune. I wasn't paying attention and
Senator Roberts had already voted. I should have called on
Senator Thune to go, but I wasn't paying attention to everybody
that was moving around. It may have saved us a little time.
But thanks to our panel here today. We appreciate that. We
appreciate all the members for being here and we look forward
to continuing to work with you all as we open up markets,
understanding how important it is to create jobs in this
country. That is going to be a critical part of putting our
economy back on track, and we know that you all provide the
great industries that can help us do that. We want to continue
to work with you and to continue to move in that vein.
So thank you for joining us. We appreciate it. We look
forward to continuing that work.
The committee stands adjourned.
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A P P E N D I X
August 4, 2010
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DOCUMENTS SUBMITTED FOR THE RECORD
August 4, 2010
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QUESTIONS AND ANSWERS
August 4, 2010
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