    [Senate Hearing 108-687]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 108-687

              HEARING ON S. 1406, THE PESTICIDE HARMONIZATION ACT

    =======================================================================

                                    HEARING

                                   before the

              SUBCOMMITTEE ON PRODUCTION AND PRICE COMPETITIVENESS

                                     of the

                           COMMITTEE ON AGRICULTURE,
                            NUTRITION, AND FORESTRY

                              UNITED STATES SENATE

                          ONE HUNDRED EIGHTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 JUNE 23, 2004

                                   __________

                           Printed for the use of the
               Committee on Agriculture, Nutrition, and Forestry

      Available via the World Wide Web: http://www.agriculture.senate.gov

                                     ______

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               COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

                      THAD COCHRAN, Mississippi, Chairman

    RICHARD G. LUGAR, Indiana            TOM HARKIN, Iowa
    MITCH McCONNELL, Kentucky            PATRICK J. LEAHY, Vermont
    PAT ROBERTS, Kansas                  KENT CONRAD, North Dakota
    PETER G. FITZGERALD, Illinois        THOMAS A. DASCHLE, South Dakota
    SAXBY CHAMBLISS, Georgia             MAX BAUCUS, Montana
    NORM COLEMAN, Minnesota              BLANCHE L. LINCOLN, Arkansas
    MICHEAL D. CRAPO, Idaho              ZELL MILLER, Georgia
    JAMES M. TALENT, Missouri            DEBBIE A. STABENOW, Michigan
    ELIZABETH DOLE, North Carolina       E. BENJAMIN NELSON, Nebraska
    CHARLES E. GRASSLEY, Iowa            MARK DAYTON, Minnesota

                     Hunt Shipman, Majority Staff Director

                    David L. Johnson, Majority Chief Counsel

                   Lance Kotschwar, Majority General Counsel

                          Robert E. Sturm, Chief Clerk

                    Mark Halverson, Minority Staff Director

                                      (ii)

                                C O N T E N T S

                                  ----------
                                                                       Page

    Hearing(s):

    Hearing on S. 1406, The Pesticide Harmonization Act..............    01

                                  ----------

                            Wednesday, June 23, 2004
                        STATEMENTS PRESENTED BY SENATORS

    Dole, Hon. Elizabeth, a U.S. Senator from North Carolina,
      Chairwoman, Subcommittee on Production and Price
      Competitiveness, Committee on
      Agriculture, Nutrition, and Forestry...........................    01
    Baucus, Hon. Max, a U.S. Senator from Montana....................    02
                                  ----------

                                   WITNESSES

    Dorgan, Hon. Byron, a U.S. Senator from North Dakota.............    03
    Sharp, Adam, Associate Assistant Administrator, Office of
      Prevention,
      Pesticides, and Toxic Substances, and Acting Agriculture
      Counsel to the EPA Administrator, U.S. Environmental Protection
      Agency, Washington, DC.........................................    05

                                    Panel I

    Gage, Mark, President, National Association of Wheat Growers,
      Page, North Dakota.............................................    11
    Gray, Jim, Pesticide Registration Coordinator, North Dakota
      Department of Agriculture, on behalf of the National
      Association of State Departments of Agriculture, Bismarck,
      North Dakota...................................................    09
    Vroom, Jay, President and Chief Executive Officer, CropLife
      America,
      Washington, DC.................................................    13
                                  ----------

                                    APPENDIX

    Prepared Statements:
        Burns, Hon. Conrad...........................................    25
        Dorgan, Hon. Byron...........................................    22
        Gage, Mark...................................................    41
        Gray, Jim....................................................    35
        Sharp, Adam..................................................    27
        Statements submitted by Senator Dole from Ralph Peck, Bob
          Stallman, Jake Cummins, and Rob Rynning...................110-116
        Vroom, Jay (with attachments)................................    47
    Document(s) Submitted for the Record:
        Agricultural Policy Brief....................................   123
        Cochran, Hon. Thad...........................................   118
        Conrad, Hon. Kent............................................   120
        Montana Farmers Union........................................   133
        Provinces-States Advisory Group/Tri-National Agricultural
          Accord.....................................................   149
        United States and Canadian Agricultural Herbicide Costs:
          Impacts on North Dakota Farmers............................   134

              HEARING ON S. 1406, THE PESTICIDE HARMONIZATION ACT

                                  ----------

                            WEDNESDAY, JUNE 23, 2004

                                           U.S. Senate,
      Subcommittee on Production and Price Competitiveness, of
          the Committee on Agriculture, Nutrition and Forestry,
                                                         Washington, DC
        The Subcommittee met, pursuant to notice, at 10:01 a.m., in
    room SR-328A, Russell Senate Office Building, Hon. Elizabeth
    Dole,
        [Chairwoman of the Subcommittee], presiding.
        Present or submitting a statement: Senators Dole and
    Baucus.

      STATEMENT OF HON. ELIZABETH DOLE, A U.S. SENATOR FROM NORTH
      CAROLINA, CHAIRWOMAN, SUBCOMMITTEE ON PRODUCTION AND PRICE
                           COMPETITIVENESS,
           COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

        Senator Dole. Good morning. This meeting of the Senate
    Subcommittee on Production and Price Competitiveness will come
    to order.
        Today, the Subcommittee will hear from various stakeholders
    and experts on the proposal to register Canadian pesticides for
    use in the United States. Specifically, we will focus on S.
    1406 as proposed by Senator Dorgan and others.
        Senator Dorgan, Senator Burns, and other cosponsors I know
    have long sought legislation to ensure pricing parity across
    the northern border with Canada. This subcommittee has a
    responsibility to consider many factors associated with this
    issue. Certainly, it is important that we evaluate the true
    price differential data, including currency valuation and
    patent considerations. Our responsibility goes beyond comparing
    prices. We must also look at any new legal liability issues,
    and we need to look at the effects such legislation will have
    on EPA's ability to ensure that chemicals registered for use in
    the United States are safe for humans and for the environment.
        We have not previously tasked EPA with imposing penalties
    derived from price comparisons, nor have we asked our courts to
    answer the question of who is legally responsible for damages
    due to application of a pesticide produced outside of this
    country. It is my desire to have a full exploration of these
    issues during today's hearing.
        Senator Baucus.

       STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR FROM MONTANA

        Senator Baucus. Thank you very much, Madam Chairwoman. I
    regret I cannot stay for the entire hearing. We are marking up
    in the Finance Committee now the Australian Free Trade
    Agreement. I deeply appreciate your holding this hearing.
        I might remind people who don't know this, but agriculture
    accounts for over half of the economy in the State of Montana,
    and it has been tough. Years of drought and low prices and
    record high costs for fuel and for pesticides have contributed
    to quite low profit margins, in some cases no profit margin,
    and that is one reason why this hearing is so important. That
    is why it is so important that we harmonize the prices between
    the United States and Canada with respect to pesticides.
        Montana shares 445 miles of border with Canada. That is the
    longest of any State in the nation. The border isn't everything
    that we share with Canada. We also share a similar climate. We
    share some of the same crops. When it comes to protecting these
    crops with the same chemicals made by the same companies, we
    face very different prices.
        We in Montana estimate that our farmers lose millions of
    dollars in increased pesticide costs a year. We are very
    pleased, frankly, by the study done by the University of North
    Dakota, which I know that the Senator from North Dakota will
    talk about more explicitly, but essentially, that study showed
    that the North Dakota producers' total pesticide expenditures
    were at least 8 percent higher, 8.3 percent higher, than they
    otherwise should have been.
        There is a grower in Montana named Herb Carst. He is a
    barley and wheat farmer, and this is a quote from him when he
    talked to me about this. He said, ``Agriculture chemicals are
    one of my most expensive inputs, at an annual cost of
    approximately $50,000. I should be able to drive to my local
    dealer and purchase those products for the same price as my
    Canadian competitor. It is a barrier created through
    labeling.'' He has anticipated he could save $4,000 if the
    prices were the same.
        He went up to Canada and poked around a little bit and he
    found that for the chemical Achieve, there is a difference of
    5.3 percent. For Fellowmaster, a 24 percent difference. For
    Puma, a 29 percent difference. The average of those differences
    is 19.6 percent.
        For all these reasons, I am a strong supporter of Senator
    Dorgan's bill, S. 1406. There are many other Senators, as you
    mentioned, Madam Chairwoman, who are also cosponsors, including
    my colleague Senator Burns from Montana.
        This legislation amends the Federal Insecticide, Fungicide,
    and Rodenticide Act to permit the EPA in certain States to
    register a Canadian pesticide for distribution and use in the
    United States if the pesticide is substantially similar or
    identical to one already registered in the United States. It is
    very important that this legislation or something very close to
    it pass very quickly. The current regime is just unfair and we
    believe very strongly that the approach taken by the Senator
    from North Dakota is very much in the right direction.
        Thank you very much, Madam Chairwoman, for holding this
    hearing and for also allowing me to speak at this time.
        Senator Dole. Thank you, Senator Baucus.
        We will hear first from Senator Byron Dorgan, sponsor of
    the legislation. Welcome, Senator Dorgan.

       STATEMENT OF HON. BYRON DORGAN, A U.S. SENATOR FROM NORTH
                                 DAKOTA

        Senator Dorgan. Madam Chairwoman, thank you very much. As
    you know from your service in the Senate, it is much harder to
    get things started than it is to get things stopped. We have
    been working a long while on this subject of chemical
    harmonization.
        As you know, the trade agreement that was done with Canada,
    including the U.S.-Canada Free Trade Agreement and NAFTA,
    offered promises of chemical harmonization, but as is usually
    the case with trade agreements, there is much more effort to
    negotiate them than there is to follow up on the details of the
    trade agreements themselves, and that is certainly true with
    this subject.
        I noted this morning that there was a new story about this
    issue and the chemical companies confidently predicted that
    this issue will go nowhere. They perhaps made that prediction
    based on past results. It has been a difficult and tortured
    trail to try to get this kind of legislation passed in the
    Congress.
        The cosponsors of this bill are myself, Senator Burns,
    Senator Conrad, Senator Daschle, Senator Crapo, Senator
    Johnson, Senator Baucus, a big, pretty broad, bipartisan group
    of Senators who believe very strongly that what is happening
    with respect to cross-border trade, or the absence of it, with
    respect to agricultural chemicals is unfair to our farmers.
        I might just put up a couple of charts to show you a couple
    of examples. I will, of course, do it from the standpoint of
    the impact on North Dakota farmers. These are price
    differentials, Stinger, Puma, Liberty, Glyphosphate, which is
    commonly called Roundup. You will see the price differentials
    there.
        The second chart, if you will put the second chart up just
    for a moment, the second chart talks about in the year 2002,
    according to a North Dakota State University study, North
    Dakota farmers paid $20 million more than they would have had
    they bought chemicals at the prices that the identical or
    nearly identical chemical was sold at in Canada. The point of
    that study is markets must be segregated if different prices
    are to be charged. The international border and trade
    restrictions then offer that capability to segregate and that
    is why we have these price disparities.
        If I might have that box of Liberty, that is the herbicide
    that--I am told by the manufacturer that they actually have a
    different color box or a different kind of box. I assume they
    are putting the same chemical in it, however. This is used on
    canola acres. We plant a lot of canola acres in North Dakota.
    You can purchase this chemical called Liberty in Canada or you
    can purchase it in the United States. The names aren't
    different and the chemical composition is not different in any
    significant way.
        The North Dakota cost would be $14 per acre applied and the
    Canadian cost, $9.60 per acre. That is a difference of $4.40 an
    acre. As I said, we have a substantial number of acres in North
    Dakota and it makes a big difference with respect to this price
    differential.
        In fact, our farmers are engaged in an international
    competition with respect to pricing. When you have input costs
    that are dramatically different, it has an impact on our
    ability to compete.
        Roundup is a chemical that has not as much price
    differential, $1.40 to $1.83 price differential, but we have
    2.25 million acres on which Roundup is applied in North Dakota.
    That is $3.7 million in increased chemical costs for North
    Dakotans.
        The question here is, should this exist? We are having a
    similar debate with respect to reimportation of prescription
    drugs, not just from Canada but from other countries. Should we
    be able to reimport FDA-approved prescription drugs? It is an
    interesting question. Congress is coming down on the side of,
    yes, we should. The Senate has voted on that. The House has
    voted on it. We haven't yet made that a law change because it
    has been opposed up the line by the Speaker and some others.
        In many ways, this is a similar question, and with respect
    to cross-border trade with Canada, should American farmers be
    prevented from accessing this chemical in Winnipeg, Canada, and
    being able to import it back into this country. The answer now
    is no. We suggest that with this legislation that this chemical
    be labeled and that the EPA--we don't take this out of the
    hands of the EPA, but that we would allow the State
    agricultural authority, with the consent of EPA, to label an
    identical chemical and allow it to be imported into this
    country.
        Madam Chairwoman, the question has been around for a long
    while. It is long past the time to solve it. You will hear from
    my colleagues, as well. You heard from Senator Baucus today.
    You will hear from Senator Burns and Senator Crapo in Idaho.
        There is a reason this refrain comes from those of us who
    are on the border, because a farmer who farms just south of the
    Canadian border discovers that the identical product is sold
    just north but that he or she cannot purchase it and bring it
    south at this point without violating the law, and the chemical
    company understands this segregation of markets and they refuse
    to label it in this country. Therefore, they are able to hold
    up our farmers for a much, much higher price than is fair or is
    reasonable.
        We can correct that here in the Congress. This is where it
    should be corrected, and it has taken far too long already for
    this to have been done. My hope is that with your chairmanship
    and with the subcommittee, we can begin the process of marking
    this bill up, send it to the full committee, and send it to the
    floor of the Senate, where I believe you will find very strong
    support for the legislation.
        Thank you, and let me thank Senator Cochran, as well, for
    your willingness to hold this hearing.
        Senator Dole. Yes, indeed. Thank you, Senator Dorgan. I
    appreciate your concern regarding this issue, your hard work on
    it, and your excellent presentation. Thank you very much.
        Senator Dorgan. Thank you.
        [The prepared statement of Senator Dorgan can be found in
    the appendix on page 22.]
        Senator Dole. I would like to include in the record the
    prepared statement of Senator Conrad Burns, who could not be
    with us this morning.
        [The prepared statement of Senator Burns can be found in
    the appendix on page 25.]
        Senator Dole. We will hear next from Mr. Adam Sharp, who is
    the Associate Assistant Administrator of the Office of
    Prevention, Pesticides, and Toxic Substances of the
    Environmental Protection Agency. Welcome, Mr. Sharp.

             STATEMENT OF ADAM SHARP, ASSOCIATE ASSISTANT
      ADMINISTRATOR, OFFICE OF PREVENTION, PESTICIDES, AND TOXIC
                        SUBSTANCES, AND ACTING
          AGRICULTURE COUNSEL TO THE EPA ADMINISTRATOR, U.S.
            ENVIRONMENTAL PROTECTION AGENCY, WASHINGTON, DC

        Mr. Sharp. Thank you. Good morning, Madam Chair, members of
    the subcommittee. I am Adam Sharp, Associate Assistant
    Administrator, EPA's Office of Prevention, Pesticides, and
    Toxic Substances. I am also currently the Acting Agricultural
    Counselor to the EPA Administrator.
        Let me ask first if I can have my full testimony, of
    course, submitted to the record.
        Senator Dole. Yes. Without objection, yes.
        Mr. Sharp. Thank you. This morning, I will provide an
    overview on the long-term approaches that EPA is taking that
    will help address this issue as well as discuss the current
    legislation under consideration.
        First, I want to say that we have worked closely with
    Congressional staff over the last several years as well as with
    State officials and others to explore remedies that would help
    address price differences that U.S. farmers may be
    experiencing. As a result of those discussions, EPA has made
    significant progress on a variety of administrative and
    regulatory approaches that help facilitate equal access and
    harmonization.
        In the long term, let me describe some of our strategies
    and actions that EPA has taken, has been a part of over the
    last several years, as well as partnerships that we have
    developed with the Canadians and others in helping to establish
    some footholds on this very important issue.
        First, under the North American Free Trade Agreement, under
    the NAFTA Technical Working Group for Pesticides and through
    other international forums, EPA has been working closely with
    Canada and other trading partners to break down barriers and
    facilitate trade competitiveness. These partnerships have led
    to more consistent regulatory and scientific requirements,
    which in turn has increased harmonization between the U.S. and
    Canada. Over the years, EPA has achieved real success in
    facilitating freer trade in pesticides.
        For example, since 1998, the U.S. and Canada have been
    guided by a Record of Understanding. This agreement included
    provisions specific to pesticide harmonization and has
    encouraged greater cooperation among government regulators,
    growers, and the pesticide industry. This coordination has
    helped advance harmonization efforts between our two regulatory
    systems.
        The NAFTA TWG recently issued a 5-year strategy which put
    forward its goals for establishing a North American pesticide
    market. This vision promotes equal access to pesticides by
    offering incentives, including a harmonized review process for
    new pesticide products and work sharing across national
    boundaries.
        To date, the vast majority of data requirements and test
    guidelines have been harmonized. The submission procedures and
    formats have also been harmonized, resulting in significant
    efficiencies for both registrants and also government
    reviewers. As a result, both work sharing and joint reviews of
    recent pesticide registration submissions and harmonization of
    risk assessment procedures between the U.S. and Canada have
    significantly improved.
        On priority pesticides, since 1999, EPA has worked very
    closely with the North Dakota Department of Agriculture,
    growers, industry groups, and others, trying to get a list of
    the products that we think are the priorities that the growers
    are telling us that they need and that there are real cost
    differences for. We came up with a list of 23 identified
    priorities. EPA has since registered 15 of those for growers'
    use. We also have work underway to continue on the rest of
    those.
        Over the years, EPA has reached out to grower groups in an
    ongoing effort to reflect grower priorities in our current
    registration plans and priorities. We are focusing our
    resources on products that are most needed by growers.
        Another important piece of the TWG's efforts is the
    creation of a NAFTA label, and some of the other folks after me
    are also going to talk a little bit about the NAFTA label. This
    is something we have been very supportive of. This label can
    help enable the sale and distribution of a pesticide across
    North America, thereby helping to make products available in
    Canada and the U.S. at the same time.
        The joint review program has resulted in simultaneous
    registration of 22 new pesticide products in the U.S. and
    Canada, with 12 additional products currently under review. The
    governments are also sharing resources and scientific expertise
    or work sharing in reviewing data on several other pesticide
    products.
        You have our commitment to continue work within our current
    authorities to promote a level playing field for U.S. growers.
    We believe regulatory harmonization will continue to bear fruit
    and help create a more level playing field for pesticides. In
    the near term, EPA stands ready to continue to work with
    Congress and others on possible legislative solutions that
    effectively address observed differences in pesticide pricing,
    as long as the protection of public health and the environment
    are not compromised.
        However, there are some broad policy implementation
    concerns that the current legislation--that could have, I
    believe, additional ramifications for ourselves as well as
    potentially on other trade agreements, et cetera.
        Specifically for EPA, one of our concerns is implementation
    issues. For example, there are important questions regarding an
    individual registrant's ability to assume the legal, financial,
    reporting, and other requirements of FIFRA. Of course, any
    legislation should not place unreasonable resource burdens on
    the government's pesticide registration program or cause any
    unintended consequences on other priorities in regulating
    pesticides.
        In the long term, EPA is working to harmonize the
    availability of pesticide products between the U.S. and Canada
    through the NAFTA Pesticide Working Group, in cooperation with
    stakeholders, States, growers, and others. International
    harmonization on pesticide regulation efforts continue to be a
    key focus of EPA and these efforts hold significant promise to
    help alleviate some of the alleged pricing issues.
        In closing, I look forward to working with you, other
    Members of Congress and other affected stakeholders on this
    important issue, and I will take any questions that you have at
    this time.
        Senator Dole. Thank you, Mr. Sharp.
        [The prepared statement of Mr. Sharp can be found in the
    appendix on page 27.]
        Senator Dole. The proposed legislation requires the
    Environmental Protection Agency to obtain the confidential
    statement of formula for any Canadian pesticide proposed for
    U.S. registration to determine if it is, in fact, identical or
    substantially similar to a product currently registered
    domestically. Now, how will EPA determine if a Canadian
    pesticide is substantially similar in composition to a
    domestically registered chemical? How will ``substantially'' be
    interpreted?
        Mr. Sharp. Right. We have talked with Senator Dorgan's
    staff and others about technical advice on this legislation and
    there is certainly a list of issues that we have provided
    advice on. This is one of those, and for us, this is a key one.
        If the legislation passed, it would have a requirement on
    us to make a substantially similar finding, and the way the
    legislation currently is written, that burden is on EPA to make
    that decision.
        Our problem with that is the question that you just asked.
    Do we have any legal ability to get that information, the
    confidential business information, from a Canadian company to
    make that finding? The answer to that is no. We don't have an
    ability to do that. Do we make substantially similar findings?
    Yes, we do, and we do all the time on ``me too'' types of
    registrations. It is a very specific type of registration
    activity that we take part of on a constant basis. That type of
    decision, a ``me too'' decision, is based on the confidential
    statement of formula that we have. If we can't get it, it
    creates a real problem for us.
        Senator Dole. Companies registering a product in the United
    States currently pay registration fees to help generate
    resources for EPA to conduct the necessary reviews. Now, under
    the proposed legislation, no such fee would be required, yet
    the EPA has to approve or disapprove the application within 60
    days. How would this be paid for?
        Mr. Sharp. That is an unknown. I mentioned actually in my
    testimony the resource constraints. We have, and we are very
    happy to have, actually, the support of Congress recently in
    passing the PRIA legislation, a new fee system, and that is a
    terrific opportunity for us, for growers, for companies and
    others to be able to produce the results that folks have been
    wanting to get, which is a more timely assessment of products
    and registration of products. It also sets up a new fee system
    and a fee of scheduling for moving products through that
    system.
        This legislation would be outside that realm. I am not sure
    how it would actually fold in with the fee system or with our
    current resources. It would be potentially a resource drain on
    us to have to pull a priority and/or workloads from priority
    areas that we currently have and move them into doing this type
    of work. I guess one of our concerns has been if you move this
    legislation without additional resources, it certainly would
    cause a problem.
        One of the other issues that you mentioned is the 60-day
    time limit. I mentioned the ``me too's'' a few minutes ago, of
    how we register products that are substantially similar within
    this country if we have the proper information. One of the
    challenges that we would have with this legislation is that
    currently, we have 90 days to make that type of finding. This
    would require 60 days. You certainly are even pushing the time
    limits down and the constraints even more so on the agency.
        Senator Dole. You are saying it could divert attention away
    from registering new products?
        Mr. Sharp. Yes, it could. We currently have a priority
    system set up where we are registering newer, safer products
    all the time. Methyl bromide alternatives and others have
    priority standing within our systems and that is why we would
    have to shift probably resources from those to this area.
        Senator Dole. S. 1406 allows EPA to delegate its authority
    to register a pesticide to a State, possibly resulting in a
    patchwork of pesticide registrations. At the same time, EPA is
    bound by NAFTA to work toward harmonization, as you said, at
    the Federal level and it is responsible for enforcing treaty
    obligations intended to result in harmonization throughout the
    States and territories. How will EPA reconcile these
    conflicting directives?
        Mr. Sharp. The legislation has changed a number of times.
    Certainly, at one point in time, and I am not sure if it is the
    current version or a prior version, but one of the prior
    versions has set up this type of a system where the delegation
    of registration would be moved from EPA to a State. That would
    potentially cause the type of situation where you would have
    individual States setting their individual standards or making
    individual regulatory decisions on products that are different
    from the Federal level.
        Senator Dole. You would end up with a patchwork there.
        Mr. Sharp. Create a patchwork. That is a situation that we
    don't currently have. We have several States that do extensive
    work on pesticides, but in this type of an arena, this type of
    a situation, we don't have that currently and it could be
    troubling. I guess I look at it as it could actually lead to
    slowing down registrations.
        Senator Dole. How will the U.S. meet its NAFTA obligation
    to protect confidential proprietary information supplied in
    connection with harmonization efforts if it has delegated
    authority to a State to compel confidential information?
        Mr. Sharp. Obviously, we have protections under FIFRA for
    protecting CBI information, confidential business information.
    One of the challenges that I know has come up in the past with
    this legislation and certainly one of the pieces of advice we
    have given Congress is that we would be very concerned if you
    moved the delegation to a State where you do have sunshine
    provisions and other types of requirements that could have that
    information moved out of the protected arena. That has been a
    concern for us.
        We, of course, under FIFRA have certain responsibilities,
    as well, when we are looking at information that we are making
    decisions on, that there are certain types of agreements made
    with the protection of that information and compensation and
    other requirements so that we can use that information. It
    would raise a lot of questions if you did move that type of an
    authority to a State as far as protection of information.
        Senator Dole. How will EPA coordinate with Customs in
    processing the commerce of third party registrant chemicals?
        Mr. Sharp. This is a question that is unclear to us of how
    we would answer that if you had this legislation passed,
    because the question on coordinating with Customs, currently,
    we have a system in place where if you are going to import a
    pesticide into this country, there is a system set up where the
    importer notifies the EPA. We check the proper paperwork. We
    send back documentation that that product is allowed to come
    into this country. Then that paperwork comes with the product
    into this country.
        This legislation, when it talks about any person being a
    registrant, we are not sure what that means and who
    specifically would then be the registrant, who would be
    responsible for that paperwork movement and how you could
    coordinate it then with Customs in order to move product across
    the border. We have talked with and given our advice on this in
    that it is difficult for us to understand exactly practically
    how this could work for an individual to go across the border
    literally and purchase a product and bring it back, given that
    it does have to move across an international border. How that
    practically could work has been not real clear to us, the way
    the legislation is currently drafted.
        Senator Dole. Thank you very much, Mr. Sharp. I appreciate
    your testimony this morning and look forward to working with
    you on this and other issues.
        Mr. Sharp. Absolutely. Thank you.
        Senator Dole. Thank you very much.
        Now, I would like to call our panel to the front, please,
    Mr. Jim Gray, Pesticide Registration Coordinator for the North
    Dakota Department of Agriculture; Mr. Mark Gage, President of
    the National Association of Wheat Growers; and Mr. Jay Vroom,
    President and Chief Executive Officer of CropLife America.
    Welcome, gentlemen.
        Let me begin with Mr. Gray. Mr. Gray, certainly the North
    Dakota Department of Agriculture is qualified to address some
    of these registration requirements. What principally do you
    view as your role under this proposal?

             STATEMENT OF JIM GRAY, PESTICIDE REGISTRATION
                COORDINATOR, NORTH DAKOTA DEPARTMENT OF
                AGRICULTURE, ON BEHALF OF THE NATIONAL
      ASSOCIATION OF STATE DEPARTMENTS OF AGRICULTURE, BISMARCK,
                              NORTH DAKOTA

        Mr. Gray. Thank you, Madam Chair. My role under this
    proposal as a State regulator would be to work with EPA. If
    they delegated that authority to a State, I would review that
    package. Otherwise, I would be a stakeholder in the process.
        Would you like for me to present the oral testimony now?
        Senator Dole. Yes, please.
        Mr. Gray. Thank you. Thank you, Madam Chair. My name is Jim
    Gray, Pesticide Registration Coordinator for the North Dakota
    Department of Agriculture, and I am here to testify in full
    support of S. 1406. I speak today on behalf of the National
    Association of State Departments of Agriculture, which
    represents the Commissioners, Secretaries, and Agriculture
    Directors of the State Departments of Agriculture in the 50
    States and four U.S. territories.
        S. 1406 deals with the issue of pesticide price
    harmonization with Canada, a pressing issue in northern border
    States with nationwide impact. By granting EPA the authority to
    issue registrations to those parties that wish to import
    certain Canadian pesticides, the bill desegments the U.S.
    market with Canada, thereby eliminating significant pesticide
    price disparities.
        There are currently barriers in Federal statutes that
    prevent American farmers from legally importing and using
    Canadian pesticides without the consent of the product
    registrant, even if the products are identical in composition
    to pesticides already registered with the U.S. EPA. As a
    result, product registrants have been able to use the U.S.-
    Canadian border as a real artificial barrier to create two
    separate pesticide markets. Similar to the situation with
    pharmaceuticals, these artificially segmented pesticide markets
    can cause significant pesticide price disparities.
        Senator Dorgan presented many of those price disparities
    this morning. There is no need for me to go into those again.
    However, the price disparities are simply a symptom of this
    system of two segmented pesticide markets.
        The system of segmented pesticide markets is simply unfair
    to U.S. farmers, especially since grain from Canada treated
    with those lower-cost Canadian pesticides travels south of the
    border every day to compete with U.S. grain on the open market.
    We cannot continue to ask U.S. farmers to compete on such an
    unlevel playing field.
        Furthermore, the current system is a clear violation of
    Article 102 of NAFTA, which states that the parties shall
    eliminate barriers to the trade in and facilitate the cross-
    border movement of goods and services between the territories
    of the parties. It is evident that existing Federal statutes
    pertaining to pesticide labeling create a clear barrier to the
    free trade in and cross-border movement of pesticides.
        Now, the ability to issue registrations for these Canadian
    pesticides without the consent of the registrants is a needed
    component of this bill. State pesticide regulators and farmers
    have tried to work in the past with registrants to import their
    pesticides from Canada, and so far, not one pesticide company
    has given its consent to purchase their products in Canada and
    import and use those products. Therefore, it is essential that
    a mechanism be created in which access to these Canadian
    pesticides is not contingent upon primary registrant consent
    and this bill provides that mechanism.
        I would also like to suggest two minor changes to the bill
    to focus efforts as well as to create a real long-term solution
    to this problem. Mr. Sharp this morning raised some resource
    concerns with EPA, and the issue with disparate pesticide
    prices between the U.S. and Canada is most prominent with
    farmers and ranchers, in the agricultural sector. Therefore, to
    focus on the most pressing needs of the agriculture user
    community, I recommend that the scope of S. 1406 be limited
    only to agricultural pesticides.
        Second, while S. 1406 is a real critical need to address
    pesticide price harmonization, it is not a long-term solution
    to the problem. Instead, the long-term solution to desegment
    the U.S. market with Canada is to label pesticides with joint
    pesticide labeling that meets the requirements of both the U.S.
    and Canada. Labeling products in such a way would negate the
    need for registrant consent for those products to cross the
    border. Instead, those jointly labeled products could cross the
    U.S.-Canadian border freely based solely on market forces.
        It is my understanding that the regulatory barriers to the
    creation of joint pesticide labeling have been largely
    resolved. However, use of joint labeling remains a voluntary
    option for the pesticide manufacturers. Because of this, the
    use of joint pesticide labeling has been virtually nonexistent.
        I suggest that language be added to S. 1406 mandating the
    use of joint U.S.-Canadian pesticide labeling in those
    situations where an identical or substantially similar
    pesticide is registered for use in both countries. However,
    such a requirement for use of joint pesticide labeling should
    become effective only when a similar mandate exists in Canada.
    Such language would be a logical complement to the existing
    bill. S. 1406 provides a real workable short-term solution,
    while mandatory use of joint pesticide labeling is the ultimate
    long-term solution.
        American farmers have proven that they can produce the
    safest, highest-quality food in the world. However, to compete
    in today's agricultural economy, they need to be able to
    operate on a level playing field with their major competition.
    This bill is one step in the creation of that level playing
    field. Thank you.
        Senator Dole. Thank you, Mr. Gray.
        [The prepared statement of Mr. Gray can be found in the
    appendix on page 35.]
        Senator Dole. Mr. Gage?

      STATEMENT OF MARK GAGE, PRESIDENT, NATIONAL ASSOCIATION OF
                   WHEAT GROWERS, PAGE, NORTH DAKOTA

        Mr. Gage. Madam Chairman, members of the committee, my name
    is Mark Gage. I am a wheat, barley, and soybean producer from
    Eastern North Dakota and I am currently President of the
    National Association of Wheat Growers. I would like to thank
    the committee for holding this hearing today to help answer a
    simple but extremely important question. Why should I, as an
    American producer, have to pay a significantly higher price for
    crop protection products than my Canadian counterpart when we
    are both using the same product on the same crop?
        The National Association of Wheat Growers strongly supports
    S. 1406, introduced by Senators Dorgan and Burns, as the best
    means to address this problem. I would urge the committee to
    favorably consider this legislation as part of any future
    deliberation. Prices on crop protection products between the
    United States and Canada have varied over the years for a
    number of reasons. However, even when taking exchange rates
    into consideration, many of these products have consistently
    been priced lower in Canada than their identical counterpart
    sold in the United States.
        Considering the fact that the cost of crop protection
    products represents anywhere from ten to 15 percent of variable
    production costs, minor differences in these prices add a
    significant amount to the cost of doing business when competing
    with Canadians to sell our products in a global marketplace.
        As mentioned in my written testimony, a number of studies
    have shown that this price disparity exists. I would simply
    like to quote from an updated study completed in 2003 by North
    Dakota State University. The controversy between the U.S. and
    Canadian chemical prices is over 6 years old. With the
    exception of a few herbicides, very little has changed. The
    overall cost difference in 2002 is about $1.56 per acre, but
    producers who use Liberty, Puma, Far-Go, or Assert are
    disadvantaged by more than $3 per acre. Whether the situation
    is due to market manipulation or other economic factors is
    undetermined, but the cost difference exists and the cost for
    North Dakota farmers is over $20 million annually.
        Therefore, to eliminate price disparities, the U.S. and
    Canadian herbicide markets must be desegmented. This bill can
    best remedy this inequitable pricing structure by allowing the
    purchase of a less costly Canadian product to be registered for
    use by EPA in the U.S. if its identical or substantial product
    is already registered for domestic use. This product would
    remain under EPA regulation. It would not pose a health or
    environmental risk. It simply brings an additional degree of
    competitive pricing into the marketplace.
        Every competitive edge is needed in a global market.
    However, much is made of the current high commodity prices as
    if that should serve as cushion against high production cost,
    whether they are chemicals, fertilizer, or energy. Wheat is
    currently bringing $3.81 per bushel at my local elevator. My
    Canadian competitor, the state trading enterprise, can sell at
    the same elevator and get $3.81. I can't get the Canadian price
    of $5.80 an acre for certain chemicals.
        This brings up a larger problem affecting all American
    agriculture. I attached to my written testimony a Wall Street
    Journal article dated June 18, 2004, titled, ``New Farm Powers
    Sow the Seeds of America's Agricultural Woes.'' While the focus
    of this article is on wheat, implications for all of
    agriculture are very stark and very real. As the article notes,
    America's run as a wheat powerhouse and dominant player in
    global agriculture is under attack from a crop of newly
    emboldened international rivals who are striking at one of the
    main pillars of American agricultural might, food exports. U.S.
    farmers are increasingly under pressure as they compete with
    commodities including Brazilian soybeans, Indian wheat, Chinese
    apples, Mexican tomatoes, and Argentine peanuts. This ``farms
    race'' has implications beyond agriculture. America's influence
    on issues such as international trade owes much of its
    domination to food.
        Madam Chairman, jump-starting America's farms race for the
    21st century ought to be the top priority not only for the U.S.
    agricultural community, but also for all of America. Providing
    access to competitive production input costs is crucial, and
    that is why I strongly urge you to favorably report on S. 1406,
    the Pesticide Harmonization Act of 2004.
        Thank you, and I would be happy to answer any questions.
        Senator Dole. Thank you, Mr. Gage.
        [The prepared statement of Mr. Gage can be found in the
    appendix on page 41.]
        Senator Dole. Mr. Vroom, welcome.

    STATEMENT OF JAY VROOM, PRESIDENT AND CHIEF EXECUTIVE OFFICER,
                    CROPLIFE AMERICA, WASHINGTON, DC

        Mr. Vroom. Thank you, Madam Chairman. Thank you for this
    opportunity to represent the industry here this morning. I am
    Jay Vroom, President of CropLife America, the trade association
    that proudly represents the manufacturers, distributors, and
    formulators of virtually all the crop protection chemical and
    crop biotechnology products used by our most valued customer in
    the entire world, the American farmer.
        I want to express my appreciation to you for inviting me to
    present our views. My remarks will highlight some items out of
    our written testimony, which I appreciate the inclusion in the
    record, and also respond to some of the other comments that
    already have been made this morning.
        As regards the attachments to our advance written
    testimony, we have those items on posters. The first one
    illustrates the notations that have already been made this
    morning about the fact that the Canadian dollar has
    strengthened against the United States dollar and that has
    contributed significantly to addressing the disparities that
    have been addressed previously.
        This next chart illustrates the fact that American farmers
    overall are paying much, much less for the same or greater
    amounts of our industry products in the last 10 years or so.
    This is driven by the fact that we have more and more
    competitors, many of our products have gone off patent, and the
    fact that the approximately $1.5 billion that have come off of
    our total sales earnings by industry in the United States
    really has gone straight to the bottom line of the American
    farmer.
        This chart illustrates the comparative relativity of the
    green line across the bottom, which is barely visible and
    represents the cost of pesticides as part of the American
    farmers' expense over the last 12 or so years, and the fact
    that it is essentially a flat line when cast against the larger
    economics of gross farm income, total farm expenses, and the
    like.
        Despite the fact that our industry sales have gone down,
    our industry's investment in research and development to find
    newer, better products and defend older products' safety has
    continued, and as Mr. Sharp has indicated in his testimony
    earlier this morning, the EPA has continued to register more
    new products of our industry as presented for licensing
    application in recent years. The total number of new use
    products adopted and approved by EPA has also continued to
    improve.
        These are important illustrations that provide a backdrop
    to the discussions that we are having here this morning around
    S. 1406.
        My organization has been involved and I have led it in this
    regard for more than 15 years around these issues related to
    U.S.-Canada pesticide harmonization. In fact, I and my staff
    were involved before there was a NAFTA, when we called it the
    U.S.-Canada Free Trade Agreement and we were very pleased with
    the support that we got even in the early days of the Canada
    Free Trade Agreement during the Reagan administration.
        As the issue expanded into the controversy of price
    perceptions across the border 6 years ago, I have been
    personally engaged at every stage of the way. I have testified
    now at each of the four U.S. Congressional hearings on the
    price perception issue. I have engaged in attempts to dialog,
    compromise, fix, and respond to the 13 separate Congressional
    bills that have been introduced on this subject over these 6
    years. I have represented my industry at two U.S.-Canada summit
    meetings convened by USDA during the Clinton administration,
    spent countless hours with our industry experts and grower
    organizations as we partner together with EPA, working in the
    NAFTA Technical Working Group that Mr. Sharp referred to
    earlier.
        Maybe most importantly, I still own my family farm in
    Illinois and I have to look my brother-in-laws and cousin in
    the eye when we talk about these very issues. After more than
    30 years of working in various agribusiness segments in the
    United States, I take this role seriously. I want U.S.
    agriculture overall and my personal little part of it to
    prosper, to compete fairly, and succeed.
        I mentioned previously that on this U.S.-Canadian
    legislation we have offered previously to seek common ground,
    to consider compromise to legislative solutions. That is no
    longer my position nor the position of CropLife America. As you
    can see from my written testimony, we have done the most
    comprehensive analysis yet of S. 1406 and have both more
    completely articulated the problems with the legislation that
    we had previously pointed out and have identified a significant
    host of additional concern areas.
        Most, if not all of these areas, I am confident, are
    unintended consequences in Senator Dorgan's drafting, for he
    would not purposely set out to propose legislation with such
    negative side effects. They are problems nonetheless. The
    significant list includes five I would like to lift up in just
    a few moments.
        No. 1, the legislation does not advance the already
    substantial progress of regulatory harmonization accomplished
    under the TWG. In fact, we believe honestly that S. 1406 would
    seriously dilute the continued progress of the TWG and our
    EPA's ability to advance real regulatory progress. Mr. Sharp's
    comments supported that notion, as well.
        No. 2, we believe that S. 1406 is not in harmony with our
    existing NAFTA and WTO treaty obligations, and as such is
    probably not even the exclusive jurisdiction of the Agriculture
    Committee.
        No. 3, S. 1406 contravenes many crucial U.S. intellectual
    property laws and international trade obligations.
        No. 4, S. 1406 creates potential user safety concerns.
        No. 5, potential for crop application and mistakes and crop
    risks.
        On the latter two points, I refer you to several product
    label examples that we brought along today that are attached to
    our written testimony showing the comparable U.S. and Canadian
    labels for what have been portrayed by many in this debate in
    recent years as products that farmers use on both sides of the
    border and depend on heavily.
        Concerns of note that these labels illustrate include the
    fact that labels in the United States are in English only,
    while Canada requires French companion language presentations
    on the labels. No. 2, U.S. products bear measurements in
    English units, Canadian labels are in metric units. The two
    countries require different warning pictograms for safety
    communications. Different product question toll-free numbers
    apply on both sides of the border, and in fact, you cannot
    access from most United States telephone exchanges Canadian 800
    numbers, raising the question that if, in the case of an
    emergency, someone tried to dial one of those numbers, would
    help not be able to be provided?
        Often, products that appear to be identical are actually
    not. Significantly different product formulations are used in
    the two markets and one might be too strong and damage crops if
    used in the other market using practices that farmers in that
    domestic market were used to employing.
        Another important point Mr. Sharp alluded to. How would
    Customs officials figure out if the correct S. 1406
    supplemental labels applied to the correct Canadian product
    container when presented for import into the United States?
    What are the security considerations that follow along that
    track?
        Finally, Madam Chairman, we point out that when examined
    overall and not on the basis of selective price comparisons,
    any previously existing significant price differentials that
    disadvantage allegedly North Dakota farmers compared to
    Canadian farmers have evaporated. In fact, the most recent
    North Dakota State University study that Mr. Gage just referred
    to, the 2003 study, shows that overall, North Dakota farmers
    were better off by over $1 million on the list of 35 products
    on the chart as opposed to what Canadian farmers paid.
        We do not find anything about S. 1406 that we can agree
    with or suggest a compromise for. Indeed, Senator Dorgan and
    others who have proposed such legislation in these past 6 years
    have drawn a great deal of attention to the issues of more fair
    product availability and cost and they have been heard by the
    marketplace and by those who have had the continued impact of
    progress around regulatory harmonization. The price problem, to
    the extent that it previously existed, has been extensively
    addressed.
        Senator Dorgan can take credit, just as President Reagan
    won the Cold War without firing a shot, of helping resolve an
    issue without having to amend U.S. law. We propose to continue
    to work with Mr. Dorgan and others on the Hill and in the
    administration to ensure continued progress around real
    regulatory harmonization and that we continue this journey of
    positive interchange under the context of NAFTA.
        I look forward to responding to your questions,
    particularly around some of the product-specific issues that
    have been raised.
        Senator Dole. Thank you, Mr. Vroom.
        [The prepared statement of Mr. Vroom can be found in the
    appendix on page 47.]
        Senator Dole. Mr. Gray----
        Mr. Gray. Yes?
        Senator Dole. The legislation allows the Administrator of
    EPA to delegate functions under this subsection to a State. Do
    you believe that most State Departments of Agriculture have the
    financial resources and the expertise necessary to carry out
    such functions as determining that the chemical is identical or
    substantially similar to a domestically-registered pesticide or
    obtaining a confidential statement of formula or determining
    tolerances for food use chemicals?
        Mr. Gray. Thank you, Madam Chair. The answer is yes. As a
    pesticide regulator, I review confidential statements of
    formula all the time as part of my State regulatory duties. I
    would urge the EPA, if they did delegate this authority, to
    delegate it only to those States that they are convinced have
    expertise and adequate resources and adequate State laws that
    do protect that data as being confidential.
        The real process of that review is to lay the Canadian
    confidential statement of formula side-by-side with the U.S.
    confidential statement of formula and make sure that the
    products have the same ingredients at comparable
    concentrations, and most State regulators have that technical
    expertise.
        Senator Dole. What are the standards? How is an applicant
    to demonstrate that a pesticide is identical or substantially
    similar? What kind of standards----
        Mr. Gray. We would need to work with EPA on really
    developing what that definition of ``substantially similar''
    means. My definition would be that the Canadian product only
    contains U.S.-approved active and inert ingredients at the same
    concentrations. To me, that would be identical or substantially
    similar. Then you get into questions of, what if it is 2 or 3
    percent concentration different? Is that substantially similar?
    We would need some guidance from EPA on that.
        Senator Dole. I note the legislation limits the liability
    of both the EPA and the individual registrant. Do you believe
    there are instances in which a State Department of Agriculture
    could be held legally liable for injury or damages resulting
    from use of a Canadian product registered under the new
    subsection? This assumes, of course, that much of the data used
    to support the registration will be furnished by the State
    Agriculture Departments.
        Mr. Gray. I don't see liability as being a major issue with
    this bill. What the bill does limit EPA's liability is as the
    registering agency, not as the registrant. Now, the
    supplemental registrant, for lack of a better term, for this
    bill, and for the most part, that is not going to be an
    individual farmer going north of the border to purchase a
    Canadian product.
        I envision if this bill passes that the majority of
    registrants are going to be the major chemical distributors and
    dealers that are going to source Canadian wholesale sources of
    these products. Their liability really centers upon those
    stages of production that are under their knowledge or under
    their control.
        The way EPA's enforcement viewpoint works now is that if
    there is a problem with the formulation or packaging of a
    product, that party that had the direct control over the
    formulation or packaging would have that liability. I don't see
    that changing with this bill. If there is a problem with the
    importation or the relabeling, the secondary registrant would
    have to assume liability for that.
        Senator Dole. Thank you very much.
        Mr. Gage, under the proposed legislation, any person may
    seek to register a Canadian pesticide, including an individual
    farmer or farmer cooperative that might then sell it to other
    farmers. The registrant or farmer cooperative in this case is
    responsible for labeling the product appropriately, and I note
    that the proposal, for example, holds the farmer cooperative
    harmless if the product becomes adulterated. However, I do not
    see any protection for mislabeling. Do you think the farmer
    cooperative could be held liable for any inadvertent crop
    damages resulting from mislabeling?
        Mr. Gage. As I understand the bill, when they pick up the
    product, it would be relabeled at that point. I do not believe
    that there would be--that there is a problem with mislabeling,
    and so I don't foresee that problem. I don't see a problem
    with--for my local cooperative in liability.
        Senator Dole. S. 1406 does not speak to whether Canadian or
    U.S. intellectual property laws apply to Canadian pesticides
    sold in the United States. Are intellectual property laws in
    the U.S. and Canada the same, and if they are not, which
    intellectual property laws would apply to Canadian pesticides
    sold in the United States if S. 1406 is passed?
        Mr. Gage. I really don't know if the intellectual property
    laws are exactly the same in the U.S. and Canada. Since we are
    in the United States, I would assume that U.S. laws apply here.
        Senator Dole. How do your growers feel about a NAFTA label?
        Mr. Gage. We are very supportive of a NAFTA label.
    Ultimately, that will be our ultimate goal. We need remedies
    before that takes place. I know that there have been examples
    cited, how the agencies are working together and passing
    products through under that format now. There are things that
    can happen in that process that can throw that out of line.
        I personally know of an example of a chemical that I was
    told by a company that was under joint review, and so I was at
    EPA and I was asking how the registration process was coming on
    this because it is under joint review, as I understood it. EPA
    told me that it wasn't under joint review. They were sharing
    some information, but it didn't qualify for joint review
    because you have regulations on determining what qualifies for
    joint review. One of those regulations was that it had to be--
    the registration had to be applied for on the same day in the
    United States and Canada, and under that particular product,
    the company applied in Canada months before, earlier than they
    applied in the U.S. Really, it wasn't under joint review, which
    throws that process out of whack and raises questions with
    growers.
        Why are we being penalized? We need something in the
    meantime when we are working toward a NAFTA label. We need this
    legislation in the meantime to equalize some of the disparities
    in prices.
        Senator Dole. Thank you, Mr. Gage.
        Mr. Vroom, the domestic companies you represent are not
    seeking to register Canadian product in the United States.
    However, under this proposal, they must supply EPA with
    information about the Canadian chemical simply because it is
    produced by an affiliate. The Canadian affiliate is not bound
    by U.S. law to provide this information, leaving the domestic
    company vulnerable to litigation in a situation that they have
    little control over. It seems that domestic chemical companies
    carry the entire burden with none of the financial benefits.
        Could the increased costs associated with this proposal
    result in the need to raise prices on products that they sell
    domestically?
        Mr. Vroom. Senator, there is a very real possibility of
    that and we certainly understand that the litigation question
    is not theoretical. Our industry faces substantial product
    liability litigation on an ongoing basis across the country,
    and in fact, as we look at our global marketplace, the United
    States is the most expensive to operate in with regard to the
    litigation overhead cost, defense, settlement of cases, and the
    like.
        Senator Dole. I understand that Liberty herbicide is sold
    in both the United States and Canada, correct?
        Mr. Vroom. Yes.
        Senator Dole. If a grower were to purchase the Canadian 150
    formulation in Canada and bring it to the United States to use
    on his corn crop, what would be the result?
        Mr. Vroom. We would anticipate that there would be a very
    real possibility of crop damage by way of misapplication of the
    product because of what appears to be a slight, but a
    substantial, differentiation in the product concentration. We
    actually have brought as props for my presentation copies of
    the Liberty boxes and labels. There are two here and one is on
    the floor.
        As you can see, they look very similar in the United States
    formation, which is this one, to the Canadian one, but, in
    fact, the bottles inside are different size, one being in
    metric and the other being in English units. The container
    instructions and language are also different. We feel that it
    would be very easy to make a mistake in crop application and
    damage the crop, and then back to your earlier question, whose
    liability is that?
        Senator Dole. Is Liberty more or less expensive in the
    United States today than in Canada?
        Mr. Vroom. According to the experts that we have consulted,
    including the manufacturer of the product, if you compare the
    like product, active ingredient concentrations, the price per
    gallon in the United States today is lower. Senator Dorgan
    referred to 2002 comparative data on Liberty. The 2003 data
    clearly show that that relationship has switched.
        Senator Dole. If Liberty is now cheaper in the United
    States than in Canada on a per gallon basis, what happened in
    the past few years to effectuate this change?
        Mr. Vroom. Well, a number of factors as is the case when
    markets are working. In the case of Liberty, the manufacturer
    have heard from their growers and part of that was amplified by
    the work that Senator Dorgan and Congressman Pomeroy and other
    proponents of their legislation on the Hill. They have reduced
    their price in the United States by nearly a third.
        I can't speak to their other specific reasons for changing
    pricing, but the result of generic competitors that have come
    into the marketplace with competing products, the impact of the
    change in the relationship of currency valuations, and many
    other factors contribute.
        Senator Dole. Gentlemen, I thank all three of you very much
    for being here today.
        I would like to include for the record written statements
    from Ralph Peck, Director of the Montana Department of
    Agriculture; the Montana Grain Growers Association; Bob
    Stallman, President of the American Farm Bureau Federation;
    Jake Cummins, Executive Vice President of the Montana Farm
    Bureau Federation; and Rob Rynning, President of the National
    Barley Growers Association.
        [The prepared statements can be found in the appendix on
    page 110.]
        Senator Dole. Since there are no other questions, I declare
    this Subcommittee hearing adjourned.
        [Whereupon, at 11 a.m., the Subcommittee was adjourned.]

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                                 June 23, 2004

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    =======================================================================

                       DOCUMENTS SUBMITTED FOR THE RECORD

                                 June 23, 2004

    =======================================================================

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