[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

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                                                                   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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                            A P P E N D I X

                             June 23, 2004



      
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                             June 23, 2004



      
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