[Senate Hearing 109-490]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-490
 
 TO REVIEW THE STATUS OF THE WORLD TRADE ORGANIZATION NEGOTIATIONS ON 
                              AGRICULTURE

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

                                HEARING

                               before the

                       COMMITTEE ON AGRICULTURE,
                        NUTRITION, AND FORESTRY

                          UNITED STATES SENATE


                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION


                               __________

                           SEPTEMBER 21, 2005

                               __________

                       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



                   SAXBY CHAMBLISS, Georgia, Chairman

RICHARD G. LUGAR, Indiana            TOM HARKIN, Iowa
THAD COCHRAN, Mississippi            PATRICK J. LEAHY, Vermont
MITCH McCONNELL, Kentucky            KENT CONRAD, North Dakota
PAT ROBERTS, Kansas                  MAX BAUCUS, Montana
JAMES M. TALENT, Missouri            BLANCHE L. LINCOLN, Arkansas
CRAIG THOMAS, Wyoming                DEBBIE A. STABENOW, Michigan
RICK SANTORUM, Pennsylvania          E. BENJAMIN NELSON, Nebraska
NORM COLEMAN, Minnesota              MARK DAYTON, Minnesota
MICHEAL D. CRAPO, Idaho              KEN SALAZAR, Colorado
CHARLES E. GRASSLEY, Iowa

            Martha Scott Poindexter, Majority Staff Director

                David L. Johnson, Majority Chief Counsel

              Steven Meeks, Majority Legislative Director

                      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):

To Review the Status of the World Trade Organization Negotiations 
  on Agriculture.................................................    01

                              ----------                              

                      Wednesday September 21, 2005
                    STATEMENTS PRESENTED BY SENATORS

Chambliss, Hon. Saxby, a U.S. Senator from Georgia, Chairman, 
  Committee on Agriculture, Nutrition, and Forestry..............    01
Harkin, Hon. Tom, a U.S. Senator from Iowa, Ranking Member, 
  Committee on Agriculture, Nutrition, and Forestry..............    13
Salazar, Hon. Ken, a U.S. Senator from Colarodo..................    22
                              ----------                              

                               WITNESSES
                                Panel I

Johanns, Hon. Mike, Secretary, U.S. Department of Agriculture, 
  Washington, DC.................................................    03
Portman, Hon. Robert, U.S. Trade Representative, Washington, DC..    06

                                Panel II

Condon, Leornard W., Director, International Business Relations 
  Altria Corporate Services, Inc., Washington, DC................    41
Erickson, Audrae, Co-Chairman, AgTrade, Washington, DC...........    37
Helms, Allen, Vice Chairman, National Cotton Council, Clarkedale, 
  Arkansas.......................................................    39
Viso, Mark, Vice President of Operations, International Program 
  Group World Vision, Washington , DC............................    43
                              ----------                              

                                APPENDIX

Prepared Statements:
    Harkin, Hon. Tom.............................................    84
    Johanns, Hon. Mike...........................................    50
    Salazar, Hon. Ken............................................    88
    Condon, Leornard.............................................   105
    Erickson, Audrae.............................................    90
    Helms, Allen.................................................    94
    Portman, Robert..............................................    58
    Viso, Mark...................................................   113
Document(s) Submitted for the Record:
    Grassley, Hon. Charles.......................................   120
    Leahy, Hon. Patrick..........................................   125
    Lincoln, Hon. Blanche........................................   130
    Roberts, Hon. Pat............................................   132
    Stabenow, Hon. Debbie........................................   139
    Letter from the Wheat Export Trade Education Committee, the 
      National Association of Wheat Growers, and the U.S. Wheat 
      Associates.................................................   143
    Statement of the American Farm Bureau Federation (AFBF)......   140
    Statement of Constance E. Tipton, President and CEO, 
      International Dairy Foods Association......................   162
    Statement of the National Pork Producers Council.............   146
    Statement of the Ranchers-Cattlemen Action Legal Fund - 
      United Stockgrowers of America (R-CALF USA)................   155
Questions and Answers Submitted for the Record:
    Harkin, Hon. Tom.............................................   166
    Lincoln, Hon. Blanche........................................   167
    Salazar, Hon. Ken............................................   174
    Stabenow, Hon. Debbie........................................   172



 TO REVIEW THE STATUS OF THE WORLD TRADE ORGANIZATION NEGOTIATIONS ON 
                              AGRICULTURE

                              ----------                              


                     WEDNESDAY, SEPTEMBER 21, 2005

                                       U.S. Senate,
         Committee on Agriculture, Nutrition, and Forestry,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:12 a.m., in 
room SR-328A, Russell Senate Office Building, Hon. Saxby 
Chambliss, [Chairman of the Committee], presiding.
    Present or submitting a statement: Senators Chambliss, 
Lugar, Roberts, Talent, Thomas, Coleman, Crapo, Grassley, 
Harkin, Baucus, Lincoln, and Salazar.

STATEMENT OF HON. SAXBY CHAMBLISS, A U.S. SENATOR FROM GEORGIA, 
  CHAIRMAN, COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

    The Chairman. This hearing will come to order. I welcome 
you to this hearing to review the ongoing agriculture 
negotiations in the World Trade Organization. I appreciate our 
witnesses and members of the public being here to review this 
very important topic as well as those who are listening through 
our website.
    With less than 85 days until the Hong Kong Ministerial 
Conference, I am eager to hear from Secretary Johanns and 
Ambassador Portman on the status of negotiations and what will 
need to happen in the coming days and weeks to reach a 
successful outcome.
    As the world's largest exporter of agricultural products, 
the United States has much to gain and lose in the 
negotiations. In some ways, the negotiations will define the 
future of U.S. agriculture and the balance sheet for millions 
of farmers and ranchers in the United States.
    Most U.S. commodities and agricultural products depend on 
export markets and agriculture remains one of the few sectors 
in the U.S. economy that has a net trade surplus. In 2004, the 
value of agricultural exports was $61 billion versus almost $54 
billion of imports. In addition, exports count for one-fourth 
of foreign cash receipts and more than one out of every three 
acres of U.S. agriculture land is cultivated for exports. 
Thirty-six percent of exports are bulk products--grains, oil 
seeds, cotton, and tobacco. Sixteen percent are livestock 
products, horticulture at 21 percent, and the remainder in 
processed foods.
    The importance of the current WTO negotiations is 
heightened by the fact that 95 percent of the world's 
population lives outside the United States and growth in 
developing countries will increase at a higher rate than in 
developed countries.
    While it is important to diversify the farm economy through 
new uses domestically, farmers and ranchers will be impacted by 
future demand and competition from customers and competitors 
abroad. Key to future success will be the extent to which 
countries provide new market access by lowering tariffs, 
eliminate export subsidies, and reducing barriers to trade, 
namely sanitary and phytosanitary requirements.
    China has 20 percent of the world's population, and 
agricultural exports to that country have grown from $1.7 
billion to $6.l billion since China entered the WTO. The 
Department of Agriculture projects an agriculture export 
surplus of $2 billion in 2005. The assumption underlying 
support for the WTO negotiations is the expectation that farm 
income will continue to grow as more developed and developing 
countries open their doors to our high-quality food and fiber 
products. In return, the United States will have to commit to 
reform our domestic programs.
    While the President's statement at the United Nations last 
week called for the elimination of, quote, ``all tariffs, 
subsidies, and other barriers to the free flow of goods and 
services as other nations do the same,'' close quote, by 2010, 
we must be careful to do so while also providing a stable and 
secure safety net for America's farmers and ranchers.
    I believe it is possible to promote trade liberalization 
and reform of our domestic support programs at the same time, 
but we must do so very carefully while being mindful of what 
future programs will replace the ones we are eliminating. The 
administration must make sure farmers and ranchers at the 
grassroots support its trade agenda.
    As recent trade debates have illustrated, producers are 
more skeptical of the promises and predictions of future market 
access than in years past. Problems with Mexico, Russia, China, 
Canada, and Europe, among others, are often used by the 
opponents of trade to make the case for suspending future 
bilateral and multilateral negotiations. In order to quell this 
sentiment, farmers and ranchers will need to se for themselves 
the benefits of trade at the farm gate level. This is the 
greatest challenge that confronts us.
    This committee will be traveling to Hong Kong to view 
firsthand the ministerial. It is my hope that the talks leading 
up to Hong Kong accomplishes most of the work and the events at 
the conference are ceremonial and capped by celebration. We 
will be watching closely the Ambassador's trip to Paris this 
week and are interested in the feedback from our witnesses 
regarding the visit last week of their European counterparts.
    In closing, while I believe the negotiations are extremely 
important, my advice and counsel to the administration is that 
the United States should not accept a deal in Hong Kong unless 
it provides tangible and real rewards for our agricultural 
sector. No deal is better than a bad deal.
    Before we proceed, I would ask that other Senators hold 
their comments until they have the opportunity to ask 
questions. Senator Harkin is obviously not here at this point 
in time, but when he does arrive, he will have the opportunity 
to make any opening statement that he wishes to make.
    And speaking of that, I have a statement from Senator 
Grassley that I would ask unanimous consent be inserted into 
the record.
    [The prepared statement of Senator Grassley can be found in 
the appendix on page 120.]
    The Chairman. We have as panel one today the Honorable Mike 
Johanns, Secretary of the United States Department of 
Agriculture, and the Honorable Robert Portman, United States 
Trade Representative.
    Let me just publicly state one more time how much I 
appreciate both of you gentlemen. Mr. Secretary, I now have had 
the privilege, I guess, of serving under four different 
Secretaries of Agriculture. No Secretary of Agriculture has 
been more cooperative with members of the House and members of 
the Senate than have you. You have been very open to 
discussion, even on difficult and sensitive issues when we 
maybe didn't always see eye to eye. You have never hesitated to 
come to the Hill when we asked you and we appreciate that very 
much. The way you solve problems is to face them head-on and 
you have done that.
    Mr. Ambassador, I would say the same thing for you. 
Everybody on this committee obviously has a very good personal 
relationship with you. You and I go way back to both of our 
days in the House when you were such a strong leader in that 
body and you have brought the same kind of leadership qualities 
that you exhibited in the House to your position as Ambassador 
for the United States with issues relative to trade. You have 
been very open, very forthcoming, and once again, when it comes 
to tough issues, you have never backed down from coming up to 
visit with us and working out the differences that we have and 
making sure that the answers to the United States, and in 
particular farmers and ranchers, is well lookayed after.
    So to both of you, I appreciate very much your great 
service to our country and to farmers and ranchers all across 
America.
    I note, too, Mr. Ambassador, one of your staff members who 
is with you today, Allen Johnson. I think it is his last week 
as a member of your staff and organization. Allen, of course, 
is a hold-over from the previous Ambassador and he is an 
individual who has worked very hard for farmers and ranchers in 
his capacity as a member of the trade staff. Allen, we just 
want to tell you how much we appreciate your service to America 
and we will miss you. I have an idea that we will continue to 
see you from time to time. We certainly hope that is the case. 
But thank you for all you have done and for all your hard work 
and efforts.
    Mr. Secretary, we will turn to you for any opening comments 
you have to make and we lookay forward to hearing that.

 STATEMENT OF HON. MIKE JOHANNS, SECRETARY, U.S. DEPARTMENT OF 
                  AGRICULTURE, WASHINGTON, DC

    Secretary Johanns. Thank you, Mr. Chairman and members of 
the committee. It is a pleasure to be here today. I do 
appreciate the compliment. Likewise, it has been a pleasure 
working with the members of this committee, each and every one.
    I am pleased to be here today along with Rob Portman to 
discuss the WTO negotiations. If I might just briefly, though, 
I would like to make mention of a few statistics relative to 
the farm economy, mention very quickly some of the work that we 
have done on Katrina, Hurricane Katrina, and then offer a 
perspective on the negotiations.
    It is important to recognize that net farm income has been 
at record levels, actually, for the past few years and it is 
expected to be at a near record this year. Our farm sector has 
been robust. It has been enjoying a period of unparalleled 
prosperity in recent years.
    We note that commodity prices have moved lower this year 
and that fuel prices and interest rates have moved higher, and, 
of course, that impacts agriculture. And we have seen adverse 
weather conditions affecting several areas of the country.
    But cash-flow continues at record or near-record levels. 
The first was set in 2003. A new record at a substantially 
higher level was actually set in 2004 and we are projecting a 
level close to that this year.
    Similarly, our agriculture exports are at record levels. 
Sales worth $62.4 billion last year were at an all-time record, 
to be followed by an estimated $62 billion this year. That will 
be the second-highest ever. And in 2006, we are forecasting a 
new record of $63.5 billion. When we succeed at opening major 
beef markets, I expect that these numbers will be even better.
    The composition of our sales has evolved, as well. Consumer 
food and intermediate product sales are growing steadily. These 
are value added. They generate jobs and economic activity for 
each dollar of product sales.
    In reference to Hurricane Katrina, the destruction and the 
social disruption of this hurricane, it just defies 
comprehension. I am proud to say that the USDA has been playing 
a major role in doing all we can to improve human conditions in 
the area that was hit by the hurricane.
    Prior to the hurricane's landfall, the USDA through the 
Food and Nutrition Service placed food in warehouses in 
Louisiana and Texas so we could move that food into the 
affected areas very quickly. Since then, we have delivered over 
15 million pounds of food. Working with our State partners, we 
have provided food stamps to over 400,000 households totaling 
more than $100 million worth of benefits. Our Rural Development 
Agency has identified 30,000 housing units across the country 
in the event that there is a need for this housing. The Forest 
Service has been operating instant management centers and the 
Farm Service Agency is providing emergency farm assistance.
    Our preliminary estimates which we released this week, and 
I emphasize preliminary, related to the hurricane and crop loss 
are $900 million, and again, I would emphasize that is our 
first lookay at that. With that said, there is a long road 
ahead for producers who face infrastructure and long-term 
losses not accounted for in the assessment.
    On the port area, I do want to indicate to you that we have 
also been working on those issues and done a number of things 
to try to get grain moving again because it is such an 
important thoroughfare for our grain into the export markets.
    I cannot emphasize enough that the future strength of 
American agriculture hinges on our success in the international 
marketplace. Historically, we have been the world's largest 
agriculture exporter. We derive 27 percent of gross farm 
receipts from foreign customers. Large portions of our 
production of many crops go into the export market. Export 
markets are vital to the economic prosperity of our farmers and 
ranchers.
    As the chairman indicated, and we all can cite these 
statistics from memory, 95 percent of our customers or 
potential customers live abroad. Only 5 percent of the world's 
population is in the United States. The major growth 
opportunity for our farmers and ranchers is going to be urban 
areas in developing countries, such as China and India, and 
gaining access is the key.
    This is a critical time to make progress in the WTO 
negotiations. You well understand the disparities we face. The 
European Union utilizes the vast majority of export subsidies. 
The average world tariff is 60 percent, while the U.S. average 
is 12 percent. You can see why we talk about market access all 
the time when we talk about trade. The EU can use domestic 
subsidies at a level four times what we are permitted, even 
though our agriculture economies are roughly the same.
    We face the Hong Kong Ministerial literally weeks away.
    We have made it very clear that it is absolutely essential 
to gain real market access for our farm products around the 
world. Our objective is to achieve a balanced package, one that 
levels the playing field on domestic supports and levels the 
playing field for market access.
    The President has challenged his counterparts to eliminate 
tariffs and trade distorting subsidies. He strongly believes 
that the American agriculture community can be a global 
competitor if we have a fair chance to compete.
    The Doha Development Agenda negotiations now provide an 
opportunity to move closer to a fairer trade environment. Last 
week at the United Nations, the President said, and I am 
quoting, he said, world leaders, to achieve a successful Doha 
Round, quote, ``will reduce and eliminate tariffs and other 
barriers on farm and industrial goods that will end unfair 
agricultural subsidies,'' unquote.
    We want fair trade. If others would join us and make 
proportional cuts in domestic supports and harmonize and 
substantially reduce tariffs, we are prepared to do as well.
    We are ready to negotiate a strong, balanced package. Let 
me reiterate our objectives. Export competition--we want to see 
the end, and very soon, of export subsidies. Market access--we 
must have significant reductions in barriers to our products. 
In domestic support, we have said all along that we are 
amenable to significant reductions if others do likewise.
    Ambassador Portman will address the specifics of 
negotiations in his remarks. He and I are doing our utmost to 
move these talks forward and we have an excellent working 
relationship. We did meet last week with our counterparts from 
the European Commission and we are leaving later today to 
continue those talks.
    This is an opportunity we cannot bypass. We need to reach 
agreement on agricultural reform. President Bush reiterated our 
ambition last week with a vision that will provide greater 
opportunities for our farmers and our ranchers to prosper in 
the global marketplace. We will now work tirelessly in the time 
until Hong Kong to achieve that goal.
    Thank you, Mr. Chairman and members of the committee.
    The Chairman Thank you, Mr. Secretary.
    [The prepared statement of Secretary Johanns can be found 
in the appendix on page 50.]
    The Chairman. Ambassador Portman?

 STATEMENT OF HON. ROBERT PORTMAN, U.S. TRADE REPRESENTATIVE, 
                         WASHINGTON, DC

    Ambassador Portman. Thank you, Mr. Chairman. I am pleased 
to be here with Mike Johanns, and Secretary Johanns has just 
laid out much of the presentation on the general situation in 
agriculture and then touched on the trade issues. I will try to 
get a little deeper into the trade issues.
    I would like to have my written statement be accepted into 
the record, and then instead have a more informal dialog based 
on the handout that I have provided.
    The Chairman. Certainly. Without objection, it will be 
included.
    Ambassador Portman. It is supposed to be a Power Point 
presentation, but we don't have a Power Point, so we will just 
walk through it, if that is okay.
    I want to start by thanking you for your earlier comments 
and telling you that in my four and a half months here at USTR, 
I have thoroughly enjoyed working with you, Mr. Chairman and 
other members of this committee. It has been a great working 
relationship and I appreciate the fact that we are able to have 
the kind of candid and constructive relationship that we have 
had so far. I know that will continue.
    You mentioned the fact that Al Johnson has joined me today. 
When I first was going through the confirmation process, 
Ambassador Johnson told me after four and a half years at USTR, 
he was ready to move to the private sector. I have been trying 
to twist his arm ever since to get him to change his mind. We 
have held him on this long and he has worked his heart out for 
America's farmers and ranchers and I want to add to the 
chairman's comments about him. His public service has been 
extraordinary. He has also been a great friend of this 
committee. I know that, as the chairman said, we are going to 
continue to hear from Al. I certainly expect to continue to get 
his advice and counsel, so I thank him for his service and for 
being here today. I am also joined by Jason Hafemeister. Some 
of you know Jason already, but Jason is our WTO negotiator who 
is also behind me.
    This presentation is an opportunity for us to get into some 
of the trade issues, not just Doha, but what this committee is 
interested in in terms of expanding markets. I divide it into 
three areas: First is our bilateral and regional agreements, 
second is the global trade talks, and third is enforcement and 
compliance.
    With regard to the bilateral agreements, we won't spend any 
time on CAFTA-DR, just to say there are some very specific 
benefits for agriculture here and I am eager to get that 
agreement in place. We hope to do so at the first of the year 
for the six countries that have already ratified it. We expect 
one more will before the first of the year, and then I think we 
should go ahead and have that put in place because it really 
does help our agriculture exports.
    We are also lookaying at a number of other free trade 
agreements. I would love to get more advice and counsel from 
you all as we move forward on these, but each of them has some 
benefits for agriculture. In Panama, the average allowed tariff 
now is 27 percent, for instance, and we have the opportunity 
here to expand the same kind of exports that we saw with regard 
to the other Central American countries--corn, soybeans, and so 
on. This is an agreement where I think we can perhaps work more 
on a bipartisan basis in the House and Senate to get it done.
    Oman, the same thing, average allowed tariff of 35 percent 
there, Mr. Chairman, so we have an opportunity here to expand 
our exports. We are hoping that we can move those two 
agreements, Oman and Panama, fairly soon, and I will talk about 
Bahrain in a second.
    There are others that we are lookaying for in 2006, 
Thailand, the Andean countries, United Arab Emirates. We can 
talk more about those if you have some interest, but again, in 
every one of these countries, we have relatively high tariffs 
now. As an example, in the Andean countries, the Colombian 
allowed tariff is 93 percent, Peru, 31, and Ecuador, 25 
percent.
    Bahrain will be the next agreement that we hope to bring up 
to the Hill and this agreement was actually signed about a year 
ago. It is important for foreign policy, as I say. The 9/11 
Report actually talks about this idea of the Middle East Free 
Trade Agreement. This would be another one of hopefully several 
agreements we can do in that part of the world to help with our 
foreign policy goals as well as our commercial interests. 
Eighty-one percent of agriculture exports to Bahrain would be 
immediately duty-free, for example, and would help, again, to 
increase some of those export opportunities that Secretary 
Johanns talked about.
    We also have some interesting potential new partners. For 
some of these, you may be seeing these countries for the first 
time. They have all come to us, expressed interest in joining 
with us in a Free Trade Agreement. I think when a country does 
that, particularly of the size of some of these economies, like 
South Korea, we should lookay at it very seriously.
    We have had serious talks with them. We have not launched a 
Free Trade Agreement yet. We have not launched those talks yet 
because, frankly, we are going through the process of letting 
them know what we require in our Free Trade Agreements, which 
is extensive. As you know, we have the most comprehensive Free 
Trade Agreement requirements in the world. We particularly 
focus on market access and we need to be sure that these 
partners know what they are getting into if they want to 
negotiate with us.
    But South Korea, as an example, is our fifth-largest 
agriculture market. This would be the largest Free Trade 
Agreement we would have done in over a decade, so this could be 
a substantial benefit to U.S. agriculture. We had a $2.3 
billion agriculture surplus with Korea last year.
    Egypt, again, interesting from a lot of different 
perspectives, including foreign policy, but also on the 
commercial side. As you can see, it is a big agriculture market 
for us already, could be much bigger. We had a $900 million 
agriculture surplus in 2004 with Egypt.
    Malaysia and Switzerland are also interesting opportunities 
for us. In both those cases, we have a deficit right now in 
agriculture, but I think you have the opportunity to do much 
more in terms of exports. In Malaysia, the deficit is now 
around $200 million. Switzerland, as you know, is one of the 
more closed markets to agriculture right now. Getting into a 
Free Trade Agreement with us is not something I thought they 
would be interested in for that reason, but they are, so we are 
talking. There, we have a deficit of around $77 million.
    On the global side, the global trade talks have already 
been addressed briefly by the chairman and then by the 
Secretary There is a great opportunity here, obviously, for 
agriculture, for us to do what we can only do in a global trade 
talk, which is have an impact in every country in the world in 
terms of our market access.
    The timing here has been the end of 2006, but this has been 
going on for 4 years and, frankly, for the last year and a 
half, the talks haven't made much progress. So we are stalled, 
in a sense, and we are really stalled going into this Hong Kong 
Ministerial which is coming up at the end of this year and we 
need to figure out a way to break the deadlock and move the 
talks forward because it is going to be great for farmers and 
ranchers if we can get a good deal.
    The three main pillars of this Doha Round are manufactured 
goods, services, and agriculture. I won't go into any detail, 
but just briefly, on the next chart, you can see why the 
manufactured goods area is important to us. On the left, you 
see America's tariffs for manufactured goods in red, all goods 
in blue. Anything that reduces barriers to trade in 
manufactured products is going to be good for us. We are still 
the world's largest exporter of manufactured products, and 
frankly, we are relatively open here, so this could be very 
beneficial to our workers and to our economy.
    On services, same story. We have a comparative advantage in 
services. We actually have a surplus of about $48 billion in 
services in 2004. Our services are expanding dramatically, but 
we do have still a lot of very high barriers to our global 
trade in services, and in the interest of the United States, 
but also in the interest of the world economy, it would be very 
beneficial for us to make progress in the services front.
    So these are two important areas that, frankly, are being 
held back at this point because of the focus on agriculture. 
This round, as you recall, was to be the development round and 
agriculture was to be a centerpiece and it really is, in a 
sense, the engine that drives the round.
    With regard to agriculture, I won't go over all these 
figures because the chairman has done a good job of that, as 
has Secretary Johanns, but I like what the chairman pointed out 
early on in his statement, saying we are the world's largest 
exporter. We have a lot to gain from knocking down barriers to 
our trade, as we will see in a second on our charts. Currently, 
one out of every three acres planted in Ohio, where I am from, 
and around the country are planted for export. So our 
agriculture economy, as the Secretary has outlined well, is 
dependent at this point on us providing that additional market 
access.
    Where are we on negotiations? We are building on the July 
2004 framework. About a year ago, we set out a framework. 
Again, we haven't made a whole lot of progress on it since, but 
it has three basic elements. One is to expand market access. 
For us, that is particularly important in some of these larger 
developed countries, like the EU and Japan, but also the 
emerging developing countries, and I would identify Brazil, 
some of the ASEAN countries where there are huge opportunities 
and, frankly, very large tariffs in place right now.
    Second was to eliminate all export subsidies. We can talk 
about that in a second, but this was an agreement that was made 
a year ago and the question is, can we get a date certain and 
move forward on that?
    And third is to substantially reduce trade distorting 
agriculture subsidies around the world. As the Secretary has 
said, that would be only done in concert with these other 
important elements, including market access.
    I throw in this next slide because you hear a lot of talk, 
and some of you have been very involved in this over the years, 
others have not been as involved, about what does the WTO 
framework lookay like for agriculture. The WTO puts all subsidy 
programs into one of three boxes, the amber box, the blue box, 
and the green box, and you hear these words kicked around.
    What they mean, basically, the amber box is the highly 
trade distorting subsidy programs, something that would 
encourage production or depress prices. Our commodity loan 
program, market loan program, would be an example of that.
    Second is the blue box, and this is something that would be 
less trade distorting. Right now, there are no limits on that. 
The set-aside programs would be an example there. We think our 
countercyclical programs could fit well into the blue box, 
although at this point, it is defined in a way that may make 
that difficult, so we are working on that.
    And then third is the green box, and the green box is 
unlimited at this point and these would be minimal or non-trade 
distorting payments, for instance, our food stamp program or 
research or direct payments, environmental programs.
    The idea is, of course, with the amber box programs, you 
are more concerned about their distorting impact on trade, so 
you have reductions there that would be more than in the blue 
box, and then in the green box, there would not be limits. So 
that is just generally how the WTO takes agriculture programs 
all around the world and puts them into categories.
    With regard to agriculture, you have seen these charts 
before, and before Senator Conrad has a chance to do it, I 
thought I would put them up here. But this gets into--since he 
is not here, I can say that, I guess.
    [Laughter.]
    Ambassador Portman. This gets into what we all know, and 
the reason these talks could be so good for us. I mean, first, 
on market access, lookay at that top bar. The U.S. average 
allowed agriculture tariff is 12 percent, and we just about use 
that. The EU is 31 percent. So it is not just the SPS issues, 
which I would like to talk to you about, but it is also 
tariffs. They have higher tariffs than we do and they use them. 
Now, some of these countries, like India don't use the full 114 
percent, but it is allowed. Their tariffs may be more in the 
area of 30, 40 percent, but we will always benefit when we are 
talking about reducing tariffs because ours are relatively low.
    Second are these export subsidies I talked about, and 
again, the 2004 framework said these export subsidies are to be 
eliminated, not just reduced, but eliminated, and there, you 
see the EU has about 90 percent of them, 87 percent. So that is 
in our interest. We need to get a time certain for that.
    And the third area is domestic support. Here, I have put 
into red what is allowed and yellow what is actually used, and 
as you can see, the EU is allowed to use about four, four-and-
a-half times what we are allowed to use under the current WTO 
rules, and they use about three times what we do. Japan, with 
much smaller production, also has a larger allowance than we 
do. So it is in our interest, again, to deal with this issue in 
the way of reducing those who have higher subsidies more 
through harmonization.
    The next chart is important because it is kind of the 
reality of where we are in terms of the reduction of these 
trade distorting supports, and the reason the Europeans and 
others say, gee, it is time for the U.S. to take a step 
forward. The fact is that since the Uruguay Round, they have 
made progress and we have to acknowledge that. Under the CAP 
reforms, as you can see by the black bars there, European trade 
distorting support has gone down since 1995. What they are 
allowed is that top black line that runs across the chart, so 
they are well below what they are allowed. The next line down 
is the Japanese limit, and Japan is in red. You can see what 
the Japanese have done since 1995. They have reduced their 
trade distorting supports. The yellow is us, and the final line 
is us, so we are pushing up close to our limit, and since 1995, 
we have seen an increase in our support.
    So this is where, again, Mr. Chairman, you talk about the 
fact that we make sure this negotiation is fair and that 
nothing we agree to is anything other than a good deal for our 
farmers and ranchers. ``Needs to have tangible results for 
America's farmers and ranchers'', was your exact statement. I 
couldn't agree with you more and we need to be darn sure that 
we get the market access, the export competition, and other 
things for our farmers and ranchers, and that with regard to 
subsidies, those who subsidize more reduce more. But this is 
just the situation that we face currently in Doha.
    The next page, I mention briefly where we are in terms of 
the negotiations themselves. We are stalled, as I said, on 
these agriculture subsidies and tariff issues. We are actively 
consulting with the Hill and key farm groups here, as we are 
doing today. We are coalition building with other countries, 
frankly, to put pressure on those key developing markets. We 
have got to have more access and we are getting a lot of 
support, actually, in the other 147 members of the WTO. But, as 
I said, other countries are lookaying for moves on our part in 
terms of the trade distorting subsidies per that 2004 framework 
that I talked about.
    So what is the dynamic now? We are building on the 
framework. There is no final deal that is going to be reached 
at Hong Kong in December, although I do think we can and should 
make progress leading up to that ministerial to be able to 
reach some agreement for Doha that avoids some of the problems 
some of us saw when we were in Seattle, or we saw in Cancun. We 
need to be sure that the meeting is successful in Hong Kong.
    I know a number of you are planning to come to Hong Kong. I 
want to be sure that you are getting the briefings you need 
moving up to that date and also in Hong Kong, that you are part 
of the process. I think one thing that has not been done 
adequately in the past is to use members of Congress more 
effectively on behalf of U.S. interests. I plan to do that,--so 
be expected to be put to work. I am going to need you.
    We are making progress in all areas of Doha, I believe it 
is fair to say, not just in services and manufactured products, 
as I talked about earlier, but also in agriculture. We had good 
meetings as the chairman alluded to last week with the EU in 
the sense that they were very candid. We were starting to put 
our cards on the table for the first time, as I say, in quite a 
while and getting closer to figuring out how to make Hong Kong 
a success.
    The critical path issues are pretty straightforward. In 
market access, we need to know what the shape of the tariff 
formula might be to begin to reduce these tariffs, as I talked 
about earlier, what is the depth of the cut, how are we going 
to deal with sensitive products, special products and 
safeguards. With export subsidies, again, we need a time 
certain. And on domestic support, we need to work within this 
context of the blue box, what is the depth of the cut in the 
AMS, or the amber box, and what is the overall subsidy cut.
    Here is a little time frame in terms of where we are. 
Again, the framework was a year or so ago. We have got Hong 
Kong coming up. And then by the end of 2006, we would hope to 
complete this. Why? Because in mid-2007, the Trade Promotion 
Authority expires, and we also have a little something called a 
farm bill apparently that comes up for renewal in 2007.
    So we have got some dates we are pushing up against, and 
particularly the TPA extension. Last time, it tookay us nine 
years to renew TPA. I will say I was pleased a couple months 
ago when we renewed it for another 2 years, until July, but we 
all know in July 2007, that is going to be tough. So my goal is 
to be sure that by the beginning of 2007, we can send up a 
package to the Hill that really makes sense, that is a good 
deal for America's farmers and ranchers, and we can get that 
moving within the context of TPA.
    The final part I want to just touch on, and my time is 
about expired here, but I just want to touch on the issue of 
enforcement and compliance because I think this is one area 
where we don't spend enough time and effort. Is my time already 
up?
    The Chairman. You are doing just fine, Mr. Ambassador.
    Ambassador Portman. I will try not to filibuster, though.
    The Chairman. If you were still a House member, you would 
have been called a long time ago.
    Ambassador Portman. Yes, all right.
    [Laughter.]
    The Chairman. Now that you have ascended----
    Ambassador Portman. Let me just leave this, then, for the 
questions, but just to say that we have made progress on the 
enforcement side. Even this summer, there are a number of 
cases. Some of you have been very involved in these--the high-
fructose corn syrup case, the Japan apples case, even on beef 
hormones. We have made some progress.
    My goal in this job is to focus more on enforcement and 
compliance and follow-up, even on these FTAs. When we make a 
commitment, we have got to be sure that we have the kinds of 
enforcement and follow-up that is expected by our farmers and 
ranchers to be sure they do get a good deal.
    So thank you, Mr. Chairman. I appreciate the opportunity to 
present where we are in terms of these trade negotiations and 
lookay forward to your questions.
    The Chairman. Thank you, Mr.
    Ambassador.
    [The prepared statement of Ambassador Portman can be found 
in the appendix on page 58.]
    The Chairman. That is an excellent primer for those of us 
going to Hong Kong. A very good presentation by both of you.
    Mr. Ambassador, before we get into questions relative to 
this, today is the day in which we are supposed to correct the 
serious prejudice charge in the WTO patent case. Since there 
will be questions asked about that, maybe statements in the 
press, I want to give you an opportunity to make any comments 
you wanted to make initially in reference to that case.
    Ambassador Portman. Well, thank you, Mr. Chairman. It is 
timely that we are meeting today because tomorrow is the date 
that we set for implementation of the recommendations of that 
WTO case.
    As you know, and you have worked with us, we have taken 
significant steps to implement the decision, both with respect 
to the findings regarding the prohibited subsidies, but also 
regarding the subsidies found to be causing serious prejudice. 
On July 5, we proposed legislation that would repeal the Step 2 
program. This would be an important development with respect to 
both sets of those findings. We think the repeal of Step 2 
significantly reduces any price effects these programs might 
have. Separately, reductions in payments under other domestic 
support programs, including those that were discussed in the 
case, are being considered as part of the deficit reduction 
efforts by the administration.
    Although the legislative process has been delayed, in part 
because of the crisis with Hurricane Katrina, we are continuing 
to work actively with Congress on this issue. We have been able 
to work well with Brazil so far to manage this dispute 
settlement process and we plan to continue that dialog with 
Brazil in our upcoming meetings. I am meeting with the trade 
minister of Brazil tomorrow in Europe, in fact, on this very 
issue, as well as WTO issues.
    But we are committed to abiding by our WTO obligations by 
implementing the cotton decision. We stress that we believe 
negotiation, not litigation, is the way to go. We think that is 
the key to a meaningful reform and we believe it is in the 
mutual interests of the United States and Brazil to focus our 
reform efforts on the Doha negotiating process.
    So, Mr. Chairman, I thank you for giving me the opportunity 
to address this issue and I hope the constructive relationship 
we have had with Brazil so far can help us both in future 
discussions and negotiations. We need to continue the dialog.
    The Chairman. Thank you very much.
    We are now joined by Senator Harkin. We welcome any 
comment, Senator you wish to make at this time.

STATEMENT OF HON. TOM HARKIN, A U.S. SENATOR FROM IOWA, RANKING 
   MEMBER, COMMITTEE ON AGRICULTURE, NUTRITION , AND FORESTRY

    Senator Harkin. Well, thank you very much, Mr. Chairman. 
First, I apologize to you and members of the committee for 
being a little late, and also to you, Mr.
    Secretary I am sorry I missed your statement, but I just 
wanted to compliment Ambassador Portman on an excellent 
statement and to thank him for his great leadership in this 
area, and to also thank you for always being open and willing 
to meet with us and discuss with us these issues of trade. So 
again, that was a great primer, as you said, Mr. Chairman, on 
just where we kind of find ourselves right now.
    Just a couple things I just want to say before we get into 
questions, and that is that, first, I am on record as 
supporting our objectives in the Doha Round. I think it would 
be better for everyone concerned if we could agree 
multilaterally to open markets more broadly and eliminate 
export subsidies and reduce the use of trade distorting support 
for farmers. So I am committed to that and hopefully we can 
move this ahead. I am a little disappointed that in the last 
year, not much has happened and we have reached some stalemates 
in that regard.
    There are a couple of issues that I will go over with you 
in questions. I met with Fischer Boel, the new EU Commissioner. 
I think some of the rest of you probably met with her last week 
when she was here regarding the issue of our Food for Peace 
Program, and to the extent that the European Union is going to 
push to convert that from food to cash is going to be a sore 
point, I think, for many of us on this committee and for a lot 
of us perhaps even not on the committee. I think in both the 
Senate and the House and I think bipartisanly, this has been a 
wonderful program for 51 or more years. It has done a lot of 
good in feeding the world's poor.
    In my discussions with Fischer Boel, they want us to 
convert it all to cash and I said, we have got reams and stacks 
of reports and investigations about how some of the money that 
goes to countries for food always gets siphoned off for 
something else. Most of these underdeveloped countries have 
dictatorships or whatever. The money very rarely gets down to 
help people. But when it goes to NGO's and other organizations 
like that and it is food, nine times out of ten, the food 
actually gets to people and helps them. So I let her know that 
that was going to be a big sticking point if they were going to 
fight for that, and I am going to be asking you, Mr. Portman, 
about your views on that.
    Last, while we all support--well, I don't know if we all, 
but at least I know I can speak for myself--support the Doha 
Round and the goals of it and where we want to get, it is clear 
that in doing so, we are going to have to pretty drastically 
change our support system under the amber box, maybe somewhat 
under the blue box, too. That is why I fought so hard in the 
last farm bill for what is known as the Conservation 
SecurityProgram, to begin to shift payments to farmers that 
would come under the green box that would be non-trade 
distorting, that would be acceptable by the WTO. In traveling 
around Europe, I had seen how they had done that and I thought, 
well, maybe that is how we have got to be lookaying at it, too.
    It is much to my dismay that in the last couple of years, 
that in our appropriations bills that have passed the House and 
the Senate, this program has been severely curtailed and 
distorted in a way that was not intended under the farm bill. 
Now, when we passed the farm bill here, you know, there are a 
lot of different streams that come together and a lot of 
agreements are made and maybe some of the things that were in 
the farm bill that some people didn't like, and some were there 
that some people liked, but we hammer it out, and that is what 
we hammered out in this farm bill.
    We made agreements on a variety of different things, and 
one of those was to have a conservation program like the 
Conservation Security Program that did not take land out of 
production, that paid framers not so much on how much they grew 
but on how they grew it. That would be green box and that would 
be treated--conservation would be treated like a commodity, 
that once you were in the program, once you met the 
requirements, you got compensation or you got paid.
    Now again, I am not saying about the Department, but I am 
just saying that it is to my great dismay that in the last 
couple of years, this Congress has distorted the program and 
put caps on it and severely curtailed it, and to my fellow 
members of the committee, I just say, you know, we are going 
into the next farm bill and that is cutting our baseline down. 
So whatever we might want to do in the green box in the next 
farm bill is going to be severely curtailed unless we lift the 
caps that were put on that program.
    Now, I say that because I believe that in thisWTO, if we 
are successful in the Doha Round, which I hope we are, Mr. 
Secretary and Mr. Ambassador, we are going to have to make some 
pretty severe changes, and that is going to have to be in the 
next farm bill. If it is in the next farm bill, we are going to 
need the baseline in order to do that. That baseline was set in 
the last farm bill with the Conservation Security Program and 
it is being curtailed. We may find ourselves in a very bad 
situation, Mr. Chairman, coming up if, in fact, we succeed in 
the Doha Round and we have the farm bill coming up in 2007, and 
how we are going to support our farmers and ranchers in the 
future without it being put in the amber or blue box.
    Having said that, I thank you, Mr. Chairman, for giving me 
this time. Again, I want to thank the Secretary and especially 
Ambassador Portman for his great leadership in this area.
    Senator Baucus. Mr. Chairman, I am low man on the totem 
pole here, so I won't take time, but I would like to submit a 
statement for the record, please.
    The Chairman. Without objection.
    Senator Baucus. I would just say to the Ambassador, I 
appreciate what you are doing, but my main point is just 
consult with us earlier and more aggressively on all this than 
your predecessors have so that you avoid Doha problems, get TPA 
extended, and for all the reasons we have discussed. You have 
got to go the extra mile in working with us. I know you will, I 
know you want to, but I am urging you to go even farther.
    The Chairman. SenatorBaucus, I would say that that same 
sentiment has been expressed by a number of us to theAmbassador 
and he understands that fully and that is one of the reasons he 
has been back and forth to the Hill as often as he has since he 
came to his new position.
    Senator Baucus. Allen, I wish you the very best. Thanks.
    The Chairman. Mr. Secretary, there is something else I just 
need to say. It is not a question because it doesn't have 
reference to this, but we have another very critical issue that 
I know your office is considering and it is going to have a 
direct effect on everybody on this committee, and with you 
leaving town today, we won't have an opportunity to discuss it 
with you in the short term, but there has already been some 
publicity out there about the FSA Tomorrow Program and Under 
Secretary Penn was gracious enough to come over and have a 
discussion with me and I know some other folks in the last 
several days and we lookay forward to working with you on this.
    But I will have to tell you that I have not had a chance to 
discuss this with the members of this committee and my 
intention is that once we get all of the information, 
particularly relative to the criteria that is going to be 
determinative of which FSA offices stay open and which close, 
that we will dialog with your office to make sure that we both 
have a thorough understanding about the direction in which you 
wish to proceed. I hope we can do that in the short term. I 
think the goal is a very admirable goal, to provide better 
service to our farmers and ranchers all across America through 
the FSA, which is so critically important.
    But I want to make sure that your office understands that 
we have not--Tom and I have not even had a chance to talk about 
this, much less with members of the committee, but we will be 
doing so in the short term.
    Gentlemen, last week, President Bush stated at the United 
Nations that the United States is ready to eliminate all 
tariffs, subsidies, and other barriers to the free flow of 
goods and services as other nations do the same. While this has 
been a longstanding United States policy and repeated by 
previous administrations, in 2002, theUnited States Trade 
Representative presented a proposal to our negotiating partners 
that would reduce trade distorting support of 5 percent of a 
country's total value of agriculture production over a 5-year 
period. That is commonly referred to as the 5 percent rule.
    Subsequent discussions among the various actors in the 
agriculture negotiating groups have discussed reducing trade 
distorting domestic support by levels up to 50 percent. The 
President's statements admittedly are ambitious, and while I 
hope we can achieve the success in the outcome of those 
negotiations, I am concerned that statements do not reflect 
what is necessarily possible, both domestically as well as in 
the current round.
    Mr. Ambassador, do you believe the current state of 
negotiations can produce equally ambitious proposals on market 
access from theEuropean Union and the G-20 group of developing 
countries?
    Ambassador Portman. Mr. Chairman I do, and I agree with 
you, the President's statements set out a vision that is bold 
and, I think, one that is very constructive toward us making 
progress. However, the negotiations inGeneva are focused on 
simply reduction of these trade distorting supports in exchange 
for real market access gains.
    You talked about tangible gains, and I believe there is an 
opportunity to do that if we work together. We have to make it 
clear that we are not going to move unilaterally on anything. 
We will work with the European Union and the other 147 members 
of the WTO on coming up with something that is consistent with 
the 2004 framework, consistent with what has been expressed by 
this committee, which is real market access gains for our 
farmers and ranchers, which is an elimination altogether of the 
export competition we talked about earlier and which gets at 
reforming trade distorting subsidies. But we need to move 
together, in parallel.
    My frustration, I have only been on the job four and a half 
months, but is we are just now getting around to talking about 
these issues in real ways. We had a good meeting last week, as 
I said. We are continuing to talk to trading partners, not just 
in Europe, but around the world, and to answer your question, I 
am hopeful that we can still come together, not with a final 
product in Hong Kong--that will not happen and we ought not to 
have those expectations--but with the kind of formulas and the 
kind of modalities, as they way in the WTO, that enable us to 
make progress in 2006.
    The Chairman. Mr. Secretary, the President's statements 
were made while the Department is hosting a series of listening 
sessions on the current farm bill, and for that, I particularly 
commend you for traveling to all parts of the country to listen 
to farmers and ranchers. Feedback from those events conveys 
that, generally, producers are favorable and happy with the 
2002 legislation. In fact, Congress Daily reported yesterday 
that farmers in nearly every region of the country want the 
2002 law extended and are disappointed with recent trade 
agreements.
    Do you believe the administration has sufficient grassroots 
support to radically transform current farm safety nets?
    Secretary Johanns. Let me offer a thought first on 
theCongress Daily article. I could not disagree more, to just 
be very blunt and direct about it. In fact, we pulled out from 
our farm bill listening session quote after quote after quote 
from producers, from farmers, and I have now done, I think, 15 
of these--14 or 15--in the Department, that that 14 or 15 is 
now over 20--where farmers are expressing concern about the 
2002 farm bill. Every place we go, we hear about the 
capitalization of farm payments and higher land costs, higher 
cash rent costs, the inability of young people to get into 
farming, and I could go on and on. Like I said, we pulled those 
criticisms and comments and we have provided them to 
CongressDaily and hopefully, they will offer the thoughts of 
many farmers across the country in terms of their concern about 
the farm bill.
    But in reference to your question, the other part of your 
question, I really appreciate the comments of Senator Harkin in 
how we approach farm policy as we think about 2007, and that is 
the whole idea of the listening sessions. We want to get around 
and hear what is on the mind of the producers.
    If there were two points I would make today in reference to 
the President's comments, it would be this. The 2007 farm bill 
can find approaches, I think very positive, forward-leaning 
approaches to supporting agriculture. Our bill is to build good 
farm policy. That is where we are starting. Our goal is to 
identify the best farm policy for the United States, not only 
for today but for the future, and that is where we are headed 
with this. Now, we also recognize that 27 percent of the gross 
receipts do come from the export market. We need to be mindful 
about that.
    The other thing I would mention in reference to the 
President's comments is that I worry that the status quo is 
very high risk for American farmers. Why do I say that? You 
know what we are dealing with with the cotton case. It is 
there, and we have got the WTO ruling. As you know, we are 
trying to work with Congress to get through that.
    You have been reading the articles, as I have, that some 
other countries are now lookaying at the rice program. Up in 
Canada, they just opened up a study or investigation, whatever 
you call it, relative to the corn program. These things are 
there and they are real, and again, 27 percent of our 
marketplace is in that foreign market.
    But our goal is going to be to work with the House and the 
Senate through the farm bill listening sessions, through the 
input that we get from farmers and ranchers and agriculture 
groups to try to develop farm policy that recognizes we can be 
supportive of America's farmers and ranchers. We need to be 
forward-thinking about that and forward-leaning, but I believe 
we can do it.
    Here are some of the ideas that have been mentioned. 
Working lands conservation--I have heard about it in just about 
every farm bill. We have had people say, Senator, exactly what 
you said. It would be nice if we could figure out a way to 
build that into the next farm bill.
    Crop insurance--disaster brings out discussion about crop 
insurance, but we have heard an idea that has been here before 
about maybe a more revenue-based approach to this.
    Direct payments--we know that you can make direct payments 
without running afoul of any trade rules or WTO rules.
    Risk management tools--you know, we had a young guy in 
Kansas get up and his testimony was fairly straightforward. He 
said, ``I worry I will probably make every farmer in the room 
mad at me, but,'' he said, ``there is a way to work with risk 
management tools that are available.''
    Here is my thought just to sum up my response. This farm 
bill dates back--this farm bill--this approach to farm policy, 
by and large, dates back 70 years to the time of the Depression 
and the need to try to figure out how to save agriculture in 
the United States, and some of the same tools that we used 70 
years ago, we are trying to fit into today's world and it is a 
different world today.
    But again, if there are two points I would make, we can 
support American agriculture, but we need to be creative in how 
we approach that and we can do that.
    And the second point I would make is that the status quo, 
just saying, lookay, I am happy with everything, has real risk 
to it and we may not like that result, either. So I think we 
have to put everything in the mix, work together to try to 
figure out how this develops good farm policy for 2007.
    The Chairman. Thank you.
    Senator Harkin?
    Senator Harkin. Thank you, Mr. Chairman.
    Ambassador Portman, again, let me just focus on the 
question, the issue that I raised in kind of my opening 
statement that I had raised with Fischer Boel last week. The 
European Union is after us to cut back on our Food for Peace 
Program, convert the food to cash. They did that themselves a 
few years ago, but if you track what they did, they converted 
it to cash, then they cut it down. I am really concerned that 
the EU is pushing this. I told her so.
    I guess my question to you is, is there any way we can get 
a lot of the other countries in the developing world where they 
have really benefited from our Food for Peace Program to 
support us in this effort, and where do you see this headed?
    Ambassador Portman. Well, first of all, I couldn't agree 
more with what you were saying earlier about the importance of 
the program and why we need to fight for it. I will also tell 
you it is not just the EU, as you know. There are others who 
are also after our food aid program.
    Senator Harkin. Who is that, beside the EU?
    Ambassador Portman. Well, Switzerland, Brazil, Australia, 
pretty much anybody who is in the export business and some of 
those who, as you say, have converted to cash only.
    But what I have found is in talking to some of the African 
nations, some of their leadership, in talking to some other 
trade ministers from countries that understand the importance 
of food aid, that we can counter this with a coalition of our 
own and we are working hard at that. We are also working with 
the NGO's. As you know, the NGO's are----
    Senator Harkin. I am sorry, Rob. Did you say we can or we 
can't?
    Ambassador Portman. We can.
    Senator Harkin. We can?
    Ambassador Portman. I believe we can, Senator. I just--
getting back to your comments about the fact that this money 
sometimes gets siphoned off, I think there is plenty of 
evidence of that and there is still a significant concern on 
our part of corruption and the need to get this food to people 
who need it quickly.
    You know, one of my points that I made with the Europeans 
last week is that there is not enough food aid out there right 
now and the last thing we want to do is to cut back on 
emergency food aid as it is needed. There has been, as you 
know, by the Europeans and others, a reasonable concern, in my 
view, raised, and that is that we not displace commercial 
sales. In my view, we do not and we do not intend to do that. 
In fact, our same exporters who are providing food aid would 
object to us displacing their commercial sales.
    So I think we can address that concern, Senator, in a way--
since we share that concern--in a way that continues to give 
people the comfort to know that our food aid is not wasted 
shipments that aren't needed, they are desperately needed, and 
that we are not asking our exporters to compete with food aid 
programs. We need to oppose the European position strongly. We 
need to be sure that the most vulnerable people who are short 
of food aid right now, when global food aid shipments are not 
even meeting current requests, are getting what they need.
    So I agree with you, it is important for us to build a 
coalition of other countries, also to work with NGO's, some of 
whom, as you know, are very supportive of our food aid program. 
Others have some questions and I think we can address some of 
those questions in terms of, as I said earlier, the commercial 
displacement issue.
    Senator Harkin. Thank you very much.
    Ambassador Portman. I lookay forward to working with you on 
it.
    Senator Harkin. Thank you, Ambassador. I appreciate that 
and----
    Ambassador Portman. Thank you for raising it with her.
    Senator Harkin.
    Whatever we can do to be helpful, let us know, and I am 
sure----
    Ambassador Portman. You were helpful. I spokaye to her 
after your meeting and I appreciate your raising it.
    Senator Harkin. Thank you. Mr. Secretary, just my final 
question, and I thank you for your observations and all the 
hearing posts, listening things that you did around. I thought 
they were very good, that you did that to get that input, and I 
lookay forward to working with you on some of those things in 
terms of the non-trade distorting aspects of support.
    This question I have has to do with the WTO and with our 
moving ahead on the Doha Round. The essence of the U.S. 
agricultural proposal is that the U.S. is willing to reduce its 
use of trade distorting domestic support in exchange for 
significant reforms by other countries in their use of export 
subsidies and tariffs so as to provide our farmers with greater 
export opportunities in foreign markets.
    Now, I am not going to get into the whole thing between 
applied and bound tariffs, but the issue is in having a good 
analysis done as to what the net benefits to us, our farmers 
and our exports would be, depending upon what they are doing 
with their bound and their applied tariffs. And so the question 
is this. Will USDA be able to provide U.S. negotiators, and 
hopefully us, also, with rapid quantitative analysis of the 
implications of proposed deals so that they and we will know 
before the agreements are made if the deals are likely to 
generate a net benefit for U.S. agriculture? It is my 
understanding that such a capacity was in place during the 
Uruguay Round and I think it is important that our negotiators 
and those of us here in the Congress have such analysis at our 
disposal in the Doha Round.
    In other words, getting a quick quantitative analysis right 
away--when they come up with a proposal, that your people are 
in place, maybe under your shop, too, I don't know, Rob, but 
that we get a quick quantitative analysis done right away so 
that when we go to Hong Kong, we will have that analysis at our 
fingertips.
    Secretary Johanns. We will. We will work with you to make 
sure that you are comfortable with the information that we are 
lookaying at, and I suspect, Senator, that you will probably 
have some of our agriculture groups out there that will be 
pretty geared up to offer their thoughts, too, and their 
analysis. But from USDA's standpoint, we will, and we will 
endeavor to work with you folks to make sure that you get what 
you need and also that the Ambassador has at his disposal what 
he needs to make the negotiation successful.
    In this area, I will tell you, just to summarize, the 
working relationship between the USDA and USTR is completely 
seamless. Our staff works with USTR as if there is no 
boundaries between our Departments.
    Senator Harkin. Thank you, Mr. Chairman.
    Ambassador Portman. Senator, may I just add to that 
quickly, the partnership we have, I think, is unprecedented. 
Certainly, I appreciate the fact thatSecretary Johanns has an 
interest in this area and I am fully utilizing him and his 
incredible resources. As you say, they can come up with data 
very quickly. They have a much larger staff than we do.
    In the negotiations, we have a USDA official that Secretary 
Johanns has kindly lent us at the table, literally there, 
hearing everything and providing the data. I have even dragged 
Secretary Johanns to some trade meetings that he might 
otherwise not have chosen to be at, including this week in 
Europe. He is going over, canceling some other important 
meetings, because it is critical that we work seamlessly. We 
have, and this partnership has been terrific.
    I appreciate the committee supporting USDA to be able to do 
that, because frankly, we need that support. These are going to 
be delicate, tough negotiations. We are going to have to work 
seamlessly not just with USDA, but with you all to be sure that 
we are giving you the full brief, you know exactly what we are 
doing, and at the end of the day, as SenatorBaucus said, we 
have an agreement that people can support.
    Senator Harkin. Thank you very much. Thank you, Mr. 
Chairman.
    The Chairman. As I turn to Senator Crapo, Mr. Ambassador, 
let me say, as you know, Senator Crapo has been a leader on 
this issue relative to the Canadian softwood lumber issue and 
he is leading a delegation of us to an interparliamentary group 
meeting next weekend. I want to thank you for your strong 
support of the lumber industry in our country and these 
negotiations, which have been very difficult. Senator Crapo has 
done a good job, but you have also done a very good job. 
Senator Crapo?
    Senator Crapo. Thank you very much, Mr. Chairman. I 
appreciate you bringing up the softwood lumber. Although I 
won't raise that as one of my questions, the Ambassador and I 
have talked about that. I, too, want to express my appreciation 
for the support that we have in this effort.
    Ambassador, given the significant challenges that face 
American agriculture and manufacturing today, I think it is 
critical that we have the maximum effectiveness for our trade 
remedy laws, and I think you probably didn't get a chance to go 
into that as much as you might have liked in your presentation. 
It seems to me that the United States should not sign an 
agreement that would lessen in any way the ability of the 
United States to enforce its trade laws and to decrease the 
effectiveness of the domestic international disciplines on 
unfair trade or safeguard provisions. In fact, one of the 
concerns that we are seeing in a number of arenas is that many 
of us perceive that we don't now have the ability to 
effectively pursue trade remedies. Could you give me your 
thoughts on this?
    Ambassador Portman. Yes, and I appreciate your raising it. 
As you indicate, at the end of the presentation, I was hoping 
to talk a little more about enforcement, including our trade 
remedies. The countervailing and antidumping laws, as you know, 
are administered by theDepartment of Commerce, not by USTR, but 
I think they are an incredibly important part of our arsenal 
and we use them and we use them appropriately.
    We are a relatively free and open country to trade. Our 
trade deficit numbers indicate that, as do our low tariffs, as 
do our low non-tariff barriers. Yet we want to be sure trade is 
fair and we do this through our trade remedy laws that are 
transparent, and that provide due process. We are under some 
pressure, as you know, around the world on this issue and I 
think, frankly, we haven't made our case as well as we could 
have.
    So we are undertaking to do that and also build some 
coalitions. SenatorHarkin talked about building coalitions on 
food aid. We also need to build coalitions around the world to 
understand what our trade remedy laws actually do and don't do, 
and lookay at other countries that are using trade remedy laws 
aggressively and be sure that they understand that their 
potential use of those could also be at risk if the WTO goes 
the wrong way.
    I will say that we believe there could be some improvement 
globally in trade remedy laws, particularly in the area of 
transparency, as I mentioned, and due process. So I think we 
have nothing to be ashamed of. In fact, we have laws that are 
working and that do provide the kind of rights to both the 
petitioners, but also the importers and we will vigorously 
defend those.
    Senator Crapo. Well, thank you. Because of the brief time 
that we have, I am going to move on to another topic, but I 
want to say to you that I think this is an incredibly important 
arena in the entire negotiation process and I hope that the 
United States can work aggressively, not only to enforce and to 
be effective at enforcement under our current system, but to 
help improve it, because a lot of us are concerned about 
whether there truly is fairness in the process.
    The other area that I wanted to go into is geographic 
indications, and I would like to discuss the current effort of 
the EuropeanUnion in the Doha Round negotiations to extend to 
foods the geographic indication protections that were 
established for wines and spirits in the Uruguay Round 
agreement. This issue is of importance to producers and 
processors in Idaho, and I am sure you are aware of the 
competing interests on this issue. What is the view of the 
administration on extension of geographic indications to food?
    Ambassador Portman. Well, again, as you know, this is an 
issue where we differ from our trading partners in the EU and 
also some other countries that are not part of the EU, but have 
a similar concern. We will continue to strongly promote the 
enforcement of intellectual property laws, including patents, 
trademarks, copyrights, and in the area of agriculture 
products, we think that is the appropriate course to take.
    This is an issue that has come up in every one of my 
meetings with the EU and in some of the mini-ministerial 
meetings, and the U.S. position is clear. I think, again, this 
is an issue where we need to perhaps explain our position a 
little more forthrightly and perhaps work with other countries 
who would share our concern. Australia has been a real leader 
on this, for example. They understand the consequences. But we 
will continue to hold firm to our position.
    Senator Crapo. All right. I appreciate that very much. And 
again, let me say to both of you, we thank you very much for 
the ability that you have shown to work closely together and 
your commitment to work closely with us. I lookay forward to 
working with you. Thanks.
    [The prepared statement of Senator Harkin can be found in 
the appendix on page 84.]
    The Chairman. Senator Salazar?

  STATEMENT OF HON. KEN SALAZAR, A U.S. SENATOR FROM COLORADO

    Senator Salazar. Thank you very much, Chairman Chambliss 
and SenatorHarkin, for scheduling these very important 
hearings, and to you, Secretary Johanns andAmbassador Portman, 
thank you for the service to our country and thank you, as 
well, for your advocacy for agriculture.
    Mr. Chairman, I have a longer statement for the record and 
I would ask unanimous consent that that be included in the 
record.
    The Chairman. Without objection.
    [The prepared statement of Senator Salazar can be found in 
the appendix on page 88.]
    Senator Salazar. Let me just say that from my point of 
view, these are very important negotiations and deadlines that 
are not too far off in our future, and I, from my point of 
view, believe that a successfully negotiatedDoha Round could 
level the playing field for U.S. producers and provide 
incredible market access for U.S. products, as you have said in 
your testimony today. So it is the right thing that you are 
doing, Ambassador Portman and Secretary Johanns, and I just 
want to encourage you to continue to be great advocates for 
agriculture, as you have said in your comments.
    At the same time, I just want to let you know that I had a 
very moving meeting with Catholic bishops from all across the 
hemisphere in Latin America and it included some bishops from 
the UnitedStates, such as Cardinal McCarrick from here in 
Washington. It included Cardinal Rodriguez from Washington, 
D.C. Many of these people were leaders in my church or people 
who are not protectionists. They understand the importance of 
the global economy and the importance of what we are doing with 
respect to trade.
    But they obviously are also leaders in what is probably one 
of the oldest multinational institutions that we know, and one 
of the concerns that they expressed to me in terms of the trade 
negotiations that are underway is that there are always winners 
and there are losers. One of the major concerns that they have 
with respect to CentralAmerica and Latin America as we move 
forward with some of these trade agreements is what happens 
with respect to some of the small farmers and ranchers that are 
displaced economically within a system that has been around for 
centuries and how we are dealing with that particular issue.
    So I would like you just to comment briefly on that concern 
that the Catholic bishops have raised with me.
    And then second, with respect to the listening conferences 
that you are having around the country, Secretary Johanns, 
could you explain a little more in detail about what it is that 
you are doing to try to get the input from the family farmer 
and the family rancher? At the end of the day in Hong Kong, 
when you are there in December, the farmers and ranchers from 
my State more than likely are not going to be able to be there. 
There may be a few that actually go, but they will be 
participating in those world trade negotiations through your 
voice and through your mind as well as Ambassador Portman's, 
and so I am wondering if you could give us a little more 
explanation with respect to what you are doing on outreach 
efforts to get their input.
    Ambassador Portman. Just briefly, Senator, first of all, I 
agree with you about the level playing field, that Doha offers 
an opportunity that we should not miss, which is to help level 
that playing field, because we are relatively open here and our 
tariffs are relatively low and our subsidies are relatively 
low. So this is an opportunity for us and our farmers and 
ranchers need to be sure that we have not squandered it.
    With regard to the statement from the bishops or your 
meeting with them, we certainly understand that concern. With 
regard to the DohaRound, as you know, there is an opportunity 
here to really assist on development around the world that is, 
again, unprecedented and one we should not miss. The World Bank 
studies show that if you were to reduce all the barriers to 
trade, which is the ultimate goal, you could pull 300 million 
people out of poverty. There is a recent study here by an 
institute, the NationalInstitute of Economics, saying 500 
million people would be lifted out of poverty by reduction of 
barriers. So there are tremendous opportunities here.
    In the case of CentralAmerica and Latin America, as you 
know, in the CAFTA context, we did things that were 
unprecedented in terms of trade aid, in other words, capacity 
building to be sure that these countries can take advantage of 
the new trade agreements. That includes infrastructure, that 
includes being sure that the rural communities are assisted to 
be able to handle the new trade agreements in beneficial ways.
    Trade is a matter of some displacement, but huge net 
benefit, and I think we have shown some sensitivity to that and 
will continue to. Part of this round, the Doha Development 
Agenda, as it is called, is to be sure that we are providing 
trade capacity building at the same time that we are reducing 
these barriers to trade that ultimately hurt the poor and hurt 
the developing world. But I appreciate your comments on it and 
lookay forward to working with you on that, both in the 
bilateral context but also with regard toDoha.
    Senator Salazar. Thank you, Ambassador.
    Secretary Johanns. In reference to your question about the 
farm bill forums, Senator Roberts was with me in Kansas, so he 
can kind of give you an idea of what we do in these, as was 
Congressman Moran. But that has not been an unusual phenomena. 
We have actually had participation from university people, 
government people at the State level, people in the House and 
in the Senate.
    What we always do is we work with broadcasters, some farm 
broadcasters, but broadcasters in general, too, and they 
promote the forum. We have tried to adopt a model of joining 
the forum with an agriculture event. It might be a State fair, 
as it was in Kansas. It was a State fair in Kansas. It was 
HuskerHarvest Days in Nebraska a few days after that, because 
you have kind of a ready-made crowd of producers.
    We identified six questions that we wanted their thoughts 
on, everything from how do we develop policy that allows for 
young people to be involved in agriculture in the future to do 
you think the distribution of the farm program benefits is a 
fair distribution. We ask a question about, are we getting the 
job done from an environmental standpoint, conservation 
programs? Are we getting the job done in our rural development 
programs?
    But having said that, it is pretty much an open mike. We 
encourage people, if they have a specific problem--my loan 
application is not getting processed--to come and see us. We 
are very interested in solving that problem, but we are there 
more to address the policy issues of the next farm bill, the 
2007 farm bill.
    And it has been a wide-ranging discussion. It has been for 
me very, very helpful just in terms of thinking about farm 
policy. We get everything from very specific suggestions about 
what people would like to see in farm bill policy to just more 
global thinking about what farm policy has done, and we have 
had arguments all over the spectrum.
    I could show you a quote from one gentleman who said, 
``Throw it out and start over,'' to others who say this has 
worked pretty well and I hope you keep that in mind as you 
think about 2007, and everything in between.
    If I might just offer one other quick thought on the 
question you asked of theAmbassador, I had the opportunity to 
go to AGOA this year, the AGOA forum in Senegal. African 
nations were there. I had a number of bilateral meetings. But 
one agriculture minister came to me in a bilateral meeting and 
he sat down and he said, ``Mr. Secretary, I am here today not 
to ask you for more aid, although we appreciate the aid.'' He 
said, ``I am here to ask you for opportunities for trade.''
    They just overwhelmingly, the people at that forum, which 
by and large was African nations, were saying to us, we need 
help here, and the reasons, I think, are obvious. We come from 
a very, very progressive nation when it comes to agriculture, 
very progressive. Our farmers and ranchers produce at 
remarkable levels. That isn't the case all over the world. And 
so we had conversations about how do we get fertilizer? How do 
we get seeds? How do we literally lay the platform for our 
agriculture to be successful?
    You see, I believe it is good to raise the standard of 
living and create consumers around the world for our products. 
I just think that is where we should be headed. That is what we 
should be thinking about. But other nations just are not as 
fortunate, and if we can reform agriculture in a way that is a 
good deal for American farmers and ranchers but also provides 
the world access for agriculture products, I think that is very 
definitely what they were reflecting to me in their statements 
when I was at the AGOA forum.
    Senator Salazar. I appreciate the comments very much, 
andSecretary Johanns, I am sure that probably every member of 
this committee is going to make a request of you to do this, 
but I very much would love to have you, as well as 
AmbassadorPortman, come to Colorado and engage in one of these 
forums with agriculture in our State. We would make sure that 
it was a bipartisan forum that was widely attended by the 
people in myState. The eyes of the world are on you, and 
Colorado is a part of that world, so I hope you can come to 
Colorado.
    The Chairman. Senator, the longer you serve here, the more 
you will realize agriculture has always been bipartisan. It has 
to be.
    Senator Thomas?
    Senator Thomas. Thank you, Mr. Chairman. Thank you, 
gentlemen, for being here. I had an opportunity to work you 
quite a little bit in the previous year, as I recall.
    I am, of course, very much interested in agriculture. I am 
also, as you know, chairman of the Subcommittee on Trade and 
Finance, so I am lookaying at it also from a broader 
standpoint.
    I do want to strengthen the notion, and you have already 
committed to do that, is to have a little more conversations 
with theSenators prior to bringing up the treaties, and I think 
we can have more input and I appreciate both of you doing some 
of that.
    I also just want to suggest that we were down in Cancun, 
and I must confess that I didn't think there was much talk 
about trade there. All we talked about was other countries' 
needs and these kinds of things. These are supposed to be trade 
agreements, andI think we ought to be willing to pursue trade 
and we ought to do that, and quite frankly, I think we have a 
large deficit in trade. We are buying more than anyone else and 
we ought to utilize that strength a little bit to be able to 
strengthen our processes, particularly in agriculture, and I 
hope we do that.
    With regard to this--I guess I was, frankly, concerned that 
sometimes there is more interest in foreign policy development 
than there is in trade, and I realize the two go together to 
some extent, but these are trade agreements, not foreign policy 
relationships, and so I hope that we emphasize that.
    With respect to what is coming up, of course, no question 
that the beef industry has been hurt a lot by global bans on 
U.S. beef and so on. These were put in place when the bans were 
first enacted. Where are we today with regard to beef trade and 
the various bans, health bans and so on around the world, from 
either or both of you?
    Secretary Johanns. Your observation is correct. The 
industry was hurt significantly by the bans relative toBSE and 
we have diligently worked country-by-country to reopen markets. 
We can give you the exact statistics on where we are at, but we 
have recaptured a fair amount of that market. What is left, the 
majority of what is left by a lot is Japan and Korea, and, of 
course, we have been engaged with Japan for many, many months 
now, and we are also engaged with Korea. China has committed to 
sending a technical team to our country in October, and so we 
are also working with China. That was one of the things we were 
able to accomplish when we were last there.
    Here is an observation I will offer relative to Japan. I 
visited with Senator Nelson about the amendment that he 
proposed yesterday, and as you know, it did get a lot of 
support in the Senate. Just speaking candidly, I warned Japan 
this was coming. I said to them over and over again, there is a 
point at which folks on the Hill are just going to lose 
patience with this very, very slow process. There is no 
scientific or world justification for the continued closure of 
this border to our beef.
    I will be very honest. I am not excited about the action 
yesterday, butI understand it. I understand the frustration. My 
hope is that we can continue to move forward to get this border 
reopened.
    I do believe--I sat down with the new agriculture minister. 
They have a new minister over there, and we literally went 
through their chart of the process to reopen the border, and 
quite simply, they are running out of process. I mean, they are 
at the end of the process chart here. So it appears to me that 
the end is in sight, but it has been so painfully slow and so 
painfully deliberate.
    We aren't going to give up. We are going to continue our 
efforts to get those markets open.
    Senator Thomas. Ambassador, are there things in the trade 
agreement that we can do to avoid having these subsequent kinds 
of enforcements that really weren't part of the trade 
agreement?
    Ambassador Portman. Well, there are, and that is to be sure 
that we have a good sanitary and phytosanitary agreement as 
part of the WTO, that we protect what we got in Uruguay and 
that we build on it. You and I have talked about this a lot in 
terms of these trade agreements, focusing on market access and 
not getting sidetracked on other issues, like the foreign 
policy issues you talked about. We have also talked about not 
just BSE, but other access issues that are SPS issues, such as 
beef hormones in Europe, poultry processing, the issue of 
biotech, and all these issues, I just want you to know that we 
are raising them.
    I met with the trade minister of Japan last week and the 
trade minister of Korea this week and, of course, this issue is 
at the top of my agenda, as well. Mike Johanns and I are 
working in concert on this.
    I do think that Secretary Johanns is right. As we push them 
on process and walk through all the science-based reasoning on 
our side, I think we are lookaying at the end of a process 
rather than their ability to continue to delay. I do think it 
is helpful, Chairman Thomas, that we have got some positive 
signs from other countries that have smaller markets. As you 
know, the President met with the Prime Minister of Thailand 
this week and had some good conversations about this, a small 
market, but you begin to get a little domino effect. Taiwan is 
another one we would like to see reopened. We have a strong 
trading relationship there with that economy.
    So we have the opportunity here, I hope, before getting 
into Hong Kong, to make some progress on this, but we need to 
see more, particularly with regard to SPS issues and 
theEuropean Union.
    Senator Thomas. I appreciate what both of you are doing. I 
just think we ought to utilize the strength we have on some of 
these things.
    Thank you, Mr. Chairman
    The Chairman. Thank you.
    Mr. Secretary, let me say that with reference to that vote 
yesterday, you are exactly right. It was frustration. It has 
been 6 months ago that 20 members of the Senate sat around this 
table with the Japanese Ambassador and discussed this issue and 
we walked away with the feeling that we were probably very 
close to getting this issue resolved and nothing has happened. 
It is very frustrating to us and we hope you will be able to 
use that to exhibit the frustration here in your future 
discussions with the Japanese.
    Senator Roberts?
    Senator Roberts. Thank you, Mr. Chairman. Thank you for 
holding the hearing. I would suggest we need a bigger room and 
maybe another hearing. There are a lot of people in the hall 
that are interested in this.
    I am going to start off to thank the Secretary 
andAmbassador for coming. I want to thank the Secretary for 
coming to Kansas. Has Ken left? I was going to tell him that I 
think the opportunity for Secretary Johanns to come to Colorado 
really depends a lot on the Colorado-Nebraska football game, 
but I will let that go.
    [Laughter.]
    Secretary Johanns. You figured me out.
    [Laughter.]
    Senator Roberts. The Secretary came to Kansas, there must 
have been 250 farmers in the room. He sat on the wagon tongue 
and he listened to them all and he tookay copious notes. I left 
to go watch a ballgame about halfway through, but--no, I had a 
plane to catch, and I do thank you for coming.
    I just would say that there is a yellow light warning not 
only on the time that I talk, but in farm country, and I think 
we are suffering from trade fatigue. That is to say that many 
times, I think we oversell and overestimate the goals of the 
trade agreements. I understand that. Many times, certainly we 
over-criticize them, but that is on the tube and in the media 
and all of the detractors. I know all of that. As a result, I 
think in farm country, they are a little weary, a little 
suspect of this animal we call free trade.
    Sitting behind the Secretary is his Chief ofStaff, Dale 
Moore, who is an old rodeo rider, and so at the Doha rodeo, I 
am concerned when chute No. 1 opens up and the WTO critter 
comes out of the chute. I hope agriculture is on board and it 
just isn't a bucking bull out there.
    You can see that with the Nelson amendment. You can see the 
frustration, and the Allard amendment prior to the Nelson 
amendment in terms of a strong message.
    So I hope, Mr. Secretary, that you will be able to continue 
your work. You have gone to 15 counties now, and I am keeping 
score because I suggested that originally when you came in in 
regards to you confirmation, that would be my best advice, is 
to go out to farm country and to listen.
    But in your role as Secretary of Agriculture, you are the 
voice of all farmers and ranchers. I hope that we can get some 
support and some real cooperation between the various farm 
groups and commodity groups in trying to work toward increased 
market access as opposed to demanding special treatment. That 
is going to be a tough thing to do.
    My question really is to Rob Portman, who is a good friend 
and a former colleague and I am delighted. He is the right man 
in the right time in the right place. So Mr. Ambassador, I met 
with the EU Agriculture Commissioner Mariann Fischer Boel as 
of, what was it, last week, and she has met with you and with 
the Secretary and with other members of this committee and the 
distinguished chairman. She was wanting to know what was going 
on in Kansas, how did I feel in regards to the WTO round, and I 
told her that basically in Kansas, our farmers were sitting 
down and writing checks, $50 and $100 to Katrina victims, and 
then turning around and wondering how on earth we are going to 
survive because of the increased gasoline, diesel, access to 
fertilizer, so on and so forth, and that right now, the WTO was 
not on their minds, although they knew it was coming and they 
knew that it was a threat, and I will use that word, to our 
farm programs as we see them. So I think that is where we are.
    The one question I want to askRob is that I am concerned 
about your comments not only with our farm programs and the 
case by Brazil, and I don't have any illusions about that, more 
especially with the cotton program, but our food aid programs. 
Now, Senator Frank Carlson and Cliff Holt from Kansas started 
thePL-480 program and I am concerned with the perception, 
including the EU, that we use our food aid programs as a 
haphazard tool for simply distributing our excess commodities, 
sort of a dumping ground.
    Now, this is not the case. This food is often the 
difference between somebody going to an extremist military 
wahabi school and then sitting on the top of a building with an 
AK-47 in an area that we do not want this young man to sit in 
and an education. It is the difference between a young woman 
having access to school in many countries and the empowerment 
of women, which I think is one of the things that we can use, 
and I am speaking as the Chairman of the Intelligence 
Committee, as one of the best anti-terrorism tools that we 
have.
    So I would like to ask you, how would you characterize 
these negotiations in regard to food aid? I know they would 
rather go to cash as opposed to commodities. We are not going 
down that road and we are not going to lessen our food aid 
programs in the war on terror, more especially with the world 
food program and other programs like that. I know they are also 
after the export programs. I don't know what we would have done 
during the 1980's and the very tough times without the 416 
program so we could move our product. So I have a lot of 
concern about that, if you could respond more especially in 
regards to the food aid programs and where we are.
    Ambassador Portman. Well, thank you, Chairman Roberts. I 
had an opportunity to talk about this a little bit with Senator 
Harkin, so I won't repeat myself too much, but I will say that 
it is very important to me that you had that meeting with her 
and that you made the statement today. I know you will continue 
because in your heart, you understand that this is about 
providing emergency aid to people who need it and there is not 
enough out there. The idea that we would go to cash and that 
some of that food, therefore, would not make its way to the 
people who need it is outrageous. Why would we do that?
    So I agree with you. This is one where I think there is 
also, as I said earlier, some misunderstanding about commercial 
displacement. As I said earlier, the very exporters who are 
sending food aid out through what Senator Harkin called the 
Food for Peace Program are people who also export on a 
commercial basis. They don't want commercial displacement 
either, and we don't believe that is occurring.
    So it is a little strange to me that this has become such a 
big issue. I think we need to better explain what we do, why we 
do it. I think we need to get more of these governments that 
are sometimes, unfortunately, dependent on emergency food aid 
to stand up and be counted. I think we need to have some of 
these nongovernmental organizations, as you talked about, 
including the United Nations, to understand what is at stake 
here. We are making some progress in that regard by being able 
to build this coalition a little bit and communicate better 
what we do and why it is so important.
    So thank you for standing up for it. I do think that the 
kind of radical rules changes that the European Union and 
others are talking about would be not just damaging to our 
farmers and ranchers, but would be terribly detrimental to the 
developing world.
    Senator Thomas. Thank you for your response. Thank you, Mr. 
Chairman.
    The Chairman. SenatorLincoln?
    Senator Lincoln. I guess I am the last man standing over 
here. Mr. Chairman, I just want to thank you for your 
tremendous leadership on what I think is such an incredibly 
important issue and I appreciate you holding the hearing today 
and your steadfast involvement and interest in this.
    Welcome, Secretary Johanns. We are delighted to have you 
back with the committee. You have definitely been very busy 
over these past 6 months and I want to tell you how grateful we 
are that you visited Arkansas.
    Secretary Johanns. Thank you.
    Senator Lincoln. I think, without a doubt, you saw that we 
in Arkansas take our agriculture very passionately. We had a 
tremendous turnout and a lot of very passionate feelings at 
that meeting and I am grateful to you for coming.
    We want to welcome Ambassador Portman to the Agriculture 
Committee. We have worked closely in the Finance Committee and 
I know that you certainly understand the importance of our 
trade policies to our American farm families. With that in 
mind, I hope you feel as comfortable talking about trade here 
in the Agriculture Committee as I do, because it is absolutely 
a critical issue for agriculture.
    There is--certainly, agriculture is one of the nearest and 
dearest issues to my heart, as a farmer's daughter, and 
certainly it is one of the things I take the greatest pride in 
in terms of advocating on behalf of Arkansas farm families. 
They are hardworking people who do something pretty incredible 
absolutely every day. Against all odds, they provide us with 
the safest, most abundant, and affordable food supply in the 
world, and they do so against tremendous odds.
    One of those odds is an increasingly competitive world 
market that is not always free and not always fair. Our U.S. 
farmers survey the world and what they see, and what I think 
contributes to some of the frustration that the chairman 
mentioned and others, is that an average bound tariff of 62 
percent against their products compared to 12 percent that our 
foreign competition sees when they want to send something to 
our borders. I think that is why our negotiators' work in 
Geneva and ultimately in Hong Kong this December is so vital. 
It is of vital importance to the future of U.S. agriculture and 
it is something that is very important and it is truly on the 
minds of producers all across this country.
    Our farmers recognize the importance of trade, but they are 
becoming increasingly frustrated with the actions of the WTO 
members who have chosen to litigate rather than negotiate and 
who have focused their attacks on our U.S. commodity support 
programs. And while the Doha talks drag on and the WTO 
continues to rule against our commodity support programs, 
programs that under the Uruguay agreement were considered fully 
compliant with WTO principles.
    Our farmers want to meet our WTO obligations. They 
definitely know how important it is to be good neighbors, to 
negotiate and come up with good agreements, but they also need 
the assurance that the U.S. Government is going to stand by 
programs contemplated and authorized in an upcoming multi-year 
farm bill. To be undercut by policies from our own government 
when they see the, I guess the fragile nature of the 
international marketplace is just absolutely not just 
frustrating, but disappointing, I think, to American farmers.
    Farmers have been frustrated--well, they are always 
frustrated, I suppose. It is either too hot or too cold, too 
wet or too dry. I certainly experienced that growing up. But 
continued demands by the Europeans that we unilaterally accept 
the drastic cuts in our farm programs without their expressed 
commitment to provide meaningful market access to our producers 
in return. That is all they are lookaying for.
    I grew up on a farm. I grew up with a farmer as a father 
and in a community that recognized that fairness is important, 
being a good neighbor is important. All of those things are 
critical, but it is a two-way street and that is very important 
to them.
    We know that you all were able to meet with European 
officials in Washington earlier this month and we lookay 
forward certainly to continuing the dialog of what your 
assessment and any progress both here today in the committee 
and also coming forward.
    Just a couple of questions. Ambassador Portman, we are just 
hoping, I think, here today and in the days moving forward you 
can provide assurances to us and to our constituency that 
moving forward in the WTO will not require the U.S. to trade 
away the farm. I mean, that is it. Our farmers are meeting 
tremendous obligations with the price of fertilizer, the price 
of fuel, the kind of drought that we are seeing. Just the 
assurance that those who remain in production agriculture, who 
really are the most efficient and effective in today's world 
under our circumstances in the U.S., that we won't trade away 
that farm, and the specific steps that the administration will 
take to ensure that the market access benefits will be achieved 
that are at least equal to the cuts in the trade distorting 
domestic supports that our negotiators have already agreed to.
    So I hope that in the days to come, you will share that 
with us, you will be very vocal and encouraging to our 
constituency in what you will be doing, what you can do. I know 
that some of the reports that you have discussed scenarios or 
tradeoffs with theEuropeans in terms of domestic support and 
market access. I hope that you will elaborate on some of those 
with us so that we will have a clear view of what it is that 
you are lookaying to do and how you intend to achieve that.
    Our USTR continually assures our Arkansas rice producers 
that trade agreements will result in higher sales and prices, 
and ours is an export-oriented industry. Arkansas rice 
producers and millers have joined with their colleagues in the 
South and California in strong support of trade agreements like 
NAFTA, the UruguayRound, most recently CAFTA. I have been 
there. I have worked with my producers. They want to be 
supportive. But these promises that they continually get are 
quickly tarnished when our trading partners fail to live up to 
their obligations.
    Our rice industry has spent close to three-quarters of a 
million dollars to defend against anti-dumping charges by 
Mexico, some of which were completely unwarranted. Access for 
U.S. brown rice in the EU was reduced when the EU withdrew the 
margin of preference concession last year, and I also 
understand that Korea has yet to implement its commitment to 
increased market access for rice, while at the same timeKorea 
is asking for free trade agreement with the U.S.
    I think that what our producers want to see is not only 
that we know how to be good neighbors, but that we also 
understand that it requires demanding respect. When agreements 
are made and that we are willing to meet our end of those 
agreements, we want to make sure that our neighbors and our 
trading partners are willing to do that, as well.
    So I hope that we can see some reassurances from you and 
from the administration to ensure compliance and enforcement 
and hope that you will share with us how that can be achieved, 
particularly with the Doha Round agreement.
    I know that you have mentioned transparency and I am 
pleased, and I hope that there will be further opportunities to 
talk about expediting some of the rules that we do have. Our 
trade laws are important to us, but if we can't use them and we 
don't have the time, if it drags on too long, it does us no 
good. I testified before the ITC just last Friday on a steel 
issue. They are great to talk about, but unless we make them 
usable and something enforceable, they really don't help us.
    So I hope that you can share any or all of that with us. 
Certainly, the trade safeguards, any progress being made by our 
U.S. Government tradeofficials in the WTO rules and 
negotiations, specifically what actions are going to be taken 
to ensure that we can vigorously enforce our trade laws, I 
think that is going to be important, as you well know, and I 
hope at some point I get an opportunity to visit with you about 
some of the efforts that we have been trying to make here to 
expedite some of those trade rules in order to be able to do 
that.
    So those are a lot of things. I would also be remiss if I 
did not just take the opportunity to shift gears and--because I 
am not sure when I will ever have the opportunity again, but to 
express my disappointment with the administration moving 
forward to support Saudi Arabia's accession to the WTO. I 
guess, again, so much of what I do goes back to many of the 
other hats I wear in my life, and it is really hard to imagine 
that we really do want to enforce poor behavior, bad behavior.
    I know that Senator Thomas brought up the issue of not 
wanting to include some of those types of issues, that these 
are trade agreements and that we have to be careful about that, 
and I don't think people mind that if it is consistent. But we 
know that there are many countries out there that we continue 
to trade with and we continue to ask enormous requirements of, 
former Communist countries and others, in order to be able to 
have the kind of free trade and open trade. But to see the kind 
of record on human rights, women's rights, religious freedoms, 
I know there have been some advancements on the boycott issue, 
but quite frankly, our hope is that we could use those 
opportunities to really encourage a nation likeSaudi Arabia to 
move further in a direction that is so important to many of us.
    Thank you both for your hard work and I lookay forward to 
working with you as we move forward. I appreciate the 
leadership of our chairman here and hope there will be 
opportunities where I can help and work with you.
    Thank you, Mr. Chairman.
    The Chairman. SenatorTalent?
    Senator Talent. Thank you, Mr. Chairman. I appreciate your 
holding the hearing, too. I know a lot of the issues that I was 
concerned about have been raised. I may have some questions for 
the record for you all.
    Let me just ask a general question and then I, too, want to 
switch subjects and bring up another issue to get your comment, 
Mr. Secretary, on something you and I discussed.
    I know these negotiations are always very complicated, and 
at the same time, there are basic principles that apply to any 
negotiations. I remember an old State Senator friend of mine 
said to me about 20 years ago, he said, ``If you want to get 
somebody to do what you want, find out what they want and find 
out how bad they want it.''
    Talk a little bit about what our trading partners want and 
how bad they want it, and maybe what they don't want and how 
bad they don't want it. I am not asking you to give away your 
negotiation strategy, but I am presuming you are thinking going 
in, and maybe, Mr. Ambassador, you could do the same, what are 
some of the leverage points we have got? I know a lot of the 
frustration our people feel is that we go into these 
negotiations and we are committed to this both in terms of our 
economy, but also in terms of our principles, and sometimes I 
am concerned other people feel like, well, they want this so 
bad that we can play that game with them. So discuss that 
general subject, the leverage points.
    And then the second point, Mr. Secretary, and it is a 
different subject, although it certainly relates to trade, I 
indicated to you before the hearing my concern about what is 
happening with the river and the fact that we have a lot of our 
product, particularly our corn, tied up in elevators and on 
barges upstream and we are unable to offload it and we have got 
the soybean harvest coming. Discuss some of the things you are 
doing, if you would, and if you have any suggestions about what 
we might do to help you with that, I would appreciate it, 
because that is an immediate concern I have.
    Secretary Johanns. Yes, it is a very important concern, and 
maybe I will jump in here ahead of the Ambassador and the 
Ambassador can handle the trade question that you posed.
    As I indicated to you before the hearing started, we have 
been working on this transportation of grain issue literally 
from the moment Katrina struck and the aftermath. The USDA is 
assisting the movement of barges of damaged corn from New 
Orleans. USDA is providing incentives for alternative grain 
storage. We are encouraging alternative shipping patterns to 
help relieve some of the pressure. We are allowing producers to 
storeUSDA-owned corn on the farm with the option to purchase.
    USDA is providing a temporary incentive to assist immediate 
movement of some 140 barges of damaged corn, and that would be 
about seven million bushels, out of New Orleans to up-river 
locations. Once unloaded, the empty barges will continue up the 
river, then, to begin moving the new crop commodities, the 2005 
commodities. USDA will pay incentives for alternative storage 
up to 50 million bushels of grain. We think all of these 
actions will help to relieve the pressure.
    To reduce stress on theCentral Gulf transportation and 
handling system, USDA will provide a transportation 
differential to cover the costs of moving grain to other river 
transportation modes and handling locations. And to further 
alleviate grain movement into the Mississippi River, USDA will 
allow producers forfeiting commodities to USDA actually the 
opportunity to buy back the grain when the farm stored loan 
matures in September and October.
    So we have done a lot of things that we had the power to 
do. Fortunately, the House and the Senate has given the USDA 
very broad power to deal with emergencies and we have just 
encouraged everybody at the USDA to be as creative as they 
possibly can in dealing with this. We will be happy to offer a 
briefing to your or your staff or to anyone else. It is a 
significant issue. I have said publicly, if there was one of 
the good news pieces of the recovery relative to Katrina, it is 
how aggressively everybody worked on the port issues, the 
Mississippi River issues. The Corps of Engineers has been 
great. The shippers have really gone overtime to try to deal 
with this issue.
    If anyone ever doubts the importance of exports, boy, 
lookay at this circumstance, because really all we did was 
stall exports for a while and it just backs up right into the 
middle of the country immediately.
    Senator Talent. That is exactly right, and so are you 
satisfied, then, that this has a high enough priority within 
the administration's overall efforts. I mean, I know you are 
paying a lot of attention to it, which that is very 
appropriate, but are those outside of the Department within the 
administration's efforts aware of this? Is it a priority with 
them, as well?
    Secretary Johanns. Absolutely. It is a priority not only 
for me, but it is a priority for the President and the folks in 
the White House. We have engaged them in our thinking on this 
and in where we are headed. So we understand the problem and 
the issue and we are going to do everything we can to 
facilitate moving this product, because really what happened 
here is it just backed up. There was all of a sudden a glut in 
the system because the system was not operating for a while, 
and now that it has come back up, it is operating, I think, 12 
hours a day. So those people are working very hard to get this 
system operating around the clock, but we have to deal with a 
glut of grain that was out there. We are going to be just as 
aggressive as we can in trying to help with that.
    So it is very much a priority issue for us. I have probably 
spent as much time on this issue as any other issue relative to 
Katrina recovery.
    Senator Talent. Thank you.
    Ambassador Portman. Just one further comment with regard to 
Katrina. I was able to go down to the region on Friday, and I 
went down specifically because of the export and import 
interest, the trade interest. Sixty-two percent of our 
agricultural exports, as you know, and the Secretary knows 
well, goes out of those ports, primarily the Port of South 
Louisiana, and I was able to tour the Port of New Orleans and 
also get a briefing on that port, South Louisiana and Baton 
Rouge.
    The traffic is moving, more slowly than we would like, but 
it is moving and all I can say is my sense is this is not just 
a very high priority of the administration, and certainly it is 
of mine from a trade perspective and the Secretary's, as you 
heard, but we are also relatively fortunate. With all the 
devastation ofKatrina and all the human tragedy involved, it is 
amazing these ports weren't more damaged.
    Most of the wharfs are in good shape. As you know, 
electricity is back, I think, to all but one terminal now. We 
have the ability to be able to move barges up and down the 
river. There was a lot of concern about silt early on. The 
soundings were taken. That has not been a problem. There were, 
I think, 200 ships or boats that were potentially in the 
channel at one point. We have been assured that that is not an 
issue.
    So compared to what it could have been, we are relatively 
lucky, but boy, this is critical to our exports and imports 
as----
    Senator Talent. Is the key remaining issue personnel, 
getting enough people there?
    Ambassador Portman. That is what I was going to mention. I 
think one of the challenges that the administration has focused 
on particularly in the last week is temporary housing for the 
ports themselves. You know, these three ports, we are told, 
support about 100,000 people, so it is critical to the economic 
development and the maritime services in that area are critical 
to the economic development of that region and bringing it 
back. But you have got to have workers to move this product, 
soMerit has provided some ships, as you know, and they have 
provided some housing, but it is focusing on some of this 
temporary housing, and I know the Secretary has been involved 
in that. The Secretary of HUD, Alfonso Jackson, and I have 
talked about it. He was actually in the region with me.
    So the administration is very focused on this, Jim, as a 
way to be sure we are both dealing with the economic 
dislocation in that area, but also with regard to the 
importance of trade, and the message to our trading partners 
needs to be the harvest is moving. We will be able to provide 
your needs and we will do everything in our power to be sure 
these exports go out.
    Secretary Johanns. If I could underscore that point, our 
international friends have been great in responding to this 
emergency in a lot of different ways. It is just very, very 
important that I assure them when it comes to the shipment of 
products they need, we are going to do that. Everybody is 
absolutely focused on responding to the purchases and needs of 
the international marketplace. It has just been a great effort 
by everybody involved to accomplish that.
    And then the last thing I failed to mention that Dale 
reminded me of is that navigation on theMississippi is done 
with navigational aids. They literally site these aids in the 
river. Some of those aids were pushed aside by the storm or 
pushed up onshore, whatever, and that is kind of the last piece 
here to get this system back to 24 hours.
    But my last briefing with the Corps ofEngineers, which was 
just within the last few days, is that everybody is working 
diligently to get that accomplished. Once those aids are back 
in place, then you will see the system come back up online 
around the clock and that will be yet another positive step to 
move that grain harvest that has already started in the 
Southern corn belt. I mean, we are seeing that harvest already 
and it will definitely be in full swing across the corn belt 
here pretty quickly. States like Illinois that had drought, 
their corn is going to cure fast, as will the soybeans. So it 
would not surprise me if you are seeing combines out in the 
field already in those areas.
    Senator Talent. Do you have comments on my broad----
    Ambassador Portman. Well, I thought your question was very 
astute and I also thought that Senator Lincoln's analysis was 
right on in terms of what we face. I mean, it is a challenge to 
determine how you can better understand the other person's 
point of view in any negotiation. In this one, the importance 
to the farm community, as we have talked about all during this 
hearing, cannot be overstated. We absolutely depend on exports 
in our farm economy. My whole job in this negotiation as I see 
it is to make sure those Arkansas families that you talked 
about have a better situation as a result of this agreement.
    So Missouri farmers and Arkansas farmers should know that 
we are doing our best to determine what is not just in the 
interests of other parties, therefore, getting them to agree 
with negotiation that is sensible for our farmers, but we are 
also working very hard with some allies who are exporters, as 
we are. This would include some of the countries even in the G-
20 which we mentioned earlier, some of the developing countries 
that have an export interest, certainly the Australias 
andCanadas and New Zealands of the world who share a lot of our 
interests.
    As I said earlier, I am hopeful that we will have a result 
that provides meaningful market access, that eliminates export 
subsidies altogether, where about 87 percent of that use is 
currently by the EU, and where we have in the trade distorting 
domestic support a situation where those who have higher 
supports, and this chart we pulled out earlier, that those 
countries reduce more. That is what the framework provides for. 
And if we end up with an agreement along those lines, it will 
be very beneficial to our exporters, manufacturers, service 
providers, but also to our farmers.
    So that is the goal of these negotiations. It is sometimes 
difficult to know, Senator Talent, in response to your specific 
question, what other people really care about as compared to 
maybe what they are saying publicly----
    Senator Talent. Perhaps I shouldn't ask you to muse on 
that, because you maybe give away the game, but maybe we can 
talk a little bit later, because my sense of it is they do a 
pretty good job of acting like, well, you know, if this thing 
busts up and we don't get an agreement, that is okay with us, 
and to the extent that they are putting that idea across, it 
seems to me they have more leverage at the table. Maybe we will 
talk later about how you counter that with them.
    I think I am sharing some of the frustrations Senator 
Lincoln mentioned. They act like, well, we will disrupt the 
system and you guys will be disadvantaged and that is okay with 
us, whereas we always come back and everybody knows we are 
committed to it. I just wonder whether that puts us sort of 
behind the eight-ball going in.
    Ambassador Portman. We are committed to a good agreement 
and only a good agreement.
    Senator Talent. okay. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Talent.
    Mr. Chairman, I am going to do a floor statement a little 
later on today where we talk about some of the successes ofNew 
Orleans after Katrina and the thing I am going to highlight, a 
situation relative to the port. That is a classic example of 
how the private sector and the public sector working together 
can get something positive done in a hurry. USDA, the Corps of 
Engineers, as well as the lessees from the port authority, like 
Cargill and ADM, have really worked very closely together to 
make sure that farmers are well served by getting that port 
reopened.
    It is kind of interesting that the major issue we have, 
Senator Lincoln, is getting enough workers back and being able 
to house those workers so that they can go to work and start 
getting paychecks again.
    Senator Lincoln. We have got about 60,000 evacuees in 
Arkansas, so we are well aware of the need to get people back 
home.
    The Chairman. Gentlemen, thank you very much for taking the 
time to be with us today. I think this has been an extremely 
informative hearing. We lookay forward to continuing to dialog 
with you as we move toward Hong Kong. Obviously, we send our 
best wishes with you as you leave today to go to Paris. We 
lookay forward to visiting with both of you when you return to 
see the results of what I know will be a very productive 
meeting, so thank you very much.
    The Chairman. We will now call our second panel. Our second 
panel today consists of Ms. Audrae Erickson, who is President 
of the National Corn Refiners. She is here today in her 
capacity as Co-Chair of AgTrade, based here in Washington. We 
also have Mr. Allen Helms, theVice Chairman of the National 
Cotton Council from Clarkedale, Arkansas; Mr. Leonard Condon, 
Director, International Business Relations, Altria Corporate 
Services based here in Washington; and Mr. Mark Viso, Vice 
President of Operations, International Program Group, World 
Vision, based here in Washington.
    Welcome to each of you. We are very pleased to have you 
here. We lookay forward to your testimony, and Ms. Erickson, we 
will start with you.
    Senator Lincoln. Mr. Chairman, may I just add a welcome to 
one of my constituents, Mr. Helms, who is testifying today on 
behalf of the National Cotton Council. He is a cotton producer, 
as you mentioned, from Clarkedale, Arkansas, and a member of 
the Arkansas Agriculture AdvisoryCouncil, but he is also a 
great friend of Southern agriculture and I just want to commend 
Allen's leadership and all of the hard work. I appreciate you 
taking the time to offer your insight in the direction of our 
trade negotiations. I know I hear it at home. I am glad to hear 
it up here.
    Thanks, The Chairman.
    The Chairman. I met Mr. Helms previously and any cotton 
farmer has got to be a great American, the way I figure it.
    Again, I thank all of you for being here. Ms. Erickson, we 
will start with you. We lookay forward to your comments.

  STATEMENT OF AUDRAE ERICKSON, CO-CHAIR, AGTRADE COALITION, 
                         WASHINGTON, DC

    Ms. Erickson. Thank you, Mr. Chairman, SenatorLincoln. 
Thank you for this opportunity to testify today on behalf of 
the AgTrade Coalition, which is a coalition that was formed in 
1999 and has over 100 organizations, associations, and firms in 
it that supports further trade liberalization in agriculture. I 
am interested in submitting a copy for the record of the 
principles that our coalition has recently revised for the WTO 
negotiations.
    The Chairman. Sure.
    Ms. Erickson. I should note that each member of theAgTrade 
Coalition has its own set of negotiating priorities, and in 
some cases, those priorities may be even more ambitious than 
what I will present today, and some may be noted as we begin.
    The WTO negotiations represent the most important element 
of the trade agenda from the President for our coalition, and 
key among that, really, is substantial improvement in market 
access. An ambitious market access package must include a 
harmonizing formula that reduces the high tariffs more than the 
low ones and results in substantial and commercially 
meaningful--and that is important--market access in all 
products to all markets.
    All tariffs should be capped and complex tariffs, of which 
there are many, as you know, must be converted to ad valorem or 
specific tariffs.
    Only a limited number of sensitive products ought to be 
allowed, and for those, market access should still be improved 
through reductions in tariffs or expansion of tariff rate 
quotas.
    Regarding tariff rate quotas, all end duties, end quota 
duties for TRQs ought to be eliminated, and the administration 
of those TRQs should be improved.
    Sectorial negotiations should be pursued for those 
commodities and food products that are seeking a more ambitious 
market access outcome.
    And balance in the level of the ambition in all three 
pillars is a central objective of the AgTrade Coalition. 
Reductions in total trade distorting domestic support and other 
U.S. concessions must be balanced with our goals for what we 
hope to achieve in market access and export competition.
    On domestic supports, a formula that harmonizes total 
levels of trade distorting support is needed.
    On the blue box, our coalition continues to support the 
July 2004 framework agreement. On the green box, there should 
be no caps on or excessively restrictive criteria defining 
eligibility for non-trade distorting domestic support.
    Now, for the export competition pillar, the elimination of 
export subsidies by a date certain is key and must remain. 
Export subsidy rules should be tightened and should be applied 
equally to developed and developing countries.
    The monopoly powers of state trading enterprises, they must 
be eliminated, as should the government subsidies, the 
financing, the underwriting of losses on their export 
activities. STE disciplines should result in transparency and 
the end of discriminatory pricing practices.
    Regarding export credits, a topic that the coalition and 
even the Export Credit Working Group here in the United States 
has worked diligently on, official export credit and credit-
related programs should be applied to allWTO member countries, 
and reductions in the subsidy component of existing programs 
that do not comply with any disciplines that are established 
should be implemented in a parallel manner with the phase-out 
of export subsidies and the elimination of monopoly powers of 
state trading enterprises.
    And there are many programs throughout the world, as you 
can imagine, that assist exports. Disciplines should be 
developed on other export measures that have equivalent trade 
distorting effects, including the elimination of differential 
export taxes.
    On food aid, I will touch on it briefly. I know it is a 
topic that will be discussed in more detail. Disciplines on 
food aid should be imposed only to the extent necessary to 
prevent such aid from distorting commercial markets. Our 
coalition opposes prohibitions on government-to-government food 
aid or any requirement that food aid be in the form of cash 
only.
    The WTO negotiations on agriculture must be concluded as a 
single undertaking that encompasses all sectors. Cotton is as 
part of the coalition, as well.
    Regarding developing countries, certain more advanced 
developing countries, particularly exporting developing 
countries, must assume obligations similar to developed 
countries in all three pillars, and WTO rules for developing 
countries to graduate them to the developed country status 
ought to be developed using objective economic criteria.
    Geographical indications is an important topic that will be 
touched on momentarily, but we oppose any extension of 
geographical indications beyond wines and spirits.
    And finally, ensuring market access for products of 
biotechnology and that the regulation of those products is 
based solely on science is an important principle that must be 
upheld.
    Mr. Chairman Senator Lincoln, thank you for this 
opportunity to testify. We lookay forward to working with you 
to ensure that the final deal represents a balanced approach 
and one that will ensure the future viability of America's 
farmers and ranchers, processors, and agribusinesses. Thank 
you.
    The Chairman. Thank you.
    [The prepared statement of Ms. Erickson can be found in the 
appendix on page 90.]
    The Chairman. Mr. Helms?

   STATEMENT OF ALLEN HELMS, VICE CHAIRMAN, NATIONAL COTTON 
                 COUNCIL, CLARKEDALE, ARKANSAS

    Mr. Helms. Mr. Chairman and members of the committee, I am 
Allen Helms, a cotton producer fromClarkedale, Arkansas. I 
currently serve as Vice Chairman of the National Cotton 
Council. Thank you for the opportunity to present the views of 
the cotton industry concerning the WTO issues confronting 
cotton.
    The U.S. cotton industry believes that a beneficial 
agricultural agreement in the Doha Round negotiations must 
provide meaningful benefits to farmers and agribusinesses in 
return for any concessions. While significant attention is 
rightly paid to theEU, we believe China, India, and Pakistan 
must also be full participants in these negotiations.
    We also firmly believe that agriculture negotiations must 
be part of a single undertaking, comprehensive negotiation. 
Efforts to single cotton out for special treatment have been 
misguided, have undermined support by cotton farmers, and 
threatened the overall DohaRound.
    In order to facilitate development of a framework 
agreement, the cotton industry did not object to the 
establishment of a special Cotton Committee. We were assured 
that the subcommittee would not become another forum for 
negotiations. Unfortunately, many participants in that 
committee ignored its original mandate, which was to monitor 
and coordinate developmental efforts with the trade policy 
negotiations.
    In his outgoing assessment of the agricultural 
negotiations, former Chairman Grosser made it clear that the 
progress of cotton trade issues was fully dependent on overall 
progress within the agricultural negotiations.
    The U.S. cotton industry is fully prepared to work toward 
the beneficial agricultural agreement. We are prepared to make 
an equitable contribution toward that positive result, but we 
will oppose any agreement that singles out cotton for unfair 
treatment.
    Much of the call for special treatment for cotton has come 
from several African countries that depend on cotton for a 
significant portion of their export earnings. Since early 2004, 
the National Cotton Council has engaged in a number of outreach 
activities with the West Africans. These efforts are detailed 
in my written testimony. They underscore the commitment of the 
U.S. cotton industry and the U.S. Government, but I must add 
that the U.S. cotton industry cannot correct the legacy of 
European colonialism. African leaders must take the initiative 
to privatize their industry and join the world's mainstream 
cotton trade.
    Mr. Chairman, the National Cotton Council's specific 
priorities for the DohaRound are also detailed in my written 
testimony. I would like to make a few additional points.
    First, it is critical that we obtain real increases in 
market access in the Doha negotiations. For example, China is 
applying a new sliding-scale tariff to imports of cotton. It is 
designed to favor domestically produced cotton and synthetic 
fibers. It limits our ability to sell product there and 
encourages the use of manmade fibers by textile mills.
    Second, we believe that special and differential treatment 
must be provided to truly less developed countries. Under 
current practice, Brazil can insist on the same benefits as 
Mali.
    Third, our experience in theBrazil case proved to us that 
we must do a better job of ensuring the language in the final 
agreement accurately reflects the intent of the parties. The 
United States never agreed that theExport Credit Guarantee 
Program was an export subsidy, but the dispute settlement panel 
read the Uruguay Round agricultural agreement differently. We 
cannot be blindsided again.
    Fourth, WTO agreements can have significant impact on our 
ability to construct effective domestic agricultural policy. As 
a result of the panel decision in the cotton case, the 
administration has recommended that a 15-year-old component of 
the cotton program be eliminated in the middle of a marketing 
year. I doubt a mandate to change loan rates or direct payment 
rates in the middle of a marketing year would be favorably 
received. This committee would probably find a less disruptive 
means to achieve this objective.
    Finally, the DohaRound agreement must appropriate protect 
countries that comply with the agricultural agreement from 
unexpected challenges under the subsidies code. Domestic farm 
programs that are structured to comply with a new agricultural 
agreement should not be undermined by subsidies code challenges 
that cannot be anticipated by Congress.
    Mr. Chairman, the cotton industry is committed to continue 
to work with Congress and the administration to find solutions 
and to support agreements that are balanced and fair for U.S. 
agriculture. This concludes my testimony. I will be happy to 
take any questions.
    The Chairman. Thank you.
    [The prepared statement of Mr. Helms can be found in the 
appendix on page 94.]
    The Chairman. Mr. Condon?

    STATEMENT OF LEONARD W. CONDON, DIRECTOR, INTERNATIONAL 
     BUSINESS RELATIONS, ALTRIA CORPORATE SERVICES, INC., 
    WASHINGTON, DC, ON BEHALF OF THE GROCERY MANUFACTURERS 
                          ASSOCIATION

    Mr. Condon. Thank you, Mr. Chairman and Mrs. Lincoln. I 
appreciate the opportunity to share the views of the Grocery 
ManufacturersAssociation on the status of the WTO negotiations. 
GMA strongly supports the talks. We believe the Doha 
Development Agenda offers huge potential for expanding U.S. 
processed food exports.
    Processed food remains a significant and increasingly 
important component of U.S. agriculture. Global processed food 
sales now total $3.2 trillion, about three-fourths of total 
world food sales. Annual U.S. processed food exports exceed $19 
billion and now account for one-third of total U.S. 
agricultural exports.
    With 95 percent of the world's consumers living outside the 
U.S., future growth of the U.S. food and agriculture complex 
will be closely tied to our ability to expand exports. Emerging 
markets offer enormous potential. The annual growth rate for 
processed food sales in developing countries range from 7 
percent in upper-middle-income countries to 28 percent in 
lower-middle-income countries, versus a two- to three-percent 
growth for developed countries.
    Processed foods provide an important export gateway for 
many bulk commodities. My company, Kraft Foods, for example, 
purchased $3.6 billion worth of farm commodities for use in our 
U.S. processing plants last year. This included $1.3 billion 
worth of dairy products, nearly half-a-billion dollars worth of 
pork, and almost a quarter-of-a-billion dollars worth of sugar. 
Worldwide, Kraft buys $7 billion worth of farm commodities 
annually.
    U.S. processed food exports grew rapidly in the 1970's and 
1980's. By the 1990's, processed foods represented a greater 
share of agricultural exports than bulk commodities. Since the 
late 1990's, however, growth in exports has leveled off. 
Despite progress in the Uruguay Round, significant trade 
barriers remain.
    Tariffs on agriculture products are excessive, 62 percent 
compared with a global average of only 4 percent for industrial 
products. Tariffs on processed products tend to be even higher 
than the average. The UruguayRound also created tariff rate 
quotas for sensitive products, like sugar and dairy, that are 
key ingredients in many processed food products. U.S. TRQs 
restrict access to key commodity markets and keep our raw 
material prices higher than they would be otherwise. This 
impairs our ability to be globally competitive. Unjustifiable 
labeling requirements, burdensome certification rules, and 
unique packaging standards also restrict processed food 
exports.
    In the ongoingWTO agriculture negotiations, GMA wants to 
achieve new commercially meaningful access for food products. 
We are pleased that negotiators have agreed in principle to a 
formula that will cut high tariffs more than low ones. We urge 
as ambitious a formula as possible to reduce tariff peaks, 
address tariff escalation, and most importantly, achieve 
substantial reductions in both bound and applied tariff rates.
    The concept of, quote, ``substantial improvements in market 
access,'' should be applied to all products, even those 
considered sensitive. The U.S. has far more to gain by pursuing 
an ambitious tariff-cutting formula for all products than an 
agenda centered on protecting our sensitive commodities.
    We also support a tariff cap in order to allow meaningful 
market access for all products. Increased market access for 
sensitive products must come from tariff cuts, substantial 
increases in TRQs, or a combination of the two.
    On domestic support, amber box payments must be reduced and 
capped on a product-specific basis to achieve equitable 
reductions. To ensure that domestic support policies are 
minimally trade distorting, new disciplines should be developed 
for the expanded blue box and there should be a commitment to 
reduce blue box support over time.
    Agricultural export subsidies are reprehensible trade 
policy instruments. They should be terminated within 5 years.
    GMA remains extremely concerned about the EU's aggressive 
push for new protections for geographical indications, 
especially its proposal to claw back rights to names that the 
U.S. considers generic, like parmesan and feta. In many cases, 
Kraft and other U.S. companies have built brands around these 
generic names. The EU demands to rescind the rights to these 
and other names should be flatly rejected.
    Finally, trade is the engine of global economic growth. A 
successful conclusion to the Doha Development Agenda will boost 
world economic activity, lift millions of suffering people out 
of poverty, resolve a number of festering trade frictions, and 
restore confidence in the global trading system. However, a 
deal is not possible without an acceptable outcome on 
agriculture. With our abundant natural resources, highly 
efficient agriculture production system, and superior marketing 
capabilities, we are convinced that U.S. food and agriculture 
producers can only gain from new WTO rules that will role back 
government intervention in the agriculture production and 
trading system.
    Thank you very much.
    The Chairman. Thank you.
    [The prepared statement of Mr. Condon can be found in the 
appendix on page 105.]
    The Chairman. Mr. Viso, I understand I mispronounced your 
name earlier. For that, I apologize. We lookay forward to your 
comments.

     STATEMENT OF MARK VISO, VICE PRESIDENT OF OPERATIONS, 
   INTERNATIONAL PROGRAM GROUP, WORLD VISION, WASHINGTON, DC

    Mr. Viso. Thank you. Mr. Chairman, good morning and thank 
you for inviting World Vision to testify today.
    World Vision recognizes the staunch support this committee 
has shown over past decades for ensuring that hungry people 
around the world are fed and provided a helping hand. Your 
track record reflects a genuine concern and empathy for the 
world' spoor. I am sure this will continue and we thank you.
    We would also like to recognize and thank Senator Johanns 
and Ambassador Portman for their support of food aid as well as 
thank Senators Harkin and Roberts for their comments here 
today.
    My testimony will focus on food aid in the WTO Doha Round 
trade negotiations. It reflects the views of the 16 American 
private voluntary organizations and cooperatives, jointly 
called PVO's, that are members of the Coalition for Food Aid. 
In partnership with the communities we serve, we use food aid 
to improve the well-being and food security of poor and 
vulnerable people.
    Coalition members have a long history with Food for Peace 
and USDA, providing food to millions of hungry men, women, and 
children who are in desperate need of assistance. Rather than 
just providing a meal today, we link food aid to long-term 
development programs so people can build a better tomorrow.
    Today, however, the future availability of food aid is in 
jeopardy due to proposals made during the Doha Round 
negotiations. At the USDA Kansas City Food Aid Conference in 
May of this year, Agriculture Secretary Mike Johanns outlined 
three critical issues that we believe could form a solid basis 
for a U.S. position in the DohaRound.
    First, the Secretary stated, we understand the important, 
often lifesaving role of food aid. Unfortunately, others in 
some countries take a dim view of the way in which U.S. food 
aid is delivered, characterizing it as a subsidy for our 
producers. We hear, no, this is not the case.
    Mr. Chairman, we agree. Food aid is humanitarian in essence 
and nature and should not be treated as an agricultural subsidy 
program. The driving force behind U.S. food aid is not 
negotiational subsidies to producers, but rather the assessed 
humanitarian needs in recipient countries. As recipient 
countries themselves have commented during the Doha 
negotiations, the needs of recipients should come first and 
food aid must remain available for both chronic and emergency 
needs.
    Second, Secretary Johanns said, what the world needs is 
more food aid commodities, more cash, and more donors, not new 
and impractical rules that require everyone to contribute in 
exactly the same way. We agree. What we absolutely concur is 
that more food aid and cash is indeed needed, as important a 
point as the need to maintain the various ways food aid is 
contributed.
    Several exporting countries claim that in-kind food aid 
creates unfair competition for their commercial agricultural 
exports and have put forth proposals to restrict or eliminate 
food aid. The most extreme suggestion is to phaseout in-kind 
food aid, defined as food procured in the donor country, and 
then only permit food in times of crisis.
    Based on our decades of work in partnership with those who 
receive aid, we believe that a variety of options for providing 
food aid are needed, including in-kind commodities for targeted 
distribution as well as cash available for local purchase and 
program support so that a program can be tailored to meet the 
specific context and needs of the recipients.
    Other proposals would require all food aid to go through 
international organizations and would eliminate non-emergency 
food aid. This would, for example, no longer allow World Vision 
and other U.S. PVO's to directly partner with the U.S. 
Government to provide food aid for mother-child health care, 
food for education, and other agricultural development 
projects. We urge the committee to work to maintain a variety 
of food aid delivery options as well as the role of American 
PVO's in food aid programming.
    Third, Secretary Johanns said we also believe that any new 
disciplines applied to food aid should be discussed by 
international food aid experts, not just trade experts 
negotiating the trade agreement. We agree with Secretary 
Johanns once again. TheWTO's objective is to provide ground 
rules for international commercial trade, not international 
aid. While only governments participate in negotiations, much 
of the expertise in food aid lies with PVO's and other 
organizations that implement programs in recipient countries. 
These groups approach food aid as a humanitarian program rather 
an agricultural trade program and work in partnership with 
local communities to save lives.
    What is not discussed enough at the Doha negotiations by 
those who would criticize U.S. food aid programs are the many 
benefits these programs provide. Millions are benefiting as 
food aid provides the nutrition needed to complement the use of 
anti-retroviral drugs in HIV-AIDS programs. Food for Work 
supports the construction of sanitation and clean water 
infrastructure in poor communities. And school meals and 
maternal-child health programs care for hungry children and 
improve their chances for a healthy, productive, enriching 
life.
    We urge you to continue keeping the poor and hungry at the 
center of decisions regarding the Doha discussions on food aid. 
If we don't make the right decisions at Doha today, the plight 
of the world's poor will be alarmingly worse tomorrow. We ask 
that the world's poor do not become the unfortunate and 
unintended victims of negotiations of international trade 
agreements.
    Mr. Chairman, thank you again. I would be happy to try and 
answer any questions you have if time permits.
    The Chairman. Thank you very much.
    [The prepared statement of Mr. Viso can be found in the 
appendix on page 113.]
    The Chairman. Ms. Erickson, in your testimony, you note 
that the best means for ensuring the continued positive impact 
of our sector on the U.S. economy is to achieve commercial and 
meaningful results in the WTO negotiations on agriculture. In 
your opinion, what is the most important objective that must be 
maintained in order to conclude the WTO negotiations on 
agriculture and what political hurdles need to be overcome in 
order to reach the critical mass for a consensus to be 
developed?
    Ms. Erickson. Well, the balance amongst the pillars is 
truly one of the more important ones, and clearly, the United 
States is willing to show its flexibility, but what we are 
seeing is that other countries, developing countries and 
clearly the European Union, are perhaps not as interested in 
the true market access improvements that are going to be needed 
to create the delicate balance and the political sign-on around 
the world.
    And when it comes to market access, the cuts, as you know, 
are being taken from the bound rates, and if they are not 
significant enough, substantial enough, they may end up being 
above the applied rates today. So we need to see that when each 
of the members of the AgTrade Coalition hit the ``total'' 
button on the calculator, once they see what the deal lookays 
like, it has got to result in a net improvement in their 
economic situation.
    The Chairman. Mr. Helms, like you, I am concerned about the 
relative impact regarding proposals to significantly reduce 
domestic support levels. Even if the United States agrees to 
more reasonable proposals offered in the agriculture 
negotiations, Congress will not be able to model the next farm 
bill after the 2002 legislation. Your testimony highlights the 
impacts of the various proposals. What would be the likely 
impacts at the farm gate level, and how many farmers would we 
lose and what would be the impact on per capita farm income in 
the cotton belt?
    Mr. Helms. I think some of the proposed models that would 
advocate as much as a 50 percent cut in our aggregate 
measurement, and that would probably equate to about a five to 
ten percent cut in our loan levels, which to the average cotton 
farmer could mean as much as a five percent--five cent 
reduction in his loan. The average cotton farmer probably would 
be a 1,000-acre farmer, so you are talking $50,000, probably 
average per producer. That is a good number, I think, for us to 
use for an example. Of course, this would equate, then, into, I 
think a half-billion dollars over the entire cotton industry 
within the United States. There would definitely be a lot of 
producers who couldn't stand to have those type of reductions 
in their income. We have not developed any numbers yet as to 
how many we think there would be, but we know it is 
significant.
    The Chairman. Mr. Condon, you state the emerging economies 
hold the most potential for increased exports of processed food 
products. To which countries in particular are you most 
interested in securing additional market access and what would 
the cost be to the food industry of the EU's proposals on 
geographical indications?
    Mr. Condon. With respect to the emerging economies, the 
ones we are most interested in are the ones with large 
populations and rising incomes and they would be countries like 
China, of course, India, Brazil, Russia. Most of those 
countries--three of those countries are currently members of 
the WTO. Russia is in the process of acceding to the WTO. All 
of them have relatively high tariffs. To the extent we can get 
those tariffs down and get more processed foods into those 
countries, that is a big gain for the processed food industry 
and for the bulk commodities that supply us.
    With regard to your question on geographic indications, the 
real answer there is we don't know what it will cost us, but it 
is likely to cost us a lot, and I will use, for example, our 
green can of parmesan cheese that Kraft sells. We are one of 
the biggest manufacturers of parmesan cheese in the world. We 
can't sell parmesan cheese under that name in the EU. In the 
EU, we sell it as parmacello, because we can't use the name 
parmesan.
    In the U.S. market, for example, if we had to repackage our 
product, relabel our product, there would be considerable costs 
involved in doing that, but the big problem for us would be 
then convincing the consumers that it is the same product, it 
just has to have a different name. We just don't know what it 
would cost us to conduct a new marketing campaign to maintain 
confidence in our product, but there would be considerable cost 
to us and considerable cost to other members of the U.S. food 
processing industry.
    The Chairman. Mr. Viso, you mentioned in your testimony 
that proposals to eliminate the direct role of private 
voluntary organizations to eliminate developmental food aid, to 
eliminate monetization, and to move to a cash-only system were 
problematic, and I think that was highlighted in Senator 
Harkin's comments. Would you briefly explain from your position 
why each of these four proposals would be problematic?
    Mr. Viso. Yes. Thank you for the question. I will try and 
go over as many as I can. We consider these proposals 
problematic and perhaps even dangerous for several reasons.
    One, it would eliminate the ability for the U.S. Government 
to partner directly with American private voluntary 
organizations and we would think that that adds another layer 
of bureaucracy and cost and reduces the level of accountability 
and transparency vis-a-vis the U.S. Government's programming 
and policy intentions, for one.
    We think that the proposals would eliminate our ability to 
choose the most appropriate food aid delivery mechanism, cash 
or in-kind or monetization, and allow us to make the best 
possible program to fit the context and needs of the foreign 
hungry recipients.
    Third, it would eliminate our ability to address non-
emergency situations, longstanding chronically poor, 
chronically food deficit situations like much of Africa is 
facing today.
    So those are just, very briefly, three main reasons why we 
think the current proposals are ill advised.
    The Chairman. Let me thank each one of you for taking time 
to be here today. Let me also say that your full statements 
will be entered into the record, as well as full statements of 
Secretary Johanns andAmbassador Portman. We will leave the 
record open until Friday of this week for any member wishing to 
submit a statement for the record.
    Again, as we move toward WTO, we are going to be calling on 
you folks to use you as resources to make sure that we are 
negotiating the right kind of agreements for farmers, ranchers, 
and the American public, and we thank you for your continued 
willingness to work with us.
    With that, this hearing will be concluded.
    [Whereupon, at 11:42 a.m., the committee was adjourned.]
      
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