[Senate Hearing 111-1026]
[From the U.S. Government Publishing Office]



                                                       S. Hrg. 111-1026
 
                    PROMOTING AGRICULTURAL EXPORTS:
                   REVIEWING U.S. AGRICULTURAL TRADE
                 POLICY AND THE FARM BILL'S TRADE TITLE

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

                                HEARING

                               before the

                       COMMITTEE ON AGRICULTURE,
                        NUTRITION, AND FORESTRY

                          UNITED STATES SENATE


                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION


                               __________

                             AUGUST 4, 2010

                               __________

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


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           COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY



                 BLANCHE L. LINCOLN, Arkansas, Chairman

PATRICK J. LEAHY, Vermont            SAXBY CHAMBLISS, Georgia
TOM HARKIN, Iowa                     RICHARD G. LUGAR, Indiana
KENT CONRAD, North Dakota            THAD COCHRAN, Mississippi
MAX BAUCUS, Montana                  MITCH McCONNELL, Kentucky
DEBBIE STABENOW, Michigan            PAT ROBERTS, Kansas
E. BENJAMIN NELSON, Nebraska         MIKE JOHANNS, Nebraska
SHERROD BROWN, Ohio                  CHARLES GRASSLEY, Iowa
ROBERT CASEY, Jr., Pennsylvania      JOHN THUNE, South Dakota
AMY KLOBUCHAR, Minnesota             JOHN CORNYN, Texas
MICHAEL BENNET, Colorado
KIRSTEN GILLIBRAND, New York

               Robert Holifield, Majority Staff Director

                    Jessica L. Williams, Chief Clerk

            Martha Scott Poindexter, Minority Staff Director

                Anne C. Hazlett, Minority Chief Counsel

                                  (ii)

  
                            C O N T E N T S

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                                                                   Page

Hearing(s):

Promoting Agricultural Exports: Reviewing U.S. Agricultural Trade 
  Policy and the Farm Bill's Trade Title.........................     1

                              ----------                              

                       Wednesday, August 4, 2010
                    STATEMENTS PRESENTED BY SENATORS

Lincoln, Hon. Blanche L., U.S. Senator from the State of 
  Arkansas, Chairman, Committee on Agriculture, Nutrition, And 
  Forestry.......................................................     1
Chambliss, Hon. Saxby, U.S. Senator from the State of Georgia....     4

                                Panel I

Kirk, Ron, Ambassador, U.S. Trade Representative, Washington, DC.     6

                                Panel II

Mencer, Joe, Board Member, USA Rice Federation; Board Member, USA 
  Rice Producers Group; Vice Chairman, USA Rice Council; and 
  Arkansas Rice Producers Group, Lake Village, Arkansas..........    35
Murphy, Danny, Vice President, American Soybean Association, 
  Canton, Mississippi............................................    33
Rhodes, Duane, Vice President of Export, Poultry and Prepared 
  Foods, Tyson Foods; Second Vice Chairman, USA Poultry and Egg 
  Export Council; on behalf of the National Chicken Council, 
  Springdale, Arkansas...........................................    37
Roggie, Brent, General Manager and Chief Operating Officer, 
  National Grape Cooperative Association; on behalf of The 
  National Council of Farmer Cooperatives, Westfield, New York...    40
                              ----------                              

                                APPENDIX

Prepared Statements:
Kirk, Ron........................................................    48
Mencer, Joe......................................................    50
Murphy, Danny....................................................    63
Rhodes, Duane....................................................    66
Roggie, Brent....................................................    79
Document(s) Submitted for the Record:
Roggie, Brent:
    Additional comments for the Record...........................    86
Question and Answer:
Lincoln, Hon. Blanche L.:
    Written questions to Ambassador Ron Kirk.....................    92
Chambliss, Hon. Saxby:
    Written questions to Ambassador Ron Kirk.....................    94
Grassley, Hon. Charles E.:
    Written questions to Ambassador Ron Kirk.....................    97
Klobuchar, Hon. Amy:
    Written questions to Ambassador Ron Kirk.....................    99
Lugar, Hon. Richard G.:
    Written questions to Ambassador Ron Kirk.....................   100
McConnell, Hon. Mitch:
    Written questions to Ambassador Ron Kirk.....................   101
Kirk, Ron:
    Written response to questions from Hon. Blanche L. Lincoln...   102
    Written response to questions from Hon. Saxby Chambliss......   105
    Written response to questions from Hon. Charles E. Grassley..   109
    Written response to questions from Hon. Amy Klobuchar........   113
    Written response to questions from Hon. Richard G. Lugar.....   114
    Written response to questions from Hon. Mitch McConnell......   118



                    PROMOTING AGRICULTURAL EXPORTS:
                   REVIEWING U.S. AGRICULTURAL TRADE
                 POLICY AND THE FARM BILL'S TRADE TITLE

                              ----------                              


                       Wednesday, August 4, 2010

                              United States Senate,
         Committee on Agriculture, Nutrition, and Forestry,
                                                     Washington, DC
    The committee met, pursuant to notice, at 9:39 a.m., in 
Room 328-A, Russell Senate Office Building, Hon. Blanche 
Lincoln, Chairman of the committee, presiding.
    Present or submitting a statement: Senators Lincoln, 
Baucus, Stabenow, Klobuchar, Gillibrand, Chambliss, Lugar, 
Cochran, Roberts, Johanns, Grassley, and Thune.

  STATEMENT OF HON. BLANCHE L. LINCOLN, U.S. SENATOR FROM THE 
    STATE OF ARKANSAS, CHAIRMAN, COMMITTEE ON AGRICULTURE, 
                    NUTRITION, AND FORESTRY

    Chairman Lincoln. Good morning. The Senate Committee on 
Agriculture, Nutrition, and Forestry will now come to order.
    This is the third in a series of hearings to help this 
committee prepare for the next farm bill. Today's focus will be 
on the state of our agricultural exports and the export 
promotion programs included in the farm bill.
    I want to thank my very good friend, Senator Chambliss, the 
Ranking Member of the committee, for helping me organize this 
hearing and for being such a great partner on the committee and 
for being a steadfast advocate for our nation's farmers and 
ranchers. Senator Chambliss and I both recognize how important 
trade is to U.S. agriculture.
    I also want to thank many other distinguished colleagues 
for their attendance today and for all the work that they do on 
behalf of rural America. I am proud to chair a committee which 
has always been bipartisan and where we put people above 
partisan politics, and I am glad that everyone is here today 
and I know there will be others joining us.
    As we work to get our economy back on track, we must focus 
on creating jobs in our rural communities. In President Obama's 
State of the Union Address, his comment that one of the best 
ways to create jobs was to increase our exports. He made a 
commitment to put our country on a path to double U.S. exports 
within five years. I applaud this commitment and believe that 
U.S. agriculture can truly lead the way.
    Today, we will focus on how we create that demand and give 
our farmers and ranchers access to markets that will ensure 
their success and the success of our rural communities.
    We are blessed to have a bounty of food produced here in 
the United States. Our farm and ranch families provide this 
bounty with greater respect for the environment than anywhere 
else in the world. And we are fortunate that we live in an age 
where we can share this bounty with the world, a world that is 
growing rapidly and desperately in need of safe food.
    We have a number of excellent witnesses that we will hear 
from today. I would like to extend a very special welcome to 
Ambassador Ron Kirk, U.S. Trade Representative, and I would 
also like to say a welcome to fellow Arkansans Joe Mencer and 
Duane Rhodes. I appreciate everyone's attendance and input on 
this very important issue.
    Agriculture is a sector of our economy where we are proving 
that we can successfully meet the export demands that will help 
rebuild our U.S. economy. For every additional $1 billion of 
agricultural products we export, we can create 9,000 jobs. 
These are long-term jobs that we desperately need. Agriculture 
is one of the few U.S. sectors where we have a trade surplus, 
and we actually export more than we import. In 2009, our net 
trade surplus was a very impressive $27 billion.
    American farmers and ranchers tell me every day we must 
continue to look for other ways to grow our exports. My 
immediate response is that we don't have to look any further 
than the 90 miles south from our own borders in the U.S., and 
that is Cuba. Relaxing trade restrictions on travel and trade 
with Cuba represents a tremendous opportunity to grow our 
economy. Even with the current restrictions in place, U.S. 
agricultural exports to Cuba have averaged about $470 million 
over the last five years, accounting for about a quarter of 
Cuba's food and agricultural imports. A recent study by Dr. 
Rossen of Texas A&M University found that passage of a bill 
relaxing trade and travel restrictions with Cuba would nearly 
double that amount annually and generate increased business 
activity valued at $1.1 billion, creating 6,000 new jobs.
    While the benefits would reach all parts of the U.S. 
economy, Arkansas, my home State, is uniquely prepared to meet 
Cuban demand for rice and poultry, both of which land in the 
top five of overall Cuban agricultural imports. Throughout my 
career, I have cosponsored legislation that will open up this 
market once and for all, and I am grateful to Chairman Baucus 
for his work in those areas and in all the trade areas and we 
are pleased that he is here today.
    I will continue to fight to see Congress take this up this 
year, and as the trade embargo on Cuba approaches its 50th 
anniversary without having had a measurable impact on the 
behavior of the government of Cuba, it is high time that we 
consider alternative approaches. Everyone should agree that 50 
years of a failed policy is unlikely to yield a different 
result than it already has.
    We can also increase exports by pursuing more Free Trade 
Agreements. The first step along that road must be to 
expeditiously consider the three pending FTA negotiated 
agreements more than three years ago with South Korea, 
Colombia, and Panama, and put them into effect. Aside from 
lingering concerns over beef access into South Korea, these 
three FTAs are broadly supported by U.S. agriculture and could 
add up to several billion dollars of overall U.S. agricultural 
exports, creating thousands of jobs in the process.
    Such action would also allow U.S. products to maintain a 
competitive balance with other major agricultural exporters, 
such as Canada and the EU. We have also negotiated FTAs with 
these countries, who threaten to jump ahead of us in terms of 
tariff preferences, not to mention having the added benefit of 
keeping our word with our friends in the global community that 
has steadfastly stood by our side in sometimes hostile regions 
of the world.
    If we succeed in these initial steps, these actions could 
provide important momentum for launching negotiations with new 
sets of trading partners. That effort will require providing 
the President with the Fast Track authority he will need to 
move forward.
    I hope that in this next stage, we can focus on countries 
with robust markets. Of our existing FTA partners, only Mexico, 
Canada, and Morocco have populations exceeding 30 million. And 
even if we add the pending FTAs to those lists, those markets 
would account for only about 380 million foreign consumers, or 
less than six percent of the world's population outside the 
United States.
    Our highly productive farmers deserve the chance to compete 
and sell their products in a free market. I am convinced that 
if we are given unhindered access to the world's markets, they 
will rise to that challenge. We cannot afford to stay on the 
sidelines. The costs of doing so are so far greater.
    I want to thank Ambassador Kirk for the hard work he has 
undertaken at USTR and his colleagues at USDA in knocking down 
unfair barriers to U.S. food and agricultural products. The 
sooner we identify and target these barriers as they emerge, 
the sooner trade flows can resume.
    One prominent example was the Russian ban imposed on U.S. 
poultry. I was very pleased to see the administration's 
positions in response to concerns that I and many of my 
colleagues have expressed. The Russian market is worth $100 
million annually to Arkansas producers, and the decision to 
lift the ban will help save 89,000 poultry jobs that are 
critical to Arkansas's economy. I am certainly proud to report 
that first shipments of U.S. poultry are hoping to arrive in 
Russia in the coming months. We know that you are continuing to 
work on that issue with us, Ambassador Kirk, and we are looking 
forward to a positive outcome and how we can be of assistance 
to you.
    This committee authorizes and funds an array of trade 
promotion programs under the trade title of the current farm 
bill, including the Market Access Program, Foreign Market 
Development Program, the GSM 102 Export Credit Guarantee 
Program, and Technical Assistance for specialty crops. Each of 
these programs help U.S. companies market their products in 
foreign countries.
    USDA and the U.S. Agency for International Development also 
operate international food assistance programs, such as Food 
for Peace and the McGovern-Dole Food Education Program, which 
we are indebted to Senator Lugar for all of his hard work in 
those areas. These programs will be a central focus as we begin 
debate on the provisions of the next farm bill, and I certainly 
welcome the second panel's feedback on how well they do work 
and how they might be improved.
    Again, thanks to all of you all for being here today and I 
will now turn to our Ranking Member, Senator Chambliss, for his 
opening statement.

STATEMENT OF HON. SAXBY CHAMBLISS, U.S. SENATOR FROM THE STATE 
                           OF GEORGIA

    Senator Chambliss. Well, thanks very much, Madam Chairman, 
particularly for holding this hearing today. I think this may 
be the most important oversight hearing that we hold as we move 
into the writing of the next farm bill, because as we see our 
budget in agriculture, and particularly for farm bills, decline 
as they have over the last several years and as we see the 
influx of policy demands coming out of the WTO, trade issues 
become more and more critical, and the future of American 
agriculture, I think, lies in our ability to export the finest 
quality of agricultural products of anybody in the world. Your 
leadership on this has been very strong and we appreciate your 
interest from a farmer's standpoint in ensuring that we have 
good trade agreements in place and that we monitor those 
agreements as we move forward.
    Earlier this year, the President announced the National 
Export Initiative and I support the plan and goal of doubling 
U.S. exports of goods and services over five years. But the 
Initiative must have a clear vision and the proper support from 
the administration in order to be successful. I remain 
skeptical this is the case, since the Initiative lacks tangible 
metrics that will measure the results, and I wonder if a 
substantial downpayment is not simply achievable by 
implementing the pending Free Trade Agreements and working with 
key partners that share a common interest in lowering tariffs 
and other barriers to trade.
    U.S. agriculture exports remain one of the few bright spots 
on the domestic economy, with a positive balance of trade, as 
you noted, Madam Chairman, noting almost $27 billion in 2009. 
Agriculture products make up over ten percent of all U.S. 
exports and despite the global economic crisis, exports last 
year were up by almost $13 billion compared to the year before 
the global economic crisis. This success is due in no small 
part to the demand for high- quality agriculture products and 
the continuing efficiency and productivity of farmers and 
ranchers in the United States.
    Despite this success, competition for new and existing 
markets continues to grow as other agriculture exporters 
aggressively negotiate Free Trade Agreements. In order to 
increase agriculture exports, the administration must do more 
than pay lip service to initiatives that lull us into a false 
sense of action.
    As we await the first report on the NEI, the administration 
continues to sit on the South Korea, Colombia, and Panama Free 
Trade Agreements. These FTAs are ready and represent real and 
tangible gains for the agriculture sector in the United States. 
If we are serious about promoting exports, the President should 
submit all three and press Congress for their immediate 
approval.
    While opening up new markets is essential, maintaining 
existing ones and providing stable access to growing demand is 
of equal importance. It is here where I have much praise for 
Ambassador Kirk and his team, along with his counterparts at 
the Department of Agriculture and the Foreign Agriculture 
Service. The growing prevalence of sanitary, phytosanitary, and 
other technical barriers to trade threaten to erode key export 
markets and proliferate in the new ones.
    The recent bilateral talks between the United States and 
Russia to resume poultry exports is just one example of a 
litany of disputes that confront our farmers and ranchers 
around the world. And when President Medvedev was here the 
other day, I had the opportunity to mention this personally in 
a meeting that I was involved in with him, and actually, the 
announcement had already been made, Mr. Ambassador, that Russia 
was going to start accepting our poultry products again and I 
was very complimentary of him and thanked him for the effort 
that had been made by both he and President Obama to get that 
negotiation concluded.
    Then in the last few days, we find out that we have hit 
another stumbling block there, and we had the opportunity to 
visit with you earlier today to talk about this. I know it is 
very much on your radar screen and the Agriculture Trade 
Minister in Russia is being a little difficult to deal with. 
Now, Senator Roberts and I had an encounter with that gentleman 
several years ago and I would suggest if you need some help, 
send Senator Roberts in as your shotgun rider----
    [Laughter.]
    Senator Chambliss. --because I assure you, he made himself 
known to the Russian Trade Minister when we were discussing 
imports into Russia several years ago. He has been banned from 
Russia since then, but----
    [Laughter.]
    Senator Chambliss. Not really. Not really.
    In addition to the proliferation of these barriers, there 
is the challenge of negotiating a multilateral agreement in the 
World Trade Organization Doha Round. This is no simple task, as 
the talks move into the ninth year of negotiations. The current 
impasse is due in no small part to what Ambassador Kirk rightly 
notes is the continued resistance of some members to engage in 
sustained and meaningful negotiations.
    Let me state unequivocally that the deal on the table is 
insufficient and unbalanced from the perspective of Congress. 
While other countries look to the United States to give more in 
order to reenergize the round, I would suggest unilateral 
action will harden views in the Senate, and particularly in 
this committee, that the Doha Round is fatally flawed. A 
successful Round is possible, but only when Brazil, China, and 
India recognize that their rising influence in the 
international economy requires shared sacrifices in order to 
achieve individual and shared gains.
    Let me conclude by noting the importance of the farm bill 
trade programs and to express my disappointment that we could 
not have with us today a representative of the Department of 
Agriculture. The Department is a key partner in expanding U.S. 
agricultural exports and their perspective is critical to the 
future success of the sector.
    Madam Chairman, thanks again. I look forward to the hearing 
and to hearing our witnesses today.
    Chairman Lincoln. As always, thanks to our Ranking Member, 
Senator Chambliss. I agree with you that opening those markets 
is absolutely critical to our agricultural producers.
    [Whereupon, at 9:54 a.m., the committee proceeded to other 
business.]
    [Whereupon, at 9:55 a.m., the committee resumed.]
    Chairman Lincoln. Again, thanks to Senator Chambliss, and 
again, I am very grateful that we have Chairman Baucus and 
Ranking Member Grassley from the Finance Committee as we have 
got much expertise in the trade arena from so many of our 
members here in the committee, but certainly with that 
jurisdiction in Finance, we are glad they are here.
    We have two panels today and we are eager to hear from our 
witnesses and get to questions, so in the interest of time, I 
am going to ask members' opening statements be submitted for 
the record and say a very hearty welcome to Mr. Ambassador.
    Thank you for coming to the committee. Thank you for your 
testimony today on behalf of your agency. Your written 
testimony will be submitted for the record, so we hope that you 
can keep your remarks to five minutes. But once again, a very 
hearty welcome to the Senate Agriculture Committee and thank 
you for coming.

 STATEMENT OF AMBASSADOR RON KIRK, U.S. TRADE REPRESENTATIVE, 
                         WASHINGTON, DC

    Ambassador Kirk. Chairman Lincoln, Ranking Member 
Chambliss, and members of the committee, I really appreciate 
the opportunity to come and share with you this opportunity to 
talk about what we are doing to advance trade in agriculture. 
As both the Chairman and Ranking Member noted, this is one area 
of our exports in that we have a surplus and the administration 
is working aggressively every day through our enforcement 
efforts and others to do all we can to assist our farmers and 
ranchers and others.
    I would like to say before I begin my remarks, in response 
to the Ranking Member's comment about Senator Roberts, 
considering the fact, and I always take every opportunity to 
remind you, at USTR, I think you get absolutely the biggest 
bang for your buck in that we are the smallest staff, and I 
think give you an incredible return. But, Senator Roberts, if 
you or any other member will raise your right hand, I am 
privileged to deputize you----
    [Laughter.]
    Ambassador Kirk. --as U.S. Trade Ambassadors pro bono. We 
need all the help we can get. But I don't know that I am any 
more welcome in Russia than you are, Senator Roberts.
    [Laughter.]
    Ambassador Kirk. Well, it is modest, trust me. But we do 
have those rights and privileges and appurtenances thereto.
    So much of what I will say in my remarks, the Chairman and 
Ranking Member have said, but it does bear repeating. With 95 
percent of the world's population outside of the United States, 
not just the growth and long-term vitality of our American 
agricultural industry, but I think the future of our American 
economy is very much dependent on our ability to access these 
markets and the world's consumers.
    Despite the recent global economic downturn, as has been 
noted, U.S. agricultural exports have continued to expand, more 
than doubling since 2000, from $50 billion to over $100 billion 
in the current year. And has been noted, last year, we exported 
$97 billion in agricultural products, supporting a $27 billion 
surplus in agricultural trade and supporting roughly 8,000 jobs 
in the United States.
    The Obama administration is committed to strengthening 
American agricultural exports and supporting the good jobs that 
come with them. As you noted, Madam Chair, in the President's 
State of the Union Address, the President set a goal for us to 
double America's exports over the next five years with the 
inherent understanding that it could create up to two million 
additional jobs in the United States. To that end, he created 
the National Export Initiative to leverage all of the resources 
across the administration to help American farmers, ranchers, 
businesses, manufacturers, or service providers and their 
workers succeed through global trade.
    At USTR, we are taking the lead in pursuing new 
opportunities, but with a special focus on the world's fastest 
growing markets through initiatives with our individual trading 
partners, across economically significant regions, and in other 
multilateral fora. We are also seeking to resolve issues on 
many of our pending Free Trade Agreements and are working to 
bring to you as soon as possible the pending Free Trade 
Agreements with Korea, Colombia, and Panama. All of these 
agreements hold significant economic promise for our farmers 
and ranchers. For example, in 2009, Colombia was among the 
fastest growing among the Central and South American markets 
for American farm exports, and Korea is currently our fifth 
largest agricultural export market.
    As you know, at the just-concluded G-20 summit in Canada, 
President Obama expressly directed me to intensify our 
negotiations on Korea in particular with the goal of being able 
to conclude that by the President's visit for the G-20 summit 
in November. Likewise, a week later when we announced our 
National Export Promotion Council, the President also 
encouraged us to move forward and try to conclude the 
agreements with Colombia and Panama.
    In the Asia Pacific, we are leading the negotiation towards 
a new high-standard 21st century agreement through the Trans-
Pacific Partnership that will ensure America's farmers and 
ranchers have access to this incredible dynamic and growing 
market.
    Globally, we remain committed to an ambitious and balanced 
conclusion to the Doha Round, but as I said to many of you when 
I visited with you during my transformation and others, Senator 
Chambliss, you are right. What is on the table is not 
sufficient. It won't get us there. And the President and all of 
us have been very clear that no three economies have benefitted 
more from trade liberalization than China, Brazil, and India. 
We think it is only right that they now accept responsibilities 
commensurate with those blessings.
    As we pursue these new markets, the Obama administration 
will also work to ensure that our farmers and ranchers benefit 
from our existing Free Trade Agreements. We now have greater 
access to many markets around the world, I am proud to say, 
because I worked over the last 18 months to resolve the 
outstanding disputes.
    For example, after the H1N1 scare, we worked very quickly 
with Secretary Vilsack and Secretary Napolitano and throughout 
the administration to reopen markets in Russia, China, Ukraine, 
Honduras, Korea, and many others to U.S. pork products. Last 
year, three months after I took office, we resolved a 20-year 
dispute with the European Union that allowed us to resume 
exports of U.S. beef to Europe, and we are now exporting about 
$48 million in beef to the European Union through the end of 
May. And as has been noted, we are working with Russia to try 
to reopen their market for our poultry exports.
    I see that I am over my time, and Madam Chair, I will 
submit the balance of my comments for the record. But we do 
look forward to working with this committee to open new markets 
and advance the interests of America's agricultural exporters, 
and I look forward to entertaining your questions. Thank you.
    [The prepared statement of Ambassador Kirk can be found on 
page 40 in the appendix.]
    Chairman Lincoln. Thank you, Mr. Ambassador, and we 
certainly appreciate your testimony and your presence with us 
today.
    I will just start with a few questions and would like to 
begin with an issue of particular importance to me and my State 
of Arkansas. That is the terms of our trade with Cuba. Cuba is 
located less than 100 miles from Florida, and with a large 
population and a strong demand for U.S. agricultural products. 
Yet our government continues to maintain barriers on U.S. 
exporters who want to meet that demand in Cuba.
    I will certainly use one of my largest commodities as an 
example, rice. As recently as 2004, U.S. rice exports to Cuba 
were valued at $64 million. However, an unfortunate 
interpretation of a specific provision of the Export 
Enhancement Act in 2005 by the Treasury Department caused Cuba 
to seek other sources of rice. And last year, the U.S. shipped 
no rice to Cuba, and I think that is certainly a critical part 
of what we are looking for, is opening markets that are close 
and that bring value to our workers and the job creation that 
we need to see happen in this country.
    A bill that I have cosponsored along with Senator Baucus 
and others aims to clarify that provision so that agricultural 
exports can flow more freely to Cuba, and I hope working with 
Senator Baucus we can move forward swiftly on something in that 
bill, or reporting out that bill. It will still only capture 
part of the great potential that the country holds for 
producers, but potentially valued in the hundreds of millions 
for rice for our State and other rice growing States, as well.
    So maybe you can help us by explaining the administration's 
position in continuing to deny really our exporters the ability 
to compete for and recapture the Cuban market, which they are 
quickly and surely losing to China and Vietnam and to other 
countries at this juncture.
    Ambassador Kirk. Senator Lincoln, as you know, President 
Obama has made it clear that he believes that now is an 
appropriate time to examine our policy in relationship with 
Cuba. As you know, last year the President by Executive Order 
released some of the travel restrictions for families on Cuba, 
and like you, we see that even under our current constraints, 
our agricultural exports to Cuba are not insignificant, just 
shy of $700 million, and I think we have calculated almost $3 
billion over the last several years. So we agree that this 
represents a very important market opportunity.
    But those of us in the administration also recognize and 
respect the prerogative of Congress to weigh on this and 
welcome the debate that has begun under your leadership and 
Chairman Baucus and others, as well as, you know, Chairman 
Peterson had a hearing on the House side, I guess just several 
weeks ago. So we await some direction from Congress on this, 
but do believe this could be an extraordinary opportunity, in 
particular, for our farmers and ranchers, particularly those in 
rice and grains.
    Chairman Lincoln. Thank you. Also, three years ago, I 
visited Colombia and witnessed firsthand the great 
transformation that country has undergone. And yet, today, we 
still have not ratified the FTA which the country signed in 
2007. I just think it is a huge missed opportunity. We have 
spent tremendous resources in getting to this point, but quite 
frankly, really, the main losers are not the Colombians but 
more so our farmers and our manufacturers. Colombians enjoy a 
duty-free access to our markets for nearly 100 percent of their 
products, as you well know, yet every single one of our exports 
suffers from tariffs that go as high as 200 percent. Even 
worse, the Canadian Parliament has just ratified an FTA with 
Colombia giving them a major competitive edge over U.S. 
producers.
    So enacting this FTA would not only boost U.S. exports by 
$1.1 billion annually, creating about 10,000 jobs and 
sustaining many, many more. I certainly want to urge the 
administration to advance this agreement as quickly as possible 
and to submit it to Congress for approval for multiple 
reasons--the job creation, the potential for our economy, but 
also the fact that we are going to lose out to other countries 
who are in there and quickly by the first of the year are going 
to have some preference that we are not going to enjoy.
    Ambassador Kirk. Well, Madam Chair, as I know you were kind 
enough to acknowledge your fellow Arkansans, but Texas thinks 
of ourselves as at least a friendly cousin. In our part of the 
world, honestly, we would say that yours is not so much a 
question as an answer. There is nothing you have said that I 
don't agree with. The President agrees with you.
    There have been concerns about the labor and justice 
provisions, which we have worked diligently with the Uribe 
administration, and like you, I would say I believe the 
progress that President Uribe and his administration have made 
in addressing violence is significant. It is real. And it is 
important to note that even the ILO now recognizes the progress 
that Colombia has made and have downgraded them in terms of 
their listing of countries with unacceptable violence. And we 
look forward to working with the new administration--I believe 
they will be sworn in, I think, Friday or Saturday of this 
week--to see if we can't conclude our outstanding issues with 
the Colombians and we can bring this agreement to you as soon 
as possible.
    Chairman Lincoln. Well, I hope we can move swiftly, and I 
think it is very important in terms of our economy and putting 
people back to work and, again, creating for ourselves in the 
global economy and the global marketplace greater 
opportunities, particularly in this hemisphere. So I look 
forward to working with you to help make that happen.
    I see my time is up, so I will turn to my colleague, 
Senator Chambliss.
    Senator Chambliss. Thanks very much, Madam Chairman.
    Mr. Ambassador, on behalf of America's farmers and ranchers 
and the policy makers here involved in agriculture, I want to 
thank you for continuing the effort that I really think started 
with Ambassador Portman, continued by Ambassador Schwab, and 
now by you in being very active and very definitive and vocal 
about the profile that American agriculture needs to have with 
respect to trade agreements. I think in times past, we may have 
been the sacrificial lamb, but you have been a real stalwart 
and I appreciate the dialogue that we have had and the efforts 
that you and your staff have gone to with respect to 
agriculture.
    With respect to the Doha Round, General Lamy recently 
stated, and I quote, ``There are signs of a new dynamic 
emerging,'' in the small group discussions and he has called on 
negotiators to build on this with a mid-October discussion to 
evaluate progress. At the same time, it seems that negotiations 
remain at an impasse with no breakthrough emerging from the 
main negotiating countries.
    Now, you recently told reporters that you feel more 
encouraged about the Doha Round and that real progress may be 
possible this year if advanced developing countries are willing 
to come to the bargaining table. Have the small group 
discussions produced any changes in the negotiating positions 
of key countries, such as China, India, and Brazil?
    Ambassador Kirk. Well, Senator, first of all, thank you for 
your acknowledgment of our team and our efforts on behalf of 
agriculture. It is central to our work at USTR. But I would 
like to note that one of the things I am most proud of is just 
the seamless relationship we have built with the Department of 
Agriculture and Commerce to make sure that we are using all of 
our resources effectively.
    With respect to Doha, I can't tell you how welcome Director 
General Lamy's statement is, because it has taken us a while to 
get him to a point to acknowledge, frankly, that, as we say, 
getting on that same old bicycle they have been on for the last 
nine years wasn't going to get us there. And if I might, I 
think the credit for the change in the negotiating environment 
in Geneva is singularly due to the insistence of the United 
States, from President Obama on down, that there had to be a 
reality check among all of the partners of Doha and we had to 
begin to look at the world the way it is now versus ten years 
ago.
    And so we have moved to understand that they had to 
supplement our negotiations in Geneva with these bilateral 
discussions, frankly, trying to get Russia, Brazil, India, and 
China. And I want to make it careful, when I was asked about my 
outlook, I don't know that I would say I am overly encouraged. 
I am less discouraged than I was before.
    I would say that our efforts have led to an acknowledgement 
that there needs to be more on the table. I think the poorest 
countries now believe us when we tell them we aren't asking for 
any additional contributions from them, but that, frankly, it 
is in the poorest countries in the world's interest to make 
sure that these three growing economies, like China, India, and 
Brazil, give them access to their markets just as, frankly, the 
United States and the European Union have done.
    And so that is where we are beginning to see the change, 
and even though it is subtle, for the first time, you have some 
countries other than the developing economies, like the U.S. 
and Canada, beginning to say to Brazil, India, and China, why 
don't you come to the table and negotiate, because that is 
where we are going to be able to close the gap.
    So we have had a number of bilateral meetings with each of 
those partners. India, at least, has been the most open to 
dialogue with us. China has been wonderfully Chinese. I will 
leave it at that. But we continue to believe that now that we 
are beyond the elections in Japan and hopefully with Brazil, 
that if we can sit down and do the tough negotiations that have 
to be made, we might.
    But I just want to emphasize, because I said it to you all 
when I came before you, and President Obama made it plain in 
Canada, what is on the table is insufficient and we would not 
bring that to this Congress and the American public. But what 
we are seeking is not just for America. We think it is in the 
interest of the developmental nature of Doha to have a much 
more balanced and ambitious package and that is what we are 
going to work for.
    Senator Chambliss. Great. Yesterday, you were quoted as 
saying that the success of the African Growth and Opportunity 
Act should not be tied to the export of textiles and apparel, 
that countries under the Preference Program should look to grow 
their economies through other trade, including in value-added 
exports made from the continent's new raw materials. You 
correctly note that textile production is crowded, with 
multiple centers of production around the world.
    At the same time, here in Congress, trade preference 
legislation for developing countries often focuses exclusively 
on textiles. Is this a short-sided approach, and should we look 
to other development models that build around indigenous 
industry rather than attempt to create new ones?
    Ambassador Kirk. Well, Senator, I don't know that I was 
much of a legislative aide when I worked for Senator Bentsen, 
but I learned enough not to ever describe any efforts by 
Congress as short-sighted, so I won't say that.
    [Laughter.]
    Ambassador Kirk. I will say this, that in the case of AGOA, 
we are pleased with the progress we have made in the last ten 
years, but we are extraordinarily frustrated. Through the 
generosity of this Congress, 97 percent of products produced in 
Africa can be exported to the United States duty-free, and 
there are almost 6,500 individual products that you have given 
us the privilege to extend duty-free preference, yet less than 
400 products are utilized.
    So rather than just insisting on more textiles, we have 
encouraged them to begin to look at the value-added stream, and 
working with partners through U.S. AID and others, beginning 
them to understand, you don't just have to sell all your cotton 
to China. Why don't you contract with U.S. companies and make 
the T-shirts, or shoe leather, or the wood products, and begin 
to look at their extracted materials, as well, and particular 
partnerships with U.S. interests and our advances in technology 
to build the income stream from that, as well. And I think if 
that model works in Africa, we are going to encourage our other 
partners to do so.
    The American public, this Congress, I think, have been 
wonderfully generous in extending preferences to the poorest 
countries in the world. But with the budgetary constraints we 
have now, we have been very honest with them. They can't just 
look to us to expand those. They are going to have to work 
harder to diversify, I think, within their countries, which 
would be to their benefit and, we think, hopefully for our 
exporters, as well, as they develop more consumptive capacity.
    Senator Chambliss. Thank you very much.
    Chairman Lincoln. Thank you, Senator Chambliss.
    I would just like to take a very quick moment of personal 
privilege and welcome two very special individuals. Mr. Atwood 
Bell and Abigail Messier. Mr. Bell is from Jonesboro, Arkansas, 
and a retired educator and a veteran of both the Korean War and 
World War II. He is joined by his granddaughter, Abigail 
Messier, of Saratoga Springs, New York. I just wanted to 
welcome both Abigail to the Agriculture Committee and Mr. Bell, 
give him a good welcome and a very big thanks for his service 
to our country.
    [Applause.]
    Chairman Lincoln. Senator Johanns?
    Senator Johanns. Thank you, Madam Chairman.
    Mr. Ambassador, it is good to see you. Let me, if I might, 
start my questions by reading something to you that I think you 
are very familiar with. I was sitting at the State of Union and 
the President said this. He said, ``So tonight we set a new 
goal. We will double our exports over the next five years, an 
increase that will support two million jobs. We have to seek 
new markets aggressively, just as our competitors are,'' which 
they are.
    Since that time, have you started any new bilateral 
discussions that might lead to negotiations of a trade 
agreement with any other countries out there?
    Ambassador Kirk. Not in a bilateral sense. We have begun 
perhaps the most ambitious effort that we have undertaken in 
the last several years when the President announced at last 
year's APEC Summit that we would move forward with the 
negotiations under the Trans-Pacific Partnership. As the 
Chairwoman noted, we have a number of bilateral agreements, and 
some would say there are economies that would question whether 
their economy is significant enough to really make a 
difference. The Trans-Pacific partnership, I think, provides us 
a unique opportunity to have market access for all American 
exporters in what is going to be, by the estimates of all 
economists, the major center for economic growth over the next 
ten to 15 years, and that is the entire Asia-Pacific region, 
so----
    Senator Johanns. So other than that, no new efforts within 
any other countries?
    Ambassador Kirk. Well, we have a number. In terms of FTAs, 
no. We are working to conclude bits with several economies, but 
I----
    Senator Johanns. Okay. And Mr. Ambassador, I think you 
would agree with me, no country is going to seriously negotiate 
with you without Trade Promotion Authority. I mean, at some 
point, they lay all their cards on the table, all face up, they 
shake hands, they have got a deal. And without TPA, you say to 
them, now you get a chance to try to convince 535 others who 
are free to amend the agreement. So you are kind of powerless 
in this regard, aren't you?
    Ambassador Kirk. Well, I wouldn't say I am powerless, but 
it would certainly--it would be very much to our advantage for 
us to address the issue of new Trade Promotion Authority in the 
very near future.
    Senator Johanns. So why--I have talked about this on the 
floor. This expired during the Bush administration, as you 
know. Congress at that time made it very clear they weren't 
going to extend it for President Bush. Why now, when you have 
such control over the House and the Senate, why hasn't the 
President said, Ambassador, go over there to Congress and let 
us start working on TPA?
    Ambassador Kirk. Well, one, we have had quite a bit on our 
plate. Second, you all have been a little bit busy the last 18 
months, and the reality is, I mean, obviously I advocate for 
that, Senator, and will continue. But I believe with the work 
we have to come in and, frankly, begin to restore the American 
public's confidence in the value proposition of trade and the 
balance of trade, the focus we have made on enforcement that a 
number of you have referenced, our efforts to conclude the 
pending Free Trade Agreements, there will be a time in the near 
future that we will come and initiate discussions with Congress 
for Trade Promotion Authority, certainly with respect to the 
Trans- Pacific Partnership, and if we can get a package that we 
think merits your consideration, we will have to address that 
for the Doha Agreement, as well.
    Senator Johanns. Well, wouldn't you agree with me, though, 
that you are not going to be successful with any effort, Trans-
Pacific Partnership or anything, without TPA, because you can't 
promise them that there is ever an end to the negotiations 
unless you have EPA.
    Ambassador Kirk. I mean, Senator, unquestionably, we will 
have to have Trade Promotion Authority. But I would say it has 
not been a hindrance, at least to the first two rounds of our 
negotiations under the Trans-Pacific Partnership.
    Senator Johanns. Let me share some statistics with you, 
changing focus to the three pending agreements. According to 
the Ways and Means Committee, in 2009, U.S. agriculture exports 
to Colombia decreased by 48 percent. Failure to implement the 
agreement has resulted in an 87 percent decrease in U.S. wheat 
exports, Ways and Means report. Between 2008 and 2009, American 
companies exporting to Colombia lost $811 million in sales of 
corn, wheat, soybeans, and soybean oil, same report. Already in 
2010, U.S. agriculture exports have fallen by another 45 
percent.
    I cite these statistics to point out that in my judgment, 
and I work these issues just like you have, we are losing this 
market because we can't assure Colombia we are serious about 
ever submitting their trade agreement. But the biggest concern 
for me is one of our key partners out there from an 
international standpoint is South Korea, and I am worried that 
in that part of the world, folks are going to reach the 
conclusion that this administration is powerless to get the 
South Korean Trade Agreement approved. Could you comment on 
that?
    Ambassador Kirk. Well, first of all, I share your concerns 
very much about our loss of market share in Colombia and 
others. It is one of the reasons I have invested so much time 
in not just the agriculture communities, but frankly, those 
communities that are most concerned about the issues of 
violence and justice in Colombia, because the reality is we are 
going to have to be able to build strong bipartisan support in 
the House to move that. And so the time we have invested over 
the last year in going around the country to places like 
Detroit and Pittsburgh and the Carolinas and leaving for Maine 
tonight is time that I think is going to pay off in having us 
have that balanced argument that we are going to have to have 
in the House to be able to move these forward.
    Secondly, I think the relationship between the United 
States and South Korea could not be stronger, as evidenced by 
the recent commitments under President Obama to President Lee 
on a number of fronts. And while occasionally I get comments 
from our partners about the domestic environment in the United 
States, frankly, Senator, I push back hard on that, and I am 
kind of tired of our trading partners who always hide behind 
and worry about the attitude in Congress. And I remind them 
that there is never the right time, in my estimation, to bring 
a bad deal to the American public. But notwithstanding what 
people may perceive to be the environment and Congress, when we 
get a deal right, we always find a way to get it passed.
    As Senator Bentsen liked to say, I have got a well-worn 
face. I am not quite as old as I look, but I was around, was 
Secretary of State to Governor Ann Richards when we went 
through the fight with NAFTA. That wasn't an easy battle. I was 
Mayor of Dallas and helped to argue for granting China PNTR 
status. Every trade agreement in this United States has been a 
major battle except for when we have a compelling case to 
present to the American public, not only in terms of market 
access, but fairness in reflecting our values. And when we get 
to that point, I believe we can pass them.
    So I am not going to let the Koreans or any of the members 
in the WTO hide behind our domestic environment. The bottom 
line is they need to come to the table, give us real market 
access, reform their behavior, give us the same rights as we 
have granted to them, and if we do that, I think the political 
environment in Congress and the United States changes 
dramatically for the better.
    Senator Johanns. Thank you.
    Chairman Lincoln. Thank you.
    My Chairman, Senator Baucus.
    Senator Baucus. Thank you, Madam Chairman.
    Mr. Ambassador, I am just a little concerned that when the 
President visits Korea November 20, he is going to be under 
tremendous pressure to deliver a deal. And you alluded to and 
others in this room alluded to some of the reasons why, that 
is, the relationship the United States has with Korea and the 
importance of Korea to the United States.
    I am very concerned that what he might want to deliver 
might not be in agriculture's best interest. I am quite 
concerned that Korea will not submit an agreement that lives up 
to what the President knows he promised back in 2007, that 
Korea will live up to OIE standards, all beef, all ages, all 
cuts. I must remind you that no deal is better than a bad deal, 
and a bad deal would be Korea not living up to its agreement to 
live up to OIE standards, all ages, all cuts.
    So can you promise me here today that any agreement that 
the President brings on November 20 will include the 
requirement that Korea opens up its markets to U.S. beef, all 
ages, all cuts?
    Ambassador Kirk. Senator, I would love to be able to make 
that hard promise. I can tell you this. This issue is of the 
highest importance to us. I would remind you that not only at 
the recent G-20 Summit in Canada, but when President Obama met 
with President Lee last year, that publicly in every case that 
he has referenced our commitment to getting Korea done. He has 
always put it in the context of our ability to resolve the 
outstanding issues on autos and beef.
    So I understand your concern for the interests of your 
cattlemen and ranchers, but this administration has never 
equivocated on the need for us to reach and move toward that 
full OIE compliance. You know that is currently the standard in 
the agreement. It was, frankly, our cattlemen and others that 
reached a separate protocol with Korea to accept a standard of 
beef 30 months or less. And the good thing is our beef exports 
to Korea are rising rapidly. They are up almost 50 percent over 
last year. We are almost to 40 percent of market share. But I 
want to give you my assurance that we are working for full OIE 
compliance, and that is one of the two main issues we will be 
discussing with my counterparts.
    Senator Baucus. Well, the trouble is that we have lost 
market share considerably in Korea. It is very similar to the 
point that Senator Johanns made. For example, in 2003, the 
United States had 70 percent of the market, Australia and New 
Zealand, 30 percent. That has flipped. Now Australia and New 
Zealand have 70 percent. Yes, you say 40. It is 30 or 40 
percent, just like we are losing market share to other 
countries because of our failure to conclude trade agreements. 
Other countries are doing deals for their own benefit, at our 
expense. I am quite concerned, in fact, I am flabbergasted 
almost, that we are not working harder getting deals done.
    Ambassador Kirk. Senator, we are----
    Senator Baucus. And I mean results. I don't mean just work. 
I mean results. If this administration really wanted a Free 
Trade Agreement adopted by the Congress, it could do it. It 
could do it if it wanted to. I hear a lot of words. I don't 
hear a lot of results.
    Ambassador Kirk. Well----
    Senator Baucus. And I don't know why I should schedule a 
hearing on a Korean FTA if it does not include all beef, all 
ages, all cuts. I don't know why I should hold a hearing on 
FTA. It will have to come before the Finance Committee and I 
don't know why the Finance Committee should even have a hearing 
on that if it doesn't include those provisions.
    Ambassador Kirk. Well, Senator, we share your concerns, but 
with all due respect, we have worked as diligently as we can to 
resolve the issues to allow us to bring this forward. The 
administration has a strong commitment to this. But as you 
know, there are very strong opinions within this Congress on 
both sides of the aisle about the equities involved in the 
accessibility of the Korean market for U.S.----
    Senator Baucus. Oh, I think there is pretty much agreement 
that we should----
    Ambassador Kirk. --ranchers and----
    Senator Baucus. I don't think there is much disagreement. I 
know there are some who say, don't rock the boat, but the fact 
that the producers say they want the bill to export into Korea. 
And I just say, Mr. Ambassador, I am going to be looking at 
this very carefully and I want to see it all there.
    Ambassador Kirk. Well, we want to see it, as well.
    Senator Baucus. If not, I don't know why I should schedule 
a hearing.
    Ambassador Kirk. Well, we want to see it, as well, and we 
are going to----
    Senator Baucus. The proof is in the pudding, Mr. 
Ambassador. We will see, see what you produce.
    Ambassador Kirk. We look forward to working with you.
    Senator Baucus. Thank you.
    Chairman Lincoln. Senator Cochran?
    Senator Cochran. Madam Chairman, we know that in June, 
China's Central Bank announced plans to allow a more flexible 
exchange rate. China is both a major customer of the U.S. 
agriculture products and a major supplier of products. What are 
the potential impacts of the decision in China to change its 
currency values? What would the impact be on agriculture trade 
and our economy?
    Ambassador Kirk. Well, Senator, thank you. As you know, 
this has been an issue of paramount concern to both members of 
Congress and to the administration. We have urged China in 
every fora, bilaterally, through the G-20 and others, to allow 
their currency to float to market rates, and we think having 
the yuan rise to a level that is more acceptable obviously 
would help to mitigate that delta between the cost of U.S. 
exports to China and others and it would be of great value to 
agricultural interests, as China is a very, very important 
market, particularly in soy and grains and poultry and others. 
And, obviously, that would be a benefit to our farmers and 
ranchers, as it would for all U.S. exporters into that market.
    Senator Cochran. In connection with Colombia's Free Trade 
Agreement, it has been documented that that agreement could 
provide very positive benefits to the U.S. cotton and cotton 
textile sectors. What is your assessment of the need for 
implementing legislation to promote Congressional approval of 
this new regime of trade? Could you update the committee on the 
administration's position?
    Ambassador Kirk. Yes, Senator. As you know, the good news 
is, obviously, a number of you have spoken to the importance of 
that market for our agricultural interests. Our challenges in 
moving forward principally have been related to concerns 
expressed by a number of members of Congress and the labor 
community over what some believe has been an unacceptable level 
of violence against labor leaders and the government's failure 
to protect, put in place legislative changes and judicial 
changes to protect them.
    We have been working with the Colombians on that, as the 
Chairman has noted and many others. I think the Uribe 
administration has made significant progress. We have been 
working with all stakeholders to try to move, frankly, in some 
cases, to fact beyond fiction and come up with an acceptable 
package that we can present to our partners in Colombia that 
will allow us to move forward, and we have noticed this in the 
Federal Register to get public comments. We have begun that 
interagency process. And with the President's direction now, we 
are moving as quickly as we can to try to complete that so that 
we can bring an agreement to Congress for your consideration.
    Senator Cochran. Well, I congratulate you on the job you 
continue to do to represent our interests and to try to move 
forward on these special troublesome areas, like China and 
Colombia. Thank you.
    Ambassador Kirk. Thank you, Senator.
    Chairman Lincoln. Senator Lugar?
    Senator Lugar. Thank you, Madam Chairman.
    Ambassador Kirk, I am just simply eager to get your 
analysis as to specifically why the Panama Trade Agreement has 
not occurred. This would seem to be a very much simpler matter 
than either Colombia or Korea. Is it objections in the Congress 
that you are working with or what problems specifically hit you 
there?
    Ambassador Kirk. Senator, in some respects, we were a bit 
advantaged in the case of Panama in that when we came into 
office, much of the process that I referenced with Colombia, 
the noticing and the sort of stakeholding had been done. 
Frankly, we had a little bit of--and we were able to present to 
our partners in Panama a very defined list of changes we would 
like to see them make.
    Initially, I will be honest with you, the previous 
administration balked very much at the notion of having to 
change their tax code to address issues raised not by the U.S., 
but within the OECD in terms of there being a tax haven. 
Fortunately, we worked with them over the summer. That has now 
changed. We have a new administration in the Martinelli 
administration. We have addressed a number of the legislative 
changes that we sought in terms of labor and justice and are 
now, frankly, waiting on the Martinelli administration and our 
Treasury to conclude their negotiations on what will be an 
acceptable response to the tax issues raised.
    Senator Lugar. Do you anticipate that our Treasury is 
moving forward rapidly? Is this a priority for----
    Ambassador Kirk. It is a priority for us. Our Treasury is 
engaged. But some degree, some of the work is in the hands of 
Panama. But we hope that we will be able to conclude those in 
the very near future, as well.
    Senator Lugar. With Colombia, you have discussed this 
extensively, but it would appear, looking at it just from a 
foreign policy standpoint for a moment as opposed to our 
domestic politics, that the Uribe government has had 
extraordinary challenges and right now a transition is 
occurring to a new presidency of Colombia. While that is 
appearing, the FARC, who have been difficult, to say the least, 
in terms of difficulty in Colombia, are apparently housed 
across the border in Venezuela, that this has led to Venezuela 
withdrawing its ambassador to Colombia and asking really for 
the OAS and others to almost go into a state of war against 
Colombia.
    In the midst of this, I appreciate the sentiments in 
Congress that have been expressed endlessly with regard to 
whether Colombia has been sufficiently rigorous with regard to 
protection of labor unions in Colombia. But I would suggest, 
and perhaps you would agree, that for the government of 
Colombia, the problem has been existential with regard to 
simply maintaining the sovereignty of the country against the 
hostility that Venezuelans and everybody else that are around. 
That is still the case.
    This is, it seems to me, in terms of our own foreign policy 
and the security of Colombia, essential to get on with the Free 
Trade Agreement. You may have come to the calculation that 
labor interests in the United States are still so hostile to 
the situation, but notwithstanding the foreign policy problem 
or whether the Colombian state exists or not, that this treaty 
somehow cannot make it through.
    But I would encourage you to give it a try. It just seems 
to me that the patriotism in the American people generally and 
the understanding of the Colombian predicament is likely to 
overcome what have been these, not quibblings, they are 
criticisms that are based on human rights of other countries, 
but still a small part, really, of the picture of our 
relationship.
    Ambassador Kirk. Senator, in the broad sense, I would 
concur with most of what you have said. I am mindful of the 
fact that I only sit here as U.S. Trade Representative because 
it was the wisdom of this Congress almost 40, 50 years ago to 
create a position within the administration separate from the 
State Department to only look at the commercial issues. And so, 
one, I am careful not to wager into--wander over into Secretary 
of State Clinton's territory. But your macro analysis is 
correct. Colombia is a critical ally and partner for the United 
States in South America for all the reasons you articulated.
    And if I would only just briefly say to you what I said 
earlier to Senator Grassley, I want to make it plain. Labor 
does not have a veto power over the trade policy of the Obama 
administration. But I do think we are greatly enhanced that we 
have invited labor back to the table and given them a voice to 
express their concerns so that we have a way to resolve these 
and move just from some, in many cases, rhetoric that is based 
on what may have happened ten to 15 years ago and at least give 
them an opportunity to play a constructive role. And that is 
the reason I believe we are much closer now to being able to 
move forward with a resolution of the issues on Panama and 
Colombia, is the time we have invested in bringing labor back 
into our Trade Advisory Groups. But I appreciate your 
encouragement and support.
    Senator Lugar. Well, my time is up, but I appreciate, 
likewise, your bringing labor back and your attempt to work, as 
you say, in a macro situation. You are right that the State 
Department and Commerce and Treasury are different, but the 
President still is the President. He has apparently given 
pretty strong instructions to get South Korea done before he 
goes to South Korea, and I would strongly agree with that and I 
am hopeful he has at least enough control over the various 
Cabinet officials to have this macro approach that will be 
helpful to you.
    Ambassador Kirk. Well, I am certain he will be pleased to 
hear your acknowledgement that he is still the President----
    Senator Lugar. Yes.
    [Laughter.]
    Ambassador Kirk. and I don't know how much control he has 
over the rest of the Cabinet, but he has quite a bit over this 
one, so----
    [Laughter.]
    Ambassador Kirk. He has given me a job to do and I am going 
to do everything I can to get it done.
    Senator Lugar. Thank you.
    Chairman Lincoln. Thank you, and I would like to associate 
myself with Senator Lugar in the fact that I do think Panama 
and Colombia are certainly very doable. I would also add to the 
Ambassador that the esteemed President of Panama is, I believe, 
a graduate of the University of Arkansas. And although we no 
longer play Texas, we might be of some service there with you 
in working on that issue, so----
    Ambassador Kirk. But he has told me a number of times that 
he could have gotten into the University of Texas----
    [Laughter.]
    Chairman Lincoln. Senator Gillibrand?
    Senator Roberts. Can we go back to that Texas-Arkansas Big 
10, Big 12 stuff? I would like to----
    [Laughter.]
    Ambassador Kirk. Senator, I would say, I think our friends 
in Kansas are pretty happy with Texas right now leaving the 
Big----
    Senator Roberts. I wouldn't quite describe it that way, but 
I will talk later about that after you deputize me to handle 
things with Russia.
    Ambassador Kirk. Yes.
    [Laughter.]
    Chairman Lincoln. Senator Gillibrand?
    Senator Gillibrand. Thank you, Madam Chairwoman.
    I would like to turn our attention to the dairy industry 
and in particular our relationship with China. New York's dairy 
industry is working very hard to continue to rebuild our dairy 
producer profitability which is a challenge many of the farm 
families in my State are still struggling with every single 
day. Given that the horrendous drop in demand for U.S. dairy 
products last year was primarily driven by a steep drop in our 
exports, rebuilding overseas markets for our quality dairy 
products and maintaining access to them is critical to ensuring 
that this process does not reverse itself. Our third-largest 
export market, as you know, averaging about $168 million over 
the last three years, is China, and so it is very important to 
this process.
    I appreciate the work that you have done to devote 
maintaining access to this market for U.S. dairy products in 
light of changes this spring to China's dairy certificate 
requirements. However, it is disturbing that we have yet not 
resolved the issue. Can you tell me what USTR is doing to 
prioritize the issue and ensure that it is swiftly addressed so 
that the U.S. exports to China are not impeded?
    Ambassador Kirk. First of all, Senator, thank you for all 
of the information that you and your dairy farmers have 
provided to our office as we have engaged China on this. This 
is one of the top issues in which we have engaged China 
directly through our JCCT, principally because a lot of the 
information the industry provided, which is the good news, when 
they brought us the concerns over the new certification 
process, we were able to intervene very early. We don't have a 
complete resolution, but we are encouraged that at least China 
did agree to pause and not move forward with the implementation 
of those while we worked to come up with an acceptable 
resolution of it.
    So as opposed to many other cases where we haven't been 
able to get any response, at least in this case, we do have a 
time out in the implementation of that latest certification 
process that was of so----
    Senator Gillibrand. Do we have a time line for that 
process?
    Ambassador Kirk. We will--we have a team, I think that may 
be going to China in September----
    Senator Gillibrand. In September, yes.
    Ambassador Kirk. --and prior to our JCCT formal meeting, 
and so hopefully we will--I mean, I will get a readout from 
that and we will make sure we keep you up to date on our 
progress.
    Senator Gillibrand. Thank you. My second question is about 
the U.S.-New Zealand dairy trade. If it is included in the TPP, 
it is my worry that all the benefits of that trade relationship 
would accrue to New Zealand's dairy industry and that it would 
be very devastating to the U.S. dairy industry and New York's 
markets. In exchange, America's dairy producers and processors 
would face tremendous pressure for job loss and reduction in 
exports, resulting truly in the loss of billions of dollars to 
the U.S. economy and to that sector.
    And to further worsen the situation, our dairy exporters do 
not even have the prospect of focusing on other significant new 
opportunities that the agreement would open up, given that most 
of the other TPP participants are already U.S. FTA partners or 
else have relatively limited tariffs and offer only small 
market opportunities for the dairy industry.
    So I appreciate the administration's use of both bilateral 
and regional approaches on this, and it is my understanding 
that the USTR's approach is to allow countries with existing 
FTAs to retain the market access provisions for those trading 
partners and that new market access negotiations allow parties 
without existing FTAs to be negotiated bilaterally. What is the 
status of bilateral U.S.-New Zealand negotiations, and do you 
believe that this approach will be successful in protecting the 
U.S. dairy industry?
    Ambassador Kirk. Well, Senator, first off, let me say we 
are acutely aware that perhaps of all of the many barriers and 
complex issues that we have to address within our negotiations 
in the Trans-Pacific Partnership, dairy is certainly the one 
that has gotten the most attention for that reason. We have 
spent an extraordinary amount of time with representatives of 
the dairy industry. I have met with dairy farmers from 
Wisconsin, Milwaukee, and New York. I have met with members of 
the caucus and yourself. So we understand your concern. I would 
remind you, my interest is not to represent anyone but U.S. 
farmers, ranchers, agriculture.
    We believe that it is still worth the effort, given the 
explosive potential to expand market access not just among this 
original nine tranche of countries, but throughout Southeast 
Asia, that we ought to continue to look at every opportunity to 
create market access for there.
    Now, you are correct that it is most likely, in terms of 
the existing FTA partners, will retain those tariff lines. Most 
of those are about at the end of their expiration period 
anyway. But we will not go forward with an agreement that we 
believe disadvantages our dairy interests to the advantage of 
those in New Zealand.
    We have had two rounds. We are scheduled for a third round 
in Brunei. We aren't quite to the point that we are negotiating 
exact sectoral lines, but I promise you, we have had more 
extensive consultation with Congress and industry on this than 
ever and we will keep you apprised as we move forward.
    Senator Gillibrand. Thank you, Mr. Ambassador. Thank you, 
Madam Chairwoman.
    Chairman Lincoln. Senator Stabenow?
    Senator Stabenow. Thank you, Madam Chair.
    Chairman Lincoln. Just before you begin, there are two 
votes, and Senator Chambliss and I are going to tag-team so we 
can keep our hearing going.
    Senator Stabenow. Great. Thank you very much, and welcome, 
Ambassador Kirk. It is good to see you.
    I wanted to just first comment on a couple of things others 
have said. I want to reiterate what Chairman Baucus said, that 
no deal is better than a bad deal, and so we need to be opening 
our markets, but we need to make sure they are good deals for 
us, and I would concur. As I have talked to you about North 
Korea, we have got a ways to go before that is a good deal. So 
we have got some work to do and I am hopeful that the 
deficiencies will be corrected.
    I also want to piggyback on what Senator Cochran said and 
just chime in on currency manipulation in China. It is 
happening. We know it is happening. We need to say it is 
happening and we need to do something about it. So I send back 
that message to the administration, as well.
    I wanted to follow up. Senator Gillibrand talked about 
dairy, and I, too, have a tremendous interest in enforcement as 
it relates to dairy around the world, and specifically in 
India. As you have been talking about, Russia, Brazil, India, 
and China and what they need to be doing. For far too long, 
India has not been playing by the rules with dairy. There are 
many ongoing issues where they are, frankly, ignoring science. 
One of the most troubling is the situation with dairy, a 
situation that a number of us wrote you about earlier this 
year.
    For over six years now, India has used dairy certificates 
to block legitimate U.S. dairy exports and refused to negotiate 
in good faith to find a resolution. This certification 
requirement is not based on sound science. India knows that it 
is not based on sound science. While our dairy exports are 
being blocked, India has exported an average of $77 million 
worth of dairy products to the U.S. over the last three years.
    So my question is, given the lack of progress with India 
over many years, what is the USTR doing to examine legal 
alternatives?
    Ambassador Kirk. Well, first of all, Senator, I have to 
tell you, I agree completely with your assessment of the 
situation in India. As frustrating as China has been, I would 
say I think one of the values of them being in the WTO, we do 
have the opportunity to move forward on other foras. And we 
have on occasion with our structure with the JCCT and others to 
engage them and at times get them to comply or at least take a 
step back.
    As I referenced to Senator Gillibrand, we are not there 
with them yet. We are exceptionally frustrated. I will tell 
you, it is generally not our practice to comment publicly as to 
whether we are going to take legal action, but I will tell you, 
we are exploring every alternative and every enforcement tool 
available to us to get India to open up their markets on a 
number of agriculture issues.
    I mean, we have raised--I was in India twice. Last year, I 
met with them directly about it. Ambassador Marantis just came 
back. Ambassador Islam Siddiqui, who is our Chief Agriculture 
Negotiator, we have used every tool of diplomacy we have, but 
we are going to be examining everything else in our toolbox to 
see if we can't get them to behave differently.
    Senator Stabenow. Well, I would encourage you to use the 
tools that need to be used.
    One other area as we look at barriers, and this relates to 
maximum residual levels as it relates to pesticides. This is an 
area I have raised, as well. For example, Michigan's cherry 
exporters face an arbitrarily low MRL, again, not based on 
science. I have heard a number of stories that our trading 
partners block our exports, requiring certain pesticides be 
used in areas where we have banned them in the U.S., but they 
are requiring that they be used when we export. We have 
approached Japan about cherries directly, my office has. When 
we look at resolving these types of issues, it is absolutely 
critical to have involvement from all of our food agencies, as 
well, the FDA, FSIS.
    As the lead agency on trade, what are you doing to work 
with those partners to resolve these challenges, because this 
is a very significant type of barrier for our specialty crops 
right now as it relates to pesticides and we need to address 
that.
    Ambassador Kirk. Senator Stabenow, first of all, thanks for 
bringing this to our attention. We have worked with your 
producers, because you do have a very discrete, I think, fly 
infestation that can only be treated by one insecticide----
    Senator Stabenow. Right.
    Ambassador Kirk. --and we are working with you on that. The 
good news is we have, because of your bringing this to our 
attention, we have gotten Japan to adopt a protocol on these 
inspections similar to the one we are using. The difficulty we 
have is you have a very discrete challenge. The good news, we 
are working both with USDA and, in this case, the EPA. The EPA 
has looked at the issue of the product used in your case and we 
are working with them to submit that data to Japan to see if we 
can't get them comfortable with the application of that.
    Senator Stabenow. Thank you. I see my time is up. Thank 
you, Madam Chair.
    Chairman Lincoln. Senator Klobuchar?
    Senator Klobuchar. Thank you very much, and thank you very 
much, Ambassador Kirk, for being here.
    My State is the seventh largest agriculture export State in 
the country, and in 2009, our farmers exported nearly a third 
of what they produced, which brought in $4.3 billion to our 
State. And when I look at our economy in Minnesota, the fact 
that our unemployment rate is only at 6.8 percent, a lot of it 
has to do with our rural economy, but also the value of exports 
across the board. And that is why I have been very focused on 
the export issue, head up the Export Subcommittee in the 
Commerce Committee.
    And I wondered, first, on a broader way, could you update 
us on the President's initiative to double exports in the next 
five years, what has been happening? Senator LeMieux and I have 
been trying to get a bill with the small business bill to help 
out with the Foreign Commercial Service, but in a general way, 
what is the status of that?
    Ambassador Kirk. The good news, Senator, is exports this 
year are up almost 17 percent over what they were last year----
    Senator Klobuchar. Although they were at an all-time low 
last year.
    Ambassador Kirk. Well, but they were at an all-time low all 
around----
    Senator Klobuchar. Okay. All right. Okay.
    Ambassador Kirk. --if you look at that base, we are 
trending up.
    Senator Klobuchar. Okay.
    Ambassador Kirk. Exports accounted for the highest 
percentage of our GDP growth ever, at 13.7 percent, and 
economists are telling us that we contribute now to the 
underlying economy. This is consumer spending. Now, that is not 
enough. We are doing a number of things through the Export 
Initiative, including what you referenced, the President asking 
for more resources, counselors for the SBA, in particular, to 
help small businesses begin to engage in exporting. He has 
asked for more Commercial Services Officers through the 
Department of Commerce. We are looking to add----
    Senator Klobuchar. And that is what our bill is in the 
Small Business Committee.
    Ambassador Kirk. Yes, and that would be most helpful. We 
will be submitting a more formal report to the President in 
September that he asked to map out some of the matrix that 
Senator Baucus and others have referenced.
    Senator Klobuchar. Thank you. People have talked a lot 
about China. I wanted to focus on what happened in April 2009 
with the H1N1 virus and then the closing of the market to U.S. 
pork. As everyone knows, the H1N1 virus, there was never proof 
that it was spread through contact with pork and blaming the 
virus was a blatantly unscientific excuse, as China's 
Agriculture Minister was even quoted saying that consumers 
can't contract the virus from pork products.
    What recourse and authority does the U.S. have when a 
country blocks a product for such a clearly fraudulent reason, 
and is this kind of action lawful under China's Free Trade 
Agreement and WTO rules?
    Ambassador Kirk. First of all, Senator, the action was not 
lawful. It was not China. I think 28-some countries moved to 
block U.S. pork products, both prepared and otherwise. In this 
case, we knew we had an actionable case in the WTO. I would 
tell you, in terms of your previous question about our working 
across government, I think this was an example where we moved 
very quickly, from President Obama down to Homeland Security 
Director Napolitano, Secretary of Commerce Locke, Vilsack, and 
myself. We all got to work to try to get these markets back 
open so we wouldn't be in a three-to five-year process. And as 
a result of that, there were seven or eight major economies 
within a year that reopened their markets to pork.
    So through the JCCT in particular, we were able to get 
China to open its market to pork. We still have an issue with 
China with respect to their blocking pork that utilizes 
ractopamine. But for that that doesn't utilize that, the pork 
exports have resumed and we are shipping pork back into that 
process.
    Senator Klobuchar. Right, and I do appreciate, as Senator 
Chambliss and others have mentioned, the work that you have 
done in reopening some of those markets.
    The other thing about this is the Mad Cow Disease, where we 
saw the same kind of thing happen. Major markets are still 
closed to American beef products. I assume there is work being 
done to reopen them. But one of the things that I thought would 
be helpful here, while we all know H1N1 had nothing to do with 
pork, but the other countries, many of them seem to claim food 
safety all the time as a reason, and do you think it would be 
helpful to pass a food safety bill to get at some of this?
    Ambassador Kirk. Senator, I think any attention we can 
bring to the security of our food chain and food safety would 
be most helpful.
    And I would say, if I could, I know many times we beat up 
on the WTO, but after the H1N1 virus, we reached out and 
immediately had a letter signed by the WTO, the OIE, all of the 
international agencies related to food health safety that 
declared and issued a very definitive statement that there was 
no risk to humans from consuming prepared pork products.
    Senator Klobuchar. Okay. And then one last thing. Are you 
looking into this honey issue at all, which Senator Schumer has 
coined ``honey laundering''?
    Ambassador Kirk. I will be now.
    [Laughter.]
    Senator Klobuchar. There is a----
    Ambassador Kirk. Senator Schumer has talked to me about 
cows and apples, but I am sure we will have an opportunity to 
get up to date on that.
    Senator Klobuchar. Okay. Very good, because we care about 
that in Minnesota, as well. Thank you very much, and we will 
write you about the honey issue.
    Ambassador Kirk. Thank you, Senator.
    Senator Klobuchar. Thank you.
    Chairman Lincoln. We have a lot of honey in Arkansas, as 
well.
    Mr. Ambassador, I am going to run to vote and I just wanted 
to, in case I miss you, as Senator Chambliss will take over and 
keep us going in the hearing, but thank you so much for your 
work. I think you have done a tremendous job and I am grateful 
to you. I appreciate our conversation on Russia and we look 
forward to working with you in the days ahead, particularly on 
that. So thank you very much.
    Ambassador Kirk. Madam Chairman, thank you for your 
leadership, and I thank this community for your advocacy of our 
trade efforts.
    Chairman Lincoln. You bet. All right. Senator Chambliss, I 
am going to hand it over to you, and I think Senator Roberts is 
next.
    Senator Roberts. I appreciate it. There are two votes, 
Madam Chairman, so I am going to have to be brief. I hear my 
colleagues laughing.
    I am going to go through the obligatory facts and figures 
about Kansas, and the same thing applies to Texas, I think, in 
regards to the necessity of exports to our economy. We have to 
export half of our wheat acres, one-third of all planted acres. 
We are the top beef processing State. That might come as some 
surprise to you, being from Texas, but we have more cattle than 
people. They are in a better mood, by the way.
    [Laughter.]
    Senator Roberts. At any rate, I am very much attuned and 
agree with the Chairman of the Finance Committee that we have a 
real problem on our hands, an ongoing challenge on our hands. I 
hope we can reopen our foreign beef markets in the post-BSE 
area. I think we have made some progress, and that has to go to 
your credit to get our trading partners to really start to rely 
on sound science instead of being governed by fear and 
politics.
    But I am concerned about the anti-trade sentiment in 
Congress, which I think has stalled action on a number of 
opportunities, and it has been mentioned before, South Korea, 
Panama, and Colombia, more especially Colombia and what Senator 
Lugar was talking about. We have a new president. The FARC is 
getting active again. Just as they have apparently won that 
battle, here they come back again. That is sort of the history 
of those kind of things. But they are being aided and abetted 
by Hugo Chavez, who is the new Castro, self-declared, in the 
area. So it is a very dicey situation.
    And then Senator Johanns pointed out the 45 percent drop in 
exports in 2010, $811 million for all farm commodities, 87 
percent drop in wheat exports to Colombia. This is not only an 
economic situation, but it is a national security situation, as 
well, and the same thing applies to South Korea, given the 
relationship with North Korea and all that is going on. And so 
trade, more especially agriculture trade, can level that 
situation out a great deal. You know that. I don't have to tell 
you that.
    You indicated you are going to make every effort to-- and 
let me say you have done an excellent job, a great job with 
very difficult circumstances to try to emphasize the value of 
our agriculture trade. But you said that we need to reform 
their behavior and get them to come to the table, and we need a 
compelling use. Well, I don't know what on earth would be more 
compelling than the economic situation we face in this country 
and our national security concerns and the fact that we have 
other countries taking over our markets. I mean, that is pretty 
compelling to me, if we just get past basically what is 
opposition by labor in this country and by some in the 
environmental community--I emphasize some.
    I note the story in the Wall Street Journal, I don't know 
if you have read it, but it is a pretty good headline: Obama 
courts labor support for trade deal. I hope he can do that. But 
he said at the Group of 20 Nations Summit in Seoul in November, 
already referred to by the Chairman and Senator Chambliss, he 
has made it a centerpiece of his efforts to boost U.S. exports 
and job growth to convince labor that the matter is 
particularly sensitive now as Democrats try to retain union 
support in advance of the mid-term elections. I hope we don't 
have that interfere in our efforts to the degree that we don't 
make any progress.
    But interestingly enough, you have said--well, not you 
personally, but the USTR, so I guess that is you, filing a 
complaint against Guatemala for allegedly--I emphasize 
allegedly--violating workers' rights under an existing trade 
accord with the country, that will hopefully reassure labor in 
this country that it will reflect labor concerns and talks over 
any accord with Korea.
    I would hope that the trade agreement in Korea would stand 
on its own merits and we wouldn't have to run around finding 
different countries where they are allegedly violating workers' 
rights, or say in Colombia that the government is not really 
treating labor leaders there in the proper fashion, well, let 
the FARC take over and see what happens to them. I mean, that 
doesn't make any sense.
    Here we are, filing a complaint against Guatemala for 
allegedly violating workers' rights, not to really further our 
efforts with Guatemala, but to prove to labor in this country 
to quit opposing these FTAs in the three countries that we have 
mentioned over and over and over and over again for 18 months, 
and it seems like we are treading water. I don't know what--I 
think your primary challenge is to convince the labor community 
and the environmental community in this country that these 
agreements are in our best interest. Would you respond to that?
    Ambassador Kirk. Senator, let me thank you for your 
observations about our efforts to advance not only agricultural 
exports and others.
    Secondly, I would only say to you, and I want to be 
careful, I didn't see the article you referenced, the decision 
we made on Guatemala stands on its own. The decision by the 
President to announce, I guess, what, 30 days ago to move 
forward with Korea stands on its own. And neither of the two go 
hand-in-hand. Our enforcement efforts are based on the simple 
premise that we believe the American public have raised a 
legitimate concern that the United States hasn't paid as much 
attention to enforcing our trade deals and holding our 
partners' feet to the fire sometimes as we have been in just 
opening new markets.
    So it was the right thing to do in Guatemala. The case was 
filed two years ago. We had extensive investigations with the 
Department of Labor and we think it is important that Guatemala 
live by the terms of its agreement.
    The Korea, Panama, Colombia agreements will each stand on 
their own merits. But I would again submit to you that the time 
that we have invested in listening to not only those of us who 
want me to put my foot to the pedal and just go forward with 
these agreements, but, frankly, those that have raised 
concerns, I think it is time that is well spent and will allow 
us to get to where you and I would like to go, be in a position 
to bring these agreements to Congress so that we can move 
forward.
    Well, I think you are working--I would ask my distinguished 
colleague, the Ranking Member, for an additional minute or two, 
if that is permissible.
    Senator Chambliss. [Presiding.] Without objection.
    Senator Roberts. I thank my friend and colleague.
    I don't know what comes first. If you have a trade 
agreement--I know the situation with China. They are making 
trade agreements with a whole bunch of folks and the trade with 
China is exploding. As a result, you have seen even labor 
strikes in China. Who would have thought you would have seen a 
labor strike in China five years ago. I mean, that would not 
have been possible. So if you have the trade agreement and you 
get the benefits of economic trade and the wherewithal in terms 
of individual citizens improve and workers' rights improve, but 
you had the trade agreement first and then you had the trade 
and then you have the progress.
    Now, it seems to me we get the cart before the horse if we, 
in fact, insist on labor concerns or criteria--I don't know 
what they are other than just people making speeches, and the 
same in the environmental community. So we put a criteria on a 
sovereign country and say, you have to live up to the criteria 
that we think is good for you. Well, I will tell you what. If I 
am the sovereign country and I find another person that is 
going to sign a trade agreement with me without that criteria, 
I do it, and I think that is what has happened.
    So you have got to figure out if you make the speech and 
you are satisfying, you know, the labor movement in the United 
States, if you satisfy the environmental community, more 
especially before November, that is one thing. But if you pass 
a trade agreement and you achieve those same things actually on 
the ground, that is another thing. Now, I don't know if that is 
a question or not, but please feel free to respond.
    Ambassador Kirk. Well, I will accept the ``or not'' part of 
that question, if that is permissible with you, Senator.
    [Laughter.]
    Senator Roberts. Okay. Well, thank you very much for 
appearing and thank you for the job that you are trying to do. 
I think it is very challenging, but I agree with the Chairman 
of the Finance Committee. There is no need to be holding 
hearings if we are treading water on trade. We have done that 
for 18 months.
    I thank the Senator.
    Ambassador Kirk. Thank you, Senator.
    Senator Chambliss. Ambassador Kirk, Senator Thune has 
indicated he wants to come back, so we are not going to let you 
leave until he gets back here.
    [Laughter.]
    Ambassador Kirk. I know you have another panel to hear 
from, as much as I am enjoying this engagement. I certainly 
don't want to----
    Senator Chambliss. Well, we are not going to hold them up 
too bad.
    Let us talk for a minute more about the situation involved 
in the export of chickens into Russia. I know we had some 
conversation about this. We thought this was a done deal, and 
then all of a sudden, I understand last Friday afternoon we 
hear from the Russians that they are not going to let imports 
into their country without having inspectors on the ground in 
the United States. What can you tell us from an update 
standpoint on where we are there and what do we need to do as 
policy makers to try to provide the right kind of assistance to 
you on this issue?
    Ambassador Kirk. Well, first of all, your recitation of the 
recent events, unfortunately, is a correct one. We were as 
surprised as you. As you know, when President Medvedev was here 
just last month, this was an issue that rose to the level even 
of President Obama and Vice President Biden, all of us rose 
with President Medvedev. President Obama and Medvedev directed 
the trade ministers at that time to sit down and see if we 
couldn't come up with a resolution of this poultry issue, and 
President Obama was, frankly, very honest that Russia's 
inability to just sort of meet basic agreements and commitments 
was one that sort of clouded our thinking in terms of our 
overall objective of having Russia in the WTO.
    We negotiated an agreement to come up with a protocol to 
allow us to resume poultry shipments. We had some difficulty, 
frankly, in getting Russia to sign that. We thought we had it 
signed last week. Secretary Vilsack and, again, Secretary 
Siddiqui and our team have been on the phone almost daily with 
our counterparts with Russia. We thought we had this issue put 
to bed Friday. The Secretary of the USDA, as you know, had put 
out regulations in terms of certifying the plants here. We felt 
the matter was put to bed. We had poultry packed and ready to 
go. Then we learned of this newest challenge.
    So, one, I know Secretary Vilsack and our team are reaching 
out to the Russians again to see if we can't get them to adhere 
to the agreement they have made, and I would encourage you, 
Senator, to express your sentiments to the Russians in whatever 
way you feel is appropriate. But we think it is just not too 
much to ask to get them to agree what they--I mean, to live up 
to an agreement they signed just three weeks ago.
    Senator Chambliss. Well, again, we appreciate your efforts 
on this. I know you have been very diligent on it and the 
Chairman and I will talk about some way that we might impress 
upon the Russians how important this is to us. When you have a 
deal and the deal is done and you are supposed to stick by it, 
and here we are not being able to trust the Russians to keep 
their word on the import of chickens into Russia, and yet we 
are in the process, and I am one of those who is on the fence 
on the issue of whether or not trust the Russians from the 
standpoint of the issue of nuclear weapons.
    So this type of action on the part of the Russians does not 
benefit them in the eyes of a lot of policy makers who are 
trying to make up their mind relative to the START treaty. If 
we can't work out a deal on chickens and they keep their word, 
what can we expect from them on inspection of nuclear weapon 
facilities?
    Going back to the issue that we touched on a little bit 
earlier relative to West African cotton producing countries, 
recent reports have indicated that those countries, also known 
as C4, plan to step up pressure on the United States and the EU 
for what they consider unfair trade practices. This comes at a 
time when world prices and demand have, frankly, improved 
pretty dramatically. Have there been any recent discussions 
between the United States and the C4 on this issue?
    Ambassador Kirk. Senator, there have, and your question is 
actually very timely. You may know or may not know, we actually 
just concluded yesterday the Ninth Annual AGOA Forum, the 
African Growth and Opportunity Act, and this is the ten-year 
anniversary of that, and obviously a number of members of the 
C4. We had 35 trade ministers, commerce ministers, ambassadors 
here, and we had a number of individual bilateral meetings with 
them.
    You should not be surprised that after our ability, again, 
working with the Department of Agriculture to avoid what could 
have been some pretty devastating retaliation by Brazil over 
the cotton case they filed against us, that the C4 have 
intensified their interest in this. But we continue to press 
upon them that, first of all, a resolution of U.S. cotton 
subsidies and other issues is only going to occur through a 
balanced conclusion to the Doha Round.
    But secondly, we have also been very honest in addressing 
with them underlying issues of desperately needed investment in 
Africa's infrastructure that would have to be made separate and 
apart from whatever the United States may do or the Europeans 
may do in terms of our approach to cotton support, that if we 
were to resolve those issues right now, the reality is the 
principal beneficiaries would be Brazil and other countries 
that have much more advanced support programs and 
infrastructure to be able to export cotton.
    So I don't know if that satisfies them. These are truly 
some of the poorest economies in the world. But at least we 
have tried to engage them in a much more honest discussion 
about what all has to happen to increase their export 
competitiveness.
    Senator Chambliss. Senator Thune?
    Senator Thune. Thank you. I appreciate the Senator from 
Georgia giving me an opportunity, and Ambassador, thanks for 
your indulgence, too, as we try and work around the votes.
    I just want to read a quote to you from a U.S. Chamber of 
Commerce study, and it says, and I quote, ``If the EU and 
Canada implement their Free Trade Agreements with Korea and 
Colombia and the United States does not, exporters in the EU 
and Canada will enjoy a competitive advantage over U.S. 
exporters in the Korean and Colombian markets. Specifically, 
failure to implement the U.S. Free Trade Agreements while our 
trading partners go forward with their agreements would lead to 
a decline of $40.2 billion in U.S. exports of goods and 
services and U.S. national output failing to grow by $44.8 
billion. The study estimates that the total net negative impact 
on U.S. employment from these trade and output losses could 
total 383,400 jobs.''
    I guess the point I am making is that this issue really 
comes down to, when you are talking about growing the economy 
and creating jobs, this is about economic growth. We are trying 
to get back on track here and get the economy growing again. 
There are tremendous export opportunities that are available to 
us that we are not able to access because we haven't gotten 
these implementing agreements submitted to Congress and moving 
forward with what I think are almost--these just seem like, for 
the most part, no-brainers in terms of these trade agreements.
    I guess my question for you has to do with regard to 
Colombia, Panama, and South Korea. Can you quantify for the 
committee the amount of tariffs that our agriculture industry 
has paid to each of these countries since these Free Trade 
Agreements have been signed?
    Ambassador Kirk. Senator, I don't have that information 
now. We will get that information for you, if you don't mind, 
and resubmit that to you. What I would say is we have been 
working very closely with the Chamber and others that are 
interested in Korea, and for the reasons that you articulated 
in reading the Chamber's statistics, it was a rationale both 
behind the President's announcement not only at the G-20 Summit 
in Canada, but frankly, when in his State of the Union people 
only heard the part of the statement about doubling exports. 
But he also spoke to the reality of us being in a very 
competitive global environment.
    Now, I want to make it plain. Our rationale in moving 
forward is not because Korea has signed a Free Trade Agreement 
with the European Union and Canada. That certainly would not be 
to our advantage.
    I would like to give you the other statistics. If we get 
this done, and I believe we will, there is a $10 billion upside 
for us, and rather than losing jobs, the opportunity to add 
70,000 jobs. And while I will get you the statistics and try to 
get the analysis you wanted looking back, but looking forward, 
the one great advantage is if we can get this Korea deal done 
and signed, is that about two-thirds of our tariffs on 
agriculture go away immediately. And then many of them will be 
phased out over ten years.
    So the upside in Korea is a huge market for us in terms of 
agricultural exports already. So it represents a very real 
opportunity for us to not only grow agricultural exports, but 
to help create jobs and grow the economy, and we think that is 
worth fighting for and that is one of the reasons the President 
has asked us to try to get this done.
    Senator Thune. Have the outstanding issues that the 
administration feels need to be resolved with these various 
countries been communicated to those countries, and what has 
been the response?
    Ambassador Kirk. In the case of Korea, certainly, I think 
it is generally accepted that concerns over the market access 
in autos, and you heard Senator Baucus and others speak about 
beef.
    In the case of Panama, there are a number of issues that we 
wanted to see them address on labor and the rights of workers 
and justice. And I want to make it plain. We are not trying to 
impose our U.S. labor code on other countries, but there are 
some generally accepted provisions encompassed in the May 10 
agreement we did with Peru that had support from Democrats and 
Republicans, we don't think are too much to ask. And in Panama, 
we did have the intervening factor of the OECD identifying 
Panama as a tax haven. So in our defense, I would say the issue 
of their coming up with an acceptable answer for that is not 
only one for the U.S., but with all of Panama's other trade 
partners. But we are making progress on that.
    In the case of Colombia, we did publish a notice in the 
Federal Register last August, one, so we could try to move just 
beyond some of the rhetoric over violence and really drill down 
and come up with a list that we can present to Colombia. We are 
now in the interagency review process to refine that, but 
again, trying to work in an expedited but thoughtful manner to 
meet the President's goal, as well, to present this to you 
sooner rather than later.
    Senator Thune. With the new Colombian administration about 
to take power, does the outlook for the Free Trade Agreement 
with Colombia improve?
    Ambassador Kirk. Yes. In fairness, Colombia has been ready 
to do this deal, because I want to make it plain that we are 
anticipating as good of a working relationship with the new 
Santos administration. But President Uribe and his team and 
Ambassador Barco have been wonderful to work with. So we don't 
see any break in the good relationship we had with them, and 
frankly, a lot of it has been our trying to work through some 
of the issues on our side so we can move forward.
    Senator Thune. And that is, I guess, what makes this so 
sort of perplexing, is that it seems like that one has been 
teed up for a long time and great cooperation from the country. 
So I would hope that, because as the President did say in the 
State of the Union, which is now many, many months ago that he 
wanted to double exports, and this is critical if we are going 
to be able to do that, and if we don't get these agreements 
signed, we are going to lose significant market opportunities 
to competitors. And I think the producers in places like South 
Dakota and other areas in America where we have strong, vibrant 
agricultural economies are going to really lose out.
    So I will share and echo the frustration you have heard 
from many of my colleagues here today that these things aren't 
getting done and would urge you to move forward as quickly as 
possible.
    Ambassador Kirk. We will do so, and Senator, we will need 
your support in that effort. Thank you.
    Senator Thune. Thank you, Mr. Chairman.
    Senator Chambliss. Mr. Ambassador, again, we thank you for 
coming today, and as you told the Chairman and I before the 
hearing this morning, it is the first time in a long time we 
have had the Trade Ambassador appear officially. Both 
Ambassador Portman and Ambassador Schwab used to come by 
informally, but we thank you for coming in and officially 
testifying at a hearing before the Agriculture Committee.
    I would simply say that our relationship with South Korea 
is very strong. We have got a brand new Kia plant that has 
opened in my State in the last several months. It has created 
1,500 jobs for Georgians directly and probably at least another 
1,500 at supplier facilities around the Western part of my 
State, the Eastern part of Alabama. We are very pleased with 
our relationship with the Koreans there.
    That being said, I think what you are going to find is 
pretty near unanimous consent around here with the statements 
of Senator Baucus. So I urge you to continue to proceed down 
the road of trying to conclude this, and we look forward to 
that being the case.
    But thank you very much for being here today and for your 
continued efforts in this.
    Ambassador Kirk. Senator, thank you so much, and we would 
welcome the opportunity to come back and visit with the 
committee at any time. And I particularly want to thank you for 
working with us on a number of issues important to American 
agriculture.
    And if I might say this, and since you referenced the Kia 
plant in Georgia, and I know the issues on autos are important. 
I mean, there are 790,000 Kias sold in the United States, less 
than 7,000 American cars of any kind sold in Korea, and that is 
unacceptable. But, on the other hand, with the increased 
production in the U.S., the number of Korean imports have 
actually declined as more and more of their cars sold are being 
produced here in the United States, which is something we would 
like to see, so that they are made by American workers.
    But thank you for your encouragement and we look forward to 
continuing to work with you and all the members of the 
committee.
    Senator Chambliss. Great. Thank you very much.
    And as the Ambassador exits, we will ask our second panel, 
Mr. Danny Murphy, Vice President of the American Soybean 
Association from Canton, Mississippi; Mr. Joe Mencer, Board 
Member of the USA Rice Federation, USA Rice Producers Group, 
and Arkansas Rice Producers Group, Lake Village, Arkansas; Mr. 
Duane Rhodes, Vice President of International Sales, Tyson 
Foods, on behalf of the National Chicken Council; and Mr. Brent 
Roggie, General Manager and Chief Operating Officer of the 
National Grape Cooperative Association, on behalf of the 
National Council of Farmer Cooperatives, to come forward.
    [Pause.]
    Chairman Lincoln. [Presiding.] All right. I thank the 
committee for their patience, and certainly for our panelists, 
we want to welcome you all. And again, I want to add my special 
thanks to Joe Mencer, who is a rice, cotton, corn, and soybean 
farmer from Lake Village, Arkansas, where he has been farming 
for 30 years on land owned by his family for 75 years. He 
serves on the USA Rice Federation Board in the Executive 
Committee and the USA Rice Producers Group Board as Vice 
Chairman of the USA Rice Council. Joe, thanks for being here. 
We are grateful to you.
    And also, Duane Rhodes of Springdale, Arkansas, Vice 
President of Export, Poultry, and Prepared Foods for Tyson 
Foods, where he has worked for the past 25 years. He is Vice 
Chairman of the Board of the U.S. Poultry and Egg Export 
Council.
    We appreciate both of you all being here from Arkansas as 
well as our other panelists, Danny Murphy, who is my neighbor 
there in Mississippi. We are grateful to you. And Brent Roggie, 
thank you so much for being here, as well.
    We are going to now move to your testimony, and I believe 
if it is appropriate--Senator Cochran, have you made your 
comments? Would you like to speak?
    Senator Cochran. Madam Chairman, I would like to have an 
opportunity to welcome----
    Chairman Lincoln. Good.
    Senator Cochran. --one of my favorite constituents, who is 
a member of this panel. I want to welcome Mr. Danny Murphy of 
Canton, Mississippi, and to thank him for his leadership and 
service to both his community and the agriculture community in 
my State.
    He and his wife and two sons are here today. He represents 
the State of Mississippi on the American Soybean Association 
Board. He is also an active farmer with his brother. They farm 
1,500 acres of soybeans and corn in our State. He has served in 
numerous positions of leadership since his election to the 
Board of the American Soybean Association back in 2005.
    I am glad to see him here and to extend the welcome to him 
and his family. We are happy that he could be here.
    Chairman Lincoln. Great. Thank you, Senator Cochran.
    We are going to wait and see. Senator Gillibrand wanted to 
be able to be here, so Mr. Roggie, I will give you a better 
introduction as we get down to you, but we will begin with Mr. 
Murphy.

  STATEMENT OF DANNY MURPHY, VICE PRESIDENT, AMERICAN SOYBEAN 
                ASSOCIATION, CANTON, MISSISSIPPI

    Mr. Murphy. Good morning, Madam Chairman and members of the 
committee. I am Danny Murphy, a soybean producer from Canton, 
Mississippi, and Vice President of the American Soybean 
Association. ASA appreciates the opportunity to appear before 
you today to provide our views on international trade issues, 
including the export promotion provisions of the 2008 farm 
bill.
    Soybeans are the second largest commodity in the United 
States in terms of annual acreage and value, with 78 million 
acres planted and a farm-gate value of $32 billion in 2009. 
Soybeans and soybean products are the most important U.S. 
export commodity, with sales exceeding $21 billion last year. 
This represents over 50 percent of U.S. soybean production and 
21 percent of total U.S. agricultural exports in 2009.
    As producers of the largest export dependent commodity, 
soybean farmers have historically made international trade a 
top priority. ASA has actively participated in negotiations on 
and strongly supported enactment of every multilateral, 
regional, and bilateral trade agreement the United States has 
engaged in. We have worked closely with every administration to 
ensure enforcement of these agreements, including their 
sanitary and phytosanitary provisions, and we have successfully 
protected access for U.S. soybean exports to foreign markets as 
new biotech traits have been introduced over the last 15 years.
    Looking to the future, the growth in world population and 
demand in developing countries for an improved diet, including 
more livestock products and vegetable oils, indicates a 
pressing need to increase soybean production over the next 
several decades. With limited opportunities to expand U.S. 
soybean acreage, most of this increase will need to come from 
raising yields. ASA has strongly supported greater funding for 
agriculture research, including the President's request for 
$429 million in the fiscal year 2011 funding for the 
Agricultural and Food Research Initiative. We are also working 
closely with companies that are developing new traits to 
increase soybean yields, protein and oil content, and other 
quality characteristics.
    ASA was pleased with the President's commitment to double 
the value of U.S. exports under the National Export Initiative. 
Efforts to contribute toward achieving this goal in the 
agricultural sector will require Congressional approval of the 
pending Free Trade Agreements with Colombia, South Korea, and 
Panama, negotiation of new Free Trade Agreements with key 
importing countries, and progress on the Asia-Pacific Economic 
Cooperation Regional Agreement. Delay in approving the Colombia 
Free Trade Agreement has caused us to lose over 50 percent of 
our market share for soybean meal. Negotiation of new Free 
Trade Agreements will require renewal of Presidential Trade 
Promotion Authority, which is a top priority for ASA.
    Action is also needed on legislation to normalize financial 
relations with Cuba. S. 3112, introduced by Senators Klobuchar 
and Enzi, would eliminate current financing restrictions as 
well as lift the ban on U.S. citizens traveling to Cuba. Cuba 
imported $284 million worth of U.S. soybeans, meal, oil, and 
livestock products in 2009. Normalizing financial relations 
would improve the competitiveness of U.S. soybeans and soybean 
and livestock product exports to the Cuban market.
    Turning to the trade title of the 2008 farm bill, ASA is 
one of the largest recipients of funds under the Export 
Promotion Program of USDA's Foreign Agricultural Service, 
including $6.8 million under the Foreign Market Development 
Program and $5.1 million under the Market Access Program. These 
funds are matched with soybean farmer check-off dollars 
contributed by the United Soybean Board. ASA strongly supports 
maintaining funding for the export promotion programs at 
current levels for fiscal year 2011 and increasing these levels 
in the 2012 farm bill.
    Finally, ASA continues to follow efforts to revive 
negotiations on the Doha WTO Trade Agreement. In December 2008, 
we joined other agricultural organizations in opposing the 
draft agricultural modalities framework known as the Falconer 
Text because it provides little assurance of improved market 
access for U.S. farm exports in exchange for major concessions 
on trade distorting domestic support. We stated at the time and 
repeat now that no agreement is better than a bad agreement. If 
the Falconer Text cannot be significantly changed, developing 
countries will need to make meaningful concessions during 
bilateral negotiations if the Doha Round is to be revived and 
completed.
    That concludes my statement, Madam Chairman, and I will be 
pleased to answer any questions you or other members of the 
committee may have.
    And I would like to add just a personal note that on behalf 
of the Mississippi farmers who were inundated with the rains 
last fall, we appreciate your work and Senator Cochran's work 
on the disaster assistance. Thank you.
    [The prepared statement of Mr. Murphy can be found on page 
63 in the appendix.]
    Chairman Lincoln. Thank you, Mr. Murphy. And as somebody 
that has walked soybean fields with a machete chopping down 
coffee bean plants, we appreciate your leadership on behalf of 
the American Soybean Association and those hard-working farm 
families out there across the country, so thank you.
    Mr. Murphy. Thank you.
    Chairman Lincoln. And we will continue to work hard on that 
disaster assistance.
    Mr. Murphy. Thanks.
    Chairman Lincoln. Joe Mencer, who is a rice, cotton, and 
soybean farmer from Lake Village, just across the river from 
Mississippi. Joe, thank you for being here and for all of your 
hard work on behalf of growers not only in Arkansas, but across 
the country.

  STATEMENT OF JOE MENCER, BOARD MEMBER, USA RICE FEDERATION; 
BOARD MEMBER, USA RICE PRODUCERS GROUP; VICE CHAIRMAN, USA RICE 
   COUNCIL; AND ARKANSAS RICE PRODUCERS GROUP, LAKE VILLAGE, 
                            ARKANSAS

    Mr. Mencer. It is my pleasure, Madam Chair. I would like to 
thank you and Senator Cochran for the opportunity to appear 
here today. I appear on behalf of USA Rice Federation and the 
USA Rice Producers Associations. Our two organizations 
represent rice producers in all the major rice producing 
States. We represent millers, merchants, exporters, and allied 
businesses.
    As you know, Arkansas is the largest rice producing State. 
We grow about 1.5 million acres, average, on an annual basis, 
and that is about half of the U.S. crop. Rice is also produced 
on another 1.7 million in five other States. Last year, U.S. 
farmers produced a rice crop of over $3 billion in farm-gate 
value. This production and subsequent sales generated $17.5 
billion in total value added to the U.S. economy from rice 
production, milling, selected end users, and had the employment 
effect of contributing 127,000 jobs to the U.S. labor force.
    The U.S. rice sector is a key player in the global rice 
market and the economic health of our industry is tied to 
exports, even though we only produce about two percent of the 
world's production. We export rice across the globe, with a 
major presence in North and Central America, Northeast Asia, 
the EU, Turkey, the Middle East, and Africa.
    Trade policy is the key focus of our industry, since we are 
greatly dependent on export channels to market nearly half of 
our annual production. Over the past 25 years, U.S. rice 
exports have risen from just under two million tons to nearly 
3.5 million tons, and that is largely because of policy gains 
made in key rice consumption markets and the joint 
international promotion work of the rice industry and the USDA. 
We believe that significant additional exports can be made if 
the public and private market promotion and development 
partnership with USDA is continued in combination with an 
aggressive trade policy agenda.
    The U.S. rice industry receives $5.7 million in our current 
fiscal year from the Market Access Program and Foreign Market 
Development Program to promote rice in foreign markets. For 
every one dollar that is received in these programs, the 
industry in turn spends $3.91.
    Trade agreements are central to our current level of U.S. 
rice exports and for future expansion. Prior to NAFTA, rice 
exports to Mexico faced high tariffs, discrimination against 
milled rice, and government control of imports. Today, U.S. 
rice trades duty-free into Mexico and it is now the number one 
export for U.S. rice, with over 833,000 tons in the 2009 crop 
year.
    Future trade agreements must be inclusive of all tariff 
lines, must reflect a level of participation by advanced 
developing countries commensurate with their economic 
development, and include market access gains for U.S. 
agriculture while preserving the ability of U.S. agriculture to 
maintain a viable domestic farm safety net.
    One key export market that can be opened very easily and 
requires only action by the U.S. Government is Cuba. Our 
industry, along with much of U.S. agriculture, favors an 
opening of trade and travel to Cuba. The ability of American 
citizens to travel freely to Cuba and to engage in the full 
range of commercial activities in Cuba is essential to a 
successful and meaningful market establishment there.
    Cuban rice imports have averaged nearly 600,000 metric tons 
annually for the last five years, and U.S. suppliers enjoy 
logistical advantages to meet this demand, but our current 
policy thwarts this advantage. U.S. rice sales to Cuba resumed 
in 2001 with the passage of the Trade Sanction Reform and 
Export Enhancement Act, until sales faltered following the 2005 
regulation change by the Department of Treasury. This 
regulation effectively placed the U.S. administration between a 
willing buyer and seller. It impedes the ability of U.S. 
companies to export and should be permanently repealed.
    We also urge support and passage of legislation that would 
allow for open agricultural trade and travel to Cuba, and two 
such bills that would do this are S. 1089 and S. 3112.
    In terms of pending trade agreements, rice was completely 
excluded from the trade agreement with South Korea and it 
blocked us out of that market forever. We do encourage the 
agreements with Colombia and Panama and we urge Congress and 
the administration to move forward on those two trade 
agreements.
    Rice farmers and exporters are also facing a challenge in 
the European market now because of an accidental presence of 
the Liberty Link gene that was introduced into the rice crop in 
2006, and we lost that market just overnight. We need the 
administration's help to restore that market. After four years 
of market absence combined with high and complex tariffs on 
U.S. rice, duty-free competition from India and Pakistan, and 
the prospective threat of duty-free competition from the 
developing countries has set back U.S. exports into the 
European market. We are pleased to be working with Ambassador 
Siddiqui and others on Ambassador Kirk's team to address our 
immediate access problems in the European market.
    We feel that there is a duty on brown rice imports in the 
European market that are not being met under the WTO 
requirements and we need the support of this committee and the 
administration to try to get those duties removed from brown 
rice.
    And in summary, Congress and the administration should 
commit to restore normal commercial relations between the U.S. 
and Cuba, approve Free Trade Agreements with Colombia and 
Panama as well as South Korea. We don't oppose that, even 
though we were left out. And we need to negotiate a balanced 
agreement in the Doha Round for future trade agreements that 
expand for access of U.S. rice and other agriculture exports 
into other countries. And, most of all, provide sufficient 
funds and resources and policy to direct USDA so they can carry 
out the important function of Export Market Promotion and 
elimination of phytosanitary and veterinary bases to trade.
    In closing, we would like to thank the committee for the 
opportunity to present rice's issues here today and I would be 
happy to take any questions.
    [The prepared statement of Mr. Mencer can be found on page 
50 in the appendix.]
    Chairman Lincoln. Thank you, Joe. We appreciate all that 
you do, and again, having walked a rice levee or two myself, we 
are grateful to you all with the U.S. Rice Federation and the 
Rice Producers Group and grateful for your leadership, as well.
    I should have noted earlier that we will hold our questions 
until everyone has given their testimony.
    Mr. Rhodes, thank you for coming to the committee, as well. 
We are grateful for your presence here. I would say a special 
thanks, as well, for your conversations earlier with the staff 
of the committee on the Russian poultry issue. Senator 
Chambliss and I had an opportunity to visit privately with the 
Ambassador, as well, and we will continue to be working with 
you all in the industry and others to really come up with the 
kind of resolutions that we need in an expeditious way. So we 
appreciate very much your input on that, as well.
    We look forward to working with you. So thanks for your 
leadership in the poultry industry and the livestock industry 
and we would love to have your testimony. Thanks.

 STATEMENT OF DUANE RHODES, VICE PRESIDENT OF EXPORT, POULTRY 
  AND PREPARED FOODS, TYSON FOODS; SECOND VICE CHAIRMAN, USA 
   POULTRY AND EGG EXPORT COUNCIL; ON BEHALF OF THE NATIONAL 
             CHICKEN COUNCIL, SPRINGDALE, ARKANSAS

    Mr. Rhodes. Well, good morning and thank you, Senator 
Lincoln, Senator Chambliss, and committee members, for the 
opportunity to present the U.S. poultry industry's views on 
critical international trade issues.
    I am Duane Rhodes, Vice President of Export Poultry and 
Prepared Foods for Tyson Foods, Incorporated, based in 
Springdale, Arkansas. I also serve as the Second Vice Chairman 
of the USA Poultry and Egg Export Council. This morning, I am 
representing the National Chicken Council. NCC represents 
companies including Tyson Foods which produce and process about 
95 percent of the chicken in the United States. Also, as Tyson 
is a major processor and exporter of beef and pork, I will 
provide some thoughts on the exports of fresh meats, as well.
    To begin, I want to thank you, Chairman Lincoln, as well as 
Ranking Member Chambliss, for working closely with the 
administration to reopen the Russian market for U.S. poultry. A 
quarter of the Senate expressed in writing to President Obama 
the critical need to achieve a resolution of the six-month 
stalemate on U.S. poultry exports to Russia. This strong 
statement by the Congress on a difficult trade issue was a 
major factor in helping to convince the Russian President to 
conclude an agreement to restore U.S.-Russian poultry trade, at 
least at the end of June.
    Poultry exports to Russia, like poultry exports to most 
foreign countries, consist mainly of chicken leg quarters. In 
2009, more than 19.5 percent of the chicken that we produced in 
the United States was exported, a record percentage. Exporting 
the ``back of the bird'' is critical to keeping the U.S. 
chicken supply in better balance for overall demand.
    With impediments to our two largest poultry export markets, 
Russia and China, poultry exports are down for 2010. 
Fortunately, there is some good news with beef and pork 
exports. Beef exports total $3.7 billion this year, just short 
of the 2003 pre-BSE levels, and pork exports are expected to be 
the second largest on record, at $4.5 billion.
    Across the poultry and meat sectors, we are optimistic that 
the U.S. Government focus on trade can yield very positive 
results. That is why we were pleased when President Obama 
called for doubling the U.S. exports in the next five years, 
including agricultural exports. The President's plan, the 
National Export Initiative, sends a strong signal to foreign 
competitors that U.S. agriculture will become more aggressive 
in securing its fair share of the world market for our food and 
agricultural products.
    For our industry, we believe there are two critical 
components to making the President's plan a success. First, the 
United States must have policies and programs in place to help 
U.S. agriculture compete effectively overseas. USDA's Foreign 
Agricultural Service administers two important export promotion 
and market development programs, the Market Access Program, 
MAP, and the Foreign Market Development, FMD. Both programs 
will require increased funding to maximize agriculture's 
contribution to the National Export Initiative's goal. The 
bottom line is that all sectors of the U.S. economy and 
agriculture will need to be energized to meet the President's 
goal.
    A second critical component is Congressional approval of 
the Korean, Colombian, and Panamanian Free Trade Agreements. 
These trade agreements should more appropriately be called Job 
Creation Agreements, because that definitely is what they would 
be for agriculture. According to a recent industry study, more 
than 29,000 meat and poultry jobs would be added as a result of 
full implementation of the three FTAs.
    There is also no question that the FTAs and increased trade 
generally boost our overall economy. According to the USDA, for 
every $1 billion in agricultural trade, 9,000 American jobs are 
created. It is worth noting that leading agricultural export 
States, as Arkansas and Georgia, are well positioned to benefit 
from the increased trade.
    A final area that I would highlight for the committee is 
China. In recent years, exports to China have been a real 
success story for the poultry industry, and China was our 
second largest export market in 2009. However, earlier this 
year, China imposed very high preliminary anti-dumping and 
countervailing duties on U.S. chicken and chicken parts and 
these duties may soon be finalized. While our industry 
certainly disagrees with China's rationale for these cases, the 
focus should be on the most effective way for U.S. poultry 
exporters to regain fair access to the China market.
    One effort that may prove productive in reestablishing 
trade in China is an industry proposal to settle the anti-
dumping and countervailing duty cases by establishing a minimum 
selling price for a number of chicken parts. USTR and USDA have 
agreed to support this initiative and the Chinese government 
has also indicated a strong interest in such an arrangement. We 
would ask for this committee's support for this initiative, as 
well.
    Another challenge for poultry for China concerns is China's 
continued ban on imports of poultry either processed in or 
moved through U.S. States that have reported an incident of 
low-pathogenic AI. Unfortunately, China is not imposing or 
lifting these bans in accordance with World Health Organization 
OIE guidelines. For Tyson, the cumulative effect of these State 
bans, which includes the Chairman's own State, is roughly 50 
percent of our export capacity is blocked. This is a problem 
that could grow worse if not addressed.
    As this committee knows, there is great opportunity in 
China not only for poultry, but for beef and pork, as well. 
There is progress on the pork exports, but the beef industry 
still lacks a Market Access Agreement. We urge this committee 
and the administration to push for a beef agreement with China 
that will open the market to beef from cattle aged 30 months 
and under as an initial step, with additional market access 
phased in.
    In closing, although this list of issues facing U.S. 
poultry and meat exports is challenging and seemingly ever 
growing, we know that we produce the world's highest quality 
products and we are optimistic about the future. In order to 
maximize poultry exports in the years ahead, we will need 
robust export promotion programs, expanded markets through Free 
Trade Agreements, and assistance in overcoming non-science-
based sanitary and veterinary prohibitions.
    I appreciate the committee's attention to these issues and 
will be happy to answer any questions.
    [The prepared statement of Mr. Rhodes can be found on page 
66 in the appendix.]
    Chairman Lincoln. Thank you, Mr. Rhodes.
    Mr. Roggie, Senator Gillibrand had hoped to be here--I 
think she is going to still be joining us--but I would like to 
go ahead and introduce you, if I may.
    Brent Roggie, who grew up on a dairy farm in Upstate New 
York has served for the past ten years as General Manager and 
Chief Operating Officer of the National Grape Cooperative, 
representing members in New York, Pennsylvania, Ohio, Michigan, 
and Washington State. We know that your industries are vital 
both to the economy here in the U.S. as well as our exports and 
we are grateful that you are here today to give us your 
testimony, so thank you, Mr. Roggie.

STATEMENT OF BRENT ROGGIE, GENERAL MANAGER AND CHIEF OPERATING 
 OFFICER, NATIONAL GRAPE COOPERATIVE ASSOCIATION; ON BEHALF OF 
  THE NATIONAL COUNCIL OF FARMER COOPERATIVES, WESTFIELD, NEW 
                              YORK

    Mr. Roggie. Thank you. Chairman Lincoln, Ranking Member 
Chambliss, and members of the committee, thank you for the 
opportunity today to testify on the importance of international 
trade in promoting U.S. agricultural exports. On behalf of 
National Grape's grower members and the more than two million 
farmers and ranchers who belong to farmer cooperatives, I 
appreciate that this statement will be made part of the 
official hearing record.
    I am Brent Roggie, General Manager of the National Grape 
Cooperative. It is an agricultural cooperative that has 1,150 
members who own and operate 46,000 acres of Concord and Niagara 
grapes, as was mentioned, in New York, Pennsylvania, Ohio, 
Michigan, and the State of Washington. I also serve on the 
Executive Council of the National Council of Farmer 
Cooperatives.
    National Grape actually owns Welch's, which processes and 
then markets our members' grapes in the United States and over 
51 other countries. Farmer cooperatives such as National Grape 
allow individual farmers, I believe, to truly participate in 
the food and fiber system all the way from the farm to retail. 
We have built well-known brands that you see every day on the 
supermarket shelves. We have also built the relationships and 
networks to help expand the demand for these brands and markets 
overseas. The earnings from these sales are returned to the 
farmer owners and help to provide market-based income from 
beyond the farm-gate.
    For National Grape's grower-owners, the Welch's brand is 
key to expanding market demand and increasing profitability, 
and foreign markets represent the greatest potential to do just 
that. Seventy percent of the world's juice is consumed outside 
of the United States, and foreign juice consumption is expected 
to increase at four times the rate of U.S. consumption. While 
foreign markets account for 15 percent of Welch's sales, they 
represent as much as 26 percent of our growers' income stream.
    USDA export promotion programs, such as the Market Access 
Program and the Foreign Market Development Program, play a 
vital role in helping farmers and their co-ops capitalize on 
these opportunities overseas. Both programs have been 
tremendously successful and extremely cost effective in helping 
maintain and expand U.S. agricultural exports.
    For example, by combining the assistance provided by MAP 
with a strong Welch's brand, our growers have seen exports to 
Japan grow by 46 percent just in the last three years, with our 
volume increasing from 857,000 cases in 2007 to 1,251,000 cases 
in 2009, and MAP was vital to our success in that market.
    Many of my fellow farmer co-op leaders could also testify 
to the success that they have had in using brands to build 
market share both here and abroad. This branding differentiates 
the product in the global marketplace and builds customer 
loyalty and confidence in quality. As such, the MAP Branded 
Promotion Program has been instrumental in leveraging farmers' 
investment in their own co-ops and brands to grow in foreign 
markets.
    Over the next five years, National Grape plans to increase 
foreign market sales by at least ten percent per year and will 
be investing heavily to make this possible. Access to matching 
funds through MAP is critical to our ability to attain these 
sales goals and enable our grower-owners to remain profitable. 
Without access to MAP, the effectiveness of our overseas 
promotion programs would be greatly diminished.
    In addition, since promotion programs are allowed under WTO 
rules, many of America's direct competitors have devoted 
considerable resources to market development, and MAP helps to 
level the playing field for American producers.
    As you prepare for deliberations on the 2012 farm bill, we 
strongly encourage the committee to maintain eligibility of 
farmer co-ops and their branded products under MAP. We also 
urge continued funding for MAP and FMD at $200 million and 
$34.5 million annually, respectively, as authorized under the 
2008 farm bill.
    Passage of the Free Trade Agreements in South Korea, 
Colombia, and Panama would also help meet the goal of 
aggressively increasing exports. The situation that our U.S. 
grape growers face in South Korea illustrates this very well. 
Currently, our grape juice concentrate is subjected to a 45.5 
percent duty, while Chile's competing red grape juice tariff is 
minimal, and starting next January it is zero. That puts us at 
a distinct competitive disadvantage, and approval of the U.S.-
South Korea FTA would eliminate this disparity. Despite the 
45.5 percent duty, we have to maintain a retail premium of just 
30 percent, so we are able to make up some of that, but not all 
of it.
    Other issues which will contribute to expanding U.S. 
agricultural exports include resolving outstanding sanitary and 
phytosanitary and technical barriers to trade, resolving 
disputes such as the one with Mexico over trucking, and a 
successful World Trade Organization Doha Round, one that makes 
for commercially meaningful advances in market access.
    In conclusion, thank you again for the opportunity to 
testify today before the committee, and thank you for your 
leadership on behalf of American farmers, ranchers, and their 
farmer co-ops. We appreciate your support of important 
agricultural export programs and policies.
    I would also like to mention to Chairman Lincoln, we thank 
you for co-chairing the Congressional Farmer Caucus. We 
appreciate your leadership in that area.
    [The prepared statement of Mr. Roggie can be found on page 
79 in the appendix.]
    Chairman Lincoln. Well, thanks to all of you all for making 
sure that we know directly from the field how important things 
are and what we can do to be more helpful in terms of both job 
creation and maintaining a safe and affordable supply of food 
and fiber, not just for our nation, but for the world.
    Just quickly, I would give each of you all also a quick 
chance, as you represent the point of view of your producer 
groups, if there is one single most important step that could 
be taken that would expand exports of your commodities, what do 
each of you all think? I know you have expressed some concerns, 
but if there is one single one that you would pick out of all 
of those, is there any one that from your point of view from a 
specific producer group? Anyone? Mr. Murphy?
    Mr. Murphy. I would just say that we would like to make 
sure that the MAP and FMD programs funds are fully funded as 
authorized. I will add a second point, that we would like to 
see them applied to Cuba, if we could move forward with this 
other previous bill.
    Chairman Lincoln. All right. Joe?
    Mr. Mencer. I would have to agree with Mr. Murphy. I have 
got two. It is hard to pick. A Free Trade Agreement with Cuba 
is vitally important to rice production in the State of 
Arkansas and the Mid-South.
    Chairman Lincoln. Great. Mr. Rhodes?
    Mr. Rhodes. I have got two, also.
    [Laughter.]
    Chairman Lincoln. You all are breaking the rule, but it is 
okay.
    Mr. Rhodes. Okay. Of course, we would love to get a 
finalized version on the Russian deal. That is on the top of 
everybody's mind here, I am sure. And the other one would be 
that in China, that we prevail or get a solution on the 
countervailing duties and anti-dumping.
    Chairman Lincoln. Great.
    Mr. Roggie. And with us, I would certainly agree with MAP 
and FMD I would also remind everyone of the USDA study that was 
recently concluded in March of 2010. For every dollar that was 
spent in MAP funding, a $35 return was shown in a cost-benefit 
analysis. It was just completed. So I would certainly like to 
have MAP and FMD fully funded, as they were in the 2008 farm 
bill, and certainly to have the FTA agreements that are 
currently under negotiation to be completed. And any others 
that could be started, that would be good, as were mentioned 
earlier this morning.
    Chairman Lincoln. Okay. Thirty-five-to-one. That is pretty 
good odds. I am with you on that.
    Mr. Murphy, according to USDA economic research, 93 percent 
of all soybean acres planted in 2010 were planted with seed 
with one or more genetically engineered traits, so certainly 
acceptance of these GM crops in international markets is 
crucial. What more could be done by the U.S. Government to 
promote the benefits of agricultural biotech?
    Mr. Murphy. I think we need to continue to work on it. Most 
countries do accept genetically modified traits, but there is 
always a constant challenge to make sure that when you have a 
new event, that it is accepted. The EU continues to be a 
problem, where they have resisted moving forward. I think 
efforts need to be made in the EU to encourage them to accept 
our products.
    Chairman Lincoln. It sets a good example. I know that.
    Mr. Mencer, after discovery of those trace amounts of 
unapproved, the Liberty Link 601 gene in the rice supply in 
2006, the EU implemented burdensome testing requirements on our 
rice which basically closed their markets to our product. I 
understand that those testing requirements have finally been 
lifted, but the trade has not yet resumed.
    I mean, kind of following on the steps of Mr. Murphy there, 
what steps need to be taken for that to happen? Is there 
something that we can do, do you think, or any comments that we 
can make that would help resume some of that trade, building 
that confidence? I think those things could be very important.
    And I know you have mentioned Cuba, and I echo that. The 
average Cuban consumer eats 150 pounds of rice annually and 80 
percent of that is imported. If these current barriers that we 
have with Cuba were relaxed, do you think the U.S. rice farmers 
could beat out the rice produced in Vietnam and Thailand for 
this market, where the Cuban imports are currently sourced 
from?
    Mr. Mencer. On the Cuban issue, we feel like that we have a 
better quality product than where they are importing the rice 
from now. Before the ban was put on back in the 1960s, we 
probably sent them 500,000 to 600,000 tons a year, and most of 
that came out of the Mid-South or Arkansas. We feel like that 
they prefer our rice. I think between the logistics of being 
closer, we can offset the price, higher price of our product by 
the lower freight rates that it will be costing. We have 
already proven we can supply the rice to them. It is a 
preferred product there.
    On the European issue, I think just trying to convince the 
European market that to base their judgments on sound science, 
that this is not a harmful trait to the rice, maybe would help 
some. And the issues with the tariffs that they are imposing on 
brown rice now is just--we don't feel like that is fair. It is 
not compliant under the WTO requirements. And we think that 
this committee could urge the administration to try to get 
those tariffs removed. They should be closer to zero.
    Chairman Lincoln. Right. There is no doubt that the Cubans 
enjoyed rice from the Southern States in the 1950s to a great 
degree, and that is certainly evidence to me there is great 
opportunity to increase that. And certainly with the growing 
popularity of brown rice, I think you are exactly right. Making 
sure that those markets are open to us and our products are 
critical. So thank you very much.
    My time has expired and I will turn to the Ranking Member, 
Senator Chambliss.
    Senator Chambliss. Thanks, Madam Chairman, and gentlemen, 
thanks for your testimony.
    This is to each of you. The administration's Interagency 
Trade Promotion Coordinating Committee recently solicited 
industry comments regarding the National Export Initiative. Did 
your national associations or companies provide comments, and 
if so, can you summarize what those comments were? Mr. Murphy?
    Mr. Murphy. I think we did, and we would have 
wholeheartedly supported that initiative. As I stated in my 
testimony, soybeans are critically dependent on exports. Over 
50 percent of the crop is exported and the soybean farmer's 
income depends on exports. Thank you.
    Senator Chambliss. Mr. Mencer?
    Mr. Mencer. Yes, sir. The Rice Federation did support this 
doubling of exports and our main focus was this could be 
achieved for rice by opening the Cuban market and Free Trade 
Agreements and the help with the European Union issue we have.
    Senator Chambliss. Okay. Mr. Rhodes?
    Mr. Rhodes. Yes, sir. I believe that our trade focused on 
the FTAs and the MAP support as far as funding and staffing.
    Senator Chambliss. Okay. Mr. Roggie?
    Mr. Roggie. Yes. We had comments that were submitted. We 
have attached them to our written record and those were through 
the Ag Export Coalition. It is a coalition of over 100 
agricultural companies that submitted that. And basically, it 
is similar to what these other gentlemen mentioned. It is fully 
funding MAP, FMD, and working through Free Trade Agreements are 
the major three.
    Senator Chambliss. Mr. Rhodes, Tysons is one of the largest 
meat processors in the United States, and obviously exporting 
your products is critically important to you. You heard us 
discussing with Ambassador Kirk the situation regarding the 
South Korean FTA. How important is it to a company like Tyson 
Foods that we have the ability to export all age, all cuts of 
beef to a country like South Korea versus our limitation now on 
being able to export only beef under 30 months of age?
    Mr. Rhodes. Well, it is important to our company, Senator. 
We actually believe that--you asked about Korea, but China 
would be the place that, if we had an opportunity to gain 
access with our beef, would be the place there. I think you are 
asking, is it kind of a process where you get one thing and 
then add another one. I think our industry would support that.
    Senator Chambliss. Okay. Thanks very much, Madam Chairman.
    Chairman Lincoln. Senator Cochran?
    Senator Cochran. Madam Chairman, I am pleased to have the 
opportunity to be here this morning and listen to the testimony 
we have heard. I think it has been very helpful, instructive 
about the policies at work and those that need to be modified, 
improved so that we can gain even more of the world's share of 
the market from our agricultural products grown and marketed 
out of the United States. I think that is one of our important 
roles here in the Congress and this committee is going to be at 
the forefront, I think, of leading the way, making sure we 
achieve those goals.
    Chairman Lincoln. Are you done?
    [Laughter.]
    Chairman Lincoln. I am sorry----
    [Laughter.]
    Chairman Lincoln. Well, thanks to you, Senator Cochran and 
the other Senators that were here. I want to thank our panel.
    I just wanted to mention, too, to Mr. Rhodes that I know 
your testimony described several instances in which the 
government of China seemed to be imposing restrictions on U.S. 
meat and poultry exports. You have mentioned it both in the two 
things that you wanted to see happen as well as in the comments 
with Senator Chambliss, some of those restrictions that are 
inconsistent with WTO obligations, either through improper use 
of anti-dumping rules or through the SPS rules which ignore the 
OIE standards. We want to continue to work with you and 
certainly continue to work as the government contemplates WTO 
dispute settlement cases against restrictions and see if there 
is not more that we can do about that. I don't know if you have 
got any further comments about that, but you have kind of been 
pretty clear.
    Mr. Rhodes. Well, the one thing I would like to say in 
reference to China, in fairness there, that if China--one of 
the things that I think would help us with just about all our 
trade issues with China, at least from a poultry area, would be 
the ability for China to export out of approved facilities 
fully-cooked poultry to the United States. I think that is a 
point that would allow them to maybe be more reasonable on our 
exports.
    Chairman Lincoln. And we have certainly been working with 
the House and others on that issue and we will----
    Mr. Rhodes. We appreciate that, Senator.
    Chairman Lincoln. You bet, and continue to do so.
    Thanks to all of you all. I would also like to publicly 
apologize to Senator Thune. I wasn't paying attention and 
Senator Roberts had already voted. I should have called on 
Senator Thune to go, but I wasn't paying attention to everybody 
that was moving around. It may have saved us a little time.
    But thanks to our panel here today. We appreciate that. We 
appreciate all the members for being here and we look forward 
to continuing to work with you all as we open up markets, 
understanding how important it is to create jobs in this 
country. That is going to be a critical part of putting our 
economy back on track, and we know that you all provide the 
great industries that can help us do that. We want to continue 
to work with you and to continue to move in that vein.
    So thank you for joining us. We appreciate it. We look 
forward to continuing that work.
    The committee stands adjourned.
      
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                            A P P E N D I X

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                             August 4, 2010



      
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                         QUESTIONS AND ANSWERS

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