    [House Hearing, 112 Congress]
    [From the U.S. Government Publishing Office]

                HEARING TO REVIEW PENDING FREE TRADE AGREEMENTS

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

                                    HEARING

                                   BEFORE THE

                            COMMITTEE ON AGRICULTURE
                            HOUSE OF REPRESENTATIVES

                          ONE HUNDRED TWELFTH CONGRESS

                                 FIRST SESSION

                                   __________

                                  MAY 12, 2011

                                   __________

                               Serial No. 112-16

              Printed for the use of the Committee on Agriculture
                             agriculture.house.gov

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                            COMMITTEE ON AGRICULTURE

                       FRANK D. LUCAS, Oklahoma, Chairman

    BOB GOODLATTE, Virginia,             COLLIN C. PETERSON, Minnesota,
        Vice Chairman                    Ranking Minority Member
    TIMOTHY V. JOHNSON, Illinois         TIM HOLDEN, Pennsylvania
    STEVE KING, Iowa                     MIKE McINTYRE, North Carolina
    RANDY NEUGEBAUER, Texas              LEONARD L. BOSWELL, Iowa
    K. MICHAEL CONAWAY, Texas            JOE BACA, California
    JEFF FORTENBERRY, Nebraska           DENNIS A. CARDOZA, California
    JEAN SCHMIDT, Ohio                   DAVID SCOTT, Georgia
    GLENN THOMPSON, Pennsylvania         HENRY CUELLAR, Texas
    THOMAS J. ROONEY, Florida            JIM COSTA, California
    MARLIN A. STUTZMAN, Indiana          TIMOTHY J. WALZ, Minnesota
    BOB GIBBS, Ohio                      KURT SCHRADER, Oregon
    AUSTIN SCOTT, Georgia                LARRY KISSELL, North Carolina
    SCOTT R. TIPTON, Colorado            WILLIAM L. OWENS, New York
    STEVE SOUTHERLAND II, Florida        CHELLIE PINGREE, Maine
    ERIC A. ``RICK'' CRAWFORD, Arkansas  JOE COURTNEY, Connecticut
    MARTHA ROBY, Alabama                 PETER WELCH, Vermont
    TIM HUELSKAMP, Kansas                MARCIA L. FUDGE, Ohio
    SCOTT DesJARLAIS, Tennessee          GREGORIO KILILI CAMACHO SABLAN,
    RENEE L. ELLMERS, North Carolina     Northern Mariana Islands
    CHRISTOPHER P. GIBSON, New York      TERRI A. SEWELL, Alabama
    RANDY HULTGREN, Illinois             JAMES P. McGOVERN, Massachusetts
    VICKY HARTZLER, Missouri
    ROBERT T. SCHILLING, Illinois
    REID J. RIBBLE, Wisconsin
    ------

                                     ______

                               Professional Staff

                          Nicole Scott, Staff Director

                         Kevin J. Kramp, Chief Counsel

                     Tamara Hinton, Communications Director

                    Robert L. Larew, Minority Staff Director

                                      (ii)

                                 C O N T E N T S

                                  ----------
                                                                       Page
    Lucas, Hon. Frank D., a Representative in Congress from Oklahoma,
      opening statement..............................................     1
        Prepared statement...........................................     3
    McGovern, Hon. James P., a Representative in Congress from
      Massachusetts, prepared statement..............................     4
        Submitted letter.............................................   101
    Peterson, Hon. Collin C., a Representative in Congress from
      Minnesota, opening statement...................................     4

                                   Witnesses

    Vilsack, Hon. Thomas ``Tom'' J., Secretary, U.S. Department of
      Agriculture, Washington, D.C...................................     6
        Prepared statement...........................................     7
        Submitted questions..........................................   127
    Kirk, Hon. Ron, United States Trade Representative, Washington,
      D.C............................................................    10
        Prepared statement...........................................    11
        Supplementary material.......................................   111
        Submitted questions..........................................   128
    Stoner, Gordon, Member, Board of Directors, National Association
      of Wheat Growers; farmer/rancher, Stoner Farms, Outlook, MT; on
      behalf of U.S. Wheat Associates, Inc...........................    44
        Prepared statement...........................................    45
    Tolman, S. Richard ``Rick'', Chief Executive Officer, National
      Corn Growers Association, Chesterfield, MO.....................    50
        Prepared statement...........................................    51
    Carney, Sam, Chairman, Trade Policy Committee, National Pork
      Producers Council; Owner and Operator, Carney Farms, Inc.,
      Adair, IA......................................................    54
        Prepared statement...........................................    55
    Johnson, Roger, President, National Farmers Union, Washington,
      D.C............................................................    67
        Prepared statement...........................................    68
    Stallman, Bob, President, American Farm Bureau Federation; rice
      and cattle producer, Columbus, TX..............................    80
        Prepared statement...........................................    82
    Donald, Bill, President, National Cattlemen's Beef Association,
      Washington, D.C................................................    89
        Prepared statement...........................................    91

                               Submitted Material

    Cressy, Dr. Peter H., President and Chief Executive Officer,
      Distilled Spirits Council of the United States, Inc., submitted
      statement......................................................   114
    Cummings, Robert, Senior Vice President, USA Rice Federation,
      submitted letter...............................................   117
    Dorr, Thomas C., President and Chief Executive Officer, U.S.
      Grains Council, submitted statement............................   119
    Erickson, Audrae, President, Corn Refiners Association, submitted
      statement......................................................   123
    International Dairy Foods Association, submitted statement.......   124
    Suber, Thomas M., President, U.S. Dairy Export Council; Jerry
      Kozak, President and Chief Executive Officer, National Milk
      Producers Federation, submitted joint statement................   113

                HEARING TO REVIEW PENDING FREE TRADE AGREEMENTS

                                  ----------

                             THURSDAY, MAY 12, 2011

                              House of Representatives,
                                      Committee on Agriculture,
                                                       Washington, D.C.
        The Committee met, pursuant to call, at 10:05 a.m., in Room
    1300 of the Longworth House Office Building, Hon. Frank D.
    Lucas [Chairman of the Committee] presiding.
        Members present: Representatives Lucas, Goodlatte, Johnson,
    King, Neugebauer, Conaway, Fortenberry, Schmidt, Thompson,
    Stutzman, Gibbs, Austin Scott of Georgia, Tipton, Southerland,
    Crawford, DesJarlais, Gibson, Hultgren, Hartzler, Schilling,
    Roby, Peterson, Holden, McIntyre, Boswell, Baca, Cuellar,
    Costa, Walz, Schrader, Pingree, Courtney, Fudge, Sewell,
    Sablan, and McGovern.
        Staff present: Mike Dunlap, Tamara Hinton, John Konya, John
    Porter, Nicole Scott, Debbie Smith, Heather Vaughn, Andy Baker,
    Liz Friedlander, and Jamie Mitchell.

     OPENING STATEMENT OF HON. FRANK D. LUCAS, A REPRESENTATIVE IN
                         CONGRESS FROM OKLAHOMA

        The Chairman. This hearing by the Committee on Agriculture
    hearing to review pending free trade agreements will come to
    order. Good morning. I would like to thank Secretary Vilsack
    and Ambassador Kirk and our industry representatives for
    joining us today to discuss free trade agreements.
        As we know, there are three pending free trade agreements
    with Korea, Colombia, and Panama. Unfortunately, it has been
    nearly 4 years since these agreements were signed, and the
    Administration is just now close to bringing the agreements
    before Congress.
        It is difficult to overstate the importance of these
    agreements to America's farmers and ranchers and to our economy
    as a whole. Trade has a ripple effect. Exports support one in
    every three jobs in farming and two of every three jobs off the
    farm in industries like transportation, food processing, and
    manufacturing. All told, American agriculture exports support
    nearly 900,000 jobs. Exports currently account for more than 25
    percent of total agricultural sales.
        For every dollar of those exports' sales, we create $1.48
    in processing, financing, shipping, and packaging activities.
    The benefits of trade are made possible by the incredible
    productivity and hard work of America's farmers and ranchers.
    Even in this economic downturn, they have managed to maintain a
    trade surplus in agricultural exports. Our farmers and ranchers
    are successfully competing in the global market and bringing
    much needed income to communities across America.
        But they are doing so in the face of stiff protectionism in
    the form of high tariffs and non-tariff import restrictions.
    The pending FTAs will dramatically reduce these barriers and
    open markets for agricultural goods. The agreement with Panama
    will immediately eliminate all duties on more than half of our
    agricultural exports. The remaining tariffs will be phased out
    over 15 years. This is critical to establishing a healthy
    trading relationship since 99 percent of Panama's exports to
    the U.S. are already duty-free.
        The FTA with Colombia will immediately eliminate all duties
    on more than half of our agricultural exports. In addition to
    phasing out the remaining tariffs, Colombia will also eliminate
    its price band system, which affects key U.S. exports
    including, corn, wheat, dairy, pork, and poultry.
        The Korean FTA will grant immediate duty-free access to \2/
    3\ of U.S. agricultural products and phase out tariffs and
    import quotas on most products within 10 years. By 2016, more
    than 90 percent of U.S. pork will be imported duty-free, and
    the elimination of the 40 percent tariff on U.S. beef will
    create $325 million in savings once the agreement is fully
    implemented. All told, American agriculture stands to gain an
    additional $1.9 billion in new market access in Korea. The
    agreements were finalized nearly 4 years ago, yet they are
    still awaiting implementation. Each year that we delay action,
    it costs us billions of dollars in unrealized benefits.
        The FTAs are more than $2.5 billion annually in market
    access for our farmers and ranchers. So our producers have
    missed out on nearly $10 billion due to inaction on these
    agreements.
        What is more, our trading partners aren't sitting around
    and waiting for us to act. Many of our competitors have
    finalized and implemented agreements with Korea, Colombia, and
    Panama in the past 4 years. That means that other countries are
    gaining preferred access to these markets and gaining ground on
    U.S. producers. Korea has an FTA with the European Union that
    will go into effect on July 1. An agreement with Australia is
    likely to be finalized within a year. Colombia has signed and
    implemented FTAs with a number of trading partners in the past
    4 years, and Panama recently completed an agreement with
    Canada.
        These FTAs include tariffs that will be phased out over 10
    to 15 year periods. So it is critical that we do not allow our
    competitors' products to gain a price advantage over American
    products in the next decade. There is still time to prevent the
    loss of valuable market access. However if we act quickly and
    bring these agreements to a vote before July 1, we can ensure
    that U.S. producers don't lose out on our competitive
    advantages.
        The agricultural communities overwhelmingly support these
    FTAs and are eager to see them implemented as soon as possible.
    It is time to take action. I look forward to hearing from
    Secretary Vilsack and Ambassador Kirk on the Administration's
    progress on readying these agreements for Congressional
    consideration.
        [The prepared statement of Mr. Lucas follows:]

    Prepared Statement of Hon. Frank D. Lucas, a Representative in Congress
                                 from Oklahoma
        Good morning. I'd like to thank Secretary Vilsack and Ambassador
    Kirk and our industry representatives for joining us today to discuss
    free trade.
        As we know, there are three pending free trade agreements with
    Korea, Colombia and Panama. Unfortunately it has been nearly four years
    since these agreements were signed and the Administration is just now
    close to bringing the agreements before Congress.
        It is difficult to overstate the importance of these agreements to
    America's farmers and ranchers and to our economy as a whole.
        Trade has a ripple effect--exports support one in every three jobs
    in farming and two of every three jobs off the farm, in industries like
    transportation, food processing, and manufacturing. All told, American
    agricultural exports support nearly 900 thousand jobs. Exports
    currently account for more than 25 percent of total agricultural sales.
    For every dollar of those export sales, we create another $1.48 in
    processing, financing, shipping, and packaging activities.
        The benefits of trade are made possible by the incredible
    productivity and hard work of America's farmers and ranchers. Even in
    this economic downturn, they have managed to maintain a trade surplus
    in agricultural exports. Our farmers and ranchers are successfully
    competing in the global market and bringing much-needed income to
    communities across America.
        But they are doing so in the face of stiff protectionism in the
    form of high tariffs and non-tariff import restrictions. The pending
    FTAs will dramatically reduce these barriers and open markets for our
    agricultural goods.
        The agreement with Panama will immediately eliminate all duties on
    more than half of our agricultural exports. The remaining tariffs will
    be phased out over 15 years. This is critical to establishing a healthy
    trading relationship, since 99 percent of Panama's exports to the U.S.
    are already duty-free.
        The FTA with Colombia will also immediately eliminate all duties on
    more than half of our agricultural exports. In addition to phasing out
    the remaining tariffs, Colombia will also eliminate its price band
    system, which affects key U.S. exports including corn, wheat, dairy,
    pork, and poultry.
        The Korea FTA will grant immediate duty free access for two-thirds
    of U.S. agricultural products and phase out tariffs and import quotas
    on most other products within 10 years. By 2016, more than 90 percent
    of U.S. pork will be imported duty-free. And the elimination of the 40
    percent tariff on U.S. beef will create $325 million in savings once
    the agreement is fully implemented. All told, American agriculture
    stands to gain an additional $1.9 billion in new market access to
    Korea.
        The agreements were finalized nearly four years ago. Yet they are
    still awaiting implementation. Each year that we delay action costs us
    billions of dollars in unrealized benefits. The FTAs are worth more
    than $2.5 billion annually in market access for our farmers and
    ranchers. So our producers have missed out on nearly $10 billion due to
    inaction on these agreements.
        What's more, our trading partners aren't sitting around and waiting
    for us to act. Many of our competitors have finalized and implemented
    agreements with Korea, Colombia, and Panama in the last four years.
    That means that other countries are gaining preferred access to these
    markets and gaining ground on U.S. producers.
        Korea has an FTA with the European Union that will go into effect
    on July 1st. An agreement with Australia is likely to be finalized
    within the year. Colombia has signed and implemented FTAs with a number
    of trading partners in the past four years. And Panama recently
    completed an agreement with Canada.
        These FTAs include tariffs that will be phased out over 10 or 15
    year periods, so it is critical that we do not allow our competitors'
    products to gain a price advantage on American products for the next
    decade.
        There is still time to prevent the loss of valuable market access,
    however. If we act quickly and bring these agreements to a vote before
    July 1st, we can ensure that U.S. producers don't lose out on any
    competitive advantages.
        The agricultural community overwhelmingly supports these FTAs and
    is eager to see them implemented as soon as possible. It is time to
    take action. I look forward to hearing from Secretary Vilsack and
    Ambassador Kirk on the Administration's progress on readying these
    agreements for Congressional consideration.

        The Chairman. And with that, I turn to the Ranking Member
    for his opening comments.

    OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE
                       IN CONGRESS FROM MINNESOTA

        Mr. Peterson. Good morning, and thank you, Chairman Lucas,
    for holding today's hearing, and thank you to the Secretary and
    the Ambassador for being here to be with us today to examine
    the potential benefits for agriculture under the three free
    trade agreements currently pending with South Korea, Colombia,
    and Panama.
        All three agreements have broad support among U.S.
    agriculture producers. Worldwide U.S. ag exports totaled $115
    billion last year, and according to the International Trade
    Commission, these three agreements together could boost
    agricultural exports by $2 billion to $4 billion.
        I want to mention, however, that there are some problems
    with these agreements in regard to how they will benefit
    farmers and ranchers. Under the Korea agreement, there is no
    new access for rice, and I continue to worry about the beef
    access given some of the unjust phytosanitary restrictions that
    keep popping up all of the time. I would also like to know more
    about how much imports that we are going to get under these
    agreements. We can't forget NAFTA. When we did that, everybody
    talked about all the increases. Nobody talked about the
    increase in imports, and actually NAFTA was the opposite of
    what we were told. So we need to make sure we know exactly what
    the numbers are.
        By and large, I think the three pending free trade
    agreements are good for agriculture. Increasing market access
    is always a good thing, but we should not ignore the fact that
    these agreements also open our market, arguably the most
    lucrative market in the world to our trading partners. We need
    to continue other approaches in trade such as opening trade
    with Cuba, which we previously supported in this Committee and
    further developing fuels from the farm that could benefit U.S.
    producers.
        So I want to thank the chair for holding today's hearing
    and I look forward to hearing the testimony of our witnesses.
        The Chairman. The chair thanks the gentleman for his
    opening comments. The chair requests that Members submit their
    statements so that we can get to questioning the witnesses.
        [The prepared statement of Mr. McGovern follows:]

       Prepared Statement of Hon. James P. McGovern, a Representative in
                          Congress from Massachusetts
        Thank you, Mr. Chairman. I'm going to confine my remarks and
    questions to the Colombia FTA.
        I've been to Colombia six times since February 2001.
        I tend to stay for several days, travel to remote areas, and visit
    some of the poorest city slums where you find hundreds of thousands of
    Colombia's five million internally displaced; and to the border
    regions, where hundreds of thousands more have fled Colombia's violent
    countryside and are now refugees in neighboring countries.
        As my colleagues know, Colombia has the greatest number of
    internally displaced people in the world, last year surpassing Sudan.
        Along with Afghanistan, it has the greatest number of landmine
    victims.
        Its homicide rate per capita--mainly from paramilitary, guerrilla
    and criminal violence--is twice that of Mexico.
        It has one of the highest levels of inequity, and the highest rate
    of land concentration in the hemisphere.
        I love Colombia and its people. But it is still a country in
    violent conflict--President Santos told us that just a couple of days
    ago. Most of that violence and conflict happens in the countryside--and
    it primarily affects rural communities and small farmers.
        In the United States, we take great pride in supporting our small
    farmers. We should also be concerned about Colombian small producers
    and how the Colombia FTA might affect them.
        The most definitive study on this matter estimates that small-scale
    producers of Colombia would lose around 16% of their net income from
    agriculture under the Colombia FTA. For those who produce products that
    will directly compete with U.S. agricultural imports, they will likely
    experience a fall of between 48% and 70% in their net agricultural
    income.
        We should care. Because it means these people are likely to lose
    their land and join the ranks of the displaced and growing urban poor.
        Or they will move to more marginal land and start growing the best-
    paying crop in town, namely coca.
        Or, in search of income, they will join one of the many criminal
    gangs that dominate rural Colombia.
        Or, in search of food for their families, they will join the
    paramilitaries or the guerrillas.
        Their land will be scooped up by local land-owners, many of whom
    are collaborators or full-scale partners with paramilitaries and
    criminals.
        Couple this with the on-going exploitation and violence suffered by
    agricultural workers and by the port workers where U.S. agricultural
    goods will enter Colombia, and you have a number of reasons why we
    should proceed with caution.
        The Labor Action Plan has a number of good proposals--but it would
    be an understatement to say that it fails to go far enough, let alone
    tackles the tough question of substantially reducing violence against
    workers.
        Sugarcane workers operate in a situation akin to modern-day
    slavery. Workers on palm oil plantations are daily threatened with
    death, including now when some are on strike. And Colombia's Vice
    President described the situation of port workers as ``a humanitarian
    crisis.'' Nothing in the Labor Action Plan addresses reducing violence
    against these workers. Nothing.
        The closest you get is to urge the Colombian Government to extend
    protection to labor activists who receive continuous death threats. But
    if we don't focus on eliminating the sources of violence and
    dismantling their structures, all we're doing is increasing the pool of
    individuals who need protection. And that number has no end.
        There's no end to the violence aimed at small farmers and rural
    communities.
        There's no end to the violence against the displaced who the
    government is asking to return to their lands.
        And there's no end to the violence suffered by workers on medium-
    and large-scale farms.
        In June, the Santos Government is convening a forum on rural
    development. The U.S. government, Colombian large-scale producers, a
    few think tanks are all invited to participate. But not a single,
    solitary rural campesino organization has been invited. No one
    representing small-scale farmers has a seat at the table--at this
    point, not even a token one, let alone the representation they truly
    deserve.
        So, I ask you, Mr. Ambassador and Secretary Vilsack, what in the
    policies of your agencies and in the terms of the Colombia FTA will
    concretely help change the violent reality and daily poverty
    confronting over 93 percent of Colombia's rural population, namely
    small-scale farmers and agricultural workers?
        No platitudes about how trade lifts all boats. We know it doesn't.
    Not here in the United States, and certainly not among Colombia's rural
    poor.
        Concretely, how do you plan to ensure that they are not displaced
    from their land, fall deeper into poverty, or forced to grow illegal
    crops, join one of the illegal armed actors, or go work for a criminal
    network? Or the other choice, stand firm and be killed?

        The Chairman. We would like to turn now to our panel, our
    first panel, I should say, and welcome our witnesses to the
    table. The Honorable Tom Vilsack, Secretary, U.S. Department of
    Agriculture, Washington, D.C., and the Honorable Ron Kirk,
    United States Trade Representative, Washington, D.C. And, Mr.
    Secretary, you may begin whenever you are ready, sir.

     STATEMENT OF HON. THOMAS ``TOM'' J. VILSACK, SECRETARY, U.S.
              DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.

        Secretary Vilsack. Mr. Chairman, and Members of the
    Committee, thank you very much. I am pleased to appear before
    you today with my colleague, Ron Kirk, to discuss the pending
    trade agreements with South Korea, Colombia, and Panama, U.S.
    agricultural exports, and the capacity of exports to create
    economic opportunities in our rural communities.
        Over the past 2 years, as the nation has rebounded from the
    worst recession in decades, American agriculture has helped
    lead our recovery by shattering trade records and creating
    jobs. In Fiscal Year 2011, U.S. agricultural exports are
    forecast to reach a record high of $135.5 billion, up nearly
    $27 billion from the previous year with a record trade surplus
    of $47.5 billion.
        They will help support 1.1 million jobs nationwide. Just
    yesterday, we learned that the U.S. farm exports reached an
    all-time high of $75 billion in the first half of Fiscal Year
    2011. This is up 27 percent from the same period last year, and
    is keeping us on track to hit the forecast. And our pending
    trade agreements will help continue that successful story.
        These three trade agreements will create jobs. Through
    agricultural exports alone, they will yield over $2.3 billion
    in sales and help to support more than 19,000 American jobs in
    agriculture and related industries.
        The Korean agreement is a trade opportunity we cannot
    afford to pass up worth an expected $1.9 billion annually to ag
    producers. Sixty percent of the items that we currently trade
    to Korea will be duty free immediately, including corn,
    soybeans for crush, cotton, cherries, and grape juice. Other
    commodities such as meat, poultry and dairy will see tariffs
    and duties reduced over a period of time, creating tremendous
    opportunity for us to grow our export opportunities.
        The Colombia Trade Promotion Agreement also contains good
    news for U.S. agriculture. Currently, no U.S. agricultural
    exports enjoy duty-free access to Colombia, with most applied
    tariffs ranging from 5 to 20 percent. But on day 1 of
    implementation, U.S. exporters will receive duty-free treatment
    on products accounting for almost 70 percent of current trade.
    When implementation is complete, we expect to increase our
    agricultural exports by 44 percent, which is an additional $370
    million per year.
        In Panama, U.S. agricultural exports have been on the rise,
    growing to over $450 million in 2010. Our agreement with them
    will continue this progress with an additional $46 million in
    annual sales upon full implementation. Tariffs on 68 percent of
    Panama's agricultural tariff lines accounting for more than
    half of current trade by value will be eliminated by the
    agreement.
        It is critical for U.S. agriculture that we work together
    to move these three pending trade agreements as part of a
    broader trade agenda. Today, Korea, Colombia, and Panama have
    approved or are negotiating trade agreements with a host of
    other nations, as the Chairman indicated, including the EU,
    Canada, Mexico, and New Zealand. Completing these three trade
    agreements will level the playing field with some competitors
    and secure better markets for U.S. agriculture ahead of others.
        These trade agreements represent an important cornerstone
    of our strategy to continue to increase agricultural trade, and
    USDA is involved in a host of other activities. Thanks to the
    President's National Export Initiative, which challenged U.S.
    businesses to double exports by the end of 2014, USDA is
    reaching out to producers and agribusiness, especially small
    and medium-sized enterprises with information about how to
    tackle the export market and financing to make it happen.
    Whether it means helping small businesses attend trade shows or
    directing U.S. companies in trade groups with foreign customers
    by connecting them and bringing them to the country, we are
    working to expand opportunity for agricultural trade.
        We have focused many of our efforts in developing countries
    with a growing middle class and increased purchasing power for
    high quality U.S. agricultural products. It is one of the
    reasons we sent a trade mission to Indonesia and Peru this year
    and why China became our biggest export market last year.
        We are engaged in nonstop efforts to break down sanitary
    and phytosanitary and technical barriers, advocating forcefully
    for the interest of American agriculture with other nations.
    USDA is also addressing export barriers to U.S. specialty
    crops, facilitating new exports and preventing disruptions that
    would have affected hundreds of millions of dollars in exports
    in Indonesia and the European Union.
        When I travel the country, especially in rural America, and
    talk about trade, the message I hear is simple. We need an
    economy that makes, creates, and innovates, and we need a
    nation that exports. That is why I am so proud of USDA's work
    to increase exports and hope that Congress will act swiftly to
    approve these trade agreements. At the end of the day,
    increased exports mean more opportunities for small business
    owners and for folks who package, ship, and market agricultural
    products as well as American agricultural producers. It means
    better incomes for our nation's family farmers, and more jobs
    across rural America.
        I look forward to answering the Committee's questions, and
    I thank the chair for this opportunity.
        [The prepared statement of Mr. Vilsack follows:]

     Prepared Statement of Hon. Thomas ``Tom'' J. Vilsack, Secretary, U.S.
                  Department of Agriculture, Washington, D.C.
        Mr. Chairman, Members of the Committee, I am pleased to appear
    before you today. I welcome the opportunity to discuss the pending
    trade agreements with South Korea, Colombia, and Panama, the
    contribution to the economy of U.S. agricultural exports, and the
    capacity of our rural communities to meet the country's agricultural
    needs and capitalize on export opportunities.
        In a word, the most paramount reason to implement these three
    pending trade agreements is ``jobs.'' For agricultural exports alone,
    USDA's Economic Research Service (ERS) projects that on full
    implementation, the three agreements will yield over $2 billion in
    sales. For every billion dollars of agricultural exports, there are
    8,400 people working in America in jobs associated with those exports.
    The additional jobs generated by the agreements will add to the
    tremendous story of U.S. agriculture's contribution to our economy.
        One out of every twelve jobs in this country is connected in some
    way, shape, or form to American farms. Our farmers and ranchers also
    make sure that this country is food secure. American consumers spend
    less for their groceries than virtually anybody else in the world--a
    recent study that we did at USDA suggested that just six to seven
    percent of our paychecks, on average, go to the grocery store.
        USDA looked at 2011 and we project that it is going to be a good
    year for farm country. We see net farm income increasing to $94.7
    billion. That is a 20 percent increase over last year, and last year
    was a 34 percent increase over the year before. It will be the second
    highest income level as adjusted for inflation in the last 3 decades.
    That is certainly good news. Crop receipts are up 14 percent, to $24.1
    billion, led by corn, cotton, soybeans, and wheat; and livestock
    receipts also are edging up a bit. We now see the value of farm assets
    exceeding $2 trillion. We have basically recouped all of the loss we
    suffered in 2009, and that is certainly a good story.
        Today we are here to talk about trade, one of the brightest spots
    in the agricultural economy. As this Committee is aware, in
    agriculture, we consistently post a trade surplus, and are coming off a
    great year. USDA's forecast for U.S. agricultural exports for FY 2011
    is a record high $135.5 billion, up from $108.7 billion in FY 2010, and
    the previous record of $114.9 billion in FY 2008. We are projecting a
    trade surplus of $47.5 billion. If we reach $135.5 billion, that means
    over a million people will have jobs that might not otherwise be
    employed but for agricultural exports.
        USDA is focused on a trade strategy that will continue to increase
    trade opportunities. In addition to our non-stop efforts to eliminate
    unwarranted sanitary and phytosanitary (SPS) and technical barriers,
    our strategy includes securing Congressional approval of the trade
    agreements with South Korea, Colombia, and Panama.
        In the Korea agreement (KORUS), we have a multi-billion-dollar
    trade opportunity. Almost \2/3\ of the items that we currently trade to
    Korea will be duty free immediately, including corn, soybeans for
    crush, cotton, cherries, orange juice, grape juice, and whey. Other
    commodities will have their tariffs and duties reduced over a period of
    time, creating tremendous opportunity for us to grow our export
    opportunities within Korea. ERS projects that on full implementation,
    U.S. agricultural export gains under KORUS would be over $1.9 billion
    annually.
        Increased meat and poultry access includes reductions in Korea's
    tariffs on beef, which will decline from the current 40 percent to zero
    in 15 equal annual reductions; duty-free entry for more than 90 percent
    of U.S. pork products by 2016; and tariffs on poultry leg quarters
    dropping from 20 percent to zero over 10 years. The KORUS agreement
    creates tariff-rate quotas that double current access for dairy
    products.
        Looking at the Colombia Trade Promotion Agreement, the news is also
    good for U.S. agriculture. On full implementation, ERS estimates that
    the Colombia agreement will generate an increase of 44 percent in U.S.
    agricultural exports, or an additional $370 million per year. On day
    one of implementation of the Colombia agreement, U.S. exporters receive
    immediate duty-free treatment on products accounting for almost 70
    percent of current trade. Currently, no U.S. agricultural exports enjoy
    duty-free access to Colombia, with most applied tariffs ranging from 5
    to 20 percent on agricultural products.
        Colombia would immediately eliminate its price band system, which
    affects more than 150 products, including corn, rice, wheat, oilseeds,
    oilseed products, dairy, pork, poultry, and sugar. Under the current
    price band system, the tariffs on these products vary with world
    prices. Under the terms of the agreement with Colombia, all prime and
    choice beef cuts receive immediate duty-free treatment. Tariffs on most
    key pork products phase-out within 5 years and chicken leg quarters
    receive an immediate 27,040 metric ton tariff-rate quota (TRQ) with
    four percent annual growth.
        U.S. agricultural exports to Panama have been on the rise, growing
    to over $450 million in 2010. On full implementation of the Panama
    agreement, U.S. exporters can expect an additional $46 million in
    annual sales of rice, corn, meats, dairy, and processed foods. Tariffs
    on 68 percent of Panama's agricultural tariff lines, accounting for
    more than half of current U.S. trade by value, will be eliminated on
    entry into force of the agreement.
        Like the Colombia agreement, the Panama agreement will provide
    immediate duty-free treatment for USDA Prime and Choice beef cuts.
    Tariffs on pork variety meats will be eliminated immediately and
    preferential duty-free TRQs will be established and grow over time for
    fresh and frozen pork cuts, pork fat and bacon, and processed pork.
    Likewise, a TRQ will be established for chicken leg quarters and, over
    time, all tariffs on poultry will be eliminated.
        It is critical for U.S. agriculture that we work together to move
    the three pending trade agreements as part of our broader trade agenda
    that includes the reauthorization of the 2009 Trade Adjustment
    Assistance program, renewal of trade preference programs, and pursuing
    Permanent Normal Trade Relations (PNTR) with Russia as it joins the
    WTO. We must lock in equal and better access to these markets than our
    competitors. Korea recently ratified an agreement with the European
    Union, which will go into effect on July 1; recently signed an
    agreement with Peru; already has in place a trade agreement with Chile;
    and is negotiating with Australia, Colombia, Turkey, and New Zealand.
    Colombia has finalized agreements with the EU and Canada, is a party to
    the MERCOSUR-Andean Community agreement, and has many FTAs with
    countries throughout the hemisphere. Panama negotiated an agreement
    with Canada in 2010 and has recently initialed an agreement with the
    European Union. Panama already has FTAs in place with Chile and
    numerous Central American neighbors. Until we complete these three
    trade agreements, U.S. agriculture will not have a level playing field
    in these important markets.
        In addition to the pending trade agreements, the Administration
    seeks to renew the 2009 Trade Adjustment Assistance program, the Andean
    Trade Preference Act (ATPA), and the Generalized System of Preferences
    (GSP), and to secure Permanent Normal Trade Relations (PNTR) with
    Russia. The preference programs, ATPA and GSP, are critical to
    developing countries' continued growth, helping them grow their
    industries and become more developed markets. Additionally, these
    programs provide U.S. businesses the inputs and products they need to
    keep good jobs here at home. Russia has become an increasingly
    important destination for American agricultural goods, and moving
    Russia fully into the global, rules-based WTO trading system will
    benefit U.S. agricultural exporters.
        At USDA, we have also focused on reducing trade barriers, and that
    is why I was so pleased when President Obama and President Calderon met
    and agreed on a path forward on the Mexican trucking issue. That is
    going to be a great opportunity for us to remove the tariffs that
    Mexico has assessed against 99 of our products, 54 of them agricultural
    products. It will restore and expand trade opportunities for us in
    Mexico. The U.S. Department of Transportation released the details of a
    proposed new program that prioritizes safety, while satisfying the
    United States' trade obligations. Mexico has committed to suspend 50
    percent of the currently charged tariffs when an agreement is signed
    and the remaining 50 percent when the first Mexican truck receives
    authorization under the new program.
        I am frequently asked about our efforts to reduce barriers to U.S.
    beef exports. Nearly 100 countries are open to at least some U.S. beef
    and beef products. This reflects the tireless efforts of USDA and USTR
    to prevent markets from closing, as well as the re-opening of some 80
    markets after the detection of a case of BSE in 2003. Continued
    recovery and expansion of beef trade remains a priority for USDA and
    USTR. U.S. beef and beef product exports were valued at nearly $4.08
    billion in calendar year 2010. While that value of trade is on par with
    the pre-BSE level of 2003, volumes still lag.
        USDA has also addressed export barriers to U.S. specialty crops in
    key markets. In FY 2010, the value of specialty crop exports increased
    eight percent from FY 2009 levels to more than $17.4 billion. The
    Administration secured Indonesia's recognition of the U.S. food safety
    system for fresh foods including specialty crops, facilitating exports
    valued at over $100 million last year. USDA arranged for a European
    inspection visit regarding mycotoxins in California pistachios, thus
    preventing disruption of exports that totaled $305 million in 2010. We
    worked quickly with West Coast cherry exporters to address SPS concerns
    in Korea and Taiwan, preserving export opportunities for $7 million in
    perishable products.
        We are going to continue to focus on countries where there are
    increasing middle classes, and China is probably the best example. In
    2010, China became our number one agricultural export market; so our
    top three agricultural markets are now China, Canada, and Mexico.
    Analysis by our Foreign Agricultural Service suggests that the size of
    the middle class in developing countries could reach 731 million
    households by 2020, up over 100 percent from 2009 levels. These middle
    class households will have the purchasing power for high quality U.S.
    agricultural products. It is one of the reasons we sent trade missions
    to Indonesia and Peru this year, in an effort to continue to promote
    agricultural opportunities--American agricultural opportunities. In
    Peru, where we have preferential market access from an existing trade
    agreement, USDA facilitated face-to-face meetings for twenty U.S.
    companies with processors, buyers, and traders. Business deals were
    finalized taking advantage of new opportunities, which translates into
    American jobs.
        We are going to continue our focus on export promotion, including
    trade shows. We will bring more foreign buyers to the United States. We
    are going to continue to promote American products. We are going to
    make sure that we also encourage our trading partners to reduce the
    sanitary and phytosanitary barriers that make it more difficult for us
    to bring product into their markets. For example, we are in the process
    of third-party mediation with Mexico in an effort to expand access to
    all of Mexico for U.S. table stock potatoes, which are limited to a 26
    kilometer border zone due to pest concerns.
        Under the Administration's National Export Initiative, President
    Obama has set a goal of doubling U.S. exports over 5 years. Opening new
    markets is key. Also key to meeting that goal is the productivity of
    U.S. farmers and ranchers. Nobody in this country, nobody in this
    economy, has been as productive over the long haul as American
    agriculture. In my lifetime, there has been a 330 percent increase in
    corn production and an over 200 percent increase in soybeans and wheat
    production. American farmers embrace technology, and because of that,
    American farmers now are able to meet our food, feed, fiber, and fuel
    needs and significantly boost our economy through exports to markets
    around the world.
        Mr. Chairman, Members of the Committee, the message I hear from
    farm country is simple. We need an economy that makes, creates, and
    innovates, and we need a nation that exports. When we do that, we see
    the kind of income projections we are speaking of today in farm country
    and all across the country.
        This concludes my statement. I look forward to answering any
    questions you may have. Thank you.

        The Chairman. Thank you, Mr. Secretary. Mr. Ambassador, you
    may begin when you are ready.

    STATEMENT OF HON. RON KIRK, UNITED STATES TRADE REPRESENTATIVE,
                            WASHINGTON, D.C.

        Mr. Kirk. Mr. Chairman, Congressman Peterson, Members of
    the Committee, it is an honor to have an opportunity to join
    Secretary Vilsack to discuss the importance of agricultural
    exports to our country's trade agenda.
        Since the Chairman and my colleague have spoken of the
    economic impact of the three free trade agreements, I will move
    on in the interest of time. I do want you to know that our
    efforts to open markets for agricultural exporters and to keep
    them open, the Obama Administration has pursued a two-pronged
    approach that balances negotiating new market access with
    strong enforcement of America's rights in the global trading
    system.
        Today, the pending agreements with South Korean, Panama,
    and Colombia are at the forefront of our efforts to open new
    markets. Last week, I am pleased to advise you we began the
    technical discussions on drafting the implementing bills for
    each of the free trade agreements with our committees of
    jurisdiction. This is part of a broader agenda that also
    includes reauthorization of a robust Trade Adjustment
    Assistance Program as well as renewal of the expired trade
    preference programs that benefit some of our poorest trading
    partners and beginning a conversation with Congress about
    granting permanent, normal trade relation status for Russia as
    it prepares to join the World Trade Organization.
        The U.S.-South Korea trade agreement will provide America's
    farmers and ranchers, food processors, workers and businesses
    they support with improved access to Korea's $1 trillion
    economy and 49 million consumers. Selling more of what we grow
    in America to South Korea will help support thousands of jobs
    on U.S. farms and ranches and in our processing plants and
    shipping centers.
        As noted by the Chairman upon entry into force, the Korea
    trade agreement will eliminate tariffs on \2/3\ of American
    agricultural exports immediately including fruits, nuts,
    vegetables, and soy beans.
        Separately, in response to the Ranking Member's concerns
    about beef access, we will request consultations with Korea
    under the 2008 Beef Protocol to discuss the full implementation
    and application of that agreement after the FTA goes into
    effect. President Obama and I are absolutely committed to
    working with Members of this Committee and others to further
    open beef access to markets across Asia consistent with
    international guidelines.
        U.S. ag exporters will also benefit from the agreement with
    Panama with more than half of our current exports to Panama
    becoming duty free immediately, and the remaining gaining duty-
    free access with the quota of tariffs reduced over time.
        With respect to Colombia, more than half of our current
    farm exports will become duty free immediately, and remaining
    tariffs will be eliminated within 15 years. Overall, the
    International Trade Commission estimates that the agreement
    with Colombia can expand our exports by over $1 billion and
    increase our GDP by $2.5 billion. Now, as we work with you to
    implement and approve these FTAs, the Obama Administration is
    also advancing our agricultural interests in other talks and
    fora as well.
        One of the most critical is our efforts to create a state-
    of-the-art trade agreement with the Asia-Pacific region through
    our Trans-Pacific Partnership. U.S. exports to this dynamic
    market have an opportunity for extraordinary growth. We are
    leading the effort to create this trade agreement within the
    region and have an opportunity to have one of these most state-
    of-the-art chapters on sanitary and phytosanitary standards of
    any free trade agreement we have ever negotiated.
        We are also working with other partners in the World Trade
    Organization to find a sober and realistic solution to the
    challenges of concluding the Doha round of talks. It is no
    secret that the Doha round is confronting a very difficult and
    challenging moment, but we are not throwing in the towel. And
    we will continue to work with like-minded partners to find an
    acceptable solution.
        Aside from our ongoing negotiation, American farmers and
    ranchers also benefit greatly to more access around the world
    because of our efforts to hold our trading partners accountable
    under our existing FTAs. I want to make sure that you know that
    USTR will continue to work with our colleagues in the Federal
    Government to hold other partners around the world accountable
    and address unwarranted SPS rules.
        Finally, improving market access to Russia is also critical
    for U.S. agriculture including as we address Russia's accession
    to the WTO. Just let me say this: Having Russia subject to the
    same rules as the other members of the global trading community
    will substantially increase the tools and enforcement
    mechanisms that we have which are extremely limited right now.
        In closing, I appreciate the opportunity to address the
    Committee. We look forward to working with you toward passing
    of the pending FTAs, and I would appreciate the opportunity to
    take your questions at this time. Thank you.
        [The prepared statement of Mr. Kirk appears follows:]

           Prepared Statement of Hon. Ron Kirk, United States Trade
                        Representative, Washington, D.C.
        Chairman Lucas, Congressman Peterson, and Members of the Committee,
    thank you for inviting me to discuss the pending trade agreements with
    Korea, Panama, and Colombia and the importance of agricultural exports
    in the Administration's trade agenda.
        President Obama has set a goal to double American exports by the
    end of 2014, selling more of what we make and grow here to the ninety-
    five percent of the world's population that resides outside the United
    States. The growth of our food and agricultural exports has helped put
    us on a path to reach that goal.
        American agriculture derives more success from export markets than
    do many other sectors. About ten percent of the overall U.S. economy
    relies on export sales--but about twenty-five percent of our
    agricultural economy depends on exports.
        In Fiscal Year 2010, domestic exports of U.S. farm products
    continue to increase for our farming sector, reaching a total of nearly
    $109 billion, a 13 percent increase over FY 2009. Equally impressive
    was the fact that we had a trade surplus in our agricultural trade of
    almost $34 billion last year.
        At the Office of the United States Trade Representative, our
    objective is to ensure access for American farmers and ranchers to a
    global customer base. The Obama Administration has pursued a two-
    pronged approach that includes both negotiating new market-opening
    opportunities and enforcing our rights in the global trading system.
        American farmers and ranchers thrive in today's competitive global
    marketplace because they are the most efficient and productive
    producers in the world. Given a level-playing field, they can out-
    compete agricultural producers from any other country. We work to
    strike trade agreements and expand trade relationships so they can have
    fair access to high-growth markets, where they can sell products to
    generate growth and income here at home. Enforcing our trade agreements
    with partner countries is just as critical to maintain the access we
    have.
        Today, the pending agreements with South Korea, Panama, and
    Colombia are at the forefront of our efforts to open new markets. Last
    week we started the technical discussions with Congress on the draft
    implementing bills and draft Statements of Administrative Action. These
    agreements are part of the Obama Administration's broad trade agenda
    that also includes the reauthorization of the 2009 Trade Adjustment
    Assistance program, renewal of the Andean Trade Preferences Act and of
    the Generalized System of Preferences, and pursuing Permanent Normal
    Trade Relations (PNTR) with Russia as they work towards joining the
    WTO.
        With respect to the U.S.-South Korea trade agreement, we are
    committed to ensuring that the significant economic promise of that
    agreement is fully realized--more than $10 billion in increased annual
    exports of U.S. goods alone, and more than 70,000 American jobs.
        The U.S.-South Korea trade agreement will provide America's
    farmers, ranchers, food processors, workers and the businesses they
    support with improved access to South Korea's $1 trillion economy and
    49 million consumers. Selling more Grown in America products in South
    Korea will support more U.S. jobs on our own farms and ranches, and in
    our processing plants and shipping centers.
        Immediately upon entry into force, the U.S.-South Korea trade
    agreement eliminates tariffs on \2/3\ of ``Grown in America''
    agricultural exports to South Korea, including fruits, nuts,
    vegetables, and soybeans. South Korea is already our fifth-largest
    agricultural export market, and the Department of Agriculture projects
    that South Korea will purchase about $6.2 billion of U.S. agricultural
    products during Fiscal Year 2011. This agreement will build on our
    current export success to benefit our farmers and ranchers even more.
    According to a recent report by USDA's Economic Research Service (ERS),
    following implementation of the agreement, total U.S. agricultural
    export gains in the Korean market are estimated at over $1.9 billion
    annually, an increase of about 40 percent from current levels.
        Improving beef access to the Asian markets in countries like China,
    Japan, Korea, and Taiwan is an important issue. The President and I are
    committed to working in close consultation with you, to further open
    these markets consistent with international guidelines. In the
    meantime, U.S. exports of beef and beef products are already growing.
    Last year, sales to Korea reached $518 million, an increase of 140
    percent in value over the previous year. Once the South Korea agreement
    enters into force, our beef exports will grow even more as American
    producers enjoy the progressive elimination of South Korea's high
    tariff on beef.
        With regard to Panama, the completion of action by the Panamanian
    Government on tax transparency and labor cleared the way for the Obama
    Administration to move forward with preparing this agreement for
    consideration by Congress.
        U.S. agricultural exporters would also stand to gain from the
    Panama agreement. Despite U.S. agricultural goods exported to Panama
    currently face an average tariff of 15 percent, with tariffs on some
    products as high as 260 percent, American products account for almost
    50 percent of Panamanian agricultural imports. More than half of
    current U.S. farm exports to Panama will become duty-free immediately,
    while other products will gain duty-free access through tariff rate
    quotas, with out-of-quota tariffs reduced and eliminated over time.
    Commodities that will be duty-free immediately include, for example,
    high-quality beef, frozen turkeys, soybeans and soybean products,
    wheat, most peanuts, whey, cotton, table wine, most fruit and fruit
    products, most frozen and processed vegetables, most tree nuts, and
    many processed products. Products such as standard beef cuts, chicken
    leg quarters, pork, corn, rice and dairy products will receive duty-
    free access for specific volumes of product immediately while the out-
    of-quota tariffs are reduced and eliminated over time. Panamanian
    duties on most other U.S. agricultural goods will be phased out within
    5 to 12 years and, for a few of Panama's most import-sensitive
    products, within 15 to 20 years. Though Panama represents a relatively
    small market, according to the USDA/ERS report, the U.S.-Panama
    agreement is expected to provide U.S. exporters with opportunities for
    an additional $46 million in annual sales of rice, corn, meats, dairy,
    and processed foods.
        There has also been important progress on the Colombia agreement.
    Last month, President Obama and President Santos agreed to an Action
    Plan Related to Labor Rights through which Colombia is addressing a
    number of labor-related concerns so that the U.S.-Colombia trade
    agreement can move forward.
        Many American agricultural commodities, including wheat, barley and
    soybeans, will benefit from the Colombia agreement, as almost 70
    percent of current U.S. farm exports to Colombia will become duty-free
    immediately. Virtually all remaining tariffs will be eliminated within
    15 years. Overall, the International Trade Commission has estimated
    that the agreement would expand exports of U.S. goods to Colombia by
    more than $1.1 billion, and increase U.S. GDP by $2.5 billion. For
    agriculture, according to the USDA/ERS report, the agreement is
    estimated to generate an increase of 44 percent in U.S. exports, or an
    additional $370 million per year.
        While we work toward preparing these agreements for your
    consideration, the Obama Administration is pursuing other opportunities
    to help America's agriculture community tap into the worlds' high-
    growth markets.
        The Trans Pacific Partnership trade agreement, or TPP, is one of
    the Administration's top trade priorities. This high-standard, regional
    agreement will help us expand U.S. exports and strengthen economic ties
    to the dynamic and rapidly growing markets in the Asia-Pacific region.
    TPP countries currently import $4.9 billion of U.S. agricultural
    products. With a successful conclusion of TPP, we will be able to
    substantially build on the $2.3 billion of U.S. agricultural exports to
    countries with which we do not already have a free trade agreement. In
    addition we are looking to have a TPP sanitary and phytosanitary
    chapter that builds on WTO obligations to ensure that regulations in
    each country are science based and transparent, and result in
    meaningful market access openings for America's farmers, ranchers and
    workers.
        At the WTO, the Doha Round negotiations are confronting a difficult
    moment. Serious gaps in ambition remain, and the path ahead is
    uncertain. With regard to agriculture, based on what is currently on
    the table, the nature of the commitments that the United States would
    be making are far clearer than the benefits we would obtain in terms of
    new access for U.S. agricultural exports in foreign markets. This is
    not the basis for a deal.
        Together with other WTO Members, the United States is currently
    pursuing a sober and realistic evaluation of the Doha negotiations. We
    are not throwing in the towel, and we will work with willing partners
    to find solutions. But time is not on our side, and our consideration
    of productive next steps must be serious, and immediate.
        Even as we pursue new market access, the Obama Administration is
    also ensuring that American farmers and ranchers benefit more fully
    from existing trade agreements.
        American farmers and ranchers now have greater access to world
    markets because the Obama Administration has resolved long-standing
    disputes and addressed other barriers to U.S. agricultural products.
    For instance, we succeeded in reopening the markets in Russia, China,
    Ukraine, Korea, Honduras and Thailand to U.S. pork and/or live hogs
    after the H1N1 influenza outbreak. Enforcing our agriculture rights has
    meant American ranchers are selling more beef to Europe than they have
    in decades.
        At the end of March, I sent to Congress and the President a report
    detailing USTR's efforts over the past year to combat unwarranted
    sanitary and phytosanitary (SPS) trade barriers. This report can be
    found on our website at http://www.ustr.gov/. We made significant
    progress in reducing or eliminating many of these barriers. The SPS
    Report was created in 2010 to respond to the concerns of U.S. farmers,
    ranchers, producers, and workers who are running into SPS trade
    barriers as they seek to export high-quality American agricultural
    products around the world. This year, USTR will continue to work with
    colleagues from across the U.S. Government, as well as interested
    stakeholders, to encourage governments around the world to remove their
    unwarranted SPS rules.
        Improving market access to Russia is important for U.S.
    agriculture, including adding some certainty and predictability to that
    access. Your frustrations, frankly, are my frustrations. USTR and our
    interagency colleagues are working closely with our stakeholders to
    improve access and remove the unjustified barriers applied to U.S.
    agricultural products exported to Russia.
        As we work to improve the SPS situation, however, it is important
    to keep in mind why it is imperative to move Russia forward towards WTO
    membership. Currently, our ``tool box'' for trade enforcement with
    regard to Russia is a small one. Having Russia subject to the same
    rules as 153 other WTO members puts meaningful enforcement tools in our
    hands.
        When Russia joins the WTO, they will agree to comply with all of
    the terms of membership, including the Agreement on the Application of
    Sanitary and Phytosanitary (SPS) Measures. That agreement requires that
    SPS measures be based on science, including risk assessments, and
    provides other disciplines on implementing SPS measures. Russia's
    implementation of this agreement will help address significant barriers
    facing U.S. exports of agricultural goods, in particular pork, beef,
    dairy, and poultry. Importantly, once Russia becomes a member of the
    WTO, it will be subject to all WTO mechanisms, including dispute
    settlement, in the event Russia fails to comply with its obligations.
        The Obama Administration supports Russia's membership in the WTO.
    Russia aims to conclude its accession negotiations this year, and we
    are doing what we can to support that goal. But as with any WTO
    accession, the pace of accession is in the applicant country's hands.
    As these efforts progress, we look forward to working with Congress to
    grant Russia PNTR this year, which will ensure that American farmers
    and ranchers enjoy the full benefits of Russia's accession.
        In closing, I want to assure you that our focus at USTR is always
    greater prosperity for American agriculture, and for the entire
    American economy. We stand ready, as always, to work with you and other
    stakeholders in pursuit of this goal.

        The Chairman. Thank you, Mr. Ambassador. The chair would
    like to remind Members that they will be recognized for
    questioning in the order of seniority for Members who were here
    at the start of the hearing. After that, Members will be
    recognized in order of arrival. I do appreciate the Members'
    understanding, and I now recognize myself for 5 minutes.
        Mr. Ambassador, let us get down to the mechanics for a
    little bit about what all it entails to make this happen. The
    action plan that Colombia has agreed to on their domestic labor
    laws has date-certain obligations that they must meet is my
    understanding. Is the Administration placing any deadlines on
    U.S. efforts to prepare the agreements for consideration by
    Congress? We have asked for date-certain times, dealing with
    certain issues. Are we doing that to ourselves?
        Mr. Kirk. Well, we have structured the action plan with
    Colombia, Mr. Chairman, in a manner that would allow us, as
    they meet those obligations, those deadlines included in the
    action plan to then continue with the progress that we have
    begun with Congress. And the first deadline was at the end of
    May. Colombia met those. We are continuing to work with them on
    the next tranche. We believe and know that they are working
    with us in good faith. As long as we have good progress on
    that, we will be able to continue our progress and discussion
    with the committees on bringing the FTA forward.
        The Chairman. And to follow up on that, are you committed
    to coordinating with Colombia in regard to those labor action
    plans at a pace that will make it possible for us to consider
    these agreements by July 1? You know a lot of my producers out
    there would like to be selling in this market season, and they
    view that July 1 as kind of target date to be able to do that.
    Are you committed to working with Colombia in a way that we can
    get there?
        Mr. Kirk. Well, we--and I want to make in plain that the
    deadlines in the action plan will allow us, if they meet those,
    to then work with Congress on the broader goal of when we would
    move all of the FTAs in concert with the other items that I
    referenced, but particularly with respect to trade adjustment
    assistance. So I want to be careful not to set a hard deadline
    of July 1. We are well aware of the interests of our farmers
    and others that want to get into this market. We want to get
    there too. That is specifically why we structured the labor
    action plan in the manner that we did.
        The Chairman. And to reiterate one more time for the
    benefit of the Committee, do you believe Colombia is working in
    good faith on their elements of the labor action plan?
        Mr. Kirk. Absolutely. I said when I was before the
    Appropriations Committee a few months ago, and I know some
    questioned whether we were doing this to just keep moving the
    goalposts. But in many ways, our work with the Santos
    Administration felt like we were pushing on an open door, and
    to their credit, they very much and his Administration very
    much understands it is in their interest to reform many of the
    practices. Not just with respect to improving the protection of
    labor and union leaders, but what he is trying to do with land
    reform. So this has been a very strong partnership and
    collaboration, and we are very hopeful we can continue to make
    the good progress that we have.
        The Chairman. One last question, Ambassador. I do lots of
    town meetings, and there are certain questions that come up in
    my town meetings. Could you describe for us the protections
    that are included in these agreements to prevent, I guess, what
    I would describe as transshipment of goods from non-FTA
    countries into the United States?
        Mr. Kirk. With respect to all three FTAs, Mr. Chairman, we
    have not changed any of the rules as it relates to
    transshipment of goods. And as a general rule, and every FTA we
    have done--and it is the same in Korea, Panama and Colombia, we
    are only dealing with granting tariff relief for goods produced
    in those countries, not with respect to a transshipment. And
    the rules of origin, as it applies here, are the same as they
    have been. We have not changed that at all.
        The Chairman. Thank you, Ambassador. I now recognize the
    Ranking Member for 5 minutes.
        Mr. Peterson. Thank you, Mr. Chairman. Secretary, when do
    you plan to publish the proposed rule on animal traceability?
        Secretary Vilsack. Representative Peterson, we are in the
    final phases of working with our cooperators at the state
    level, with state veterinarian groups, with the tribes, with a
    number of commissioners and secretaries of agriculture. So we
    anticipate sometime this late spring or early summer that that
    rule will be available for review.
        Mr. Peterson. And what risk do U.S. producers, meat
    packers, and food companies face in the global marketplace
    should we not have a viable animal traceability system
    established?
        Secretary Vilsack. Well, one of the concerns that we often
    hear from our trading partners is the capacity to basically
    trace back at least to the state of origin any problem with
    animal health. This is why the traceability system is important
    and why we wanted a system that was more effective than the
    previous system, which was a voluntary system. It was one in
    which roughly 30 percent of producers participated in, and it
    really didn't provide us the certainty and the guarantee that I
    believe this system will. It is much less complex. It is much
    less expensive.
        It recognizes that it only relates to interstate transfer
    and transport of livestock, as opposed to things that occur
    within the state. We are looking for the least expensive
    technology in terms of traceability, in terms of
    identification. So we think we are going to get much more
    acceptance from this effort, and that should reassure our
    trading partners.
        Mr. Peterson. Thank you very much, and I yield back.
        The Chairman. The gentleman yields back. Tim Johnson from
    Illinois is recognized for 5 minutes.
        Mr. Johnson of Illinois. Thank you, Mr. Chairman. I will
    address this question to both of you. There is apparently
    certain new European Union rules pertaining to sustainability
    that have the potential to dramatically reduce or almost
    eliminate our soybean producers and their access to the
    European market. What--can you tell me what your role is and
    what you are doing, your respective agencies, to try to deal
    with that issue?
        Mr. Kirk. If I might, Congressman, I think I can probably
    respond for the both of us. This is an area that USTR works
    hand-in-glove with the Department of Agriculture. And we have
    engaged the EU immediately on what we think are the negative
    impacts. This is what they call a renewable energy directive
    that can widely impact and negatively, we think, impact
    agricultural exports in general.
        We have engaged the EU very early and directly with our
    concerns, encouraged them to have the most transparent process
    possible. We don't quarrel with the overriding objective of
    what they are doing, but we have made them aware of the
    implications that it could have in unfairly impacting exports
    from the United States and other markets.
        And I just want to assure you that this is an area that we
    work hand-in-glove with the Department of Agriculture in terms
    of our engagement with the EU.
        Mr. Johnson of Illinois. Thank you. Another question. I
    know these three agreements have really been executed quite
    some time ago, and for a variety of reasons haven't been
    submitted to the Congress yet for ratification. Can you give us
    an indication of why we have delayed this long and what the
    timetable is going forward?
        Mr. Kirk. Yes. Well, let me, if I can, work from the end of
    your question back. The good news is we began the informal
    process that we follow in the Trade Promotion Authority of
    reviewing in every detail the proposed implementing bills and
    FTAs on Korea, Panama, and Colombia with our committees of
    jurisdiction last week and are hoping to complete that review
    as expeditiously as possible.
        I would like to take a minute and address your broader
    question of why it took us a while to get here, and one of the
    challenges that we faced when we came into office was what to
    do with the three FTAs that we inherited. And there were some
    that believed the FTAs were just fine as they were and wanted
    us to move. There were a number, including a number of your
    colleagues in Congress, that thought each of the three
    agreements had challenges with them that needed to be addressed
    before we could move forward.
        With respect to the Korea FTA, there was very broad concern
    from Members on both sides of the aisle, that they thought was
    just an unspeakable disparity in access to Korea's auto market
    compared to ours. We were able to stay at the table and
    negotiate a much better deal with respect to access to that
    automotive market and for manufacturers that now puts us in a
    position of having an agreement that has very broad support
    from Members on both sides of the aisle, and also for the first
    time in a very long time, having a trade agreement not only
    endorsed by all of our agricultural interests and the Chamber
    of Commerce, but also the United Auto Workers and the Food and
    Commercial Workers, which is almost unprecedented in this time.
        With respect to Colombia, I think many of you know there
    was very strong concern, not so much with the FTA but whether
    the United States would address those core issues that many
    Americans were concerned about in terms of respect for human
    rights and what some believed was an unspeakable amount of
    violence against union organizers and labor leaders.
        We believed Colombia had made great progress, but we also
    believe that the United States entering an FTA for many
    economies is like a gold seal of approval, and that we should
    leverage that opportunity to try to advance some of our other
    interests. And the good news is we were able to work with both
    the Arriba and Santos Administrations to come up with the labor
    action plan to move that forward.
        With respect to Panama, the agreement was stalled for
    reasons really having to do with neither of these. In the
    previous Administration, unfortunately, Panama elected as the
    head of their parliament, an individual who had been convicted
    in our courts.
        Mr. Johnson of Illinois. Let me just--I appreciate--let me
    just get to one more question. I appreciate your response.
        Mr. Kirk. I didn't mean to--
        Mr. Johnson of Illinois. No, that is okay. I just wanted to
    ask one more thing before my time expires. What do you foresee
    as new opportunities in specific geographical areas around the
    world?
        Mr. Kirk. Well, part of what we are doing through the
    National Export Initiative is to look at those. One of the next
    frontiers, we believe, is that encompassed in the area in which
    we are negotiating the Trans-Pacific Partnership. Most
    economists forecast over half the world's growth in the next 25
    years or so is going to be in the Asia Pacific region and then
    including India, China, and Brazil and Africa. And so these are
    areas in which we are paying specific attention.
        Mr. Johnson of Illinois. Thank you.
        The Chairman. The gentleman's time has expired. The
    gentleman from Oregon, Mr. Schrader, is recognized for 5
    minutes.
        Mr. Schrader. Thank you very much. I guess, Mr. Trade
    Representative and Mr. Secretary, which country of the three
    holds the most promise to take more ag exports, American ag
    exports?
        Secretary Vilsack. Let me try to respond initially. It is
    fairly clear that Korea, from an ag trade standpoint, has the
    greatest potential, $1.9 billion of additional trade, which
    would be Korea ag trade at $7.2 billion. To give you a sense of
    how big that number is, if you take the nine previously
    entered-into free trade agreements and totaled up ag activity
    in those nine, it would equal less than $7.2 billion.
        Mr. Schrader. Well, that is a good enough answer for me. Is
    it true that our balance--I will ask Mr. Kirk this one. Is it
    true that our balance of trade with Korea is actually narrowing
    at this point, that the imbalance is getting better for
    America?
        Mr. Kirk. It is narrowing a bit. I mean one of our
    challenges--our ag balance with Korea, we are wildly on the
    surplus side. Now, on the manufacturing side, it has narrowed,
    but on balance, it is a pretty strong relationship both ways.
        Mr. Schrader. Isn't it also true that Korea has tariff
    barriers in the neighborhood of, I guess, 11 to 13 percent
    against American goods and we only have a three percent
    barrier, if you will, on average to----
        Mr. Kirk. Yes, actually in some cases, it is much higher
    than that 11 and 12. But this is--these agreements, all three,
    very much are going to operate in our favor because our tariffs
    are so low.
        Mr. Schrader. Yes, so it sounds like we are going to
    obviously be net winners at the end of the day in terms of
    being able to export more American goods, not jobs overseas, at
    least to Korea.
        Are we having the same problems with Panama and Colombia as
    we are with Korea with regard to pending free trade agreements
    with other countries that could undercut American opportunity?
        Mr. Kirk. Well, as the Chairman noted, we are in, aside
    from our own issues, we are in a very competitive environment,
    and Korea and Panama, collectively, have signed 12 other free
    trade agreements over the last 4 to 5 years. So there is some
    imperative for us to resolve our differences and move forward.
        Mr. Schrader. Is there anything like the Australia or EU
    agreements with Korea pending right now in Panama and Colombia?
        Secretary Vilsack. I simply will point out that over the
    last several years, we have seen an erosion of our market share
    in Colombia. So obviously there is very stiff competition, and
    obviously the sooner we get this done, the better it will be
    for us because tariffs will come down, and our goods will be
    much more competitive than they have been.
        Mr. Schrader. Isn't it, I guess, also true that our sugar
    industry will be impacted negatively with any free trade
    agreement with Colombia and Panama?
        Mr. Kirk. Well, there is an elimination of the price band
    system with sugar, which should be beneficial to sugar
    producers as a result of the Colombian agreement.
        Mr. Schrader. But won't we see greater imports from those
    two countries to the United States?
        Mr. Kirk. Well, there are obviously restrictions and
    regulations in terms of the level of imports in sugar as part
    of the sugar program.
        Mr. Schrader. Well, I guess my point, if I may, Mr.
    Chairman, is I am just trying to point out that there is one of
    the three agreements that American farmers as well as American
    workers are clear winners on. There is the Colombia agreement
    that still is, while all the good intentions of the Santos
    Administration work is great, right now, as long as labor
    leaders are getting murdered and butchered in Colombia, it is a
    little tough for Congress to step up and support that
    particular agreement. I would hope the Administration, after
    trying to submit all three agreements, finds that it doesn't
    work that they would follow up very quickly with the Korea Free
    Trade Agreement to make sure agriculture is protected at the
    end of the day. I yield back.
        Mr. Conaway [presiding.] The gentleman yields back. I
    recognize myself for 5 minutes. Mr. Schrader, if you wouldn't
    mind providing us with the murder and butchering data that you
    just referenced.
        Mr. Schrader. I can do that. I will be glad to.
        Mr. Conaway. Okay, because I--my information is that is
    pretty dated scenario. Start the clock. I am on a 5 minute
    clock for myself. The Foreign Agricultural Service and USTR
    have had a great role in developing all of these trade
    agreements. Back home, the folks believe sometimes that ag is
    traded out too often in many of these agreements, that we are--
    ag interests don't have the same standing that others do. And
    so having a standalone agency helps with that perception.
        The President has recently asked OMB to merge all of trade-
    related issues under one agency. You are shaking your heads no.
    He has not done that?
        Secretary Vilsack. He has asked the OMB to conduct a
    conversation with all trade agencies and those who are engaged
    in trade to see if there are ways in which we can simplify the
    process in which we can provide a more streamlined effort and a
    greater effort. And we have been engaged in that process.
        Mr. Conaway. Okay, so could you help, just for the record,
    Secretary Vilsack, state that it is your intention that ag
    interests in that new arrangement, whatever it might be, would
    have the same standing in the level of authority with respect
    that they currently have in any kind of a new paradigm that you
    would work out with OMB and the USTR.
        Secretary Vilsack. Mr. Chairman, I have actually
    specifically indicated that to the President, the importance of
    maintaining the good relationship that we have with the Office
    of the United States Trade Representative and others who are
    involved in trade. Agriculture, in our view, is a very
    specialized area, and it requires specialized information and
    knowledge.
        And the reality is that in many countries, agriculture is,
    in terms of its overall economy, is a much greater proportion
    to the overall economy than in the United States. And so you
    have to be conscious of that when you are discussing any kind
    of trade relationship.
        Mr. Conaway. Okay, well, that is good news to hear that you
    guys recognize that and that maybe the information we received
    with respect to the breadth of what President Obama asked OMB
    to do, it looked to us that they were going to put it all under
    one umbrella. And that would, in our view, would decrease ag's
    standing with respect to the overall negotiations. So it is
    good to hear those reassuring comments. I will yield back. Now,
    Ms. Fudge, I guess you are next. Five minutes.
        Ms. Fudge. I thank you very much, Mr. Chairman, and I thank
    both of you gentlemen for being here today. And I just have
    three quick questions, and either of you, whichever one feels
    comfortable, may answer. The first one is the TPP does include
    Vietnam, which is now only second to China in the exports of
    apparel to the United States. How will the U.S. trade
    negotiators address issues surrounding trade of textiles and
    apparel in TPP negotiations?
        Mr. Kirk. We are--for reasons that I am surmising behind
    your concern behind the question, we are seeking to have a
    textile chapter. We have tabled one in one of our round of
    negotiations so that we can address many of the concerns we
    have heard from you and a number of your colleagues who
    represent that industry.
        We think it is an important opportunity to bring Vietnam in
    because we don't have a free trade agreement. They are
    potentially a huge market, but we--in the development of our
    negotiating parameters for TPP in general, I would just say we
    have done more outreach with Members of Congress and
    stakeholders. Representatives of the textile industry have been
    present at most of the six rounds we have had thus far, and so
    we have had them engaged in every step of the way.
        Ms. Fudge. Second, are there some parts of previous trade
    agreements--we have heard colleagues talk about the fact that
    some of us were not clear on what was in previous agreements.
    But are there parts of previous trade agreements that U.S.
    negotiators would seek to avoid this time as negotiations
    proceed with TPP?
        Mr. Kirk. Well, one of the things--one of our goals with
    TPP was to learn from what we have done, what we have done
    well, what we can do better, but also what we can address that
    perhaps wasn't as relevant 20, 30 years ago. Our broad goal is
    to have as aspirational and forward-looking of an agreement as
    we can. For example, we know much more about what it takes to
    compete against state-owned enterprises than we did 20 years
    ago. So we are seeking to address some of those challenges.
        Protecting intellectual property rights doesn't just go to
    Microsoft, but in particular with agriculture. So much of what
    we do in biotech in this industry is critical to make sure that
    we have state-of-the-art language on that. So a lot of what we
    are doing is making sure that we include those areas, in
    particular with respect to labor rights and the environment,
    which were side agreements, for example, in NAFTA. Those are
    now embedded in just about everything we are proposing, going
    forward.
        Secretary Vilsack. If I might just add one comment about
    this, I think there is a degree of sensitivity and acute
    awareness on the part of negotiations and discussions as it
    relates to the dairy industry. We want to make sure that
    whatever is done in the TPP discussions that it is a fair and
    balanced approached to that very important aspect of
    agriculture, which is our dairy industry.
        Ms. Fudge. Thank you. Is it possible that North Korean
    inputs could find their way into South Korean company supply
    chains and be exported to the United States directly or
    indirectly? Do you think that is a possibility?
        Mr. Kirk. We believe that it is not, and I want to make it
    plain because there has been a lot of confusion about this.
    Nothing in this trade agreement changes existing law, either
    under FTA's or under Congress's authority to singularly make
    the decision on whether or not we would allow goods to come
    from North Korea under any circumstances. So nothing we do in
    this agreement changes current law.
        Now, there have been previously sanctions imposed by this
    Congress on North Korea that had very limited exceptions for
    some goods from North Korea. But it would take Congress making
    that decision in order for that to happen.
        Ms. Fudge. Okay, and my last question: What discussions or
    options are going to be available to the United States to
    protect our chief exporters?
        Mr. Kirk. Under any of the agreements or all three?
        Ms. Fudge. All three.
        Mr. Kirk. Again, in every agreement, we have done
    everything we could to create opportunities, reduce tariffs for
    all of our ag exporters, particularly whether it is in dairy,
    whether it is fluid milk or processed goods or cheese, and so
    we have fairly detailed information, Congresswoman. Perhaps I
    can have our staff sit down with you and go through those exact
    elements in each of the agreements.
        Secretary Vilsack. I would just add to that, in terms of
    the Korean agreement, there is an opportunity for phasing out
    duty-free access within tariff rate quotas that we will phase
    out over a period of time as it relates to cheese. So that is a
    benefit for cheese exports that should see--we should see an
    increase. That is part of the $1.9 billion increase that we
    think we will see from the Korean Free Trade Agreement.
        Ms. Fudge. Thank you. I yield back, Mr. Chairman.
        Mr. Conaway. The gentlelady yields back. The gentleman from
    Ohio, Bob Gibbs, is recognized for 5 minutes.
        Mr. Gibbs. Thank you, Mr. Chairman, and thank you Secretary
    and Ambassador for coming in. And thank you for your work to
    expand agricultural trade and exports. You know, gaining duty-
    free access to markets has greatly expanded particularly in
    regards to the livestock sector. In the pork industry alone,
    passage of these three agreements would mean an estimated $800
    million in additional exports annually. This goes along nicely
    with the President's stated goal of doubling exports in the
    next 4 years.
        However, one of the biggest concerns I hear is from the
    livestock sector on the feed availability issue, and this is to
    Secretary Vilsack. I would be interested to hear your thoughts
    about this issue, especially given the tight corn supplies that
    we are looking at and the increased production with the trade
    agreements. If USDA has any ideas or preparation to address the
    situation to ensure that livestock producers have source feed
    and have reliable supply and predictability.
        Secretary Vilsack. A couple of things, Congressman. First
    of all, notwithstanding the difficulties we are having from
    weather, we are looking at fairly significant increases in
    planting of corn in particular, roughly 4 to 5 million
    additional acres. The yields that we are projecting are also
    higher than last year's, so we are going to see an increase in
    productivity, which should help address some of the concerns
    that you have raised.
        It is also important to point out that as we use our corn,
    for example, to produce fuel, there is also a byproduct of that
    process, which is a feed supplement, which has been very widely
    used and very helpful in expanding the feed opportunities. So
    the combination of those two things has us in a position where
    we recognize there are tight supplies, but we are very
    confident in the American producers' capacity and capability of
    being able to meet the various needs.
        I don't know of a single circumstance in my experience
    where we haven't challenged agriculture where they haven't met
    the challenge. And I see no reason why this will be any
    different.
        Mr. Gibbs. I agree with you, Mr. Secretary, and I think
    that the free market should function. I just want to make sure
    that there is no impediments to prevent the free market from
    functioning, and price will ration supply and demand. And we
    will see what happens, but I just wanted to make the point that
    a lot of poultry and livestock producers are really concerned
    about the feed situation.
        So I just want to make that point. So I yield back, Mr.
    Chairman. Thank you.
        Mr. Conaway. The gentleman yields back. The gentleman from
    Minnesota, Mr. Walz, is recognized for 5 minutes.
        Mr. Walz. Thank you, Mr. Chairman. Thank you, Mr.
    Secretary, Mr. Ambassador, for the work you do and for being
    here. I just have one question, and you have spoken a little
    bit on it. It goes to dairy, obviously critically important to
    many of my colleagues and myself in southern Minnesota.
        My question is a little different though, off the trade
    agreement right now. It deals with access to the Indian market.
    My producers and folks are pretty frustrated. They are not
    asking for a trade agreement. They are simply asking India to
    abide by its responsibilities to WTO, and that is a fast and a
    large market. And we have been stymied now for 7 years. I just
    kind of wanted to hear your take on this and maybe how do we
    deal with countries like that?
        Secretary Vilsack. Congressman, I share your frustration.
    We have had opportunities to visit with the Indian ag minister,
    agricultural minister on several occasions both here in the
    U.S. and in India. I traveled with the President to India. The
    discussions we have had have been primarily focused on the
    dairy industry.
        As you know, there are cultural and religious issues that
    are raised whenever we discuss dairy, and we are continuing to
    work to try to reassure India that we can meet the cultural and
    religious concerns in terms of an understanding of the
    physiology of cows and how they digest feed and how we can
    reassure folks that the product that they are getting is
    appropriate. We still have work to do.
        We have sent the Indians a series of studies to support our
    belief that we can provide them scientifically balanced and
    supported assurances. We still continue to have a difficulty,
    and we are going to continue to work on this until we finally
    open that market. They are open obviously to the possibility of
    organic milk products. The problem that our industry sees in
    that particular market is really, really, really small at this
    point in time and may not merit all of the activities that the
    industry would have to go through in order to access that
    market.
        So we continue to negotiate. We continue to try to
    convince. We continue to try to educate, but I don't want to
    underestimate the difficulty of this. We have been very frank
    in our conversations and will continue to be so.
        Mr. Walz. Mr. Ambassador, do you have anything to add to
    that, or does that sum it up?
        Mr. Kirk. You know if the pained look on my face doesn't
    convey our--I mean we share your--we have engaged the Indians
    at every forum, every opportunity from when the prime minister
    was here. I myself have been to India twice. Secretary Vilsack
    has had his team with us. We continue to push. We thought we
    had what was an acceptable resolution of it in terms of how we
    feed our animals and get them ready. But they came up with yet
    another creative response. But we are--one thing I might add is
    because of that, in our conversations with many Members, if I
    would just draw to your attention, one thing we did do is last
    year, because of cases like this, for the first time now in
    addition to our 301 report, we just published our annual report
    on sanitary barriers entitled, Report on Sanitary and
    Phytosanitary Measures. It helps to inform our work to try to
    work with you on how we can attack those, and if you have not
    seen that, I would like to make sure that we get that in your
    hands of you and your staff.
        Mr. Walz. Thank you both, and thanks for your service to
    the country. I yield back, Mr. Chairman.
        Mr. Conaway. The gentleman yields back. The gentleman from
    Georgia, Austin Scott, is recognized for 5 minutes.
        Mr. Austin Scott of Georgia. Thank you, Mr. Chairman, and
    gentleman, thank you for coming before the Committee today.
    Secretary Vilsack, just following up on what Mr. Gibbs said,
    you said that you expect an increase in the productivity of the
    corn crop. And I guess my question is: have y'all taken into
    account the recent flooding and the disruption in planting and
    anything that that may do to the actual yields of the crop?
        Secretary Vilsack. We have. Notwithstanding those
    difficulties and challenges, the yield projections which were
    announced in the last day or 2 are actually, in my view,
    significantly above what they were last year.
        Mr. Austin Scott of Georgia. Okay, thank you. Thank you for
    that, and I am sorry. I would like to move to the next
    question. I will try to be brief. You said that you hope that
    Congress will act swiftly. Are you talking about acting swiftly
    on the South Korea, Panama, and Colombia trade agreements?
        Mr. Kirk. Yes, sir.
        Mr. Austin Scott of Georgia. Okay, well we want to act
    swiftly on those as well, and, Mr. Ambassador, the President is
    in the third year of a 4 year term. He has a Republican
    Congress that is ready, willing, and able to work with him on
    this. And, over a year ago, he said he was going to--new market
    access was going to be a priority. This was over a year ago.
    And we hear now that the informal review, the technical
    discussions on drafting are moving along, but that Congress
    should act expeditiously once we get them.
        I mean this Committee, and I think that the vast majority
    of the Committee Members are saying what are you waiting on.
    What are you waiting on, and when can we expect the agreement?
    And nobody in the Administration has shown us enough respect to
    give us at least the goal of the timeline. And again, I
    apologize that we haven't had more time to get to know each
    other. But then you said that the Administration is essentially
    waiting on union approval so that the unions would be on board
    before we get the trade agreements.
        And with all due respect to the President and the
    Administration, if the American farmer is being held hostage
    over union approval of these trade agreements, that is not
    acceptable. And that is one of our chief concerns for the trade
    agreements going forward and what the President wants to do and
    what many of us believe will be diminishing the USDA's role in
    negotiating trade agreements, going forward.
        So there is a broad statement there, but I have a couple of
    issues. One is, is agriculture going to be held hostage by the
    unions in this Administration and trade agreements?
        Mr. Kirk. Well, first of all, Congressman, I could
    understand your frustration if that had been what I said, but
    let us be clear. I did not. And we are not waiting on union
    approval, and let me be clear. We finished negotiating the
    Korean Free Trade Agreement in December. We sent a letter to
    our committees in January and said we are ready to go. Let us
    approve it. The Korean agreement hasn't been held up because of
    the Administration. It was held up frankly because some of your
    colleagues insisted they would not move on Korea until we
    finished the work that we had done with Panama and Colombia. So
    the delay on Korea has not been because of the Administration.
    Second----
        Mr. Austin Scott of Georgia. Let us get Korea, and let us
    roll.
        Mr. Kirk. We absolutely are ready to move on the Korea Free
    Trade Agreement. Again that has been held because there were
    many on both sides that wanted all of the agreements to move
    forward at once. Now look, the good thing is we are not as far
    apart as you think we are. We are ready to move those
    agreements. There is a manner in which they go through an
    informal review under TPA, and then we will formally submit
    those agreements. We are having those conversations with the
    committees of jurisdiction----
        Mr. Austin Scott of Georgia. Sir.
        Mr. Kirk. If I could----
        Mr. Austin Scott of Georgia. We are short on time, and I
    have a 5 minute time limit. And I apologize for that, but the
    difference in a farmer which is a small or mid-sized business
    owner and a bureaucracy--I mean time is money for both. The
    more time a bureaucrat wastes, the more money they get. The
    more time that is wasted from the standpoint of the small
    business owner, the more opportunity, costs, and revenue they
    lose. So I mean why can't we have these trade agreements ready
    to vote on July 1?
        Mr. Kirk. Well, that--listen some degree, that is now going
    to be up to the leadership of the Ways and Means and Finance
    Committees as we come up with the structure to move those
    agreements as well as address the issues we have raised on
    trade adjustment assistance and the preference programs. If it
    is----
        Mr. Austin Scott of Georgia. Okay, in your department that
    you are in charge of, present them to the committees by July 1
    so that the committees can start----
        Mr. Kirk. That is not within the prerogative of my
    department. We negotiate the agreements----
        Mr. Austin Scott of Georgia. Whose prerogative is it?
        Mr. Kirk. It will be up to the President to formally submit
    them to Congress.
        Mr. Austin Scott of Georgia. Thank you.
        Mr. Conaway. The gentleman's time has expired. Mr. Boswell,
    from Iowa, 5 minutes.
        Mr. Boswell. Mr. Chairman, I appreciate you recognizing me.
    I have been in and out. We were having our annual visit from
    our Greater Des Moines Partnership, and my schedule in the
    office is unbelievable. So I haven't heard the questions that
    were asked, and I don't want to waste the Secretary's time to
    ask the same questions that are already answered. So I guess I
    will check the record, but I appreciate that discussion that
    just took place. You tell me that you told us that the Korean
    deal was ready to go, but the process here is holding it up
    because they want all three packages together. Is that--did I
    understand that clearly?
        Mr. Kirk. That was one of the reasons. Yes, sir. But the
    important thing is the Administration is--we have begun the
    process of reviewing the implementing bills with the
    committees. We think we have a reasonable way to move forward
    and get all of the agreements done, but we have made it plain.
        I want to say it again. For the Obama Administration, this
    was never just about passing three FTAs. It is about trying to
    come up with a more thoughtful, balanced trade policy that will
    allow us to keep trade part of our economic growth, going
    forward. And to do that, we have to demonstrate the same
    commitment to trade adjustment assistance in America's workers
    as the enthusiasm we have for opening up these new markets.
        Mr. Boswell. Well, I appreciate that. I, personally, and
    with others have worked very hard on the Korean side. There is
    a guy in the next panel--I don't know if he is in the room or
    not. The name is Carney. I just saw his hand go up. We have
    been on this discussion for a long, long time. I went to Korea,
    and a little sidelight, just for the fun of it. They said they
    were glad to see us the day we were there because the next day
    they were going to have a fight on the committee. And they had
    a fight. They were tearing each other's clothes and bloody
    noses and everything else. So I am glad we missed out on that,
    Mr. Chairman. That was good.
        But it seems to me like that move right along, but--on the
    agreement. And you tell us it is ready to go, and we are
    waiting on the other parts. I keep hearing things, problems in
    the other countries. I don't know. I haven't had time to check
    it out. I thought I would wait and see if something shows up,
    but I appreciate your hard work. Thank you very much.
        Mr. Kirk. Thank you.
        Mr. Boswell. I yield back.
        Mr. Conaway. The gentleman yields back. The gentleman from
    Iowa, Steve King, for 5 minutes.
        Mr. King. Thank you, Mr. Chairman. I want to thank the
    Secretary and the Ambassador for your testimony here today, and
    this aisle back-to-back thing, that can happen very well here,
    and I appreciate that all the way around the triangle here
    today.
        I just have a series of questions that--one I would just
    make a comment that the Cuban Free Trade Agreement isn't tied
    to these three, or I would have a real problem with that, just
    in case anybody wonders what my position is on Cuba. But I
    would go beyond this. This has been a bit of a mystery to me on
    the free trade agreements that we have had, and they have been
    before this Congress, some might say, 4 years.
        But I remember George Bush timing it so he could deliver
    these three trade agreements to Congress because the law
    required that there be a vote on the floor of Congress. And
    there was a procedural vote that suspended that, and now here
    we are, these years past, 2\1/2\ or so years into this
    Administration. And finally they come forward.
        And so I am curious. Mr. Secretary, I know you have been
    engaged in trade, and I am curious as to what the directive has
    been from the White House that might have made you less
    aggressive than you would naturally be, and what has been the
    directive now that brings this forward? I heard the details,
    but I think there is something more behind this. And there is a
    White House that runs a cabinet.
        What is the theme? Have they taken a shift in their
    position, or is it labor protectionism that many have reported
    is part of it? What has finally been resolved in the larger
    picture of politics? Mr. Secretary, please.
        Secretary Vilsack. Representative King, the President has
    been quite clear in every cabinet meeting that I have been
    involved in where trade has been discussed that he wants an
    aggressive effort, and it is one of the reasons why we
    continually report the success of agricultural trade. I
    indicated in my testimony that we are anticipating an ag
    surplus this year of $47.5 billion. To give you a sense of
    that, 5 years ago, that number was $5 billion. So the President
    has been very consistent and very insistent on us being
    aggressive, and that is the reason why we did 27 international
    shows through the National Export Initiative, why we helped 970
    exhibitors in foreign countries, why we participated in 250
    trade missions, and why we also extended $5.5 billion of
    financing help.
        Mr. King. Mr. Secretary.
        Secretary Vilsack. So, you know, we----
        Mr. King. Why couldn't this have been before this Congress
    in the first 2 or 3 months of President Obama's Administration
    then?
        Secretary Vilsack. Well, I can just speak to one aspect of
    the Korean agreement that I am somewhat familiar with, and that
    is the issue involving beef and the access to the beef market.
    This is a very complicated issue, and it involves a wide
    variety of not just the politics here in this country but
    probably more so the politics in Korea. And I am very pleased
    with the fact that we now have a roadmap pathway to opening up
    access to that very significant market and a process and a
    phase out of various tariffs.
        Mr. King. So it would be your position then that the
    Administration has been active and aggressive in promoting not
    only trade but these specific free trade agreements and that
    there were issues to work out that went beyond the issues that
    were worked out under the Bush Administration?
        Secretary Vilsack. That is correct, and I think probably
    the Trade Representative is in a better position to respond to
    that.
        Mr. King. And I appreciate that, and I will come back to
    that if I have time, Mr. Ambassador. But I had another subject
    I wanted to raise that I think is important for us to think
    about. I watched these free trade agreements be negotiated, and
    I have been a promoter and active in all of them since I have
    been here on this Agriculture Committee. And I appreciate the
    balance in trade that has been improved because of our export
    of agriculture. That is significant data.
        I am also watching some trade protectionism take place
    within the 50 states. And I speak specifically of California
    that has been putting regulations on Iowa ag products including
    ethanol and eggs. And when we are dealing with foreign trade
    free trade agreements, I would suggest that some of the
    protectionism that comes from within us, and that would be the
    regulations in California, run up against the line and probably
    cross the line of the commerce clause in the Federal
    Government's preemption.
        And so I would suggest this, Mr. Secretary. I would ask if
    you would consider this proposal. That this Agriculture
    Committee, working with the Energy and Commerce Committee,
    produce some language that would eliminate the regulation of
    commonly traded commodities based upon the means of production,
    such as ethanol going into California with California CARB regs
    on it that looks to me like they are trade protectionism for
    California.
        The requirement that Governor Schwarzenegger has signed
    that there be only free range eggs--eggs from free-range hens
    after 2014 in California. I would suggest that if you cannot
    determine by analysis of the commodity, the means of
    production, I would let them regulate the analysis of the
    commodity. But the means of production is an entirely different
    thing, and when we go into that area, we end up allowing
    California to regulate and do trade protectionism.
        From a Federal perspective, is that something you would
    consider and perhaps support?
        Secretary Vilsack. On the ethanol side, I will try to be
    brief, Mr. Chairman. On the ethanol side, I think perhaps a
    better way of looking at this would be to figure out ways in
    which we can produce ethanol in other parts of the country from
    sources in addition to the corn-based ethanol that you and I
    are familiar with; which is what we are trying to do with a
    strategy to expand this industry to create a million new jobs
    in rural America and to provide great opportunity for producers
    in all parts of the country. When we see that, Representative,
    I think we will see greater acceptance, and perhaps we will see
    less restriction on the lines that you have outlined.
        Mr. King. But, of course, that is not an answer. But thank
    you, Mr. Secretary. I yield back.
        Mr. Conaway. The gentleman's time has expired. The
    gentleman from--Joe Courtney, from Rhode Island, 5 minutes.
        Mr. Courtney. I am a little further west in Connecticut,
    Mr. Chairman.
        Mr. Conaway. Sorry about that.
        Mr. Courtney. I know from Texas, we just look like a little
    county, but----
        Mr. Conaway. It is a good sized county though, but
    nevertheless a county.
        Mr. Courtney. Thank you. I thank the witnesses for their
    testimony today. Mr. Ambassador, actually during the last
    break, I was over in the UK on a trade mission with the U.S.
    Department of Commerce Export Assistance Center with 16
    Connecticut companies. Last year, we did the Middle East. Year
    before, we did Brussels.
        First of all, I just want to make a comment that the export
    assistance centers are absolute all-stars in terms of helping
    U.S. firms, particularly small, medium-sized firms who, on
    their own, would really struggle in terms of trying to find new
    opportunities. It is a great program. We have real tangible
    great stories to tell as a result of those last visits.
        But I would say that being with them and actually in
    meetings with prospective customers, I mean, it has been an
    eye-opener and an education to me about what really is on the
    minds of U.S. firms when they are sort of dealing with
    international markets. This is not in your wheelhouse or this
    Committee's wheelhouse necessarily, but the issue of export
    controls, it is a problem that people are still bitterly
    frustrated with. And I know Secretary Gates is trying to move
    that initiative forward.
        But I will tell you for the firms that I spent time with,
    free trade agreements barely register on the Richter Scale in
    terms of their issues. Export controls are just persistent and
    vehement problems.
        And second, I mean, the other issue is currency. You know,
    when you have a product that is of the highest quality that
    will match any firm or country in the world in terms of input
    costs and productivity, but will be at a disadvantage because a
    country is putting the thumb on the scale in terms of devaluing
    their currency. Then it really kind of renders the whole effort
    moot.
        I mean right now in Europe, we are on the good side of that
    because the Euro is overvalued, and we are undervalued. But the
    fact is in Asia, that is not the case. And I realize, I am just
    going to make that observation. I mean that is a real issue for
    a lot of us who are looking at these trade deals in terms of
    the lack of any provisions in terms of currency manipulation.
        We went through the whole exercise in the last Congress of
    passing a Currency Reform for Fair Trade Act, H.R. 2378, which
    got huge bipartisan support in terms of final passage because
    of the frustration level of the fact that it is just not a fair
    system when a country is actually intervening into those
    markets. It just renders all the hard work that you are doing
    almost moot.
        The question I want to ask though is does it apply ag? And
    that is another issue which we are also waiting for action on,
    and is the Trade Adjustment Assistance Reauthorization--we have
    lobstermen who, frankly, were put at a tough disadvantage in
    terms of Canadian lobsters. This is a program which has
    provided real help for them. And I just want to hear your view
    in terms of reauthorization and whether or not ag is still
    going to be part of that program, which, again, I think is so
    important.
        Mr. Kirk. First, Congressman, thanks for your comments
    about the export assistance, and I will pass those onto
    Secretary Locke. That is a great program. Second, as you know,
    we just finished a strategic economic dialogue with China. They
    were here Monday and Tuesday. I want to assure you Secretary
    Geithner, all of us, continued to press China on allowing their
    currency to float to international standards. And that is
    something we take very seriously.
        And third, if you had heard my--I mean in my response to a
    number Members of your--colleagues on the Committee, the Obama
    Administration has been unequivocally clear that we think a
    part of our overall trade strategy that allows us to move
    forward with Panama, Colombia and Korea is keeping faith with
    America's workers. And that means that we have to renew trade
    adjustment assistance. We want it renewed at a level
    commensurate to what was included in the 2009 Global Trade
    Recovery Act, which did help many of those in agriculture. It
    has been used by over a half a million workers in every state
    in the country. We think it is the right thing to do, and we
    are asking that Congress approve it just as they move forward
    with these other agreements.
        Secretary Vilsack. Representative, if I could just say that
    the TAAF has helped about 11,000 farmers and producers and
    fishermen, on a wide variety of products. Because of limited
    funding this year, we are going to have to prorate our
    payments, but they are going to be coming out very soon. We
    will be prepared to do whatever Congress directs us to do, and
    hopefully Congress will provide us the resources to be able to
    do an adequate job of providing assistance and help to
    producers that need it.
        Mr. Courtney. I yield back.
        Mr. Conaway. The gentleman's time has expired. The
    gentleman yields back. Mr. Steve Southerland, from Florida, is
    recognized for 5 minutes.
        Mr. Southerland. Thank you, Mr. Chairman, and, Mr.
    Secretary, Mr. Ambassador, thank you for being here today. I,
    of course, am from Florida, and we produce a tremendous number
    of specialty crops. So I wanted to ask some questions regarding
    some of those specialty crops. I understand one of the chief
    anticipated imports from Colombia and Panama is tropical fruits
    and vegetables. How will these compete in Florida, the nation's
    second largest producer of these products?
        Secretary Vilsack. How will they compete?
        Mr. Southerland. How will they compete? In other words, how
    will the imports--obviously we in Florida are huge producers of
    fruit and vegetables. I mean tell me in the agreements that you
    are working on with Colombia and Panama, tell me what success
    looks like.
        Secretary Vilsack. Well, success from my perspective is
    that we are actually exporting much of what is being produced
    in your state, whether it is citrus, lemons, grapefruits, or
    oranges. And all three of these agreements have opportunities
    for expanded exports.
        As tariffs come down, we have a more level playing field,
    and we will be in a position to compete more effectively. So
    success for me is immediate reductions and phased-in reductions
    of those tariffs, resulting in higher exports from our
    producers, which creates additional markets, which helps to
    stabilize price.
        Mr. Kirk. If I might just briefly----
        Mr. Southerland. Yes.
        Mr. Kirk.--Congressman. We have the reality that, one, I
    don't know that Panama does a lot in agriculture, particularly
    not in citrus. Colombia, most of what they bring to us is
    coffee, is in coffee and cut flowers and others. But almost 99
    percent of what comes currently from Panama and Colombia come
    into the U.S. duty-free already. So as counterintuitive as it
    is to some in agriculture, this is a huge win because we are
    reducing our tariffs that is going to increase our
    competitiveness going the other way.
        Mr. Southerland. Let me ask. One of the things that we are
    obviously concerned about in Florida is pests and disease,
    okay, and we struggle there. Well, we just must be vigilant all
    the time regarding that. Tell me about the safeguarding of
    those issues in these agreements.
        Secretary Vilsack. The process involves very close
    examination and inspection of products that come in from other
    countries at the border. APHIS works with the Customs folks to
    make sure that they are properly trained and on the lookout.
    Obviously as it relates to disease, we are very concerned about
    citrus greening, which I know you are very well aware of. We
    are spending millions, tens of millions of dollars now, as is
    the industry, in an effort to try to figure out how to contain
    and ultimately eliminate that pest.
        This is a challenge for us. It is a challenge in a global
    economy where we are now faced with roughly $1 billion of
    investments in various disease and pest mitigation strategies.
    But we are continuing to work on making sure that we are doing
    a better job at the border.
        Mr. Southerland. Let me ask another thing. I am going to
    kind of switch gears. I know that you have mentioned in your
    statement, Mr. Vilsack, that the U.S. needs to lock in equal
    and better access to key markets than our competitors. How does
    the department deal with the perception of inequities in our
    trade agreements?
        And this is something that is not just, I don't think, this
    department, this Administration has had to deal with. This is
    something that predates many Administrations. The American
    families feel like in many ways these trade agreements that the
    Americans get kicked in the teeth.
        How do you go about, day-to-day, to convince the American
    people otherwise?
        Secretary Vilsack. Well, one of the things I try to point
    out, Congressman, is the trade surplus that we enjoy in
    agriculture. As I have said earlier today, we have a $47.5
    billion expected ag surplus in trade, $135.5 billion of
    expected sales. Every billion dollars of ag sales generates
    somewhere in the neighborhood of 8,400 to 8,500 jobs. So this
    is not just providing assistance to producers and growers and
    farmers and ranchers to improve their bottom line, but it is
    also creating jobs.
        And speaking of bottom lines, last year was the second best
    year we have seen in farm income in 35 years. Our expectation
    is that this may be a record year for income, and part of that
    is because we have a strong export story to tell. So one,
    making sure they understand that we are aggressively pursuing
    agricultural trade, that that puts money in the pockets of
    those who produce the food, and two, that it is also a job
    creator at home.
        Mr. Southerland. Ambassador Kirk, if I could ask you to
    kind of expand on that. I know my time is waning here. As far
    as focusing on balanced trade rather than any kind of--so many
    of the American people are aggravated with our trade
    agreements, with China in particular. Can you expand on that as
    far as our pursuit of----
        Mr. Conaway. The gentleman's time has expired. Could we
    take that for the record, or we will do a second round, Mr.
    Southerland?
        Mr. Southerland. That is fine.
        Mr. Conaway. All right, thank you. Mr. Costa from
    California.
        Mr. Costa. Thank you very much, Mr. Chairman, for this
    important hearing and having our two witnesses here. Let me
    start first with Mr. Ambassador Kirk. I know there has already
    been reference in previous questions with regards to the South
    Korean treaty as it relates to the case on a region and
    potentially North Korea benefiting as a result of this trade
    agreement. I would just like to get it from you one more time
    because I want to support the treaty, but a lot of folks who I
    care about have very deep concerns that this is a loophole that
    you could literally drive the proverbially truck through. So
    will you please once again tell me why it is not going to
    happen?
        Mr. Kirk. As plainly as I can say, nothing in this
    agreement makes a provision for an exception to U.S. law that
    prohibits goods from North Korea coming to United States,
    unless this Congress specifically decides you want to make an
    exception.
        Mr. Costa. So on that point is a side agreement or
    legislation, separate legislation an option on this issue?
        Mr. Kirk. Not within this FTA. As I understand it, they
    have previously been in place, Congressman, and this isn't my
    first field, brought sanctions against North Korea with very
    limited exceptions. As I understand it, those exceptions are
    now up for review, and Treasury and State are reviewing those.
    But that would have to come back from Congress. That has
    nothing to do with the FTA.
        Mr. Costa. All right, well, I appreciate your efforts on
    this. For a lot of my agricultural exporters, this is a big
    effort. We appreciate also the effort and the focus on the beef
    issue that both you and Secretary Vilsack have paid attention
    to, given what I think has been some issues that the South
    Korean Government has raised that frankly, are somewhat
    duplicitous in terms of reaching an agreement. Is there any
    effort going to be made, in your view, to tie all three
    together where the Administration resists the effort to tie all
    three treaties together?
        Mr. Kirk. Well, if I can just say briefly, as many have
    noted, all three of these agreements are coming forward under
    previously authorized promotion authority. Each of those is
    frankly very prescriptive. We don't know of any mechanism by
    which there would be ``an omnibus vote'' where you roll them
    all three into one.
        Mr. Costa. Okay, let me move over. Mr. Secretary Vilsack,
    it is always good to have you here. You were touting, and I
    think deservedly so, the expansion of U.S. exports of
    agricultural products. I think part of that is due to the
    bipartisan effort we have on the 2008 Farm Bill. I think the
    Market Access Program has been a good tool, along with some of
    the other efforts. As we look at the 2012 Farm Bill, you have
    any thoughts as it relates on how we build on that to continue
    to expand our exports, and what will be your view on Market
    Access Program?
        Secretary Vilsack. Congressman, we have seen remarkable
    returns on investment from the Market Access Program. For every
    dollar that USDA has been involved and engaged in in investing
    in trade, we have seen a $35 return in terms of trade activity.
    So obviously we will be supportive of continuation of
    investments in that area. Understanding that this is a
    constrained fiscal environment that we are all working under,
    we want to make sure that folks understand that there are ways
    that you can grow your way out of a deficit as well as cutting
    your way out of a deficit. And our hope would be that----
        Mr. Costa. Well, and certainly we have a history here over
    the last several years to see what works, and it seems to me we
    ought to--you know it is--we don't want to be penny wise and
    pound foolish. This is an area that brings in greater return
    and revenues to our nation, as well as to farmers, ranchers,
    dairymen throughout the nation. It is a good investment.
        Secretary Vilsack. Yes, it is.
        Mr. Costa. So we will be looking forward to hearing your
    thoughts as we try to reauthorize that particular area on
    specialty crops, which I think many of us here have a great
    interest in.
        Secretary Vilsack. Well, Congressman, we look forward to
    working with you on this.
        Mr. Costa. It is not directly related to the subject at
    hand, but as it relates to exports of beef to South Korea and
    other markets in Asia, I am very concerned about getting this
    GIPSA rule worked out. I appreciate what the USDA has done to
    address many of the concerns and the economic analysis.
    Although, that was somewhat troublesome but now it is there. I
    remain concerned about the process as you move forward. In the
    new rule with the economic analysis put forth and the final and
    interim or final rule, will there be any other opportunity for
    the stakeholders to comment?
        Secretary Vilsack. Well, Congressman, we have had 66,000
    comments, 30,000 of which are unique, and all of that was
    designed to inform the analysis that is in the process of
    being----
        Mr. Costa. Before my time runs out, what is the timeline--
    --
        Mr. Conaway. The gentleman's time has expired.
        Mr. Costa. Well, I will take that for the record, or finish
    quickly, Mr. Vilsack.
        Secretary Vilsack. Mr. Chairman, our hope is that we get
    this done sometime in the fall.
        Mr. Costa. All right, thank you very much, Mr. Chairman.
        Mr. Conaway. The gentleman's time has expired. The
    gentleman from Arkansas, Mr. Crawford, for 5 minutes.
        Mr. Crawford. Thank you, Mr. Chairman. I have a quick
    question for the Ambassador. I understand the U.S. Free Trade--
    Korea Free Trade Agreement offers no improved market access for
    U.S. rice. In fact, rice was completely excluded from the
    agreement at the insistence of the Korean Government. Besides
    denying potential benefits to U.S. rice farmers and exporters,
    the exclusion of rice, I believe, sets a terrible precedent
    that will haunt U.S. negotiators in future deals.
        Many of my colleagues and I understand the import
    sensitivity surrounding food and agricultural products. There
    are negotiating solutions to accommodate these sensitivities,
    but exclusion is not one of them. And rice is one of the most
    important import-sensitive foods around the globe.
        And protectionism against U.S. rice is widespread and
    significant. Our trading partners now look at the Korea
    agreement as precedent to exclude rice from any trade
    agreements they may be negotiating with the United States. What
    assurances can you provide the Committee and to me that the
    U.S. will not accept the exclusion of rice in current trade
    negotiations like the upcoming Trans-Pacific Partnership or in
    future negotiations?
        Mr. Kirk. Well, Congressman, you are correct. Korea was
    very protective of their rice market. We are encouraged though.
    There is a minimum market access, 50,000 metric ton provision
    for U.S. rice, and we are exceeding that last year by almost
    another 40,000 tons. And we are going to continue to see if we
    can't press and work with Korea to see if we can't improve on
    that minimum market access. But we are selling just under $100
    million worth of rice into the Korean market.
        And in the interest of time, for all the reasons you
    articulated, we are very careful in TPP that at least all the
    parties we have asked to put everything on the table. Now you
    can understand every country is then going to come back, and we
    are concerned about dairy and others. But we are very cognizant
    of those issues that you raised.
        Mr. Crawford. Thank you, Mr. Ambassador. I yield back.
        Mr. Conaway. The gentleman yields back. Mr. McGovern, from
    Massachusetts, for 5 minutes.
        Mr. McGovern. Thank you very much. I thank you both for
    being here. I have a great admiration for your work, but I have
    a lot of concern about these trade agreements. But I want to
    confine my comments, if I could, and my questions to the
    Colombia FTA. I also co-chair the Tom Lantos Human Rights
    Commission, so human rights is a major concern of mine.
        I have been to Colombia six times since February 2001, and
    when I go, I tend to stay several days. I travel to remote
    areas, visit some of the poorest city slums where you find
    hundreds of thousands of Colombia's five million internally
    displaced people, and to the border regions where hundreds of
    thousands more have fled Colombia's violent countryside and are
    now refugees in their neighboring countries.
        Colombia is a wonderful country with so many incredible
    people, but it is still a country in violent conflict. That is
    what President Santos told us just a couple of days ago. Most
    of that violence and conflict happens in the countryside, and
    it primarily affects rural communities and small farmers.
        Now, in the United States, we take great pride in
    supporting our small farmers. We should also be concerned for
    Colombia's small producers and how the Colombia FTA might
    affect them. The most definitive study on this matter estimates
    that small scale producers of Colombia would lose around 16
    percent of their net income from agriculture under the Colombia
    FTA. For those who produce products that will directly compete
    with U.S. agricultural imports, they will likely experience a
    fall of between 48 percent and 70 percent in their net
    agricultural income.
        And I think we should care because it means that these
    people are likely to lose their land and joins the ranks of the
    displaced and the growing urban poor.
        Colombia, is only second to Sudan in terms of the number of
    internally displaced people inside their country. But these
    people, who are going to join the ranks of the displaced, or
    they are going to end up moving--or they will move to more
    marginal land and start the growing the best paying crop in
    town, which is namely coca.
        I worry that they will be--in search of income, they will
    join one of the many criminal groups that dominate rural
    Colombia, or they will join the paramilitaries or the guerillas
    because there will be no other choice.
        The Labor Action Plan has a number of good proposals, but
    it would be an understatement to say that it fails to go far
    enough, let alone tackles the tough questions of substantially
    reducing violence against workers. So I ask you, Mr. Ambassador
    and Mr. Secretary, what in the policies of your agencies and in
    terms of the Colombia FTA will concretely help change the
    violent reality and daily poverty confronting over 93 percent
    of Colombia's rural population, namely small-scale farmers and
    agricultural workers?
        And concretely, how do you plan to ensure that they are not
    displaced from their land, fall deeper into poverty, forced to
    grow illegal crops, or join one of the illegal armed actors or
    go to work for a criminal network? Or the other choice, stand
    firm and end up being killed. It is a very serious situation,
    and I appreciate the Administration coming forward with a
    proposal. But, setting benchmarks and not insisting on results,
    I don't think, is the right way to go. I mean from a human
    rights perspective, there is a lot to be concerned about here,
    and I appreciate your comments.
        Mr. Kirk. Well, first of all, Congressman, I very much
    appreciate the care and the attention that I know that you and
    many others have brought to this issue. I would say for the
    record for those that have asked why the Administration took
    the time and care that we did to work with Colombia to come up
    with the action plan is reflected in the concerns you
    expressed. And for our Administration, we did think this is
    important.
        Now, to your latter question about what analysis, we do not
    have the charge nor the resources to make a determination of
    the impact of the FTA on what it is going to do in Colombia. I
    would say broadly that your concern about what do we do to help
    the poorest farmers in countries of our trading partners is
    reflected in our request that Congress renew the Andean Trade
    Preferences Act. It is designed specifically to address many of
    the concerns that you spoke of. It is to get people away from
    poverty other than being involved in the drug trade, either in
    terms of farming or joining FARC.
        And it is one of the reasons we think it is a real tragedy.
    Congress could have approved that now. We asked them to do it
    in December. We got a temporary extension to get through the
    flower season and Valentine's Day, but it is one of the reasons
    that the Administration has asked that, as proud as we are of
    the work that we have done on Colombia with the action plan in
    Korea and Panama, this all be done as part of a broad strategy
    in which we renew the Preferences Act. We pass Trade Adjustment
    Assistance right along with the three FTAs.
        Mr. Conaway. The gentleman's time has expired. The
    gentleman from--sir?
        Mr. McGovern. I ask for an unanimous consent request to
    insert in the record a memo to the Administration signed by six
    Members of Congress expressing a concern about the agreement.
        Mr. Conaway. Any objection? Without objection.
        Mr. McGovern. Thank you.
        [The document referred to is located on p. 99.]
        Mr. Conaway. The gentleman's time has expired. The
    gentleman from Nebraska, Mr. Fortenberry, for 5 minutes.
        Mr. Fortenberry. Thank you, Mr. Secretary and Mr.
    Ambassador, for coming today. First, Mr. Ambassador, let me
    thank you for working so aggressively a while back on reopening
    hog markets that were artificially closed, hog export markets.
    You did a good job. I know you put a lot of effort into that. A
    number of people were hanging in the balance, and I appreciate
    that effort. I hadn't had a chance to see you since that
    occurred, but thank you.
        Gentlemen, let me ask a straightforward question. When is
    your best estimate that these agreements will get done? The
    President--this is a central component of the President's
    economic policy, as we all know. Most Members of Congress agree
    on this. You have talked about the broad coalition of groups
    that support this. You gave a very good history of the free
    trade agreements with Korea, the development of them with Korea
    and Colombia. You got cut off on Panama. I would like to hear
    the remainder of your answer that you were giving to Mr.
    Johnson in regards to Panama. Your best estimate, given all the
    convergence of variables that you have laid out well that have
    to happen, your best estimate of a timeline.
        Mr. Kirk. We believe--and, Congressman, thank you for your
    remarks about our efforts to reopen the pork markets. That is a
    great example again of where we work across the Administration
    with USDA, Commerce, and others to protect the interests of our
    farmers.
        The President has made it clear we are ready. We would like
    to see all these agreements implemented as soon as possible for
    the reasons we want open markets, for competitive reasons, the
    Korea EU FTA having been signed, with Colombia and Korea
    moving.
        But I would say I have to put it back on you. Largely now,
    this is in the hands of Congress. We have made it plain, and I
    will say again, it is a broken record. We want to see action on
    all of these. The FTAs, Trade Adjustment Assistance, the
    Preference Program. Congress can approve Trade Adjustment
    Assistance now. You have had two votes on it. They stalled in
    the House. We think it is important.
        We have to make that covenant to American workers because
    we are concerned for the reasons a number of you have raised,
    the American public has lost faith with Congress in terms of
    our trade policy. They know we get excited about passing FTAs,
    but they don't believe we will enforce them. And we think we
    have a good record on that, but they are really concerned that
    we will stand up for the rights of workers and the environment
    and will look and take care of American workers.
        So if we can have Trade Adjustment Assistance pass, the
    committees have a process we can move through and get these
    agreements approved and ready, and they could be passed
    certainly by August, perhaps sooner. But to some degree, this
    is now in the hands of Congressional leadership.
        Mr. Fortenberry. Okay, clearly my question is intended to
    pressure, urge you to continue your forceful march toward
    getting this done and to remain flexible so that we can
    actually wrap this up. I think most people simply want to know
    when is this going to happen.
        If you could finish the commentary on the history of
    Panama, I think that would be helpful. But also before I run
    out of time, let me make a comment in regards to what you said
    earlier. I appreciate your thinking that trade agreements are
    an opportunity to leverage outcomes on human rights progress.
    Ultimately, trade and economies are about persons and societal
    well-beings and should not just be about the potential of
    propping up unjust structures elsewhere, such as we see in
    China for instance.
        I would like you to define though how you measure progress
    on human rights.
        Mr. Kirk. Well, let me--first of all, we believe that if
    the United States is going to enter into an agreement with
    another country, we owe it at least to the American public to
    give them the confidence. We are not trading our jobs away,
    which a lot of people believe. And they know we get great
    consumptive benefits, cheaper food, fresher products, cheaper
    computers, but right now, Americans are concerned about jobs.
    And they want to make sure we are doing a trade agreement with
    another country that doesn't have the minimum standards of
    labor so we encourage businesses from here to move production
    elsewhere. So that is why we took the time and the care that we
    did.
        Now, we did everything we could to work with Panama to
    address some of those most egregious cases, have a real labor
    ministry. They have agreed they are going to hire 100 labor
    inspectors and enforcers. They are going to deal with the
    backlog of cases. They are going to extend protection not just
    to union leaders. Much of the violence is against teachers, and
    I won't belabor it. But if you look at the action plan, it has
    very specific benchmarks and guidelines what we have asked them
    to address.
        And then finally in interest of time, what stalled the
    Panama agreement were two things. One, the Bush Administration,
    and we applauded it for that, said we will not bring this
    agreement forward as long as you have sitting at the head of
    your legislative body someone convicted of murdering an
    American soldier. Once that was resolved, we had the
    circumstance of OECD labeling Panama a tax haven, and we had
    leadership of----
        Mr. Fortenberry. I think we could do an entire hearing on
    this very question as to how we couple the advance of economic
    progress between peoples with social progress as well. But
    thank you.
        Mr. Conaway. The gentleman's time has expired. The
    gentleman from Indiana, Mr. Stutzman, for 5 minutes.
        Mr. Stutzman. Thank you, Mr. Chairman. And thank you, Mr.
    Secretary and Ambassador, for being here. I want to touch on
    something that I am hearing from folks back in my district in
    northeast Indiana, and that is the rising cost of feed. And I
    am a corn farmer and high prices, high commodity prices to me
    are a good thing as long as you sell high and buy your input
    costs at a reasonable rate.
        But large poultry--we have a lot of poultry production in
    Indiana and also beef. I am looking through the trade
    agreements specifically in Korea. Seems like poultry and beef
    are put at a disadvantage, and I know that eventually the
    tariffs will be removed long term. But even through the other
    trade agreements, and I would like your thoughts on
    international trade specifically to beef and poultry. Seems
    like they continually are put at a disadvantage. Agree or
    disagree, and what are some of your thoughts?
        Secretary Vilsack. Well, let me start. On the beef trade,
    we are working our way out of a circumstance that occurred in
    2003 with BSE, and we are now almost to the level where we were
    prior to that incident. And we continue to work with countries,
    Korea, China, Japan and others who have concerns about the
    safety of product, trying to reassure them that it is safe and
    in fact it is high quality and it is affordable.
        This Korean agreement helps us open the door for an even
    more aggressive effort in some of those other countries that
    have been closing their markets to beef trade. So I am
    confident we are going to see more activity here.
        In terms of poultry, we have been working aggressively with
    Russia, for example, to deal with some of the concerns that
    they have raised. And sometimes it is frustrating because some
    of those concerns, we don't think, are backed by science. They
    are not consistent with international standards and
    organizations.
        I think it is one of the reasons why the Administration is
    looking at Russian accession to the WTO as an opportunity
    perhaps to get them to a point where they don't necessarily
    arbitrarily impose things on our products that disrupt the
    trade as they have done in the past.
        I think these trade agreements move that process forward. I
    think we are aggressively promoting the sanitary and
    phytosanitary standards so that it is a science-based, rules-
    based system and that we are going to continue to encourage
    other countries to abide by those same standards.
        Mr. Stutzman. I mean don't you agree that we are somewhat
    putting ourselves at a disadvantage when corn exports are up,
    and we are shipping feed to other countries--and I appreciate
    that you said that you are aggressively pushing our poultry and
    beef. And I understand the concerns from the past, but my fear
    is that we continually ship our feed products overseas. They
    then feed their poultry and beef and other livestock. Are we
    coming back around to where we are going to be the leader and
    then continue to be growing our exports in our livestock
    production?
        Secretary Vilsack. Well, we have seen rather dramatic
    growth in all aspects of agriculture exports, and we see no
    reason that that growth is going to abate, given the rising
    middle class, given the aggressive efforts and the resources
    that we are putting behind this; and the President's insistence
    that we focus on exports, knowing full well that it not only
    helps the bottom line for farmers and ranchers and growers, but
    also helps to create jobs here back at home.
        Mr. Stutzman. Because I hear a lot of folks think that it
    is really ethanol that is driving commodity prices higher, and
    that is not really--I mean that may play into it a very small
    part. But it is really the global demand that is driving
    commodity prices higher. We have a weaker dollar. We have debt
    problems and all sorts of issues that play into all of this.
    But, I mean, I think that our folks back home are trying to
    figure out why--what are we going to do to encourage purchases,
    internationally and domestically, for our beef and our poultry
    products.
        Secretary Vilsack. We are focusing our efforts and
    targeting our efforts on countries where we see emerging middle
    classes where we know that will result in the need for more
    protein, and I think we have seen some success with those
    efforts. We are going to continue to see more with this
    agreement in Korea for sure, and I think again this agreement
    gives us an opening to renew our discussions with the Chinese
    in a more aggressive fashion than we have. Although we have
    been very aggressive with the Chinese on this.
        And once Japan gets itself through dealing with the
    disaster that struck them just several months ago, I think we
    have an opportunity to more aggressively look at that market as
    well. So I think there are great opportunities here with this
    agreement basically paving the way.
        Mr. Stutzman. All right, thank you, Mr. Chairman.
        Mr. Conaway. The gentleman's time has expired. The
    gentleman from Pennsylvania, Mr. Thompson, 5 minutes.
        Mr. Thompson. Thank you, Mr. Chairman. Mr. Secretary, Mr.
    Ambassador, it is good to see you. Thanks for your continued
    service, and thanks for your, Mr. Secretary, well, both of you,
    thanks for your support of these free trade agreements. It is
    obviously very important. You know they have been slow coming
    for a multitude of reasons, and we have heard good discussion
    on that.
        I am kind of looking ahead of that. You know we have lost--
    I think because of others, and you referenced some of the other
    negotiations some of these countries have been doing, have been
    able to facilitate goes along a little quicker than what we
    have. So they have kind of got in line or they have them
    implemented.
        Are there any strategies to regain market share, going
    forward? Any of the lost market share that we have perhaps lost
    as a result of these delays?
        Mr. Kirk. Well, and thanks for your comments. It will sound
    fairly simple. One of the smartest things we can do is get
    these trade agreements passed because it will--even against
    those odds, we see a very strong, strong preference still all
    around the world. The good news is, ``Grown in America,''
    ``Made in America,'' is still just absolutely one of the most
    powerful brands in the world. Anything we can do that reduces
    our cost, reduces tariffs on us is going to enhance our
    competitiveness.
        Second, and to some degree, this goes to your colleague's
    question, if I could just add briefly, Mr. Chairman. It is one
    reason we try to spend as much time on enforcement as we do on
    market access, and we spend an extraordinary amount of time
    engaging industry. And they are as frustrated because of some
    barriers other countries put up, and again I would reference--
    commend again for Committee's consideration the report that we
    put out to you now addressing sanitary and phytosanitary
    barriers.
        But broadly, what we are seeking to achieve is to get all
    of our partners to just play by the rules. If you do that, we
    know consumers around the world have a strong preference for
    products made here. So both opening new markets, enforcing our
    rules, and then trying to look down the road at this incredible
    universe now of 95 percent of world's consumers who live
    outside of the United States where are they moving into a
    middle class that they can afford American beef and pork and
    other products. And that is where we are beginning to look in
    terms of new opportunities.
        Secretary Vilsack. I might just simply add to that that we
    anticipate and expect that there is going to be an aggressive
    marketing effort once the Korean Free Trade Agreement is
    approved. The Meat Export Federation is indicated a real desire
    to really begin to aggressively promote the American brand in
    beef, and I suspect that that will be successful. We do have
    the best, highest quality, best tasting, and competitively
    priced livestock opportunities in the world. And we need to
    continue to market that, and I think you are going to see a
    very aggressive move on the part of all of us to do that.
        Mr. Thompson. Thank you. I apologize. I came in late, and
    so if this was already traveled--this discussion, I missed it.
    I did hear some discussion about organic milk products. I am
    just--beyond that, how will these agreements affect dairy
    exports? And by extension, how might these increase--if we see
    an increase in exports, would this help increase our dairy
    prices?
        [The information referred to is located on p. 111.]
        Secretary Vilsack. Congressman, we know that in the Korean
    Free Trade Agreement, we are going to look at a doubling of
    access immediately for cheese with the TRQ and that that will
    grow over time. We anticipate a similar situation with butter.
    We will see duty-free access within the TRQs for skimmed and
    whole milk powder in Korea. In Panama, we are going to see a
    greater commitment to sanitary and phytosanitary standards that
    will promote more dairy opportunities. And I think a similar
    circumstance is true with the elimination of the price bands in
    the Colombia agreement.
        So we see that there is a real opportunity across the board
    in all three of these agreements. And that is why we project
    significant increases in agricultural exports as a result of
    these three agreements.
        Mr. Thompson. Great. That is good news. Any potential
    within these free trade agreements in terms of affecting timber
    exports that you are aware of?
        Mr. Kirk. I don't know that there is an extraordinary
    amount of timber, but if you will allow our staff to go back
    and look at that, and if we can follow up with you.
        [The information referred to is located on p. 112]
        Mr. Thompson. That would be great. I appreciate it.
        Secretary Vilsack. There is the product of timber. Nuts
    is--there is an opportunity for nuts.
        Mr. Thompson. That is going out on a branch. I yield back.
        Mr. Conaway. The gentleman yields back. The gentleman from
    Texas, Mr. Neugebauer, for 5 minutes.
        Mr. Neugebauer. Thank you, Mr. Chairman. And Secretary and
    Ambassador, thank you for being here, and thanks for your hard
    work on these important trade agreements. I think there is a
    broad agreement that this will be a positive thing for American
    agriculture. I do have some questions from some of my
    constituents, particularly in the textile area. And one of the
    things that they are concerned about that they think that--and
    in fact, according to a former Customs agent, that there is a
    weak area of their enforcement in the ability to actually make
    sure that textiles from other countries aren't filtered through
    Korea and then to avoid, or circumvent the system. And I heard
    you say, Ambassador, a while ago that you have been stepping up
    your enforcement area.
        What kind of assurances can I give the folks back home that
    we are going to be on the lookout and make sure that that's not
    the case?
        Mr. Kirk. First of all, and a number of your colleagues,
    Congressman, have been concerned about potentially goods
    coming, say, from North Korea through Kaesong. And I just want
    to make it plain again. Nothing in this Korea FTA permits goods
    made outside of Korea to be transshipped, or in any of our
    FTAs.
        With respect to North Korea, if that were to happen, that
    would have to--that would require an affirmative decision by
    this Congress to make an exception, which Congress has done in
    very limited cases under the previous sanctions. But again we
    don't touch that in the FTA at all, and generally, our rules of
    origin apply to the FTA, and the tariff protections only go to
    goods made in those countries. And if I might say, you can be
    pretty much assured most countries that negotiate an FTA with
    us are much more interested in creating jobs for their people
    and products just as we are creating them here. So there is
    nothing in the agreement that would facilitate that.
        Now, the responsibility to inspect those is more Customs
    than us. The enforcement to which I was referring to Mr.
    Thompson is looking at our current agreements and making sure
    we get the access that we have been entitled to. I will give
    you one example. I came in the office, and one of the Members
    was expressing concern about impact on farmers. We had a
    dispute with the European Union over beef access that had gone
    on for 14 years. I thought that was absolutely nuts.
        Now, we can't do it in every case. We were able to get that
    resolved within 90 days, and we now are selling about $120
    million, about 11,000 metric tons of beef back into Europe that
    we should have been doing. So we are looking in every case
    where our partners aren't living up to their agreements in
    addition to negotiating new market access to make sure we get
    those markets open.
        Mr. Neugebauer. Well, I agree with you that most countries
    want to create jobs in their countries. But where there are
    opportunities for arbitrage where if I can bring goods in from
    China, or I can bring goods in from North Korea cheaper than I
    can build them or make them in South Korea, then it is to my
    advantage to manipulate the system, change the labels,
    whatever.
        And so I think the primary question for my constituent is
    what kinds of enforcement resources and processes are in place
    to watch over that kind of activity?
        Mr. Kirk. Well, again, the rules of origin provisions
    within the FTA speak to how much of that product has to be made
    in that agreement to be considered a product of that country
    and get the benefits. And I would have to--I would be happy to
    get DHS and Customs to perhaps walk you through your concerns
    about what they do in terms of inspection and enforcement on
    that end.
        [The information referred to is located on p. 112]
        Mr. Neugebauer. I appreciate it. Thank you very much. I
    yield back, Mr. Chairman.
        Mr. Conaway. The gentleman yields back. Mrs. Roby, from
    Alabama, for 5 minutes.
        Mrs. Roby. Thank you. I too apologize for being late. So if
    this is a repeat, I am sorry, but I too have lots of concerns
    from the textile industry in Alabama. And so I want to address
    that. Colombia Free Trade Agreement will benefit many
    businesses in my district, in particular our textile producers.
    And as you are aware, the Andean Trade Preference Program
    expired in February. Colombian manufacturers, many of whom
    depend on U.S. producers for inputs, are now paying 15 to 30
    percent in duties to import products into the United States.
        And while we appreciate very much your efforts to achieve
    Congressional approval of the Colombia Free Trade Agreement, I
    would like to know your plans to extend the Andean program in
    the meantime so that important businesses in the region,
    Colombia in particular, is not lost during the FTA approval
    process.
        As you know, 95 percent of all cotton exported to Colombia
    is U.S. cotton, and Colombia will consume more than 250,000
    bales of U.S. cotton in 2011. So, Ambassador Kirk, if you could
    just kind of address this, that would be great.
        Mr. Kirk. Well, first of all, Congresswoman, welcome to the
    Committee.
        Mrs. Roby. Thank you.
        Mr. Kirk. And I just want you to know on behalf of the
    Administration that we still are all, our hearts and prayers,
    with many of your constituents with respect to the recent
    natural disasters that have occurred in your state.
        Mrs. Roby. Thank you very much.
        Mr. Kirk. I have said to the point of making--well, still
    somewhat of a bore on the Committee for the Obama
    Administration. We are proud of the work we have done to get
    Panama, Korea, and Colombia in a position that Congress could
    approve them. But we think it should be part of a comprehensive
    strategy that includes renewal of the Trade Preferences
    Program, particularly the Andean program.
        And we worked very hard to try to get Congress to authorize
    that in December. We were only successful in getting an
    extension through Valentine's because of the importance of the
    flower industry, but we have been very up front in asking the
    justice--we are asking Congress to embrace and improve the free
    trade agreements. They should extend not only to Andean but the
    generalized system of preferences for many of the same reasons
    you articulated and trade adjustment assistance as well.
        Mrs. Roby. Thank you. And again, I apologize if this is a
    repeat of concerns of my colleagues. What was the
    Administration's process in determining which parts of the
    South Korea Free Trade Agreement were to be renegotiated? The
    textile producers in my district have real concerns with how
    the Korea agreement is structured, and I understand from my
    constituents, and, of course, my colleague just addressed some
    of the issues. But I understand that certain fixes to the
    agreement would have gone a long way to stem the estimated
    40,000 jobs lost to the industry if the agreement is approved
    as is.
        The auto and beef industry had their opportunity. Why did
    the Administration shut out textiles? My constituents on the
    one hand would benefit under the Colombia agreement, but if
    Korea goes into effect, that agreement threatens to shift
    product lines that flourish under the Andean and soon-to-be
    Colombian Free Trade Agreement into South Korea, China,
    Vietnam. Was there any impact analysis done industry by
    industry with all three agreements?
        Mr. Kirk. First, let me answer your first question. When we
    met, I--for reasons you articulated, I took the time to go to
    North Carolina. I have been to Maine. I have been throughout
    the South. We have met with many in the textile industry. We
    raised some of those issues, but we knew we were not going to
    be able to rewrite the entire agreement and get everything.
        But I hear your concern. We are disappointed. We were not
    able to address those. We did think we had an opportunity to
    greatly improve the agreement, particularly on the auto side
    because the imbalance was so extraordinary. And then I did
    advise your colleagues we did--I sent a letter to Congress last
    week advising them that, in addition to the extraordinary
    progress we have made in getting beef back into the market, we
    will be requesting consultations under the 2008 Beef Protocol
    once the agreement goes into force.
        Now, for the reasons you articulated, we have been very
    careful with respect to whether it is Colombia, Panama, but
    more importantly, what we are looking for down the road with
    the Trans-Pacific Partnership to engage the textile industry
    often and early. They have been a participant in just about all
    of our sessions, and we have tabled a textile chapter as part
    of what we are putting forward in the Trans-Pacific Partnership
    hopefully so that we can get a much better deal for the
    industry.
        Mrs. Roby. Thank you so much. I yield back.
        Mr. Conaway. The gentlelady yields back. Panel, thank you
    very much. We have a request for one second round. I think, Mr.
    McGovern, if you want to quickly ask something within a 5
    minute timeframe.
        Mr. McGovern. Yes, thank you. I just want to again re-
    emphasize this issue of human rights. I think if the United
    States stands for anything, we need to stand out loud and
    foursquare for human rights. And there is a human rights
    problems in Colombia, and I am a great--I am hopeful with the
    new President, President Santos, that he can get things under
    control. He said all the right things, but, I have been here a
    long time. And I have heard people say nice things, but it
    doesn't always necessarily follow with nice actions. And, I
    mean, there are--right now, the sugarcane workers in Colombia
    operate in a situation akin to modern day slavery. I mean it is
    an atrocity. I mentioned the number of people who were
    displaced. You know I appreciate the kind of notion that a
    rising tide lifts all boats, but it doesn't always work that
    way.
        And I believe that Americans are focused on jobs, but I
    think most Americans want jobs not at the expense of the
    displacement of more workers in Colombia. And I think this is
    an opportunity that I think we are missing to leverage a trade
    agreement to actually get some real improvements in human
    rights in Colombia. And I appreciate the attempts that you have
    made, but I would be more comfortable and I would be more
    supportive if it were based on results and not on future
    promised actions.
        And so again I would just--I would urge the Administration
    to not relegate human rights kind of as a side agreement or an
    afterthought. Yes, we want jobs. But I will tell you in the
    long run, to the extent that we can benefit and small farmers
    in Colombia can benefit, I think it is a win-win. And again
    Colombia is the most dangerous place in the world to be a trade
    unionist. And I just--I wish we would focus more on this issue
    of human rights. I think in the long run, it is in our
    interest, and not only from a moral perspective, but also in
    our economic interest. And I think what you have proposed in
    your action plan falls short on that issue, and I would be
    remiss if I didn't emphasize that concern. I mean we should be
    more concerned with human rights. I appreciate you being here.
    Thanks.
        Mr. Conaway. The gentleman's time has expired. The
    gentleman yields back. Mr. Ambassador, thank you very much. Mr.
    Secretary, thank you very much. We appreciate it. We will now
    move to the second panel.
        [Recess.]
        Mr. Conaway. We appreciate the second panel's patience with
    the lengthy questioning of our Trade Representative and also
    the Secretary Vilsack. Let me quickly introduce the panel. We
    have Gordon Stoner, Stoner Farms, on behalf of the National
    Wheat Growers and the U.S. Wheat Association from Outlook,
    Montana. Rick Tolman, Chief Executive Officer from the National
    Corn Growers Association, Chesterfield, Missouri. Sam Carney
    from--do we have Mr. Carney? Okay, Mr. Carney decided to take a
    quick break. Meantime, we have Mr. Roger Johnson, President of
    the National Farmers Union here in D.C. Bob Stallman, American
    Farm Bureau, D.C. And Bill Donald, National Cattleman's Beef
    Association here in D.C.
        You latter three understand the drill. You three from out
    of town, thank you for coming in. If you could keep your
    comments within the 5 minute timeframe, we would appreciate
    that. And with that, Mr. Stoner, if you will--your testimony,
    with unanimous consent, will be--the written testimony will be
    entered into the record as you have presented it. So hit the
    highlights for us within your 5 minutes.

              STATEMENT OF GORDON STONER, MEMBER, BOARD OF
       DIRECTORS, NATIONAL ASSOCIATION OF WHEAT GROWERS; FARMER/
                 RANCHER, STONER FARMS, OUTLOOK, MT; ON
                 BEHALF OF U.S. WHEAT ASSOCIATES, INC.

        Mr. Stoner. Very good. Good morning, Chairman Lucas,
    Ranking Member Peterson, Members of the Committee. My name is
    Gordon Stoner. I am fourth generation farmer/rancher from
    Outlook, Montana where I run a diversified operation raising
    durum wheat, peas, lentils, and cattle. Thank you for the
    opportunity to testify before you today to discuss the values
    these three outstanding free trade agreements hold for U.S.
    wheat growers.
        Free and open trade is critical. We are the third largest
    wheat-producing country in the world and also the largest
    exporter of wheat in the world. In a typical year, we export
    about half of the product we produce, meaning that we really do
    feed the world. Agricultural export markets are even more
    important to Montana farmers because we export approximately 80
    percent of our annual wheat production.
        In fact, if Montana residents were required to consume all
    the wheat we produce within our borders, every person would
    have to eat 400 loaves of bread every day.
        The entire U.S. wheat exports for 2009/2010 marketing year
    was nearly seven times the average annual production of my own
    home state. The U.S. wheat industry strongly supports immediate
    ratification of the three outstanding free trade agreements
    with Colombia, Panama, South Korea. We request that when the
    Administration sends the agreements to Congress, you support
    them and move them through the approval process.
        Last year, U.S. wheat farmers exported to these three
    countries wheat that at today's prices would be valued at more
    than $650 million. With the agreements, we will be able to
    maintain and grow these volumes because immediately upon
    implementation, duties on wheat imports to each country will be
    eliminated.
        The U.S.-Colombia FTA is of particular importance. Colombia
    is a wheat-dependent import country, and the United States has
    been the dominant supplier of wheat to the Colombian people. It
    is estimated that U.S. wheat producers will lose $100 million
    in annual sales to this market without an FTA. In marketing
    year 2007/2008, our share of the Colombian wheat market was
    almost 70 percent, representing almost one million metric tons.
        However in every year since, U.S. sales have declined by
    hundreds of tons per year. The Colombian people are not eating
    less wheat. They simply are looking and buying it elsewhere,
    especially from Canada and Argentina. There is every indication
    that sales will continue to decline, especially as our
    competitors gain preferential access through lower duties.
        This marketing year, Colombia has purchased five of our six
    classes of U.S. wheat from farmers across the country, loading
    vessels out of the Gulf of Mexico and the Pacific Northwest.
    Colombia's purchases of different classes of wheat means that
    this FTA will benefit wheat producers from coast to coast.
    Competition with Canadian wheat in the Colombian market means
    our market share is hanging by a thread.
        Additionally, increasing and maintaining sales of U.S.
    wheat abroad reaps rewards for the entire U.S. economy. A USDA
    Economic Research Service study found that for every billion
    dollars in exports, 8,400 jobs are created in the United States
    from farms to export barges to my local equipment dealer and
    grocery store.
        Ultimately, Mr. Chairman, these agreements are about jobs.
    U.S. wheat growers welcome developments that indicate the
    Administration is ready to begin technical discussions. We
    encourage Congress and the Administration to work together to
    quickly move and approve these agreements as soon as possible.
        Mr. Chairman, Mr. Peterson, Members of the Committee, thank
    you for allowing me this opportunity to be here with you today
    to discuss the importance of these trade agreements to my
    industry. Immediate ratification of each will increase U.S.
    wheat sales abroad and create much needed jobs here at home. I
    look forward to answering any questions you may have.
        [The prepared statement of Mr. Stoner follows:]

        Prepared Statement of Gordon Stoner, Member, Board of Directors,
     National Association of Wheat Growers; Farmer/Rancher, Stoner Farms,
             Outlook, MT; on Behalf of U.S. Wheat Associates, Inc.
        Chairman Lucas, Ranking Member Peterson, Members of the Committee,
    my name is Gordon Stoner, and I am a fourth generation farmer/rancher
    from Outlook, Mont., where I run a diversified operation raising durum
    wheat, peas, lentils and cattle.
        Thank you for giving me the opportunity to testify before you today
    to discuss the value these three outstanding free trade agreements
    (FTAs) hold for U.S. wheat farmers.
        I currently serve as President of the Montana Grain Growers
    Association; on the board of directors for the National Association of
    Wheat Growers (NAWG); and as Vice Chairman of the Joint International
    Trade Policy Committee coordinated between NAWG and U.S. Wheat
    Associates, Inc.
        Free and open trade is critical to U.S. wheat farmers. We are the
    third largest wheat producing country in the world after China and
    India, but the largest exporter of wheat in the world. In a typical
    year, we export about half of the product we produce, meaning we really
    do feed the world.
        Free and open trade with other countries is a vital component for
    ensuring the financial viability of U.S. wheat farmers. Nearly 96
    percent of the world's consumers live beyond U.S. borders. The
    remaining four percent, those who live within the U.S., do not consume
    enough wheat products to utilize the abundance of our nation's farms.
    As growers of an export-dependent commodity, NAWG welcomes every
    opportunity to reduce costs for our international customers and compete
    on an equal playing field with our competitor suppliers.
        In the most recently completed marketing year of 2009/2010, the
    United States exported 24 million metric tons (MMT) of wheat, roughly
    40 percent of production. One metric ton is equivalent to 2,204.623
    pounds or about 37 bushels of wheat. One million metric ton of wheat is
    then 37 million bushels. So 24 MMT is roughly 6.7 times the average
    Montana wheat harvest of 131 million bushels (2005-2010 average
    production as reported by USDA). World wheat exports in 2009/2010 were
    estimated at 135.8 MMT, with the United States accounting for nearly 18
    percent of global exports.
        The 2010/2011 market year projections by USDA indicate an
    increasingly important picture for U.S. wheat exports with 34.7 MMT
    expected to be sold to buyers around the world, which represents 58
    percent of production, and accounting for 28 percent of world wheat
    trade.

                                                   World and U.S. Wheat Production, Exports and Ending Stocks
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                      World           U.S.                                                                        World ending   U.S. ending
                   production      production      U.S. share     World exports   U.S. exports     U.S. share        stocks         stocks       U.S. share
     Mkt year 1     (million        (million        (percent)       (million        (million        (percent)       (million       (million      (percent)
                    bushels)        bushels)                        bushels)        bushels)                        bushels)       bushels)
    --------------------------------------------------------------------------------------------------------------------------------------------------------
         1991       19,970.574       1,980.139            9.92       4,039.897       1,282.305           31.74      5,997.970        475.021           7.92
         1992       20,673.261       2,466.798           11.93       4,043.241       1,353.580           33.48      6,505.106        530.652           8.16
         1993       20,520.260       2,396.440           11.68       3,810.947       1,227.761           32.22      6,706.682        568.484           8.48
         1994       19,218.100       2,320.981           12.08       3,608.784       1,188.277           32.93      6,004.584        506.585           8.44
         1995       19,750.332       2,182.708           11.05       3,644.792       1,241.143           34.05      5,726.544        376.020           6.57
         1996       21,365.365       2,277.388           10.66       3,928.013       1,001.522           25.50      6,045.700        443.607           7.34
         1997       22,422.188       2,481.466           11.07       3,836.521       1,040.391           27.12      7,279.407        722.478           9.93
         1998       21,694.809       2,547.321           11.74       3,722.028       1,045.743           28.10      7,690.753        945.918          12.30
         1999       21,561.099       2,295.560           10.65       4,169.235       1,086.499           26.06      7,728.488        949.748          12.29
         2000       21,425.441       2,228.160           10.40       3,730.479       1,062.041           28.47      7,633.579        876.182          11.48
         2001       21,441.976       1,947.453            9.08       3,891.710         962.311           24.73      7,514.015        777.112          10.34
         2002       20,893.833       1,605.878            7.69       3,882.818         850.211           21.90      6,202.779        491.416           7.92
         2003       20,384.492       2,344.415           11.50       3,995.254       1,158.324           28.99      4,935.195        546.439          11.07
         2004       23,028.533       2,156.790            9.37       4,108.902       1,065.911           25.94      5,637.661        540.100           9.58
         2005       22,749.354       2,103.325            9.25       4,298.463       1,002.781           23.33      5,528.716        571.190          10.33
         2006       21,908.548       1,808.416            8.25       4,108.865         908.476           22.11      4,799.133        456.153           9.50
         2007       22,490.641       2,051.088            9.12       4,309.376       1,262.612           29.30      4,627.834        305.818           6.61
         2008       25,066.192       2,499.164            9.97       5,278.601       1,015.415           19.24      6,123.597        656.505          10.72
         2009       25,125.606       2,218.061            8.83       4,989.833         881.017           17.66      7,271.911        975.637          13.42
         2010       23,779.831       2,208.391            9.29       4,561.989       1,275.000           27.95      6,717.963        839.235          12.49
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    1 Aggregated based on local marketing years. Latest data may be preliminary or projected.
    Source: USDA, Foreign Agricultural Service, Production, Supply, and Distribution Database and USDA, World Agricultural Outlook Board, World Agricultural
      Supply and Demand Estimates.

        Agricultural export markets are even more important to Montana
    farmers because we send 80 percent of our annual wheat production into
    export channels. In 2010 Montana growers produced more than 200 million
    bushels of wheat and the U.S. Census listed our state population at
    989,415 people. We simply do not have a large enough consumer base to
    support our state's large agricultural production. In fact, if Montana
    citizens were required to consume all of the wheat we produce within
    our borders, every person would have to eat 400 loaves of bread every
    day.
        The U.S. wheat industry strongly supports immediate ratification of
    the three outstanding free trade agreements with Colombia, Panama and
    South Korea. We request that when the Administration sends the
    agreements to Congress, you support the agreements as they move through
    the Congressional approval process. Each of these three countries has
    been a valuable buyer of U.S. wheat, and passage of these agreements
    will enable us to maintain and grow sales and market share.
    Implications for FTAs with Colombia, Panama and South Korea
        Last year, U.S. wheat producers exported 645 thousand metric tons
    to Colombia, 123 thousand metric tons to Panama, and 1.1 MMT to South
    Korea. Using today's export price of $350 per metric ton, trade to
    these three countries represents more than $650 million for wheat
    farmers, and thousands of jobs in the United States. U.S. wheat farmers
    will be able to maintain and grow these volumes with the FTAs as
    immediately upon implementation, duties on wheat imports to each
    country will be eliminated.
    U.S. Exports to Colombia by Class
    1,000 Metric Tons

        Panama is a consistent market for U.S. wheat producers, buying hard
    red winter (HRW), hard red spring (HRS) and soft red winter (SRW)
    wheat, and sourcing almost all of their needs from the United States.
    The FTA will lock in zero duties and Panama will not be able to
    increase tariffs to a bound level of three percent.
    U.S. Exports to Panama U.S. by Class
    1,000 Metric Tons

        South Korea is a large market for U.S. wheat and is the sixth-
    largest world market for U.S. wheat farmers based on a 5 year average.
    They purchase a range of wheat classes that impact wheat farmers in
    several growing regions.
        The South Korea FTA would mean they will not be able to increase
    tariffs to 1.8 percent. Econometric analysis i indicates
    that this agreement would cause a gradual increase of $0.08/bushel in
    farm gate prices for wheat when implemented. Although this seems small,
    when multiplied by the entire U.S. wheat production of over 2 billion
    bushels, the economic gain is significant.
    U.S. Exports to South Korea by Class
    1,000 Metric Tons

        Commercial sales to Colombia and South Korea have risen in the
    current market year, indicating the preference these buyers have for
    U.S. wheat when we are able to compete on a similar playing field, but
    also the increased trade we have to lose with delayed ratification.
    Colombia of Particular Importance
        The U.S.-Colombia FTA is of particular importance to U.S. wheat
    farmers. Colombia is a wheat import-dependent country, and the United
    States has been the dominant supplier of wheat to the Colombian people.
    It is estimated that U.S. wheat producers will lose $100 million in
    annual sales to this market without an FTA.
        In marketing year 2007/2008, our share of the Colombian wheat
    market was almost 70 percent, representing almost one million metric
    tons. However, in every year since, U.S. sales have declined by
    hundreds of tons per year. The Colombian people aren't eating less
    wheat--they are simply looking elsewhere to buy it, particularly from
    Canada and Argentina. There is no indication that this decline will not
    continue, especially as competitors gain preferential access through
    lower duties.
        In marketing year 2009/2010, Colombia was the eighth largest market
    for U.S. wheat. Colombia has routinely been the top South American
    market for U.S. wheat producers for many years, but has been nudged out
    this marketing year by Peru (1 MMT in sales)--in part because of an
    implemented free trade agreement that entered into force in February
    2009.
        This marketing year Colombia has purchased five of our six classes
    of U.S. wheat from farmers across the country, loading vessels in the
    Gulf of Mexico and the Pacific Northwest. Colombia's diversity of
    purchases to make various end products means that this FTA will benefit
    wheat producers from coast to coast.
        Sadly this FTA is no longer about giving U.S. wheat farmers an
    advantage into the Colombian market. Instead, it is now about being on
    an equal playing field with our competitors. Argentine wheat, under the
    MERCOSUR agreement, currently enters Colombia duty free. Argentine
    wheat was basically non-existent in this market until their duties were
    decreased in February 2005, making imports from Argentina more
    attractive, resulting in a 375 percent increase year on year due to
    this preference. Similarly, Canadian wheat will not be subject to
    tariffs once the Colombia-Canada FTA is implemented, which is expected
    in early July of this year.
        Colombian flour millers have told us that they like using U.S.
    wheat, and would like to continue doing so. However, they have also
    said that they cannot continue to buy our wheat at the volumes they
    have been if it is more expensive than Canadian wheat. More concerning
    to me as a farmer is that they tell us that Argentine and Canadian
    wheat blend together quite well. If millers become accustomed to an
    Argentine-Canadian blend, it will be more difficult to get them to
    recalibrate their mills back to using mainly U.S. wheat.
        The U.S. agreement will eliminate Colombia import duties currently
    applied at ten percent, and they will not be able to increase duties to
    their World Trade Organization-bound limit of 124 percent. Also
    eliminated will be Colombia's price band system, a variable import
    tariff scheme to keep domestic prices within a specific price range
    that is based on fluctuations in international prices. The certainty
    granted to U.S. farmers and Colombian importers by a permanent zero
    tariff rate is critical for the United States to remain competitive in
    this market. I can not stress enough how important this market and FTA
    is for us. The same econometric analysis i also indicates a
    $0.10/bushel increase in farm gate price for the Colombia FTA.
    Tangible Benefits for the U.S.
        Increased sales of U.S. wheat abroad--or not losing sales as is the
    case in Colombia--isn't just beneficial for U.S. wheat growers but it
    reaps rewards for the entire U.S. economy. A USDA Economic Research
    Service study found that for every $1 billion in exports, 8,400 jobs
    are created in the United States--from farming to product
    transportation to banking and related support industries. During this
    time of economic recovery, we must take advantage of every opportunity
    to create jobs. Passage of the FTAs with Colombia, Panama and South
    Korea are three perfect opportunities to do just that.
        Reduced trade barriers also have the potential to increase demand
    as lower-priced products and increased economic well-being contribute
    to greater purchases of food. We cannot afford to miss out on these
    markets as these countries are not waiting on us. Negotiations and
    talks are underway between these three countries and a number of
    others, including major wheat competitors, such as Australia, Canada,
    European Union and the MERCOSUR block that includes Argentina. A USDA
    Economic Research Service report states that the number of regional
    trade agreements has proliferated from fewer than 25 in 1990 to over
    290 in 2010. The United States and U.S. wheat producers are missing out
    on new market access by having only 11 trade agreements in place with
    17 countries.
    Conclusion
        Last week, the U.S. Trade Representative notified Congress that the
    Administration is ready to begin technical discussions on the FTAs and
    kick off the process of sending the agreements to Congress for
    ratification. U.S. wheat farmers welcome this development, and
    encourage Congress and the Administration to work together quickly
    through the technical discussions and bring the agreements up for a
    vote as soon as possible. There is broad support for both agreements,
    and they should be passed with bipartisan support. Competition with
    Canadian wheat in the Colombian market is looming as a critical market
    for U.S. wheat farmers hangs by a thread.
        Mr. Chairman, Mr. Peterson and Members of the Committee, thank you
    for allowing me the opportunity to be with you today to discuss the
    importance of these free trade agreements to my farm. Immediate
    ratification of each will increase U.S. wheat sales abroad and create
    much-needed jobs here at home. I am happy to answer any questions you
    have.
    Endnote
        i DTB Associates LLP, Allen F. Johnson and Associates,
    AgRisk Management LLC, Dan Sumner & William Mathews, Global AgriTrends.
    (2010) Analysis of the Effects of Trade Agreements on U.S. Agricultural
    Exports and U.S. Market Development Programs--A Global Broad-Based
    Initiative Study.

        Mr. Conaway. Thank you, Mr. Stoner. I appreciate you
    finishing right on the button. Mr. Tolman for 5 minutes.

             STATEMENT OF S. RICHARD ``RICK'' TOLMAN, CHIEF
                EXECUTIVE OFFICER, NATIONAL CORN GROWERS
                     ASSOCIATION, CHESTERFIELD, MO

        Mr. Tolman. Thank you very much, Mr. Chairman and Members
    of the Committee, and thank you for the opportunity to testify
    about these pending trade agreements and their importance to
    agriculture. My name is Rick Tolman. I am the Chief Executive
    Officer of the National Corn Growers Association. Our
    association was founded in 1957 and represents over 35,000
    dues-paying corn growers and others who are affiliated through
    our state associations.
        I appreciate this Committee holding this hearing so we can
    demonstrate how developing new markets for our country's
    agricultural products will help lead the nation in economic
    growth and international competitiveness. Our members have a
    lot to gain from ratification of free trade agreements with
    Korea, Colombia, and Panama. Beyond just increasing and holding
    international demand for corn, passing these free trade
    agreements benefits our important customers in the livestock
    and poultry industries. And we are very supportive of these
    agreements for those reasons.
        The U.S. is the largest corn producer and exporter in the
    world. Our exports of corn and corn products are essential to
    farmer income. During the last marketing year, we exported
    about 2 billion bushels of corn worldwide. Corn co-products
    such as dried distillers grains represent a growing export
    market for our farmers, and in the last year, the United States
    exported over 8 million tons of dried distillers grains.
        Despite numerous weather issues from 2008 to 2010, U.S.
    corn growers producers over 12 billion bushels each of those
    years annually. And Mother Nature has ensured that this year is
    going to be another exciting year. We are off to a little bit
    of a challenging start this spring, but we expect to produce a
    record amount of corn this year, as you heard from Secretary
    Vilsack a few minutes ago.
        Now, under the free trade agreements, Korea is the United
    States' third-largest corn market. In the last year, Korea
    imported 279 million bushels of corn from the United States,
    and we know that Korea is a market that we cannot afford to
    ignore. We also don't want to lose this market to our
    competitors. Just earlier this month, Korea's National Assembly
    ratified its free trade agreement with the European Union. And
    we know, as we have heard this morning, that Korea is in
    negotiations with other competitors, such as Canada, Australia,
    and China.
        When the FTA has passed, Korea's imports of U.S. corn for
    feed are guaranteed to enter at zero duty immediately. This is
    certainly according to our growers' desire to ensure a robust
    and reliable export market. Although Korea currently imports
    large quantities of corn at zero tariff under its autonomous
    quota, Korea can legally discontinue this zero tariff at any
    time and revert to the WTO tariff of five percent for the first
    about 240 million bushels of corn and 328 percent for any
    imports above that quantity.
        The growth in ethanol production here in the United States
    has lead to increased production of dried distillers grains.
    This high-protein feed is a direct co-product of the ethanol
    industry. Korea imported 351,000 tons of dried distillers
    grains last year from the United States. While somewhat small
    in volume, imports are growing, and there is significant
    potential for increased use in feed rations. Once this
    agreement is signed, it will provide duty-free access for dried
    distillers grains into the Korean market.
        On to Colombia. Colombia is currently importing corn from
    U.S. competitors in Argentina, Brazil, and Paraguay. Typically
    Colombia is one of our top ten export markets, but there is an
    import duty preference for these other countries. We have
    watched this market slip away, particularly to our largest
    competitors in the region, Brazil and Argentina. Failure to
    implement a trade agreement with Colombia will place the U.S.
    corn producers at a competitive disadvantage.
        From a corn grower's perspective, the pending trade
    agreements with result in benefits far beyond increasing
    international markets for U.S. corn. NCGA recognizes any
    opportunity to increase access to downstream value-added
    products, such as meat products, as a benefit to our economy.
        We respectfully request that Members of this Committee and
    others in Congress support pending trade agreements with Korea,
    Colombia, and Panama. Our members want to preserve current
    export markets, increase the exports of dried distillers
    grains, but significantly important to us is to increase demand
    for corn domestically through other value-added exports like
    meat exports.
        We appreciate the efforts of U.S. trade negotiators to
    increase meaningful and achievable access to foreign markets.
    Moreover, U.S. corn producers stand ready to develop and
    provide corn products to meet the demands of modern global
    consumption. Thank you very much.
        [The prepared statement of Mr. Tolman follows:]

       Prepared Statement of S. Richard ``Rick'' Tolman, Chief Executive
          Officer, National Corn Growers Association, Chesterfield, MO
        Chairman Lucas, Ranking Member Peterson and Members of the
    Committee, thank you for the opportunity to testify about the pending
    free trade agreements and their importance to the agriculture sector.
    My name is Rick Tolman, and I am the Chief Executive Officer for the
    National Corn Growers Association (NCGA). NCGA was founded in 1957 and
    represents over 35,000 dues-paying corn growers. NCGA and its
    affiliated state associations work together to help protect and advance
    corn growers' interests.
        NCGA members have much to gain from ratification of free trade
    agreements with Korea, Colombia and Panama. Beyond increasing domestic
    and international demand for corn, passing free trade agreements also
    benefits our customers in the livestock and poultry industries.
    Developing new markets for our country's agricultural products will
    help our sector lead the nation in economic growth and international
    competitiveness.
        NCGA supports a consistent U.S. trade policy so that corn and corn
    products are not disadvantaged for the benefit of another sector. In
    finalizing the pending agreements, NCGA emphasizes the need to
    eliminate sanitary and phytosanitary barriers that are not based on the
    unique science of agriculture products derived from biotechnology.
    U.S. Corn Production and Export Demand
        The United States is the largest corn producer and exporter in the
    world, and exports of corn and corn products are essential to producer
    income. During the 2009-10 marketing year, the United States exported
    50.4 million metric tons of corn worldwide. Corn co-products such as
    distiller's dried grains (DDGS) represent a growing export market for
    domestic producers. In marketing year 2010, the United States exported
    over 8 million metric tons of DDGS.
        Production growth and consistency make the United States both a
    reliable supplier of grain and a steadfast advocate for new export
    markets for corn and livestock products. Despite numerous weather
    issues from 2008 to 2010, U.S. corn growers produced over 12 billion
    bushels of corn annually. Mother Nature has ensured that this year is
    also off to a challenging start. However, the rebounds witnessed in
    previous years indicate growers' ability to harvest a record crop.

                           U.S Corn Supply and Demand
    ------------------------------------------------------------------------
     (mil bushel)      2007-08       2008-09        2009-10       2010-11
    ------------------------------------------------------------------------
        Carry-in           1,304        1,624           1,673        1,708
    Average Yield            151          153.9           165          152.8
      Production          13,038       12,092          13,092       12,447
          Supply          14,362       13,729          14,773       14,169
          Feed &           5,913        5,246           5,242        5,200
         Residual
         Ethanol           3,049        3,677           4,474        4,922
             FSI           1,338        1,276           1,365        1,390
          Export           2,437        1,858           1,985        2,000
       Carry-out           1,624        1,673           1,708          658
    ------------------------------------------------------------------------
    Source: USDA World Agricultural Supply and Demand Estimates (WASDE).

    Corn Sales to Korea
        The Republic of Korea (Korea) boasts a $1 trillion economy and 49
    million consumers. Based on these statistics alone, corn growers
    understand that Korea is a market we cannot afford to ignore. More
    importantly, Korea is a market we cannot afford to lose to our largest
    competitors. On May 4, 2011, Korea's National Assembly ratified its
    free trade agreement with the European Union. Additionally, we know
    that Korea is in negotiations with U.S. competitors including Canada,
    Australia and China.
        The U.S. share of agricultural imports to Korea stood at nearly 30
    percent in 2010. The U.S. Department of Agriculture's Foreign
    Agricultural Service (USDA FAS) warns that if the United States fails
    to implement the U.S.-Korea Trade Agreement (KORUS), that share will
    certainly decline.
        Korea is the United States' third largest corn market, and it is a
    potentially important market for corn co-products such as DDGS. In
    marketing year 2009-2010, Korea imported over 7 million metric tons of
    corn from the United States. The flow of corn into Korea is affected by
    a myriad of factors, and Korea remains one of our more volatile export
    markets.

                                            Marketing Year (September-August)
    ----------------------------------------------------------------------------------------------------------------
                          2004-5          2005-6          2006-7          2007-8          2008-9          2009-10
    ----------------------------------------------------------------------------------------------------------------
               MT         2,100,515       5,585,993       4,042,566       8,555,974       5,195,554       7,075,479
          Bushels        82,692,774     219,908,574     159,147,161     336,830,362     204,537,828     278,546,446
    ----------------------------------------------------------------------------------------------------------------

        Under KORUS, Korea's imports of U.S. corn for feed are guaranteed
    to enter at zero duty immediately. Although Korea currently imports
    large quantities of feed corn at zero tariff under its autonomous
    quota, Korea can legally discontinue this zero autonomous tariff at any
    time and revert to the World Trade Organization (WTO) tariff of five
    percent for the first 6.1 million tons, and 328 percent for any imports
    above this quantity. KORUS is critical to corn growers because the
    tariff will be fixed at zero percent. This is the certainty growers
    desire to ensure robust, reliable export markets.
        The growth in corn-based ethanol production has led to increased
    production of DDGS. This high protein feed is a direct co-product of
    the ethanol industry. In 2009-2010, Korea imported 351,389 metric tons
    of DDGS from the United States. While relatively small in volume,
    imports are growing, and there is significant potential for increased
    use in feed rations. Korea's WTO bound rate for DDGS is 6.6 percent.
    Once more, KORUS provides immediate duty-free access for DDGS into the
    Korean market.
        Allowing greater market access can alleviate volatility and, more
    importantly, open the Korean market to meat imports. Only a decade ago,
    the United States exported 44,000 metric tons of pork to Korea. Today
    that number is zero. Ratifying KORUS will translate into significant
    increases in pork, beef and other livestock product exports. Such
    increases in market access not only help NCGA members who raise
    livestock, but also enhance total demand for corn and DDGS
    domestically.
    Corn Sales to Colombia
        Colombia is traditionally one of the top ten export markets for
    U.S. corn. During marketing year 2007-2008, the Unites States exported
    114 million bushels of corn to Colombia, with an estimated value of
    nearly $627 million. Unfortunately, U.S. corn exports declined
    dramatically during the 2009-2010 marketing year. Only 36 million
    bushels of corn were exported to Colombia during that time, valued at
    $152 million. The decline in exports reflected a loss of $475 million
    to the U.S. economy.

                                            Marketing Year (September-August)
    ----------------------------------------------------------------------------------------------------------------
                          2004-5          2005-6          2006-7          2007-8          2008-9          2009-10
    ----------------------------------------------------------------------------------------------------------------
               MT         1,932,544       2,597,611       3,148,527       2,902,893       1,234,651         912,954
          Bushels        76,080,116     102,262,379     123,950,761     114,280,677      48,605,564      35,941,043
    ----------------------------------------------------------------------------------------------------------------

        Under the U.S.-Colombia Trade Promotion Agreement (Colombia TPA),
    U.S. corn producers would gain immediate access to the Colombian market
    for 2.1 million metric tons of corn at zero percent duty. Over the
    course of the 12 year phase out for corn's 25 percent over-quota base
    tariff, the rate would be reduced each year by two percent, while the
    volume of the tariff rate quota would increase by five percent,
    compounded annually.
        Currently, Colombia is importing corn from U.S. competitors
    including Argentina, Brazil, Paraguay and the majority of MERCOSUR
    members because of an import duty preference. We cannot afford to watch
    important export markets slip away, particularly to our largest
    competitors in the region, Brazil and Argentina. Failure to implement a
    trade agreement with Colombia will place U.S. corn producers at a
    competitive disadvantage in the world market.
    Corn Sales to Panama
        The U.S.-Panama Trade Promotion Agreement (Panama TPA) stands to
    level the playing field between U.S. and Panamanian exports. U.S. grain
    tariffs into Panama can be as high as 90 percent, while nearly all
    Panamanian exports enter the United States duty free under the
    Caribbean Basin Initiative passed by Congress in 1983.
        According to USDA FAS, under the agreement Panama will establish a
    298,700 ton duty free preferential tariff rate quota for corn. The
    over-quota rate tariff will be eliminated in 15 years, with no
    reduction in the first 5 years.
        Corn exports to Panama peaked in 2007 and have since dropped 20
    percent. In 2010, U.S. share of Panama's agricultural imports stood at
    48 percent. Similar to the Colombia TPA, if the United States fails to
    capture the opportunities presented in the Panama TPA, our share of
    Panama's agricultural imports will plummet.
    Value-Added Products
        U.S. corn markets are directly impacted by increased exports of
    value-added products such as meat. To put this into perspective, it
    takes approximately 79 bushels of corn to produce one metric ton of
    poultry, under a 2:1 conversion ratio of corn to white and/or dark
    meat. Likewise, it takes approximately 232 bushels of corn to make one
    metric ton of pork. As referenced in the section discussing corn sales
    in Korea, the loss of 44,000 metric tons of pork in the Korean market
    affects 10 million bushels of corn.
        From a corn grower's perspective, the pending trade agreements will
    result in benefits far beyond increasing international markets for U.S.
    corn. NCGA recognizes any opportunity to increase access to downstream,
    value-added products as a benefit to the U.S. economy.
    Conclusion
        NCGA respectfully requests that the Members of this Committee and
    others in Congress support the pending trade agreements with Korea,
    Colombia and Panama. Our members want to preserve current export
    markets, increase exports of DDGS and significantly increase demand for
    corn through opportunities in value-added corn products.
        NCGA remains committed to the development and maintenance of fair
    and open global trade policies. We appreciate efforts by U.S. trade
    negotiators to increase meaningful and achievable access to foreign
    markets. Moreover, U.S. corn producers stand ready to develop and
    provide corn products to meet the demands of modern global consumption.

        Mr. Conaway. Thank you, Mr. Tolman. We appreciate that. Mr.
    Carney, you missed a lengthy introduction a while ago by being
    out of the room. So I will abbreviate it. Mr. Carney represents
    the National Pork Producers Council from Adair--Adair or Adair?
        Mr. Carney. Adair.
        Mr. Conaway. Adair, Iowa. Mr. Carney for 5 minutes.

      STATEMENT OF SAM CARNEY, CHAIRMAN, TRADE POLICY COMMITTEE,
      NATIONAL PORK PRODUCERS COUNCIL; OWNER AND OPERATOR, CARNEY
                         FARMS, INC., ADAIR, IA

        Mr. Carney. All right, good afternoon. I am Sam Carney, a
    pork producer from Adair, Iowa, immediate past President of
    National Pork Producers Council, and Chairman of NPPC's Trade
    Policy Committee. I appreciate the opportunity to appear here
    before you today.
        The future of the U.S. pork industry and America's family
    hog farms, like mine, depend on free and fair trade and the
    continued expansion of our exports. The U.S. is now the lowest
    cost producer of pork in the world and the number one global
    exporter of pork. In 2010, the United States exported more than
    $4.8 billion of pork, which was nearly 20 percent of the pork
    produced in the United States. That is up about six percent
    from 10 years ago.
        Those exports added $56 to the price I received for each
    hog I sold. There is no disputing that free trade agreements
    have been a major factor in the rapid growth of the U.S. pork
    exports over the last few decades. Since the year before NAFTA
    was implemented in 1994, for example, U.S. pork exports to
    Mexico, now our number two market, have increased 780 percent
    to almost $1 billion last year. And similar increases have
    occurred in other countries in which the U.S. has FTAs.
        Increasing pork exports is important to more than just pork
    producers. The U.S. pork industry supports an estimated 550,000
    domestic jobs, 110,000 of which are result of pork exports.
    Just last year, U.S. pork exports grew by almost $500,000. USDA
    estimated that for each $1 billion in meat exports generated,
    about 12,000 new U.S. jobs. Meaning that last year, pork
    exports created 6,000 new U.S. jobs.
        Mr. Chairman, as you can see on our display, we export
    products, not jobs. Currently, the U.S. has pending FTAs with
    Colombia, Panama, and South Korea. These FTAs will generate
    over $770 million in additional pork exports annually, causing
    live hog prices to increase by more than $11 and creating more
    than 10,000 direct pork industry jobs.
        We need to approve these FTAs as soon as possible before
    other pork export competitors like EU and Canada move forward
    with their own FTAs with Colombia, Panama, and South Korea.
    Economists have projected that we will be out of all three
    markets in 10 years if the U.S. fails to implement its
    agreements with these countries as a result of the FTAs these
    nations have concluded with U.S. competitors. Losing these
    markets would mean less value to the hogs I sell, which I would
    translate into less profit and ultimately lost jobs.
        Let me touch on three other trade topics. NPPC is pleased
    that the U.S. and Mexican Governments have resolved the long-
    standing truck dispute. The United States has agreed to its
    NAFTA obligations, and Mexico will suspend its tariffs on $2.4
    billion of U.S. goods including pork. Congress should allow a
    U.S. pilot program that lets Mexican trucks haul products into
    the United States to go forward. If it doesn't, Mexico
    undoubtedly will reinstate and possibly raise the tariffs on
    pork and other U.S. goods.
        Russia is an important market for us, but in recent years,
    we have lost sales there because of the tariff rate quota
    system and use of non-science-based restrictions delisting U.S.
    pork plants over unfounded SPS issues.
        For the United States to maintain access to the Russia pork
    market and to begin recovering lost sales, it is critical that
    the Obama Administration use the WTO accession negotiations
    with Russia to eliminate that country's restrictions on U.S.
    pork.
        We also must negotiate an equivalency agreement with Russia
    on SPS issues and plant inspections. Like Russia, Vietnam has
    imposed non-science-based restrictions on U.S. pork. As part of
    the negotiations for joining the TPP, Vietnam should abide by
    WTO principles.
        Finally, while free and fair trade will continue to be a
    boom to the U.S. pork industry, it will do little good if
    domestic policies hamper pork producers' ability to operate.
    Unfortunately that is exactly what the USDA's regulation on
    buying and selling of livestock and poultry with the GIPSA rule
    will do if implemented as currently drafted. The bottom line is
    it will raise my cost and make the U.S. pork industry less
    competitive in a global market that will mean lost U.S. jobs.
        In closing, to continue as leaders in the global and
    domestic economies, U.S. pork industry needs free and fair
    trade and domestic policies to support America's producers. Mr.
    Chairman, thank you. I am happy to answer any questions.
        [The prepared statement of Mr. Carney follows:]

      Prepared Statement of Sam Carney, Chairman, Trade Policy Committee,
      National Pork Producers Council; Owner and Operator, Carney Farms,
                                Inc., Adair, IA
    Introduction
        The National Pork Producers Council (NPPC) is an association of 43
    state pork producer organizations and serves as the voice in Washington
    for the nation's pork producers. The U.S. pork industry represents a
    significant value-added activity in the agriculture economy and the
    overall U.S. economy. Nationwide, more than 67,000 pork producers
    marketed more than 110 million hogs in 2010, and those animals provided
    total gross receipts of $15 billion. Overall, an estimated $21 billion
    of personal income and $34.5 billion of gross national product are
    supported by the U.S. hog industry. Economists Dan Otto and John
    Lawrence at Iowa State University estimate that the U.S. pork industry
    is directly responsible for the creation of 34,720 full-time equivalent
    pork producing jobs and generates 127,492 jobs in the rest of
    agriculture. It is responsible for 110,665 jobs in the manufacturing
    sector, mostly in the packing industry, and 65,224 jobs in professional
    services such as veterinarians, real estate agents and bankers. All
    told, the U.S. pork industry is responsible for more than 550,000
    mostly rural jobs in the U.S.
        Exports of pork continue to grow. New technologies have been
    adopted and productivity has been increased to maintain the U.S. pork
    industry's international competitiveness. As a result, pork exports
    have hit new records for 17 of the past 19 years. In 2010, the U.S.
    exported more than 1.9 million metric tons of pork valued at $4.8
    billion of pork. Exports last year represented about 20 percent of pork
    production. The U.S. pork industry today provides 21 billion pounds of
    safe, wholesome and nutritious meat protein to consumers worldwide.
        The demand for meat protein is on the rise in much of the world.
    Global competitiveness is a function of production economics,
    regulations, labor costs and productivity. The U.S. pork industry can
    continue to be a leader in food production and meet the needs of
    increased consumer demands as long as exports continue to grow, feed
    grains are available and producers are allowed to operate without undue
    legislative and regulatory burdens.
    Free Trade Agreements
        There is considerable global demand for pork and pork products.
    Pork represents 44 percent of global meat protein intake, far more than
    beef and poultry. And there is no disputing that free trade agreements
    have been a major factor in the rapid growth in U.S. pork exports over
    the last 2 decades. Since the year before the North American Free Trade
    Agreement was implemented in 1994, for example, U.S. pork exports to
    Mexico have increased 780 percent to $986 million last year; since the
    year before the Australia FTA was implemented, U.S. pork exports to
    that country have grown by 1,300 percent to $148 million; since the
    year before the Central America FTA was implemented, U.S. pork exports
    to the CAFTA countries have increased by 313 percent to $119 million;
    and in the 2 years since the Peru FTA took effect, U.S. pork exports to
    that South American country have more than doubled to $1.3 million.
    Iowa State University economist Dermot Hayes estimates that U.S. pork
    prices were $56 per hog higher in 2010 than they would have been in the
    absence of exports.
        The United States is now the lowest-cost pork producer in the
    world, and the U.S. pork industry has established itself as the number
    one global exporter. But the industry will not stay in that position,
    even as the lowest-cost producer, if competitor countries cut trade
    deals in key markets and the United States does not.
        U.S. pork producers have been and continue to be strong supporters
    of trade agreements, including the deals with Colombia, Panama and
    South Korea, which are pending Congressional approval. Iowa State
    University economist Dermot Hayes estimates that, when fully
    implemented, those FTAs will generate more than $770 million in
    additional pork exports, causing live hog prices to increase by $11.35
    per head and creating more than 10,200 direct pork industry jobs.
        The failure of the United States to approve free trade agreements
    with Colombia, Panama and South Korea would result in the U.S. pork
    industry eventually being out of those markets. Not only would U.S.
    pork producers forgo the increase in hog prices, but the U.S. pork
    industry and the U.S. economy, in general, would lose thousands of
    jobs, according to analyses conducted by Iowa State University
    economist Dermot Hayes.
        Given that South Korea already has an FTA with Chile and that its
    agreement with the European Union becomes effective July 1, 2011, and
    under a scenario in which the U.S. dollar returns to a price of $1.25
    to the Euro--reflecting the long-run equilibrium between these two
    currencies--if the United States fails to implement its FTA with South
    Korea, U.S. market share in Korea would fall by three percentage points
    per year for the entire projection period, and the U.S. would be
    eliminated from the Korean market over a 10 year period. That, Hayes
    calculates, would cost the United States more than 3,600 full-time
    positions in the pork industry and 18,000 total full-time positions
    after allowing for indirect employment affects.
        Likewise, because Colombia and Panama have concluded FTAs with
    Canada, if the United States fails to implement its agreements with
    those countries, it will be out of the markets in 10 years at a loss of
    hundreds of jobs.
    U.S. Trade Obligations
        As it demands of other countries, the United States must live up to
    its trade obligations. Bilateral and multilateral trade agreements lay
    out specific commitments for the signatories, and failure to abide by
    them can--and often does--lead to disputes that hurt one or more
    countries.
        Such was the case with the trucking provision of the North American
    Free Trade Agreement (NAFTA) among the United States, Canada and
    Mexico. The provision allowed each country's trucks to haul goods into
    the other nations, but the United States refused to allow Mexican
    trucks into the country. Mexico took its case to a NAFTA dispute-
    settlement panel, which ruled that it could retaliate against the
    United States. In March 2009, the Mexican Government placed tariffs of
    up to 20 percent on 89 U.S. products worth $2.4 billion; in August
    2010--after no U.S. action to resolve the dispute--it added more
    products, including pork, to its retaliation list. The duties made U.S.
    goods going to Mexico less competitive with products from other
    countries and placed more than 26,000 U.S. jobs in jeopardy.
        NPPC is pleased that the U.S. and Mexican Governments have reached
    a framework agreement that should lead to resolution of the dispute.
    Under the agreement, the United States will implement its NAFTA
    obligations over time, and Mexico will suspend the tariffs on U.S.
    goods while the U.S. implements its commitments. Congress should allow
    a U.S. pilot program that lets Mexican trucks haul products into the
    United States to go forward. If it does not, Mexico undoubtedly will
    reinstate, and possibly raise, the tariffs on pork and other U.S.
    goods.
    Other Trade Issues
    Russia
        Russia until recently has been a very important market for U.S.
    pork exports. In 2008, U.S. pork sales to Russia totaled more than
    203,000 metric tons (MT), making it the fourth largest market in the
    world for U.S. pork exports. Since that time, however, U.S. pork sales
    to Russia have plummeted, totaling only 83,000 MT in 2010.
        The rapid decline in U.S. pork exports to Russia can be attributed
    primarily to restrictive Russian import policies. Since 2008, Russia
    has unilaterally reduced the tariff rate quota (TRQ) it provides for
    pork imports. In addition, it has imposed a series of sanitary and
    phytosanitary (SPS) restrictions that have resulted in the delisting of
    a large number of U.S. pork plants, representing close to 60 percent of
    U.S. pork production capacity.
        For the United States to maintain access to the Russian pork market
    and to begin recovering sales it has lost in recent years, it is
    critical that the Obama Administration use the World Trade Organization
    (WTO) accession negotiations with Russia to eliminate non-science-based
    and WTO-inconsistent Russian restrictions on U.S. pork.
        Russia currently maintains a global tariff rate quota for pork of
    472,100 MT, 57,500 MT of which is allocated to the United States. This
    stands in contrast to the commitments Russia made in a bilateral Meat
    Agreement with the United States in 2008, under which it was supposed
    to provide a global pork TRQ of 531,900 MT, 100,000 MT of which was
    allocated to the United States. In recent WTO accession negotiations,
    Russia has been proposing to even further reduce the size of the global
    TRQ for pork, while maintaining the U.S. country allocation at close to
    its current level of 57,500 MT, by increasing the U.S. share of the
    overall quota. This approach is unacceptable to the U.S. pork industry
    and would essentially freeze the U.S. country allocation at an
    unacceptably low level.
        In addition to a larger quota, pork producers seek either
    elimination of or a deep reduction in Russia's current 15 percent in-
    quota tariff rate applied under the TRQ. As a secondary priority, the
    industry would like to see a reduction in the out-of-quota duty,
    currently set at 75 percent. Also, it is important that Russia include
    commitments on a fair and transparent system for administering its pork
    TRQ.
        In addition to restricting U.S. pork exports by reducing the size
    of the TRQ, Russia has used spurious SPS measures to limit U.S. pork
    exports. The most serious SPS problem that the U.S. pork industry faces
    with Russia is the Russian Government's arbitrary, unpredictable and
    non-science-based delistment of U.S. pork plants from eligibility to
    ship product to Russia. Over the course of several years of
    discussions, U.S. officials have amply demonstrated the efficacy of the
    U.S. meat inspection system in ensuring product safety. U.S. consumers
    and U.S. trading partners around the world recognize the effectiveness
    of the U.S. system in ensuring a safe product. In spite of this, the
    Russian Government has refused to recognize the U.S. pork plant
    approval process, continues to insist that U.S. establishments strictly
    comply with Russian plant approval rules and has delisted a large
    number of U.S. plants from eligibility to export to Russia. At present,
    U.S. plants representing 60 percent of U.S. pork production capacity
    have been banned from exporting pork to Russia.
        A fundamental principle contained in the WTO Agreement on the
    Application of Sanitary and Phytosanitary Measures is that of
    ``equivalence.'' The equivalence principle requires that WTO members
    recognize the SPS measures of other trading partners as equivalent to
    their own if they achieve an appropriate level of health and sanitary
    protection. The United States was able to extract highly valuable
    commitments from China and Vietnam as part of the WTO accession
    process, recognizing the U.S. Federal meat plant inspection system as
    fully equivalent to their own. It is critical that United States obtain
    the same kind of clearly worded equivalence commitment from Russia
    through the WTO Accession negotiations.
        Directly linked to the massive delistment of U.S. pork plants are a
    variety of Russian SPS measures covering technical issues such as
    compound and pathogen tolerance levels in pork products. For example,
    Russia maintains an effective zero tolerance for the antibiotic
    tetracycline in pork production, even though both the U.S. Food and
    Drug Administration and the Codex Alimentarius have found the
    controlled use of the antibiotic to be safe in pork production. Russia
    also maintains an effective zero tolerance for pathogens such as
    salmonella on meat products, even though it is virtually impossible for
    any country, including Russia, to ensure absolute freedom from such
    pathogens. Russia insists on testing for trichinosis in fresh/chilled
    pork from the United States, even though there has not been a single
    case of trichinosis in the U.S. commercial herd in more than a decade.
        SPS technical measures of this kind have frequently been used by
    the Russians as a pretext for the delistment of U.S. plants. None of
    these measures is based on legitimate food safety concerns. They
    violate fundamental requirements of the WTO SPS Agreement that SPS
    measures be based on a scientifically based risk assessment or
    internationally established standards.
        To address these issues in a systemic way, the United States will
    need additional assurances from Russia that go beyond the commitment to
    accept the U.S. Federal meat plant inspection and approval system as
    equivalent to its own. Along with the equivalence commitment, Russia
    should provide a specific commitment that it will abide by the WTO SPS
    Agreement obligations as it relates to tetracycline, pathogens on meat,
    trichinosis and other SPS import measures by either adhering to
    internationally established standards or conducting a science-based,
    peer reviewed risk assessment in the establishment of import policies.
    Trans-Pacific Strategic Economic Partnership
        NPPC strongly supports U.S. participation in the Trans-Pacific
    Strategic Economic Partnership (commonly referred to as TPP). U.S. pork
    producers would derive major benefits from this proposed regional free
    trade agreement, through the elimination of import duties and sanitary-
    phytosanitary (SPS) barriers to trade in participating countries.
        The U.S. pork industry has a number of non-tariff issues with some
    of the countries now negotiating to join the TPP. U.S. trade
    negotiators must focus not only on the removal of tariffs but the
    removal of all non-tariff barriers to trade, particularly SPS barriers.
        Of the countries currently participating in the TPP negotiations,
    Vietnam offers the most potential for expanded U.S. pork exports.
    According to Iowa State University economist Dermot Hayes, the short-
    term potential for U.S. pork exports to Vietnam if import duties and
    SPS barriers are eliminated is $80 million, while the long-term
    potential is $600 million. Market prices in Vietnam are three times
    higher than those in the United States, and more than 60 percent of
    Vietnam's pork is produced by inefficient backyard producers.
    Unfortunately, Vietnam recently has taken a series of actions that
    seriously restrict U.S. pork sales. These actions run contrary to the
    trade liberalizing objectives of the TPP negotiations and are having a
    negative impact on U.S. pork exports to Vietnam.
        Vietnam instituted in July 2010 an effective ban on the importation
    of all pork offals. No explanation was given for the import ban. As a
    result of the de facto ban on pork offals, U.S. pork offal sales to
    Vietnam plummeted from 5,868 MT in 2008 to 611 MT in 2010. Vietnam also
    refuses to recognize the scientific process of applying a ``reference''
    maximum residue level (MRL) for compounds in pork offals. This process
    is recognized by the Codex Alimentarius and used by the United States
    and most other countries. In lieu of establishing a reference MRL,
    Vietnam has instead established non-science-based MRL requirements for
    individual pork offal products. So even if the import ban on offals is
    lifted, this practice will continue to inhibit our exports of offals.
        Further, Vietnam's zero-tolerance policy for pathogens on raw meat
    products, including pork, is not acceptable. No country in the world,
    including Vietnam, can guarantee the complete absence of pathogens on
    raw meat products. The United States and many other countries use the
    Hazard Analysis and Critical Control Points (HACCP) process to ensure
    product safety as it relates to pathogens. Vietnam's zero-tolerance
    policy for pathogens is not based on science and likely violates
    numerous provisions of the WTO's Agreement on the Application of
    Sanitary and Phytosanitary Measures. If strictly applied to U.S. pork,
    it would act as an effective ban on U.S. pork sales to Vietnam.
        Malaysia is another country with excellent potential for increased
    pork imports from the United States. There is a large ethnic Chinese
    population in Malaysia, and an estimated ten million people in that
    country consume pork. Per capita consumption among those who consume
    pork in Malaysia is 22 kilograms per year, a level roughly equal to
    that of Australia and New Zealand. Malaysia's domestic pork production
    industry is small and inefficient. According to Iowa State's Hayes, the
    long-term potential in Malaysia if import tariffs and SPS barriers are
    eliminated is $100 million.
        Malaysia's Department of Veterinary Services maintains a list of
    pork products that are allowed entry into Malaysia. The allowable
    import list includes bellies, pig feet, ribs and intestines for the
    fresh market and hams and other cuts for further processing. However,
    except in cases of exceptional shortages, Malaysia does not allow
    imports of most fresh and frozen pork cuts for direct sale on the
    Malaysian retail market. Malaysia has never provided an adequate
    explanation of why it maintains an effective import ban on sales of
    most pork products into its retail market. The effective ban is clearly
    WTO illegal.
        In addition, Malaysia has indicated that it intends to impose a new
    and highly burdensome registration process for all foreign meat
    establishments supplying product to Malaysia. This includes a long
    questionnaire that requires all foreign plants to provide confidential
    business information on their operations. Many U.S. plants are unlikely
    to complete the Malaysian plant registration process for this reason.
    The plant registration process acts as a significant barrier to trade
    and should be removed through the TPP negotiations.
        As a result of the 2005 U.S.-Australia FTA, U.S. pork exports have
    surged to Australia from about 2,700 MT in 2004, the year before the
    agreement went into effect, to 43,800 MT in 2008, valued at $111
    million. However, there is still potential for growth in U.S. pork
    sales to Australia if SPS barriers are removed.
        Australia has implemented an unreasonable and unscientific zero-
    tolerance approach to two commonly managed diseases that are endemic in
    the U.S. and other major pork producing countries in the world,
    including the European Union and Canada: Porcine Reproductive and
    Respiratory Syndrome (PRRS) and Post Systemic Wasting Syndrome (PMWS).
    Neither disease is a food-safety issue and does not pose a risk to
    human health.
        As the result of a 2004 risk assessment, Australia partially opened
    its market to U.S. pork, allowing processed pork and frozen boneless
    pork for further processing. The risk of introduction of PRRS or PMWS
    from U.S. pork to the Australian pork herd is negligible. Therefore,
    Australia should take action to fully open its import market to U.S.
    pork.
        New Zealand restricts imports of U.S. pork for further processing
    and only a few months ago allowed imports of consumer-ready high-value
    cuts. These restrictions are because of an unreasonable and
    unscientific zero-tolerance approach to two commonly managed diseases
    that are endemic in the U.S. and other major pork producing countries
    in the world, including the European Union and Canada: Porcine
    Reproductive and Respiratory Syndrome (PRRS) and Post Systemic Wasting
    Syndrome (PMWS). Neither disease is a food-safety issue and does not
    pose a risk to human health. The New Zealand restrictions are not
    justified by any legitimate health or sanitary concerns.
        Chile, Singapore and Peru impose restrictions on U.S. pork exports
    based on unscientific concerns of transmission of trichinae. These
    countries impose costly and unnecessary trichinae risk mitigation
    requirements such as freezing and testing of all U.S. pork. These
    testing requirements are prohibitively expensive and act as a major
    barrier to U.S. exports of fresh/chilled and frozen pork and pork
    products to these countries.
        While trichinae is a concern in domestic pork from many developing
    countries, there is negligible risk in the U.S. commercial herd because
    of the high level of biosecurity and commercial production practices.
    According to Dr. Ray Gamble, President of the International Commission
    on Trichinellosis, the odds of trichinae in the U.S. commercial food
    supply is 1 in 300 million. Under the USDA Agricultural Marketing
    Service's Trichinae Export Program, more than 38 million tests have
    been conducted for trichinae in pigs. Not a single pig was infected
    with trichinae.
        NPPC and virtually every other U.S. food and agriculture group
    support the addition of Japan to the TPP negotiations. NPPC urges the
    Obama Administration and Congress to make this a reality should Japan
    request to become part of the TPP.
    Thailand
        Although Thailand has relatively high per capita consumption of
    pork, it imports only a small amount of pork from the United States
    because of a variety of import restrictions. In the absence of current
    import barriers, Thailand could be a very good market for U.S. pork
    exports.
        Thailand imposes an import inspection fee of 5 Baht per kilogram,
    currently equal to about $166 per MT, on pork imports. Thailand argues
    that this fee is needed to cover the cost of health inspections for
    imported pork, but the fee is far in excess of the cost of any
    legitimate inspection costs. Domestically produced pork in Thailand is
    assessed an inspection fee of only $15 MT. Thailand needs to reduce the
    import fee on pork imports, which contravenes WTO rules, to a level no
    more than the fee currently applied to domestically produced pork.
    Additionally Thailand's Department of Livestock and Development rarely,
    if ever, grants import licenses for U.S. pork, other than cooked pork.
    The policy has been in place for a number of years, but the Thai
    Government never has provided a justification for this arbitrary import
    permit refusal. Indeed, there is no justification for this practice,
    which violates WTO rules.
        Thailand also has a ban on imports of pork produced with
    ractopamine despite the fact that its Ministry of Health has approved
    ractopamine for domestic use. Ractopamine is a feed ingredient that is
    used to improve efficiency in pork production in the United States and
    in other pork-producing countries. In 1999, it was approved and
    recognized as safe by the U.S. Food and Drug Administration and has
    been proved safe in several scientific safety reviews by the Joint FAO/
    WHO Expert Committee on Food Additives (JECFA)--the independent
    international scientific advisory committee to the Codex Alimentarius
    Commission. At least 26 countries now recognize the safety of
    ractopamine in pork production. In fact, some countries such as Japan,
    which is the number one importer of U.S. pork, have already adopted the
    JECFA safety tolerance for imported pork.
    WTO Doha Round
        NPPC remains hopeful that the WTO Doha Round negotiations, which
    have been going on for nearly 10 years, can be resumed. For NPPC, a
    successful Doha Round agreement would include improved market access
    for U.S. pork in developed and developing countries--particularly
    Japan, the EU and the Philippines--and the elimination of the European
    Union's trade-distorting export subsidies for pork. The average global
    tariff on pork is a staggering 77 percent.
    Ractopamine
        As noted above, ractopamine is an FDA-approved feed ingredient that
    is used to improve efficiency in pork production in the United States
    and in at least 25 other pork-producing countries, including several
    Asian nations.
        Despite the product being deemed safe by FDA, 25 other national
    authorities and the JECFA, several countries, including China, the
    European Union, Singapore, Taiwan and Thailand, have banned imports of
    pork produced using ractopamine without any scientific justification.
        The feed additive has been up for final adoption the past 3 years
    by the Codex Alimentarius Commission, which establishes international
    food standards, guidelines and codes of practice for the trade of safe
    food. At its last meeting in July 2010, the commission determined that
    a ``draft'' maximum residue level (MRL) for ractopamine, the same
    standard that has been up for adoption the past 3 years, met human
    safety standards. However, because of unscientific concerns raised by
    several Codex members, the adoption of the ractopamine MRL has been
    delayed, causing further market disruptions for U.S. pork producers.
    NPPC is concerned that the commission has become politicized and that
    decisions are not being based on science. NPPC strongly urges the Codex
    Alimentarius Commission to adopt without further delay the MRLs for
    ractopamine at its next meeting in July 2011.
    Legislation and Regulation
        As NPPC recently testified before the Committee on Agriculture's
    Livestock, Dairy, and Poultry Subcommittee, while exports have been,
    and with new FTAs will continue to be, a boon for the U.S. pork
    industry, they will do little good if domestic policies hamper
    producers' ability to operate.
        NPPC restates its strong opposition to the U.S. Department of
    Agriculture's proposed regulation on the buying and selling of
    livestock and poultry--the GIPSA rule. Congress in the 2008 Farm Bill
    asked USDA to address five specific issues related to production
    contracts. But USDA's proposed rule goes well beyond those issues and
    includes provisions considered and clearly rejected by Congress. If
    implemented as currently drafted, the GIPSA rule would have a
    devastating impact on livestock producers. According to an analysis of
    the rule conducted by Informa Economics, it would cost the U.S. pork
    industry nearly $400 million annually. Industry analysis of the
    regulation concluded that it likely will have a chilling effect on
    innovation and flexibility, will create legal uncertainty that will
    drive costs higher and cause an increase in vertical integration in the
    livestock sector, driving producers out of the business and possibly
    affecting meat supplies. All of those effects will harm the U.S. pork
    industry's international competitiveness, costing U.S. on-farm and pork
    processing jobs as well as negatively affecting the U.S. balance of
    trade.
        NPPC continues to urge USDA to scrap the current GIPSA rule and to
    write a regulation that sticks to the five mandates it was given by
    Congress in the 2008 Farm Bill. It wants USDA to conduct a cost-benefit
    analysis--open to public comment--before any rule is finalized. It also
    requests Congress to conduct oversight hearings on the origins of the
    rule, the legal and economic analyses used to develop it and the rule's
    impact on small businesses.
    Conclusion
        The U.S. pork industry is the lowest-cost producer and number one
    exporter of pork in the world, and U.S. pork producers continue to
    produce the most abundant, safest, most nutritious pork in the world.
    They have proved very resilient, most recently weathering financial
    crises in 1998-1999 and 2008-2009 as well as the vagaries of a free
    market economy, all while investing in and adopting new technologies
    that have promoted animal health, protected the environment and added
    thousands of jobs and billions in national income to the American
    economy.
        To continue as leaders in the global and domestic economies, the
    U.S. pork industry needs free and fair trade and domestic policies that
    support America's pork producers.
                                  Attachments
    February 14, 2011

    Hon. Barack Obama,
    President of the United States,
    The White House,
    Washington, D.C.

        Dear Mr. President:

        Many of the undersigned food and agriculture organizations first
    declared their support for the Colombia and Panama free trade
    agreements (FTAs) in 2007. Four years of trade benefits for U.S.
    farmers, ranchers and food processors have now been forfeited by our
    inaction on these agreements, and competitor countries have taken
    advantage of this lapse to grab U.S. market shares. It is time to bring
    this situation to an end.
        We greatly appreciate Ambassador Kirk's recent statement to
    Congress that the Administration is committed to intensifying
    negotiations with Colombia and Panama and to resolving the issues that
    have prevented you from submitting the implementing legislation to
    Congress. We urge you to direct U.S. negotiators to move forward with
    these efforts as quickly as possible.
        Colombia and Panama each have undertaken important changes in
    policies to correct problems identified by Members of Congress. There
    is little debate that those governments have worked hard to address
    U.S. concerns. We believe that a strong and mutually beneficial
    relationship between our respective nations may well advance legitimate
    U.S. objectives in these areas more than continuing to withhold
    approval of the FTAs. At some point, the current approach could cause
    us to lose not only the trade agreements but the friendships of those
    important regional allies.
        As you know, each agreement will provide important new market
    access benefits to U.S. food and agricultural exports that will in turn
    create U.S. jobs and strengthen rural economies. Many U.S. food and
    agricultural products will become eligible for duty-free treatment in
    those countries immediately upon entry into force of the agreements,
    and virtually all will receive duty-free treatment over specified
    phase-in periods.
        According to the American Farm Bureau Federation, the U.S.-Colombia
    FTA would result in U.S. agricultural export gains of more than $815
    million per year at full implementation, and the Panama FTA would add
    another $195 million. This extra $1 billion in exports would generate
    6,000-8,000 new jobs here at home. But we are already several years
    behind in implementing the agreements, and those jobs are going
    elsewhere.
        Colombia is on the verge of implementing FTAs with Canada and the
    European Union, and other major agricultural exporting countries, such
    as Argentina and Brazil, already have preferential access to that
    market. Our share of that market in wheat, feed grains and other
    products is certain to plummet unless we act promptly to correct these
    inequities. According to USDA, the U.S. share of Colombia's total
    agricultural imports has already fallen from almost 44 percent in 2007
    to 27 percent in 2009.
        Mr. President, implementation of these agreements, along with the
    Korea FTA, will significantly advance your effort to double U.S.
    exports over 5 years. On the other hand, because these countries are
    negotiating agreements with some of our main competitors, the failure
    to implement the agreements will be a real set-back to that objective.
    Once again, we urge you to move forward rapidly to finalize the FTAs
    and submit the implementing bills as soon as possible.
                Sincerely,

    American Farm Bureau Federation;
    American Feed Industry Association;
    American Frozen Food Institute;
    American Meat Institute;
    American Peanut Product Manufacturers, Inc.;
    American Seed Trade Association;
    American Soybean Association;
    Animal Health Institute;
    Blue Diamond Growers;
    California Table Grape Commission;
    Commodity Markets Council;
    Corn Refiners Association;
    Distilled Spirits Council of the United States;
    Grocery Manufacturers Association;
    Idaho Barley Commission;
    International Dairy Foods Association;
    National Association of State Departments of Agriculture;
    National Association of Wheat Growers;
    National Barley Growers Association;
    National Cattlemen's Beef Association;
    National Chicken Council;
    National Confectioners Association;
    National Corn Growers Association;
    National Council of Farmer Cooperatives;
    National Grain and Feed Association;
    National Meat Association;
    National Milk Producers Federation;
    National Oilseed Processors Association;
    National Pork Producers Council;
    National Potato Council;
    National Renderers Association;
    National Sorghum Producers;
    National Sunflower Association;
    National Turkey Federation;
    North American Equipment Dealers Association;
    North American Export Grain Association;
    Northwest Horticultural Council;
    Produce Marketing Association;
    Sweetener Users Association;
    U.S. Apple Association;
    U.S. Canola Association;
    U.S. Dairy Export Council;
    U.S. Livestock Genetics Export, Inc.;
    U.S. Wheat Associates;
    United Egg Association;
    United Egg Producers;
    USA Dry Pea & Lentil Council;
    USA Poultry & Egg Export Council;
    USA Rice Federation;
    Western Growers Association.

    CC:

    Hon. Ron Kirk, U.S. Trade Representative;
    Hon. Tom Vilsack, U.S. Secretary of Agriculture.
                                     ______

    January 24, 2011

    Hon. John Boehner,                   Hon. Harry Reid,
    Speaker,                             Majority Leader
    U.S. House of Representatives,       U.S. Senate,
    Washington, D.C.;                    Washington, D.C.;

    Hon. Nancy Pelosi,                   Hon. Mitch McConnell,
    Democratic Leader,                   Republican Leader,
    U.S. House of Representatives,       U.S. Senate,
    Washington, D.C.;                    Washington, D.C.

        Dear Speaker Boehner and Leaders Reid, Pelosi and McConnell:

        The undersigned food and agricultural groups and companies,
    representing nearly all sectors of the agricultural economy, applaud
    the recent agreement between the United States and the Republic of
    Korea on issues that have delayed approval by Congress of the Korea-
    U.S. Free Trade Agreement (KORUS FTA). We strongly support this
    agreement and urge that it be approved at the earliest possible
    opportunity.
        Below we offer a number of compelling reasons for supporting the
    KORUS FTA. But the simple heart of the matter is that the agreement is
    overwhelmingly good for American agriculture and presents no risks. It
    will create significant new and expanded market opportunities for U.S.
    exports but will not result in any appreciable increase in agricultural
    imports.
        Risks for U.S. agriculture--and they are extremely serious--arise
    if the KORUS FTA is not implemented. If this agreement is rejected, we
    stand to relinquish our export sales to countries that have implemented
    their own FTAs with Korea.
        This is not a trivial concern. There are 13 such agreements in
    place or in the works involving some 50 nations around the world. They
    include some major agricultural producing and exporting countries:
    Chile, Australia, New Zealand, Canada, the 27-nation European Union,
    Mexico, MERCOSUR (Argentina, Brazil, Paraguay and Uruguay), Peru and
    the ASEAN bloc. In fact, South Korea's FTA with the European Union is
    set to enter into force on July 1, 2011. This, coupled with the failure
    to implement the KORUS FTA, will put U.S. food and agriculture products
    at a severe disadvantage with respect to competition from the European
    Union in the Korean market.
        Imagine, for example, Korea's current 25 percent tariff remaining
    in place on U.S. pork but eliminated for pork from the European Union.
    Our standing as the top global pork exporter would count for nothing.
    Iowa State economist Dermot Hayes has calculated that we would be
    completely out of the Korean market in 10 years. The same predicament
    would face a wide range of U.S. agricultural exports.
        Another example of a U.S. agricultural product losing out on an
    important export market is corn starch. The European Union secured a
    highly advantageous deal for its starch exports. In some cases,
    European starches received approximately four times the market access
    that U.S. starches did. Moreover, tariffs on European starch products
    are eliminated more rapidly than tariffs on U.S. corn starch exports.
    If Congress fails to ratify the agreement in a timely manner, the U.S.
    corn refining industry will be placed at a significant competitive
    disadvantage relative to its European competitors.
        With the KORUS FTA, on the other hand, existing import barriers
    will be removed immediately for nearly $3 billion of U.S. food and
    agricultural products. These exports represent more than 60 percent of
    our sales and include wheat, feed corn, soybeans, hides and skins,
    cotton and a large number of high-value agricultural products,
    including almonds, pistachios, wine, raisins, grape juice, orange
    juice, fresh cherries, cranberries, frozen French fries, frozen orange
    juice concentrate, Bourbon, Tennessee Whiskey and pet food.
        In just 2 years, many other products will be tariff-free, including
    avocados, lemons, dried prunes and sunflower seeds. In 5 years, more
    products will gain free access, including food preparations, chocolate
    and chocolate confectionary, sweet corn, sauces and preparations,
    alfalfa and other forages, breads and pastry, grapefruit and dried
    mushrooms.
        Still other important U.S. farm products will benefit from new or
    expanded tariff rate quotas. These include skim and whole milk powder,
    whey for food use, cheese, starches, barley, popcorn and soybeans for
    food use. Market access improvements were also achieved for beef and
    pork products, eggs and egg products, pears and table grapes.
        Put together, these access benefits mean greatly expanded exports
    to Korea. According to an analysis by the American Farm Bureau
    Federation, the KORUS FTA would result in $1.8 billion in additional
    sales to Korea, a 46 percent increase over existing sales. This
    analysis appears very conservative according to Dr. Hayes of Iowa State
    and the American Meat Institute, who forecast increased U.S. beef, pork
    and poultry exports alone to be more than $2.1 billion.
        These new exports would create thousands of new jobs on the farm
    and in rural communities and throughout the economy. They would expand
    our share of trade in a growing economy with the 15th highest GDP in
    the world. For 3 years, these important benefits have been forfeited
    while the implementing legislation has been on hold.
        We can either lose jobs as our market share declines in Korea, or
    we can create new jobs by expanding exports to that market. We urge
    Congress to choose the latter. In addition, we urge Congress to work
    with the Obama Administration so that the Colombia and Panama trade
    agreements also may soon be sent to Congress for approval. These
    agreements, like the KORUS, will generate additional agricultural
    exports and create new jobs.
                Sincerely,

    Agri Beef Co.;
    American Farm Bureau Federation;
    American Feed Industry Association;
    American Frozen Food Institute;
    American Meat Institute;
    American Peanut Product Manufacturers, Inc.;
    American Soybean Association;
    California Dried Plum Board;
    California Fig Advisory Board;
    California Strawberry Commission;
    California Table Grape Commission;
    California Walnut Commission;
    Cargill;
    Commodity Markets Council;
    ConAgra Foods, Inc.;
    Corn Refiners Association;
    Distilled Spirits Council of the United States;
    Grocery Manufacturers Association;
    Hormel Foods;
    International Dairy Foods Association;
    JBS USA;
    National Association of State Departments of Agriculture;
    National Association of Wheat Growers;
    National Barley Growers Association;
    National Cattlemen's Beef Association;
    National Chicken Council;
    National Confectioners Association;
    National Corn Growers Association;
    National Council of Farmer Cooperatives;
    National Grain and Feed Association;
    National Grape Cooperative Association Inc.;
    National Meat Association;
    National Milk Producers Federation;
    National Oilseed Processors Association;
    National Pork Producers Council;
    National Potato Council;
    National Renderers Association;
    National Sorghum Producers;
    National Turkey Federation;
    North American Equipment Dealers Association;
    Northwest Horticultural Council;
    Ocean Spray Cranberries, Inc.;
    Pet Food Institute;
    Produce Marketing Association;
    Seaboard Foods;
    Smithfield Foods;
    Sunmaid Growers of California;
    Sunsweet Growers Inc.;
    Sweetener Users Association;
    Tyson Foods, Inc.;
    U.S. Canola Association;
    U.S. Dairy Export Council;
    U.S. Premium Beef;
    United Egg Association;
    United Egg Producers;
    United States Dry Bean Council;
    USA Dry Pea & Lentil Council;
    USA Poultry & Egg Export Council;
    Valley Fig Growers;
    Welch Foods Inc., A Cooperative;
    Western Growers Association;

    CC:

    Members of the U.S. House of Representatives,
    Members of the U.S. Senate.
                                     ______

    U.S. Pork Exports

        Mr. Conaway. Mr. Carney, thank you very much. Roger Johnson
    from the National Farmers Union. Mr. Johnson for 5 minutes.

    STATEMENT OF ROGER JOHNSON, PRESIDENT, NATIONAL FARMERS UNION,
                            WASHINGTON, D.C.

        Mr. Roger Johnson. Mr. Chairman, Members of the Committee,
    thank you for the opportunity to testify. At our recent
    convention in Texas, our National Farmers Union delegates voted
    to oppose the three pending free trade agreements before you
    today because they will force thousands of Americans out of
    their jobs and worsen America's overall trade deficit.
        We take a very holistic approach to trade. While
    recognizing that there are agricultural advantages posed by
    these agreements, we know that there are disadvantages in other
    areas. There are many reasons for entering into trade
    agreements: market access, economics, diplomatic purposes,
    building democracies. Free trade agreements are often promoted
    by claiming new markets and new jobs, but trade deficits and
    lost jobs are the much more common result.
        If a trade agreement is desired to help stabilize a country
    and bring about better democracy in that country, the agreement
    should be sold on those merits, instead of misleading claims
    about more markets and more U.S. jobs.
        U.S. agriculture has a history of generating significant
    agricultural trade surplus, as shown in Figure 1 of my
    testimony. On the other hand, the U.S. economy as a whole has a
    history of generating significant trade deficits as shown in
    Figure 2 of my testimony. U.S. agriculture has actually done
    worse after trade agreements than prior to the agreements.
    Figure 3 shows net agricultural trade with countries that have
    entered into trade agreements with the U.S. Contrast that with
    the ag trade surplus in Figure 1 for the rest of the world.
        Following the 1988 Canada-U.S. Free Trade Agreement,
    American imports of Canada's six major grains and oilseeds
    increased substantially. Consequently, my organization strongly
    opposed NAFTA. We feared that our experience with Mexico might
    be similar to what we had experienced with Canada: 680,000 U.S.
    jobs were lost since NAFTA took effect. One year before NAFTA
    was implemented, the U.S. had a $1.6 billion trade surplus with
    Mexico that supported nearly 30,000 U.S. jobs.
        Per Figure 4, post-NAFTA exports did increase, but imports
    increased much faster, leading to a large trade deficit. NAFTA
    was sold as providing new market access to farmers. Then Mexico
    devalued their peso, and those benefits turned to losses. The
    ITC estimates that U.S. beef exports to South Korea could
    increase by about $1 billion under the FTA, but will they?
        During NAFTA debates, USDA predicted increases in U.S.
    exports of beef to Mexico. History shows large losses occurred
    instead. It seems foolish to think that these free trade
    agreements will be much different. They are based on the same
    model. We need a new model, and that new model, we believe,
    should be based on the TRADE Act, which, among other things,
    would address environmental, health, and labor standards, deal
    with currency manipulation, increase inspections on imported
    food and mandate trade pact reviews to determine whether the
    promises made materialize.
        So how do these three agreements before you today stack up
    against those benchmarks? Korea, certainly there are benefits
    to agriculture, especially meat. More important perhaps is
    solidifying an already strong alliance with South Korea as a
    vital ally of the U.S. However, South Korea has a history as a
    currency manipulator, and this agreement does not address
    currency manipulation. So any benefits for added market access
    could well be negated. We worry that we may repeat the NAFTA
    experience.
        The ITC predicts the Korea agreement will increase the
    overall U.S. goods trade deficit by $300 to $400 million and
    cost us 159,000 jobs. And historically the ITC projections have
    been overly optimistic.
        Colombia, this agreement would likely increase market
    access. It is a part of Colombia's overall development
    strategy. It would most likely promote economic growth and
    stability. However, as this Committee has heard earlier today,
    Colombia has some of the lowest labor standards in the world,
    and our members are concerned about those. Violence against
    labor is widespread in Colombia. It is the most dangerous place
    in the world to be a trade unionist, and the agreement so far
    that it has been structured is not proven. We would like to see
    some action before the agreement is adopted.
        Panama is a tax haven. Only recently has Panama begun to
    address the tax avoidance practices, and we have no experience
    to find out whether they are going to be effective. In fact,
    the OECD has called for more time to review the effectiveness
    of their new policies. National Farmers Union supports trade,
    fair, mutually beneficial trade that seeks to increase human
    welfare and respects sovereign nation's need for food and
    national security. Thank you.
        [The prepared statement of Mr. Johnson follows:]

    Prepared Statement of Roger Johnson, President, National Farmers Union,
                                Washington, D.C.
        Chairman Lucas, Ranking Member Peterson, and other Members of the
    U.S. House of Representatives Committee on Agriculture, I personally
    thank you on behalf of the U.S. family farmers, ranchers, fishermen and
    consumers my organization represents. I am Roger Johnson, President of
    National Farmers Union (NFU).
        NFU was founded in 1902. We are one of the largest general farm
    organizations in the United States and have members in all 50 states,
    with organized divisions in 32 states. I stand here today in opposition
    to the three pending free trade agreements (FTAs) before the United
    States Congress on behalf of the hard working members of NFU who labor
    every day to produce a safe and affordable food supply for American
    consumers. The Korea, Panama, and Colombia FTAs will force thousands of
    Americans out of their jobs, result in the importation of products that
    could be produced domestically, and displace our own family farmers,
    ranchers and fishermen.
        NFU is a grassroots organization. Our members believe that trade
    policy should help U.S. producers gain greater market access, increase
    the quality of life for the citizens of all parties in a trade
    agreement, and provide other mutual economic, social and governance
    benefits. NFU takes a holistic approach to trade.
        There are many reasons for entering into trade agreements. One
    could be to gain better market access. Another may be on strictly
    economic grounds. The U.S. may want to establish a trade agreement for
    diplomatic purposes to help build relationships or even assist
    countries that are struggling with democracy. Free trade agreements are
    often justified by claims that the agreements will open new markets and
    create jobs in the U.S. A study of previous agreements suggests that
    trade deficits and lost jobs are the more common result. If a trade
    agreement is desired to help stabilize a country and bring about better
    democracy, the agreement should be sold on those merits instead of
    misleading claims about more markets and more U.S. jobs.
        NFU has historically opposed free trade agreements on the basis
    that the agreements were more likely to increase imports rather than
    open new markets to U.S. goods, as claimed by proponents. We have been
    proved correct. Vague promises of ``market access'' have been too often
    empty and factually inaccurate.
    Net U.S. Agricultural Trade with the World

            Source: U.S. Department of Agriculture Foreign Agriculture
            Service.

        U.S. agriculture has a history of generating agriculture trade
    surplus, as shown in Figure 1. We have a very efficient system of
    family farmers, ranchers and fishermen, and have historically provided
    a safety net for agriculture that helps our producers survive difficult
    times. This has resulted in long-term agricultural surpluses. On the
    other hand, the U.S. economy as a whole has a history of generating
    trade deficits as seen below in Figure 2.
    Figure 2
    Total U.S. Trade Surplus (Deficit)

            Source: U.S. International Trade Commission (ITC).

        On the whole, U.S. agriculture has actually done worse after trade
    agreements have been entered into than prior to the agreements. Figure
    3 below shows the net agriculture trade surplus (deficit) with
    countries that have entered into trade agreements with the United
    States. Each year only includes trade data from countries with which
    the U.S. had a free trade agreement in that year. This subpar
    performance contrasts with U.S. agriculture's performance as a whole,
    as depicted in Figure 1. For example, the 1998 data includes only trade
    information with Israel, Canada and Mexico. Table 1 shows when the
    United States entered into agreements with each of the 17 countries
    with which it has an FTA.
    Figure 3
    Net Agriculture Trade with Countries That Have FTAs with the U.S.

            Source: U.S. Department of Agriculture Foreign Agriculture
            Service.

                                     Table 1
    ------------------------------------------------------------------------
                  Agreement                          Year Effective
    ------------------------------------------------------------------------
    United States-Israel Free Trade                        1985
                    Agreement
    Canada-United States Free Trade                        1988
                    Agreement
    North American Free Trade Agreement
                    Includes:
      Canada and Mexico (Superseded                        1994
       Canada-United States FTA).........
    United States-Jordan Free Trade                        2001
                    Agreement
    Australia-United States Free Trade                     2004
                    Agreement
    United States-Chile Free Trade                         2004
                    Agreement
    United States-Singapore Free Trade                     2004
                    Agreement
    Dominican Republic-Central America
     Free Trade Agreement Includes:
      Dominican Republic, Costa Rica, El                   2005
       Salvador, Guatemala, Honduras, and
       Nicaragua.........................
    United States-Bahrain Free Trade                       2006
                    Agreement
    United States-Morocco Free Trade                       2006
                    Agreement
    United States-Oman Free Trade                          2006
                    Agreement
    United States-Peru Trade Promotion                     2007
                    Agreement
    ------------------------------------------------------------------------

        We have many FTAs with countries that do not have the economic
    purchasing power to afford our products. U.S.-produced goods are more
    expensive than those in such countries because we maintain strong
    labor, environmental protection, and other standards.
        With our economic ability in the U.S., we are able to purchase
    their products, which increases our imports and offsets our own
    domestic production, resulting in lost U.S. jobs and even higher U.S.
    trade deficits.
    History
        Albert Einstein said, ``Insanity is doing the same thing over and
    over again and expecting different results.'' Following the 1988
    Canada-U.S. Free Trade Agreement that laid the foundation for the North
    American Free Trade Agreement (NAFTA), American imports of Canada's six
    major grains and oilseeds increased 38 percent from 1990 to 1991. From
    1991 to 1992,  the rate of growth of Canadian exports to the
    U.S. grew faster than any of the other top ten U.S. trading partners.
    U.S. imports of Canadian wheat increased by 76 percent after the
    implementation of the Canada-U.S. Free Trade Agreement, U.S. barley
    imports increased by 213 percent, and durum imports increased 130
    percent.
        Based on this dismal agricultural trade data, NFU strongly opposed
    NAFTA. We feared that our experience with Mexico might be similar to
    what we had already experienced with Canada. What happened?
        A recently released Economic Policy Institute study shows that
    682,900 U.S. jobs have been lost or displaced since NAFTA took effect
    in 1994.
        The main reason for the job loss is a $97.2 billion trade deficit
    with Mexico. In 1993, one year before NAFTA was implemented, the United
    States had a $1.6 billion trade surplus with Mexico that supported
    nearly 30,000 U.S. jobs. The states with the most jobs displaced since
    NAFTA went into effect were California (86,500 jobs), Texas (55,600),
    Michigan (43,600), Ohio (34,900), Illinois (34,700), New York (34,300),
    Florida (28,800), Pennsylvania (26,300), Indiana (24,400) and North
    Carolina (18,900).\1\
    ---------------------------------------------------------------------------
        \1\ Scott, Robert E. (May 3, 2011) Heading South U.S.-Mexico trade
    and job displacement after NAFTA. Retrieved from http://epi.3cdn.net/
    fdade52b876e04793b_7fm6ivz2y.pdf.
    ---------------------------------------------------------------------------
        As illustrated in Figure 4, post-NAFTA exports did increase, but
    our imports increased more quickly, leading to a growing trade deficit
    with our NAFTA partners. Only the Great Recession interrupted this
    downward trend.
    Figure 4
    U.S.-Mexico Trade Before and After NAFTA, 1989-2010

            Source: Economic Policy Institute Briefing Paper Number 308,
            May 3, 2011.

        Most of the jobs displaced by trade with Mexico, 415,000 jobs or
    60.8 percent of the total, have been in manufacturing. The hardest hit
    manufacturers have been in computer and electronic parts with 150,300
    jobs lost or displaced, or 22 percent of the total number of jobs, and
    motor vehicles and parts losing 108,000 jobs or 15.8 percent.\2\
    ---------------------------------------------------------------------------
        \2\ Ibid.
    ---------------------------------------------------------------------------
        During NAFTA negotiations, Members of Congress were given a list of
    tariff cuts for crops in their districts as evidence of the new market
    access their farmers would obtain. In reality, those tariff cut
    benefits were eliminated when Mexico devalued the peso 50 percent
    shortly after NAFTA went into effect.\3\ Now the same old promises have
    returned. The U.S. International Trade Council (ITC) has estimated that
    ``U.S. beef exports to South Korea could increase by $600 million to
    $1.8 billion under the FTA.'' \4\
    ---------------------------------------------------------------------------
        \3\ Espana, Juan R. (July, 1995) The Mexican peso crisis: impact on
    NAFTA and emerging markets. Retrieved from http://findarticles.com/p/
    articles/mi_m1094/is_n3_v30/ai_17221265.
        \4\ Cooper, William F. (June 17, 2009) The Proposed U.S.-South
    Korea Free Trade Agreement (KORUS FTA): Provisions and Implications.
    CRS Report RL34330.
    ---------------------------------------------------------------------------
        During the NAFTA debates, USDA analysts predicted an increase in
    U.S. exports of beef products to Mexico.\5\ The reality is that beef
    and pork, two projected NAFTA winners, saw their exports to Mexico fall
    13 percent and 20 percent, respectively, in the 3 years after NAFTA was
    implemented compared to the 3 years prior to NAFTA.\6\
    ---------------------------------------------------------------------------
        \5\ Congressional Budget Office. (May 1993) Agriculture in the
    North American Free Trade Agreement. Retrieved from http://www.cbo.gov/
    ftpdocs/64xx/doc6444/93doc176.pdf.
        \6\ Calculations based on data obtained from the USDA Foreign
    Agricultural Service's (FAS) Global Agricultural Trade System on Jan.
    21, 2011. Data was inflation-adjusted using the Consumer Price Index--
    U-RS as estimated by the Congressional Budget Office in the backup data
    for Table C-1 of their ``The Budget and Economic Outlook: An Update'',
    released August 2010. FAS aggregations used for beef were ``Beef &
    Veal,Fr/Ch/Fz'' and ``Beef&Veal, Prep/Pres''. FAS aggregations used for
    pork were ``Pork, Fr/Ch/Fz'', ``Pork,Hams/Shldrs,Crd'', ``Pork, Bacon,
    Cured'', ``Hog Sausage Casings'', ``Pork,Prep/Pres,Nt/Cn'', and
    ``Pork,Prep/Pres,Cannd''.
    ---------------------------------------------------------------------------
        As noted by a former World Bank chief economist, ``. . . the real
    depreciation of the peso, given its magnitude, was a larger influence
    on trade than was the entry into NAFTA. This is because the total
    reduction in tariffs at the end of 15 years would average only ten
    percent, in contrast with the 50 percent real depreciation.'' \7\ Due
    to the peso devaluation, U.S. products became more expensive in Mexico
    after NAFTA, and many sectors suffered.
    ---------------------------------------------------------------------------
        \7\ Krueger, Anne O. (June, 2000) ``NAFTA's Effects: A Preliminary
    Assessment,'' The World Economy, Volume 23, Issue 6, at 764.
    ---------------------------------------------------------------------------
        Trade is vital in maintaining standards of living, cultural
    exchange, economic development, and even national security. But bad
    trade agreements work contrary to those objectives and create
    uncertainty and difficulties for affected people. Now that free trade
    agreements with South Korea, Colombia, Panama, and a Trans-Pacific
    Partnership are being debated, we have an opportunity to learn from our
    mistakes.
        When we look back on the broken promises that free trade agreements
    were supposed to deliver, it seems foolish to think the United States-
    Korea Free Trade Agreement (KORUS), Panama or Colombia free trade
    agreements will be much different. They are based on the same model as
    NAFTA.
        We desperately need a new model. The current free trade agenda has
    consistently failed to live up to its promised benefits, encouraging a
    race to the bottom to see who can produce the cheapest food and fiber,
    regardless of the conditions under which it was produced. Future trade
    agreements must address additional issues. NFU believes that new models
    should be based on the Trade Reform, Accountability, Development and
    Employment (TRADE) Act.\8\
    ---------------------------------------------------------------------------
        \8\ H.R. 3012: Trade Reform, Accountability, Development and
    Employment (TRADE) Act of 2010 (111th Congress). Retrieved from http://
    www.gpo.gov/fdsys/pkg/BILLS-111hr3012ih/pdf/BILLS-111hr3012ih.pdf.
    ---------------------------------------------------------------------------
        The TRADE Act would address environmental, health, and labor
    standards of all countries involved in the agreement, and deal with
    issues such as currency manipulation (Appendix 1). It would increase
    inspections on imported food, mandate trade pact reviews, restore
    Congressional oversight of future agreements, and enact national
    security exceptions and remedies that must be included in trade pacts.
    The TRADE Act would set requirements with respect to public services,
    farm policy, investment, government procurement and affordable
    medicines.
        The bill would also create a committee, comprised of the chairs and
    ranking members of each committee whose jurisdiction is affected by
    trade agreements, to review the President's plan for renegotiations.
    Under the terms of the legislation, the U.S. Government Accountability
    Office (GAO) would be required to conduct a comprehensive review of
    existing trade agreements with an emphasis on economic results,
    enforcement, and compliance and to analyze non-tariff provisions of the
    agreements.
        The TRADE Act would restore your authority as Members of Congress
    to direct how this country should negotiate trade agreements. It would
    establish clear benchmarks for assessing trade agreements. So how do
    the three agreements before you today stack up against those
    benchmarks?
    Pending Free Trade Agreements
    KORUS
    The Korean Economy
        South Korea is considered a high-tech industrialized country. In
    2010, its Gross Domestic Product (GDP) was $1.467 trillion with a GDP
    per capita of $30,200. The economy is highly service-sector based, with
    only three percent of the population working in agriculture. Rice is
    the biggest agriculture product, and technology products and motor
    vehicles are the major exports.\9\
    ---------------------------------------------------------------------------
        \9\ U.S. Central Intelligence Agency. The World Factbook. Retrieved
    from https://www.cia.gov/library/publications/the-world-factbook/geos/
    ks.html.
    ---------------------------------------------------------------------------
    Benefits of KORUS Agreement
        The Bush Administration completed the FTA in 2007 and the Obama
    Administration renegotiated the text in late 2010. NFU acknowledges
    that there are benefits to the KORUS agreement, especially to American
    agriculture exports. Korea was our fifth largest agricultural export
    market in 2009. The removal of tariffs should substantially open the
    Korean economy to U.S. products.
        For example, U.S. beef producers would likely see savings of $90
    million annually because of tariff eliminations on Korea's 40 percent
    tariff on beef.\10\
    ---------------------------------------------------------------------------
        \10\ U.S. Trade Representative. Retrieved from http://
    www.whitehouse.gov/sites/default/files/
    fact_sheet_economic_value_us_korea_free_trade_agreement.pdf.
    ---------------------------------------------------------------------------
        More important than any potential economic benefit is solidifying
    an already strong alliance. South Korea is a vital ally in the region,
    and with threats such as North Korea, it is in the interest of U.S.
    national security to fortify that alliance.\11\
    ---------------------------------------------------------------------------
        \11\ U.S. Department of State. Retrieved from http://fpc.state.gov/
    documents/organization/161348.pdf.
    ---------------------------------------------------------------------------
        NFU understands that it is too late to alter the pending FTA with
    South Korea, and it is now up to Congress to approve or reject the
    agreement. While Obama Administration negotiations added more access
    for U.S. pork exports and automobiles during the renegotiation,\12\ we
    cannot support this agreement for a number of reasons. NFU delegates
    passed a Special Order of Business specifically opposing KORUS
    (Appendix 2), and it states that trade negotiations must take into
    consideration more than just traditional trade barriers such as tariffs
    and import quotas.
    ---------------------------------------------------------------------------
        \12\ ``Statement by the President Announcing the U.S.-Korea Trade
    Agreement.'' December 3, 2010. The White House.
    ---------------------------------------------------------------------------
    Currency Manipulation
        First and foremost, NFU is concerned about South Korea's history as
    a currency manipulator, which could be damaging to U.S. exports. The
    U.S. Treasury Department has listed South Korea as one of only three
    countries to be a currency manipulator.\13\ Disturbingly, South Korea
    is currently taking similar steps to manipulate their currency
    according to the Treasury Department's semi-annual ``Report to Congress
    on International Economic and Exchange Rate Policies.''\14\ According
    to the report, the Korean Government intervened during the 2008
    economic crisis in order to support the won. However, as the economy
    began to recover and capital flows and exports increased, the Korean
    Government then began going in the opposite direction in the currency
    markets. In particular, Korea is intervening in global currency markets
    by buying up U.S. financial assets in order to keep the Korean won at a
    deflated exchange rate. The report goes on to cite a 2010 International
    Monetary Fund Article IV consultation with Korea that states that the
    exchange rate of the won is undervalued relative to its equilibrium
    level by between five and 20 percent. This is despite the fact that
    Korea has $23 billion more in their coffers compared to pre-crisis
    levels.
    ---------------------------------------------------------------------------
        \13\ U.S. Department of Treasury. Retrieved from http://
    www.treasury.gov/resource-center/international/exchange-rate-policies/
    Documents/appendix2finalapril152009.pdf.
        \14\ U.S. Department of Treasury. Retrieved from http://
    www.treasury.gov/resource-center/international/exchange-rate-policies/
    Documents/Foreign%20Exchange%20Report%20
    February%204%202011.pdf.
    ---------------------------------------------------------------------------
        Unfortunately, the negotiated agreement does not deal with currency
    manipulation. If South Korea continues to devalue its currency, any
    benefits stemming from added market access in the FTA could well be
    negated.
        Sadly, past FTAs have also failed to take currency manipulation
    into account. As previously stated, after passing NAFTA, Mexico
    devalued the peso by 50 percent.\15\ This devaluation negated the
    tariff cuts as a result of NAFTA.\16\ NFU is concerned that without
    provisions to prevent currency manipulation, South Korea will do the
    same.
    ---------------------------------------------------------------------------
        \15\ Espana, Juan R. (July 1995) ``The Mexican peso crisis: impact
    on NAFTA and emerging markets,'' Business Economics. Retrieved from
    http://findarticles.com/p/articles/mi_m1094/is_n3_v30/ai_17221265/.
        \16\ Krueger, Anne O. (June 2000) ``NAFTA's Effects: A Preliminary
    Assessment,'' The World Economy, Volume 23, Issue 6.
    ---------------------------------------------------------------------------
    Negative U.S. Trade Balance
        The U.S. ITC predicts that the KORUS agreement will lead to an
    increase in the overall U.S. good trade deficit of $308 to $416 million
    because seven U.S. industrial sectors will see net losses.\17\ However,
    using history as a guide, projections by the ITC have been overly
    optimistic. As stated earlier, the U.S. ITC projected net trade
    surpluses following the NAFTA agreements. As we now know, this
    agreement led the U.S. on a direct path to a greater trade deficit. In
    fact, as earlier discussed, U.S. exports to countries with which it has
    an FTA have not grown as fast as exports to non-FTA countries. In
    addition, if Korea devalues its currency as it has in the past, the
    trade deficit would be even greater.
    ---------------------------------------------------------------------------
        \17\ U.S. International Trade Commission. (September, 2007) ``U.S.-
    Korea Free Trade Agreement: Potential Economy-wide and Selected
    Sectoral Effects.'' USITC Publication 3949. Corrected printing March
    2010. Retrieved from http://www.usitc.gov/publications/332/pub3949.pdf.
    ---------------------------------------------------------------------------
    Job Losses
        The U.S. ITC report also predicts greater imports than exports as a
    result of the FTA.\18\ Because of the increased imports and resulting
    loss of production in the U.S., implementing the KORUS agreement is
    projected to lead to a net loss of 159,000 jobs.\19\ At a time of high
    unemployment, it seems unwise to pass an agreement that would lead to
    even more job losses. We are aware that there is another ITC report
    that has been circulated on the Hill which shows the FTA in a more
    favorable light.
    ---------------------------------------------------------------------------
        \18\ Ibid.
        \19\ Scott, Robert E. (Feb. 25, 2010) Trade Policy and Job Loss,
    Economic Policy Institute, Working Paper #289. Retrieved from http://
    www.epi.org/publications/entry/trade_policy_
    and_job_loss/.
    ---------------------------------------------------------------------------
    Colombia Free Trade Agreement
    The Colombian Economy
        Colombia is still very much a developing country. In 2010, Colombia
    had a GDP of $431.9 billion with a GDP per capita of $9,800. In 2010,
    Colombia had exports totaling $40.24 billion, up from $32.08 billion in
    2009. The Colombian economy continues to struggle because of
    inequality, underemployment, and narco-trafficking. The unemployment
    rate is hovering around 12 percent and 45.8 percent of Colombians live
    below the poverty line.\20\
    ---------------------------------------------------------------------------
        \20\ U.S. Central Intelligence Agency. (May 4, 2011). The World
    Factbook. Retrieved from https://www.cia.gov/library/publications/the-
    world-factbook/geos/co.html.
    ---------------------------------------------------------------------------
    Benefits of a Colombia FTA
        A Colombia FTA would increase market access for U.S. goods and
    services in Colombia, which is currently not provided for in the
    existing unilateral trade preference program under the existing Andean
    Trade Preference Act (ATPA). About 90 percent of U.S. imports from
    Colombia enter the United States duty-free under either ATPA, other
    trade preferences or through normal trade relations. A Colombia FTA is
    expected to provide economic benefits for both the U.S. and Colombia as
    trade increases between the two countries. Additionally, a free trade
    agreement with the U.S. is part of Colombia's overall development
    strategy, with expectations that the FTA would attract increased
    foreign investment and promote economic growth and stability.
        Specific benefits of the FTA for agriculture include phase out of
    tariffs over a period ranging from 3 to 19 years. The FTA would provide
    duty-free access on 77 percent of all agricultural tariff lines, which
    account for 52 percent of current U.S. exports to Colombia.\21\
    ---------------------------------------------------------------------------
        \21\ Villarreal, M. Angeles, Congressional Research Service. (April
    12, 2011). Proposed U.S.-Colombia Free Trade Agreement: Background and
    Issues. Retrieved from http://www.fas.org/sgp/crs/row/RL34470.pdf.
    ---------------------------------------------------------------------------
    Neglect of Labor Laws
        Trade policy should promote economic growth, job creation,
    increased wages, and workers' rights. Although the benefits of the
    arrangement may appear lucrative to the U.S., Colombia has some of the
    lowest labor standards in the world. The labor agreement in the
    Colombia FTA includes only the provision for the government to enforce
    its own labor laws. While the agreement does require Colombia to adhere
    to ILO core labor standards, it does not prevent Colombia from
    weakening their national labor laws. In addition, the Colombia FTA does
    not prevent violent land displacement for agriculture and use of other
    natural resources.
        Colombia does have laws regarding labor standards, and is a member
    of the International Labor Organization (ILO). ILO requirements
    include: freedom of association, the right to collective bargaining,
    the elimination of forced behavior, the abolition of child labor, and
    the elimination of discrimination.\22\ Unfortunately, even as a member
    of the ILO, Colombia falls short on labor standards in all of those
    categories. Language in the FTA does require strict adherence to ILO
    requirements and has additional labor standard stipulations.\23\ It is
    hard to believe, however, that when the agreement with the ILO has been
    ignored for so long that conditions in the FTA will be taken seriously.
    ---------------------------------------------------------------------------
        \22\ International Labour Organization. (2006) International Labour
    Standards by Subject. Retrieved from http://www.ilo.org/ilolex/english/
    subjectE.htm#s01.
        \23\ Office of the United States Trade Representative. (n.d.).
    Colombia FTA Final Text: 17. Labor. Retrieved from http://www.ustr.gov/
    sites/default/files/uploads/agreements/fta/colombia/
    asset_upload_file993_10146.pdf.
    ---------------------------------------------------------------------------
        Through government corruption, impunity, and power, Colombian labor
    laws are frequently altered or ignored. Although the Colombian
    Government allows for the organization of unions, workers join unions
    at the risk of being subject to discrimination, abuse, violence and
    often death. In 2005, approximately 900,000 workers were members of
    unions, making up less than five percent of trade workers. The labor
    code allows for automatic recognition of a union that is supported by
    25 signatures but official recognition can take years.\24\
    ---------------------------------------------------------------------------
        \24\ U.S. Department of State. (March 8, 2006). Country Reports on
    Human Rights Practices-Colombia. Retrieved from http://www.state.gov/g/
    drl/rls/hrrpt/2005/61721.htm.
    ---------------------------------------------------------------------------
        Colombian law allows for collective bargaining only when a union
    represents more than \1/3\ of a firm's workers. The law encourages
    employers to use this statute as a means to reduce union membership
    below the \1/3\ threshold.\25\ This is certainly not in line with the
    ILO agreements, that state terms of employment should be negotiated
    under collective agreement, and direct negotiations should be possible
    only in the absence of a union.\26\ In addition, a union must represent
    half of the workers in each firm in order to bargain at an industry-
    wide level.\27\
    ---------------------------------------------------------------------------
        \25\ The Labor Advisory Committee for Trade Negotiations and Trade
    Policy (LAC). (October 4, 2006). The U.S.-Colombia Free Trade
    Agreement. Retrieved from http://www.aflcio.org/issues/jobseconomy/
    globaleconomy/upload/colombia_LAC_report.pdf.
        \26\ International Labour Organization. (2006) International Labour
    Standards by Subject. Retrieved from http://www.ilo.org/ilolex/english/
    subjectE.htm#s01.
        \27\ The Labor Advisory Committee for Trade Negotiations and Trade
    Policy (LAC). (October 4, 2006). The U.S.-Colombia Free Trade
    Agreement. Retrieved from http://www.aflcio.org/issues/jobseconomy/
    globaleconomy/upload/colombia_LAC_report.pdf.
    ---------------------------------------------------------------------------
    Unionist Violence and Impunity
        Violence against union organizers and labor rights leaders is
    widespread. In 2010, 51 union members were killed in Colombia.\28\ The
    International Trade Union Confederation ranks Colombia as the most
    dangerous place to be a trade unionist. The country is home to 63.12
    percent of trade unionists murdered in the world over the last
    decade.\29\
    ---------------------------------------------------------------------------
        \28\ U.S. Labor Education in the Americas Project (USLEAP).
    (December 2010). Murder and Impunity of Colombian Trade Unionists.
    Retrieved from http://www.usleap.org/files/
    Colombia%20Fact%20Sheet_Dec%202010.pdf.
        \29\ International Trade Union Confederation. (June 11, 2010). 2010
    Annual Survey of Violations of Trade Union Rights. Retrieved from
    http://survey.ituc-csi.org/+-Whole-World-+.html?lang=en.
    ---------------------------------------------------------------------------
        The frequency of unionist killings stems from the level of impunity
    allowed in Colombia. According to the Escuela Nacional Sindical (ENS),
    only six percent of the 2,857 unionist murders ever reached a verdict,
    and only 25 percent of these murders even went under investigation.\30\
    In addition, those who actually planned the killings are usually not
    convicted.
    ---------------------------------------------------------------------------
        \30\ Acosta, Jennifer, Council on Hemispheric Affairs. (December 5,
    2008). The Colombia FTA: A Less Attractive Face for Trade? Retrieved
    from http://www.coha.org/the-colombia-fta-a-less-attractive-face-to-
    trade/.
    ---------------------------------------------------------------------------
    Poor Labor Conditions
        The lack of ability to unionize, as well as the lack of labor law
    enforcement leaves Colombian workers to face unfavorable working
    conditions. In addition to poor standards, physical or sexual abuse is
    common. Agricultural workers often work in unhealthy labor situations,
    such as being exposed to toxic pesticides, but continue in fear of
    losing their jobs.\31\ Child labor laws are also frequently neglected
    in Colombia. There are 2.5 million children employed in Colombia, two
    million of them working illegally. Only 38 percent of these children
    attend school. Significant numbers of children work in illegal mining
    operations, as coca pickers, or are used as child soldiers.\32\
    ---------------------------------------------------------------------------
        \31\ U.S. Department of State. (March 8, 2006). Country Reports on
    Human Rights Practices-Colombia. Retrieved from http://www.state.gov/g/
    drl/rls/hrrpt/2005/61721.htm.
        \32\ U.S. Department of State. (n.d.). Colombia. Retrieved from
    http://www.state.gov/documents/organization/160452.pdf.
    ---------------------------------------------------------------------------
    Agriculture and Land Displacement
        The Colombia FTA encourages agricultural trade with a nation that
    has faced serious conflict in terms of land ownership. Millions of
    people have been displaced from their land in these conflicts, fleeing
    to cities or deeper into the jungle. When the latter is the case, the
    only economically viable crop to grow is coca.
        Cheap agricultural commodities coming in from America will make the
    markets of the nine basic crops in Colombia difficult to maintain. A
    report done by the Colombian Ministry of Agriculture in 2004 stated
    that with an increase in agricultural products from the U.S. and no
    support system for Colombian farmers, rural issues could increase.
    Colombian farmers would be left with the choices of migration,
    cultivating opium or coca, or joining illegal armed groups.\33\
    ---------------------------------------------------------------------------
        \33\ Colombia Ministry of Agriculture. (July 2004). Colombian
    Agriculture Before the Free Trade Agreement with the U.S.
    ---------------------------------------------------------------------------
    Free Trade's Impacts on the Environment
        Colombia is an ecologically rich country, home to ten percent of
    the world's species. Colombia is ranked second in the world for
    biodiversity; 18 percent of the birds, amphibians, mammals, reptiles
    and fish species and 30 percent of the plant species are native only to
    Colombia.\34\ The U.S.-Colombia FTA requires each party to ``establish
    its own levels of domestic environmental protection and environmental
    development priorities, and to adopt or modify accordingly its
    environmental laws and policies.'' \35\ The environmental stipulations
    in the agreement only require the parties involved to enforce their own
    environmental regulations. The FTA puts much more value on trade and
    investment provisions than environmental protection.\36\ Increasing the
    opportunity for industrial and agricultural development will certainly
    have implications for this biologically rich country.
    ---------------------------------------------------------------------------
        \34\ The Nature Conservancy. (n.d.). Colombia. Retrieved from
    http://www.nature.org/ourinitiatives/regions/southamerica/colombia/.
        \35\ Office of the United States Trade Representative. (n.d.).
    Colombia FTA Final Text: 18. Environment. Retrieved from http://
    www.ustr.gov/sites/default/files/uploads/agreements/fta/colombia/
    asset_upload_file993_10146.pdf.
        \36\ Acosta, Jennifer, Council on Hemispheric Affairs. (December 5,
    2008). The Colombia FTA: A Less Attractive Face for Trade? Retrieved
    from http://www.coha.org/the-colombia-fta-a-less-attractive-face-to-
    trade/.
    ---------------------------------------------------------------------------
        In the Colombian industrial sector, a substantial environmental
    impact will be seen on water quality and air quality. Liquid chemical
    byproducts and effluents will impact water quality. The impacts on air
    quality include: pollution from water vapor, emissions, incineration of
    solid residues, organic components from hydrocarbons and chemical
    reactions and other particles. Ecological influences from increased
    trade will also be seen from changes in agriculture. Increased
    opportunity for livestock production will result in deforestation and
    biodiversity loss. Water and land pollution will be amplified as
    through soil erosion and chemical treatments. In addition, greenhouse
    gas emissions will increase.\37\
    ---------------------------------------------------------------------------
        \37\ Organization of American States. (2007). Colombia FTA Impacts
    by Sector. Retrieved from http://www.oas.org/dsd/EnvironmentLaw/trade/
    Documents/TablasColombia,EcuadoryPeru
    disponibles.pdf.
    ---------------------------------------------------------------------------
    Panama Free Trade Agreement
    Panamanian Economy
        Although it is amidst Central America's fastest growing economies,
    Panama is still very much a developing nation. Panama's per capita GDP
    was $7,579 in 2010, which ranked 91st among all countries.\38\ The
    isthmus nation is unique among Central American countries in that the
    service sector dominates the economy. More than 80 percent of Panama's
    economic activity is generated by the Panama Canal, the Colon Free
    Zone, container ports, flagship registry, tourism, banking, insurance
    and other services.\39\ In 2010, Panama had exports totaling $12.52
    billion, an increase from $10.9 billion in 2009, but ran a total
    account balance deficit of $5.946 billion in 2010, larger than the
    $4.991 billion deficit in 2009.\40\
    ---------------------------------------------------------------------------
        \38\ International Monetary Fund, ``World Economic Outlook
    Database.'' Retrieved from
    https://www.imf.org/external/pubs/ft/weo/2010/01/weodata/index.aspx.
        \39\  Labor Advisory Committee for Trade Negotiations and Trade
    Policy. (April 25, 2007) Report to the President, the Congress and the
    U.S. Trade Representative on the U.S.-Panama Free Trade Agreement.
    Retrieved from http://ustraderep.gov/assets/Trade_Agreements/Bilateral/
    Panama_FTA/Reports/asset_upload_file696_11235.pdf.
        \40\ U.S. Central Intelligence Agency, ``The World Factbook.''
    Retrieved from https://www.cia.gov/library/publications/the-world-
    factbook/geos/pm.html.
    ---------------------------------------------------------------------------
    Panama as a Tax Haven
        Panama has been considered by the GAO to be a ``tax haven,'' or a
    state that allows for a greater degree of financial privacy for
    depositors, among 50 other countries.\41\ This is especially attractive
    in a country that is heavily involved in the shipping industry. Many
    transportation companies that might otherwise be based in the United
    States are headquartered in Panama, home not only to a vital canal but
    also to secretive financial institutions.
    ---------------------------------------------------------------------------
        \41\ United States Government Accountability Office. (December,
    2008) International Taxation: Large U.S. Corporations and Federal
    Contractors with Subsidiaries in Jurisdictions Listed as Tax Havens or
    Financial Privacy Jurisdictions. GAO-09-157.
    ---------------------------------------------------------------------------
        Only recently were these tax avoidance practices addressed by the
    Panamanian Government. After significant pressure from U.S. trade
    negotiators, Panama entered into a Tax Information and Exchange
    Agreement (TIEA) with the United States in November 2010 that would
    allow for the exchange of data for the purposes of tax assessment.
    Panama's legislative assembly ratified the TIEA in April 2011, which
    followed legislation passed in June 2010 that would allow the
    Panamanian Government to implement and enforce the treaty.\42\
    ---------------------------------------------------------------------------
        \42\ Hornbeck, J.F. (April 21, 2011) The Proposed U.S.-Panama Free
    Trade Agreement. CRS Report RL32540.
    ---------------------------------------------------------------------------
        Although the agreement aims to end tax shelter policies in Panama,
    the language of the law is deficient. The agreement contains a
    significant loophole for prohibiting American access to tax information
    if Panama determined ``the disclosure of the information request would
    be contrary to the public policy.'' \43\ This allows for unlimited
    exemptions to the new tax disclosure rules. The Organisation for
    Economic Co-operation and Development (OECD) has called for more time
    to review the effectiveness of the new tax information access process.
    OECD will not conclude its review of Panama's compliance with world
    standards until late 2012.\44\
    ---------------------------------------------------------------------------
        \43\ U.S. Department of Treasury. ``Agreement Between the
    Government of the United States of America and the Government of the
    Republic of Panama for Tax Cooperation and the Exchange of Information
    Relating to Taxes.'' Signed in U.S. November 30, 2010. Ratified in
    Panama on April 13, 2011. Retrieved from http://www.treasury.gov/
    resource-center/tax-policy/treaties/Documents/PanamaTIEA10.pdf.
        \44\ Organisation for Economic Co-operation and Development (April,
    2011) OECD's Current Tax Agenda. Retrieved from http://www.oecd.org/
    dataoecd/38/17/1909369.pdf.
    ---------------------------------------------------------------------------
        In addition, Panamanian politicians have already begun to pursue a
    challenge to the constitutionality of the agreement.\45\ The
    superficial efforts made by Panama to squelch tax evasion by foreign
    corporations were conducted simply in the hopes of assuaging the
    concerns of American trade negotiators. More information is needed to
    fully understand the strength and force of the new tax information
    system before entrusting a known tax haven with easier access to
    American business.
    ---------------------------------------------------------------------------
        \45\ Robinson, Roberto. (April 14, 2011) ``PRD se queja por tratado
    con Estados Unidos (Revolutionary Democratic Party's complaint with the
    U.S. Treaty),'' El Siglo. Retrieved from http://www.elsiglo.com/
    mensual/2011/04/14/contenido/354357.asp.
    ---------------------------------------------------------------------------
    Panama and Human Rights
        Although human rights concerns in Panama are not as grave as in
    Colombia, the Panamanian Government has used force against its own
    citizens during labor disputes within the last year. In July 2010,
    several thousand indigenous workers at an American-owned fruit
    plantation demonstrated in the Changuinola in the Bocas del Toro
    province. The uprising came as a result of the laborers' opposition to
    a controversial law that would roll back many workers and environmental
    protections.\46\ Ignoring a warning from the United Nations, security
    forces suppressed the protestors with violence, killing several workers
    and injuring more than 100.\47\ Entering into a free trade agreement
    with a country that resorts to violence to settle labor disputes
    encourages such behavior. American trade policy should not condone such
    actions by eliminating trade restrictions with countries that violate
    internationally recognized human rights standards.
    ---------------------------------------------------------------------------
        \46\ Organization of American States: Inter-American Commission on
    Human Rights. (August 3, 2010) IACHR Expresses Concern over Deaths and
    Injuries During Demonstration in Panama. Retrieved from http://
    www.cidh.oas.org/Comunicados/English/2010/77-10eng.htm.
        \47\ The Regional Office of the United Nations High Commissioner
    for Human Rights (July 10, 2010) Urgent Statement on the events in
    Bocas del Toro in Panama. Retrieved from http://www.oacnudh.org/
    novedades/comunicado-urgente-sobre-los-sucesos-de-bocas-del-toro-en-
    panama/37.
    ---------------------------------------------------------------------------
    Panama and the Environment
        The enforcement of environmental regulations in Panama is a major
    concern for independent observers, as well as the people of Panama. A
    recent poll found that 61 percent of Panamanians believed that public
    servants care little about improving the condition of the
    environment.\48\ These concerns are justified by the fact that between
    1970 and 2008 Panama lost 838,000 hectares (2,070,000 acres) of forest,
    equivalent to 11 percent of the country's total land area.\49\ Panama
    has been identified by international organizations to be failing to
    satisfactorily protect its environment. According to the Inter-American
    Commission on Human Rights, an entity of the Organization of American
    States, Panama lacks adequate environmental quality standards to ensure
    the health and quality of life of its citizens and the preservation of
    natural resources.\50\ Free trade with the United States will encourage
    further degradation of environmental quality by encouraging development
    of natural resources without functional oversight from the Panamanian
    Government.
    ---------------------------------------------------------------------------
        \48\ Newsroom Panama. (April 21, 2011) 90% of Panamanians want
    stronger enforcement of environmental standards--poll. Retrieved from
    http://www.newsroompanama.com/environment/2661-90-of-panamanians-want-
    stronger-enforcement-of-environmental-standards-poll-.html.
        \49\ Ibid.
        \50\ Interamerican Association for Environmental Defense. (April
    19, 2010) Universal Periodic Review of Panama Situation of the human
    right to a healthy environment and related human rights. Retrieved from
    http://www.aida-americas.org/sites/default/files/UPRjointsub_envhr
    groups_Panama%20Eng.pdf.
    ---------------------------------------------------------------------------
        NFU policy calls for trade agreements that address differences in
    environmental standards, human rights, working conditions, health care,
    and currency. Such standards should meet or exceed those of the U.S. It
    also is necessary to ensure that trade agreements do not undermine U.S.
    laws, including the tax code.\51\ Although some attempts at improvement
    have been initiated, the proposed agreement with Panama does not
    satisfy those principals. As a result, NFU opposes the Panama FTA.
    ---------------------------------------------------------------------------
        \51\ National Farmers Union. (March 15, 2011) 2011 Policy of the
    National Farmers Union. Retrieved from http://nfu.org/policy-nfu.
    ---------------------------------------------------------------------------
    Conclusion
        When NFU considers trade agreements, there are key elements that
    are always considered. Legislation introduced in the 110th and 111th
    Congresses encompasses these ideals. The TRADE Act called for all trade
    agreements to be considered on the basis of their effects on economics,
    the environment, national security, health and safety.
        More than 2 years of research and work went into the TRADE Act. It
    charted a course for how our country should approach trade, clearly
    laying out a path to steer the U.S. away from repeating the failures of
    the FTAs of the past. It is vital that elements of the TRADE Act be
    applied to pending FTAs, to the Trans Pacific Partnership, and to
    future agreements.
        Agriculture is a multifunctional industry with a value that cannot
    be fully quantified by trade balance. Nations will protect their
    domestic agricultural production for national security, to maintain
    economic independence, and due to rural employment concerns that
    surround food production.\52\ It is unreasonable to expect our trading
    partners to fully remove their trade barriers. What one nation may
    describe as trade barriers another may describe as incentives for
    domestic agricultural production that are important to their own
    national security. If the past has taught us anything, it is that too
    often these free trade agreements have not delivered on promises of
    increased revenue and more jobs. A trade agreement that grants the
    United States additional market access for our agricultural goods does
    not necessarily mean more exports, job creation and money for family
    farmers.
    ---------------------------------------------------------------------------
        \52\ OECD Department for Trade and Agriculture (July 20, 2007)
    Multifunctionality, Retrieved from http://www.oecd.org/dataoecd/62/43/
    40782915.pdf.
    ---------------------------------------------------------------------------
        National Farmers Union supports trade; fair, mutually beneficial
    trade that seeks to increase human welfare and respects sovereign
    nations' need for food and national security.
                                   Appendix 1
    Support the TRADE Act
       The current free trade agenda has consistently failed to
            live up to its promised benefits, encouraging a race to the
            bottom to see who can produce the cheapest food and fiber
            regardless of the conditions it has produced.

       Future trade agreements must address all factors of trade,
            including environmental standards, health and labor standards
            and currency manipulation.

       Rapidly rising unchecked food imports and an inadequate
            import inspection system jeopardize consumer confidence in the
            quality and safety of ALL food products.

       The Trade Reform, Accountability, Development and Employment
            (TRADE) Act (H.R. 3012--Michaud) mandates trade pact reviews,
            establishes uniform standards, protects workers in developing
            nations and restores Congressional oversight of future
            agreements.

       Congress should pass the TRADE Act and demonstrate its
            commitment to ensuring American agricultural producers compete
            on a level playing field. The TRADE Act will:

         Establish standards for labor and environmental
                protections, food and product safety, national security
                exceptions and remedies that must be included in new trade
                pacts;

         Restore Congressional oversight of trade agreements;

         Set requirements with respect to public services, farm
                policy, investment, government procurement and affordable
                medicines;

         Require the President to submit renegotiation plans
                for current trade pacts prior to negotiating new agreements
                and prior to Congressional consideration of pending
                agreements;

         Create a committee, comprised of the chairs and
                ranking members of each committee whose jurisdiction is
                affected by trade agreements, to review the President's
                plan for renegotiations; and

         Require the Government Accountability Office (GAO) to
                conduct a comprehensive review of existing trade agreements
                with an emphasis on economic results, enforcement and
                compliance and an analysis of non-tariff provisions.
                                   Appendix 2
    National Farmers Union
    Special Order of Business 2011
    Free Trade Agreements and Agriculture
        Whereas, past free trade agreements such as the North American Free
    Trade Agreement (NAFTA) and the Central American Free Trade Agreement
    (CAFTA) did not perform as promised to U.S. agriculture, nor did they
    hold all participant countries to comparable U.S. standards for labor,
    environmental, health and food safety; and

        Whereas, past trade agreements have allowed food imports into the
    U.S. that do not meet U.S. domestic food safety standards; and

        Whereas, the service sector provisions of such agreement require
    financial deregulation and promote the global concentration of
    agricultural markets, agribusiness trading, and shipping; and

        Whereas, U.S. trade agreements prohibit the use of ``Buy America''
    and Buy Local procurement policies with respect to food and other
    products; and

        Whereas, past free trade agreements and all pending trade
    agreements do nothing to address currency manipulation which puts U.S.
    producers at an economic disadvantage; and

        Whereas, National Farmers Union policy calls for all U.S. trade
    agreements to address currency manipulation; and

        Whereas, many countries in the last twenty years have implemented
    value-added taxes (VATs) to raise tax revenues while also providing
    significant trade export and import advantages; and

        Whereas, the U.S. does not utilize value-added taxes, and as such
    is at a significant disadvantage when trading with nations that do have
    VATs in place; and

        Whereas, the U.S. does not have nor is in the process of developing
    any trade policy tools that could be utilized to equalize the
    inequities that result when the U.S. engages in trade with nations that
    do have VATs in place: and

        Whereas, the Korea, Colombia and Panama FTAs contain a prohibition
    on reference to the International Labor Organization Convention; and

        Whereas, NFU policy is in support of the Trade Reform
    Accountability Development and Employment Act which sets forth a new
    model to capture the benefits of trade expansion without replicating
    the damaging provisions of NAFTA and CAFTA; and

        Whereas, U.S. environmental, health, labor and food safety
    standards continue to be at a higher level than those of Colombia or
    Panama; and

        Whereas, the U.S. International Trade Commission predicts that the
    KORUS agreement would lead to an increase in the overall U.S. good
    trade deficit of $308-$416 million because seven U.S. industrial
    sectors will see net losses and the Economic Policy Institute projects
    the agreement will cost the U.S. 159,000 jobs in its first 7 years; and

        Whereas, the U.S. International Trade Commission predicts that the
    Korea FTA could result in the trade balance for some U.S. agricultural
    sectors being improved while some agricultural sectors would see
    declines; and

        Whereas, South Korea is one of only three countries that the U.S.
    Treasury Department has officially cited as a currency manipulator and
    noted in its February 2011 Semiannual Report on International Economic
    and Exchange Rate Policies as currently intervening to hold down its
    currency's value; and

        Whereas, currency devaluations and VATs have been used time after
    time in past trade agreements to more than offset any perceived
    benefits from additional tariff cuts and market access;

        Therefore, Be It Resolved, that NFU opposes the KORUS agreement
    even though additional agriculture access was granted to the U.S.,
    especially in the meat and livestock sectors, and will not support such
    agreements until the below concerns are addressed;

        Be It Further Resolved, that NFU will not support trade agreements
    as long as they simply repeat and replicate the mistakes of the NAFTA-
    CAFTA model and do not adequately address currency manipulation or the
    inequities created by the use of VATs; and

        Be It Further Resolved, that NFU will not support the trade
    agreements with Colombia and Panama and other future trade agreements
    if they do not meet the standards of the International Labor
    Organization Conventions and products from such countries do not meet
    U.S. standards for environment, health and food safety; and

        Be It Further Resolved, that NFU will not support the Trans-Pacific
    Partnership (TPP) unless dairy is exempt from the negotiations between
    the U.S. and New Zealand, unless it does not include the NAFTA-CAFTA
    foreign investor and service sector deregulation provisions, unless all
    TPP countries are required to meet the International Labor Organization
    Convention standards for labor, and products from such countries meet
    U.S. standards for environment, health and food safety and unless such
    agreement adequately addresses currency manipulation.

        Mr. Conaway. Thank you, Mr. Johnson. Mr. Stallman from
    American Farm Bureau Federation, 5 minutes.

      STATEMENT OF BOB STALLMAN, PRESIDENT, AMERICAN FARM BUREAU
           FEDERATION; RICE AND CATTLE PRODUCER, COLUMBUS, TX

        Mr. Stallman. Mr. Chairman, Members of the Committee, my
    name is Bob Stallman, and I am President of the American Farm
    Bureau Federation and a rice and cattle producer from Columbus,
    Texas. I appreciate the invitation to share Farm Bureau's views
    on the three pending free trade agreements and their benefits
    for U.S. agriculture.
        Farm Bureau is the nation's largest general farm
    organization with more than 600 million member families
    representing producers of nearly every commodity grown or
    raised commercially in all 50 states and Puerto Rico.
        The American Farm Bureau Federation supports passage of the
    Korea, Colombia, and Panama Free Trade Agreements with the
    United States. Combined, these agreements represent almost $2.5
    billion in additional trade for U.S. agricultural producers,
    but that is only if they are implemented.
        The U.S. is facing a proliferation of FTAs that increase
    the export potential of our competitors while putting U.S.
    agriculture at a disadvantage. Due to the Administration and
    Congress's inaction on these agreements, the debate is no
    longer simply about generating potential export gains but about
    how to prevent the loss of existing export markets. These trade
    agreements are not only important to the bottom line of
    America's farmers and ranchers, but also the economic health of
    our rural communities and the overall U.S. economy. The USDA
    estimates that every billion dollars in agricultural exports
    supports 9,000 U.S. jobs. There is a long supply chain made up
    of American workers who get products from the farm gate to our
    foreign consumers.
        A decline in our exports means a decline in work for those
    that are part of that supply chain. Given the state of our
    economy, we must do whatever we can to assure we are creating
    opportunities for work and not taking them away.
        The U.S.-Korea Free Trade Agreement, or KORUS, provides a
    significant opportunity for the U.S. agriculture sector. When
    the agreement is fully implemented, we estimate export gains to
    exceed $1.9 billion annually. Korea has completed an agreement
    with the European Union, which is expected to be implemented by
    July of 2011. The Korea-EU FTA in 5 years will eliminate 94
    percent of Korea's tariffs. In contrast, the KORUS would
    eliminate 94.5 percent of Korea's tariffs in 3 years of
    implementation.
        We know that the Korea-EU agreement will enter into effect
    before KORUS. If we further delay passage, European exporters
    will gain a significant competitive advantage over the United
    States in the Korean market.
        Loss of market share in Korea because of U.S. competitors
    preferential access has become a reality for some segments of
    U.S. agriculture. Wine consumption has been increasing in
    Korea. During the 2000-2009 period, Chilean market share, by
    value, rose from 2.4 percent to 21.5 percent while the U.S.
    share fell from 17.1 percent to 10.8 percent. This is believed
    to be the direct result of the 15 percent import duty
    eliminated on Chilean wine under the Korea-Chile Free Trade
    Agreement implemented in 2004.
        The Colombia Trade Promotion Agreement eliminates Colombian
    tariffs on U.S. agricultural products, correcting the current
    imbalance in agricultural trade between our countries, created
    in part by Congressional passage and extension of the Andean
    Trade Preference Act. Recent analysis of the agreement suggests
    gains in exports in this agreement of $370 million. This is
    significantly less than the $815 million that we estimated just
    a few years ago. And this adjustment is due in large part to
    the delay in passing the Colombia agreement, thus allowing our
    competitors to move in and displace U.S. agricultural products.
        Our competitors such as Brazil, Argentina, Uruguay, and
    Paraguay have passed agreements with Colombia granting
    preferential access to this growing market at the expense of
    U.S. exporters. Colombia continues to negotiate and sign free
    trade agreements with additional U.S. competitors such as the
    EU and Canada.
        Overall, we have seen not only the value of our exports
    decline, but also a U.S. market share decline. We have seen
    almost a billion dollar loss in exports to the country since
    2008 and a drop in market share from 46 percent to 21 percent.
    In other words, the United States has already blown a major
    trade opportunity and will need to work hard to ever return to
    our earlier status.
        In April, I lead a Farm Bureau delegation to Colombia and
    Panama to see firsthand what the potential of the market holds
    for U.S. agriculture, and there is a demand. We consistently
    heard from the Colombians that they want to purchase U.S.
    products because of the high quality, but they are buying from
    Brazil and Argentina because the price is better, given that
    they face little to no tariff on their products due to the
    MERCOSUR Agreement. Passage of the U.S.-Colombia agreement will
    put us back in the game.
        Under the Panama agreement, we estimate increased exports
    of U.S. ag exports to exceed $45 million. Panama has completed
    a trade agreement with Canada. If this agreement enters into
    effect before the U.S. agreement, Canadian exporters will gain
    a significant competitive advantage over the United States.
        Mr. Chairman, just to restate, these agreements contain
    significant export gains for U.S. agriculture that will only be
    realized by passage and implementation. Conversely inaction has
    proven to result in loss of market share and forfeiture of
    economic growth here. We need to pass these agreements, and
    Farm Bureau supports passage of all three. Thank you for the
    opportunity to share our views.
        [The prepared statement of Mr. Stallman follows:]

      Prepared Statement of Bob Stallman, President, American Farm Bureau
               Federation; Rice and Cattle Producer, Columbus, TX
        My name is Bob Stallman. I am President of the American Farm Bureau
    Federation (AFBF) and a rice and cattle producer from Columbus, Texas.
    I appreciate the invitation to share Farm Bureau's views on the three
    pending free trade agreements (FTA) and their benefits for U.S.
    agriculture. Farm Bureau is the nation's largest general farm
    organization, with more than six million member families, representing
    producers of nearly every commodity grown or raised commercially in all
    50 states and Puerto Rico.
        The American Farm Bureau Federation supports passage of the Korea,
    Colombia and Panama trade agreements with the United States. Below is a
    detailed description of each agreement. Combined, these agreements
    represent almost $2.5 billion in additional trade for U.S. agricultural
    producers, but that is only if they are implemented. The U.S. is facing
    a proliferation of FTAs increasing the export potential of our
    competitors, while putting U.S. agriculture at a disadvantage. Due to
    the Administration and Congress' inaction on these agreements, the
    debate is no longer about generating potential export gains but about
    how to prevent the loss of existing export markets.
        These trade agreements are not only important to the bottom line of
    America's farmers and ranchers, but also to the economic health of our
    rural communities and the overall U.S. economy. The Agriculture
    Department estimates that every $1 billion in agricultural exports
    supports 9,000 U.S. jobs. There is a long supply chain made up of
    American workers who get products from the farm gate to our foreign
    consumers. They are transportation workers, processors, packers,
    longshoreman, sales and marketing employees and administrative and
    clerical staff. A decline in our exports means a decline in work for
    those who are a part of that supply chain. Given the state of our
    economy, we must do whatever we can to assure we are creating
    opportunities for work, not taking them away.
    U.S.-Korea Free Trade Agreement (KORUS)
        KORUS provides a significant opportunity for the U.S. agriculture
    sector. When the agreement is fully implemented, increased exports of
    the major grain, oilseed, fiber, fruit, vegetable and livestock
    products are likely to exceed $1.9 billion annually. KORUS allows the
    United States to become a competitive supplier of agricultural products
    to South Korea by providing duty-free and reduced tariff access.
    Agricultural tariff rates in South Korea range from just over one
    percent to nearly 500 percent, depending on the commodity. Eliminating
    these tariff rates through KORUS would be extremely beneficial to the
    United States' agricultural sector. The United States currently has
    less than \1/3\ of the market share and faces considerable pressure
    from other suppliers. Lower tariff rates on U.S. products will make the
    United States more competitive with the European Union, Australia,
    China, Japan and other agricultural suppliers to South Korea.
    Benefits for U.S. Agriculture
        Under KORUS, almost \2/3\ of current U.S. agricultural exports to
    South Korea will become duty-free immediately. Items that receive
    immediate duty-free treatment include wheat, corn, soybeans for
    crushing, hides and skins, cotton and a broad range of high-value and
    processed products including almonds, pistachios, bourbon whisky, wine,
    raisins, grape juice, fresh cherries, frozen French fries and frozen
    orange juice concentrate.
        KORUS will provide an opportunity for the United States to expand
    exports of grains, oilseeds, fiber, fruits, vegetables and livestock
    products. Unlike previous free trade agreements where trade gains have
    been focused in bulk agricultural commodities, the largest gains from
    KORUS are focused in the processed and semi-processed products. In
    addition to the usual products, livestock products, fish, fruits,
    vegetables and nuts all benefit substantially from the agreement. The
    table below shows the value of these increased exports.

                  Summary of KORUS Benefits to U.S. Agriculture
    ------------------------------------------------------------------------
                              Current Imports from U.S.      Estimated Gains
                         -----------------------------------
    Agricultural Product   22006-2008 Avg    2009-2010 Avg
                         ---------------------------------------------------
                                       (Values in U.S. Dollars)
    ------------------------------------------------------------------------
                 Rice         44,056,800       78,818,200       ^1,000,000
                Wheat        433,854,000      343,148,400       30,000,000
                 Corn      1,493,024,100    1,501,800,300      ^11,880,000
         Other Grains          8,811,800        8,503,800         ^120,000
    Fruits, Vegetables       372,601,800      429,645,000      133,000,000
              and Nuts
    Soybeans & Products      292,431,500      439,650,100       71,064,000
     Other Oilseeds &         97,639,800      102,223,200       12,936,000
              Products
               Cotton        123,756,800      122,167,100       14,000,000
                 Beef         97,042,000      353,556,200      563,000,000
              Poultry         57,544,900       76,493,800       52,440,000
                 Pork        239,426,500      207,482,700      223,560,000
               Other Livestoc457,839,200      430,943,000       49,000,000
              Products
                Dairy         97,716,800      114,372,100       93,000,000
    Processed Food and       320,656,100      416,961,500      404,000,000
         Fish Products
    Other Agriculture        378,847,300      436,685,300      301,000,000
                         ---------------------------------------------------
      Total.............   4,515,249,400    5,062,450,700    1,934,000,000
    ------------------------------------------------------------------------
    Source: USDA ERS, American Farm Bureau Federation Economic Analysis.

        Looking at some of the specific commodities of export interest to
    the United States, the agreement would put the United States in a
    strong position to capitalize on the following commodity opportunities
    in what will be a fast-growing market:

       Growing import demand for livestock products related to
            growth in population and per capita incomes, combined with
            limited domestic production potential, and a 2011 outbreak of
            foot-and-mouth disease will drive considerable expansion of
            U.S. exports. KORUS would allow the United States to use its
            cost advantages and its wide variety of beef, pork and poultry
            products to fill a growing share of this market. Prior to the
            agreement, all U.S. beef had been shut out of the Korean
            market. U.S. exports of beef to South Korea are rebounding
            dramatically since the market was reopened in 2006. In 2010
            alone, U.S. beef exports to Korea increased more than 140
            percent from the previous year to total $518 million in sales.
            Reduction of import tariffs will further boost the United
            States' efforts to re-gain supplier of choice status in this
            important market. The U.S. and Korean beef industries have
            agreed that the United States will export to the Korean market
            only beef less than 30 months of age. This is a worthy first
            step in allowing U.S. beef into the market and achieving
            consistency with the World Organization for Animal Health
            standards. While we urge the U.S. and Korean Governments to
            continue to discuss further opening of the market, Congress
            should move ahead and pass the trade agreement.

       Related to growing import demand for livestock products,
            indirect exports of grains and oilseed products are likely to
            be substantial. For U.S. corn and soybean producers, exports of
            meat products will have a large and important impact. The
            livestock products produced for export will be grown
            domestically utilizing domestic feed, thereby indirectly
            increasing exports of corn and soybeans. Indirect exports of
            corn as a result of KORUS are estimated to exceed $212 million
            per year. Indirect exports of soybeans are estimated to exceed
            $66 million per year. With no wheat and oilseed production
            capacity, South Korea's dependence on imports is likely to grow
            steadily. South Korea has already made a transition to fed
            livestock (producing some livestock and importing the
            feedstuffs). The trade agreement puts the United States in a
            strong supplier position to compete on a level playing field
            with other trade partners.

       Gains in fruit and vegetable import demand are expected to
            be substantial. South Korea imports a wide variety of fruits,
            processed fruits and vegetables, and tree nuts. Exporters of
            oranges, cherries, grapes, processed potatoes, sweet corn,
            shelled walnuts and shelled almonds will benefit greatly. KORUS
            will put the United States in a position to capture the
            remaining market share.

       Gains in other agricultural products and processed food and
            fish products will also be substantial. The United States
            exports a broad range of farm products to South Korea. Other
            commodities or commodity groupings of importance include dairy
            products, snack foods, horticultural products, food ingredients
            and other animal products, such as hides. KORUS will allow the
            United States to capture a larger share of these expanding
            markets as well.
    Lost Opportunities
        Korea has completed an agreement with the European Union (EU),
    which is expected to be implemented by July 2011. The Korea-EU FTA will
    immediately eliminate 82 percent of Korea's tariffs; in 5 years, the
    agreement will eliminate 94 percent of Korea's tariffs. In contrast,
    KORUS will eliminate 94.5 percent of Korea's tariffs within 3 years of
    implementation; virtually all tariffs will be eliminated in 10 years.
    If the Korea-EU FTA agreement enters into effect before KORUS, European
    exporters will gain a significant competitive advantage over the United
    States in the Korean market.
        Loss of market share in Korea because of U.S. competitors'
    preferential access has become a reality for some segments of U.S.
    agriculture. Korean wine imports were increasing sharply and peaked at
    about $167 million in 2008. During the 2000-2009 period, Chile's Korean
    market share (by value) rose from 2.4 percent to 21.7 percent, while
    the U.S. share fell from 17.1 percent to 9.8 percent. This is believed
    to be the direct result of the 15 percent import duty which was
    eliminated on Chilean wine under the Korea-Chile trade agreement
    implemented in April 2004. There is a real potential for the U.S.
    position to be further eroded if South Korea's FTA with the EU, which
    currently enjoys a market share in excess of 50 percent, enters into
    force before KORUS. In addition to the EU, other U.S. competitors--
    Australia, Canada and the members of MERCOSUR--are currently
    negotiating deals with Korea, any of which could further erode the U.S.
    competitive position.
    South Korea Wine Imports
    2000-2010

            Source: American Farm Bureau Federation Economic Analysis.
    U.S.-Colombia Trade Promotion Agreement (CTPA)
        The CTPA eliminates Colombian tariffs on U.S. agricultural
    products, correcting the current imbalance in agricultural trade
    between our countries created in part by Congressional passage and
    extension of the Andean Trade Preference Act (ATPA). It is important to
    understand that the CTPA allows the United States to become a
    competitive supplier of agricultural products to Colombia. The United
    States will be able to land product duty-free and compete with
    Colombia's Latin American trading partners who currently supply a large
    percent of the Colombian food and fiber market through preferential
    trade agreements. This also levels the playing field by providing U.S.
    products exported to Colombia the same duty-free access already enjoyed
    by Colombian products imported to the United States.
        Colombia has one of the highest tariff structures in South America.
    This is the major impediment to market access in many sectors,
    including agriculture. Colombian import duties on agricultural and
    processed food products are currently high, and the average tariff rate
    is roughly 30 percent. Elimination of Colombia's duties in the
    agricultural sector would create new opportunities for American farmers
    and ranchers in this market, particularly relative to other suppliers
    that already have trade agreements with Colombia.
    Benefits for U.S. Agriculture
        Under the CTPA, more than 80 percent of current U.S. exports to
    Colombia will become duty-free immediately. Agricultural items that
    receive immediate duty-free treatment include high-quality beef,
    cotton, wheat, soybeans, soybean meal, apples, pears, peaches, cherries
    and some processed food products. In addition, the United States and
    Colombia have worked to resolve sanitary and phytosanitary (SPS)
    barriers to agricultural trade, including food safety inspection
    procedures for beef, pork and poultry.

                  Summary of CTPA Benefits to U.S. Agriculture
    ------------------------------------------------------------------------
                              Current Imports from U.S.      Estimated Gains
                         -----------------------------------
    Agricultural Product   22006-2008 Avg    2009-2010 Avg
                         ---------------------------------------------------
                                       (Values in U.S. Dollars)
    ------------------------------------------------------------------------
                 Rice            584,900       13,193,500       28,600,000
                Wheat        234,443,400      159,251,800       90,100,000
                 Corn        588,056,800      195,707,100       68,537,700
         Other Grains          4,398,100        6,300,300          762,300
    Fruits, Vegetables        31,445,700       46,315,200        2,500,000
              and Nuts
    Soybeans & Products      320,609,300      199,432,900       62,969,400
     Other Oilseeds &         21,518,800       26,176,900        7,230,600
              Products
               Cotton         64,127,200       91,393,400        9,600,000
                 Beef            440,600          649,400       17,500,000
              Poultry         14,840,000       21,518,900       12,670,000
                 Pork          8,534,500       12,372,500        5,430,000
               Other Livestock22,136,300       16,658,000        2,400,000
              Products
                Dairy          8,340,400        5,001,700        2,300,000
    Processed Food and        50,001,200       98,131,900       55,900,000
         Fish Products
    Other Agriculture        134,230,700      143,761,500        4,100,000
                         ---------------------------------------------------
      Total.............   1,503,707,900    1,035,865,000      370,600,000
    ------------------------------------------------------------------------
    Source: USDA ERS, American Farm Bureau Federation Economic Analysis.

        As shown in the table, our analysis of the agreement suggests CTPA-
    related gains in exports of $370 million.
        Looking at some of the specific commodities of export interest to
    the United States, the agreement would put the United States in a
    strong position to capitalize on the following commodity opportunities
    in what will be a fast-growing market overall:

       Colombia's growth in imports of grains and oilseed products,
            related both to growing food demand for wheat and vegetable
            oils and to growing domestic livestock demand for feed grains
            and protein meals, is likely to be substantial. The trade
            agreement puts the United States in a strong supplier position
            to compete on a level playing field with other preferential
            trade partners.

       Gains in cotton imports are key, due to increased domestic
            demand for cotton and import demand from the U.S. for finished
            textiles and apparel. The CTPA would put the United States in a
            position to price competitively and boost market share.

       Gains in other agricultural products could also be
            substantial. The United States exports a diverse basket of farm
            products to Colombia. The commodities noted specifically above
            account for \2/3\ of the United States total exports. Other
            commodities or commodity groupings of importance include
            fruits, vegetables, tallow and other processed products.
    Lost Opportunities
        In addition to detailing the potential gains to U.S. agriculture, a
    review of the CPTA would be incomplete without discussing the potential
    losses of continued inaction on the CPTA. In 2009, AFBF's Economic
    Analysis Department estimated that the increased total U.S.
    agricultural exports likely with the CTPA in place could exceed $815
    million. AFBF models used at that time accurately reflected the
    potential gains from trade that would have been experienced given the
    agricultural trade situation of the 2005 to 2008 base period.
        However, since that time, there have been several significant
    global economic changes affecting trade, including increased energy and
    agricultural commodity prices, a worldwide financial crisis, newly
    enacted SPS and technical barriers to trade (TBT) measures, and
    considerably shifted global trade patterns. These changes, and the
    continued inaction on the CTPA, led to continuing and considerable
    losses for U.S. agricultural exports to the Colombian market.
        While passage of the CPTA has languished in the United States, our
    competitors such as Brazil, Argentina, Uruguay and Paraguay (MERCOSUR)
    have passed agreements with Colombia, granting preferential access to
    this growing market, at the expense of U.S. exporters. Colombia
    continues to negotiate and sign free trade agreements with additional
    U.S. competitors, such as the EU and Canada. This, combined with
    further implementation of the MERCOSUR agreement, will continue to
    erode the U.S. competitive position, likely closing the U.S. out of the
    Colombian market if the CPTA is not enacted. As a result, potential
    trade losses grow larger with each day the CPTA is not passed. This
    inaction could lead to U.S. agricultural export losses in excess of
    $1.1 billion annually. The annual losses for the United States are
    detailed in the table below.

                                                               Estimated Losses from Non-Passage of the Pending Colombia FTA United States
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          2006-2008 Average
                                                          2009-2010 Average
                              ------------------------------------------------------------------------------------------------------------------------------------------------
       Agricultural Product      Imports from World      Imports from United      U.S. Market Share      Imports from World      Imports from United      U.S. Market Share     Potential U.S. Loss
                                                               States                                                                  States
                              ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       Million $U.S. Dollars
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                      Rice                     43.9                     0.6                      1%                    31.4                    13.2                     42%                  ^10.1
                     Wheat                    417.5                   234.4                     56%                   353.8                   159.3                     45%                 ^166.4
                      Corn                    677.7                   588.1                     87%                   729.8                   195.7                     27%                 ^115.5
              Other Grains                    115.7                     4.4                      4%                   110.1                     6.3                      6%                   ^1.3
    Fruits, Vegetables, and                   246.9                    31.4                     13%                   340.2                    46.3                     14%                  ^85.6
                       Nuts
       Soybeans & Products                    629.1                   320.6                     51%                   831.4                   199.4                     24%                  ^98.4
    Other Oilseeds & Products                 155.7                    21.5                     14%                   240.3                    26.2                     11%                  ^11.3
                    Cotton                     76.7                    64.1                     84%                    94.8                    91.4                     96%                 ^347.2
                      Beef                      7.3                     0.4                      6%                    11.4                     0.6                      6%                   ^0.4
                   Poultry                     21.4                    14.8                     69%                    32.4                    21.5                     66%                  ^14.5
                      Pork                     23.3                     8.5                     37%                    31.9                    12.4                     39%                  ^13.1
                    Other Livestock Products   55.6                    22.1                     40%                    60.1                    16.7                     28%                   ^8.0
                     Dairy                     75.4                     8.3                     11%                    73.0                     5.0                      7%                  ^14.6
    Processed Food and Fish                   281.0                    50.0                     18%                   384.9                    98.1                     25%                 ^207.7
                  Other Ag                    416.1                   134.2                     32%                   486.4                   143.8                     30%                  ^60.0
      Total..................               3,243.2                 1,503.7                     46%                 3,812.0                 1,035.9                     27%               ^1,154.0
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Source: USDA ERS, American Farm Bureau Federation Economic Analysis.

    Colombia Agricultural Imports
    2000-2010

            Source: American Farm Bureau Federation Economic Analysis.
    U.S.-Panama Trade Promotion Agreement (PTPA)
        The United States already has a very large share of the Panamanian
    agricultural market. In fact, averaged across all agricultural
    products, the United States already supplies 47 percent of Panamanian
    agricultural imports. For the commodities that the United States has
    the most interest in, the share is more than 80 percent. However, the
    agreement will prevent other countries, specifically other Latin
    American suppliers, from taking some of the current U.S. share of the
    Panamanian market. The agreement also levels the playing field by
    providing U.S. products exported to Panama with the same duty-free
    access already enjoyed by Panamanian products exported to the United
    States through the Caribbean Basin Initiative (CBI).
        While Panama's agricultural sector is very small, there are some
    segments that are protected from imports. For the most part, Panama's
    tariffs on bulk and intermediate commodities are low. However, high-
    value and consumer-ready products, which tend to compete directly with
    local Panamanian producers, generally face higher tariffs. Agricultural
    tariff rates in Panama range from just three percent to nearly 160
    percent, depending on the commodity. Eliminating, or even significantly
    reducing, these tariff rates through free trade agreement negotiations
    could be beneficial to the U.S. agricultural sector.
    Benefits for U.S. Agriculture
        Under the PTPA, more than half of current U.S. agricultural exports
    to Panama will become duty-free immediately. Items that receive
    immediate duty-free treatment include high-quality beef, mechanically
    de-boned chicken, frozen whole turkeys and turkey breast, pork variety
    meats, whey, soybeans and soybean meal, cotton, wheat, barley, most
    fresh fruits, almonds, walnuts and many processed products.
        The PTPA will provide an opportunity for the U.S. to expand exports
    of grains, oilseeds, fiber and livestock products. The PTPA allows the
    United States to maintain its competitive supplier position for
    agricultural products to Panama. Passing the PTPA will put the United
    States in a position to take full advantage of Panama's expected
    economic growth when the Panama Canal's expansion is completed in 2014.
    While the PTPA does not guarantee the United States expanded exports,
    the United States will be able to land product duty-free, along with
    Panama's other regional suppliers. The increased total U.S.
    agricultural exports likely with a PTPA in place could exceed $45
    million if other agricultural and processed products grow at the same
    pace.

                  Summary of PTPA Benefits to U.S. Agriculture
    ------------------------------------------------------------------------
                              Current Imports from U.S.      Estimated Gains
                         -----------------------------------
    Agricultural Product   22006-2008 Avg    2009-2010 Avg
                         ---------------------------------------------------
                                       (Values in U.S. Dollars)
    ------------------------------------------------------------------------
                 Rice         22,947,500       25,326,600       13,810,300
                Wheat         35,268,700       36,633,200        1,999,500
                 Corn         64,321,200       75,949,700        6,776,000
         Other Grains          1,614,400          789,900          124,200
    Fruits, Vegetables        46,745,000       60,730,300        8,190,000
              and Nuts
    Soybeans & Products       52,418,100       66,164,300        5,100,000
     Other Oilseeds &         12,001,400       14,613,300          893,000
              Products
               Cotton              2,400            4,500            3,800
                 Beef            662,700        2,651,700        1,200,800
              Poultry         13,290,800       18,662,100        2,035,300
                 Pork          5,550,900        9,334,200        1,301,200
               Other Livestock 6,945,500       11,063,400           39,900
              Products
                Dairy         16,814,600       19,236,900          737,600
    Processed Food and        60,153,100       88,478,300        3,497,200
         Fish Products
    Other Agriculture         19,829,300       23,482,700                0
                         ---------------------------------------------------
      Total.............     358,565,600      453,121,100       45,708,800
    ------------------------------------------------------------------------
    Source: USDA ERS, American Farm Bureau Federation Economic Analysis.

    Lost Opportunities
        In addition to detailing the potential gains to U.S. agriculture, a
    review of the PTPA would be incomplete without discussing the potential
    losses of continued inaction on the PTPA. In 2009, AFBF's Economic
    Analysis Department estimated that the increased total U.S.
    agricultural exports likely with the PTPA in place could exceed $195
    million. AFBF models used at that time accurately reflected the
    potential gains from trade that would have been experienced given the
    agricultural trade situation of the 2005 to 2008 base period.
        However, since that time, there have been several significant
    global economic changes affecting trade, including increased energy and
    agricultural commodity prices, a worldwide financial crisis, newly
    enacted SPS and TBT measures, and considerably shifted global trade
    patterns. These changes, and the continued inaction on the PTPA, led to
    continuing and considerable losses for U.S. agricultural exports to the
    Panamanian market.
        While passage of the PTPA has languished in the United States, our
    competitors--Chile, Costa Rica, El Salvador and Honduras, among
    others--have secured agreements with Panama, granting preferential
    access to this growing market, at the expense of U.S. exporters.
    Additionally, Panama has completed trade agreement negotiations with
    Canada and the EU. If these agreements enter into effect before the
    U.S. agreement, the United States will lose an important competitive
    advantage in the market for products such as beef, frozen potato
    products, beans, lentils, pork, malt and other processed foods.

        Mr. Conaway. Thank you, Mr. Stallman. Mr. Donald for 5
    minutes.

    STATEMENT OF BILL DONALD, PRESIDENT, NATIONAL CATTLEMEN'S BEEF
                     ASSOCIATION, WASHINGTON, D.C.

        Mr. Donald. Good morning, Mr. Chairman and Members of the
    Committee. My name is Bill Donald, and I am President of the
    National Cattlemen's Beef Association. It is my pleasure to
    testify before your Committee to discuss the importance of the
    Korea, Colombia, and Panama Free Trade Agreements. I am a
    third-generation rancher from Melville, Montana, and I know how
    important access to foreign markets is for the beef industry.
        With 96 percent of the world's consumers living outside the
    U.S., it is understandable that those of us in the beef
    industry are overwhelmingly supportive of these trade
    agreements. Fast-growing economies in Asia and South America
    represent an ever-growing consumer base that enjoys eating
    American beef. I appreciate the Administration's efforts to
    finalize these agreements, but time is ticking. And we need to
    begin implementation.
        Time is of the essence because, as a cattle producer, I am
    competing with other cattlemen in the EU, Australia, Canada,
    Argentina, and Brazil. We are all courting the same consumer
    base, particularly in Asia and South America. These foreign
    governments are independently working to secure trade
    agreements and market access for their own cattle producers.
        In Korea, the largest competitor to U.S. beef is Australian
    beef. In 2010, Australia had 53 percent of the Korean market
    compared to 32 percent for U.S. The Australian Government is
    currently negotiating a similar bilateral trade agreement with
    South Korea. And if they sign their agreement before the U.S.
    ratifies ours, then Australian producers will have a 2.67
    percent tariff advantage over American beef producers for the
    next 15 years.
        In October of last year, the EU and South Korean Government
    signed a free trade agreement that will likely take effect in
    July. Korea also recently announced they will reopen their
    markets to Canadian beef as early as next month. Our
    government's failure to implement these trade agreements sends
    the wrong message to major exporting markets including Russia
    and China.
        Let me be clear. NCBA fully supports the immediate
    implementation of the Korean Free Trade Agreement. Korea is one
    of the largest markets for American beef. In 2010, the U.S.
    exported nearly $518 million worth of beef, which is 140
    percent increase on sales over 2009. However, due to the 40
    percent tariff on all cuts of U.S. beef, we paid over $200
    million in tariffs.
        The Korean trade agreement phases out the 40 percent tariff
    on beef imports and includes $15 million in tariff reductions
    the first year and $325 million annually once fully
    implemented. The U.S. International Trade Commission's report
    states that annual exports of U.S. beef could increase as much
    as $1.8 billion after full implementation.
        Additionally NCBA supports the immediate passage of the
    Colombia trade agreement. Recently I sent a letter to President
    Obama urging him to work with Congress to pass and implement
    the revised agreement. Despite an 80 percent tariff Colombia
    currently has in place on U.S. beef imports, consumers
    purchased $759,000 worth of U.S. beef in 2010. This agreement
    eliminates that massive tariff. Cattlemen are also supportive
    of the Panama Free Trade Agreement. Currently American beef
    faces a 30 percent tariff on prime and choice cuts. This tariff
    would immediately be eliminated, and the duties on all other
    cuts would be phased out over the next 15 years.
        We are pleased this agreement is ready for Congressional
    conclusion--consideration, excuse me. We can't talk enough
    about discussing trade without discussing non-tariff trade
    barriers. International trade must be based on sound science,
    not political science. Abiding by the internationally
    recognized science-based guidelines like those set by OIE
    promotes fair trade for the U.S. and developing countries. We
    are extremely supportive of the fact that both Colombia and the
    Panama agreements provide assurances for a stable export market
    through planned equivalency inspections and OIE guidelines
    related to BSE.
        According to CattleFax, the U.S. beef industry lost nearly
    $22 billion in potential sales since 2003 due to BSE bans and
    restrictions that were not in compliance in OIE standards.
        In closing, I want my sons and my grandchildren to be able
    to carry on the family business. The beef industry is not
    asking for a handout from Washington, but we are asking for the
    opportunity to compete for consumers in Korea, Colombia, and
    Panama. Exports have added $145 per head advantage, and these
    agreements will increase that number. Pass the trade agreements
    and enhance America's cattle producers' ability to do what we
    do best, produce the safest, most wholesome and affordable beef
    in the world. I look forward to answering any questions.
        [The prepared statement of Mr. Donald follows:]

    Prepared Statement of Bill Donald, President, National Cattlemen's Beef
                         Association, Washington, D.C.
        Chairman Lucas, Ranking Member Peterson, and Members of the
    Committee thank you for giving me the opportunity to testify before
    your Committee today. The three pending trade agreements are a top
    priority for the beef industry and it's a privilege to be here
    representing my fellow cattlemen and women. I'm Bill Donald, President
    of the National Cattlemen's Beef Association (NCBA). I am a third
    generation rancher from Melville, Mont. Along with my family, I own and
    operate Cayuse Livestock Company, a cow/calf/yearling operation. My
    wife, our two sons and their families are actively involved with our
    operation, which is headquartered in the foothills of the Crazy
    Mountains in South Central Montana.
        NCBA is the nation's oldest and largest national trade association
    for cattlemen and represents more than 140,000 cattle producers through
    direct membership and our state affiliates. NCBA is producer-directed
    and consumer-focused and represents all segments of the beef industry.
    Our top priority is to produce the safest, most nutritious and
    affordable beef products in the world. This has been consistent
    throughout our industry's history and in our long-term efforts to
    continually improve our knowledge and ability to produce beef products
    to meet consumer preferences.
        With 96 percent of the world's consumers living outside of the
    United States, access to foreign markets for our beef and beef products
    is significantly important for our industry to grow. Exports are
    vitally important for the future success of U.S. beef producers and
    rural America. Future growth of the U.S. economy depends upon our
    ability to produce and sell products competitively in a global
    marketplace. Economic globalization is not simply a matter of
    ideological or political preference; it is a fundamental reality that
    will determine whether America remains an economic super-power or
    becomes a secondary economic force.
        Fast-growing economies in Asia and South America expose a growing
    consumer base to U.S. beef, and as statistics show, they enjoy eating
    U.S. beef. The pending free trade agreements with Korea, Colombia and
    Panama give cattlemen like me and my sons the opportunity to compete on
    a level playing field with cattlemen around the world. We're all
    courting the same consumers internationally. I'm here to say today--
    please do not handicap us by delaying these agreements any longer. I
    want my sons and grandchildren to be able to carry on the family
    business. The beef industry is not asking for a handout from Washington
    but we are asking for the opportunity to compete for consumers in
    Korea, Colombia and Panama. These trade agreements would allow the beef
    industry to grow and create economic opportunities throughout rural
    America without costing taxpayers a dime.
        NCBA continues to encourage Congress to expedite the technical
    discussions with President Obama and U.S. Trade Representative Ron
    Kirk, draft legislation and send the three pending agreements to
    Capitol Hill for swift consideration. I appreciate the recent efforts
    to finalize these agreements, but we cannot afford to wait any longer
    to implement them. Each day that goes by without implementing these
    agreements is another day we risk losing more American jobs by losing
    market share to other countries. Additionally the free trade agreements
    are an important factor to reach President Obama's goal of doubling
    exports. The progress made last week to move forward with technical
    discussions is definitely welcome, but I will not be satisfied until
    the ink is dry and the trade agreements are implemented. As a
    cattleman, I am only as good as my word. And quite frankly, I've heard
    a lot of bull when it comes to trade. Last May, a group of us from the
    agriculture industry came to Washington and heard lots of promises and
    talk about action on these trade agreements. But here we are one year
    later. The agreements still have not been implemented. It's time. Not 6
    months from now. Right now.
    Competing for Market Share
        The European Union (EU), Australia, Canada, Argentina and Brazil
    are independently competing with the United States for access and
    market share of foreign markets. Further delay of these free trade
    agreements keeps outrageously high tariff rates in place that put
    American cattlemen at a competitive disadvantage. If other countries
    secure agreements that eliminate or reduce their tariff rates before we
    do, their beef will be sold at a lower cost than ours. This means we
    lose even more market share and consequentially will export more
    American jobs.
        The U.S. beef industry's largest competitor is Australia. In 2010,
    Australia had 53 percent of Korean market share compared to 32 percent
    by U.S. If the Australians successfully ratify a similar bilateral
    trade agreement with South Korea before the United States, they will
    have a 2.67 percent tariff advantage over American beef for the next 15
    years, allowing them to sell more of their product at a cheaper price.
    Additionally, South Korea and the EU signed a free trade agreement in
    October 2010 that will take effect this July. Recently, Korea announced
    they will re-open their market to Canadian beef as early as June 2011.
    Time is ticking--we can't continue to sit on the sidelines while other
    countries move forward and sign their trade agreements. Furthermore,
    other key Asian trading partners are closely watching the Korea-U.S.
    Free Trade Agreement (KORUS FTA) as this agreement will likely set the
    benchmark for American beef trade with Japan, China and Hong Kong.
        Other countries are also competing with the United States for
    market share in Central and South America. Most recently, Canada and
    Mexico aggressively pursued free trade agreements with Colombia and
    have been successful in securing those agreements. Failure to implement
    the pending free trade agreements sends the wrong message to major
    export markets like China and Russia--markets with tremendous potential
    consumer demand but limited or non-existent access. That demand will be
    met, let us meet it with American beef. Pass the trade agreements and
    allow America's cattle producers to do what they do best--produce the
    safest, most wholesome and affordable beef in the world.
    NCBA Supports Implementation of Korea-U.S. Free Trade Agreement (KORUS
            FTA)
        NCBA fully supports immediate implementation of the KORUS FTA.
    Korea is one of the largest export markets for American beef. The
    United States exported nearly $518 million of beef in 2010, which is a
    140 percent increase in sales over 2009. American beef exports to South
    Korea added $25 in value to each of the 26.7 million head of steers and
    heifers produced in the United States in 2010. Unfortunately, American
    beef faces a 40 percent tariff on all cuts, resulting in over $200
    million in tariffs in 2010. NCBA strongly believes the 40 percent
    tariff is the greatest hindrance to U.S. beef exports to Korea.
        Implementation of the KORUS FTA would phase out South Korea's 40
    percent tariff on beef imports, with $15 million in tariff benefits for
    beef in the first year of the agreement alone and about $325 million in
    tariff reductions annually once fully implemented. According to U.S.
    International Trade Commission, annual exports of U.S. beef could
    increase as much as $1.8 billion once the agreement is fully
    implemented. Eliminating the 40 percent tariff will give more Korean
    consumers greater access to safe, wholesome U.S. beef at a more
    affordable price.
    NCBA Supports Implementation of U.S.-Colombia Trade Promotion Agreement
            (CTPA)
        NCBA supports immediate passage of the U.S.-Colombia Trade
    Promotion Agreement (CTPA). I recently sent a letter to President Obama
    urging him to work with Congress to pass and implement the revised
    agreement with Colombia. I am pleased that Ambassador Kirk has notified
    Congressional leaders of his intent to begin technical discussions, and
    I hope these discussions are completed as soon as possible.
        Colombia is an important market for U.S. beef and beef variety meat
    exports. Unfortunately, Colombia places up to an 80 percent tariff on
    U.S. beef imports, making it one of the highest tariffs U.S. beef faces
    anywhere in the world. Once the CTPA is implemented, high quality U.S.
    beef will have duty-free access and the tariffs on all other beef and
    beef products will be reduced over the next 15 years. For the first
    time ever, the CTPA puts American beef on a competitive footing with
    beef imports from Brazil and Argentina. In 2010, the United States
    exported approximately $759,000 of beef and beef products to Colombia,
    a paltry sum considering the excessive duties. In addition to
    eliminating tariffs, CTPA addresses non-tariff barriers by providing
    assurances for a stable export market through plant inspection
    equivalency. It also fully reopens the Colombian market to U.S. beef by
    assuring that Colombia adheres to the World Organization for Animal
    Health (OIE) guidelines related to BSE.
    NCBA Supports Implementation of Panama Free Trade Agreement
        Another important lynch pin for U.S. beef trade is the Panama Free
    Trade Agreement. NCBA is pleased that all outstanding issues have been
    addressed and that the agreement is ready for further action by
    Congress. Like the CTPA, the Panama Free Trade Agreement provides
    assurances for a stable export market through plant inspection
    equivalency and Panama also modified its import requirements related to
    bovine spongiform encephalopathy (BSE) to be consistent with
    international standards. Additionally, the 30 percent tariff on prime
    and choice cuts would be immediately eliminated and the duties on all
    other cuts would be phased out over 15 years. Once the agreements with
    Panama and Colombia are put into place, the United States will
    ultimately have free trade for U.S. beef with approximately \2/3\ of
    the population in the Western Hemisphere.
    Abiding By Internationally-Recognized Science-Based Standards Insures
            Fair Trade
        International trade must be based on sound science, not political
    science. Allowing U.S. beef producers to be subject to the whim of
    foreign governments who do not base their decisions on internationally
    recognized science-based standards creates a high level of market
    volatility. According to CattleFax, U.S. beef lost nearly $22 billion
    in potential sales through 2010 due to BSE bans/restrictions.
        Abiding by internationally recognized science-based guidelines as
    those set by the OIE guidelines promotes fair trade for the U.S. and
    developing countries. Additionally, this creates less market volatility
    and encourages safer production practices. But if you question the need
    for abiding by internationally recognized science-based standards, take
    a look at what has happened to U.S. beef in some key Asian markets.
        China's market remains closed to U.S. beef since the 2003 discovery
    of a Canadian-born cow infected with BSE in the United States. China
    uses non-science based standards to keep out U.S. beef, which is
    recognized internationally as a safe product. U.S. Beef sales in China
    could exceed $200 million if given access. Beef isn't the only industry
    to suffer from these non-science based trade restrictions. On a larger
    scale, the elimination of China's tariff and other trade restrictions
    could lead to an additional $3.9 to $5.2 billion in U.S. agricultural
    exports to China, according to an U.S. International Trade Commission
    study.
        Historically, Japan was the top market for U.S. beef exports at
    $1.4 billion. In 2010, the U.S. exported $640 million in U.S. beef in
    Japan--far short of pre-BSE levels due to Japan's 20 month age
    restriction, which is not based on internationally recognized sound
    science. If Japan would follow OIE guidelines and recognize U.S. beef
    as the safe product it is by raising the age limit, it is estimated
    that Japan would once again easily be a $1 billion market for U.S.
    beef.
        Unfortunately, Taiwan is another example of what happens when
    internationally-recognized science-based standards are not in place.
    Recently, 20 United States senators sent a letter to Taiwan President
    Ma urging his government to use internationally-recognized scientific
    standards regarding U.S. beef.
        In January 2011, the Taiwan Food and Drug Administration began
    testing for the existence of ractopamine in imported beef. Based on
    trace amounts of the feed additive in U.S. beef products, Taiwanese
    officials pulled products from grocery shelves and rejected affected
    products at ports of entry. Ractopamine is recognized by the U.S. Food
    and Drug Administration as a safe feed additive. Taiwan's current zero-
    policy standard lacks scientific standing and is out of step with
    accepted international standards. Further, the zero-tolerance policy is
    inconsistent with Taiwan's own risk assessment in 2007, which found
    that ractopamine was safe for use. Taiwan's non-science based actions
    create an unnecessarily volatile trading environment. U.S. exporters
    are extremely reluctant to ship product to Taiwan given the uncertainty
    presented by the amplified testing regime. Prior to the enhanced
    testing regimen, Taiwan had been a historically strong market for U.S.
    beef. In 2010, Taiwan purchased more than $216 million worth of U.S.
    beef, a 53 percent over 2009 levels of $141 million in sales.
    Exports Create Jobs
        Without question, exports create jobs. According to CattleFax, fed
    steers have been selling near $115 per hundred weight (cwt), or roughly
    $1,495/head. Of that, Cattlefax estimates that exports have added a
    minimum of $145/head in value (as opposed to not having exports). I
    believe the potential value added to each head that is created by
    increased exports provides the essential economic incentive needed to
    curb out-migration in rural America. An aging agricultural workforce is
    a serious problem facing our country. A profitable future in
    agriculture is the draw we need to get younger generations involved in
    food and fiber production.
        I am fortunate and blessed that my sons have chosen to return to
    our family ranch, but that isn't the case everywhere. One of the
    biggest problems facing agriculture today is an aging workforce with
    fewer young people returning to the farm to participate in farming and
    livestock production. There is a growing global demand for food, and
    some predict that global food production must double by 2050 to meet
    demand. ``[G]lobal food production may have to double by 2050, says
    agriculture economist Robert Thompson of the Chicago Council on Global
    Affairs. From 2010 to 2050, the world's population is projected to
    increase 38 percent, from 6.9 billion to 9.5 billion, with gains
    concentrated in poorer countries.'' (Samuelson, Robert, ``The Global
    Food Crunch,'' The Washington Post, 03/13/2011).
        The shrinking number of young folks returning to production
    agriculture isn't the only challenge. For those men and women who do
    choose farming and ranching, they face a wide array of challenges.
    Rising land prices and startup costs make it difficult for younger
    generations to begin ranching unless they inherit the family business.
    High startup costs for production agriculture and market volatility
    make livestock production a risky investment for young people with
    little credit. ``Higher land values also can have a crippling effect on
    beginning and limited resource farmers or ranchers who may not have the
    capital necessary to initiate or expand their operations. Nationwide,
    the annual number of new farm entrants under age 35 declined from
    39,300 from 1978-1982 to 15,500 from 1992-1997 (Gale, 2002).'' (``Final
    Benefit-Cost Analysis for the Farm and Ranch Lands Protection Program
    (FRPP),'' USDA--Natural Resources Conservation Service, December 2010)
        Without question, development of land formerly used for production
    agriculture is making farm/grazing land more scarce and more expensive.
    ``As development pressure increases, agricultural land values are hard
    pressed to compete with developed uses. Farm real estate values
    continue to increase. These values have been driven largely by non-
    agricultural factors, such as low interest rates and demand for
    residential development and recreational uses.'' (``Final Benefit-Cost
    Analysis for the Farm and Ranch Lands Protection Program (FRPP),''
    USDA--Natural Resources Conservation Service, December 2010).
        Rural America is facing a growing trend of out-migration primarily
    due to lack of employment opportunities.
    Nonmetro Population Change, 2000-05

            Source: USDA, using ERS data from the U.S. Census Bureau.

        As you can see, most of this out-migration is occurring in the
    middle of cattle country. According to USDA-ERS, one of the reasons we
    are experiencing out-migration in rural areas is due to few non-
    agriculture related jobs. Between 2000 and 2005, population patterns in
    non-metro counties reverted to those of the 1980s. Population in an
    estimated 1,027 out of 2,051 non-metro counties (about half) declined
    in population, compared with the decline in 593 counties between 1990
    and 2000. This is a reversion to patterns of the 1980s. For the most
    part, the newly declining counties are found in and among the large
    agriculture-dependent zones of the Great Plains and Corn Belt that lost
    people in the 1990s. But counties with declining populations also
    include Appalachian mining areas and a number of Southern counties that
    have relied heavily on manufacturing. Population decreased overall in
    both farming and mining county types (in the ERS county typology
    system) during 2000-05. (http://www.ers.usda.gov/Briefing/Population/
    Natural.htm)
        One way to fight trend of out-migration is to develop more jobs in
    rural areas. If exports add value to and increase demand for
    agricultural products, then increasing exports is a benefit to
    employment in rural America. The U.S. should stop relying on government
    programs as the main incentive for young people to get into
    agriculture. Greater market access for U.S. agricultural goods means
    greater economic incentive for young people to get involved in
    agriculture.
        In closing, I appreciate the opportunity to testify before you
    today on an issue of such importance to beef producers. I support
    President Obama's effort to double U.S. exports and create jobs in
    rural America. NCBA and many other stakeholders ask for your continued
    support in expanding market access by voting for the pending free trade
    agreements.

        Mr. Conaway. I want to thank the panel. Excellent job of
    staying right under the 5 minute window. I appreciate that. Did
    you want to ask questions, or you want to go to----
        The Chairman. Mr. Chairman, since I was detained at a
    Financial Services Committee markup, I will let the other
    Members go first who were able to be here for the process.
        Mr. Conaway. All right, the gentleman from Iowa, Mr.
    Boswell, for 5 minutes.
        Mr. Boswell. Well, thank you, Mr. Chairman. Interesting
    presentation. It seemed like everybody is on the same frequency
    except for one, and I am concerned, Mr. Johnson, where you come
    up with the details regarding the currency business. I haven't
    heard that one. I have heard it a lot about China, but I
    haven't heard about Korea.
        Mr. Roger Johnson. Well, Mr. Chairman, Congressman Boswell,
    my prepared testimony is actually pretty extensively footnoted
    as to where these references came from. I believe it is the
    ITC. It was the U.S. Government that has recognized Korea as a
    currency manipulator, one of three. And it is a large concern
    of ours. We--I think we all, in this room, are aware of the
    issue that we face with China right now, and it is largely an
    issue that is predicated on their ability and, in fact, action
    to manipulate their currency to take advantage of this very
    lucrative market in this country.
        Korea has a similar history, and so it was really sort of
    astounding to us that, given the detail, the amount of
    attention that was provided to these agreements, that the
    question of currency manipulation was not an issue that was put
    on the table. As I think was stated earlier in the hearing,
    this body, the full Congress, in fact, the House--not
    unanimously--overwhelmingly approved a bill in the last session
    dealing with this very question. So I think this is an issue
    that has broad support, but it simply is not recognized in any
    of these agreements.
        And in Korea in particular, it is the one where history has
    shown that we ought to be most concerned about.
        Mr. Boswell. I appreciate that. I will read your testimony
    to learn more about it. Mr. Carney, we have known each other a
    long time.
        Mr. Carney. Long time.
        Mr. Boswell. And we have spent a lot of time over the last
    many months or year or 2 on the deal with some of the
    pharmaceutical stuff going on. Has that kind of quieted down
    now? Is there any question about this with like Korea or any
    other place? And we went through that landmark deal, and I
    don't want to reinflame that. I am just curious. I haven't had
    a chance to talk to you. I suppose you have been planting corn.
    Are you done?
        Mr. Carney. Got the corn in. Still planting beans.
        Mr. Boswell. Okay, well, good luck. I heard going to the
    airport yesterday or the day before rather, that we are at the
    5 year average getting the corn in so I hope that is true.
    Anyway, anything about the question that I just asked? You have
    any concerns there with this market?
        Mr. Carney. With the pharmaceuticals, as of now, no, there
    has not been any problems. They have not raised any concerns
    that I know about, and I can check into it in more depth if you
    would like.
        Mr. Boswell. No, I just haven't had a chance to talk to you
    because we have both been busy. I was just curious about it
    because we spent a lot of time on it once before. So good. I
    yield back.
        Mr. Conaway. The gentleman yields back. Mr. Johnson, from
    Illinois, for 5 minutes.
        Mr. Johnson of Illinois. Thank you, Mr. Chairman. I think
    that this is as much a statement as it is a question, but I am
    interested to see any of the panelists' response. I think one
    of the underlying points that we sometimes forget in a hearing
    of this sort, we get so focused on the nuances and specific
    aspects of trade agreements that we maybe partially lose sight
    of the fact that we are not just talking about the agricultural
    sector that benefits from these trade agreements, but also the
    whole economic social infrastructure of any one of our states.
        And we represent Iowa, North Carolina, Oklahoma, Texas,
    Pennsylvania, and we all have grocery stores and implement
    dealers and restaurants and so forth that benefit very directly
    when farmers and the agricultural sector is prosperous. And
    when they are not, those same areas that employ a lot of people
    have a tendency to go the other way. So I don't know if any of
    you have any particular response to that, but it seems to me
    that is something that we ought to make sure to continue to
    tell the American people and continue to tell the world, that
    this is a symbiotic relationship. Any thoughts about that?
        Mr. Stallman. Well, absolutely. I mean we focus in
    agriculture as producers on what our ag exports numbers are and
    what our commodity prices are. But the reality is that the
    whole food chain from producer gate all the way to, in the
    U.S., to consumer plate or to the ultimate consumer plates in
    other countries where we are providing product for.
        All of that creates jobs, and the range of those jobs are
    tremendous and the number tremendous, and sometimes I don't
    think we really pay a lot of attention to that or enough
    attention to that when we talk about the benefits of these
    trade agreements. But the benefit is very real as you have
    stated. I have watched rural communities. When agriculture does
    well in rural communities, rural communities tend to do well,
    and the reverse is true.
        Mr. Johnson of Illinois. Another question for really any of
    the panelists. I know the earlier two panelists, Mr. Kirk and
    Mr. Vilsack, were certainly helpful to us, but they seemed to
    be very self-congratulatory in terms of their movement on these
    trade agreements, which, as I understand it, were largely
    framed a good many years ago.
        I guess my question for any of you--and I don't think any
    of you want to be in a position of criticizing the
    Administration for obvious reasons. Wouldn't you agree that
    time is a very significant factor and the passage of time from
    point--even before the point when Speaker Pelosi refused to
    call the Colombian trade agreement for a vote, that you and
    various other competitors move into that market and that time
    is a very, very significant matter?
        Mr. Donald. Yes, sir, I agree wholeheartedly that time is
    of the essence, and being from Montana, I would like to just
    acknowledge that our senior senator, Senator Baucus, has been
    very adamant that this agreement must address the issue of
    getting South Korea to set standards before he wanted to allow
    it through his committee. And I will acknowledge, while that
    has been a delay, the Senator has confidence that that is the
    direction that South Korea is going to go, and this
    Administration is committed to ensuring that we get to that
    point.
        And now, with that hurdle behind us, I absolutely recommend
    that this Congress and the Administration work together to get
    this done as quickly as possible because we are going to be at
    a competitive disadvantage to our main competitors in the
    market, and so that is why timing is such an issue. Thank you
    for bringing that up.
        Mr. Johnson of Illinois. And last, Mr. Johnson, I don't
    meant to single you out, but I think it is a fair assessment of
    your testimony that it stands in fairly sharp contrast to the
    other five and in contrast to what I believe. And again,
    everybody is entitled to their own opinion, not everybody is
    entitled to their own facts.
        It seems to me that what we are doing with respect to
    meeting the deadlines under the action plan that the
    Administration required in Colombia as well as the whole
    dynamic of what this does to exports and imports, again, I am
    not going to get into a one-on-one debate with you. But what I
    would simply say is that the greater weight of evidence to me
    is very strongly that this will help America. It will help our
    exports. It will help our balance of trade, and that we are
    doing a very, very good job, we have, to meet some of those
    labor and human rights concerns that we all have.
        Mr. Roger Johnson. We share that hope. In the 3 seconds
    remaining, I would simply say that our members are the ones
    that adopt our positions, and they carefully looked at all
    these questions, understanding there are significant values to
    agriculture that come from these agreements. But there are also
    other things that need to be considered.
        Mr. Conaway. The gentleman's time has expired. Mr.
    McIntyre, from North Carolina, for 5 minutes.
        Mr. McIntyre. No questions at this time. Thank you.
        Mr. Conaway. Thank you. Mr. Thompson, from Pennsylvania,
    for 5 minutes.
        Mr. Thompson. Thank you, Mr. Chairman. Mr. Stoner, who are
    your chief competitors in the global market, and what is the
    best way you see to outpace them and secure additional market
    share?
        Mr. Stoner. Depending on the market we are looking at, that
    varies. Colombia, clearly Canada, Argentina. Argentina, is a
    member of the MERCOSUR region, 2005. That agreement was
    implemented by 2009. Their tariffs went to zero. Canada has an
    FTA in place likely to be implemented by July 2010, we lost to
    Argentina our place as Colombia's number one supplier of
    agricultural products, clearly due to their trade preference.
    Our market share of wheat in Colombia has declined from 73
    percent, 2008, to now about 43 percent. Canada's market share
    is increasing because the mills are anticipating duty-free
    wheat entering their country shortly. They are switching over.
    We need a level playing field.
        Other countries, the Asian Rim, certainly Australia is a
    competitor. As time continues on, the EU, the Black Sea region,
    as their infrastructure ramps up. Wheat is grown the world
    over. If we do not have at least as competitive a marketplace,
    the American farmer cannot compete.
        Mr. Thompson. Thank you, sir. President Stallman, you
    mentioned in your testimony that there have been several
    significant global economic changes affecting trade, including
    increased energy and agricultural commodity prices. Can you
    elaborate a little bit on that?
        Mr. Stallman. Well, that was just acknowledgement that when
    you do these kind of analyses as to what the impacts are going
    to be, you have a lot of variable factors. And obviously the
    economic volatility that has occurred over the course of the
    past several years, the commodity price volatility and energy
    price volatility all weigh into those numbers. And that is
    really all that that refers to is that there are a lot of
    factors that adjust the analysis, if you will, and how you come
    out with the numbers.
        Mr. Thompson. In your view, is the trade agenda that is
    outlined by the current Administration aggressive enough to
    position U.S. agricultural exporters at the forefront of the
    global markets that are obviously out there?
        Mr. Stallman. Well, I will say it is better than it was. I
    guess that is the best way to characterize it. We have been
    actively and aggressively calling for passage specifically of
    these three FTAs the sooner the better. From the time this
    Administration came in, we are pleased that where it looks
    like--we are not certain--but it looks like we are getting to
    the point where we are going to be able to pass these three
    agreements.
        In terms of trade enforcement and trade negotiations, we
    have been working closely with USTR and USDA, and we have been
    relatively pleased with the process that has unfolded, whether
    we are talking about Doha or talking about dealing with some of
    these phytosanitary bilateral situations that we have. Probably
    we would say that it is never strong enough, and that may apply
    to any Administration. But at least we think directionally we
    are headed the right way.
        Mr. Thompson. Okay, thank you. Well, I think that is the
    nature of agreements versus mandates, I guess. Mr. Tolman, you
    mentioned that the challenges your exporters face with regard
    to the sanity, the phytosanitary barriers. Do you feel the SPS
    issues are adequately addressed in these agreements, and is
    this an approach you feel should be--should or should not be
    replicated with other trading partners?
        Mr. Tolman. I think the approach in these agreements are to
    move forward, and they are ones that we should look at using in
    other agreements. We continue to have new products, new traits,
    particularly in air and biotechnology. And there are times when
    the SPS--standards in certain countries are used as trade
    barriers to keep us from getting our product in there. And the
    more we can get worldwide agreement on those standards and some
    consistent basis for evaluating regularly in those, the better
    off we are going to be.
        But these agreements certainly are a step forward and a
    good measure for us to use in other agreements as well.
        Mr. Thompson. Okay, Mr. Chairman, given the waning seconds,
    I will yield back.
        Mr. Conaway. The gentleman yields back. The real Chairman
    of the Agriculture Committee is recognized for 5 minutes. Mr.
    Lucas.
        The Chairman. Thank you, Mr. Chairman. Let me speak from an
    Oklahoma perspective for just a moment, and while we are
    traditionally thought of as a state that is wheat and it is
    cattle and Farm Bureau members and, yes, the single largest
    farmers' union membership, I believe, in the country. Correct,
    Mr. Johnson, is still in Oklahoma?
        Mr. Roger Johnson. Yes.
        The Chairman. Nonetheless, we have an industry that has
    grown rather dramatically in the last 20 years in regard to
    pork. And looking again at some of the information provided by
    the panel, it would indicate that right behind beef in
    Oklahoma, pork would be the biggest gainer. Could you expand
    for just a moment, Mr. Carney? And I apologize for being
    delayed in a Financial Services markup coming back. Expand for
    just a moment. If I am doing a town meeting and I am trying to
    explain in Oklahoma why it is important we raise those millions
    of pigs, the effect this potential has on pork not only in
    Oklahoma but across the country?
        Mr. Carney. Yes, Mr. Chairman, what you would tell them
    right now is if we get these three free trade agreements
    passed, it will add approximately $11 a pig. It is going to add
    billions of dollars of export----
        The Chairman. That is a stat they understand, yes.
        Mr. Carney. I know. And then it will add exports, and when
    you--for every billion dollars of exports, USDA says there are
    12,000 new jobs, so they will provide new jobs. And I don't
    know if you have this chart. I thought maybe I got it passed
    out to everyone up there, but I am not sure. This chart--and I
    will make sure you get one.
        For every time that we have passed a free trade agreement,
    our export levels have went up every year, every time, except
    for 2009, and we had this little thing called H1N1. We lost
    exports. It went down. We got things fixed. We worked hard at
    it, very hard at it. And in 2010, our exports started going
    back up.
        So you can tell your folks, it is going to add jobs. It is
    going to help their bottom line, and it is just a boom boom for
    the pork industry.
        The Chairman. Thank you, sir. And in that spirit, Mr.
    Chairman, I will yield back the balance of my time.
        Mr. Conaway. The gentleman yields back. Well, gentlemen,
    thank you very much for coming today. Any other comments? Thank
    you very much for coming today. We appreciate your testimony.
    We appreciate the impact you have on helping us decide policy
    in this arena. Under the rules of the Committee, the record of
    today's hearing will remain open for 10 calendar days to
    receive additional material and supplementary written responses
    from witnesses to any question posed by a Member. This hearing
    of the Committee on Agriculture is adjourned.
        [Whereupon, at 12:47 p.m., the Committee was adjourned.]
        [Material submitted for inclusion in the record follows:]
        Submitted Letter by Hon. James P. McGovern, a Representative in
                          Congress from Massachusetts
    March 17, 2011

    Hon. Barack Obama,
    President of the United States,
    The White House,
    Washington, D.C.

        Dear President Obama,

        We write to you with significant urgency about the consideration of
    the pending U.S.-Colombia Free Trade Agreement (FTA), and to offer a
    credible and meaningful basis for assessing whether conditions on the
    ground in Colombia have been sufficiently transformed to merit
    consideration of this FTA by Congress.
        At a time of economic uncertainty, with millions of families across
    our country struggling to support themselves, it is our responsibility
    as Members of Congress to do everything in our power to promote and
    protect American jobs. One of the most important ways we can safeguard
    the ability of American families to make a living and keep their jobs
    is by guaranteeing they are not in competition with workers in other
    countries whose wages are kept low not simply because their countries
    are poor, but because they lack the essential democratic rights that
    American workers have to improve their standards of living--the right
    to speak out, to protest, to organize unions, to bargain collectively
    and directly with their employers, and to freely support political
    efforts to improve their economic condition. Colombia, sadly, stands
    out as a country where wages are kept low and workers are repressed
    through widespread violence against employees trying to better their
    lot.
        Mr. President, we have long been engaged on human rights issues in
    Colombia, many of us for over a decade; these are matters of critical
    concern in their own right, which demand your attention and the
    attention of Congress. Our monitoring of the labor and human rights
    situation on the ground in Colombia indicates that very little tangible
    progress has been made in improving human rights. Colombia continues to
    lead the world in murders of trade unionists. The level of murder and
    violence is not declining. Despite this, we believe this is a moment of
    opportunity for the United States and Colombia to break the stalemate
    and address the underlying problems that have made consideration of
    this FTA untenable for many Members of Congress and a broad swath of
    the American public.
        The United States and Colombia currently enjoy a robust trade
    relationship, and we believe that should be continued by providing a 2
    year extension of the Andean Trade Promotion and Drug Eradication Act
    (ATPDEA). In that same spirit, and consistent with your commitment to
    ensure that trade agreements reflect our values as a nation, we provide
    for your serious consideration the attached memo outlining measures
    that can be undertaken immediately and in the near term by the
    Colombian Government. If implemented with strong and sincere political
    will, these measures could result in Colombia showing substantial
    progress in areas that have long been under scrutiny by those concerned
    about labor and human rights conditions in Colombia.
        These are credible, achievable steps Colombia can take in the near
    term to comply with internationally recognized labor rights; protect
    unionists and other rights activists from violence, attacks and
    threats; and break with its long history of impunity. Anyone familiar
    with Colombia understands that the magnitude and roots of the
    challenges it faces cannot be addressed in one or 2 years, but the
    measures we describe would clearly show that Colombia has turned the
    corner and is committed to irrevocable and sustainable change.
        We support international trade and we are dedicated to doing
    everything possible to increase American jobs--but only if the terms
    are fair to American workers. Therefore, before you send us an FTA with
    Colombia for consideration, we ask that you first assure us that
    Colombia's long track record of repression, violence and murder of
    labor unionists has truly changed and that trade between our countries
    can take place on an even playing field for both nations' workers. As
    you have commented, ``The history in Colombia right now is that labor
    leaders have been targeted for assassination on a fairly consistent
    basis and there have not been prosecu-
    tions . . . We have to stand for human rights and we have to make sure
    that violence isn't being perpetrated against workers who are just
    trying to organize for their rights.''
        The question remains of how to evaluate and determine whether the
    situation on the ground in Colombia has improved substantially with
    regards to basic labor rights for Colombia's workers, and by
    dramatically diminishing the level of violence carried out with
    impunity against unionists and rights defenders.
        We believe that in order to make such a determination it is
    essential to ask those most affected by the lack of rights and the
    threat of violence. As Members of Congress, we will consult and speak
    directly with Colombian trade unionists, rights defenders, Afro-
    Colombian and indigenous leaders, and rely upon the analysis of
    Colombian organizations such as the Escuela Nacional Sindical and
    others, to determine the situation on the ground and whether
    substantial, sustainable and irreversible change is genuinely
    occurring. We recommend that responsible officials in your
    Administration interfacing with Colombia use the good offices of the
    Bureau of International Labor Affairs in the U.S. Department of Labor
    to do the same.
        Please feel free to contact us should you have any questions about
    these recommendations. We would welcome the opportunity to discuss them
    with you.
                Sincerely,

     Hon. James P. McGovern,  Hon. George Miller,      Hon. Rosa L. DeLauro,
    Member of Congress;      Member of Congress;      Member of Congress;

     Hon. Michael H.          Hon. Janice D.           Hon. Linda T. Sanchez,
     Michaud,                 Schakowsky,
    Member of Congress;      Member of Congress;      Member of Congress;
                                  attachment 1
    Date: March 17, 2011

    To: Hon. Barack Obama,
      President of the United States,
      The White House,
      Washington, D.C.

    From: Hon. James P. McGovern;
          Hon. George Miller;
          Hon. Rosa L. DeLauro;
          Hon. Michael H. Michaud;
          Hon. Janice D. Schakowsky
          Hon. Linda T. Sanchez

    Subject: Advancing Colombian Labor and Human Rights and Congressional
                Consideration of the U.S.-Colombia Free Trade Agreement
        For the past several years, the proposed U.S.-Colombia Free Trade
    Agreement (FTA) has not advanced in the U.S. Congress because of labor
    rights and human rights abuses in Colombia. A chief concern has been
    the plight of Colombia's trade unionists, who defend the rights of
    workers producing the goods to be traded with the United States, and
    who continue to be threatened, attacked and killed. Colombian workers
    also lack the basic rights to organize unions, bargain collectively,
    strike or otherwise engage in public protest aimed at improving their
    standard of living. Internationally, Colombia, in particular, is set
    apart by its long history of murder and threats against labor unionists
    and the deprivation of the most basic worker rights.
        Colombia continues to be ranked by the International Trade Union
    Confederation as the single most dangerous country in the world for
    unionists, with the annual number of union murders in Colombia often
    equal to or exceeding the total murders of unionists in all other
    countries combined. Violence against Colombian trade unionists
    continues unabated, and in most cases, no one has been held
    accountable. The International Labor Organization (ILO) has repeatedly
    reported that the Colombian Government has failed to provide in law and
    practice the most fundamental rights of workers and has failed to
    effectively enforce those laws, including in the recent conclusions and
    recommendations issued by the ILO High-Level Tripartite Mission to
    Colombia following its February 14-18, 2011 meetings and consultations
    in Colombia.
        Anti-union violence has not only taken the lives of thousands of
    men and women belonging to labor and union organizations, it has also
    affected the labor movement as a whole. Collectively, the Colombian
    labor movement has been adversely affected by stigmatization, a
    reduction in the number of affiliates, and the weakening of its
    capacity for action, mobilization and participation in Colombian
    democracy.
        The attacks, murders and death threats against trade unionists are
    manifestations of much larger threats to the rule of law in Colombia,
    especially the continued power that illegal armed groups exercise over
    many of Colombia's regions and political structures. Among these groups
    are the successor organizations to the paramilitaries that only
    partially demobilized in 2005. Several regions of the country are
    dominated by a combination of these paramilitary structures, organized
    crime, and their accomplices among local politicians, landowners, and
    sectors of the security forces. In addition to trade unionists, these
    illegal successor groups threaten and attack sectors of the population,
    particularly Afro-Colombian and indigenous communities. They target
    human rights defenders, victims seeking return of stolen land, and
    religious and community leaders who, like trade unionists, advocate for
    fundamental rights.
        Further, members of Colombia's own military and security forces
    collaborate with these illegal groups. According to its 2010 Annual
    Report, publicly released on February 24, 2011, the U.N. High
    Commissioner for Human Rights (UNHCHR) in Colombia estimates that more
    than 3,000 persons may have been victims of extrajudicial murders,
    primarily attributed to the Army. Most occurred over the past 6 years,
    and the majority remain unresolved. In particular, for those murders
    carried out by the Colombian military that took place during the period
    of 2004-2008, a verdict has been reached in only 6% of the cases.
        Despite this problematic landscape of violence and rights abuses,
    we believe there is a window of opportunity for the United States and
    Colombia to advance the rule of law and the rights and security of
    trade unionists--and by extension, of all civil society. President Juan
    Manuel Santos has established a welcome tone for civil discourse by
    asserting the legitimacy of human rights defenders and their work;
    improving relations with the Supreme Court and Constitutional Court and
    recognizing their independence; submitting to the Colombian Congress
    laws on land restitution and victims' rights; directing the security
    forces to more forcefully target and arrest leaders of successor groups
    to paramilitaries; and announcing a commitment to address poverty and
    inequity and to modernize the Colombian state. While these proposed
    policies would help to align the government with the victims of
    violence rather than its perpetrators, they have not yet been
    implemented and face powerful opposition from armed groups and their
    political supporters and benefactors.
        It is incumbent upon the United States, along with its European and
    Canadian counterparts, to support the Colombian Government in these
    efforts so that concrete and sustained results can be achieved in
    addressing violence against trade unionists and its larger causes, and
    creating a climate in which workers can exercise their fundamental
    labor rights without fear.
        We understand that it might take years for many of these ongoing
    problems, some with deep historical roots, to be fully addressed and
    resolved. Nonetheless, we believe concrete measures can be taken--
    decrees issued and robustly carried out, laws adopted and implemented,
    policies enforced, and relevant government agencies strengthened--that
    would demonstrate over time that Colombia is engaged in irreversible
    change.
        After consulting with labor and human rights organizations in
    Colombia and the United States, and carefully reviewing recent reports
    by the ILO, United Nations and others on the labor and human rights
    situation in Colombia, we believe, at this time, that the conditions on
    the ground in Colombia do not allow for consideration of the FTA. It is
    our belief that the U.S.-Colombia FTA should not be brought before the
    Congress, Mr. President, until you can assure and demonstrate to
    Congress that the changes outlined in this memo have occurred. We
    recommend that responsible officials in your Administration interfacing
    with Colombia use the good offices of the Bureau of International Labor
    Affairs (ILAB) in the U.S. Department of Labor when making such a
    determination. We view as insufficient superficial gains that fail to
    create an environment in which workers can exercise their fundamental
    rights, do not decrease substantially the level of violence and threat
    targeted at unionists and other rights defenders, and do little to end
    impunity.
        With these challenges in mind, we provide you these measures for
    realizing sustainable change and ask you to support and work with
    Colombian Government efforts dedicated to achieving them in three major
    categories:

       Ending Violence Against Trade Unionists and Other Human
            Rights Defenders;

       Strengthening Investigation, Prosecution and Breaking the
            Culture of Impunity; and

       Strengthening Fundamental Worker Rights.
    I. Ending Violence Against Trade Unionists and Other Human Rights
            Defenders
        From 1986 to the present, the Escuela Nacional Sindical (ENS),
    Colombia's most prominent NGO monitoring labor rights, has recorded the
    murder of over 2,800 unionists. The number of assassinations of
    unionists per year remains shocking, with 149 unionists murdered over
    the past 3 years alone--51 in 2008, 47 in 2009 and 51 in 2010. New
    murders of unionists have already occurred in 2011, including the
    killings of three teachers. Other forms of violence also remain at
    crisis levels, including death threats, forced disappearances,
    kidnappings, attempted murders, arbitrary detentions, torture, forced
    displacement and illegal break-ins targeted at trade unionists. These
    facts horrify. As the February 2011 ILO Mission to Colombia recognized
    in its conclusions, ``the only acceptable situation is one in which all
    acts of violence have ceased and there is need to act with
    determination to bring this about.'' The challenge is how to
    effectively and sustainably reduce sharply and ultimately end the level
    of violence and threat against unionists, target the source(s) of that
    violence, dismantle the structures that support and benefit the
    perpetrators of violence, bring to justice those engaged in murdering
    and threatening unionists along with their collaborators, and increase
    the state's ability to provide effective protection to unionists and
    others who live under a state of constant threat and violence.
        In 2003-2006, Colombia instituted a demobilization process aimed at
    the coalition of right-wing armed paramilitary organizations known as
    the AUC. Almost immediately, after the seriously flawed process had
    ended, new groups cropped up all over the country, taking the reins of
    the criminal operations that the AUC leadership previously ran. These
    groups--often led by mid-level commanders of demobilized paramilitary
    organizations--are committing widespread abuses, including massacres,
    killings, rapes and forced displacement. They have taken on roles
    similar to the defunct AUC, such as murdering and issuing threats
    against labor, Afro-Colombian, indigenous, religious, human rights and
    community leaders. For example, according to the Colombian Commission
    of Jurists, 14 human rights defenders were killed in 2010. And on March
    7th, the Inter-American Commission on Human Rights (IACHR/OAS)
    condemned the continuing threats, harassment, and murders of family
    members of human rights defenders in Medellin, charging the state with
    having failed to provide effective measures for protection. On February
    24, 2011, with the release of its 2010 Annual Report, the UNHCHR-
    Colombia stated that criminal organizations linked to former
    paramilitary groups drove a dramatic increase (34%) in massacres in
    2010, and killed human rights activists, trade unionists, public
    officials and other civilians. In January 2011, Colombian National
    Police Director Oscar Naranjo acknowledged that successor groups to
    paramilitaries are responsible for the majority of violence in
    Colombia.
        The emergence and increasing consolidation of these successor
    groups is largely due to the Colombian Government's failure to
    thoroughly investigate and dismantle the military, financial and
    political networks of the AUC; effectively identify and recover the
    illegally seized property that provides a material and economic base
    for the new groups' on-going activities and recruitment of new members;
    or bring to justice the majority of paramilitary gunmen, sponsors and
    beneficiaries. In many regions, Colombian military, police, political
    and judicial officials have been collaborators with these armed actors,
    or at a minimum, tolerated and turned a blind eye to their violence,
    threats, abuses, murders and criminal activities. The result has been
    continuing and increased violence in those regions where these groups
    hold sway. In some cases, U.S. corporations and investors with
    operations within Colombia have made extortion payments to these groups
    for so-called ``protection.'' In effect, they provided funds for
    criminal groups engaged in violence against the civilian population,
    including labor activists employed by the U.S. corporations.
        If the Santos Administration is to have success in carrying out its
    land restitution and victims' rights initiatives, it will need to
    confront this challenge head on, providing greater protections to labor
    and rights activists, and to those who represent families and
    communities dispossessed of their lands who are now being asked to
    return. The government will need to work forcefully and effectively to
    dismantle the structures that support and benefit from these
    paramilitary and criminal organizations. It is encouraging that the
    Santos Administration has recently announced a new strategy to combat
    successor groups, but the implementation and results of this policy
    remain to be seen. Success must be measured in terms of reduction of
    abuses against the civilian population, well-founded prosecutions of
    members of successor groups and their accomplices, and the dismantling
    of organizational structures.
    Recommended Measures
        With these challenges in mind, the Colombian Government must:

       Demonstrate a dramatic and sustained decrease from current
            levels in murders and attacks against trade unionists and
            rights defenders, with the clearly-defined goal and recognition
            that the only acceptable situation is one where all murders
            have ceased;

       Ensure that members of state security forces do not engage
            in extrajudicial executions or other serious abuses against
            civilians, or collaborate with paramilitary successor groups
            and other illegal groups; and

       Demonstrate a substantial reduction in abuses committed by
            successor groups to the paramilitaries, and significant
            progress in dismantling their organizational structures.

        To achieve these goals the Colombian Government must, among other
    steps:

        (1) Establish and enforce a ``zero tolerance'' policy on
            extrajudicial killings by Colombia's military, police and other
            state actors, including immediate suspension from duties and
            ending any incentives that may encourage such abuses.

        (2) Establish and enforce a ``zero tolerance'' policy on
            collaboration with abuses carried out by guerrillas,
            paramilitaries or other illegal armed groups and criminal
            networks by Colombian military, police or other state actors,
            including immediate suspension from duties.

        (3) Substantially strengthen the presence of professionally trained
            police in areas where successor groups to the paramilitaries
            are present, particularly in rural areas where police often are
            not present, ensuring full compliance with the zero tolerance
            policies and practices stated above.

        (4) Strengthen the Early Warning System of the Ombudsman's Office
            (Defensoria), so that it has the necessary resources and
            stability to continuously monitor potential threats to
            civilians posed by successor groups. Ensure that the system's
            risk reports are made public and that other state agencies take
            necessary actions to respond to these reports, protect the
            population and address the threats, including taking actions to
            sanction state agents who fail to carry out such duties.

        (5) Ensure that protection programs and measures for trade
            unionists, rights defenders and other community leaders receive
            adequate and sustainable resources so that no one at risk or
            under threat who requires protection fails to receive it. In
            addition, the state should not delegate its responsibility to
            protect its citizens, and should abide by the recommendations
            described in the March 2010 Mission to Colombia Report of the
            U.N. Special Rapporteur on the Situation of Human Rights
            Defenders, namely that protection measures offered under
            Colombia's Protection Program should not be privatized.

        (6) Ensure the removal from national intelligence files of
            references to unionists and union organizations that were
            included in the files because of their union activity.

        (7) In coordination with union organizations, carry out a multi-
            year national campaign to promote the legitimacy of union
            organizations in Colombian society.

        (8) Dismantle organizational structures and substantially reduce
            abuses by paramilitary successor groups by establishing and
            effectively enforcing a mechanism to identify land and illegal
            assets that paramilitaries, members of successor groups or
            their accomplices may be holding, and ensure their recovery and
            restitution to victims. Importantly, this needs to include
            measures and funding that effectively protect the safety of
            those returning to their former lands. It also needs to include
            return of land to Afro-Colombian and indigenous communities in
            a manner that respects their Constitutionally-protected rights,
            including the right of prior consultation.
    II. Strengthening Investigation, Prosecution and Breaking the Culture
            of Impunity
        The history of impunity in Colombia has made it difficult for the
    Colombian people, victims of abuse, and the international community to
    have confidence in the judicial system. While there have been modest
    advances over the past decade, the Attorney General's Office (Fiscalia)
    is still largely ineffective in investigating and prosecuting even high
    profile crimes and abuses, due to a variety of structural, financial,
    technical, logistical, and political deficiencies. While the Government
    of Colombia has created new structures and made modest progress
    prosecuting those responsible for committing various crimes against
    unionists, the overwhelming majority of violent crimes against
    unionists remain in impunity. According to the Colombian Commission of
    Jurists, the Fiscalia is only investigating 25.5% of union killings
    since 1986, and no one has been held accountable in 98% of crimes
    against unionists. Even the limited number of convictions reached has
    been marred by serious flaws in the methodologies authorities employ to
    investigate anti-union violence.
        The problems confronting investigations, prosecutions and breaking
    the culture of impunity are intimately tied with the challenges in
    providing protection and ending the violence, murders, threats and
    stigmatization against trade unionists, other rights defenders and
    vulnerable populations. It is impunity--the ability to literally get
    away with violence and murder unpunished--that results in and
    encourages further violence, threats and abuses.
        The Santos Government has demonstrated that when the political will
    exists, investigations and arrests of state and non-state perpetrators
    of violence, including the intellectual authors, can occur in a swift
    and professional manner. The arrests of members of security forces
    accused of the rape and murders of children in Tame, Arauca and the
    arrests of those responsible for the murders of two Universidad de los
    Andes students are recent examples of the government's capacity when a
    mandate and appropriate resources are provided. This same mandate and
    political will must be demonstrated, at a minimum, in new cases of
    violence, murder and threats perpetrated against trade unionists and
    rights defenders.
    Recommended Measures
        With these challenges in mind, the Government of Colombia must
    demonstrate a dramatic increase from current levels in the rate and
    significant improvement in the quality of criminal investigations and
    prosecutions of:

       Perpetrators of anti-union violence, including convictions
            in a significant number of the more than 2,800 killings of
            trade unionists reported since 1986;

       Perpetrators of violence against other rights defenders,
            including Afro-Colombian and indigenous leaders;

       Members of paramilitary successor groups and their
            accomplices;

       State actors responsible for extrajudicial killings; and

       State actors who have collaborated with, benefited from, or
            tolerated the criminal acts of paramilitaries or their
            successor groups.

        To achieve these goals, the Colombian Government must, among other
    steps:

        (1) 3Develop a new strategy for investigating and prosecuting cases
            of anti-union violence, drawing upon the expertise of union and
            human rights organization through direct consultation on such a
            strategy, and including the following measures:

         Staff the Attorney General's special sub-unit for crimes
                against union members with prosecutors with expertise in
                the subject area and reassign all other cases unrelated to
                trade union violence. (When the sub-unit was created, it
                pooled prosecutors from unrelated divisions and added the
                union cases onto their workload.)

         Ensure investigations examine the context of these crimes
                rather than treating them as isolated cases. The failure to
                do so means that connections are not made that could lead
                to the identification of other perpetrators, intellectual
                authors or beneficiaries. Every effort must be made to
                identify and prosecute intellectual authors.

         Ensure prosecutors follow up on credible evidence that
                implicates members of the armed forces, politicians or
                business leaders. If the evidence points towards state
                actors, prosecutions should continue up the chain of
                command to those responsible.

         Ensure that the accused and convicted be in custody, as
                trials in absentia do not adequately end impunity. Far too
                many of the sentences are unenforceable because the accused
                is not in custody.

         Ensure that convictions are based on more than the mere
                admissions of guilt by paramilitaries participating in the
                Justice and Peace process. Prosecutors should follow all
                lines of inquiry in order to establish full truth about
                crimes and acquire information to identify intellectual
                authors and who benefited from the murder.

         Ensure that the special prosecutors for labor union cases
                handle all the reported cases, not just the reduced number
                they are currently investigating. Assess the universe of
                murder cases found in the database of the Escuela Nacional
                Sindical (ENS), not the subset currently under review by
                the Fiscalia. Issue a plan for overcoming impunity that
                establishes a credible process for investigating and
                prosecuting this caseload, with annual benchmarks and the
                financial and institutional resources required to
                accomplish those benchmarks. (Colombian labor organizations
                have suggested designing a 10 year plan to achieve this
                goal.) Special attention should be given to the 12
                departments and 25 unions that account for 85% of the
                homicides against unionists and investigations should
                prioritize the murders of the 737 union leaders killed
                since 1986.

        Further, the Colombian Government must, among other steps:

        (2) Ensure that all criminal cases involving human rights abuses by
            state actors, including members of the military and security
            forces, are handled by civilian authorities.

        (3) Strengthen and increase the size of the specialized unit of
            prosecutors in the Attorney General's Office charged with
            investigating successor groups and assign them sufficient
            resources to carry out their work effectively.

        (4) Ensure that the National Unit for Human Rights and
            International Humanitarian Law of the Attorney General's
            Office, including its Sub-Unit for Crimes Against Union Members
            and the sub-units charged with investigating extrajudicial
            killings and violence against rights defenders, have sufficient
            resources and staff to effectively carry out their work.

        (5) Conduct thorough investigations not only of individual members
            of successor groups, but of their criminal networks, including
            financial backers and collaborators within the state.

        (6) Provide the mandate and resources to vigorously arrest,
            investigate and prosecute the perpetrators of new cases of
            violence against trade unionists and rights defenders so that
            violence and murder with impunity are no longer the norm.

        (7) Increase funding for the Attorney General's witness protection
            program for human rights cases, especially those involving
            violence against trade unionists and other rights defenders, so
            that the program has sufficient resources to ensure that all
            witnesses requiring it in fact receive appropriate, timely and
            effective protection measures.

        (8) Establish and implement a robust system to effectively
            investigate threats against trade unionists and other rights
            defenders and bring to justice the perpetrators. Threats have a
            chilling effect on trade union activity and human rights
            advocacy and amplify the ability of perpetrators of violence to
            operate with impunity.

        (9) Develop a state policy that establishes collective reparations
            for the union movement, including collective reparations within
            the Draft Law on Reparations for Victims of Violence, as
            expressed in the conclusions of the February 2011 ILO Mission
            in Colombia.
    III. Strengthening Fundamental Worker Rights
        Although Colombia has ratified all of the eight core ILO
    conventions, its laws and regulations fail to comply with the minimum
    obligations set forth in these conventions. Moreover, even the laws
    that are currently on the books are not effectively enforced. In
    industry after industry, Colombian workers, many of whom make goods for
    export to the U.S. market, are unable to exercise their fundamental
    labor rights. Further, the development of industries that potentially
    compete with American workers--mining, agriculture, alternative fuels
    and transportation--have been expanded through the seizure and violent
    forced displacement of campesino, Afro-Colombian and indigenous
    communities.
        Colombian employers and authorities have created and/or permitted
    the use of a series of schemes to undermine or disguise direct
    employment relationships in order to deny workers the rights they would
    normally be due under law or collective bargaining agreements. These
    include, but are not limited to, the practice of forcing employees into
    involuntary ``cooperatives'' functionally controlled by the employer
    (CTAs), hiring workers under commercial rather than employment
    contracts, and employing workers through temporary service companies,
    among others. Additionally, workers face a number of other hurdles such
    as: the institution of pactos colectivos--contracts often unilaterally
    imposed by employers on unorganized workers; restrictions on the right
    to bargain or strike; the blanket prohibition on public employees and
    apprentices from collective bargaining; and the denial of national-
    level union organizations the right to negotiate for industry-wide
    agreements. Through these and other strategies, millions of Colombian
    employees have been denied even the most basic labor rights. According
    to the conclusions of the February 2011 ILO High-Level Tripartite
    Mission to Colombia, the level of trade union density in Colombia
    remains very low, variously estimated between 4% and 7%, and collective
    bargaining lower still, marking a steep decline from the 15% who
    enjoyed collective bargaining coverage in 1990.
        Colombia has also failed to uphold international standards
    concerning child labor. According to government statistics, an
    estimated 1.6 million Colombian children are currently working in
    violation of child labor laws, including significant numbers in trade-
    related industries such as agriculture and mining.
        Beyond child labor violations in the mining industry, Colombian
    miners are exposed to dangerous conditions, including preventable coal
    dust explosions caused by primitive mine safety laws. Miners receive
    scant protections because Colombia has failed to provide more than a
    handful of inspectors for some 2,000 mines. Further, mining companies
    are hamstrung because the government-controlled enterprise, Industria
    Militar (INDUMIL), has blocked the import of special ``permissible''
    safe explosives designed for mining to reduce mine explosions. These
    matters have received attention inside Colombia due to mining accidents
    and deaths over the past few months.
        Article 63 of the recent Law on Formalization and Generation of
    Employment (Law 1429 of 2010) is a modest step forward in combating
    involuntary ``cooperatives'' by substantially increasing the penalties
    for employers who violate the prohibition on using involuntary
    ``cooperatives'' to hire workers to perform the core functions of an
    enterprise (as defined by the employer), and which were largely already
    prohibited by law but rarely enforced. We remain concerned, however,
    that the law does not actually outlaw involuntary ``cooperatives.'' The
    law also does not adequately address the many other forms of indirect
    employment that, like involuntary ``cooperatives,'' deny workers the
    rights to unionize and negotiate directly with their employers.
        Indeed, along with specific requests to be carried out by the
    Colombian Government between April and September of this year, the
    February 2011 ILO High-Level Tripartite Mission to Colombia identified
    three key areas where urgent action is needed:

       ``Renewed legislative and enforcement measures to put an end
            to the labor intermediary activities of cooperatives (CTAs),
            and to all other legal and practical obstacles to freedom of
            association and collective bargaining;

       Additional effective legal and practical action to ensure
            that collective accords concluded by employers with non-union
            workers are not used against the exercise of freedom of
            association and collective bargaining; and

       A major effort to strengthen labor inspection, enforcement
            and effective sanctions so that acts of anti-union
            discrimination, including dismissals and intimidation, are
            prevented, or addressed through expeditious, accessible, and
            effective procedures and remedy.''
    Recommended Measures
        With these challenges in mind, the Colombian Government must take
    immediate measures to address these concerns:

        (1) Colombian labor law must explicitly provide for the full range
            of rights contained in the ILO Declaration on Fundamental
            Principles and Rights at Work and in the eight core ILO
            conventions that Colombia has ratified (see Adenddum), as
            required under the terms of the FTA, although little has been
            done to do so since Colombia formally approved the FTA in 2007.
            These include, but are not limited to: the rights of all
            workers, both public and private, to freedom of association and
            to collectively bargain over their terms and conditions of
            employment; revising the legal definition of ``essential
            services'' in which employees are banned from striking in
            conformity with ILO definitions and jurisprudence; explicitly
            permitting parties to engage in industry-wide bargaining; and
            recognizing the fundamental right to strike. Particular
            attention must be given to advancing the absolute prohibition
            of acts of anti-union discrimination and other obstacles to the
            exercise of freedom of association and collective bargaining
            presented by the use of associated work cooperatives (CTAs), as
            well as collective accords in enterprises with non-unionized
            workers (pactos colectivos). The President should ensure legal
            conformity with these rights through the promulgation of
            decrees, executive orders, regulations and directives to
            relevant ministries; by proposing to and gaining the approval
            of the Colombian Congress of changes to current labor law and
            the labor code; and by robustly implementing the resulting laws
            and policies.

        (2) As recommended by the February 2011 ILO Mission, the Colombian
            Government must ensure changes to Colombian labor law and
            legislative action are vigorously pursued in a timely and
            expeditious manner. These measures should be submitted for
            consultation, at a minimum, to the appropriate ILO mechanisms
            set up to work with Colombia on these matters, Colombian labor
            organizations, and the National Commission on Social Policy and
            Salaries prior to their submission to Congress.

        (3) The Ministry of Labor should be reconstituted, as announced by
            the Santos Government, and provided consistent and sufficient
            funding to carry out its functions, including the necessary
            funds and personnel to carry out labor inspections and enforce
            employment policy. It should draw upon the technical assistance
            offered by the ILO Office, be designed to conform with
            internationally-recognized ILO standards, and as recommended by
            the February 2011 ILO Mission to Colombia, facilitate national
            dialogue that results in agreements between the government,
            union organizations and the private sector.

        (4) In addition to strengthened inspection enforcement that occurs
            through a reconstituted Ministry of Labor, working through the
            Ministry of Mining and Energy, the Director of Mines, and the
            Director of INGEOMINAS (mine safety enforcement, mine rescue,
            etc.) the Colombian Government should codify new mine safety
            rules that will prevent mine explosions and fires, eliminate
            non-tariff trade barriers so that mining companies can import
            safe explosives designed for mining, and provide the necessary
            resources to expand the number of mine inspectors with
            qualified staff in order to ensure mines are regularly
            inspected for compliance.

        (5) The Colombian Government must demonstrate and increase
            confidence in its ability and commitment to guarantee the
            rights of freedom of association and collective bargaining. In
            order to do so, it should issue decrees and regulations that
            allow workers to contract directly with their employers in
            industry sectors where such relationships existed in the past
            and/or where agreements were negotiated but not implemented.
            These include, but are not limited to, ensuring that:

         The port workers contract directly with the Port
                Societies, eliminating all subcontractors in port-related
                employment and allowing 100% direct contracting between
                labor (employees) and the Port Society (employer). The
                President should direct the Ministry of Labor and provide
                it with the necessary support to remove subcontractors in
                all port-related employment, transition employees into the
                formal workforce with direct contracts, and ensure
                compliance with international labor rights and standards.
                The President should provide port workers protection during
                this transition period.

         The sugarcane workers contract directly with refineries,
                eliminating use of third party sub-contractors, including
                the Associative Labor Cooperatives (CTAs). The President
                should direct the Ministry of Labor and provide it with the
                support necessary to remove the CTAs, transition employees
                into the formal workforce with direct contracts, and ensure
                compliance with international labor rights and standards.
                The President should provide the sugarcane workers with
                protection during the transition period.

         The telecommunications workers contract directly with
                telecom companies, eliminating the use of cooperatives
                (CTAs). The President should direct the Ministry of Labor
                and provide it with the necessary support to remove the
                CTAs, transition employees into the formal workforce with
                direct contracts, and ensure compliance with international
                labor rights and standards. The President should provide
                the telecom workers with protection during the transition
                period.
    IV. Conclusions and Final Recommendations
        We believe these are credible and achievable measures. We intend
    that they provide you with a meaningful basis for discussions between
    yourself and President Santos and decisions you must take on how the
    Colombian Government must demonstrate that it has achieved concrete
    results in protecting and upholding the rights and security of workers
    in Colombia.
        As stated above, we believe there is a window of opportunity to
    move forward these fundamental labor rights and human rights issues.
    These are matters of grave concern to Colombians, and the Santos
    Government has announced initiatives under consideration on some of the
    measures noted here, although most have yet to be implemented.
    Pronouncements are welcome first steps, but they are not change. Any
    serious undertaking will require much more than a matter of days or
    weeks to achieve genuine change, although some, like demonstrating the
    political will, commitment and mandate could happen immediately.
    Others, like bringing Colombian labor law into conformity with ILO
    standards and conventions, might take months. Still others, such as
    substantially reducing the level of violence against unionists, rights
    defenders and civil society leaders, breaking the culture of impunity,
    and dismantling the structures of those most responsible for violence
    against unionists require time to implement and mature before
    sustainable results on the ground are realized.

        We emphasize, therefore, that the U.S.-Colombia FTA should not be
    brought before the Congress, Mr. President, until you can assure and
    demonstrate to Congress that these changes have occurred, as current
    conditions on the ground do not now warrant its consideration.

        The question remains of how to evaluate and determine whether the
    situation on the ground in Colombia has improved substantially with
    respect to guaranteeing basic labor rights for Colombia's workers and
    dramatically diminishing the level of violence carried out with
    impunity against unionists and rights defenders. We believe that in
    order to make such a determination it is essential to ask those most
    affected by the lack of rights and the threat of violence. As Members
    of Congress, we will consult and speak directly with Colombian trade
    unionists, rights defenders, Afro-Colombian and indigenous leaders, and
    rely upon the analysis of Colombian organizations such as the Escuela
    Nacional Sindical and others, to determine the situation on the ground
    and whether substantial, sustainable and irreversible change is
    genuinely occurring. We recommend in the strongest possible terms that
    you and the responsible officials in your Administration interfacing
    with Colombia use the good offices of ILAB in the U.S. Department of
    Labor to do the same.
        We believe it is essential that your Administration, under the
    direction of ILAB, establish immediate direct consultation with the
    sectors inside Colombia cited above that have been most affected by the
    lack of rights, violence and threats and create jointly a formal
    mechanism to monitor and determine the status of union rights and
    security currently and over the longer term. Such joint consultation
    and the resulting formal mechanism should also identify and determine
    how the U.S. would respond and sanction Colombian commercial interests
    and/or the government should there be a dramatic deterioration in the
    situation of labor rights, security and protections in the future.
        We recognize that it might be difficult for the Colombian
    Government to achieve some of these measures without additional
    targeted financial, technical, logistical and other assistance from the
    United States, Canada, the European Union and other international
    parties. We strongly recommend that the U.S. Government take the lead
    in ensuring those resources are available. Over the past decade, the
    U.S. has invested substantial sums in strengthening rule of law and the
    ability of the Attorney General's Office to bring to justice those
    state and non-state actors responsible for carrying out acts of
    violence and murder against trade unionists, rights defenders and other
    civil society leaders. As these recommended measures make clear, the
    task is far from done. We should not squander these prior investments
    by failing now to provide the resources needed to strengthen the
    Fiscalia's professional quality, staffing, and its investigative
    capacity and infrastructure. If the Santos Government commits itself to
    carrying out these measures, then the United States must provide the
    necessary resources so that they can be implemented expeditiously.
        Mr. President, we trust that these measures will receive your most
    serious attention. Should you have any questions or desire additional
    information, we would welcome the opportunity to discuss them further
    with you.
                                    addendum
        The Eight Core ILO Conventions Signed and Ratified by Colombia:
    29--Forced Labor Convention
    87--Freedom of Association and Protection of the Right to Organize
        Convention
    98--Right to Organize and Collective Bargaining Convention
    100--Equal Remuneration Convention
    105--Abolition of Forced Labor Convention
    111--Discrimination (Employment and Occupation) Convention
    138--Minimum Age Convention
    182--Worst Forms of Child Labor Convention
                                  attachment 2
    Violence Against Colombian Trade Unionists: Fact vs. Myth
        The Myth:

            ``Most experts agree that the violence [against Colombian trade
            unionists] has abated recently.''--The New York Times, March 1,
            2011 news story.
        The Facts:
    The Number of Colombian Trade Unionists Murdered Is Not Declining

            Source: Escuela Nacional Sindical (ENS), Colombia.
    ---------------------------------------------------------------------------
        * In the October 15, 2008 presidential debate, candidate Barack
    Obama defended his opposition to the Colombian Free Trade Agreement,
    saying: ``The history in Colombia right now is that labor leaders have
    been targeted for assassination on a fairly consistent basis and there
    have not been prosecutions . . . We have to stand for human rights and
    we have to make sure that violence isn't being perpetrated against
    workers who are just trying to organize for their rights.''
         Impunity Continues Unabated         Colombia Continues to Lead the
                                           World in the Number of Unionists
                                                   Killed Each Year
                (1986-2010)                          (2005-2009)

       Source: Escuela Nacional Sindical    Source: International Trade Union
       (ENS), Colombia                   Confederation.
    U.S. Labor Education in the Americas Project, www.usleap.org
                                     ______

    Supplementary Material Submitted by Hon. Ron Kirk, United States Trade
                                 Representative
        During the May 12, 2011 hearing entitled, Hearing To Review Pending
    Free Trade Agreements, requests for information were made to Hon. Ron
    Kirk. The following are information submissions for the record.
    Inserts 1 & 2
              Mr. Thompson. Thank you. I apologize. I came in late, and so
            if this was already traveled--this discussion, I missed it. I
            did hear some discussion about organic milk products. I am
            just--beyond that, how will these agreements affect dairy
            exports? And by extension, how might these increase--if we see
            an increase in exports, would this help increase our dairy
            prices?
              * * * * *
              1Mr. Thompson. Great. That is good news. Any potential within
            these free trade agreements in terms of affecting timber
            exports that you are aware of?
              Mr. Kirk. I don't know that there is an extraordinary amount
            of timber, but if you will allow our staff to go back and look
            at that, and if we can follow up with you.
    Response for Insert 1
        The three pending trade agreements will provide significant new
    market access for U.S. dairy products through the phased elimination of
    tariffs. In addition, under each of the agreements the creation of
    tariff rate quotas (TRQs) will provide duty free access for various
    dairy products during the transition period. According to projections
    made by the Department of Agriculture's Economic Research Service,
    growth in exports of U.S. dairy products to Korea is projected to be
    145 percent, or more than $90 million per year under the KORUS trade
    agreement. Similarly, the USDA projects U.S. dairy exports to Colombia
    to increase an additional 50 percent as a result of the elimination of
    tariffs under the Colombia Trade Promotion Agreement. A sentence about
    the specific benefits to Pennsylvania exporters, including dairy could
    be added here.
    Response for Insert 2
        All three agreements eliminate 100 percent of duties on wood,
    lumber and paper products.
        Under the U.S.-Korea Trade Agreement more than 92 percent of U.S.
    wood and lumber exports to Korea by value would receive duty-free
    treatment within three years of implementation of the agreement; Korean
    wood and lumber tariffs currently average 5.9 percent, ranging up to 12
    percent. All U.S. paper product exports to Korea will receive duty-free
    treatment immediately upon implementation of the agreement. Korean
    paper and paper product tariffs currently range from 0 to 7 percent.
        Under the U.S.-Colombia TPA more than 84 percent of U.S. wood and
    lumber exports to Colombia would receive duty-free treatment within
    five years of implementation of the agreement; Colombian tariffs on
    wood and lumber currently average 12 percent, ranging up to 20 percent.
    More than 97 percent of U.S. paper and paper product exports to
    Colombia would receive duty-free treatment within five years of
    implementation of the agreement; Colombian paper and paper product
    tariffs currently average 12.5 percent, ranging up to 20 percent.
        Under the U.S.-Panama TPA over 80 percent of U.S. exports of forest
    products (wood, lumber and paper products) to Panama would receive
    duty-free treatment immediately upon implementation of the agreement.
    Insert 3
              Mr. Neugebauer. Well, I agree with you that most countries
            want to create jobs in their countries. But where there are
            opportunities for arbitrage where if I can bring goods in from
            China, or I can bring goods in from North Korea cheaper than I
            can build them or make them in South Korea, then it is to my
            advantage to manipulate the system, change the labels,
            whatever.
              And so I think the primary question for my constituent is
            what kinds of enforcement resources and processes are in place
            to watch over that kind of activity?
              Mr. Kirk. Well, again, the rules of origin provisions within
            the FTA speak to how much of that product has to be made in
            that agreement to be considered a product of that country and
            get the benefits. And I would have to--I would be happy to get
            DHS and Customs to perhaps walk you through your concerns about
            what they do in terms of inspection and enforcement on that
            end.

        U.S. Customs and Border Protection maintains a number of tools and
    processes to implement and enforce our agreements. We have contacted
    U.S. Customs and Border Protection, which we understand will be
    reaching out to your staff shortly for a in-depth discussion of this
    issue.
                                     ______

      Submitted Joint Statement by Thomas M. Suber, President, U.S. Dairy
      Export Council; Jerry Kozak, President and Chief Executive Officer,
                       National Milk Producers Federation
        The National Milk Producers Federation (NMPF) and the U.S. Dairy
    Export Council (USDEC) would like to express our strong support for the
    passage of the Free Trade Agreements with South Korea, Panama and
    Colombia and appreciate the opportunity to provide comments on this
    issue in the context of the Agriculture Committee's May 12th hearing on
    these agreements. As debate on these agreements moves forward, we would
    also like to express our support for a renewal of Trade Adjustment
    Assistance (TAA). TAA, including its component that targets assistance
    to impacted agricultural sectors meeting the program's criteria, is a
    complementary trade program that helps solidify support for the
    expansion of beneficial U.S. trade agreements.
        The members of NMPF's 31 cooperatives produce the majority of the
    U.S. milk supply, making NMPF the voice of more than 40,000 dairy
    producers on Capitol Hill and with government agencies. USDEC is a
    nonprofit, independent membership organization that represents the
    export trade interests of U.S. milk producers, proprietary processors,
    dairy cooperatives, and export traders.
        Despite a temporary decline in 2009, U.S. dairy exports have been
    on an upward trend for the past several years. In fact, the U.S. dairy
    industry has become a significant supplier to the world dairy market,
    and these overseas markets are playing a greater role in determining
    prices for dairy products in the United States.
        Given the expected benefits to our industry of the three FTAs with
    South Korea, Panama and Colombia, USDEC and NMPF are urging broad
    support for these agreements when they are submitted to Congress. We
    applaud the commitment by many in our government to ensure that these
    agreements, which were all negotiated years ago, finally get the
    opportunity to be approved. We greatly hope that Congressional
    consideration of each FTA will be positive given the strong benefits
    for the U.S. dairy sector from these three agreements.
        Most of the anticipated growth in U.S. dairy exports as a result of
    these FTAs will be the result of improved access for U.S. cheese, whey,
    skim milk powder, and certain other processed dairy products. In
    addition to directly benefiting those companies actively involved in
    these export sales, the additional exports will help bolster milk
    prices for America's dairy farmers, and help to support additional jobs
    in the dairy processing and transportation sectors. Although the value
    of the agreements differs, each of them offers positive new market
    access opportunities for the U.S. dairy industry. At this time of
    heightened global competition, it is all the more important to take
    advantage of all positive opportunities since even relatively smaller
    markets become quite meaningful when the benefits of each begin to
    accumulate.
        The U.S. Free Trade Agreement (KORUS FTA) will provide the best
    opportunity since the U.S.-Mexico portion of the North American Free
    Trade Agreement to expand U.S. dairy exports. We estimate that the
    benefit to the U.S. dairy industry over the first several years of the
    agreement will yield approximately an additional $380 million per year
    on average. Based on Commerce Department multipliers, we estimate that
    the expected increase in U.S. dairy exports would mean as many as
    10,000 additional U.S. jobs, on and off the farm. Our industry is very
    eager to take advantage of this remarkable opportunity, particularly
    considering the fact that Korea's FTA with one of our major
    competitors, the European Union, will go into effect this summer,
    thereby putting U.S. dairy exports at a tariff disadvantage.
        The FTA will help to grow a high-value market that has historically
    strictly limited imports. (Korea has temporarily allowed for greater
    access to its dairy market in the wake of the Foot and Mouth Disease
    crisis it suffered earlier this year and the devastation that wreaked
    on its dairy sector.) U.S. sales to Korea in 2010 totaled $130 million.
    Conversely, if the agreement is not approved, we risk losing even our
    existing market share not only to the EU but also to major competitors
    Australia and New Zealand, with whom Korea is swiftly negotiating new
    FTAs. That would put U.S. suppliers at a distinct disadvantage in the
    Korean market.
        The agreements with Colombia and Panama will also provide very
    helpful new export avenues to our industry. They build on the natural
    proximity advantage we have over our three largest dairy exporting
    competitors: the European Union, New Zealand, and Australia. We
    estimate that the combined benefit to the U.S. dairy industry over the
    first several years of each of these agreements will be additional $50
    million per year, on average.
        The Colombian and Panamanian dairy markets are relatively
    restricted currently. This is particularly the case in Colombia, to
    which the U.S. exported only $6 million last year. Similarly, we also
    anticipate meaningful gains above the $16 million the U.S. exported to
    Panama in dairy products last year. The European Union has just
    completed FTA negotiations with both countries, creating a strong need
    for swift action by the U.S. government to approve these agreements to
    maximize the possibilities for U.S. suppliers to gain an early
    advantage or at a minimum not lose competitive ground to the European
    Union in these markets.
        We look forward to working with this Committee to continue to
    provide information as these agreements move forward through the
    Congressional process. Thank you for the opportunity to submit comments
    in relation to this Committee's May 12th hearing on the three FTAs.
                Sincerely,

     Thomas M. Suber,                     Jerry Kozak,
    President,                           President and CEO,
    U.S. Dairy Export Council;           National Milk Producers Federation.
    Point of Contact:

    Shawna Morris,
    Vice President, Trade Policy,
    National Milk Producers Federation & U.S. Dairy Export Council.
                                     ______

        Submitted Statement by Dr. Peter H. Cressy, President and Chief
    Executive Officer, Distilled Spirits Council of the United States, Inc.
        The following statement is submitted on behalf of the Distilled
    Spirits Council of the United States, Inc. (Distilled Spirits Council)
    for inclusion in the printed record of the Committee's hearing on the
    pending bilateral free trade agreements (FTAs) with Colombia, Panama
    and South Korea. The Distilled Spirits Council is a national trade
    association representing U.S. producers, marketers and exporters of
    distilled spirits products. Its member companies export spirits
    products to more than 130 countries worldwide, including to Colombia,
    Panama and South Korea.
    I. Overview
        Distilled spirits are processed agricultural products that fall
    within the scope of Chapter 22 of the Harmonized Tariff Schedule of the
    United States, the WTO Agreement on Agriculture and the agriculture
    chapters of the free trade agreements the United States has negotiated
    with a number of key trading partners. The Distilled Spirits Council
    and its member companies have a strong and growing interest in
    agricultural trade, from a commercial perspective and from a policy
    perspective.
        The Council and its members enthusiastically support Congressional
    approval and prompt entry-into-force of the free trade agreements
    (FTAs) with Colombia, Panama and South Korea, which will bring about
    significant and measurable benefits for U.S. spirits exporters. As a
    commercial matter, the Council's members have become increasingly
    reliant on exports to fuel growth. Indeed, as shown below, U.S. spirits
    exports have more than doubled since 2000, and have surpassed the $1
    billion mark for the fourth consecutive year. The vast majority of U.S.
    spirits exports are comprised of whiskeys, including Bourbon and
    Tennessee Whiskey, which are distinctive products of the United States.
    As of 2008, the industry supported 676,000 direct employees. Expanding
    exports to foreign markets will help to support current and future
    employment in the industry.
    Global U.S. Distilled Spirits Exports
    (2000-2010)

        While the Uruguay Round negotiations produced significant benefits
    for U.S. distilled spirits exporters, including substantial reductions
    in import tariffs and non-tariff barriers, numerous barriers still
    remain. Thus, the U.S. distilled spirits industry actively supports the
    U.S. government's efforts to seek the elimination or reduction of these
    remaining barriers within the context of the ongoing World Trade
    Organization negotiations, and in other multilateral and bilateral
    negotiations.
        The pending FTAs eliminate several of the barriers that U.S.
    spirits exporters currently face in these markets. Prompt Congressional
    approval and implementation of the FTAs will permit U.S. spirits
    exporters to benefit from improved market access to Colombia, Panama
    and South Korea, thus ensuring the continued growth of the U.S.
    distilled spirits industry.
    II. Benefits of the U.S.-Colombia Agreement to U.S. Distilled Spirits
            Exporters
        The U.S.-Colombia Free Trade Agreement (or Trade Promotion
    Agreement (CTPA)) will provide significant benefits for the U.S.
    distilled spirits industry in the growing Colombian spirits market,
    which was valued at $2.5 billion in 2010 (retail sales). Although the
    overall spirits market is growing, the market for imported spirits
    faces several hurdles in Colombia. The spirits market is dominated by
    locally-produced spirits (i.e., aguardiente and rum). Aguardiente, in
    particular, has a long-standing place in Colombia's beverage alcohol
    market, accounting for approximately 67% of total spirits volume in
    2010. The dominance of domestically-produced categories is due, in
    part, to the benefits these products have enjoyed from lower tax rates
    via Colombia's discriminatory consumption tax regime, as well as by the
    existence of alcohol monopolies or licoreras in several states or
    departamentos. As detailed below, implementation of the CTPA will
    address these concerns and provide meaningful market access
    improvements for U.S. spirits exporters to Colombia.
        First, the U.S.-Colombia FTA provides essential protections for
    Bourbon and Tennessee Whiskey--two distinctly American spirits. Under
    the agreement, Colombia has agreed to provide explicit protection in
    the Colombian market for Bourbon and Tennessee Whiskey as distinctive
    products of the United States. Such recognition ensures that only
    spirits produced in the United States, in accordance with the laws and
    regulations of the United States, may be marketed in Colombia as
    Bourbon and Tennessee Whiskey.
        Second, Colombia has agreed to eliminate its 20% ad valorem tariff
    on all U.S.-origin spirits, except whiskey, rum, and vodka, immediately
    upon entry-into-force of the agreement. The tariffs on U.S.-origin
    whiskey, rum, and vodka will be phased out over a 10 year period. While
    the U.S.-Colombia FTA remains in limbo, both Canada and the European
    Union--the U.S. spirits industry's key competitors in international
    markets--have concluded FTAs with Colombia. Once in force, Colombia
    will phase out its tariffs on imports of Canadian whisky and vodka over
    a 12 year period and will phase out its tariffs on European whiskeys
    and vodka over a 10 year period. Unless the U.S.-Colombia FTA is
    promptly implemented, U.S. spirits exporters will be placed at a
    significant competitive disadvantage vis-a-vis European and Canadian
    producers.
        Third, Colombia has agreed to eliminate the discriminatory aspects
    of its tax regime for distilled spirits within 4 years of entry-into-
    force of the agreement. Colombia's tax regime, which has been in place
    since 2003, discriminates against imported distilled spirits through
    arbitrary breakpoints that have the effect of applying a lower tax rate
    per degree of alcohol to domestically-produced spirits than the rate
    that applies to most imported spirits. Every year that the agreement
    has remained in limbo has added another year to the time that U.S.
    spirits exports continue to be subject to Colombia's discriminatory tax
    system.
        Finally, the agreement contains important obligations with regard
    to national treatment (Article 2.2) and prohibitions with regard to
    import/export restrictions (Article 2.8), which will help to address
    the industry's concerns regarding the operation of Colombia's alcohol
    monopolies (i.e., licoreras) in several states or departamentos. The
    licoreras control the distribution and marketing of distilled spirits,
    restricting the ability of U.S. distilled spirits companies to do
    business in Colombia. These state monopolies are subject to the
    national treatment obligations in the CTPA. The state monopolies remain
    a significant and real concern: earlier this year press reports
    suggested that the monopolies proposed to prohibit certain imported
    spirits. Thus, once the agreement is implemented, it should usher in
    much needed reform to this system.
    III. Benefits of the U.S.-Panama Agreement to U.S. Distilled Spirits
            Exporters
        Similarly, the U.S. spirits industry stands to benefit from the
    provisions of the U.S.-Panama FTA. Panama's 15% ad valorem tariff on
    U.S. spirits imports will be eliminated immediately upon entry into
    force of the agreement, significantly improving the competitiveness of
    U.S. spirits in this market. Panama currently ranks as the fifth
    largest export market in Latin America for U.S. distilled spirits; in
    2010, exports totaled almost $4.8 million (FAS value). As in the case
    of Colombia, further delays in implementation of the FTA will be costly
    to U.S. exporters. Canada, one of the U.S. spirits industry's major
    competitors, particularly in the whiskey category, signed a free trade
    agreement with Panama in May 2010. Under that agreement, Panama will
    immediately eliminate its tariffs on most spirits imported from Canada,
    including Canadian whisky. Prompt action on the U.S.-Panama FTA is
    required to ensure that U.S. exporters will not be disadvantaged.
        In addition, under the FTA Panama has agreed to provide explicit
    protection in its market for Bourbon and Tennessee Whiskey as
    distinctive products of the United States which, as stated above, is an
    important tool to ensure that only spirits produced in the United
    States, in accordance with the laws and regulations of the United
    States, may be marketed in Panama as Bourbon and Tennessee Whiskey.
    IV. Benefits of the U.S.-Korea Agreement to U.S. Distilled Spirits
            Exporters
        Prompt implementation of the U.S.-Korea Free Trade Agreement (KORUS
    FTA) will ensure that U.S. spirits exporters will be able to compete in
    one of the most important markets in Asia with strong potential for
    increased spirits sales. In 2010, the Korean spirits market was valued
    at $10.1 billion (based on retail sales prices), ranking it as the
    tenth largest spirits market in the world, and fourth among Asian
    nations behind China, India and Japan, respectively.
        The spirits market in Korea is dominated by two categories: whiskey
    and soju, the domestically-produced spirit made from any of the
    following ingredients: rice, wheat, barley, sweet potatoes or tapioca.
    In volume terms, soju accounts for an astonishing 96% of total spirits
    sales in Korea. In value terms, however, the market is more evenly
    divided, with soju accounting for 56% and whiskey accounting for 39%.
    Thus, the whiskey category is comprised mainly of higher-priced premium
    and super-premium brands--the segment were U.S. whiskeys compete.
    Whiskey is forecast to grow by over 45% from 2009 to 2014 in value
    terms (Euromonitor International).
        Korea's whiskey market is dominated by Scotch Whisky; sales of
    Scotch Whisky accounted for almost 98% of total whiskey sales (retail)
    in Korea in 2010 (Euromonitor International). The leading U.S. spirits
    exports to Korea are Bourbon and Tennessee Whiskey, accounting for 68%
    of total exports in 2010. Although American whiskeys are growing in
    popularity in Korea, they are still considered as niche products and
    have not been able to penetrate significantly the whiskey market in
    Korea, in large part due to the high tariffs and taxes that currently
    apply and Scotch Whisky's continued dominance.
        Under the KORUS FTA, Korea will eliminate its 20% ad valorem tariff
    on Bourbon (and Tennessee Whiskey), which as noted above comprises 68%
    of total U.S. spirits exports to Korea, immediately upon entry into
    force. The tariffs on all other U.S. origin spirits (between 15-20% ad
    valorem) will be phased out over a 5 year period. Prompt action to
    approve the KORUS FTA is needed to ensure that U.S. spirits exporters
    are not competitively disadvantaged vis-a-vis European spirits
    producers: under the terms of the EU-Korea FTA, which will enter into
    force on July 1, 2011, Korea will eliminate its tariffs on Scotch and
    Irish whisky over 3 years.
        In addition, as noted above with the Colombia and Panama FTAs, the
    KORUS FTA provides recognition of Bourbon and Tennessee Whiskey as
    distinctive products of the United States. Securing this recognition is
    critical because it provides the U.S. spirits industry with an
    important anti-counterfeiting tool.
    V. Conclusion
        In summary, the pending free trade agreements with Colombia, Panama
    and South Korea successfully address the principal trade barriers
    currently impeding U.S. exports of distilled spirits to those markets.
    The Distilled Spirits Council, therefore, strongly supports these
    agreements, which, once implemented, will provide considerable tangible
    benefits to U.S. spirits exporters. We stand ready to work closely with
    the Congress in seeking the swift approval of these agreements, so that
    U.S. spirits exporters may begin soon to enjoy improved access to the
    Colombian, Panamanian and South Korean markets.
        Thank you very much for your consideration.

    Written Statement of:

    Dr. Peter H. Cressy,
    President/CEO,
    Distilled Spirits Council of the United States, Inc.
                                     ______

     Submitted Letter by Robert Cummings, Senior Vice President, USA Rice
                                   Federation
    May 16, 2011

    Hon. Frank D. Lucas,
    Chairman,
    House Committee on Agriculture,
    Washington, D.C.

    Via Electronic Submission

    Re: Comments Concerning the House Agriculture Committee Hearing on the
    Pending Free Trade Agreements with Colombia, Panama, and South Korea

        The USA Rice Federation (USA Rice), located at 4301 N. Fairfax
    Drive, Suite 425, Arlington, VA 22203, is the global advocate for all
    segments of the U.S. rice industry with a mission to promote and
    protect the interests of producers, millers, merchants and allied
    businesses. USA Rice members are active in all major rice-producing
    states: Arkansas, California, Florida, Louisiana, Mississippi, Missouri
    and Texas. The USA Rice Producers' Group, USA Rice Council, USA Rice
    Merchants' Association and the USA Rice Millers' Association are
    members of the USA Rice Federation.
        USA Rice appreciates the opportunity to comment on the pending free
    trade agreements. Rice is a sensitive political and economic commodity
    throughout the world, and protectionism is extensive. The U.S. rice
    sector is a key player in the global rice market and the economic
    health of the rice industry is tied to exports. While the United States
    produces only two percent of global rice output, the United States
    ranks, in any year, as the third or fourth largest global exporter and
    between 45 and 50 percent of the U.S. rice crop is exported.
        Through free trade agreements, rice is able to be a competitive
    commodity and, in turn, create U.S. jobs. According to a recent
    economic impact study completed by the Agriculture and Food Policy
    Center at Texas A&M, the rice industry contributed 127,186 jobs to the
    U.S. economy in 2009. This figure, based on 2009 rice production and
    sales information, is a component of the total value-added to the U.S.
    economy from rice production, milling, and selected end-users of $17.5
    billion in 2009. Small businesses are well represented within the
    thousands of rice farmers across the six rice-producing states.
    Colombia
        The free trade agreement with Colombia offers tremendous short and
    long term economic benefits to U.S. rice producers, millers and
    exporters. We believe that this trade agreement holds the most promise
    for the rice industry since the North American Free Trade Agreement was
    implemented more than 10 years ago.
        The free trade agreement with Colombia reflects the sensitivity of
    rice. Import duties on U.S. rice phase out over 19 years, with
    reductions from the bound rate of 80% not beginning until year 7. A
    tariff rate quota for 79,000 mt (milled equivalent basis) of U.S. rice
    is established in year one, growing 4.5% annually until free trade is
    achieved in year 19.
        The rice provisions of the agreement with Colombia are similar to
    those in the CAFTA-DR agreements, but with one substantial and positive
    difference. The Colombia agreement provides that the net revenue from
    auctioning licenses to import under the TRQ will be split evenly
    between the U.S. and Colombian industries. This provision remains a
    singular achievement of U.S. negotiators that distinguishes this
    agreement from other U.S. free trade agreements in the region and
    significantly increases its value to U.S. rice farmers and marketers,
    who otherwise would wait nearly 2 decades for free trade.
        The USA Rice Federation recently estimated that the gross revenue
    to the United States from a 79,000 TRQ would be approximately $11.5
    million. While the net figure would be somewhat smaller because of the
    expenses associated with administering the TRQ, the remaining revenue
    is significant and would greatly benefit the rice industry. The USA
    Rice Federation has proposed that all net revenue be allocated to the
    state rice research boards in the six producing states to be used
    exclusively for rice research.
        Because of Colombia's 80% duty on imported rice, U.S. sales to date
    have been sporadic and surged only in response to production
    shortfalls. Annual imports from the United States have rarely exceeded
    5,000 mt in the current decade, except in 2009 when a crop shortfall
    caused Colombia to establish a zero-duty TRQ for 75,000 mt, which the
    United States promptly filled nearly exclusively. U.S. sales suffer
    further from the duty-free treatment afforded rice from Venezuela and
    Ecuador.
        Without the passage and implementation of this agreement, U.S. rice
    exports to Colombia will be sporadic at best and the key benefit of
    sharing the quota rents from the TRQ between the two rice industries
    will be lost. Colombia is an important commercial and political partner
    of the United States and the trade agreement with Colombia is a key
    tool for strengthening this agreement that should not be lost.
    Panama
        The U.S.-Panama Free Trade Agreement will also benefit U.S. rice
    producers, millers and exporters. The agreement phases out Panama's
    duties on U.S. rice over a 20 year period. Two separate TRQs are
    established for rough rice and milled rice, which allow for duty-free
    imports.
        The milled rice TRQ in year one is 4,240 mt and will increase 6%
    each year before becoming duty free in year 20. Average U.S. milled
    rice exports to Panama for 2005-2009 were only 758 mt. This TRQ will
    allow for substantial access for U.S. milled rice starting in the
    agreement's first year of implementation.
        The rough rice TRQ in year one is 7,950 mt and will similarly
    increase 6% each year before becoming duty free in year 20. However,
    the TRQ for all years is less than the 2005-2009 average for U.S. rough
    rice imports of 59,405 mt.
        Unlike the CAFTA-DR agreement, domestic purchase as a requirement
    of import under the TRQ is forbidden. The agreement calls for detailed
    TRQ administration requirements to guarantee quota fill and to exclude
    producers from influencing quota administration. Thus, domestic
    producers cannot be allocated or awarded a portion of the TRQ. Any
    unfilled TRQ licenses must be surrendered by September 1 and a final
    auction held by October 1.
        Although the 20 year phase out until free trade is 3-5 years longer
    than the CAFTA-DR, it is an important agreement supported by USA Rice.
    South Korea
        USA Rice does not support the agreement due to the exclusion of
    rice. Free trade agreements entered into by the United States should be
    comprehensive and include all products, even those that are politically
    sensitive.
        The U.S. rice industry understands the political and cultural
    sensitivity of the matter for Korea. However, the U.S. rice market is
    open, and about 15 percent of U.S. rice consumption is imported. Tariff
    protection in the United States for rice is virtually non-existent.
        We appreciate the opportunity to provide these comments. Please
    contact us if you have any questions.
                Sincerely,

    Robert Cummings,
    Senior Vice President,
    USA Rice Federation.
                                     ______

     Submitted Statement by Thomas C. Dorr, President and Chief Executive
                          Officer, U.S. Grains Council
        Chairman Lucas, Ranking Member Peterson, and distinguished Members
    of the House Committee on Agriculture. My name is Tom Dorr. I am
    President and CEO of the U.S. Grains Council (USGC). Founded in 1960,
    The Council is a private, nonprofit corporation with ten international
    offices and programming in more than 50 countries. Its unique
    membership includes barley, corn and sorghum producer organizations and
    agribusinesses from across the United States with a common objective in
    developing export markets.
        The Council appreciates the efforts of the Committee in holding
    hearings regarding the importance of ratification of the existing free
    trade agreements (FTAs) with Colombia, Panama and South Korea. All are
    important export markets for the coarse grains and important co-
    products (i.e., distiller dried grains, corn gluten feed, corn gluten
    meal) we represent and offer significant opportunities for growth and
    each of which the Council has had extensive involvement in capacity-
    building and increasing demand for these products. We offer this
    statement to explain the economic implications and importance of these
    FTAs.
    Korea--Important Asian Market
        The Republic of Korea has been a strong and important export market
    for U.S. feed grains, and is third largest market for U.S. corn. Korea
    is Asia's fourth largest economy with a $1 trillion gross domestic
    product (GDP) that is projected to grow by five percent in 2011.
        Korea produces a total of only about 300,000 metric tons (tmt) of
    barley, corn, and sorghum a year, representing about three percent of
    total domestic consumption. As the world's third largest grain
    importer, the U.S. has been a consistent and reliable supplier
    providing over 65% of Korea's feed grains and substitutes market. Corn
    imports to Korea in 2010 totaled $1.7 billion. It has also been a
    growing market for DDGs with the U.S. supplying over 90% Korea's total
    imports. As a result, U.S. feed grains and co-products are critical in
    meeting their food security needs.
        The U.S. feed grains industry has enjoyed the existence of low or
    zero tariff rates for corn imports to Korea. Under the U.S.-Korea FTA,
    the tariff for U.S. corn will be fixed at zero and eliminating the
    current ability of Korea to discontinue the zero autonomous tariff and
    revert back to the WTO tariff of five percent for the first 6.1 million
    tons, and 328 percent for any imports above this quantity. Similarly,
    Korea's current 6.6 percent tariff on DDGS will be provided duty free
    access upon implementation of the FTA.
        In addition to providing coarse grains for the Korea livestock
    industry, the U.S. also provides corn to Korea's food and industrial
    sector. Currently, Korea imports practically no corn starch from the
    U.S. as almost all of its 6.1 million ton WTO Tariff Rate Quota is used
    to import feed corn and corn starch for manufacturing. Korea's over-
    quota tariff on corn starch is 226 percent.
        With the FTA, the U.S. will have an opportunity to establish a
    foothold in Korea's corn starch market. During the first year of the
    agreement, 10,000 tons of U.S. corn starch will enter Korea duty free.
    The quota will grow three percent a year through the beginning of year
    15, when all U.S. corn starch will enter duty free.
        With respect to barley and malting barley, the FTA will provide
    U.S. barley a tariff advantage over its competitors. The agreement
    creates a 2,500 duty-free quota for U.S. unhulled and naked barley
    (excluding malting barley), which increases two percent a year while
    the tariffs are phased out over 15 years. Outside the FTA, Korea has an
    unhulled barley autonomous TRQ of 50,000 tons at a two percent tariff
    and a WTO 23,582 ton TRQ that covers both unhulled and naked barley at
    five percent with over-quota tariffs of 324 and 300 percent,
    respectively.
        In addition, in the first year of the agreement, the U.S. will be
    able to export 9,000 tons of unroasted malt barley and malting barley,
    combined, into Korea duty free. The duty free quota grows two percent a
    year through year 15, at which time all U.S. shipments of malt and
    malting barley will enter duty free. This provides the U.S. a ten
    percent tariff advantage over our competitors for malt and 20 percent
    for malting barley. At a minimum, this will keep the United States on a
    level tariff playing field if Korea concludes similar trade agreements
    with Canada, the EU and Australia.
        Finally, passage of the FTA will allow the Council to continue to
    promote the advantages of U.S. grains and their reliable supplies to
    meet Korea's growing feed, food and industrial demand. It will also
    help the Council in promoting the growing use of DDGs of Korea's
    poultry and livestock operations.
    Panama--Gateway Corridor to Central and South America
        While Panama is a small country with only 3.3 million people it is
    a key building block in the U.S. strategy to advance free trade within
    the Western hemisphere. Spearheaded by transportation,
    telecommunications, commercial and tourism sectors, Panama's economy is
    based on a well-developed services sector. GDP in 2010 was nearly $26
    billion and is anticipated to grow at more nine percent in 2011.
        Panama is an important market for U.S. agricultural exports. The
    U.S. corn industry has traditionally been the sole supplier to this
    market with poultry sector as the dominant end-user of feed grains.
    However, there has been some erosion in 2010 due to, among other
    reasons, a lack of progress on the U.S.-Panama FTA.
        The agreement will provides for immediate duty-free treatment for
    over 60 percent of current U.S. exports to Panama. Current duty-free
    agricultural products such as wheat, barley, cotton, crude soybean oil,
    soybeans and soybean meal will be made permanent.
        The FTA will also provide opportunities for immediate duty-free
    access through tariff-rate quotas (TRQs) for many of Panama's more
    sensitive products including corn, refined corn oil. Most remaining
    tariffs will be eliminated within 15 years. Upon the FTA's
    implementation a tariff-rate quota of 298,700 mt with zero tariffs
    would apply to corn. The quota would be increased annually three
    percent (compounded) and corn imports exceeding the quota would have a
    40 percent levy. The over-quota tariff of 40 percent will be gradually
    eliminated between the fifth and fifteenth years of the Agreement.
    Sorghum will be duty-free within 5 years while barley, DDGS and crude
    corn oil would receive immediate duty-free treatment.
        Ratification of the FTA will accelerate the ability of the Council
    to work with Panamanian end-users to introduce feed grain co-products
    and value-enhanced grains. In addition, promoting the use of corn co-
    products will provide cost savings to feed millers and as a result
    create more demand for U.S. corn.
    Colombia--Key Strategic U.S. Agricultural Export Market
        Colombia is a key strategic market with exceptional growth
    potential. Colombia has the second-largest population in South and
    Central America and the Caribbean, and is the third-largest economy in
    the region. Colombia is experiencing strong economic growth, projected
    to exceed four percent annually over the next 3 years. Colombia's per
    capita income has grown steadily over the last decade, exceeding
    $9,000, and is projected to increase to nearly $12,000 by 2015. As a
    result, its middle class continues to grow and is projected to increase
    to more than 25 percent of the total population by 2020.
        This higher growth income has resulted in more consumption of
    animal proteins with an increase in pork production (32 percent),
    poultry (32 percent) and eggs (12 percent) in the last 5 years. While
    Colombia is a net exporter of agricultural commodities, it imports over
    80 percent of the corn it uses domestically. Similarly, it imports over
    95 percent of the wheat and soybeans products it consumes.
        Colombia is an important market for America's farmers and ranchers.
    Total U.S. agricultural exports exceeded $1.6 billion in 2008. Colombia
    is the fifth-largest market for U.S. coarse grains, eclipsed only by
    Mexico, Japan, Taiwan and South Korea.
        But it is a situation where we have experienced extraordinary
    challenges with an increasing loss of market share in what is one of
    the strongest growth markets in our own hemisphere. Until 2008, the
    U.S. agricultural sector had been the beneficiary of Colombia's growing
    need for imports of agricultural commodities. U.S. market share of
    Colombia's total agricultural imports grew steadily from 2005 to 2008
    reaching nearly 50 percent. However, since 2008, U.S. market share has
    declined rapidly to only 21 percent. Conversely, Argentina's market
    share of Colombia's total agricultural imports rose sharply from eight
    percent to nearly 30 percent over the same time period.
        For U.S. coarse grains, the decline has been even more dramatic. At
    its peak, U.S. exports of coarse grains approached $635 million and
    accounted for 83 percent of the total Colombian coarse grains imports.
    In 2010, U.S. coarse grains exports declined to $118 million and market
    share fell to 18 percent, a residual suppler level. The loss of market
    share can be attributed to major inroads by Argentina and Brazil. In
    2008, Argentina held an 11 percent share of coarse grains imports,
    primarily corn. By 2010, Argentina's market share was 66 percent. Over
    the same time period, Brazil's market share of coarse grains imports to
    Colombia increased from 5 to 16 percent.
    Tariff Constraints Erode U.S. Competitiveness
        Colombia protects its local production with a common external duty
    (15 percent) that includes corn (and other agricultural commodities).
    In addition, Colombia is a party to the MERCOSUR-Andean Community
    agreement, under which it has implemented bilateral agreements with
    Brazil, Argentina and Paraguay. Under that agreement exists a price
    band mechanism which levies additional duties on the 15 percent duty
    when international corn prices are lower than a preference and
    conversely reduces the basic duty when international corn prices are
    higher. This price band mechanism operates as a protective policy when
    international prices are lower by increasing the import duty, while
    high international prices act as natural protection for the local
    production.
        Colombia's trade agreement with MERCOSUR allows member countries to
    receive a preferential duty treatment. Argentina and Brazil receive an
    annual duty reduction on corn imports to Colombia, which completely
    phases out the basic duty by 2018. Beginning in 2006, the duty
    preference on the basic duty (15 percent) granted for corn was 31
    percent or a duty of 10.35 percent--a 4.65 percent advantage over corn
    import from the United States. By 2009, the duty preference reached 49
    percent and then 54 percent in 2010. In 2011, the duty preference
    increased to 60 percent, which represents a nine percentage point
    advantage over corn imports from the United States. Even with the duty
    preferences in place, the United States remained competitive until
    2008. However, the increased duty preference to corn imports from
    MERCOSUR has virtually eliminated that advantage.
        This is despite the fact that the United States, with its close
    proximity to Colombia, has a freight transportation advantage over
    Argentina and Brazil. According to estimates provided by Colombian feed
    importers, the lower import tariff by itself currently provides a $20/
    ton advantage over U.S. shipments.
        Corn makes up a larger percentage of grain imported into Colombia,
    which leads importers to combine it with other grain imports, such as
    soybeans, wheat and other grain co-products to complete their grain
    cargo. As U.S. corn imports have declined, the same has occurred with
    other bulk products. The decline of U.S. imports has lowered the
    incentive to import other U.S. grains as well.
        Equally troubling, the shift in grain flows from the United States
    to Argentina and Brazil has allowed those countries to include
    additional quantities of corn over and above the shipments to Colombia
    that are later shipped to Latin American countries such as Panama and
    the Dominican Republic. The lower tariff rates allow Argentina and
    Brazil to import corn into these markets despite the transportation
    disadvantage. These are markets where the United States has a clear
    competitive advantage and yet we are seeing them be eroded because of
    the pernicious effects of the lower duty preferences. Once trade flows
    become established and relationships are formed with other trading
    partners, it is very difficult to win back these markets.
        In addition to the MERCOSUR-Andean Community Agreement, Colombia
    currently has free trade agreements (FTA) in place with Chile, El
    Salvador, Guatemala, Honduras, Mexico and Uruguay. It is also a member
    of the Andean Community Customs Union (Bolivia, Ecuador and Peru). In
    2010, Colombia finalized FTAs with Canada and the European Union, and
    is presently negotiating new FTAs with Panama, South Korea and
    Singapore. Without the U.S.-Colombia FTA, U.S. coarse grains producers
    as well as the producers of other U.S. agricultural commodities will
    cede this market to our competitors.
    USGC Capacity-Building Efforts in Colombia
        The Council works closely with the Colombian feed, livestock and
    poultry industries to build capacity and increase efficiency to utilize
    U.S. coarse grains products. Several of the numerous Council programs
    include: Capacity-building to the poultry and dairy sectors in disease
    management and training in feed formulation; training in nutritional
    and price benefits associated with using distiller's dried grains and
    an introduction of U.S. sorghum into the Colombian livestock sector;
    and U.S. grain trade promotion through grain marketing and risk
    management training for major Colombian grain importers. The resulting
    productivity gains have greatly enhanced Colombia's ability to meet the
    needs of their growing middle class and supply high-quality protein
    products at low cost to their consumers.
        Separately, the Council and the United Soybean Board participated
    in a technical cooperation agreement with the Inter-American Institute
    for Cooperation on Agriculture on a 2004 study on the impact of the
    elimination of Colombian trade protection on corn, sorghum and
    soybeans. That study revealed that with the elimination of Colombia's
    tariff barriers, prices of corn and sorghum would fall by 33 percent.
    Imports of corn and sorghum would increase by 92 percent with a value
    of $192 million. The lower feed prices would increase the demand for
    feed and the Colombian livestock and poultry sector would benefit
    through projected increases in the value of production of poultry (17
    percent); pork (14 percent); and eggs (11 percent).
        As a result of these ongoing efforts, the Council has established a
    strong partnership with Colombia's livestock and poultry sectors. U.S.
    producers gained their trust as a long-term, reliable supplier that
    provides consistent, quality products. As valued customers, the Council
    consistently provides technical support and outreach to meet their
    needs.
        The Colombian feed, livestock and poultry industries want to retain
    and build on that relationship. Representatives of the Colombian feed
    milling, swine and wheat industries traveled to Washington, D.C.,
    earlier this year and provided Congressional briefings to this
    Committee as well as the Senate Agriculture Committee, Senate Finance
    Committee and House Ways and Means Committee. They explained that
    Colombia must import agricultural commodities at competitive prices to
    meet their growing demand for protein products. While the United States
    has been a reliable supplier, they stressed that duty preferences
    afforded to Argentina and Brazil has eroded the competitiveness of U.S.
    commodities and they have no choice but to import corn and other
    commodities from those markets. They stated that the U.S.-Colombia FTA
    would allow them the opportunity to acquire more U.S. commodities.
    However, price is paramount and if the United States cannot compete
    they will continue to source products from our competitors.
    U.S.-Colombia FTA Removes Tariff Constraints--Levels Playing Field
        The benefits provided under the U.S.-Colombia FTA will eliminate
    the tariff constraints that are eroding the competitiveness of U.S.
    agricultural exports. Upon implementation of the FTA, the applied
    tariffs are eliminated, providing immediate duty-free access to coarse
    grains and more than 80 percent of current U.S. agricultural exports to
    Colombia. Colombia will immediately eliminate its price band system,
    which in addition to corn, affects more than 150 agricultural products.
        For yellow corn, Colombia will provide immediate duty-free access
    through a 2.1 million tariff rate quota (TRQ) with five percent annual
    growth. Colombia will phase out its out-of-quota tariff of 25 percent
    over 12 years. For white corn, a staple product for Colombia's
    consumers, the agreement will provide immediate duty-free access
    through a 136,500 ton TRQ with five percent annual growth. Colombia
    will phase out the out-of-quota tariff on 20 percent over 12 years.
        The Council has worked aggressively to promote the use of grain
    sorghum in feed rations in Colombia. Under the agreement, Colombia will
    provide immediate-duty free access through a 21,000 ton TRQ with five
    percent annual growth. Colombia will phase out the out-of-quota tariff
    of 25 percent over 12 years.
        Tariffs on barley and barley products, with the exception of feed
    barley, will be eliminated immediately. Important co-products--
    distiller's dried grains, corn gluten feed and corn gluten meal--will
    also be provided immediate duty-free access.
    Concluding Remarks
        In summary Mr. Chairman, Colombia is a key strategic market with
    exceptional growth potential right in our own hemisphere. The United
    States is already losing hundreds of millions of dollars in annual
    exports and this is compounded by the loss or non-creation of thousands
    of U.S. jobs. If U.S. agriculture is to remain competitive and
    capitalize on this significant opportunity it must also maintain its
    leadership role. Without removal of these trade constraints, the U.S.
    coarse grains producer will lose this market.
        If we are to collectively meet the critical objectives of the
    National Export Initiative, we see great opportunity and progress if
    there is ratification of the Colombia, Panama and South Korea FTAs.
    Equally important, should Congress ratify these FTAs it will enhance
    the credibility of the United States with its global trading partners
    on the overall trade agenda and increase its ability as the world's
    largest trading partner to marshal completion of the Doha Development
    Round and the Trans-Pacific Partnership agreement.
        Again, Mr. Chairman, Ranking Member Peterson, and Members of the
    Committee, I appreciate the opportunity to present the views of the
    U.S. Grains Council.
                                     ______

       Submitted Statement by Audrae Erickson, President, Corn Refiners
                                  Association
        The Corn Refiners Association (CRA) is pleased to submit the
    following comments for the record in response to the House of
    Representatives Committee on Agriculture's hearing on the pending free
    trade agreements with Colombia, Panama, and South Korea on May 12,
    2011. The CRA strongly supports these agreements and urges swift
    Congressional approval of them.
        CRA is the national trade association representing the corn
    refining (wet milling) industry of the United States. CRA and its
    predecessors have served this important segment of American
    agribusiness since 1913. Corn refiners manufacture sweeteners, ethanol,
    starch, bioproducts, corn oil, and feed products from corn components
    such as starch, oil, protein, and fiber. In 2010, our industry's
    exports of refined corn products were valued at $2.3 billion.
        CRA favors all three agreements because of their benefits to
    agriculture in general and the corn refining industry in particular.
    The specific benefits of each agreement are outlined below.
    Colombia-U.S. Trade Promotion Agreement
        Even with current restrictive tariffs, Colombia has been a growing
    market for U.S. exports of refined corn products. Passage of this
    agreement would accelerate this growth, particularly for corn gluten
    feed and meal. Duties on these products will be eliminated immediately,
    which would provide an important export market for the growing supply
    of ethanol co-products in the United States.
        In addition, duties on corn starch, crystalline fructose, dextrin,
    and modified corn starch will be eliminated immediately. Colombian
    tariffs on most processed food--a major market for U.S.-produced corn
    starches, sweeteners, and oil--will be reduced to zero upon enactment
    of the agreement. The elimination of price-band systems for vegetable
    oils, coupled with full duty elimination in 5 years, will restore and
    increase trade for U.S. corn oil that was lost in the 1990s. Duties on
    most glucose syrup and high fructose corn syrup will be eliminated over
    10 years. In the meantime, a new tariff-rate quota for U.S. glucose
    syrup will expand trade by 300%.
        While the CRA seeks the shortest path to duty free trade, the
    significant market access granted in the Colombian agreement for
    starches, sweeteners, oil, feed and processed food products is a major
    step. CRA supports passage of the Colombian Trade Promotion Agreement.
    Korea-U.S. Free Trade Agreement
        Currently, Korea imposes high tariffs on refined corn imports that
    prevent entry of many of our exports. Under the KORUS Agreement,
    several products of the U.S. corn refining industry would have all
    duties eliminated in 5 to 7 years, including corn oil, corn syrup, high
    fructose corn syrup, and crystalline fructose.
        The most highly protected segment of the Korean market for
    processed corn products--corn starches and high-value modified
    starches--would see duties eliminated over the life of the agreement
    and new duty-free quotas will enable U.S. firms to enter the market
    during this transition period.
        While the KORUS awaits U.S. ratification, Korea is actively
    pursuing free trade or preferential trade agreements with other
    nations. It has successfully concluded agreements with the European
    Union, the ASEAN group of countries, and India. Negotiations are
    ongoing with Australia, Canada, China, Mexico, New Zealand, and Peru.
    All of these countries are current or future competitors for the U.S.
    corn processing industry in the Korean market. Failure to adopt the
    KORUS will make the U.S. a residual supplier to the Korean market
    compared to these countries, or will prevent U.S. corn refiners from
    competing in this market altogether.
        This is especially true in the case of corn starch products in the
    Korea-European Union Agreement, an agreement that will go into force in
    July 2011. The European Union secured a highly advantageous deal for
    their starch exports, in some cases European starches received
    approximately four times the market access that U.S. starches received.
    Moreover, tariffs on European starch products are eliminated more
    rapidly than tariffs on U.S. corn starch exports.
        Failure to secure expeditious ratification of the KORUS will place
    the U.S. corn refining industry at a significant competitive
    disadvantage relative to its European competitors. We urge immediate
    Congressional approval of the KORUS to ensure that the Korean market is
    not handed over to the European starch industry.
    Panama-U.S. Trade Promotion Agreement
        The Corn Refiners Association also supports passage of the Panama-
    U.S. Trade Promotion Agreement (TPA). Currently, Panama maintains
    restrictive duties on imports of U.S. refined corn oil, dextrose,
    crystalline fructose, and corn gluten feed and meal. The U.S.-Panama
    TPA will eliminate these duties in incremental steps, resulting in full
    free trade in all refined corn products in fifteen years. Immediate
    tariff reductions for animal feed products will provide rapid
    opportunities for U.S. exporters.
        Thank you for the opportunity to provide these comments for the
    record in conjunction with the House Agriculture Committee hearing.
                                     ______

          Submitted Statement by International Dairy Foods Association
        The International Dairy Foods Association (IDFA),\1\ representing
    the nation's dairy processing and manufacturing industry, strongly
    supports the pending free trade agreements (FTAs) with South Korea,
    Colombia, and Panama. Dairy exports have grown into a vitally important
    aspect of the U.S. dairy industry and continued expansion overseas is
    the market's logical progression. The U.S. dairy market is fairly
    mature, meaning that opportunities to grow domestic consumption of
    dairy products are limited. Demand abroad, however, is growing rapidly.
    In 2010, the U.S. exported over $3.7 billion worth of dairy products
    around the world, up 64% from 2009 and the second-highest level ever.
    The U.S. ran a dairy trade surplus last year of over $1.2 billion.
    These numbers are a clear departure from a decade ago when the U.S.
    dairy industry historically ran a trade deficit and many dairy product
    exports occurred only due to government export subsidies.
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        \1\ The International Dairy Foods Association (IDFA) represents the
    nation's dairy manufacturing and marketing industries and their
    suppliers, with a membership of 550 companies representing a $110
    billion a year industry. Our member companies manufacture more than 85%
    of the milk, cultured products, cheese and frozen desserts produced and
    marketed in the United States.
    ---------------------------------------------------------------------------
    U.S. Dairy Import/Export Quantity: 2000-2010

        Although job creation is difficult to quantify, it has been
    estimated that every $1 billion increase in exports creates nearly
    5,000 new jobs here in the United States. Several new dairy processing
    plants have been built or expanded in recent years, resulting in more
    jobs in our facilities and the opportunity for dairy farm operations to
    grow. Much of the expansion in our industry in the past decade was
    dependent upon export sales.
        With the right domestic and international policies, we are
    confident that these positive job creation and industry growth trends
    will continue.
        In 2009, the Innovation Center for U.S. Dairy, funded by dairy
    producers, commissioned a study by Bain & Co. which found that
    international demand for dairy products will grow faster than the
    available world milk supply creating a latent demand gap resulting in
    major export growth opportunities for the U.S. dairy industry. The
    study found that our international competitors have problems that will
    negatively affect their ability to fill the gap, but only in the near
    term. Thus, the U.S. industry has a limited window of opportunity to
    capture this significant increase in market share.
    Global Dairy Net Trade: Milk Protein

            Source: ``World Trade Trends 2008,'' USDEC; FAPRI.

        The study recommended that the dairy industry focus its attention
    on becoming a ``consistent exporter'' and that we change many of our
    domestic and international policies in order to position our dairy
    industry to take advantage of this opening. IDFA agrees with this
    recommendation and urges you to review the full report.\2\
    ---------------------------------------------------------------------------
        \2\ http://www.usdairy.com/Globalization/GlobalImpactStudy/Pages/
    BusinessCase.aspx.
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        Concerning international policies, FTAs are an extremely important
    opportunity to advance dairy trade and break down barriers that
    obstruct the global growth of the dairy industry. The agreements
    currently pending before Congress, including those with Colombia,
    Panama, and South Korea, offer enormous potential for growth in new
    markets for U.S. dairy products.
        In particular, quick action is needed to move the Korea-U.S. Free
    Trade Agreement (KORUS FTA) forward as South Korea's dairy market is
    particularly important to American exporters. Assuming the U.S. is able
    to make full use of the new market access opportunities negotiated,
    this agreement embodies what IDFA believes is one of the most important
    free trade deals for the American economy since the North American Free
    Trade Agreement.
        U.S. dairy exports to Korea have been subject to high tariffs
    starting at 36 percent, while most of Korea's agricultural exports
    enter the U.S. market with tariffs of about ten percent. Despite these
    barriers, in 2010 South Korea constituted the U.S. dairy industry's
    sixth largest export market and imported over $115 million worth of
    American dairy products, which was a 72 percent increase over 2009.
    South Korea was the fourth largest export destination for U.S. cheeses
    and curds and the eighth largest export destination for ice cream and
    related products.
        Estimates from the U.S. International Trade Commission (ITC)
    Report: U.S.-Korea Free Trade Agreement ``Potential Economy-wide and
    Selected Sectoral Effects'' indicate that full implementation of the
    KORUS agreement would increase U.S. dairy exports by $175-$336 million
    (249-478 percent).\3\ The report notes that the domestic Korean dairy
    industry is currently unable to supply total Korean demand for dairy
    products. One-half of non-fluid dairy consumption in Korea is supplied
    by imports. If the market access opportunities for the U.S. dairy
    industry under the KORUS-FTA are fully realized, U.S. farmers,
    processers and their suppliers are well positioned to meet this demand.
    ---------------------------------------------------------------------------
        \3\ Impact relative to a 2008 base. See chap. 2 of U.S.
    International Trade Commission U.S.-Korea Free Trade Agreement:
    Potential Economy-wide and Selected Sectoral Effects report for
    additional information regarding the economy-wide analysis: http://
    www.usitc.gov/publications/pub3949.pdf.
    ---------------------------------------------------------------------------
        Perhaps most importantly, the ITC report estimated that the dairy
    sector would be among the industries seeing the largest gains in output
    and employment. Based on Commerce Department multipliers, such an
    increase in U.S. dairy exports could mean 10,000 or more additional
    U.S. jobs when considering the effect across the dairy industry value
    chain.
        In addition to supporting the approval of the KORUS-FTA at the
    earliest opportunity, IDFA also strongly supports quick approval of the
    FTAs with Colombia and Panama. The estimated benefit to the U.S. dairy
    industry over the first several years of each of these agreements will
    be an additional $25 million per year, on average.
        If Congress fails to act, these tremendous opportunities for market
    expansion and resultant job growth in the U.S. will be critically
    threatened, especially in light of the rapid pace at which the European
    Union has negotiated competing FTAs with these countries.
        With regard to domestic agriculture policy, the Bain report
    specifically recommends against establishing policies that would create
    a ``Fortress USA'' by establishing government programs which attempt to
    manage dairy price volatility or control the supply of farm milk. The
    report warns that such policies will lead the U.S. towards being a
    secondary and inconsistent supplier thereby reducing opportunities for
    growth in export markets.
        When considering the potential benefits of the pending FTAs the
    committee should be aware that the type of policies that would create a
    ``Fortress USA'' by establishing a new mandatory growth management
    program to address volatility are being considered by Congress. Studies
    of milk supply control programs established in other countries such as
    Canada and the European Union have shown that exports decline and
    imports increase under such programs.\4\ If growth management or price
    stabilization programs are established here, they will work at cross
    purposes to undermine the market access gains of the pending FTAs for
    the dairy industry.
    ---------------------------------------------------------------------------
        \4\ http://www.keepdairystrong.com/files/
    Informa_International_Comparison_Supply_
    Control_Impacts_0910.pdf.
    ---------------------------------------------------------------------------
        One proposal in particular, the Dairy Market Stabilization Program,
    that is included in a dairy reform package called the Foundation for
    the Future, and sponsored by the National Milk Producers Federation
    (NMPF), would create a new mandatory government program to limit milk
    supply when producers' operating margins fall. NMPF claims that this
    program will not have an impact on exports because it is temporary of
    emergency in nature. However, studies sponsored by NMPF found that the
    impact of the stabilization program will be to increase domestic prices
    for dairy products well above international levels. Logically, this
    will hurt U.S. dairy exports.
        In fact, one of the studies prepared by FAPRI at the request of
    NMPF specifically details the significant negative impact that the
    stabilization program would have on U.S. dairy exports.\5\ In addition,
    Informa Economics has also reviewed the FAPRI analysis of the
    stabilization program and found that ``FAPRI's estimated average of
    Class III and Class IV milk prices would have averaged $1.62 per
    hundredweight more than the equivalent prices in Oceania, which likely
    would have reduced U.S. exports from 14 billion pounds of milk
    equivalent to just 12 billion pounds, a 14% reduction.'' \6\
    ---------------------------------------------------------------------------
        \5\ http://www.fapri.missouri.edu/outreach/publications/2011/
    FAPRI_MU_Report_04_
    11_Appendix.pdf.
        \6\ http://www.keepdairystrong.com/page.php?ID=InformaReports.
    ---------------------------------------------------------------------------
        The adoption of the NMPF stabilization program, or any other
    program to limit milk supply in an attempt to manipulate farm milk
    prices, would clearly reduce our industry's ability to compete
    internationally and harm our industry's ability to export dairy
    products. Because the NMPF stabilization program triggers off and on,
    U.S. dairy companies would be hard pressed to become reliable
    exporters; our domestic prices would at times unpredictably be
    manipulated by government policy to be above international competition.
    As such, the so-called temporary operation of the program runs counter
    to the importance of being a ``consistent'' or reliable supplier to the
    world dairy market.
        IDFA urges members of this Committee and Congress to work
    diligently to approve these long-pending FTAs and to reject any effort
    to impose milk supply controls. These actions are viewed by IDFA as
    crucial to ensure the industry's continued overseas growth and logical
    progression towards becoming a ``consistent exporter.''
        IDFA appreciates the opportunity to provide comments on the
    importance of these issues to the future of our industry. Thank you.
                                     ______

                              Submitted Questions
    Response from Hon. Thomas ``Tom'' J. Vilsack, Secretary, U.S.
            Department of Agriculture
    Question Submitted by Hon. Reid J. Ribble, a Representative in Congress
            from Wisconsin
        Question. Mr. Secretary, given your Department's role in promoting
    agriculture abroad and maintaining and expanding export markets for
    America's agricultural products, and the President's stated goal of
    doubling exports in the next 4 years, I would be curious to hear if
    your agency has undertaken a review of a proposed rule from GIPSA
    regarding the buying and selling of livestock. Specifically, I would
    like to hear if you have analyzed the potential trade impacts this rule
    will have on U.S. agricultural exports.
        I have heard from pork and livestock producers in my district that
    they are concerned that this rule will result in a single pricing
    system and that value-based marketing programs will become a thing of
    the past out of fear of legal challenges to differential pricing. I
    know that many of our trading partners, specifically in Asian
    countries, demand a unique product that requires a greater degree of
    specialization to produce. How will the U.S. producer be able to meet
    this demand if they are not adequately paid for their more ``high end''
    product?
        Answer. GIPSA has received a large number of comments addressing
    the sections of the proposed rule regarding livestock purchasing
    practices. Some of the comments addressed issues similar in nature to
    the issue you have raised in this question. GIPSA will take the
    comments into consideration in preparing the rule. While it would
    violate the rules governing the rulemaking process to discuss the
    details of what revisions are being considered based on the comments,
    we fully recognize there are concerns with some aspects of the rule and
    we are working to addressing them.
    Question and Letter Submitted by Hon. Joe Courtney, a Representative in
            Congress from Connecticut
        Question. Extract from letter.

              As Chairman of the Congressional Dairy Farmers Caucus, I
            greatly appreciate the Administration's efforts to resolve the
            export issues America's dairy farmers face in accessing India's
            dairy market. During the hearing you had an exchange with my
            colleague Congressman Tim Walz of Minnesota in which you
            stressed the importance of respecting India's cultural
            sensitivities regarding dairy trade. While I appreciate those
            concerns, I would ask you to clearly state how USDA and USTR
            plan to ensure that India honor their WTO obligations by basing
            their requirements on scientific grounds and not on cultural
            concerns, or perceived Indian consumer preferences.

        Answer. As indicated in recent letters from Secretary Vilsack and
    Ambassador Kirk to the dairy industry, USDA and USTR remain seriously
    concerned about the issue of dairy access to the Indian market and will
    accordingly continue to address our concerns, including any concerns
    related to India's WTO obligations, through all appropriate fora that
    can help lead to a resolution. This includes formal bilateral meetings,
    technical exchanges where relevant, agriculture-related meetings in the
    WTO, and informal opportunities for bilateral engagement, all of which
    would continue to be premised on ensuring any restrictions are applied
    in a non-discriminatory manner and are based on appropriate criteria
    justifiable under the WTO agreements.
                                     letter
     Hon. Thomas J. Vilsack,              Hon. Ron Kirk,
    Secretary,                           Ambassador,
    U.S. Department of Agriculture,      U.S. Trade Representative,
    Washington, D.C.;                    Washington, D.C.

        Dear Secretary Vilsack and Ambassador Kirk,

        I want to thank each of you for your recent testimony before the
    House Agriculture Committee on pending free trade agreements with
    Colombia, Korea and Panama.
        I want to first take a moment to express my appreciation for your
    efforts to increase trade and remove roadblocks that businesses face as
    they attempt to enter the export market. During my most recent trade
    mission to the United Kingdom, which I discussed at the hearing, it is
    clear that there is more we can do together to increase opportunities
    for American businesses in foreign markets.
        I wanted to follow up with you regarding a matter I did not get to
    discuss during my limited question and answer time. As Chairman of the
    Congressional Dairy Farmers Caucus, I greatly appreciate the
    Administration's efforts to resolve the export issues America's dairy
    farmers face in accessing India's dairy market. During the hearing you
    had an exchange with my colleague Congressman Tim Walz of Minnesota in
    which you stressed the importance of respecting India's cultural
    sensitivities regarding dairy trade. While I appreciate those concerns,
    I would ask you to clearly state how USDA and USTR plan to ensure that
    India honor their WTO obligations by basing their requirements on
    scientific grounds and not on cultural concerns, or perceived Indian
    consumer preferences.
        I look forward to your response and appreciate your continued
    efforts to increase opportunities for American businesses.
                Sincerely,

    Hon. Joe Courtney,
    Member of Congress.
    Response from Hon. Ron Kirk, United States Trade Representative
    Question Submitted by Hon. Jim Costa, a Representative in Congress from
            California
        Question. I appreciated Sec. Vilsack's assurances at the hearing
    about the need to find a fair and balanced outcome in TPP for America's
    dairy industry. As you know from discussions and letters over the past
    year, that objective and particularly the concerns about any expansion
    of U.S.-New Zealand dairy trade, is very important to me and many of my
    colleagues. How is USTR ensuring that this sensitive issue is being
    dealt with at the most appropriate time and in a way that will
    sufficiently address these concerns?
        Answer. During the seventh round of TPP negotiations in Vietnam in
    June, the United States made progress in market access discussions with
    TPP partner countries with a goal of increasing U.S. food and
    agricultural exports. There will be further discussions on market
    access for agricultural products at the upcoming round in September. We
    recognize fully the import sensitivities related to market access for
    dairy products from New Zealand and continue to work closely with U.S.
    industry and Congress to develop our approach in the negotiations. At
    this stage, no decisions have been made on the issue of market access
    for dairy products from New Zealand.
    Questions Submitted by Hon. Peter Welch, a Representative in Congress
            from Vermont
        Question 1. The benefits to U.S. agriculture of increasing our
    exports is clear. Secretary Vilsack stated that no U.S. agricultural
    exports currently enjoy duty-free access to Colombia, but that 70
    percent of current trade would be duty-free immediately when the FTA
    enters into force. What impact will this have on farmers in Colombia?
        Answer. Colombian farmers will gain improved market access in the
    United States under the Agreement. In addition, and perhaps at least as
    important, they will enjoy the certainty of long-term access to the
    largest market in the world, which in turn encourages investment. Much
    of Colombia's access to the U.S. market to date has been under time-
    limited preference programs that were subject to expiration, which
    created uncertainty.

        Question 2. According to an Oxfam commissioned study by leading
    Colombian economists there are 1.8 million small-scale farmers in
    Colombia, 89 percent of the total farming population. They contribute
    about half of agricultural production in Colombia, and nearly 30
    percent of the area they cultivate is sown with crops that compete with
    U.S. exports. The vast majority of these small farmers now live in
    poverty. Has anyone within the USTR explored the impact on small-scale
    Columbian farmers?
        Answer. The Agreement provides for long phase-out periods for
    tariffs on sensitive agricultural products, and applies other tools
    such as agricultural safeguards, designed to enable local populations
    to adjust gradually to trade liberalization. In addition, the phase-out
    of Colombia's barriers to agricultural imports from the United States
    will advance the competitiveness of Colombian agricultural interests
    who use U.S. inputs and contribute to lowering the cost of food for
    Colombian consumers. The Agreement also constitutes an important means
    for fighting poverty by spurring new economic activity, creating jobs
    and opportunities for Colombian workers. Finally, the Agreement
    includes commitments to coordinate trade capacity building programs in
    Colombia to help promote growth and reduce poverty.

        0Question 3. According to Oxfam, \2/3\ of rural households in
    Colombia live in poverty, and \1/3\ of those live in extreme poverty.
    Rural poverty fuels both the armed conflict and the illegal economy.
    The U.S. has invested $8 billion over the last decade in counter-
    narcotics, counter-insurgency and alternative development efforts. If
    small-scale farmers in Colombia are negatively impacted by the FTA
    could this undermine our counter-narcotics and counter-insurgency
    efforts? What can be done to ensure that this does not occur?
        Answer. The U.S. Government and the Colombian Government have a
    multi-part strategy to address this concern. First, as I indicated, the
    Agreement contains a number of mechanisms to ensure an adjustment to
    the new terms of competition. In addition, the U.S. Government
    administers an integrated set of programs in Colombia to promote
    alternative development as an important component of our
    counternarcotics efforts. Both our governments are committed to
    promoting development, growth and opportunity in Colombia while
    combating narcotics production and trafficking.

        Question 4. I want to thank you for meeting with the dairy caucus
    during the last Congress. As you may remember from the meeting, I and
    many of my colleagues are concerned about any expansion of U.S.-New
    Zealand dairy trade as part of Trans Pacific Partnership FTA. Can you
    provide an update on the progress of the TPP talks and how the issue of
    NZ dairy is being dealt with?
        Answer. During the seventh round of TPP negotiations, which were
    held in Vietnam in June, the United States made progress in market
    access discussions with TPP partner countries with a goal of increasing
    U.S. food and agricultural exports. There will be further discussions
    on market access with TPP partners at the September round. At this
    stage, no decisions have been made on the issue of market access for
    dairy products from New Zealand. USTR will continue to work closely
    with the U.S. dairy industry and Congress as the negotiations move
    forward.

        Question 5. It is my understanding that sanitary and phytosanitary
    (SPS) problems often hinder agricultural exports. As the USTR moves
    forward with the Korea, Panama, and Columbia FTA's can you discuss how
    these issues are handled in the three agreements and how what USTR is
    doing to combat this problem plaguing agricultural exports with other
    countries?
        Answer. The South Korea, Colombia, and Panama trade agreements will
    open markets for U.S. firms, increasing trade and exports. Increasing
    U.S. exports through these agreements will support additional jobs for
    American workers and support the Administration's goal of doubling U.S.
    exports by 2014. In particular, these three agreements will provide
    important opportunities to significantly increase economic benefits for
    American farmers and ranchers, as the agreements will eliminate high
    tariffs and restrictive tariff rate quotas and address non-tariff
    measures that limit market access. As to the latter, all three
    agreements lay out a framework to help ensure that the sanitary and
    phytosanitary measures of the parties to these agreements are based on
    science and international standards and do not unfairly block
    agricultural exports. These provisions will help U.S. exporters
    maintain and enhance their competitiveness against other suppliers in
    these key foreign markets.
    Question and Letter Submitted by Hon. Steve Southerland II, a
            Representative in Congress from Florida
        Question. Extract from May 12, 2011 letter.

              As you are aware, on October 12, 2006, the second U.S.-Canada
            Softwood Lumber Agreement (SLA) came into effect and terminated
            more than 20 different legal disputes surrounding Canada's
            softwood lumber subsidies and below cost of production sales in
            the U.S. market. The agreement encourages Canadian provinces to
            forego their long-standing practices of subsidizing Canadian
            lumber production.
              These unfair trade practices have caused hundreds of U.S.
            lumber mill closures, thousands of U.S. job losses, and have
            suppressed the market for thousands of private timberland
            owners.
              Effective enforcement of the U.S.-Canada Softwood Lumber
            Agreement can make the difference between survival and
            permanent closures for U.S. softwood lumber manufacturers.

              Your assistance would be appreciated in providing my office
            and the House Committee on Agriculture, information regarding
            what steps the Office of the U.S. Trade Representative has
            taken to resolve unfair trade practices affecting the U.S.
            lumber industry and forestry producers to sustain and promote
            economic growth and fair trade policy. Specifically please
            provide details on actions to resolve non-compliance with the
            U.S.-Canada Softwood Lumber Agreement and whether your agency
            is prepared to take appropriate enforcement steps in a timely
            manner should Canada further violate this trade agreement?

        Answer This Administration has made enforcement of the 2006
    Softwood Lumber Agreement (SLA) a top priority and is fully committed
    to its swift enforcement. USTR actively manages the SLA and will
    continue to evaluate and act on any evidence of non-compliance to
    ensure that the Agreement is enforced.
        The United States has pursued three arbitrations in the LCIA
    against Canada under the SLA within the last 4 years. In each case we
    have challenged what appear to be actions taken by Canadian Government,
    in breach of the SLA.
        We prevailed in the first two arbitrations, which resulted in the
    imposition of additional export charges totaling over $100 million on
    certain softwood lumber products coming from Canada into the United
    States. The third arbitration, which is currently underway, concerns
    alleged under pricing of logs in British Columbia.
        As our record demonstrates, the United States is committed to
    taking timely action to hold Canada accountable for circumventing the
    SLA.
        We also would note that industry stakeholders have been satisfied
    with the SLA, and Canada's share of U.S. consumption has fallen from 33
    percent in 2006 to 29 percent in 2010.
                                     letter
    May 12, 2011

        The Honorable Ron Kirk, United States Trade Representative (USTR):

        Thank you for your testimony before the House Agriculture
    Committee, Hearing to Review Pending Trade Agreements of May 12, 2011.
    I appreciate the opportunity you took to testify on behalf of the
    Administration's trade agenda and the promotion of economic growth for
    U.S. producers in the global market.
        As you noted in your testimony, ``American farmers and ranchers
    thrive in today's competitive global marketplace because they are the
    most efficient and productive producers in the world. Given a level-
    playing field, they can out-compete agricultural producers from any
    other country.'' Toward that end, I ask for your continued attention to
    the issues affecting U.S. lumber production with the goal of open
    competition, free of subsidies, to enhance and sustain jobs and promote
    fair trade among nations.
        As you may agree, subsidized lumber imports are not in the best
    interest of forest landowners and softwood lumber manufacturing
    facilities in Florida and throughout the United States. Since nearly
    all of the Canadian timberland is owned by the government, Canadian
    subsidies may not only affect the commodity price for lumber, but also
    the value of the forest resource.
        Lumber mills in Florida and the United State pay market value for
    timber that, on average, represents roughly 65-70 percent of a mill's
    variable production cost. Canadian lumber shipments to the United
    States beyond the market-supported level results in artificially
    depressed prices that affect sawmills and the value of the resource for
    the landowner.
        With timber prices falling in Florida and throughout the U.S. and
    mill closings occurring almost daily, Florida landowners and lumber
    sawmills are facing a crisis. Lumber prices are below 1995 levels and
    shutdowns are spreading as import volumes increase. Free and open
    competition for lumber and logs is the only real long-term solution to
    the problem.
        As you are aware, on October 12, 2006, the second U.S.-Canada
    Softwood Lumber Agreement (SLA) came into effect and terminated more
    than 20 different legal disputes surrounding Canada's softwood lumber
    subsidies and below cost of production sales in the U.S. market. The
    agreement encourages Canadian provinces to forego their long-standing
    practices of subsidizing Canadian lumber production.
        These unfair trade practices have caused hundreds of U.S. lumber
    mill closures, thousands of U.S. job losses, and have suppressed the
    market for thousands of private timberland owners.
        Effective enforcement of the U.S.-Canada Softwood Lumber Agreement
    can make the difference between survival and permanent closures for
    U.S. softwood lumber manufacturers.

        Your assistance would be appreciated in providing my office and the
    House Committee on Agriculture, information regarding what steps the
    Office of the U.S. Trade Representative has taken to resolve unfair
    trade practices affecting the U.S. lumber industry and forestry
    producers to sustain and promote economic growth and fair trade policy.
    Specifically please provide details on actions to resolve non-
    compliance with the U.S.-Canada Softwood Lumber Agreement and whether
    your agency is prepared to take appropriate enforcement steps in a
    timely manner should Canada further violate this trade agreement?

        Thank you very much. These efforts will not only result in
    strengthening and enhancing U.S. trade policy, but are also in keeping
    with USTR's stated goal of, ``greater prosperity for American
    agriculture, and for the entire American economy.''
    Question and Letter Submitted by Hon. Joe Courtney, a Representative in
            Congress from Connecticut
        Question. Extract from letter.
              Dear Secretary Vilsack and Ambassador Kirk,
              * * * * *
              I wanted to follow up with you regarding a matter I did not
            get to discuss during my limited question and answer time. As
            Chairman of the Congressional Dairy Farmers Caucus, I greatly
            appreciate the Administration's efforts to resolve the export
            issues America's dairy farmers face in accessing India's dairy
            market. During the hearing you had an exchange with my
            colleague Congressman Tim Walz of Minnesota in which you
            stressed the importance of respecting India's cultural
            sensitivities regarding dairy trade. While I appreciate those
            concerns, I would ask you to clearly state how USDA and USTR
            plan to ensure that India honor their WTO obligations by basing
            their requirements on scientific grounds and not on cultural
            concerns, or perceived Indian consumer preferences.

        Answer. As indicated in recent letters from Secretary Vilsack and
    Ambassador Kirk to the dairy industry, USDA and USTR remain seriously
    concerned about the issue of dairy access to the Indian market and will
    accordingly continue to raise our concerns, including any concerns
    related to India's WTO obligations, through all appropriate fora that
    can help lead to a resolution. This includes formal bilateral meetings,
    technical exchanges where relevant, agriculture-related meetings in the
    WTO, and informal opportunities for bilateral engagement, all of which
    would continue to be premised on ensuring any restrictions are applied
    in a non-discriminatory manner and are based on appropriate criteria
    justifiable under the WTO agreements.
                                     letter
     Hon. Thomas J. Vilsack,              Hon. Ron Kirk,
    Secretary,                           Ambassador,
    U.S. Department of Agriculture,      U.S. Trade Representative,
    Washington, D.C.;                    Washington, D.C.

        Dear Secretary Vilsack and Ambassador Kirk,

        I want to thank each of you for your recent testimony before the
    House Agriculture Committee on pending free trade agreements with
    Colombia, Korea and Panama.
        I want to first take a moment to express my appreciation for your
    efforts to increase trade and remove roadblocks that businesses face as
    they attempt to enter the export market. During my most recent trade
    mission to the United Kingdom, which I discussed at the hearing, it is
    clear that there is more we can do together to increase opportunities
    for American businesses in foreign markets.
        I wanted to follow up with you regarding a matter I did not get to
    discuss during my limited question and answer time. As Chairman of the
    Congressional Dairy Farmers Caucus, I greatly appreciate the
    Administration's efforts to resolve the export issues America's dairy
    farmers face in accessing India's dairy market. During the hearing you
    had an exchange with my colleague Congressman Tim Walz of Minnesota in
    which you stressed the importance of respecting India's cultural
    sensitivities regarding dairy trade. While I appreciate those concerns,
    I would ask you to clearly state how USDA and USTR plan to ensure that
    India honor their WTO obligations by basing their requirements on
    scientific grounds and not on cultural concerns, or perceived Indian
    consumer preferences.
        I look forward to your response and appreciate your continued
    efforts to increase opportunities for American businesses.
                Sincerely,

    Hon. Joe Courtney,
    Member of Congress.
    Questions and Letters Submitted by Hon. Reid J. Ribble, a
            Representative in Congress from Wisconsin
        Question 1. Ambassador Kirk, you referenced in your testimony
    USTR's work on a Trans-Pacific Partnership sanitary and phytosanitary
    (SPS) Chapter that ``builds on WTO obligations to ensure that
    regulations in each country are science-based and transparent, and
    result in meaningful market access openings for America's farmers,
    ranchers and workers.'' I applaud USTR's commitment to this goal, given
    its importance to American agriculture. Could you explain further what
    USTR is doing to ensure that these obligations would be genuinely
    effective in addressing the most common barriers our agricultural
    exports face, such as constantly evolving import certificate
    requirements and a lack of clearly mandated time-frames for commenting
    on and adjusting to changing SPS requirements?
        Answer. The TPP Sanitary and Phytosanitary (SPS) negotiations
    provide the United States with a strong opportunity to resolve specific
    trade concerns. In addition to affirming our current WTO obligations,
    the United States would like to use the TPP to promote improved
    transparency and the need for science based SPS measures. Too often, we
    encounter barriers in other countries that are imposed without proper
    notification. And most importantly, many barriers are not based on
    science and sound risk assessments. In Singapore, the United States
    introduced a new SPS text proposal with detailed transparency and risk
    analysis obligations for all Parties that will ensure that stakeholders
    are aware of proposed regulations, have a chance to review and comment
    and review the underlying scientific basis for the measure prior to
    implementation. We will continue to focus our SPS negotiations building
    on WTO obligations to ensure that regulations are science based,
    transparent and result in meaningful market access openings for
    America's farmers, ranchers and workers.

        Question 2. Ambassador Kirk, Thailand is the largest beneficiary of
    the Generalized System of Preferences program, shipping over $3 billion
    in products through this program to the United States last year.
    However, Thailand does not provide reciprocal market access; it has a
    de facto ban on U.S. pork. The country discriminates against U.S. pork
    by refusing any pork that was produced with the FDA-approved feed
    additive ractopamine, applying excessive import inspection fees, and
    rarely issuing pork import permits. Each of these barriers appears to
    violate WTO rules. What is USTR doing to open the Thai market to U.S.
    pork exports?
        Answer. Thailand continues to maintain barriers that limit access
    of U.S. producers to the Thai market, including continuing to ban pork
    containing trace amounts of ractopamine. Such a restriction is
    inconsistent with recommendations of recognized international
    scientific bodies, and Thailand has not produced any scientific
    evidence to warrant this restriction. USTR, in close collaboration with
    USDA, continues to urge Thailand at every opportunity to resolve this
    issue so that we can normalize pork trade based on science and in a
    commercially viable manner. For example in June, USTR officials met
    with Thai officials to urge Thailand to lift this unwarranted
    restriction on U.S. pork.
        Question 3. Extract from attachment 1.

              Collectively, America's packaged food and beverage industry
            is a job creator representing 1.7 million manufacturing jobs--
            14% of total U.S. manufacturing jobs. The industry produces
            300,000 products and annually exports over $50 billion worth of
            goods to more than 200 countries. In 2010, packaged food and
            beverage exports of over $50 billion exceeded food imports by
            over $10 billion. Very simply, our industry is one of our
            nation's few net exporters.
              However, the longer it takes to implement these agreements,
            the more we risk losing not only future opportunities to create
            jobs and increase exports, but also the market share and access
            we currently enjoy. Already these countries either have, or are
            pursuing, free trade pacts with some of our biggest economic
            competitors. An agreement between South Korea and the European
            Union (EU) will take effect July 1, jeopardizing 345,000 U.S.
            jobs and $1.7 billion in U.S. food exports. Similarly, Colombia
            already has trade pacts with the EU and Canada in place, while
            Panama has agreements with Canada and Chile.
              Each of these pending agreements provides significant new
            market access opportunities for the foods and beverages we
            produce, including immediate duty-free access for many of our
            products and greatly improved tariff treatment for other
            products. We encourage Congress and the White House to take all
            necessary steps to ensure each of these agreements can be
            approved and implemented as soon as possible.
              In addition, we urge Congress to approve long-term extensions
            of the Andean Trade Preferences and Drug Eradication Act and
            the Generalized System of Preferences. These trade preference
            agreements enable U.S. businesses to globally source inputs and
            products, not readily available in the U.S., helping to reduce
            costs for businesses and consumers. Reauthorizing these
            agreements will go a long way to reducing the uncertainties
            many of our companies now face when attempting to engage
            international trade partners.
              Our organizations believe we must embrace these opportunities
            now in order to provide America with a much needed economic
            boost. We ask you to act quickly to approve and extend these
            trade pacts and help dramatically improve the economic outlook
            for U.S. businesses. Our organizations stand ready to work with
            Congress and the Administration to help ensure that the promise
            offered by these trade agreements soon becomes a reality.

        Answer. President Obama has made sure that these agreements with
    South Korea, Colombia, and Panama are fairer for American workers and
    businesses, hold our partners accountable to keep their promises, and
    also reflect core American values on key issues like worker rights and
    protections. These agreements will help to boost U.S. exports and
    support tens of thousands of American jobs, and we are committed to
    their passage. Advancing Trade Adjustment Assistance with these pending
    pacts is the right thing to do--because a balanced trade agenda
    recognizes the tough realities of trade for some Americans, even as we
    seize trade's opportunities to create jobs here at home. America can
    and must do both, and we look forward to working with Congress to
    secure approval of the three agreements.
        We also agree that it is important to renew the Generalized System
    of Preferences and the Andean Trade Preference Act, which expired in
    December 2010 and February 2011, respectively. These programs are
    designed to promote economic growth in the developing world by
    providing preferential duty-free entry for products from designated
    beneficiary countries and territories; they also support American jobs
    and improve American competitiveness since many American businesses use
    imports under these programs as inputs to manufacture goods in the
    United States.
        Question 3. Extract from attachment 2.

              As we work to recover from one of the worst recessions in our
            nation's history, we urge you to send implementing language to
            Congress on the pending free trade agreements (FTAs) with South
            Korea, Colombia, and Panama as quickly as possible. If they are
            fully implemented, these FTAs will represent nearly $3 billion
            in new trade for American agricultural producers.
              However, we are concerned that inaction on the pending FTAs
            will result in lost opportunities for American farmers and
            ranchers. Colombia will soon implement trade agreements with
            Canada and the European Union, while Argentina and Brazil
            already have critical access to the Colombian market.
            Similarly, South Korea is in the process of completing trade
            pacts with many of our agricultural competitors, including
            Chile, Australia, New Zealand, Canada, the European Union, and
            Mexico. At a time when unemployment still hovers around nine
            percent, we cannot afford to sacrifice significant access to
            these overseas markets.
              Should the U.S.-Korea Free Trade Agreement (KORUS FTA) be
            adopted in short order, increased farm exports to South Korea
            will likely surpass $1.8 billion annually, a 46 percent
            increase over current levels. U.S. exports of wheat, corn,
            soybeans, cotton, fresh cherries, grape juice, and numerous
            other processed foods will receive immediate duty-free access
            under the FTA. Additionally, the U.S. dairy industry, which
            endured significant losses amidst the global economic downturn
            in 2009, will take in roughly $380 million per year during the
            first few years of the FTA as a result of expanded market
            access for cheese, whey, skim milk powder, and other products.
            The KORUS FTA, if realized at its full potential, would result
            in the creation of thousands of new jobs in the agricultural
            and rural sectors of our economy.
              Likewise, implementation of the U.S.-Colombia Trade Promotion
            Agreement would enable over 80 percent of current U.S. exports
            to become duty-free upon enactment, including beef, cotton,
            wheat, soybeans, apples, and cherries. Total export gains for
            American agriculture would likely exceed $815 million per year
            upon full implementation. Similarly, the U.S.-Panama Trade
            Promotion Agreement would allow more than half of our current
            agricultural exports to become duty-free immediately upon
            implementation. Additional exports could total $195 million as
            a result of the pact's approval. The two FTAs combined would
            likely yield between 6,000 and 8,000 new jobs as a result of
            this enhanced market access.
              While you are undoubtedly familiar with these figures, we
            believe that they bear repeated emphasis in the current
            economic climate. Moreover, moving forward on these FTAs would
            support the President's stated goal of doubling U.S. exports by
            2014. We know from our experience building businesses, in some
            cases in agriculture, that increasing trade nets new jobs
            across many sectors of our economy. We therefore support quick
            action on the FTAs with South Korea, Colombia, and Panama and
            we are hopeful that you will send us the implementing language
            for the pacts in very short order.

        Answer. We agree that the three pending trade agreements with South
    Korea, Panama, and Colombia, will support tens of thousands of American
    jobs--each one a lifeline to a working family in this country. The
    Administration has successfully addressed the concerns that had been
    raised with respect to each of the agreements. We are eager to work
    with Congress to advance these agreements along with a responsible,
    cost-effective Trade Adjustment Assistance package.
                                  attachment 1
    May 5, 2011

     Hon. John A. Boehner,                Hon. Harry Reid,
    Speaker,                             Majority Leader,
    U.S. House of Representatives,       U.S. Senate,
    Washington, D.C.;                    Washington, D.C.;Hon. Nancy Pelosi,                   Hon. Mitch McConnell,
    Democratic Leader,                   Republican Leader,
    U.S. House of Representatives,       U.S. Senate,
    Washington, D.C.;                    Washington, D.C..

        Dear Speaker Boehner and Leaders Reid, Pelosi and McConnell:

        Our organizations represent a diverse spectrum of food and beverage
    manufacturers who play a pivotal role in helping nourish our nation and
    the world. We have joined together to express our support for action on
    a variety of trade initiatives, including swift approval and
    implementation of free trade agreements with Colombia, Panama and South
    Korea.
        America exports more than $2 billion worth of food and beverage
    products to Colombia, Panama and South Korea each year, a figure that
    will surely grow as a result of our pending free trade agreements with
    these countries--further increasing our industry's already large world-
    wide net export position.
        Collectively, America's packaged food and beverage industry is a
    job creator representing 1.7 million manufacturing jobs--14% of total
    U.S. manufacturing jobs. The industry produces 300,000 products and
    annually exports over $50 billion worth of goods to more than 200
    countries. In 2010, packaged food and beverage exports of over $50
    billion exceeded food imports by over $10 billion. Very simply, our
    industry is one of our nation's few net exporters.
        However, the longer it takes to implement these agreements, the
    more we risk losing not only future opportunities to create jobs and
    increase exports, but also the market share and access we currently
    enjoy. Already these countries either have, or are pursuing, free trade
    pacts with some of our biggest economic competitors. An agreement
    between South Korea and the European Union (EU) will take effect July
    1, jeopardizing 345,000 U.S. jobs and $1.7 billion in U.S. food
    exports. Similarly, Colombia already has trade pacts with the EU and
    Canada in place, while Panama has agreements with Canada and Chile.
        Each of these pending agreements provides significant new market
    access opportunities for the foods and beverages we produce, including
    immediate duty-free access for many of our products and greatly
    improved tariff treatment for other products. We encourage Congress and
    the White House to take all necessary steps to ensure each of these
    agreements can be approved and implemented as soon as possible.
        In addition, we urge Congress to approve long-term extensions of
    the Andean Trade Preferences and Drug Eradication Act and the
    Generalized System of Preferences. These trade preference agreements
    enable U.S. businesses to globally source inputs and products, not
    readily available in the U.S., helping to reduce costs for businesses
    and consumers. Reauthorizing these agreements will go a long way to
    reducing the uncertainties many of our companies now face when
    attempting to engage international trade partners.
        Our organizations believe we must embrace these opportunities now
    in order to provide America with a much needed economic boost. We ask
    you to act quickly to approve and extend these trade pacts and help
    dramatically improve the economic outlook for U.S. businesses. Our
    organizations stand ready to work with Congress and the Administration
    to help ensure that the promise offered by these trade agreements soon
    becomes a reality.
                Sincerely,

    American Bakers Association;
    American Beverage Association;
    American Frozen Food Institute;
    American Meat Institute;
    Distilled Spirits Council of the United States;
    Grocery Manufacturers Association;
    International Dairy Foods Association;
    National Chicken Council;
    National Confectioners Association;
    National Fisheries Institute;
    National Frozen Pizza Institute;
    National Turkey Federation;
    Pet Food Institute;
    Snack Food Association;
    Sweetener Users Association.

    CC:

    Senate Finance Committee;
    House Ways and Means Committee;
    House Agriculture Committee.

                                  attachment 2
    April 19, 2011

    Hon. Ron Kirk,
    U.S. Trade Representative,
    Washington, D.C.

        Dear Ambassador Kirk:

        We write to you as new Members of the House of Representatives with
    proven experience creating jobs, manufacturing products, and providing
    services. To put our business backgrounds to use, we have recently
    formed a working group to propose and advance policy intended to spur
    job growth throughout our economy. Our experience bears out that
    expanding trade will support new jobs in many industries, but few
    sectors are as trade-dependent as agriculture, which drives commerce in
    many of our Congressional Districts.
        As we work to recover from one of the worst recessions in our
    nation's history, we urge you to send implementing language to Congress
    on the pending free trade agreements (FTAs) with South Korea, Colombia,
    and Panama as quickly as possible. If they are fully implemented, these
    FTAs will represent nearly $3 billion in new trade for American
    agricultural producers.
        However, we are concerned that inaction on the pending FTAs will
    result in lost opportunities for American farmers and ranchers.
    Colombia will soon implement trade agreements with Canada and the
    European Union, while Argentina and Brazil already have critical access
    to the Colombian market. Similarly, South Korea is in the process of
    completing trade pacts with many of our agricultural competitors,
    including Chile, Australia, New Zealand, Canada, the European Union,
    and Mexico. At a time when unemployment still hovers around nine
    percent, we cannot afford to sacrifice significant access to these
    overseas markets.
        Should the U.S.-Korea Free Trade Agreement (KORUS FTA) be adopted
    in short order, increased farm exports to South Korea will likely
    surpass $1.8 billion annually, a 46 percent increase over current
    levels. U.S. exports of wheat, corn, soybeans, cotton, fresh cherries,
    grape juice, and numerous other processed foods will receive immediate
    duty-free access under the FTA. Additionally, the U.S. dairy industry,
    which endured significant losses amidst the global economic downturn in
    2009, will take in roughly $380 million per year during the first few
    years of the FTA as a result of expanded market access for cheese,
    whey, skim milk powder, and other products. The KORUS FTA, if realized
    at its full potential, would result in the creation of thousands of new
    jobs in the agricultural and rural sectors of our economy.
        Likewise, implementation of the U.S.-Colombia Trade Promotion
    Agreement would enable over 80 percent of current U.S. exports to
    become duty-free upon enactment, including beef, cotton, wheat,
    soybeans, apples, and cherries. Total export gains for American
    agriculture would likely exceed $815 million per year upon full
    implementation. Similarly, the U.S.-Panama Trade Promotion Agreement
    would allow more than half of our current agricultural exports to
    become duty-free immediately upon implementation. Additional exports
    could total $195 million as a result of the pact's approval. The two
    FTAs combined would likely yield between 6,000 and 8,000 new jobs as a
    result of this enhanced market access.
        While you are undoubtedly familiar with these figures, we believe
    that they bear repeated emphasis in the current economic climate.
    Moreover, moving forward on these FTAs would support the President's
    stated goal of doubling U.S. exports by 2014. We know from our
    experience building businesses, in some cases in agriculture, that
    increasing trade nets new jobs across many sectors of our economy. We
    therefore support quick action on the FTAs with South Korea, Colombia,
    and Panama and we are hopeful that you will send us the implementing
    language for the pacts in very short order.
                Sincerely,

     Hon. Reid J. Ribble,                 Hon. Tom Reed,
    Member of Congress;                  Member of Congress;

     Hon. Billy Long,                     Hon. Vicky Hartzler,
    Member of Congress;                  Member of Congress;

     Hon. Marlin A. Stutzman,             Hon. Richard L. Hanna,
    Member of Congress;                  Member of Congress;

     Hon. Robert T. Schilling,            Hon. Eric A. ``Rick'' Crawford,
    Member of Congress;                  Member of Congress;

     Hon. Mike Kelly,                     Hon. E. Scott Rigell,
    Member of Congress;                  Member of Congress;

     Hon. Robert J. Dold,                 [*]
    Member of Congress;
    * Editor's note: There was no
     signatory adjacent to Mr. Dold's
     signature.
      Hon. Bill Flores,                    Hon. Diane Black,
    Member of Congress;                  Member of Congress.