[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.
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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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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.
                                  
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