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



 
    MARKET CLOSED: FOREIGN TRADE BARRIERS FACING SMALL AGRICULTURE 
                               EXPORTERS

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

                                HEARING

                               before the

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD
                             JULY 26, 2012

                               __________

                               [GRAPHIC] [TIFF OMITTED] TONGRESS.#13
                               

            Small Business Committee Document Number 112-082
              Available via the GPO Website: www.fdsys.gov



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                            C O N T E N T S


                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Hon. Scott Tipton................................................     1
Hon. Mark Critz..................................................     2

                               WITNESSES

James Boyer, Owner, Jim Boyer Hogs, Ringstead, IA................     8
Jason Hafemeister, Vice President, Allen F. Johnson and 
  Associates, Washington, DC.....................................     5
Roger Mix, Owner-Operator, Mix Farms, Center, CO.................     3
Carl T. Shaffer, President, Pennsylvania Farm Bureau, 
  Mifflinville, PA...............................................     7

                                APPENDIX

Prepared Statements:
    James Boyer, Owner, Jim Boyer Hogs, Ringstead, IA............    17
    Jason Hafemeister, Vice President, Allen F. Johnson and 
      Associates, Washington, DC.................................    32
    Roger Mix, Owner-Operator, Mix Farms, Center, CO.............    37
    Carl T. Shaffer, President, Pennsylvania Farm Bureau, 
      Mifflinville, PA...........................................    40
Additional Materials for the Record:
    Letter to Ambassador Kirk....................................    45
                   HOUSE COMMITTEE ON SMALL BUSINESS

                     SAM GRAVES, Missouri, Chairman
                       ROSCOE BARTLETT, Maryland
                           STEVE CHABOT, Ohio
                          STEVE KING, Colorado
                         MIKE COFFMAN, Colorado
                     MIKE MULVANEY, South Carolina
                         SCOTT TIPTON, Colorado
                         JEFF LANDRY, Louisiana
                   JAIME HERRERA BRUTLER, Washington
                          ALLEN WEST, Florida
                     RENEE ELLMERS, North Carolina
                          JOE WALSH, Illinois
                       LOU BARLETTA, Pennsylvania
                        RICHARD HANNA, New York
                     ROBERT T. SCHILLING, Illinois
               NYDIA VELAZQUEZ, New York, Ranking Member
                         KURT SCHRADER, Oregon
                        MARK CRITZ, Pennsylvania
                        YVETTE CLARKE, New York
                          JUDY CHU, California
                     DAVID CICILLINE, Rhode Island
                       CEDRIC RICHMOND, Louisiana
                        JANICE HAHN, California
                         GARY PETERS, Michigan
                          BILL OWENS, New York
                      BILL KEATING, Massachusetts

                      Lori Salley, Staff Director
                    Paul Sass, Deputy Staff Director
                      Barry Pineles, Chief Counsel
                  Michael Day, Minority Staff Director


    MARKET CLOSED: FOREIGN TRADE BARRIERS FACING SMALL AGRICULTURE 
                               EXPORTERS

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                        THURSDAY, JULY 26, 2012

              House of Representatives,    
               Committee on Small Business,
                       Subcommittee on Agriculture,
                                          Energy and Trade,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
room 2360, Rayburn House Office Building. Hon. Scott Tipton 
(chairman of the subcommittee) presiding.
    Present: Representatives Tipton, King, Critz, and Keating.
    Chairman Tipton. Good morning. I would like to thank all of 
you for joining us today. The hearing will now come to order.
    I would like to begin by extending a special thanks to each 
of our agricultural industry witnesses for taking time out of 
your business schedules to be able to travel to Washington, 
D.C. and to be able to appear before this Committee. I would 
like to especially recognize Mr. Roger Mix, a constituent of 
mine from Colorado's Third Congressional District out of 
Center, Colorado, and we look forward to everyone's testimony.
    Today's issue is very important to small agricultural 
producers and their key role within the American economy. The 
challenges posed by foreign non-tariff barriers to agricultural 
trade. Approximately 91 percent of farming and ranching 
operations in the United States is classified as small by the 
United States Department of Agriculture. In comparison to most 
other industries, agricultural operations depend more heavily 
on overseas trade for a significant portion of their income. It 
has often been said that one of every four acres planted in the 
United States is planted for the export markets. Overall, 
exports account for up to 30 percent of farm income. 
Agricultural trade is also an important job creator in the 
United States and our economy needs job creators right now.
    According to the Department of Agriculture, farm exports 
support more than one million jobs on and off the farm. Along 
with many of my colleagues, I believe that more can be done to 
take advantage of our nation's apparent comparative advantage 
and agricultural production by further expanding our access to 
foreign markets. A common tool employed by foreign nationals to 
block U.S. agricultural products is the use of non-tariff trade 
barriers, predominantly sanitary and phytosanitary measures. 
Because nations have the sovereign right to be able to block 
products that pose a threat to human or animal health that 
could contaminate their food systems, they have used these 
measures in some instances as a means to be able to block 
competition.
    The agricultural community and Congress have taken notice. 
I have heard from a number of potato and other commodity 
growers in my district regarding the harm caused to them by 
unfair trade. These barriers have to be able to be dealt with 
and I personally met with USDA Secretary Edward Avalos to be 
able to discuss this problem. I would also like to include, 
without objection, for the record, a letter that we sent to 
Ambassador Ron Kirk in regards to our export of potatoes into 
the Mexican market as well.
    The purpose of today's hearing is to examine these issues 
further and to learn how sanitary and phytosanitary measures 
have been used as trade weapons against American agricultural 
producers and the resulting economic impact on all small 
businesses.
    I would now like to yield to Ranking Member Critz for his 
opening statement.
    Mr. Critz. Thank you, Mr. Chairman. I was going very 
quickly through my statement here as we have votes that could 
be coming within the next half hour, 45 minutes. So I will try 
to go very quickly so that we can get to your testimony.
    Right now, job creation is priority one for this Committee 
and that means looking to new markets, whether they are 
domestic or abroad. One such opportunity lies in agriculture 
exports which have exceeded imports since the early '70s. In 
fact, last year, U.S. agricultural exports reached nearly $140 
billion outpacing the previous record set in 2008 by 23 billion 
and suppressing 2010's totals by 29 billion. This growth shows 
that America's farmers are essential to leading our economy 
forward, spurring development and employment gains throughout 
the country.
    Within this sector, small farms play a key role, accounting 
for 91 percent of all farms and 23 percent of overall 
agricultural production. Not surprisingly, these smaller farms 
are actively engaged in international trade, which now drives 
20 percent of their employment. This is especially true for my 
home state. During an April field hearing in Pittsburgh, we 
heard the significant role that international trade plays in 
western Pennsylvania's economy. In fact, agricultural exports 
support more than 20,000 jobs in our state. Further inroads in 
foreign markets are necessary to generate even more jobs in our 
local communities. In order to do so, key challenges must be 
overcome.
    The breadth of restraints is staggering and they reach into 
nearly every product grown or raised on America's farm. For our 
country's poultry producers, this means that such important 
markets like China, India, and Japan are off limits. Pork 
producers cannot export to the European Union, Singapore, or 
even Peru. The impact of this reaches into communities like 
mine in western Pennsylvania, where local dairy farmers are 
left with fewer customers even though foreign goods are 
plentiful in local stores. The truth is that for many the 
promises of free trade have never materialized, and America's 
farms face the prospect of having to compete with foreign 
imports without having access to those very markets.
    Reversing unfair practices has been extremely difficult. 
The U.S. trade representatives have taken the lead in 
mitigating the impact of these standards. They have worked to 
undue restrictions in Japan and Korea in cherries and citrus, 
as well as barriers in South Africa and Sri Lanka for apples 
and seed potatoes. They were also able to get Kuwait and Taiwan 
to lift unwarranted restrictions on U.S. exports of poultry and 
poultry products, while it also negotiated full market access 
for U.S. beef to the United Arab Emirates. Clearly, this is 
progress, but more needs to be done if we are going to achieve 
the president's goal of doubling U.S. exports by the end of 
2014.
    Aside from the bilateral efforts of the USTR, there is a 
lot riding on the Trans-Pacific Partnership. This multiregional 
trade pact will ideally set common certification requirements 
for agricultural products which will ultimately be adopted by 
all signees of the partnership.
    In the essence of time, I would ask unanimous consent if I 
could enter my full statement into the record. And I want to 
thank all the witnesses in advance, and I look forward to their 
testimony.
    Chairman Tipton. Thank you, Ranking Member Critz. We would 
like to be able to go ahead and start with introducing a 
constituent of mine for our first portion of testimony this 
morning, Mr. Roger Mix. He is from Center, Colorado. I was 
there just a couple of weeks ago. Roger is a fourth generation 
farmer and has been active in a number of agricultural producer 
organizations. Most recently, he served as president of the 
National Potato Council from 2010 to 2011. Roger is testifying 
today on behalf of both the Colorado Potato Committee and the 
National Potato Council. Mr. Mix, thank you for appearing today 
and you now may deliver your testimony.

STATEMENTS OF JAMES BOYER, OWNER, JIM BOYER HOGS, TESTIFYING ON 
     BEHALF OF THE NATIONAL PORK PRODUCERS COUNCIL; JASON 
 HAFEMEISTER, VICE PRESIDENT, ALLEN F. JOHNSON AND ASSOCIATES; 
ROGER MIX , OWNER-OPERATOR, MIX FARMS, TESTIFYING ON BEHALF OF 
 THE COLORADO POTATO ADMINISTRATIVE COMMITTEE AND THE NATIONAL 
 POTATO COUNCIL; CARL T. SHAFFER, PRESIDENT, PENNSYLVANIA FARM 
                             BUREAU

                     STATEMENT OF ROGER MIX

    Mr. Mix. Thank you. Good morning, Chairman Tipton, Ranking 
Member, and other members of the Committee. Thank you for 
inviting me to testify before you today. It is an honor and a 
privilege to be here.
    I am here today representing over 170 potato growers in the 
San Luis Valley of south central Colorado. Colorado produced 21 
million hundredweight of potatoes in 2011 with an approximate 
market value of $200 million. We produce over 100 varieties of 
potatoes with 95 percent marketed as fresh potatoes, which 
ranks Colorado as the second largest producer of fresh potatoes 
in the nation.
    Colorado is the largest United States shipper of fresh 
potatoes to Mexico, but access has been limited to a 26 
kilometer deep area along the northern border of Mexico. The 
opportunity to expand this market represents a significant 
economic opportunity for Colorado and other U.S. potato 
growers. Currently, about one in every five rows of potatoes 
grown in the United States is exported, but in Colorado it is 
only one in every 20.
    I want to thank you for calling this hearing to examine the 
effects of the application of non-scientifically based sanitary 
and phytosanitary standard on agriculture products grown in the 
United States and exported to our value-trading partners. All 
too often, the application of these standards has resulted in 
reduced market access for the agricultures grown by America's 
family farmers, who operate small businesses across the 
country. As we all understand, these small businesses are the 
heart and the soul of our economy.
    In March 2003, the United States and Mexico signed a market 
access agreement that allowed for the shipment of U.S. fresh 
potatoes from all 50 states into a 26-kilometer deep area along 
the border of Mexico. This signed agreement called for 
increased access to the five northern Mexican states in 2004 
and for the consideration of full access by 2005.
    Presently, the shipping of U.S. fresh potatoes to Mexico is 
limited to 26 kilometers. In 2011, U.S. potato growers exported 
$39 million worth of fresh potatoes to Mexico, making it our 
second largest export market behind Canada. If our products had 
full access to all of Mexico, we estimate that would become the 
largest market for U.S. fresh potatoes with a value in excess 
of $150 million.
    Many of the obstacles raised by Mexico to justify their 
failure to honor commitments in the 2000 agreement have been 
phytosanitary in nature, but were not based in sound science 
and did not justify trade restrictions. For example, Mexican 
potatoes produced in areas of the country with identical pass 
profiles as those in U.S. production areas have been allowed to 
move throughout Mexico if they were washed or brushed and 
labeled for consumption only. Yet, U.S. fresh potatoes exports 
to Mexico are not allowed to move in a similar manner.
    The application of the different standard for domestic 
production than that for imports clearly violates the globally 
accepted principle of national treatment. Mexico also argues 
that the pest finds on U.S. potatoes entering Mexico have been 
excessive. U.S. growers and shippers apply rigorous production 
and testing protocols to ensure that shipments to Mexico are 
free from pests. According to USDA's Animal and Plant Health 
Inspections Service, legitimate pest finds on U.S. potatoes 
entering Mexico are at or below the levels of pest detections 
for any Mexican agriculture products entering the U.S. The lack 
of timely and accurate reporting of test finds is used by 
Mexico to artificially inflate the number of pest finds.
    Recently, U.S. and Mexico negotiators were able to reach an 
agreement on a path forward to develop a market access 
agreement for the U.S. for potatoes to Mexico. As Mexico, 
Canada, and other key trading partners seek to become 
participants in the Trans-Pacific Partnership, we need to be 
vigilant in using that process to increase the commitments to 
signed space resolutions on sanitary issues. The trade 
agreement negotiation process provides an opportunity to gauge 
our trading partners' commitment to the scientific evaluation 
of sanitary risk, as well as our internationally accepted trade 
rules and standards.
    We are encouraged that the progress toward expanding potato 
trade with Mexico and as of TPP negotiations continue, 
America's family potato farmers believe there is a need for 
continued and visible progress on the final work plan that 
would give potato growers and shippers in Colorado and the rest 
of the U.S. the opportunity to export potatoes to Mexico. A 
lack of progress on the potato issue would call into question 
Mexico's commitment to be a responsible partner in the TPP 
agreement.
    Thank you again for the opportunity to testify.
    Chairman Tipton. Thank you, Mr. Mix.
    I neglected to mention, and you hit it right on the button, 
we do have five minutes to be able to testify. When you do see 
the green light on you are doing great. When the yellow light 
comes on you have a minute left. And when the red light comes 
on, if you would wrap up your testimony. And you did perfect. 
Thanks a lot.
    Mr. Mix. Thank you.
    Chairman Tipton. Our next witness is Jason Hafemeister. He 
is vice president of Allen F. Johnson and Associates, a trade 
consulting firm headquartered in Washington, D.C. In this 
capacity, he works with businesses and associations in 
identifying trade opportunities and barriers for American 
agricultural producers. Prior to joining Allen F. Johnson and 
Associates, he served as deputy assistant and U.S. trade 
representative for agriculture, where he led agricultural 
negotiator at a number of treaty discussions including the WTO 
to a round of trade negations. The Central America-Dominican 
Republic Free Trade Agreement and negotiations over China's 
success to the WTO.
    Mr. Hafemeister, you may deliver your testimony. Thank you 
for being here.

                 STATEMENT OF JASON HAFEMEISTER

    Mr. Hafemeister. Great. Good morning. Thank you, Mr. 
Chairman, Ranking Member Mr. Critz, and Mr. King. It is good to 
be here.
    What I would like to focus my time on here is to summarize 
three of the key points that we face in agriculture when 
looking at unjustified trade restrictions on our exports. 
First, right now, U.S. agriculture exports are doing great, but 
even today we are performing below our potential because of 
unjustified health and safety measures applied by other 
countries. And in the future we run the risk of even more 
disruption of our exports as countries revert to unwarranted 
technical barriers to restrict trade, either to protect 
domestic industries from competition or for misguided efforts 
to protect health and safety. The kind of problems our products 
face, which I think are well explained in the case of Mexico 
and potatoes, range from shipments held up in ports because of 
concerns about a particular government test that an inspector 
finds, or production or labeling requirements that other 
countries employ that force changes in how we have to produce 
goods if we are going to access the market, or limits on 
chemicals or other residues that may show up in our products 
that are more stringent than required by the U.S. laws or 
international standards. Or even just outright bans on our 
products because of purported concerns about the safety of U.S. 
products. So these are the reasons, some sincere and some not 
so, that are used to stop our products. And in the future, we 
expect it is going to be an even bigger problem as tariffs come 
down and we conclude other trade agreements.
    So I do not think there is any dispute about the importance 
of this. What I think the issue is is making them a top 
priority in U.S. trade policy and implementing effective action 
plans to improve our export opportunities. Reducing tariffs in 
other countries or running promotion programs to boost exports 
will deliver no benefits if our exports can be shut down by 
unjustified import restrictions. That means the United States 
need to prioritize staffing, operations, and policies that give 
our trade negotiators the tools needed to convince other 
countries to establish science-based health and safety 
standards and work to facilitate trade rather than trying to 
block it. In particular, technical agencies, such as agencies 
within USDA, FDA, and EPA need to prioritize discouraging other 
countries from erecting unjustified barriers and challenging 
unjustified barriers when they are established.
    Finally, third point, we have a strong set of principles 
already to guide us in world trade in the WTO. They require 
countries to establish science-based measures and encourage 
them to facilitate trade when there may be different approaches 
across countries' health and safety systems. But this set of 
principles needs to be strengthened by prioritizing efforts to 
foster trade through international standard organizations and 
through trade negotiations, such as the Trans-Pacific 
Partnership which was mentioned earlier.
    I will give you two examples. One is the United States 
needs to work in the Codex Alimentarius to set more common 
standards that recognize scientific consensus on the safe use 
of technologies so that countries across the world, when they 
recognize a product as safe, will allow it to be imported. This 
is particularly true in veterinary drugs. Similar work is 
needed in the World Animal Health Organization on animal 
diseases and in the International Plant Protection Convention 
on plant pests.
    Similarly, the United States needs to negotiate agreements 
with other countries that facilitate trade by delivering 
enforceable agreements that recognize the U.S. system as 
delivering high levels of food safety and protection against 
pests and diseases. Important ideas that should be included in 
these negotiations include developing common export 
certificates to reduce the complexity of meeting paperwork 
requirements; recognition by other countries that the U.S. 
system, while it may be different in some technical details 
from theirs, delivers world-class food safety protection 
against pests and diseases, protection that is equal or higher 
than exists in the importing country; and providing procedural 
safeguards that allow exporters time to comment on and adapt 
new measures before they are finalized.
    America's farm and ranch families include some of the most 
successful exporters in this country. They, along with the 
network of food processors, brokers, and trade servicing 
professionals depend on keeping U.S. export markets open. 
Health and safety barriers are the biggest threat to reducing 
our current exports and can place a cap on their future growth. 
Moving aggressively to stop these barriers from being put on 
place or removing those that exist will provide a tremendous 
benefit to our farmers.
    Thank you for your time, and I am happy to answer any 
questions.
    Chairman Tipton. Thank you. Our next witness, I will now 
yield to Ranking Member Critz to be able to introduce.
    Mr. Critz. Thank you, Mr. Chairman.
    I would like to introduce Mr. Carl Shaffer, president of 
the Pennsylvania Farm Bureau. Pennsylvania Farm Bureau is the 
state's largest farm organization with a volunteer membership 
of more than 50,000 farm and rural families representing farms 
of every size and commodity across Pennsylvania. Mr. Shaffer 
also serves on the American Farm Bureau Federal Board of 
Directors where he serves on the Trade Advisory Committee. Mr. 
Shaffer continues to be an active farmer himself, growing 
vegetables and grains on 1,800 acres of farm land in Columbia 
County, Pennsylvania. Among the much recognition for leadership 
and achievement in agriculture, Mr. Shaffer was named as a 
Master Farmer in 1996, one of the highest honors awarded to 
farmers in the Commonwealth.
    Mr. Shaffer, if we could have your testimony.

                  STATEMENT OF CARL T. SHAFFER

    Mr. Shaffer. Thank you, Mr. Tipton. Thank you very much for 
the opportunity to be here, and Ranking Member Critz, and the 
rest of the Committee.
    Trade matters to Pennsylvania and America's farmers. As you 
well know, more than 95 percent of the global population lives 
beyond our borders. As such, agriculture is mindful of global 
markets, the opportunities they present and the trade barriers 
that exist. Previously, barriers to U.S. agricultural trade 
were mostly confined to tariffs. As tariffs on many 
agricultural products have been reduced, other forms of 
barriers have been increased, though they essentially serve the 
same function--restricting market access.
    You may have seen a report published by the Office of the 
U.S. Trade Representative, which gives an account of the 
sanitary barriers maintained by nations against the United 
States agricultural exports. Within this report, the primary 
concerns of Pennsylvania agriculture include restrictions on 
biotechnology; export health certificates for poultry, pork, 
dairy, and dairy products, specifically regarding Russia and 
India; and the increased use of geographic indicators. Formal 
negotiations between nations can act to reduce tariff and non-
tariff trade barriers. However, in negotiating these 
agreements, we must strive to make sure we benefit the entire 
agricultural economy, not just parts of it. For example NATFA 
did nothing to address the Canadian tariff on U.S. dairy 
products. Canada imposes out-of-quota tariffs on dairy products 
that exceed 200 percent, with some as high as 292\1/2\ percent. 
This is particularly harmful to Pennsylvania's dairy industry 
in that we could be exporting cheese to our northern neighbors 
if NATFA had eliminated or reduced this barrier.
    U.S. negotiations should use the Trans-Pacific Partnership 
negotiations to address these Canadian tariffs and expand 
market opportunities for America's dairy producers close to 
home. As you know, the dairy sector has taken several hits on 
the chin lately. Any effort we can take to find long-term, 
reliable markets for our dairy products will help decrease 
price volatility for our dairy farmers. The conversation about 
geographic indicators as a non-tariff barrier is an emerging 
and difficult challenge. Pennsylvania's dairy industry is 
concerned about the common names for dairy products, like 
mozzarella or feta cheese, or even Greek yogurt being 
restricted in use.
    Affordable and reliable shipping of commodities and foreign 
products is also essential in delivering U.S. agricultural 
products to foreign consumers and to compete in world markets. 
Our inland waterways are in need of continuing repair and 
maintenance to locks to preserve a major domestic shipping 
advantage that the U.S. has over many other nations in the 
movement of agricultural goods. Our seaports need to be 
improved to take advantage of and to be ready for the 
competition that will come from nations after the expansion of 
the Panama Canal moves freight into even larger ships that 
require deeper harbors.
    Even though Pennsylvania is not often considered to be an 
agricultural exporter, poor infrastructure is a major concern 
of farms. Lone Maple Farms of New Alexandria in Pennsylvania's 
12th Congressional District sells all the soybeans they grow to 
Agland Co-op in neighboring Ohio. Their beans are loaded on a 
barge, floated down the Ohio and Mississippi Rivers, and loaded 
onto ships headed into Asia. Unfortunately, Gulf Coast ports 
are not able to accommodate the larger ships that will soon 
navigate the Panama Canal. The inability to dock, load, and 
unload the post-Panamax ships in the Gulf Coast could limit the 
foreign markets currently enjoyed by Lone Maple Farms and 
several other Pennsylvania farmers.
    In closing, America's agriculture depends on export 
markets. Policymakers must remain committed to reducing 
sanitary and phytosanitary trade barriers. Moreover, an 
efficient, reliable, export-oriented transportation system is 
necessary to get agricultural goods to foreign markets. 
Agriculture matters to the American economy, and trade matters 
to agriculture.
    I really look forward to your questions. Thank you.
    Chairman Tipton. Thank you, Mr. Shaffer.
    Our final witness today is Mr. Jim Boyer. Jim raises hogs 
on his family's operation located in Ringstead, Iowa. He also 
serves on the board of Iowa Farm Bureau and represents Iowa on 
the American Farm Bureau Swine Advisory Committee. He is also a 
member of the Iowa Pork Producers Association and will be 
testifying today on behalf of the National Pork Producers 
Council.
    Mr. Boyer, thank you for being here, and we look forward to 
your testimony.

                    STATEMENT OF JAMES BOYER

    Mr. Boyer. Good morning, Chairman Tipton, Ranking Member 
Critz, and members of the Subcommittee.
    As Mr. Tipton said, I am Jim Boyer, pork producer from 
Ringstead, Iowa. My wife, Lisa, and I, and our three kids, 
operate a third-generation family farm where we produce corn, 
soybeans, hogs, and cattle. I appreciate the opportunity to 
present my views and those of the U.S. pork industry on the 
application by foreign nations of non-science based sanitary 
and phytosanitary measures that restrict market access of U.S. 
pork and adversely affect small producers like myself. I also 
appreciate the interest of this Committee in assuring that 
future trade agreements include more robust and effective 
dispute resolution mechanisms to address the misuse of sanitary 
measures.
    The future of the U.S. pork industry and of American family 
hog farms like mine depend on free and fair trade and the 
continued access of our exports. The U.S. is the lowest cost 
producer of pork in the world and the number one global 
exporter of pork. In 2011, the United States exported a record 
$6.2 billion worth of pork, up from $4.8 billion in 2010. Those 
exports represent nearly 27 percent of the pork produced in the 
United States and added almost $55 to the price I receive for 
each hog I sell.
    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 which are a result of pork export. USDA 
estimates that each $1 billion in meat exported generates about 
12,000 new U.S. jobs, meaning that last year's increase in pork 
exports created about 18,000 new jobs.
    The growth in the U.S. pork export has been achieved 
despite significant foreign barriers in the form of unjustified 
health and sanitary measures. Those barriers are costing the 
U.S. economy and the pork industry billions of dollars. The 
U.S. pork industry supports the Trans-Pacific Partnership, but 
for it to be a 21st century agreement there must be a market 
access outcome similar to that achieved in the Korea and the 
Columbia Free Trade Agreements. And sanitary barriers must be 
eliminated. A strong SPS chapter with a meaningful dispute 
settlement provision must be part of the TPP, and sanitary 
restrictions on pork in all TPP countries must be eliminated. 
Vietnam alone holds incredible potential but blocks pork with 
non-science based restrictions.
    The only way to gain the support of U.S. pork producers for 
a final TPP deal will be though a robust outcome in Vietnam and 
other TPP countries in which all barriers are eliminated. 
Russia soon will be joining the World Trade Organization. 
Although Russia established a zero duty tariff rate quota for 
pork as part of its WTO essential commitments, it is highly 
unlikely that the U.S. pork industry will be able to take 
advantage of those quotas because of a long list of Russian 
sanitary barriers. Russian food safety officials recently said 
they intend to leave these unjustifiable and trade restrictive 
measures in place after Russia joins the WTO and that they may 
add new restrictions. We need Russia to eliminate its sanitary 
barriers. The EU should be one of our largest export markets, 
but because of numerous sanitary barriers it is currently one 
of our smallest export markets. We actually export more pork to 
Honduras than we do to the entire EU.
    As in the TPP and other trade deals, agriculture and pork 
must be included in any EU trade negotiations, and discussions 
on eliminating sanitary barriers also must be included. It 
makes no sense to have a standard for our TPP partners and 
another for the European Union. Taiwan unfairly restricts 
exports of U.S. pork from hogs that have been fed ractopamine, 
a feed additive approved by the FDA, 25 other countries and 
earlier this month the U.S. Codex. This restriction flies in 
the face of science. If eliminated, ISU economist Dermot Hayes 
estimates that we could see pork exports to Taiwan increase by 
an additional $417 million. Taiwan has been campaigning for 
entry in the TPP, but a country that ignores science likewise 
should have its bid to join the TPP ignored.
    In conclusion, Mr. Chairman, we are convinced if we sit by 
passively while SPS measures are incorrect or erected and 
maintained, we will see our exports rapidly erode. Pork 
producers understand that the future of our industry depends on 
adopting new and safe technologies and in expending our 
exports. We must protect our current market access from unfair 
barriers or such expansion will be impossible.
    Thank you, and I will be happy to answer any questions you 
may have.
    Chairman Tipton. Thank you, Mr. Boyer. And thank all of you 
for your testimony. We will now begin the questioning. I will 
begin, and if you can give maybe a brief answer we would 
appreciate it. And this is for all of the panelists here.
    A number of associations representing agricultural 
producers are pushing for inclusion of a WTO plus chapter in 
future trade agreements. In your opinion, would enforceability 
of SPS major requirements improve market access for small 
producers? Mr. Mix.
    Mr. Mix. I believe it would. Anything that would help as a 
fresh potato grower get access to the various export markets 
that would definitely help us and go in the right step.
    Chairman Tipton. Mr. Hafemeister.
    Mr. Hafemeister. Yes, it would. I think the key thing to 
focus on is the difference between a best endeavors commitment 
by some other country to something that is actually subject to 
dispute that we can litigate. And that I think is the key 
question in the negotiation. And without the ability to 
litigate, it is not worth much.
    Chairman Tipton. Mr. Shaffer.
    Mr. Shaffer. I think without a doubt it would be 
beneficial. With us depending on exporting 30 percent of what 
we produce, that is how critical the continuation to expand 
that market just becomes.
    Mr. Boyer. Yes, I believe so also, like the other three 
gentlemen said. It is imperative to small producers, like 
myself, that we have access to these markets. Like I said in my 
statement, 27 percent of the pork that we produce here in the 
United States goes to export markets. If we can expand that, we 
saw what the dollar value of the Taiwan market is. We look at 
the value of the Russian market. We have already achieved or 
seen what we can create by the Korea, the South Korea, and the 
Columbia trade agreements. So yes, it is definitely going to 
help small producers like myself.
    Chairman Tipton. Mr. Boyer, you spoke a lot about 
scientific-based testing to be able to make sure that the 
products are safe. We all want that. And how many agencies do 
testing on pork--U.S. agencies?
    Mr. Boyer. That I do not know off the top of my head but I 
can get you that number. Just assuming it is USDA, FDA, they 
regulate all the pharmaceuticals that we use and that is what 
is standing as a barrier, especially with Russia, the European 
Union, as some of the pharmaceuticals that we use, their 
standards for traceable amounts within the meat, anything that 
we produce. As a family farmer, I also feed my children what I 
produce on my farm. So as a producer and as a farmer, I am not 
going to--and as a father, I am not going to produce something 
that is going to be detrimental to the health of my kids.
    Chairman Tipton. Certainly.
    You know, we have groups representing--Mr. Hafemeister, 
maybe you would like to be able to speak to this--groups 
representing small agricultural producers wrote to USTR 
regarding their concerns that certain regions, such as the EU 
that Mr. Boyer had mentioned as well, are overrepresented in 
international standard setting bodies and that these regions 
use these positions to be able to legitimize non-science based 
standards. Is this a worthy concern?
    Mr. Hafemeister. I think it is certainly worth attention. 
The key issue here is that in World Health Organization 
proceedings, all countries are allowed to attend and they can 
all vote on whether or not a certain product is safe or not, 
say a veterinary drug. One of the concerns we have had is that 
some of the small countries who may otherwise not attend a 
meeting or pay attention, may find their airfare paid by the 
European Union and encouraged to vote against a standard that 
may protect European producers and damage U.S. producers.
    We just had a big vote in Rome that the U.S. won, but just 
barely, on ractopamine, which benefits pork in particular. So 
the U.S. government did a great job of convincing all these 
folks, but we are running up against some undue influence we 
thought from other countries. So it is definitely working to 
make sure these decisions are science-based and not influenced 
by anything else. But of course, we want to make sure all 
countries have bought into this process. That requires 
international organizations' cooperation, consensus, so it is a 
difficult issue.
    Chairman Tipton. Well, thank you for that. You know, we 
have worked long out of our district to be able to try to work 
with the Mexican government. We thought about a year ago we got 
there, to be able to get the potatoes out of the San Luis 
Valley down into the Mexican market. And when you are talking 
about being limited to 26 kilometers into Mexico, Mr. Mix, I 
understand that some of the potato exports going into Mexico, 
they have been denied access by the Mexican officials because 
they claim that they test positive for certain pathogens. 
However, those are the same potatoes that are tested in U.S. 
laboratories and they came up clean. Is this a common practice 
that you see?
    Mr. Mix. I believe it is getting better. Working with 
Secretary Vilsack and Under Secretary Avalos, they have brought 
this to the attention of the Mexican government. As of February 
of this year, we have only had one legitimate fine. So the 
fines have dropped due to the talks with the NAPO panel. They 
have dismissed a bunch of the fines. A lot of them were like 
PV-wide viruses that they were finding, but they have the same 
viruses in Mexico that we do in the United States. So they 
decided to dismiss the viruses. So it is getting better, but 
the thing that, you know, halters the shipments into the 26 
kilometers is if they find a pest, it is the timeliness that 
they get back to the growers. And then it just distorts 
everything. So you have to wait a certain period of time before 
you can export from that shed again. So if they find a pest, 
they hold up the proceedings and take their time before they 
let the grower know what they did find and if there was a 
second test in the United States' lab, it just takes time to do 
it. So that is the bad part about it.
    Chairman Tipton. Thank you. I would now like to yield to 
Ranking Member Critz for his questions.
    Mr. Critz. Thank you, Mr. Chairman. And before I ask my 
first question I did want to recognize a special guest that 
came down with Mr. Shaffer and the Farm Bureau, Jenna Moser, 
who is in the audience. She is a candidate for the FFA national 
officer team and came along to learn about public policy 
process and agriculture in general. So Jenna, welcome to the 
hearing. I hope this is helpful in your future. And thanks for 
being a young person who is interested in the future of 
agriculture in this country.
    With that said, Mr. Shaffer, you had mentioned about inland 
infrastructure, water infrastructure, the inland waterways, and 
you and I discussed very briefly when the Panama Canal gets 
finished, and you mentioned that as well in your testimony. And 
if you would, just elaborate. And if anyone else wants to jump 
in on this as well, elaborate on what you see as what is going 
to be happening as these larger barges come online, what the 
impact is going to be on agriculture. And sort of, if you have 
a crystal ball, what the timing is. You know, what you think, 
you know, when do you think the impact is really going to hit 
us?
    Mr. Shaffer. Okay. As I indicated in my testimony, with the 
opening up of the new Panama Canal, the post-Panamax ships are 
so much larger. They are going to be able to accommodate them 
through the canal. Unfortunately, according to USDA, there are 
only six ports in the United States that will be able to accept 
these larger vessels. Now, if we expect them to go to the 
Bahamas and be offloaded on another smaller ship to accommodate 
a U.S. port, our economic competitiveness is just going to drop 
to nothing. We are going to be uncompetitive. Now, if we do not 
wake up and address the infrastructure in our ports and harbors 
in this country to accept these larger vessels as other 
countries have done who have invested billions of dollars in 
infrastructure upgrades, we are going to be left behind. And as 
you know, for instance, it is my understanding New Orleans 
cannot accept these larger vessels, and that is where a lot of 
the majority of our agricultural products are funneled down the 
Mississippi loaded on these ships for export. So I think in the 
future it is going to be very critical to address this 
situation, and it is going to come sooner than later.
    Mr. Critz. Anyone else like to----
    Mr. Boyer. I concur with what Mr. Shaffer said, too. And 
this is outside my realm of pork, but as a producer from the 
Midwest, a lot of our agricultural raw products, be it soybean 
or corn, move down the Mississippi River. As we see the impacts 
of the drought this summer, a lot of that traffic has been 
curtained or they are moving it at a much larger expense 
because of the draft or the barges and such.
    As we look at our competition, especially in the soybean 
area, we look at the expenditures or the investment that other 
countries are making in their infrastructure. One of our 
biggest competitors for soybean is Brazil, and we look at the 
share of the soybean production that China is now buying from 
Brazil because they can move that product a lot more efficient 
than we can.
    Mr. Critz. Thank you. And this question is for Mr. Shaffer 
and for Mr. Mix about what the TPP means for farmers in 
Pennsylvania or farmers in general. Now, in Pennsylvania, my 
question was centered around dairymen and the problems 
exporting to Canada, but one of the questions I wanted to ask, 
too, is do we send potatoes as well to Mexico? Is that part of 
our market or is that too far from Pennsylvania? We do not 
export to Mexico. But what would the TPP mean to dairy and 
potatoes in both of your instances?
    Mr. Shaffer. We ship very little potatoes to Mexico, but I 
will tell you this. When I look at trade, whatever leaves any 
part of the country is making room for the rest of the product 
in the country.
    Mr. Critz. Okay.
    Mr. Shaffer. So whether it leaves from Colorado, that opens 
up more markets for our potatoes on the East Coast or anything 
else.
    Mr. Critz. I see.
    Mr. Shaffer. So that really has that effect. And dairy, as 
I said, our dairy farmers really have been taking a beating on 
price the last couple of years. And in this country, we are 
about at maximum consumption of dairy products for all 
practical purposes. So the only opportunity is exports, and 
that is why it is so vital to the dairy industry.
    Mr. Mix. I would agree with the statement of Mr. Shaffer on 
exports. You know, if Colorado does get the Mexican to all the 
nation, that market, it allows the potato movement in the 
United States to open up and there are less potatoes. So it is 
the supply and demand curve that everybody knows in the 
economics.
    We, as a potato industry, right now we are watching the 
negotiations of the TPP to see how that goes and to see what 
the reaction of the Mexican government is to that to go forward 
with it. I think that would be a definite help to us as an 
industry in Colorado being with our locality to Mexico, the 
freight advantage that we do have. So that is where we are at 
with the TPP, is just watching the negotiations and where it is 
going to go here in the next 80-90 days.
    Mr. Critz. Okay. Well, thank you. And because I know we are 
going to have votes here shortly, I have about a dozen 
questions but I will yield back so that we can get to our other 
members. Thank you.
    Chairman Tipton. Thank you, Mr. Critz. And we actually have 
had votes called now and that series will run until about 1:00. 
And I want to recognize and give Mr. King and Mr. Keating an 
opportunity to maybe ask a question before we do move on to 
vote.
    Mr. King. Thank you, Mr. Chairman. I would first inquire 
how much time is left on the clock at the vote. Pardon?
    Chairman Tipton. Nine minutes.
    Mr. King. Nine minutes. So normally here we would be able 
to head over that way with a couple minutes left but I 
appreciate being recognized and I appreciate the witnesses. I 
regret I had to step out of the room and miss the opportunity 
to introduce Mr. Boyer, who comes from--I will call it my 
neighborhood in Iowa. And some things call us away and we have 
simultaneous committee meetings and hearings going on in this 
town on a regular basis.
    I wanted to start with Mr. Mix and ask you do you know if 
there is, aside from these issues that you testified, do you 
know if there is a foreign entity out there that has regulated 
your means of production that said you have to raise potatoes 
in a certain way?
    Mr. Mix. I am not aware of a foreign entity. There are 
protocols that we have to meet to ship to Mexico. The brushing 
of dirt off and we have to apply a storage product so they do 
not sprout, but as far as a foreign entity, I am not aware of 
one.
    Mr. King. Are there any regulations that you know of that 
would regulate how you raise potatoes that could not be 
identified at the border? For example, application of a 
treatment to the potato where cleaning those potatoes, they can 
look at that potato and examine it and tell whether you have 
done what they have asked. Correct?
    Mr. Mix. Yes.
    Mr. King. So there is no regulation that you know from a 
foreign entity that regulates the means of production, just the 
product itself at the border?
    Mr. Mix. Right. They do not--there is no means of 
regulating how we grow the actual potato.
    Mr. King. Okay. I like that kind of world.
    Mr. Shaffer, I would ask you, do you know of any 
regulations of any means of production that you have to comply 
with that cannot be identified by examining the product?
    Mr. Shaffer. No, I would only referred to limited exports 
because of biotechnology issues some countries put on us that 
that might--I consider that a production tool that I use, so 
that might be one of the means you are referring to.
    Mr. King. That would be GMO?
    Mr. Shaffer. Correct. Correct.
    Mr. King. And do we not know also that that can be examined 
in the lab to determine the GMO identity?
    Mr. Shaffer. Correct.
    Mr. King. Like ground up ready beans, for example?
    Mr. Shaffer. Yes.
    Mr. King. And so we know that technical fee has been 
applied to soybeans coming in from Argentina and Brazil over 
the years and charged back again. So I understand your answer 
and I appreciate it.
    I would like to turn to Mr. Boyer and say do you know of 
any regulations of the means of production that come from an 
outside entity outside Iowa or the country that cannot be 
identified by observing the product and examining it but only 
can be a regulation on your means or method of production?
    Mr. Boyer. At this time I am not aware of some but I think 
if we are not cognizant about it, it will come to fruition. We 
see what is going on within our own country between states--
California requiring some kind of identifying of a product, if 
it was raised in a cage or not in a cage. I know for a fact you 
cannot tell from a pound of bacon if that pig was castrated 
using anesthetics or if that sow was housed in a gestation 
crate or an open pen.
    But at the same time we are seeing through the European 
Union some are processing practices. One of the problems that 
the European Union had was the color of the walls in the 
processing plants and also the style of molding using the 
processing plants. Those have been addressed by some of the 
packers, but it is still one of those issues that they are 
using, what they are saying are sanitary or phytosanitary 
measures but they are accurately not being portrayed that way.
    Mr. King. Aesthetics for hogs or aesthetics for the people 
that are processing them?
    Mr. Boyer. I could not answer that. I am not from France.
    Mr. King. You would not take that I think.
    Mr. Boyer. Yes.
    Mr. King. But in any case, what you have identified, Mr. 
Boyer, is the trade protectionism by regulating the means or 
method of production. When that happens from a foreign country, 
we see that as trade protectionism. When that happens within 
the United States, state-to-state, it is still trade 
protectionism. The Constitution of the United States reserves 
the regulation of interstate commerce to the Congress and 
prohibits it to the states for that very reason, because they 
did not want to set up trade wars between the states. Now we 
are seeing this emerge in the ag community with regulations of 
gestation crates, stalls for veal calves, how you feed ducks 
and geese for liver, the ag piece, and it will be broilers 
next. And so I am just suggesting that the language that we 
have written into the Farm Bill now that prohibits the states 
from regulating the means of production of ag products as an 
important piece of language and legislation that must go into 
law or we will see in the United States trade wars by 
regulating the means of production that are worse than the 
trade competition that you have testified to here today.
    So I thank all of the witnesses, and I thank the Chairman 
for calling this hearing. And I yield back the balance of my 
time, even realizing it is a minus 14 seconds.
    Chairman Tipton. Thank you, Mr. King.
    Mr. Keating, I would like to be able to yield to you, and 
we can see how much time we have left.
    Mr. Keating. Not much, but thank you, Mr. Chairman.
    Thank you for your comments on infrastructure improvements, 
particularly seaport infrastructure improvements. I think the 
same thing could be said for rail, as well. That would be 
helpful in our country, not just for agriculture but for 
manufacturing.
    Now, I come from a huge cranberry growing area, and I was 
going to ask you--I am also on Foreign Affairs--have you been 
helped at all by any of the U.S. missions or any diplomacy? I 
notice in cranberries, in Turkey there is a market but they do 
not even have a word for cranberries. And in Italy just 
recently they just were still calling it red fruit. So have you 
had any help from the U.S. missions in terms of trying to take 
some of the informal barriers, not the strict ones, but the 
ones that are just very real but maybe sometimes unintended?
    Mr. Mix. With potatoes, in Mexico, where we have been 
helped down there mostly is the retailers and the wholesalers 
trying to get their point across to their government that there 
is a market for the United States' potatoes going in there. So 
we are working through that avenue to get them on board with us 
to relay their point of view in their own country that there is 
a market for United States' fresh potatoes in Mexico. So we are 
not using missions but other avenues.
    Mr. Keating. Okay, quickly, the Import-Export Bank, are all 
of you utilizing that? How effective is that? We just 
reauthorized that. Is it helpful?
    Mr. Mix. I am not aware of any help on that.
    Mr. Keating. Mr. Boyer.
    Mr. Boyer. I think any influence that we can see from our 
federal government to help us open these other countries to our 
exports which, you know, in fact, increases our bottom-line and 
helps us is appreciated.
    Mr. Keating. Great. Thank you. With the seconds ticking I 
will yield back the rest of my time. And I thank all of you for 
coming.
    Chairman Tipton. Thank you, Mr. Keating. And I would like 
to thank all of our witnesses again for taking the time to be 
able to appear before us today. We do apologize for having to 
move a little quicker than we would like in regards to the 
votes that we have coming up. You have all provided insight to 
this Committee, and we pledge to be able to work with you to 
ensure that American exports, agricultural products and 
otherwise, receive fair treatment in international markets.
    I would like to be able to ask for unanimous consent that 
members have five legislative days to be able to submit 
statements and supporting materials for the record. Without 
objection, so ordered. The hearing is now adjourned.
    [Whereupon, at 10:53 a.m., the Subcommittee was adjourned.]

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