[Senate Hearing 112-742]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 112-742
 
                 THE ASIA PACIFIC: TRADE OPPORTUNITIES
                   FOR AGRICULTURE AND FOOD PRODUCERS
                        FROM THE GREAT PLAINS TO
                         THE PACIFIC NORTHWEST
=======================================================================


                                HEARING

                               before the

       SUBCOMMITTEE ON INTERNATIONAL TRADE, CUSTOMS, AND GLOBAL 
                            COMPETITIVENESS

                                 of the

                          COMMITTEE ON FINANCE
                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 18, 2012

                               __________

                                     
                                     

            Printed for the use of the Committee on Finance



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                          COMMITTEE ON FINANCE

                     MAX BAUCUS, Montana, Chairman

JOHN D. ROCKEFELLER IV, West         ORRIN G. HATCH, Utah
Virginia                             CHUCK GRASSLEY, Iowa
KENT CONRAD, North Dakota            OLYMPIA J. SNOWE, Maine
JEFF BINGAMAN, New Mexico            JON KYL, Arizona
JOHN F. KERRY, Massachusetts         MIKE CRAPO, Idaho
RON WYDEN, Oregon                    PAT ROBERTS, Kansas
CHARLES E. SCHUMER, New York         MICHAEL B. ENZI, Wyoming
DEBBIE STABENOW, Michigan            JOHN CORNYN, Texas
MARIA CANTWELL, Washington           TOM COBURN, Oklahoma
BILL NELSON, Florida                 JOHN THUNE, South Dakota
ROBERT MENENDEZ, New Jersey          RICHARD BURR, North Carolina
THOMAS R. CARPER, Delaware
BENJAMIN L. CARDIN, Maryland

                    Russell Sullivan, Staff Director

               Chris Campbell, Republican Staff Director

                                 ______

             Subcommittee on International Trade, Customs,
                       and Global Competitiveness

                      RON WYDEN, Oregon, Chairman

JOHN D. ROCKEFELLER IV, West         JOHN THUNE, South Dakota
Virginia                             ORRIN G. HATCH, Utah
JOHN F. KERRY, Massachusetts         CHUCK GRASSLEY, Iowa
CHARLES E. SCHUMER, New York         MIKE CRAPO, Idaho
DEBBIE STABENOW, Michigan            PAT ROBERTS, Kansas
BILL NELSON, Florida
ROBERT MENENDEZ, New Jersey

                                  (ii)


                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Wyden, Hon. Ron, a U.S. Senator from Oregon, chairman, 
  Subcommittee on International Trade, Customs, and Global 
  Competitiveness, Committee on Finance..........................     1
Thune, Hon. John, a U.S. Senator from South Dakota...............     3

                        ADMINISTRATION WITNESSES

Hormats, Hon. Robert, Under Secretary for Economic Growth, 
  Energy, and the Environment, Department of State, Washington, 
  DC.............................................................     6
Siddiqui, Ambassador Isi, Chief Agriculture Negotiator, Office of 
  the U.S. Trade Representative, Washington, DC..................    10
Vetter, Darci, Deputy Under Secretary, Farm and Foreign 
  Agricultural Services, Department of Agriculture, Washington, 
  DC.............................................................    13

                            PUBLIC WITNESSES

Powers, Mark, vice president, Northwest Horticultural Council, 
  Yakima, WA.....................................................    25
Casper, Paul, president, South Dakota Soybean Association, Sioux 
  Falls, SD......................................................    26
Crider, Steve, international sales manager, Amy's Kitchen, 
  Medford, OR....................................................    28
Thomson, Steve, executive vice president, King Estate Winery, 
  Eugene, OR.....................................................    30

               ALPHABETICAL LISTING AND APPENDIX MATERIAL

Casper, Paul:
    Testimony....................................................    26
    Prepared statement...........................................    41
Crider, Steve:
    Testimony....................................................    28
    Prepared statement...........................................    44
Hormats, Hon. Robert:
    Testimony....................................................     6
    Prepared statement...........................................    48
Powers, Mark:
    Testimony....................................................    25
    Prepared statement...........................................    54
Siddiqui, Ambassador Isi:
    Testimony....................................................    10
    Prepared statement...........................................    61
Thomson, Steve:
    Testimony....................................................    30
    Prepared statement...........................................    65
Thune, Hon. John:
    Opening statement............................................     3
    Prepared statement...........................................    70
Vetter, Darci:
    Testimony....................................................    13
    Prepared statement...........................................    72
Wyden, Hon. Ron:
    Opening statement............................................     1

                             Communication

American Farm Bureau Federation..................................    83


                 THE ASIA PACIFIC: TRADE OPPORTUNITIES



                   FOR AGRICULTURE AND FOOD PRODUCERS



                        FROM THE GREAT PLAINS TO



                         THE PACIFIC NORTHWEST

                              ----------                              


                     WEDNESDAY, APRIL 18, 2012    

                           U.S. Senate,    
           Subcommittee on International Trade,    
               Customs, and Global Competitiveness,
                                      Committee on Finance,
                                                    Washington, DC.
    The hearing was convened, pursuant to notice, at 2:05 p.m., 
in room SD-215, Dirksen Senate Office Building, Hon. Ron Wyden 
(chairman of the subcommittee) presiding.
    Present: Senators Cantwell and Thune.
    Also present: Democratic Staff: Jayme White, Staff 
Director. Republican Staff: Paul Poteet, Senior Tax Policy 
Advisor.

   OPENING STATEMENT OF HON. RON WYDEN, A U.S. SENATOR FROM 
OREGON, CHAIRMAN, SUBCOMMITTEE ON INTERNATIONAL TRADE, CUSTOMS, 
        AND GLOBAL COMPETITIVENESS, COMMITTEE ON FINANCE

    Senator Wyden. Good afternoon. This Subcommittee on 
International Trade, Customs, and Global Competitiveness will 
come to order.
    I want to say to all our guests, we are going to have a bit 
of a challenge this afternoon because the Senate Budget 
Committee, on which both Senator Thune and I serve, has begun 
to meet on the important budget questions, so we are going to 
be running a little bit of a shuttle this afternoon, trying to 
make sure we can be in two places at once. I just want to tell 
our guests right at the outset that we appreciate their 
patience, and of course being here.
    Expanded international trade is a huge opportunity for 
American farmers and producers who can literally feed the Asia 
Pacific's growing appetite for high-value food products. To 
fully tap this growing demand, American producers are going to 
rely on the Federal Government to establish a level economic 
playing field in the Asia Pacific region.
    Under the leadership of Chairman Baucus and Ranking Member 
Hatch, this subcommittee's mission is to identify, to 
understand, and to influence the changes under way in our 
economy. We do all this so the American trade agenda reflects 
our current economic interests.
    Our goal is to ensure that American workers and businesses 
can successfully compete in the global marketplace. We need 
only to look at the economies of the Asia Pacific region to 
immediately witness rapidly changing economies and the 
opportunities they hold for increased U.S. exports and job 
creation.
    In emerging markets like Russia and China, incomes are 
rapidly rising, and the middle class is expanding. I intend for 
American producers of agriculture to have the opportunity to 
tap that growing demand that an expanding middle class will 
have for high-value agriculture and food products. The number 
of middle-class households in China is expected to almost 
triple to nearly 350 million people by the next decade.
    The importance of China as an export market for agriculture 
is going to continue to grow. That is why our trade 
relationship with China continues to confound so many 
Americans. On one hand, China routinely violates its trade 
obligations. On the other hand, China represents one of our 
most important export markets for agriculture and food.
    The opportunities are similar in Vietnam, Thailand, and 
Indonesia, where the number of middle-class households is 
expected to double by 2020. In the Pacific Northwest, our 
farms, our factories, and our kitchens can produce more than 
can be consumed locally.
    So the growth of the Asian Pacific economy represents a way 
to create, and more importantly sustain, good-paying jobs that 
rely on export sales. These are good-paying jobs associated 
with growing things, adding value to what we grow, and then 
shipping finished products to Asian consumers.
    When it comes to agriculture and food, our domestic supply 
chain is fully integrated, which means that boosted agriculture 
and food exports hold the potential to create thousands of new 
jobs. But we do face significant tariff and non-tariff barriers 
to American agriculture and food producers in the Asia Pacific 
area. These are barriers that undermine our exports and limit 
job creation.
    According to testimony provided by today's private sector 
panel, American wine faces a 14-percent tariff into China. Some 
of our competitors are not hit with such an onerous tariff. 
Pacific Northwest pears, apples, and cherries are burdened by 
tariffs that range from 10 to 50 percent in the Asia Pacific 
region. Some prepared organic foods are challenged by tariff 
rates of up to 30 percent. It is going to require some deft 
work by American diplomats and trade negotiators to see that 
these trade barriers are promptly dismantled.
    But simply dismantling traditional tariff or protectionist 
health and safety barriers is not enough to enable American 
agriculture and food producers to tap growing demand in the 
region. When Pacific Rim economies share a natural resource 
like the Pacific Ocean, there must be a set of disciplines in 
place to ensure that the resource is protected from things such 
as over-fishing. Enforcement of laws to combat illegal logging 
among Asia Pacific countries is going to be important if 
American wood products are to be provided a fair chance to 
compete.
    Sellers and buyers of agriculture and food products must be 
free to travel among Asia Pacific economies to meet each other 
and to conduct business. To facilitate online direct sales to 
consumers with a taste for high-value wine, for example, the 
Internet must be open. For perishable exports to be 
competitive, Customs procedures must be efficient, they must be 
transparent, they must be nondiscriminatory.
    The Asia Pacific Economic Counsel, what is known as APEC, 
serves as a valuable forum to discuss and debate these issues, 
and also provide an immediate opportunity to establish binding 
rules to address these and other issues that exist within the 
Trans-Pacific Partnership discussions.
    The subcommittee looks forward to hearing from our 
witnesses today about their views about the TPP. Beyond the 
Trans-Pacific Partnership, for the U.S. to fully realize the 
economic opportunities in the Asia Pacific, shippers must be 
provided the freedom to navigate through secure sea lanes.
    China's growing naval fleet is viewed by some as a 
potential threat to vital shipping concerns. Senate 
ratification of the Law of the Sea treaty would give the United 
States international legitimacy in its efforts to keep the sea 
lanes of the South China Sea open.
    Russia's pending membership to the World Trade Organization 
also provides opportunities in the Pacific. It is going to 
provide challenges as well, complicating our producers' efforts 
to expand exports in the Asia Pacific, due to the vast 
contrasts in the region. There are emerging markets to be sure, 
but there are also countries that are still less developed, 
while there are advanced economies almost side by side.
    Each of these situations presents a unique challenge to our 
exporters. For American producers to navigate these markets, 
they need the help of foreign embassies and resources and 
talent found at our Departments of Agriculture, State, and 
Commerce.
    There are enormous opportunities that can be seized by the 
economic growth that is expected in the Asia Pacific region, 
and there are substantial challenges that will take American 
leadership to tackle. This subcommittee is going to play a role 
in some of these key issues. We offer to fully support our 
farmers and our producers, and we intend to work closely with 
the Obama administration.
    Today's hearing will focus primarily on the efforts we can 
expect from the administration about the trade-specific 
barriers in the Asia Pacific and the means by which the 
administration seeks to dismantle them. We have two excellent 
panels of witnesses. We look forward to their testimony.
    Somehow my long-time friend and the ranking member Senator 
Thune has managed to be in two places at once, because I 
already announced that you were, like myself, going to be in 
the Budget Committee off and on this afternoon. I thank my 
colleague and just welcome any comments that you would like to 
make, Senator Thune.

             OPENING STATEMENT OF HON. JOHN THUNE, 
                A U.S. SENATOR FROM SOUTH DAKOTA

    Senator Thune. Thank you, Mr. Chairman. I want to start by 
thanking you for holding this hearing and all the witnesses we 
have here today for taking the time to testify. Our hearing 
today is an opportunity to highlight the American success 
story, that is, our Nation's growing agricultural exports and 
the jobs that they support here at home. The nations of the 
Asia Pacific region are vital to this success story and will 
become even more important in the coming years.
    I want to consider just a few statistics. Last year, 
American agricultural exports reached a record level of nearly 
$138 billion, with demand in Asia a key component of this 
success. China is today the largest export market for U.S. 
agriculture, with agricultural exports to China totaling nearly 
$20 billion and supporting 160,000 American jobs. Our 
agricultural exports to China have grown more than 10-fold over 
the past decade, increasing from $1.9 billion in 2001 to $19.9 
billion in 2011. In 2010, the U.S. enjoyed a trade surplus in 
agriculture with China of over $14 billion.
    However, the success story for U.S. agriculture in Asia is 
not just about China. America's exports of agricultural 
products to South Korea more than doubled in the past 10 years, 
reaching sales of $6.7 billion in 2011. The nations of 
Southeast Asia, such as Malaysia, Indonesia, and Vietnam have 
more than tripled their imports of U.S. agricultural products 
over the last 10 years. In 2011, these nations consumed $9.6 
billion worth of American agricultural exports.
    In South Dakota, we understand the importance of opening 
new markets to our home-grown products. South Dakota's 
agricultural exports were $2.4 billion in 2010, supporting 
roughly 20,000 jobs both on and off the farm. These export 
sales are a very meaningful part of South Dakota's farm 
economy, which had total cash receipts of $7.7 billion in 2010.
    Later today we are going to hear from Paul Casper, 
president of the South Dakota Soybean Association. Soybeans and 
corn in particular have been drivers of South Dakota's export 
economy, and Asian nations such as China have been at the 
forefront of this growth. In 2011, over $12 billion of high-
quality U.S. soybeans were shipped to China. This represented 
roughly 50 percent of U.S. soybean exports and 25 percent of 
the entire U.S. soybean harvest. Driven in large part by 
Chinese demands, South Dakota's exports of soybeans have grown 
rapidly from $340 million in 2006 to over $1 billion in 2010.
    While China was the largest purchaser of U.S. soybeans, 
another Asian economy, Japan, was the third-largest purchaser, 
with imports of $1.2 billion last year. Japan remains the 
world's single-largest importer of feed grains and the number-
one importer of U.S. corn.
    Yet while U.S. agricultural trade with Asia has been a 
success story, we know that challenges remain. Our beef 
exporters, for example, still face unjustified sanitary and 
phytosanitary (SPS) barriers in nations such as China, Taiwan, 
and Japan.
    While China is the top export market for U.S. soybeans, 
their regulatory approval process for commodities containing 
biotechnology traits has been slow and cumbersome, leaving room 
for substantial improvements. Additionally, America's poultry 
exports to China continue to be stymied by high tariffs imposed 
in 2010. Given the growing middle class in Asian nations such 
as China, Thailand, and Vietnam, a successful conclusion to the 
Trans-Pacific Partnership agreement is incredibly important to 
the future of America's agricultural exports.
    Yet I find it troubling that the administration has not yet 
requested an extension of Trade Promotion Authority, which 
expired in 2007. Trade Promotion Authority is essential to not 
only bring the TPP negotiation to a successful conclusion, but 
also to initiate new free trade negotiations.
    While I commend the administration for its work on the TPP 
agreement, it is disappointing that, more than 3 years into the 
Obama administration, TPP is the only new trade agreement being 
pursued by the administration. It is unfortunate that this 
President has not yet seen fit to ask for the trade authority 
granted to Presidents of both parties since 1974.
    Clearly, America cannot continue to lead the world in high-
quality agricultural exports unless we continue to open new 
markets in Asia, a region that includes more of the world's 
fast-
growing economies and that accounts for more than 40 percent of 
global trade.
    I look forward to continuing to work with the 
administration on a successful conclusion to the Trans-Pacific 
Partnership, and I am hopeful that this administration will 
become more aggressive when it comes to opening up new markets 
to American exports, not just in Asia but around the globe.
    I look forward to working with you, Mr. Chairman, and the 
members of this committee as we pursue additional market 
opportunities for American exporters and what that can do in 
terms of creating jobs here in the United States. So, thank you 
again for holding the hearing. Again, I want to thank our 
witnesses for being here today, and I look forward to hearing 
your testimonies.
    Senator Wyden. Thank you, Senator Thune. I think you make 
an important point about the need to always be on the offense 
in terms of trade and finding new opportunities. I think we 
both very much enjoyed the fact, I think because both the 
chairman, Senator Hatch, and others were tied up in some of the 
Super Committee negotiations, that you and I ended up spending 
a fair amount of time managing the floor when it came to those 
three trade agreements. They are going to make a big, big 
difference.
    [The prepared statement of Senator Thune appears in the 
appendix.]
    Senator Thune. They are.
    Senator Wyden. It is a pleasure to work with you on those 
and the trade agenda.
    Senator Thune. Same here.
    Senator Wyden. We have three very valuable witnesses here 
this afternoon. We are going to start by hearing from the 
Honorable Robert Hormats, who is Under Secretary for Economic 
Growth, Energy, and the Environment at the U.S. Department of 
State. He is going to give us a broad view about the importance 
of U.S. engagement in the Asia Pacific region. Bob Hormats is 
Secretary Clinton's go-to person on global economics, and I can 
say for the record he is somebody that I go to often for his 
counsel and ideas with respect to global economics as well, and 
we are glad to have you here today, Mr. Hormats.
    Then we are going to hear from Ambassador Siddiqui. He is 
the Chief Agriculture Negotiator for the Office of the U.S. 
Trade Representative. It is good to have you again, Mr. 
Ambassador, as you can anticipate folks at home in Oregon 
continue to ask questions about organics. We went through a 
number of those issues at your confirmation, and we know you 
are following up and look forward to hearing your testimony 
this afternoon.
    Finally, we are going to have Ms. Darci Vetter. Ms. Vetter 
is Deputy Under Secretary for Farm and Foreign Agricultural 
Services at the U.S. Department of Agriculture. Prior to her 
service at the Department of Agriculture, we simply want to 
take note of the fact that she is an alum and has roots here in 
the Senate Finance Committee, doing very good work for Chairman 
Baucus on trade and agricultural kinds of questions. Ms. 
Vetter, we are glad to have you here today.
    So we will make the remarks of all three of you a part of 
the hearing record. Why don't you just take as much time as you 
would like to outline your priorities, then I know we will have 
some questions. So, let us begin with you, Secretary Hormats.

STATEMENT OF HON. ROBERT HORMATS, UNDER SECRETARY FOR ECONOMIC 
   GROWTH, ENERGY, AND THE ENVIRONMENT, DEPARTMENT OF STATE, 
                         WASHINGTON, DC

    Secretary Hormats. Thank you very much, Mr. Chairman and 
Ranking Member Thune. It is a real pleasure to be here today. 
It is also a pleasure to be here with my colleagues from two of 
the agencies that are very actively involved in this. Isi 
Siddiqui is a very good friend, as is Darci Vetter, and both of 
them have done a lot of very good work on all the issues we 
have mentioned.
    I will try to confine myself to some of the issues the 
State Department is most directly involved in, and I know that 
both Darci and Isi will be providing some more details in some 
of these areas as well.
    I am also very pleased to be on a panel that precedes the 
impressive private sector panel that you have here, because the 
private sector is really the key to the generation of exports 
and job creation which are so important in the agricultural 
sector and other sectors of our economy. So, bringing them in 
and giving them an important opportunity to express their views 
is highly important.
    One of the things that makes the State Department's 
contribution to our goals of advancing agricultural exports 
particularly unique is our team of ambassadors and nearly 1,000 
economic officers located in almost every country in the world. 
Through this presence, we work directly with host government 
officials to improve our bilateral and economic relations.
    This is particularly important for the U.S. agricultural 
sector in the Asia Pacific region, where there is an enormous 
amount of economic growth and where there is a new generation 
of consumers coming of age which is dramatically increasing in 
size and in spending power and is ratcheting up the kind of 
goods they purchase.
    We were talking just before in the anteroom about 
increasing sales of American organic products in East Asia. 
This is just a sign that these countries are looking for high-
quality goods, and goods and products produced in the Northwest 
are certainly very important in the improving of diets, both in 
terms of the quality and the nutrition of the foods, and the 
variety of the foods they want.
    So it is a very important area for expansion of 
opportunity, and our embassies are very aware of that. I was 
just in Vietnam and Thailand and talked about a number of these 
issues with their embassy people, who are very strongly 
committed to boosting exports, and they are quite aware that 
agricultural exports are a key part of that, for two reasons.
    One is, because they produce a lot of jobs and employment 
directly. And also, the indirect benefits are quite substantial 
in the areas that service agricultural exports: shipping and 
all the processing that goes on as well. So they see this and 
understand that this is an opportunity. Secretary Clinton and I 
constantly remind them of this priority, although they are very 
much aware of it themselves.
    I will focus in particular on APEC and some of the things 
that we are doing in other areas that relate to agriculture. 
With respect to APEC, which the State Department is playing the 
leadership role in putting together--we were the hosts last 
time in Honolulu; the next time the Russians will be hosting it 
in the Russian Far East--seven of America's top 15 trading 
partners are APEC members, and several APEC members have key 
emerging agricultural markets: Indonesia, Malaysia, Vietnam, 
and a number of others. China is one you mentioned, and I will 
spend a particular amount of time on that since it does present 
unique and substantial problems, as you have indicated, Mr. 
Chairman.
    The State Department led a government effort during APEC 
2011. We sought to strengthen global economic integration by 
advancing common trade and investment practices in the region. 
We have had some success, although we still have challenges.
    For example, after the high-level engagement with State 
Department officials last year, the Indonesian government--
Indonesia is a very important economy in the region, large, 
growing, and prospering--established a science-based regulatory 
system and embraced the potential of agricultural 
biotechnology, which is progress considering that there are a 
number of countries that are not very far along in advancing 
biotechnology.
    There are currently multiple crops undergoing field trials 
in Indonesia, with the first expected commercialization being 
later this year. Also, we are working with other government 
agencies to help Vietnam establish a biotech regulatory 
framework by building the capacity of Vietnamese officials to 
administer a science-based, rules-based system.
    As I say, I was in Hanoi discussing this issue. It is a 
very important one for our agricultural exporters, that they 
use science as a basis for their decisions as opposed to 
responding to political pressures or charges that bear no 
scientific evidence at all, which is all too common in the area 
of biotech and agriculture.
    Just last week, the State Department, in cooperation with 
the USDA and EPA, hosted a group of Vietnamese scientists who 
were preparing to issue the first environmental risk assessment 
for genetically engineered crops in their country's history. We 
hope to see the first Vietnamese crops approved for 
commercialization in 2012-2013. The goal will be to facilitate 
market access for U.S. agricultural products, and that can help 
our exporters, and it improves the diet of the Vietnamese.
    One of the things that you mentioned, Mr. Chairman--and I 
am really glad to see that you placed such emphasis on it--is 
the question of Russia. Russia hosts APEC this year and is 
expected to become a member of the WTO this summer. This could 
provide an enormous opportunity for American agricultural 
products.
    But, as you have indicated, to seize on that opportunity, 
American farmers need the help of Congress, specifically to 
enact the necessary legislation to terminate the application of 
Jackson-Vanik with respect to Russia. If not, U.S. exporters 
will not get the full benefits of Russia's WTO membership, but 
our competitors will. Unlike other WTO members, the United 
States will not be able to turn to the WTO dispute settlement 
procedures to ensure compliance with trade rules.
    One particular example is very relevant to this hearing. 
When Russia becomes a WTO member, it will be required to comply 
with the WTO's agreement on the application of sanitary and 
phytosanitary measures, including obligations relating to the 
use of science-based international standards.
    However, Russia would only be required to apply these rules 
to U.S. exports of, say, meat, or poultry, or dairy, or other 
agricultural products if Congress terminates the application of 
Jackson-Vanik to Russia. We should be very clear about this: 
Russia will join the WTO, but action is required from Congress 
to ensure that American agriculture fully reaps the benefits of 
this. Therefore, it is very important.
    I will leave the Korea-U.S. issues to my colleagues who 
have exercised enormous leadership in this area. I just would 
make two quick points. KORUS will directly benefit in many ways 
the Pacific Northwest's food producers. Korean tariffs of 24 
percent on U.S. fresh cherries will be eliminated, and also 
tariffs on frozen potatoes from Idaho will be eliminated as 
well. So, there are some real benefits in this region.
    We are working with our diplomats in the region, hand in 
hand with USTR and USDA, and the Commerce Department as well, 
to monitor firsthand Korea's implementation of the agreement. A 
key point here that all of our diplomats are now being made 
aware of, if they were not already--and most of them knew it 
already--is that it is very important that what we negotiate, 
we aim to enforce.
    This is critical in keeping faith with the American people. 
Our goal is to maintain credibility with the American people 
and strengthen the integrity of the global trading system by 
ensuring that, when agreements are made, they are rigorously 
enforced.
    The TPP is an ongoing exercise. Isi and his colleagues have 
worked very actively on that, so I will not take any more time 
on that issue, except to say that it is extremely important 
from an economic point of view, from a trade point of view, 
from a foreign policy point of view, and can have enormous 
benefits for agriculture.
    Let me just turn to the State Department's deployment of 
its resources to promote agricultural trade. One of the things 
we can do, and are doing, is to insist that our Ambassadors 
themselves insist on addressing stalled high-profile issues and 
using a lot of tools to resolve them.
    Ambassadors host agricultural trade missions to highlight 
U.S. agricultural export opportunities and keep American 
farmers, keep American agri-business companies in touch with 
buyers in various parts of the world. We continue particularly 
to raise concerns about market access, noting that we expect 
countries to live up to their multilateral and their bilateral 
obligations.
    I will just cite one example. In Russia, Mike McFaul, who 
was just recently confirmed, who is a particularly energetic 
person--those of you who know him understand this--has already 
met with high-level officials several times to ensure that, 
when Russia fully accedes to the WTO, the Russian market will 
be open to American chicken exports.
    In China, one of the problems is that the absence of 
transparent science-based regulations has the potential to 
disrupt or limit the flow of U.S. agricultural exports. For 
example, differential approval rates, known as asynchronous 
approvals, the low-level presence of biotech products approved 
in the country of export but not yet in the country of import, 
and the lack of constant harmonized rules can potentially 
result in billions of dollars of losses.
    The State Department works very closely with the Chinese 
authorities to address a number of agricultural issues. As you 
pointed out, Mr. Chairman, that presents a problem. We also 
work in a variety of forums to proactively encourage economic 
and regulatory systems that will address these issues.
    For example, in APEC's high-level policy dialogue on 
agricultural biotechnology, the State Department promotes the 
adoption of transparent science-based regulations in Asia for 
the review of agricultural products produced through modern 
biotechnology, a major theme.
    We are addressing the asynchronous approval process in a 
very vigorous way with the Chinese, in conjunction with our 
colleagues from USTR and USDA. This is something that comes up. 
It will come up almost certainly at the SNED meetings which we 
are going to have in China within a couple of weeks.
    We also sponsor outreach programs in Asia and elsewhere to 
enable officials of other interested parties to be able to 
separate myth and misinformation from science and facts 
regarding agricultural biotechnology. We think this is a very 
important point.
    That brings me to my final point, and that is what we are 
doing in multilateral forums to create the global conditions 
favorable to agricultural trade. Again, we work with USDA and 
USTR and the WTO, and in various other forums. This is a 
particularly important thing.
    One of the things that I find particularly significant when 
I speak with people in this area and other parts of the world 
is the arbitrary application of non-science based government 
regulations. This is a very important item.
    There is certainly a role for regulation to protect 
consumers and support commerce, but in order to facilitate 
trade it is important that we harmonize standards as much as 
possible to ensure sound science-based regulations that will 
ensure that other countries recognize our certifications and 
have open, transparent, rules-based tests when they make their 
regulatory decisions.
    Multilateral diplomacy is crucial to creating these 
international standards and reinforcing good practices. Using 
international bodies such as the Codex Alimentarius, the U.N. 
body responsible for setting food safety standards, the U.S. is 
able to work to establish worldwide standards based on the 
recommendations of expert panels.
    So, in the interest of time, let me just conclude here and 
just say again how important we think it is to take a very 
proactive view that, when agreements are made, they should be 
enforced, even if issues do not rise to the level where we are 
able to raise a challenge in the WTO, but simply are 
incompatible with international standards or international 
principles of fairness or international principles of science-
based judgment.
    We go after these things and raise them because they are 
important to jobs here, they are important to exports here, and 
agriculture is critical, critical to farmers, critical to 
ranchers, critical to people who are engaged in producing a 
whole range of fruits and vegetables throughout the country. It 
is, therefore, necessary to create good, high-quality jobs.
    We can compete in all these areas if we have a fair and 
open opportunity to do that. The quality is good, the energy of 
our farmers and our ranchers and people who produce the kinds 
of goods we are talking about, the products we are talking 
about, is high.
    We need to be able to support them at all levels, and our 
Ambassadors and our embassies are strongly committed to doing 
that, as is everyone at the State Department who works on 
these.
    So, thank you very much.
    Senator Wyden. Thank you, Secretary Hormats. That was a 
tour de force through the region, and we will have plenty of 
questions. I was glad you touched on the issue of enforcement. 
This is something Senator Thune and I have spent a lot of time 
on throughout this Congress, looking at issues like merchandise 
laundering that largely come about because of a lack of 
transparency and corruption.
    I am glad you made the point about Russia as well, because 
one of the other issues that we care a great deal about as it 
relates to Jackson-Vanik, human rights, and trade, is keeping 
the Internet open, because that is absolutely key for those 
activists and others who want to be in a position to 
communicate their concerns worldwide. So we thank you. We will 
have plenty of questions for you in just a moment or two.
    [The prepared statement of Secretary Hormats appears in the 
appendix.]
    Senator Wyden. Ambassador Siddiqui, you have to try to pick 
up the ball after all that. You have a challenge, and you are 
up to it.

    STATEMENT OF AMBASSADOR ISI SIDDIQUI, CHIEF AGRICULTURE 
     NEGOTIATOR, OFFICE OF THE U.S. TRADE REPRESENTATIVE, 
                         WASHINGTON, DC

    Ambassador Siddiqui. Thank you, Mr. Chairman and Ranking 
Member Thune. It is going to be a very hard act to follow 
Ambassador Hormats.
    Mr. Chairman, I would like to request that my written 
testimony be submitted for the record.
    Senator Wyden. It will be done.
    [The prepared statement of Ambassador Siddiqui appears in 
the appendix.]
    Ambassador Siddiqui. It is indeed my pleasure to be here 
this afternoon with Under Secretary of State Robert Hormats and 
my colleague Deputy Under Secretary Darci Vetter from USDA.
    I must emphasize the strong partnership we have established 
with, not only the USDA and the State Department, but also with 
other agencies like EPA, FDA, and Commerce, which are essential 
to deal with many of the trade barriers we face around the 
world. It is quite fitting that this hearing is focused on the 
opportunities for exporting agricultural and food products to 
the Asia Pacific region.
    As you know, the Asia Pacific region includes some of the 
world's most dynamic economies. It is a key destination for 
agricultural products we produce in this country, with nearly 
75 percent of these total products being exported to these 
rapidly growing economies in the Asia Pacific region.
    It is, therefore, imperative that USTR prioritize the Asia 
Pacific region, focusing on creating new market opportunities, 
as well as high-quality, high-paying jobs in the U.S. 
Consequently, we are moving full speed forward on the Trans-
Pacific Partnership negotiations, or TPP, which are essential 
to the administration's 2012 trade agenda as we seek to 
conclude the landmark TPP negotiations this year.
    The TPP holds the prospect for unlocking significant new 
market access opportunities for U.S. exports that support high-
level, high-paying jobs in the U.S. Negotiation of the TPP is 
an enormous undertaking, as many of us are finding out, not 
only for the combined size of the economies which are 
participating among those nine countries, but also the scope 
and ambition of this agreement itself.
    For example, in the case of TPP negotiations on sanitary 
and phytosanitary issues, there is going to be a separate 
chapter. The part I want to emphasize, since Ambassador Hormats 
also mentioned this, is the difficulties we encounter in many 
of these countries are related to barriers related to sanitary 
and phytosanitary issues. So there is going to be a separate 
chapter in the TPP agreement which will be where we are seeking 
new commitments which will improve transparency around the 
development of SPS regulations and strengthen science and risk 
analysis requirements to support any SPS measures.
    The Obama administration's goal is to conclude this 
agreement that positions U.S. farmers, ranchers, and businesses 
to compete successfully in the Asia Pacific region. Already, 
other countries in the region have publicly expressed interest 
in participating in this high-standard agreement, so much so 
that the TPP has the potential of becoming a primary platform 
for regional economic integration in the Asia Pacific region.
    In addition to negotiating new agreements, USTR is devoting 
significant time and resources on the enforcement aspects of 
existing agreements. Trade enforcement has been a high priority 
for the Obama administration, and we will continue to 
aggressively challenge the kinds of unfair trade practices and 
barriers we face every day around the world.
    I am also proud to say that our negotiating efforts in 2011 
resulted in successful expansion of market access for our 
agricultural products in Korea, China, Japan, and Taiwan. This 
includes, for example, opening the Korean market for 
blueberries from Oregon starting this growing season.
    Another priority of the Asia Pacific region continues to 
be--and Senator Thune mentioned it--market access for beef and 
beef products in the Asia Pacific region which is based on 
science consistent with international and commercially viable 
standards. We are encouraged by Japan's recent steps they have 
taken to take these issues of beef market access and risk 
assessment to their Food Safety Commission to reevaluate their 
import measures for U.S. beef. We are also working to open 
market access for beef and beef products in China as well.
    Last month, USTR Acting Under Secretary Michael Scuse, 
Deputy Under Secretary Darci Vetter, and I led a team to 
Beijing to engage with our Chinese counterparts on beef market 
access. As a result of these discussions, both sides have 
agreed to resume technical discussions on product scope and 
other issues related to market access for beef.
    Finally, Mr. Chairman, another issue critical to the 
continued growth of U.S. agricultural exports involves Russia's 
accession to WTO. Ambassador Hormats mentioned that, and I 
fully concur with him that, to fully reap the benefits of 
Russia's accession, Congress will need to terminate the 
application of the Jackson-Vanik amendment and grant Russia 
permanent normal trade relations status.
    We look forward to working with you, Mr. Chairman and 
members of the committee, as well as your colleagues in 
Congress, to end the application of Jackson-Vanik to Russia in 
order to ensure that American exporters will enjoy the same 
benefits of Russia's WTO membership as our international 
competitors will.
    Mr. Chairman, since you mentioned in your opening remarks 
the work which we are doing on organics--although it was not in 
my prepared remarks, so I will deviate from that--I can assure 
you that the administration has given a high priority to this 
issue of increasing market access for organic products across 
international borders.
    One of the things which we have done in the past 3 years is 
the first organic equivalency arrangement, which was signed 
about 2 years ago with Canada. Just about 2 months ago, in 
February, Deputy Secretary of Agriculture Kathleen Merrigan and 
I, on behalf of the U.S., signed a landmark arrangement on 
organic equivalency with the European Union.
    So what that will do is, it will allow for, starting June 1 
this year, any organic product which is certified to be grown 
organically and meets USDA's standard for ``organic,'' 
automatically will be qualified to be shipped and sold into the 
European Union, and the converse will also be true: any 
European ``organic''-labeled product will be able to be sold in 
the U.S.
    This represents, between the U.S. and the E.U., a 50-
percent global market on organic trade. This is a very 
significant development, and I want to assure you we will 
continue to look into other options in the Asia Pacific region 
to do the same thing as what we have done with the organic 
equivalency arrangements with these two countries, Canada and 
the European Union.
    In closing, I would like to emphasize the USDR's strong 
commitment to ensuring that the United States plays a leading 
role in the economic integration of the Asia Pacific region. 
Our focus at USTR remains on enforcing existing trade 
agreements, negotiating new agreements, and leveling the 
playing field for our farmers, ranchers, and businesses, thus 
ensuring greater prosperity for American agriculture and the 
entire American economy.
    Thank you, Mr. Chairman.
    Senator Wyden. Ambassador, thank you. Very helpful 
testimony on a number of key points. You just feel comfortable 
about deviating from your testimony whenever you come up with 
something like equivalency for the organic agricultural sector, 
because I share your view. I think that is a real opportunity 
for those markets, and I appreciate those comments.
    Ms. Vetter, welcome. We will make your prepared remarks a 
part of the record. Just proceed as you would like.

  STATEMENT OF DARCI VETTER, DEPUTY UNDER SECRETARY, FARM AND 
   FOREIGN AGRICULTURAL SERVICES, DEPARTMENT OF AGRICULTURE, 
                         WASHINGTON, DC

    Ms. Vetter. Thank you very much. Mr. Chairman and Ranking 
Member Thune, again, thank you for the opportunity to testify 
today.
    Right now there are many USDA Foreign Service Officers at 
posts around the world who are working with their State 
Department colleagues on behalf of U.S. agriculture. There is 
not a working hour that the Foreign Agricultural Service and 
USTR are not tackling an agricultural issue together.
    Among the most rewarding work we do is combining forces 
with our government colleagues and the private sector to open 
and maintain foreign markets for U.S. farmers, ranchers, and 
producers. So it is my pleasure to be here today to discuss 
successes and opportunities in Asia Pacific markets. I will try 
to be brief, as my distinguished colleagues have covered a lot 
of ground here, and I will try not to repeat their examples.
    But this month, visitors to the Beijie Tourism Festival in 
China's Guizhou Province will notice something all-American: it 
will be hard to miss. The new 3,300-square meter tourism 
festival center is China's first dome structure built of an 
all-American timber product.
    The dome's laminated wooden beams were manufactured by 
Calvert Company of Vancouver, WA, and fabricated by Western 
Wood Structures of Tualatin, OR. How this project came to be is 
an example of how the Foreign Agricultural Service partners 
with the private sector to capitalize on foreign market 
opportunities.
    Five years ago, our FAS officers analyzed market 
opportunities for wood products in China, and in 2008 FAS 
coordinated with the APA-Engineered Wood Association 
headquartered in Tacoma, WA on a seminar funded by USDA's 
Market Access Program (MAP) and supported by local FAS 
personnel. U.S. companies were introduced to Chinese officials 
at the seminar, who then contracted to build the dome. The 
value of materials for the dome is over $800,000, a win for 
these U.S. exporters and all of their employees.
    Last year, U.S. agricultural exports to China supported 
nearly 160,000 American jobs. Dried cranberries from Oregon, 
soybeans from South Dakota, salmon from the Pacific Northwest, 
and grains from the Great Plains are just a handful of the U.S. 
agricultural products we ship to China.
    USDA opened its first office in Beijing in 1976. Now with 
seven offices in five cities, FAS is well-positioned to advance 
U.S. agricultural interests throughout China.
    Last month, as Ambassador Siddiqui noted, he and I joined 
USDA's Acting Under Secretary Michael Scuse on a trade mission 
to China, accompanied by 40 American businesses and 6 State 
Departments of Agriculture. In Chengdu and Shanghai, we met 
with dozens of Chinese buyers and distributors. On-the-spot 
sales for that trip totaled more than $800,000, and numerous 
companies remain in contract negotiations with interested 
Chinese buyers.
    And as you noted, Mr. Chairman, in your opening remarks, a 
key factor that is fueling our opportunities for agricultural 
exports is the growing middle class in a number of Asia Pacific 
developing countries. Middle-class households in Vietnam and 
Indonesia are projected to more than double by 2020, and in 
China those households are expected to almost triple to nearly 
350 million in the same period. This increased purchasing power 
is driving greater demand for high-quality U.S. fruits, 
vegetables, proteins, and value-added consumer foods.
    My colleagues also highlighted the importance of trade 
agreements, including the current TPP negotiations and the 
implementation of the U.S.-Korea trade agreement. In each of 
these cases, FAS experts are members of the USTR-led 
negotiating and implementation teams. Once implemented, FAS 
helps exporters take advantage of the market access that these 
agreements provide.
    If you look, for example, at the website of our 
Agricultural Trade Office in Seoul, it lays out clearly the 
steps that any U.S. exporter can take to sell their products 
now that the KORUS has entered into force as of March 15. 
Likewise, USDA negotiated with Russia on WTO accession and 
stands ready to assist Congress in granting permanent normal 
trade relations to Russia.
    USDA dedicates significant effort to monitoring compliance 
with our trade agreements and removing trade barriers. In the 
past year, USDA personnel have been instrumental in resolving 
numerous bilateral sanitary, phytosanitary, and technical 
barriers to trade. We have helped open the Japanese market to 
U.S. chipping potatoes, the Korean market to fresh Oregon 
blueberries--along with our colleagues at USTR--and the Chinese 
market to live swine.
    In addition to bilateral work, we work diligently in 
international standard-setting bodies like the Codex, where I 
had the opportunity to lead the U.S. delegation to the Codex 
Commission last July, where we promoted international 
recognition of science-based standards for key products, 
including certain veterinary drugs.
    Agricultural exports contribute to the prosperity of 
communities across America. Every $1 billion of agricultural 
exports stimulates over $1.3 billion in additional business 
activity and supports 7,800 American jobs. The fiscal year 2012 
forecast for U.S. agricultural exports is $131 billion, the 
second-highest on record.
    For U.S. agriculture to continue to thrive, we must open, 
expand, and maintain access to markets across the Asia Pacific 
and throughout the globe, where 95 percent of the world's 
consumers live.
    Thank you very much for the opportunity to be here. I look 
forward to your questions.
    [The prepared statement of Ms. Vetter appears in the 
appendix.]
    Senator Wyden. Thank you. An excellent presentation. I was 
trying to follow how you would alternate products that came 
from the Pacific Northwest and South Dakota. I am sure there is 
something that is grown in other States, but the fact that you 
managed to highlight so many of those is very good.
    This was an excellent panel. Let me start, in terms of 
trying to unpack a little bit of the perception that folks feel 
in our part of the world and just kind of get your reaction to 
it. I think there is a sense, particularly in the Pacific 
Northwest, that the trade barriers that agricultural products 
face in particular are not treated with as high a priority as 
other kinds of concerns. I am sure you have heard that.
    You have outlined a number of areas, and I think you heard 
me take note of, particularly, some of the accomplishments 
which I think are significant. Yet, when you talk to people who 
grow stone fruits and fresh vegetables and value-added goods 
like wine and prepared meals, this is the question that they 
ask.
    So I think for the three of you, I want to put it in the 
context almost of what Senator Thune and I are going to be 
dealing with in the Budget Committee when we have to pop up, 
and that is priorities. I mean, at the end of the day, these 
are judgments about choices.
    So, when I go up to the Budget Committee in a few minutes, 
they are going to say, what are the couple of things that are 
important to you, and I am going to say, protecting the 
Medicare guarantee and bipartisan Medicare reform, and I am 
going to say, pro-growth tax reform. Those are the two things 
that I want to accomplish in the Budget Committee. Both of them 
are bipartisan concerns.
    So let us go down the row and have each one of you say--
starting with you, I think, Secretary Hormats--what would be 
the two things you would like to see accomplished in this area, 
in the question of the Asia Pacific region and agriculture?
    You gave a very good presentation, an excellent one. This 
is not to suggest for any of you that your points were not 
well-placed, because they were. I think just in terms of the 
choices and the fact that this will be a challenging remainder 
of the Congress, election year and the like, just quickly go 
down the row and give me your two priorities in this particular 
area. Let us start with you, Secretary Hormats.
    Secretary Hormats. The two I would pick would be (1) how 
these countries conduct themselves with respect to the setting 
and implementation of regulations and standards. That would be 
one, because, in many cases what countries do when they do not 
have the option of raising tariffs because they are limited by 
their WTO commitments, they use other methods within the 
border, methods of restricting access to their markets, and 
many of those are based on how they set standards.
    Do they set them in a more nationalistic and discriminatory 
way, and how do they establish regulations? Are they 
transparent, non-transparent, are they designed to help 
domestic firms as opposed to foreign firms? So going after that 
issue of standards and regulations is really critical because 
some of them are designed in effect to discriminate in favor, 
in many cases, of local production as opposed to foreign 
production and, quite frankly, keep foreign production out. 
China does use this to a far greater degree than they should or 
we would want, and this is a major topic as well.
    The second is protection of intellectual property. This is 
a huge issue, a huge issue. It affects everything. One of the 
problems is that the intellectual property that goes into 
producing modern agricultural products, into producing 
software, into producing movies, into producing you name it, is 
very important because, in some areas, we are not as 
competitive as we used to be. We are very competitive in high-
end, innovative products, and those tend to incorporate and 
involve intellectual property, innovative capabilities.
    If we find that those are lost due to cyber-thievery, 
piracy, forced transfer, or other kinds of things, then we as a 
country are going to suffer a severe decline in our ability to 
compete in the areas where we should be, and are--on a level 
playing field--the most competitive.
    So we must address regulations and standards setting and 
make sure they are done in a fair, transparent, rules-based, 
science-based fashion. It affects sanitary and phytosanitary 
conditions, it affects a lot of things, and the intellectual 
property area is a broad area, but it affects every single 
industry and virtually every major job in the United States.
    We are suffering because most countries do not have either 
strong rules--in some cases they may have laws that look good, 
but they are poorly enforced, and in some cases there is simply 
a national effort to pirate intellectual property, whether it 
is inspired by the government or countenanced by the government 
or not corrected by stiff government policy.
    It is happening in virtually every American company you 
talk to--and you talk to a lot of them, and I know that Ranking 
Member Thune does as well--and they are very worried about 
losing the best technology, the best innovation to people who 
pirate it, and therefore they lose revenues, they lose jobs, 
and we as a country lose competitiveness.
    Senator Wyden. Two important issues. As those who watch 
this subcommittee know, it does not take a whole lot to trigger 
a lengthy discussion on the intellectual property front. I 
think I will pass on that. We have had a pretty vigorous debate 
in this session on it, and fortunately it protected Internet 
freedom. The discussion will continue. You are absolutely 
right, those are important issues.
    Let us go to you, Ambassador Siddiqui--your two priorities.
    Ambassador Siddiqui. Mr. Chairman, in the TPP context, 
negotiating a comprehensive and ambitious agreement is still 
the 
number-one priority for us. After the APEC meeting last 
November in Honolulu, the leaders of the nine countries which 
are participating in the TPP negotiations directed the staff to 
complete the negotiations in 2012. So we continue to be focused 
on completing these negotiations. So I think that 
architecturally a comprehensive and ambitious agreement is 
number one.
    I think the subset of that is, when tariffs go down in any 
trade agreement, then barriers--which are non-tariff barriers--
become even more important. This is where our efforts in this 
21st-century agreement we are negotiating among TPP countries, 
having a separate chapter on sanitary and phytosanitary, is 
really important for us, which is essentially making sure 
decisions--sometimes regulatory decisions--are transparent, are 
based on science, and also comply with international standards.
    We believe the stakeholders' input, as well as 
consultations we have done with members of Congress--I think 
this seems to be one of the highest priorities. As your own 
remarks mentioned, the barriers we face on the sanitary and 
phytosanitary front, this is where we need to focus some of the 
longstanding--there is a perception that we are not working and 
prioritizing it high enough, but some of these problems by 
nature are such that these other countries also have issues 
where they want us to be working on those.
    So many times it becomes one of those things where we have 
to move these issues very much on parallel tracks so that we 
are making progress on issues which are of our concern, and at 
the same time issues other trading partners want us to work on. 
Again, they have to be based on sound science and international 
standards and risk assessment.
    Senator Wyden. All right.
    Ms. Vetter, two priorities?
    Ms. Vetter. Sure. Well, following up on the comments of my 
colleagues, I think that we have a critical window in the next 
few months, both to expand beef access with Japan, China, and 
Korea, and also to reduce the threat of asynchronous approvals 
and the delays they cause in trade in products of 
biotechnology. I think that will require our focus, but that we 
have a real opportunity to make a difference in both of those 
areas in the next few months.
    I would just note one thing in the long term, that for USDA 
I think is a real priority for us over the next few months, and 
that is to take a step back from dealing with specific sanitary 
and phytosanitary issues and create an environment with a 
number of our trading partners where we work hand-in-hand with 
our regulators and our regulatory agencies to start a broader 
conversation on their approach to regulatory regimes and how 
they set their sanitary and phytosanitary standards.
    By doing this and by talking about how it is that we create 
policy, we can often prevent trade barriers before they come to 
light if our trading partners start by building their 
regulations based on science. This is one of the things we are 
doing with China. We are building on the Symposium on 
Agriculture we held when Vice President Xi visited. We are now 
building out a cooperative agenda on how to improve food 
safety, food security, and agricultural sustainability, and 
exactly these types of discussions will be on that agenda.
    Senator Wyden. All right.
    Senator Thune?
    Senator Thune. Thank you, Mr. Chairman.
    I want to follow up, if I might, on--and I mentioned this 
in my opening remarks, and you touched on it, Ms. Vetter--the 
beef export issue. Our beef exports have been subject to 
unwarranted restrictions in some of these important Asian 
markets, notably China and Japan. It is an issue I care a great 
deal about in South Dakota. I know the chairman of the full 
committee, Senator Baucus, also cares a great deal about it.
    I am wondering if you might be able to comment a little bit 
more on the situation regarding access for U.S. beef in China, 
which does remain closed to our beef since the BSE incident 
back in 2003, as well as access for U.S. beef in Japan, which, 
as of right now, only allows beef in from cattle aged 20 months 
or younger. If you want to comment, Mr. Ambassador, as well, 
and whoever else wants to speak to that issue. But maybe go 
into a little bit more detail about where we are.
    Ambassador Siddiqui. Senator, on the Japan beef market 
issue, we right now have access for beef and beef products 
under 30 months. Our goal has been to normalize trade on beef 
so that we can get that remaining part of the market share. 
Again, we have insisted that this be done on a basis where it 
is based on science and international standards and it is 
commercially viable.
    We are making some progress. We are pleased with the way 
Japan submitted those questions about age, raising the age from 
20 months to above, as well as on the specified risk material. 
This risk assessment is in progress right now. We are pleased 
with the action the Japanese government has taken. But I agree 
with you, this is a longstanding issue, and we would like to 
have it resolved sooner rather than later. We will continue to 
work on that with our Japanese counterparts.
    On the issue of China's beef market access, it was closed 
to us, as you know, since 2003. Off and on over this period 
from 2003 when they shut down the market until now in 2012, 
there have been several times where we have been engaged more 
intensively. The last engagement started in 2011.
    At that time, Under Secretary Jim Miller of USDA and I 
nearly camped out there in Beijing for 10 days, and we thought 
that we had some progress being made, and actually we did make 
progress. They had 22 conditions which they had laid down for 
providing market access for beef under 30 months, both bone-in 
and boneless.
    Our teams, which were comprised of interdisciplinary teams, 
had people from USDA's APHIS and FSIS, as well as FDA and USTR. 
We were able to narrow down those conditions to eight 
conditions where we still disagree. So we are continuing to 
discuss that and hopefully we can resolve some of these issues 
which have to do with the product scope, which I mentioned in 
my remarks, as well as traceability and some other issues which 
are still unresolved. So we will continue to engage the Chinese 
on this issue, and hopefully we can make progress and find a 
path forward in the coming months.
    Senator Thune. Last December, the National Pork Producers 
Council and 63 other food and agricultural groups sent a letter 
to Ambassador Kirk expressing support for Japan's inclusion in 
the current TPP negotiations. Japan is the United States' 
fourth-
largest agricultural export market overall, despite maintaining 
some import barriers in the food and agricultural sector, some 
of which we have addressed.
    But total agricultural exports to Japan in 2011 totaled 
over $14 billion, so it is a particularly important market for 
the U.S. pork industry. In fact, in 2011, Japan was a top-value 
market for U.S. pork exports, and it was worth nearly, at that 
time, $2 billion. Can you address how the U.S. Government is 
assessing the benefits of having Japan in the TPP?
    Ambassador Siddiqui. Well, number one, Senator, we had 
published in the Federal Register comments of other 
stakeholders. I think we have gotten hundreds and hundreds of 
those comments, which by and large were from the agricultural 
community, which were very supportive of Japan joining TPP.
    Our position continues to be that, since this is a very 
high-
standard agreement, as per agreement among those nine 
participating countries, we expect the newly entering countries 
to meet that high standard. That also means, by virtue of that 
requirement, that this be comprehensive, and all issues, 
especially the high standards related to sanitary and 
phytosanitary standards, also be complied with.
    Senator Thune. All right.
    This question has to do with TPP, of course, being an 
important agreement relative to our trade agenda, but it should 
not be the entire agenda. I would point out that, under the 
previous administration, we negotiated FTAs with Chile, 
Singapore, Australia, Morocco, Bahrain, six Central American 
nations including Colombia and Peru, Oman, and South Korea.
    The current administration has only initiated one trade 
negotiation, and that is the TPP. It appears unlikely to 
conclude before the end of President Obama's term. So, given 
the need to aggressively open new markets to American goods 
through new trade agreements, when do you expect the 
administration is going to request Trade Promotion Authority? 
And, as a follow-up, do you believe that the President having 
Trade Promotion Authority is necessary to successfully 
concluding the TPP negotiations?
    Secretary Hormats. The Trade Promotion Authority, at this 
point, I think we are still considering what to do and when to 
do it on that. But can I address the broader point you have 
made, which I think is a very compelling one? That is, even 
though for the moment there are no active FTA negotiations 
under way, there is a very substantial effort under way to 
further open foreign markets in a variety of ways.
    I would say that in virtually every conversation we have 
with other governments, one of the major topics in the State 
Department, and I know in USTR and I know in USDA as well, is 
identifying barriers to American exports. While we may not have 
formal FTA negotiations under way, we still see market opening 
as a very high priority and trade in general as a very high 
priority.
    So I do take your point that the TPP is really the only 
major free trade area in negotiation, but, if that succeeds, it 
is an enormous step forward. I would say that it would be, in 
my judgment, after NAFTA--which was obviously very large and 
very comprehensive--if the TPP succeeds--and enormous amounts 
of efforts, as Isi has been pointing out, have been going into 
that--that would be a game-changer for a number of reasons.
    First of all, it engages countries on both sides of the 
Pacific and in both hemispheres, the northern hemisphere and 
southern hemisphere. Second, it deals with the 21st-century 
issues that he has talked about: state enterprise issues, 
intellectual property issues, sanitary and phytosanitary 
issues.
    I would say that, if that can be done along the time frame 
that the President has outlined and Isi talked about--and he 
has been a real leader in this area with an enormous amount of 
energy, I can tell you--this would be a huge success, and the 
success would be not just the success among the nine countries, 
but it sets the standards. Other countries are interested, as 
you know, in participating and getting on the train, although 
the train is somewhere down the road out there.
    Senator Wyden. Somewhere out there.
    Secretary Hormats. Yes. It is somewhere between Portland 
and Seattle, but it has certainly left Portland. So they need 
to find out whether they can match the conditions that are 
required for them to get onto that train, and they have to make 
that judgment, we have to make that judgment, the eight other 
countries participating have to make that judgment.
    But I would say if this succeeds, it changes everything 
because it sets (A) high standards, and (B) other countries 
will want to participate. Whether they will be able to do it 
remains to be seen, whether they can meet those conditions. But 
they will, and they will want to participate, not just for the 
trade benefits but because a really good trade agreement also 
enhances their prospects of attracting investment. It gives 
opportunities for their companies to interact more actively 
with American companies.
    So I take the point that there are no other negotiations, 
but if this succeeds--and I think a lot of people have put a 
lot of time into it--this is the grand-slam home run for us and 
will change the world in a way that no other agreement for a 
long time has been able to do.
    Senator Thune. Mr. Chairman, in the interest of time, I 
have a question I will submit for the record having to do with 
biotechnology trades, which I think Mr. Casper will probably 
address in his testimony in the second panel.
    Senator Wyden. If that is your choice. We are going to have 
Senator Cantwell, and I am going to have another question or 
two. Are you sure you would like to put it in the record, or--
--
    Senator Thune. I can do that.
    Senator Wyden. All right. Very good.
    Senator Cantwell has not had a turn. She is one of our most 
technology and trade-savvy legislators, and we are glad to have 
her.
    Senator Cantwell. Thank you, Mr. Chairman. Thanks for 
holding this important hearing. It is important to continue to 
focus on what we are doing to gain market access for products. 
And yes, there is a lot that goes on beyond Portland and 
Seattle, and we are very proud of our large export markets 
there.
    So I wanted to ask first, Ambassador Siddiqui, about the 
potato market in Mexico. We have been very aggressive at trying 
to get Northwest product into that country. So what are we 
doing to make sure we are fully opening access and resolving 
the issues there?
    Ambassador Siddiqui. Senator, the potato issue with Mexico 
is a very high-priority issue for both USTR and USDA. Both 
Ambassador Kirk and Secretary Vilsack of USDA have raised this 
issue during their meetings with their counterparts in Mexico. 
We have made it very clear to Mexico that we expect them to 
resolve this issue sooner rather than later. This 26-kilometer 
boundary which they have set is not based on science. There is 
adequate scientific justification to support our contention. 
So, we would like to have that issue resolved.
    As you know, there was a panel, a scientific panel put 
together at the request of USDA, which actually agreed in 
principle by and large, with our contention on this issue. So 
we are hoping that Mexico will resolve this issue in the near 
future.
    Senator Cantwell. Do you think the panel of experts on----
    Ambassador Siddiqui. This was on potatoes. It is called 
NAPPO, North American Plant Protection Organization. A panel 
was assembled after Secretary Vilsack met with his counterpart, 
Secretary Mayorga, about, I believe, a year and a half ago. So 
we are waiting for Mexico to make the move.
    Senator Cantwell. And when do you expect the finality of 
that report?
    Ambassador Siddiqui. That is, Senator, hard for me to 
predict. But it continues to be one of the highest priorities 
in terms of the issues we have with Mexico in agriculture that 
we will expect them to resolve.
    Senator Cantwell. All right.
    Then what are we doing with South Korea and the 
phytosanitary issue as it relates to getting apples into South 
Korea? What are the next steps?
    Ambassador Siddiqui. Senator, I do not have the 
information, if you are talking about the pesticide issue.
    Senator Cantwell. Well, we are very excited obviously that 
the free trade agreement got signed, and obviously we think it 
represents an opportunity for a lot of Washington products--
wine, probably all Northwest wine. But obviously there are lots 
of other products that we want to see gain access, apples being 
a very important Northwest product. So we just want to see what 
steps we need to take to make sure that they are going to gain 
that access.
    Ambassador Siddiqui. I was just given a note, so I think 
this issue has to do--it was not pesticide, it has to do with 
fire blight that is a disease of apples, where many of the 
countries have these restrictions against apples.
    But we will continue to work with our counterparts in Korea 
to again lift those restrictions based on science and 
international standards. This is not the first time it was 
raised. If you will remember, we had a similar issue with Japan 
before Japan allowed market access for U.S. apples. So, this is 
an old issue which comes up in many countries which either do 
not have the fire blight, or, if they have it, they do not want 
to admit it.
    Ms. Vetter. Senator, if I might, it appears that Korea has 
indicated that they will begin the pest risk assessment process 
for fire blight, which is the first step in, unfortunately, a 
lengthy process in order to gain access. But at least that is 
now under way, and they will be working in concert with our 
regulatory officials to go through that process. So we have 
pushed for them to begin, and they have indicated a willingness 
to do so, and we will make sure that they continue along in 
that process.
    Senator Cantwell. I hope that we are going to be aggressive 
about pursuing this in a timely fashion.
    Ms. Vetter. We absolutely will.
    Senator Cantwell. Thank you.
    Thank you, Mr. Chairman. I know we are going to have a 
second panel, so I have questions for them as well.
    Senator Wyden. Very good. We are just going to wrap up with 
a couple of other matters.
    All of you have referred to the TPP. We understand how 
important that is. Secretary Hormats, could you just tell us 
your sense of how important it is to have Japan part of a 
completed, ambitious agreement and how this might influence 
China's embrace of rules-based trade. As Senator Cantwell said, 
we have another panel, so, if you could just kind of capsulize 
this, that would be great.
    Secretary Hormats. I will try to be brief. Thank you. I 
think that the key point at this moment is that we and our 
current TPP partners--and, as you know, there are nine 
countries altogether--are now having conversations among 
ourselves, and indeed with Japan, to determine whether Japan is 
ready to meet the high TPP standards which would provide 
enormous benefits, if they were, to American farmers, ranchers, 
and producers. It would be a great opportunity to access one of 
the world's most valuable markets.
    The issue relating to China is very interesting because, if 
Japan were prepared to do what is needed to meet these high 
standards and address a number of other issues that would come 
up in this conversation, if they were, then it would send a 
very positive message to non-TPP countries such as China that 
there are advantages in playing by the same open, transparent, 
and investor-friendly rules as everyone else.
    TPP is open to other countries as well if--if--they can 
meet the very high standards of the agreement. So that is what 
we really are aiming at: very high standards. Anyone who wants 
to join has to be ready itself and satisfy other countries who 
are now in the process that they are ready.
    If these high standards can be met by the nine countries 
plus other countries, it raises the bar for other countries 
that are not members. The key point, Mr. Chairman, is that, 
when we look at competition around the world today--as you 
know, because you have really done a lot of thinking about this 
and have addressed this, as have other members of the 
committee--we are not just competing product-by-product 
anymore--although we are in fierce competition on individual 
products as well--but our system of rules-based practices, of 
science-based rules, of transparency and openness, is facing 
competition from another system which is based on a very 
centralized role of the government, on practices that do not 
necessarily embrace transparency, that do not necessarily 
embrace rigorous scientific methods for determining standards 
and regulations, where these are frequently made for 
protectionist or mercantilistic reasons, where intellectual 
property is not respected.
    To the extent that we can develop rules among a group of 
countries like these nine--and perhaps some others--that 
achieve these high standards and demonstrate that they increase 
trade and jobs in the region, that sets a very powerful example 
that the model that we regard as important and that has 
sustained us and other countries is one that other countries 
should embrace and is attractive, as opposed to the competing 
model, which we do not find attractive, first of all, and 
which, if more and more countries become advocates of that 
model, will weaken our system.
    We want the model that we have been producing and 
developing, along with others, to be the one that is the 
prevalent one, and the TPP is a way of developing that. So it 
would be a very powerful signal to these more state-oriented 
economies that do not necessarily share our views on how to run 
a domestic economy or how the global economy should function.
    Senator Wyden. Let us do this. I am going to give you, 
Ambassador Siddiqui, and you, Ms. Vetter, both questions for 
the record. Ambassador, yours will deal with Japan and the 
question of phytosanitary practices and the concerns that tree 
fruit growers have in that area.
    Ms. Vetter, for you, many of the farmers are interested in 
looking at the Internet as a way to find additional 
opportunities for their markets. I know you run a variety of 
programs. The Market Access Program is one where we will ask 
you to respond in writing on it.
    But I want to move just slightly out of the region, 
Ambassador Siddiqui, to a question about India, because I 
learned something that just struck me as such a flagrant kind 
of abuse, I would just like to get your reaction on it. We 
learned recently that the Indian market--a very large and 
growing market--is essentially closed to Oregon wines.
    Our initial research indicated that India applies tariffs 
between 100 and 150 percent on these kinds of wines. We are 
very proud of Oregon wine. Senator Cantwell is very proud of 
the wines of the Northwest of her State. The United States 
provides significant duty preferences, for example, to India 
under the Generalized System of Preferences. Is it right, in 
your view, that India in effect locks out these kinds of wines 
which are so important to agriculture in my State?
    Ambassador Siddiqui. Senator, this issue is more widespread 
than just the State of Oregon. We are very much aware of 
India's high tariffs, not only on wines but many of the 
agricultural products, where 50-percent to 100-, or 150-percent 
tariffs are levied on those products.
    This has been one of those continuing dialogues we have 
with India in terms of opening up their markets by lowering 
tariffs, as well as removing some of the tariff barriers they 
have on SPS issues like poultry and dairy. So we continue to 
engage them, and I will be more than happy to work with your 
staff to explore this and discuss the other angle you brought 
up on the GSP issue.
    But we have gone to the Indian government, and they have a 
very antiquated process where, if you want to have a tariff 
relieved, you have to go to the Indian parliament in their 
session, which takes place early in the year, January/February. 
You have to work up a list of products. We have gotten the wine 
subsidy--actually U.S. wines have been on that list, and we are 
urging the Indian government to reduce the tariffs. So far, our 
efforts have not succeeded. We will continue to work on this.
    Senator Wyden. Let us do this. You characterize it as 
engaging the Indian government. We have to up our game here. I 
mean, the fact of the matter is, a Subcommittee on Trade and 
Competitiveness cannot sit around in the face of products that 
are such an exciting part of American agriculture and just sit 
around with tariffs between 100 and 150 percent.
    So why don't you plan to get back to us, if you would, 
within 30 days and outline for us the specific steps that we 
are going to take to, as I say, up our game and prosecute this 
cause much more vigorously, because I just think it is 
unacceptable to just have, again, discussions that we have 
about prospects of something changing in parliament. These are 
major benefits that are accorded the Indian government under 
the Generalized System of Preferences, and we have to get this 
changed. So, is that acceptable, to get back to us within 30 
days and outline the steps there?
    Ambassador Siddiqui. I will get back to you, Mr. Chairman.
    Senator Wyden. Very good.
    Thank you all. You have been extremely patient. I know my 
colleagues and I have other questions, but, given the 
challenges of the Senate schedule, we will excuse you at this 
time. I want to thank all of you for coming and for the 
valuable input.
    Secretary Hormats. Thank you, Mr. Chairman and members of 
the committee.
    Ambassador Siddiqui. Thank you, Mr. Chairman.
    Senator Wyden. Thank you.
    Our next panel is going to be comprised of, first, Mark 
Powers. He is vice president of the Northwest Horticultural 
Council. He has been around a long time, working with members 
of Congress and their staffs to achieve open markets for 
Pacific Northwest tree fruit.
    We have Mr. Steven Crider, who is the international sales 
manager of Amy's Kitchen.
    I am very pleased that Mr. Steve Thomson, executive vice 
president for King Estate Winery, is located in Eugene, OR.
    And we have Mr. Paul Casper, who is president of the South 
Dakota Soybean Association. There would be something wrong in 
the world if I did not permit Senator Thune to introduce Mr. 
Casper.
    Senator, why don't you do that?
    Senator Thune. Well, thank you, Mr. Chairman. I do want to 
welcome Paul Casper to the committee today and thank him for 
his willingness to make some comments. He is the quintessential 
family farmer in South Dakota. He has a 4,800-acre corn and 
soybean operation near Lake Preston, which he operates with his 
parents, wife, and son.
    Married for 32 years, he has 4 great kids and works hard 
out there every single day, trying to make a living on the 
farm. As someone who has assumed many leadership positions in 
agricultural organizations in South Dakota, he has really stood 
out as someone whom we look to for guidance and counsel and 
input when we are trying to do our best to form agricultural 
policy that is good for South Dakota and good for America.
    In that vein, he was elected as the director of the South 
Dakota Soybean Association back in 2009 and is currently 
serving as its president. So he is also on numerous other 
organizations, as I said, leadership positions in South Dakota, 
and we are just grateful to have him here and look forward to 
hearing from him.
    Welcome, Paul.
    Mr. Casper. Thank you, Senator.
    Senator Wyden. Thank you all.
    Why don't we start with Mr. Powers?

      STATEMENT OF MARK POWERS, VICE PRESIDENT, NORTHWEST 
               HORTICULTURAL COUNCIL, YAKIMA, WA

    Mr. Powers. Good afternoon, Mr. Chairman, Ranking Member 
Thune, and Senator Cantwell. My name is Mark Powers, and I am 
pleased to be here before the committee this afternoon, 
testifying to the wonderful export opportunities the Asia 
Pacific region holds for Pacific Northwest tree fruit.
    I have submitted my full statement to the committee and ask 
that it be made a part of the record.
    Senator Wyden. Without objection, it is so ordered.
    [The prepared statement of Mr. Powers appears in the 
appendix.]
    Mr. Powers. I will move forward with an opening statement.
    I am the vice president of the Northwest Horticultural 
Council, a position I have held for the past 12 years. The 
Northwest Horticultural Council is a trade association. We are 
located in Yakima, WA. One of the reasons we exist, and a 
primary reason, is to obtain and maintain access to foreign 
markets for the apples, pears, and cherries that are grown in 
our region and exported out of Idaho, Oregon, and Washington.
    The point of my testimony today is to convey the fragile 
nature of these export opportunities in the Asia Pacific 
market, just as the opportunities for trade are indeed very 
bountiful. So are the opportunities for trade barriers. We need 
the strong support of the U.S. Government to maintain and 
expand access in the Asia Pacific region.
    The good news is that market access to the region for much 
of our fresh fruits is very healthy. The 3-year average value 
of Pacific Northwest tree fruit exports to the region has 
increased an estimated 50 percent, to over $300 million, since 
2008.
    Our growers are not the only ones who recognize that the 
Asia Pacific region is a growth market. Many other countries 
have already negotiated, or are negotiating, free trade 
agreements in the region. For example, fresh fruit producers in 
Australia, Chile, and New Zealand now have duty-free access to 
Thailand, as do growers from China. Apples imported from the 
United States are assessed a 10-percent duty; pears, 30 
percent; cherries, 40 percent. Expanding TPP to include 
Thailand would be a great opportunity worth many millions of 
dollars.
    During the past 12 years, I have witnessed the evolution of 
non-tariff barriers to trade, which we have already heard quite 
a bit about. A few observations. Non-tariff barriers can be 
exceedingly complex and technical in nature, as we all know. 
Resolution of these barriers requires an in-depth knowledge of 
the production systems and the specific technical concerns, be 
they plant pest, food safety, or particular industry practices.
    To address these types of barriers, expertise must be drawn 
from the private sector, the government, and academia. The 
effort to find a timely solution that is commercially viable 
requires close consultation and coordination between all 
parties, yet the mechanism for making this process occur is, at 
best, ad hoc. In addition, unlike tariff barriers, the 
resolution of technical barriers often involves regulatory 
agencies which can present an entirely different level of 
complexity to problem resolution.
    As an example, only a few weeks ago there was considerable 
question whether cherry growers would maintain access to 
Australia this year. A phytosanitary concern is a fruit fly 
called spotted wing drosophila. It is native to Asia and a 
recent invasive pest in the United States. Unless a resolution 
could be found to a plant pest problem for a commodity of 
Australian producers wanting to export to the United States, we 
were not going to get access to the Australian market. Luckily, 
late last week the two governments came to an agreement that 
will allow our growers to export cherries to Australia this 
season.
    Now, as we all know, under WTO rules or obligations these 
types of technical barriers to trade, are supposed to be 
resolved on their respective technical merits. In reality, the 
resolution of issues is much more political. It involves the 
U.S. providing something of benefit to a trading partner in 
exchange for obtaining resolution of a non-tariff barrier.
    A final observation. At the end of the day, if a trading 
partner is unwilling to remove a barrier to trade, there is 
very little recourse available to small exporters such as the 
ones I represent. Neither dispute resolution through the WTO at 
one end of the spectrum, or continued technical discussions at 
the other end, is a rapid process or holds any guarantees of 
success. The example for this I would draw on is the current 
situation facing us in Indonesia, described further in my 
written testimony.
    In short, the Asia Pacific region provides significant 
opportunities for those trading apples, pears, and cherries. 
The prospects look good for continued success in the future, so 
long as protectionist forces are kept at bay.
    Thank you, Mr. Chairman and committee members for the 
opportunity to participate in this important public hearing. I 
look forward to answering any questions members of the 
committee may have as a result of this testimony.
    Senator Wyden. Thank you, Mr. Powers. Excellent testimony. 
You set the land speed record for completing it, too, today. We 
thank you.
    Mr. Casper, welcome, from Sioux Falls, SD.

   STATEMENT OF PAUL CASPER, PRESIDENT, SOUTH DAKOTA SOYBEAN 
                  ASSOCIATION, SIOUX FALLS, SD

    Mr. Casper. Thank you very much. Good afternoon, Mr. 
Chairman, members of the subcommittee. I am Paul Casper, a 
soybean grower and farmer from Lake Preston, SD. I serve as 
president of the South Dakota Soybean Association, which is an 
affiliate of the American Soybean Association. We appreciate 
the opportunity to appear before you today to provide our views 
on agricultural trade with the Asia Pacific region.
    Soybeans and soybean products are the most significant U.S. 
agriculture export commodity. Exports of U.S. soybean products 
exceeded $22 billion last year, representing over 60 percent of 
the U.S. soybean production. South Dakota has become a leading 
exporter of soybean products, with sales to foreign markets 
reaching a record $1.04 billion in 2010, compared to just $348 
million in 2006.
    The rapidly growing markets in the Asia Pacific region, led 
by China, are key drivers of U.S. soybean demand. In fact, 6 of 
the top 10 foreign markets for U.S. soybeans are in the Asia 
Pacific region. China is by far the largest customer of U.S. 
soybeans, with purchases of more than $10.6 billion last year.
    Japan was the third-largest market, with the purchase of 
$1.2 billion. Other significant buyers of soybean products in 
the region include Indonesia, with its purchase of $870 
million; Taiwan, with $714 million; South Korea, with $362 
million; the Philippines, $353 million; and Thailand, which 
purchased $195 million worth of soybean products last year.
    With the recent implementation of the South Korea FTA, U.S. 
soybeans for crushing and U.S. soybean meal now enter Korea 
duty-free. U.S. food-grade soybean producers will also have 
access for the first time outside the Korean import monopoly. 
The FTA creates landmark opportunities for meat and poultry 
exports which should further boost local consumption of soybean 
meal.
    The Trans-Pacific Partnership, TPP, and the free trade 
agreement would also provide market opportunities for soybeans 
and other U.S. agricultural exports, especially as it 
established a broader Asia Pacific trade arrangement. Entry of 
Japan into the TPP negotiations would increase the economic 
significance of the agreement, and soybean farmers strongly 
support Japan joining the negotiations.
    While soybeans and soybean meal enter Japan duty-free, 
Japanese barriers to livestock exports are much more 
restrictive. Their removal under a TPP agreement would offer 
substantial new opportunities to expand U.S. exports to Japan 
of dairy, pork, beef, and poultry products, which should boost 
domestic demand of soybeans and soybean meal.
    Substantial potential exists for expansion of agriculture 
and soybean trade between the United States and the region. 
Vietnam, for example, is a rapidly growing market for soybean 
products. Since joining the WTO, Vietnam's imports of U.S. 
soybeans rose to $150 million last year, compared to $7.4 
million in 2006.
    There also remains great potential for expansion of U.S. 
agricultural exports to the region if non-tariff barriers 
restricting U.S. exports can be eliminated. A key area that 
affects exports of U.S. soybeans concerns the policies that 
regulate agricultural commodities derived through 
biotechnology.
    As I stated earlier, China is our single-largest export 
customer. Soybean products purchased by China last year 
represented 50 percent of all U.S. soybean exports and 25 
percent of U.S. soybeans harvested. But China's slow regulatory 
approval process for commodities containing biotech traits 
causes great concern.
    China is the only major importing country that requires 
biotech events be fully approved in the country of development 
before it will accept any application for its registration to 
export the product to China. This requirement delays 
commercialization of new traits in the U.S. for as much as 2 
years. On this issue, we strongly support the initiative put 
forth by USDA to China to implement a pilot project to attempt 
to begin to address these issues.
    In general, however, the soybean sector's impressive export 
growth in the region could not have been achieved without 
unique government/industry partnerships that characterize the 
Foreign Market Development program, FMD, and the Market Access 
Program, MAP. However, our competitors in South America also 
continue to increase exports to Asia Pacific markets as their 
production levels jump to new records.
    Despite slower world growth, the outlook for agricultural 
trade remains promising. We strongly encourage the U.S. 
Government to pursue market-opening initiatives in this region, 
and we strongly support the inclusion of Japan in the TPP 
negotiations.
    Thank you, Mr. Chairman, for the opportunity to present our 
views here today. I am happy to respond to any questions later.
    Senator Wyden. Very helpful.
    [The prepared statement of Mr. Casper appears in the 
appendix.]
    Mr. Crider?

 STATEMENT OF STEVE CRIDER, INTERNATIONAL SALES MANAGER, AMY'S 
                      KITCHEN, MEDFORD, OR

    Mr. Crider. Chairman Wyden, Ranking Member Thune, and 
members of subcommittee, I am Steve Crider, international sales 
manager for Amy's Kitchen. I am engaged in the export of high-
value organic foods. In my current role with Amy's Kitchen, a 
manufacturer of frozen organic meals, pizza, and canned soup, I 
am responsible for the international market development in 
Canada, the Middle East, the Pacific Rim, and Asia. I also 
serve as Amy's liaison to the Organic Trade Association.
    Thank you for this opportunity to provide testimony 
regarding policies to increase trade with the Pacific Rim as 
part of the Trans-Pacific Partnership agreement.
    For those of us working on the front lines of sales in a 
rapidly changing business environment, it is clear that the 
Pacific Rim's regional economy is extremely dynamic and poised 
for continued growth. U.S. agricultural exports will have many 
opportunities and advantages in meeting the dietary demand of 
these markets. There remains an active and important role 
government can play in assisting U.S. companies to compete and 
succeed in these regions.
    Today, U.S. organic sales are in excess of $31 billion. 
Despite the worst recession in modern times, the industry still 
grew by almost 6 percent in 2009. The most recent figures 
available for 2011 show we are currently growing at 9.5 
percent.
    We see the same general trend within our business at Amy's 
Kitchen. Investing in organic production is a sound business 
decision. Amy's Kitchen is based in California and Oregon. We 
are a family-owned and -operated business. Our success is 
founded on producing, in our own factories, high-quality, 
delicious foods using organic and natural ingredients. 
Together, our two production facilities employ over 2,000 
people, supplying over 250 organic food products to the U.S. 
and global markets.
    We procure the majority of our organic ingredients from 
local sources, but, in deference to Senator Thune, Amy's also 
sources hundreds of tons of organic grain and soy from 
America's breadbasket in the Midwest. This activity, in turn, 
supports a large network of organic farm producers and rural 
communities.
    Export markets play an increasingly important role in Amy's 
business. We have added new, well-paying jobs in our company to 
support this expanding growth in market demand for the 
container loads of our products that we ship overseas.
    The same is true for our domestic business. Today, Amy's 
Kitchen can be found in mainstream retailers such as Wal-Mart, 
Kroger, Cosco, and many others. Increasing consumer demand for 
organic food is driving this placement in conventional retail 
settings, and this trend is being replicated worldwide in major 
cities all over the world.
    Our appeal today is for Congress to continue to support key 
programs that nurture and promote U.S. agricultural exports, 
especially now when American foods have such a great 
opportunity to supply the Pacific Rim. Our key requests are as 
follows: maintain the strength of the national organic program. 
The U.S. ``Organic'' seal establishes the credibility of the 
Amy's product claim here at home and in global markets.
    Let us build on the successful negotiations for organic 
equivalency we accomplished with Canada, and most recently with 
the E.U. This historic achievement will reap huge benefits for 
American food exporters for generations to come. It is crucial 
to note that Asia and the Pacific Rim are now poised to follow 
suit in eliminating this type of trade barrier, and I can 
elaborate further during question time. We have great 
confidence that the U.S. Government negotiators will continue 
to be smart, far-sighted, and fair in upcoming organic trade 
negotiations.
    Second, we ask Congress, the USTR, and USDA to continue to 
press for the reduction of import duties and tariffs on U.S. 
agricultural products. Amy's Kitchen is often hit with tariffs 
that can be as high as 30 percent. Reducing these tariffs in 
trade agreements is crucial to expanding export growth and 
making our U.S. products more affordable to consumers in these 
emerging markets.
    Third, expand the criteria for participation in FAS 
programs so that more medium- and larger-sized companies can 
engage. In order to meet the aggressive goals for U.S. exports 
in the President's National Export Initiative, we need these 
larger players participating in market access and export 
development programs.
    Likewise, matching fund programs make it possible for the 
organic industry to participate in key trade shows. These 
international marketing events result in millions of dollars of 
new and incremental sales. Simply put, from global demand comes 
export sales, which in turn drive increased production, 
expanded organic acreage, and more jobs here at home.
    We at Amy's Kitchen are seizing these opportunities as more 
consumers worldwide look for healthy, tasty, and convenient 
foods. With your help and support, we will continue to expand 
into these foreign markets. Amy's growth shows no sign of 
slowing down, and we look forward to contributing our part in 
doubling U.S. exports.
    Senator Wyden. Mr. Crider, thank you. As both a consumer of 
the wonderful products that come from Amy's Kitchen and being 
able to represent you and your employees in the U.S. Senate, we 
are glad you are here and appreciate your testimony.
    Mr. Crider. And we are proud to be a producer in Medford, 
OR.
    Senator Wyden. Very good. All right.
    [The prepared statement of Mr. Crider appears in the 
appendix.]
    Senator Wyden. Mr. Steve Thomson, King Estate Winery. 
Wonderful wines that ought to be in India, by the way.
    Mr. Thomson. We are working on it.

  STATEMENT OF STEVE THOMSON, EXECUTIVE VICE PRESIDENT, KING 
                   ESTATE WINERY, EUGENE, OR

    Mr. Thomson. Thank you, Mr. Chairman, Ranking Member Thune, 
and Senator Cantwell. It is an honor to be here today. I want 
to thank Senator Wyden for convening this hearing and providing 
an opportunity for King Estate to speak about opportunities and 
challenges with trade to Asia.
    I have provided a full draft that I would like to submit 
for the record.
    [The prepared statement of Mr. Thomson appears in the 
appendix.]
    Mr. Thomson. Pacific Northwest agriculture producers have 
benefitted greatly from exports to Asia. We anticipate 
continued growth in wine exports to Asian markets for many 
years to come. But this is not to suggest that trade with Asia 
is without significant challenges. In the remarks that follow, 
I intend to offer a brief summary of the present state of U.S. 
and Northwest wine trade to Asia and discuss the support and 
collaboration required to ensure that U.S. producers can 
compete on a level field.
    Today's hearing is a great opportunity to identify and 
advance the linkages between the administration's National 
Export Initiative and the goals and objectives of the Pacific 
Northwest wine industry. Exports are a vital part of the U.S. 
economic engine, and the U.S. wine industry is poised to grow 
and contribute.
    There are over 1,000 wineries in the Pacific Northwest, the 
vast majority of which are small family wineries generally 
supported by small family farms. Pacific Northwest wineries 
represent vibrant jobs creation and revenue growth. Recent 
economic impact studies for Oregon and Washington demonstrate 
that the wine industries in these two States likely deliver 
over $7 billion in in-State economic impact and nearly 40,000 
jobs.
    For many Asian consumers, wine is increasingly seen as 
fashionable, healthy, and a status symbol. As we see 
historically strong wine consumption in Europe decrease per 
capita, we see per capita consumption in Asia increase.
    Presently, per capita consumption in France leads the 
world, at 50 liters per person, and is falling. Per capita 
consumption in the U.S. and Japan is 15 liters and 2 liters per 
person, respectively, and increasing. Per capita consumption in 
China is presently a mere 0.5 liters per person and is growing 
strongly.
    While U.S. wine exports show strong growth, the U.S. 
presently exports far less wine than it imports. Given this 
imbalance and the opportunities abroad, it is very important 
for our industry to develop and grow new markets, such as Asia. 
Total wine trade for the Asia Pacific region was $18 billion in 
2010, with U.S. exports to the region being just $243 million, 
still a 39-percent increase over 2009. Asia Pacific is now the 
second-largest export market for U.S. wine. These numbers 
demonstrate that Asia Pacific is a critically important market 
for U.S. wineries. Persistence in collaboration will be 
required to ensure it stays that way.
    I would like to briefly outline three areas of concern and 
focus for our industry moving forward. First is the need for 
continued funding for export assistance programs and greater 
collective export marketing cooperation among regional 
industries. Second is the pursuit of more favorable trade 
agreements and reduction of non-tariff trade barriers. Third is 
the need for harmony, clarity, and ease of regulatory issues 
for our exporting producers.
    USDA's export assistance programs, such as the Market 
Access Program, have become the backbone of wine exporting for 
most U.S. wine regions. The funding is modest but vital, and 
the investment is more than 50 percent matched by wineries 
large and small.
    Dollar investments alone are not a guarantor of success, 
however. U.S. trade policy is lagging in terms of removal of 
barriers to trade in Asia. The Pacific Northwest wine industry 
supports free trade agreements that improve market access and 
competitiveness.
    China represents a market of untold potential for U.S. wine 
marketers. Wine consumption is increasing rapidly, as is the 
quality of wine being consumed. However, the U.S.'s share of 
wine imports to China is falling. Awareness and penetration is 
very low for U.S. wines. In China, imports from France, 
Australia, and Chile are leading the growth. France now has a 
market share of 52 percent. All three of these competitors rely 
on aggressive pricing to build new markets. France is supported 
by subsidies in the form of the E.U. Export Rebate Program.
    Chile and New Zealand have focused on pursuing trade 
agreements. Our industry needs to promote better coordination, 
perhaps with a national branding strategy that would create 
more of an identity for U.S. wine in export markets. This is 
the approach that successful countries such as France, Italy, 
and Spain favor with their export strategies.
    Finally, the Pacific Northwest wine industry can benefit 
greatly from clarification and standardization of regulatory 
issues. Documentation can be cumbersome, costly, and with 
little transparency or timeliness.
    The market engine for worldwide consumption is gradually 
shifting from Europe to Asia. The wine production engine of the 
world is gradually shifting from Europe to the West Coast of 
the Americas, from Washington in the north, through Oregon and 
California, to the countries of Chile and Argentina in South 
America.
    The West Coast of the United States represents perhaps the 
highest volume in concentration of potential fine vineyard 
plantings in the world. Much of Asia is only marginally suited 
for fine wine production and with substantial quality 
limitations; there is a great supply and demand fit.
    It is important that the U.S. Government continue to work 
to eliminate tariff and non-tariff trade barriers for U.S. wine 
exports. We ask Congress to pursue free trade agreements with 
markets that offer growth opportunity. We urge Congress to 
reauthorize the Market Access Program funding as part of the 
2013 Farm Bill, and that it continue to be fully funded at the 
$200 million level.
    In closing, the wine production and consumption growth 
engines of the future may well lie on either side of the 
Pacific Rim. The U.S. wine industry has unique resources and 
potential access to markets that will ensure that this industry 
is a big winner in the U.S. economy. It is vital that the U.S. 
wine industry have the political and economic resources to 
succeed.
    Thank you, Mr. Chairman.
    Senator Wyden. Thank you very much, Mr. Thomson. I thought 
that last point was especially telling. There is no question 
that your products are going to be a hit in the Asia Pacific 
region. We just have to make sure that your government adopts 
policies so you can get them in. So, we appreciate it.
    You now have three Senators trying to deal with the 
procedural rhythms of an institution that is almost 
incomprehensible at this time of the day, so Senator Cantwell 
is going to start, and then we are going to see if Senators 
Thune and I can juggle this.
    So, Senator Cantwell, go ahead.
    Senator Cantwell. Thank you, Mr. Chairman. Thank you for 
that courtesy. I greatly appreciate it. Panelists, thank you so 
much for your testimony.
    Mr. Crider, I think you actually have a facility in Skagit 
County as well.
    Mr. Crider. That is where I am based, yes.
    Senator Cantwell. Great. Well, we are glad you are here. 
Amy's is a good product, so thank you for having facilities in 
our State as well. And Mr. Thomson, I am sending a letter to 
the Agriculture Committee this week in support of the MAP 
program. It is vitally important, and hopefully this proposed 
legislation will include that.
    Mr. Thomson. Thank you. I would also like to point out that 
King Estate Winery has a winery project in the Columbia Valley 
of Walla Walla, and we produce Washington wines as well.
    Senator Cantwell. All you have to say is, ``There is good 
wine in the Northwest,'' and that is good by us.
    So, Mr. Powers, I wanted to talk about apples, if we could. 
Thank you for representing the Northwest horticulture industry 
and all that you do. One of the issues that I want to talk 
about is China. Obviously they do allow access to two 
varieties, and yet, if you look at the Yakima Valley and our 
production in general, two-thirds of that production, we are 
looking at a variety of varietals that are not allowed in 
China.
    We have had these issues and discussions. You heard what my 
questions were to our Trade Representative, trying to push 
forward on getting access to markets. So what do we need to do 
to make sure that we get more than two varieties and get past 
these issues that are not--we do not need pest assessments. 
That is not what the problem is. So how do we get past this?
    Mr. Powers. That is an excellent question, a longstanding 
one. We have been seeking access for apples to China since the 
mid-1990s, or the early 1990s. We do have access for two 
varieties. Really, varietal issues are not at the heart of SPS 
questions, really. I mean, if we have access for apples we 
should have access for all varieties of apples.
    However, China does not necessarily see it that way. While 
the two technical agencies have been involved in dialogues for 
years, at a certain point--and this happened a few years ago--
there was a recognition that this was not about a technical 
dialogue, this was basically a political matter. I think that 
is, at the heart of it, what we are facing.
    We are not just facing it in China, we are facing it in 
many countries where the technical discussions can go on and on 
and on, and oftentimes do. What is needed is a political 
solution, or a political trade-off at the end of the day, that 
needs to occur.
    With China, I think that is the same situation, and it is a 
dicey one, because, as you may know, the Chinese want access 
into the U.S. for their apples. So the U.S. is working through 
the Animal, Plant, and Health Inspection Service, is working 
through that pest risk assessment on Chinese apples. That 
process is unfolding.
    We have legitimate concerns about the threat of invasive 
pests that might be present on apples coming from China. So, 
until that process works through--and we want to make sure that 
it is thorough--we are unlikely to see much in the way of 
advances on our other apple varieties into China, simply 
because things are not necessarily resolved on the basis of 
their technical merits.
    I do not have a solution, quite frankly. I think that it 
will have to continue to be part of the dialogue between the 
two governments, and hopefully a resolution will appear. But 
there is no real technical reason at this point related to fire 
blight that would not allow our apples to go----
    Senator Cantwell. And so, what do you think the solution is 
from a political perspective? How do you get the issue above 
the discussions that it is on the technical points and up to 
the political level? What do you think that takes?
    Mr. Powers. It takes more than what we have been able to do 
so far. I do not have a great solution to that. I think that 
there has to be something of value to China in order to move 
forward, and at this point what we know is that they have 
basically said, until we allow them to have access into the 
U.S. for their apples, they are not going to move forward on 
our apple access issue.
    Senator Cantwell. And where do you think we are with pears?
    Mr. Powers. Pears, I am much more optimistic. Again, it is 
a longstanding issue. China has access to the U.S. for two 
varieties of its pears, and APHIS is now working on the third 
variety. That process is in rulemaking at this point and 
appears to be moving forward. There is a clear recognition that 
China needs to allow us in the Northwest and in California to 
have access for our pears going into China.
    They are working on a work plan. They, being the two plant 
health agencies, are involved in that. So we are hopeful that, 
perhaps by this next harvest season or, if not, the next one, 
that the technical issues will be resolved and exports will be 
allowed to move forward.
    Senator Cantwell. Well, I certainly hope so. I thank you 
for your work in this area. Having visited Chinese supermarkets 
and seen these products there, you want to make sure that we 
get access and compensation for the products that are there. 
So, I would hope that we could continue to make movement on 
these issues and find a solution that would give this wide 
variety of products from our State access to that market.
    So, thank you, Mr. Chairman. I appreciate it.
    Senator Wyden. Thank you, Senator Cantwell.
    At this point I am going to ask just a couple of questions 
for the record, and then see if I can get back. Also, on 
Senator Cantwell's point, it seems to me with these bilateral 
dialogues, particularly with China, apropos your point, Mr. 
Powers, given the fact that we have these formal talks 
essentially every year, we ought to get these phytosanitary 
issues up at the top of the priority list for these bilateral 
dialogues. I share Senator Cantwell's concerns. We are going to 
follow up with those of you who are expressing this concern 
about the phytosanitary practices. Thank you, Senator Cantwell.
    Let me, if I might, just ask one question for now and then 
I am going to turn it over to Senator Thune. If I can get back, 
I am going to come back. Do not interpret this as an insult, it 
is just that the Budget Committee is about to wrap up. If I 
cannot get back, then Senator Thune will adjourn.
    Mr. Crider, on this question of organic equivalency in the 
Asia Pacific area, obviously this would be a chance for us to 
get an exciting, high-growth product into the region. What does 
this really mean, in something resembling English, to have a 
requirement for organic equivalency?
    Mr. Crider. Well, every nation establishes its own criteria 
and definition of ``organic.'' It would be unreasonable to 
expect that these be perfectly in synch. Different conditions 
exist and different farming situations exist. However, we 
cannot allow those minor differences to become a reason for 
trade barriers to exist. We can co-exist with differences. In 
fact, the differences between us and the E.U., we are 99 
percent the same, and we allowed the 1 percent of difference to 
become a reason for not allowing U.S. products to be called 
organic in that marketplace.
    So, even though Amy's was exporting to Europe for a number 
of years, we had to remove the ``O'' word from all of our 
packaging. We are a natural food company, so we were unable to 
compete on a fair level there. That has been eliminated.
    So over time--and there have been many years in this 
process--the negotiation with Canada broke this logjam of 
allowing this 1 percent of difference to become an impediment 
to trade in mutual recognition of each other's organic 
processes and standards.
    From the Canadian agreement, it opened up the E.U. Now we 
are poised in this unique situation where Korea and Japan, who 
have organic standards which are different from ours that fit 
their region, but they are not necessarily based on what our 
standards are, we have something that they want. We finally 
have some bargaining chips here. They want access to our market 
for their organic foods, and we want access to their market for 
American-
produced organic foods.
    So again, reaching a higher level of understanding where we 
respect each other's differences but do not allow those 
differences to become the impediment or a reason to deny a 
marketing claim in that marketplace for that high-valued 
product is kind of what we are driving at.
    Senator Wyden. Mr. Thomson, I am not going to ask you any 
questions right at this point. I think you could see from my 
discussion with Ambassador Siddiqui that I do not think wine is 
getting the priority that it deserves in some of these key 
high-growth kinds of markets. I just want you to know that, on 
our watch, we are going to change that.
    Mr. Thomson. Thank you.
    Senator Wyden. We are going to stay at it until it gets 
changed. I mean, this is too important. It is important to 
Oregon, but it is important to the country. This is a high-
growth area of agriculture, and we are going to make a very 
aggressive push until it gets fixed.
    With that, I think I am going to turn this over to Senator 
Thune. I want to thank him for his patience. I am going to try 
to get back, Senator Thune, but why don't you just proceed with 
the questions that you would like? If I cannot get back, why 
don't you just wrap it up? I very much, as usual, appreciate 
your cooperation.
    Senator Thune. All right. Thank you, Mr. Chairman.
    Let me, if I might, say just as a question to Mr. Casper, 
in your testimony you talk about how greater market access for 
meat products such as beef and poultry will spur greater 
domestic consumption of soybeans, which is used as a feed for 
the animals from which these products are produced. This is in 
regard to the importance of the Asia Pacific market to 
America's soybean producers.
    Could you expand upon this point and talk specifically 
about how greater access into markets such as Japan and Vietnam 
for pork, poultry, and beef will benefit soybean farmers such 
as yourself?
    Mr. Casper. Yes, Senator, I will. Increases in the meat and 
pork and poultry exports make our domestic meal markets larger 
for our customers here in the United States. A 1-percent 
increase to U.S. beef and pork exports sends more than 2 
million bushels of corn and soybeans overseas. So, if we can 
process that protein here in the United States, rather than 
shipping the raw soybean and corn over, and put it through 
livestock production and send that over, it has a great impact 
on that, not only in the meal and light distillers' grain use, 
it also takes and puts many more employees to work, and we are 
increasing that opportunity to keep that value added here in 
the United States.
    Just one more note. For every pound of U.S. pork exported, 
it utilizes 1.5 pounds of U.S. soybeans. So it is so important, 
if we can process here that soybean meal and send the ready 
product in animals and birds across, it is much, much more 
beneficial for this country.
    Senator Thune. In your testimony, you also talked about the 
competition that U.S. soybean growers are facing in global 
markets, especially from South American nations such as Brazil 
and Argentina. Could you discuss how U.S. soybean producers 
plan to stay a step ahead of your competitors? Do you believe 
that the quality of your product gives you an advantage over 
soybeans produced in other countries?
    Mr. Casper. Well, with regards to our quality, yes, I truly 
believe that. In fact, we have funding here, State and national 
funding, with regards to amino acid research. If you understand 
how amino acids work in livestock, it is very beneficial with 
regards to what the U.S. production is on the amino acid side. 
So that has really gotten us a competitive and quality 
advantage, and sustainability.
    Also, we need to be more competitive, and in order to do 
that we need to streamline our approval process of our biotech 
traits with regards to APHIS, which we understand they are 
currently doing. Otherwise, technology providers will bring 
their technology to South American farmers because their 
process is emerging with greater efficiency.
    Sometimes I think we get ourselves in positions where we 
are falling behind. We are the number-one soybean producer in 
the world, and, if South America would have had their crop like 
they anticipated, they may have taken over that number-one 
position this year. We do not want to give that up. Please do 
not put us in a position where we lose that. We want to be the 
number one. We want to stay competitive, and those markets are 
very, very important. Biotechnology is very important to us.
    Senator Thune. Let me expand on the biotechnology issue 
with regard to China. I would like to have you describe in a 
little bit more detail if you would the problems that China's 
approval process is creating for soybean farmers in the United 
States. Do you believe that USDA--as a follow-up question--and 
USTR are doing all that can be done to effectively address that 
issue?
    Mr. Casper. Yes, we do. We appreciate it very much, and we 
believe they are doing everything they can. But perhaps we need 
to take this a little bit further, like to the White House. I 
think this needs to be a priority. This is a pretty big deal 
for us.
    Senator Thune. All right.
    Let me just, if I might--and anybody feel free to answer 
this question. In fact, I would like to get probably a response 
from all of you. You all depend on access to new markets for 
your products, as more than 95 percent of the world's consumers 
lives outside the United States.
    I would be curious to know from each of you if you have a 
view on the renewal of Trade Promotion Authority, which I 
referenced earlier in my opening remarks, the process under 
which nearly all of our trade agreements have been approved, 
and if you believe that renewing the Trade Promotion Authority 
that expired in 2007 is important.
    Mr. Powers?
    Mr. Powers. We do believe it is important to regain that 
authority, that the administration should have it, and we are 
fully supportive of providing that authority to the President.
    Senator Thune. All right.
    Mr. Casper. With our location in the very Northwest growing 
region of the United States, that Asia Pacific region is so 
beneficial to us. Rather than waiting for the river to un-thaw, 
because we are limited with the river market, we can load up 
our products right in South Dakota, down the rail, out the 
harbor and across the water it goes. So, it is very, very 
important to us.
    Senator Thune. All right.
    Mr. Crider?
    Mr. Crider. The organic industry does support that, yes.
    Senator Thune. All right.
    Mr. Thomson?
    Mr. Thomson. Yes. The wine industry would support that as 
well. We see the Pacific Rim and the wine industry on the 
Pacific Rim as being just a really powerful value-added export 
generator in the coming few years.
    Senator Thune. All right. Well, I hope your various 
organizations will convey that to the administration as well. 
We have tried to do that, and we have had Ambassador Kirk in 
here, and others. For the life of me, I do not know why we have 
not been able to make any headway on extending TPA and moving 
forward with free trade agreements. We finally got the three 
that were negotiated under the previous administration approved 
and entered into force, but now we have expired TPA.
    With the exception of the Trans-Pacific Partnership, 
nothing is really going on out there on the horizon in terms of 
looking at additional market opportunities. There does not seem 
to be a sense of urgency about it. You heard what the previous 
panel said in terms of, they are focusing on opening markets.
    But, clearly, one of the best ways we have seen to do that 
in terms of the results has been negotiating free trade 
agreements. Without TPA, absent TPA, we are just not able to do 
that. So, I would hope that you would carry that message as 
forcefully as you possibly can to members of the administration 
through your various organizations and members.
    Let me just ask sort of one general question. We have a 
challenge, I believe, in the country in helping people 
recognize the value of trade. I think that a lot of times 
Americans do not always appreciate how important export markets 
are to job creation here at home. They, in many cases, I think, 
view that as something that is happening overseas, but does 
create thousands of jobs here in the United States.
    I am wondering if there is anything that you can do as 
producers who rely on foreign trade to better educate American 
consumers as to the benefits of trade, international trade. Any 
thoughts about that?
    Mr. Powers. I will take a stab at it, certainly. Even among 
some of our own growers, I think there is continual outreach 
that we do in terms of the importance of trade, how that 
benefits our region locally. We do get the word out through 
trade associations and other organizations, like the Washington 
International Trade Council and others, to try to have an 
active response either through editorials or a voice to the 
greater U.S. population about the importance of trade.
    I mean, just in a small industry--and ours really is a 
small industry. We are talking about $800 million worth of 
exports in a year. To our region, that is direct money coming 
in from foreign consumers. That is an economic engine. It is 
rural communities. That $800 million obviously spins off into 
additional economic benefits. Our calculation is about $1.5 
billion and 7,300 jobs come out of those dollars, et cetera. So 
we have a great story to tell.
    We get that message out as best we can, and we will 
continue to do that. I think the challenge sometimes is 
reaching the right people. It is easier to hear about the down 
sides and the difficulties. I mean, even in this committee, 
what we are talking about are problems even though we are very 
successful in terms of exports. But we are focused on solving 
these problems, and hopefully folks realize that, and we will 
certainly do a better job if we can get the word out in our 
neck of the woods.
    Senator Thune. Yes. Thanks.
    Paul?
    Mr. Casper. Senator Thune, it is kind of interesting. When 
I first started farming--it was quite a few years ago, 
actually--our job as farmers was to produce enough food to feed 
this country. The last few years, the meetings that I go to, 
with the population explosion expected, I have to double my 
production in 30, 35 years. I have a task every day when I wake 
up that I have to feed not only the country, but the world. In 
order to do that, science-based technology has to be provided 
for me to do that.
    I have to have market access. And bridge-building rather 
than wall-building is so important here. So there are 
consequences for decisions made, and we need bridges, not 
walls. So we have a task, as producers of food in this country, 
that is enormous. Seriously, there is not a time in a day that 
I do not think about that, because that is what my job is 
supposed to be--looking out with regards to the future. We need 
your help to do that.
    Senator Thune. Thanks. Thank you.
    Anybody else?
    Mr. Crider. I would have two points. One, the quality and 
variety of U.S. agriculture products are competitive and 
respected around the world. We are second to none in what we 
can do in providing high-quality food to consumers all over the 
planet.
    However, on the trade side, I was based in Japan for 9 
years. I was there when the beef and orange agreement was 
agreed to, when the rice millers tried to bring their food in. 
We need to be playing chess, not checkers. We have to be 
sophisticated and 
forward-thinking in these trade agreements.
    When we opened the doors in Japan, we were the bullies. We 
kicked down the door: we are going to open this market for beef 
and oranges. It was not American products that walked through 
that door, it was Australian products that went through that 
door. It is not American rice that is going into Japan, it is 
Thai and Vietnamese rice.
    So our follow-through on creating these openings has to be 
long-term and well thought out and supported with the follow-
through that allows the American products, once we create those 
openings, that we are the ones who benefit from the change. I 
do not think we have been as sophisticated and as proactive in 
that as we need to be. I will leave it at that.
    Senator Thune. Thanks.
    Mr. Thomson?
    Mr. Thomson. Yes. Senator Thune, we struggle in this 
country to create jobs. In my testimony, I pointed out that in 
the Pacific Northwest--and these are very new industries in 
Oregon and Washington in particular--recent economic impact 
studies demonstrated that the wine industry in those two States 
has delivered over $7 billion in in-State economic impact and 
nearly 40,000 jobs in these very new industries.
    We have wineries in every State in the Union now. In fact, 
we have nearly 20 wineries in South Dakota. So, this is an 
opportunity again where we have an export value-creating model 
that is going to present a fantastic opportunity for the 
American trade balance and the American worker moving forward.
    Senator Thune. Yes. Well, I think the sky is the limit. You 
look at 95, 96 percent of the world's population living outside 
of the United States and the capacity, the technology--as long 
as we can continue lowering barriers in these countries, and 
these trade agreements have helped remarkably in doing that--I 
just hope that we can continue to allow American producers, who 
are the best in the world, to continue to help feed the world.
    So we certainly welcome any additional thoughts, ideas, and 
input that you would have, and we appreciate your willingness 
to be with us today. I will conclude. I do not think the 
chairman is going to make it back. But, if there are any 
additional comments or thoughts that you have, we will keep the 
hearing record open for a few days. Five days. We will keep the 
hearing record open for 5 days. Again, we appreciate very much 
your being here today and your very insightful comments. Thank 
you.
    This hearing is adjourned.
    [Whereupon, at 4:10 p.m., the hearing was concluded.]


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